Climate action through circularity and waste management: Malaysian palm oil company IOI’s approach
10/09/2024 (Eco-Business) - Industrial waste is often treated in most sectors as a disposal challenge, but agribusinesses have long leveraged on the organic by-products of their crops as valuable resources. Malaysia’s palm oil companies are no exception, using regenerative agricultural techniques such as mulching and organic composting to enrich the soil and improve yields.
Beyond its economic and environmental benefits, improved waste management is also crucial towards achieving circularity, which in turn plays a part in supporting climate action. At IOI Corporation Berhad, circularity and waste management are part of a holistic response to climate change, which culminates in its broader goal of achieving net-zero carbon intensity by 2040, said the integrated palm oil player.
Embedding circularity within IOI’s operations follows from its overarching strategies to combat climate change. This involves reducing its climate impact to achieve its net-zero goals and promoting climate action via innovation, improved efficiencies and supporting action throughout its upstream and downstream operations.
Identifying circularity as a material matter
In 2023, IOI identified waste management and the circular economy as one of four new “sustainability material matters”, which are issues that may significantly impact the group’s stakeholders and its business. IOI’s top 10 sustainability material matters were selected following a stringent internal process – from selecting sustainability concerns faced in IOI’s operations, determining their impact on internal and external stakeholders, and ensuring the final selection was validated by internal governance parties, it said.
To IOI, circularity and waste management matter because irresponsible production and consumption can overexploit natural resources, placing biodiversity and future generations at risk. The company adopts the 7Rs of circularity – Rethink, Repurpose, Reduce, Reuse, Recycle, Repair and Recover – to reduce its greenhouse gas emissions and other environmental impacts. It also disposes of all hazardous wastes following local laws and regulations, it shared.
The company said practising the 7Rs has helped it create closed-loop systems by improving waste management and resource efficiency and are enablers for IOI to align closely to the United Nations’ Sustainable Development Goal 12 of Responsible Consumption and Production.
Circularity in action
Developing and executing the 7Rs at IOI begins with ensuring that stakeholders understand the principles of circularity. The firm practices ‘rethinking’ by instilling awareness among employees through talks and trainings such as zero waste, biodiversity through urban farming, and converting waste to treasure, it told Bursa Sustain.
Rethinking the opportunities associated with oil palm-related waste has led to adoption of the subsequent ‘R’s. For example, IOI reimagined the ways in which felled oil palm trunks (OPT) could be repurposed to become a new material.
To reduce and reuse wastage on its plantations, IOI employs a combination of regenerative and precision agriculture. Regenerative agriculture involves the use of organic compost – cycling organic waste back as mulch onto the land and weeding manually to limit soil disturbance. Precision agriculture employs a combination of technologies and innovations to optimise yields, including the use of machines on plantations to transport and evacuate fresh fruit bunches.
Overall, both regenerative and precision techniques have resulted in a 30 per cent increase in IOI’s worker-to-hectare ratio by increasing productivity, IOI shared. These techniques have also directly reduced IOI’s greenhouse gas emissions, with regenerative agriculture in particular resulting in lower and more precise use of chemical fertilisers and pesticides.
Another significant source of greenhouse gas emissions for IOI is the methane released by the waste palm oil mill effluent (POME) from the company’s mills. This methane has been captured and repurposed as a renewable energy source since 2013. IOI currently runs 10 methane capture plants across its mills that produce about 45 million cubic metres of biogas, which is used to fuel boilers and electricity generation. Using captured methane as fuel also means that biomass which was previously burned in the boilers can be used for other purposes such as mulching, fertiliser and activated carbon.
IOI’s practice of its 7Rs also extend to its treatment of wastewater, particularly via the recycling and reusing of wastewater throughout its operations. Effluent water from the company’s refineries is treated according to local regulations before being recycled and reused. The group’s oleochemical facilities follow a similar process, treated effluents are cycled back into its cooling towers.
The group practices the final two ‘R’s, ‘repair’ and ‘recover’, by repairing the machineries in its mills and factories, as well as recovering the parts for other uses. On the social front, IOI recovers and donates its older office computers to communities in need, such as schools and welfare homes.
Improved recycling rates
As a result of IOI’s implementation of the 7Rs, it achieved a 95 per cent recycling rate of non-hazardous waste in its 2023 financial year, a 13 per cent increase compared to the year before. The bulk of this was attributed to its plantation arm, which recycled and reused 97 per cent of non-hazardous waste, mostly comprised of biomass in the form of empty fruit bunches and POME.
Meanwhile, the company’s refinery business also recycled over 97 per cent of its non-hazardous waste, mainly by repurposing biomass from treated palm oil refinery effluent and ashes from refining operations as fertiliser.
Moreover, IOI’s oleochemicals reduced their waste disposal volumes by repurposing soap scraps into hygienic scented soaps in collaboration with third parties, while palm oil sludge is being repurposed as a raw material for the cement industry.
These outcomes demonstrate that the implementation of the 7Rs have helped the group to minimise its environmental impact while unlocking new opportunities for value creation, share IOI. IOI said the results highlight a business case for implementing climate-responsive approaches to waste management and is a testament to the benefits of applied circularity.
This article was first published on Bursa Sustain, Bursa Malaysia’s one-stop knowledge hub that promotes and supports development in sustainability, corporate governance and responsible investment among public-listed companies.