Japfa Ltd

The company's environmental targets are based on a quantitative, science-based Life Cycle Assessment (LCA) methodology, but they are not SBTi validated. Despite dealing in various proteins such as poultry, swine, aquaculture, and beef, which emit methane, it lacks a specific methane emission reduction target for animal farming.

The company aims to reduce its Scope 1 emissions in poultry live bird production by 25% by 2030, 50% by 2040, and achieve Net Zero by 2050. It has transitioned to renewable energy in its poultry and aquaculture operations, resulting in a 21% reduction in indirect emissions. The company prioritises sourcing raw materials from local suppliers, affecting its Scope 3 emissions, and reports this data for FY2023. Although it is exploring alternatives to reduce reliance on soybean imports, no specific targets for these initiatives have been disclosed.

The company does not discuss whether it is working with suppliers to reduce emissions from agriculture.

The company does not engage in innovative projects to reduce or mitigate emissions from feed farming.

The company does not engage in innovative projects to reduce or mitigate emissions from animal farming.

The company reports its direct GHG emissions (Scope 1) for 2023 as 105,412 tonnes CO2eq, energy indirect emissions (Scope 2) as 644,842 tonnes CO2eq, and Scope 3 emissions as 17,713,410 tonnes CO2eq. These figures include the production and transportation of raw materials, supporting materials, energy (excluding Scope 2), and waste processing but exclude consumer products, business travel, employee commuting, and downstream emissions. The sustainability report includes operational units in Indonesia, Vietnam, Myanmar, Bangladesh, and India, covering poultry and aquaculture operations.

The company reports Scope 3 emissions from a Life Cycle Assessment (LCA) of its poultry operations in Indonesia, Vietnam, Myanmar, Bangladesh, and India. However, it does not provide similar disclosures for other animal farming operations or separately disclose CO2-equivalent emissions from animal farming. The company's feed mill operations are included in Scope 1, and the transportation of purchased raw materials falls under Scope 3. Despite this, the disclosed Scope 3 emissions are estimated only for the specified poultry operations, and the company does not explicitly disclose CO2-equivalent emissions from feed production or land use.

The company submitted a response to CDP's Climate Change questionnaire in 2023, but the information is neither publicly available nor scored by CDP. Additionally, the company has not disclosed whether its GHG inventory data has been audited by a third party.

The company's emissions increased across all scopes from FY2022 to FY2023. Scope 1 emissions rose from 93,206 to 105,412 tonnes of CO2e, Scope 2 from 586,165 to 644,842 tonnes, and Scope 3 from 16,821,995 to 17,713,410 tonnes. This rise is attributed to expanded emission data coverage, now including poultry life cycle assessments in Indonesia, Vietnam, Myanmar, Bangladesh, and India. Emissions data now comprehensively covers poultry and aquaculture operations in all countries. From FY2021 to FY2023, emissions increased by 9.7% from 11,404,910 to 12,509,680 tonnes of CO2e, representing an average annual increase of 4.8%. The company does not disclose emissions from feed, enteric fermentation, or manure management. Scope 3 emissions include those from the production and transportation of raw materials and waste processing but exclude consumer products, business travel, employee commuting, and downstream emissions from food processing.

The company utilised the IPCC's 2014 climate data to perform a general analysis under a 2°C scenario, assessing the potential climate change impact on its operations, alongside the associated risks and opportunities. It also conducted a Life Cycle Assessment (LCA) to examine materiality and impact, focusing on key climate-related areas. In its 2023 Sustainability Report, the company stated it would use LCA to enhance scenario analysis as part of its climate risk management strategy. An update on this is recommended.

The company recognises the risks related to fluctuations in raw materials for feed production and the challenges posed by climate change in its various markets, where extreme weather events such as heatwaves, rain, floods, and typhoons can impact its operations and distress its animals. However, it does not provide specific details on how climate change and extreme weather impact the availability and price volatility of feed ingredients. To mitigate these challenges, the company has implemented a closed-house system with environmental control systems regulating temperature and air quality, improving conditions for chickens and reducing mortality rates. Sensors monitor CO2 levels to prevent excess humidity or heat. The company has not disclosed information on veterinary and medicine costs. While addressing the industry's challenges, including extreme weather, social conflicts, and rising energy costs, it focuses on energy management with 37.62% of its energy sourced from renewables, prioritising energy efficiency and cleaner production methods. The company identifies risks associated with a potential carbon tax on GHG emissions and plans to use digital tools for compliance with evolving sustainability policies and climate-related disclosure requirements. However, it does not disclose the number of financially material events linked to climate risk during the reporting period.

The company's Sustainability-Related Investment Guideline directs capital towards investments that align with its three Sustainability Pillars, including emission reduction. It also operates a Sustainability-Linked Financing Framework aligned with these Pillars, underpinning instruments like Sustainability-Linked Bonds (SLB) and Sustainability-Linked Loans (SLL). In 2023, the company enhanced its CapCom system to track capital investments and expenditures for sustainability initiatives, categorising them by the three Pillars for better monitoring and control. It invested US$24 million in initiatives across these Pillars. The company has not reported any costs associated with climate risk.

The company sources soy for animal feed but does not disclose the percentage of feed ingredients this represents. 100% of soy is not sourced from deforestation-free areas or suppliers. The company has not undertaken a deforestation-related risk assessment to identify high-risk sourcing locations.

The company states that its supplier code of conduct requires suppliers to exercise due diligence to ensure responsible sourcing.

The company does not report progress against its commitment. Nor did it respond to the CDP Forest Questionnaire in 2022.

The company acknowledges the potential risks of deforestation within its supply chain and has conducted a survey to raise sustainability awareness among suppliers. Despite more than 50% of respondents indicating no association with deforestation issues, it remains unclear if the survey included both soy and cattle suppliers. While the company reports informing all suppliers about deforestation risks, it does not explicitly support soy producers in promoting deforestation-free production or improving traceability.

The company reserves the right to assess supplier performance at any time to ensure compliance with its Code of Conduct. However, it does not disclose the process for monitoring compliance with sourcing deforestation-free commodities. Upon discovering non-compliance with its code of conduct, the company may request corrective actions, and failure to comply may lead to further measures, including re-evaluation of the business relationship. The company emphasises efforts to promote the traceability of raw materials, specifically soybean meal, requiring a Certificate of Origin for every shipment. However, it is unclear what level of traceability this certificate provides or whether this requirement applies to shipments from both direct and indirect suppliers. Improved disclosure regarding the traceability of the soy supply is recommended.

The company is exploring alternative local raw materials to reduce its reliance on imported soybean meal, incorporating additional feed ingredients such as copra, rice bran, wheat bran, broken rice, and palm kernel cake.

The company's aquaculture division in Indonesia has received various certifications, including BAP, G.A.P., and MSC CoC. Specific units such as the Shrimp Pond Units at Situbondo, Bomo (Banyuwangi), and Sobo (Banyuwangi), as well as the Eel Pond Unit at Bomo (Banyuwangi), have attained G.A.P. certification. The Aquafeed Unit at Medan and the Tilapia Grow Out Unit at Simalungun hold ASC certificates. In 2023, aquaculture units in Nagara, Anyer, and Banyuwangi achieved BAP certification. Although certifications are listed by site, the percentage of certified farms is not disclosed, and improved clarity in reporting this information would enhance transparency.

The company does not disclose feed ingredients by percentage, nor does it state if it purchases certified soy and marine animal products. The company does not provide disclosure on forage fish dependency for fish meal and fish oil.

The company does not disclose information about the sourcing of fishmeal and fish oil used in its feed basket, nor does it specify whether marine and soy ingredients are 100% certified. Furthermore, the company does not provide information on improvements in feed conversion efficiency or its reliance on foraged fish during the reporting period.

The company discloses successful replacement of fish oil with local vegetable oil for some farmed aquaculture species. It collaborates with Gadjah Mada University to manage poultry waste using black soldier fly maggots for producing nutrient-rich larvae for catfish feed. Additionally, it has expanded polychaeta farming, offering nutrient-rich worm feed for tilapia to reduce pressure on wild stocks. The company utilises fish intestines and frames from processing to produce fishmeal and fish oil but has not disclosed a strategy to increase the use of alternative feed ingredients like algae, insects, or single-cell proteins. It acknowledges the risk of fluctuations in feed ingredient availability and price but lacks specific details on the impact of changes in marine and soy ingredients on production.

The company has not disclosed the percentage of R&D funding allocated to developing novel ingredients. Additionally, it does not provide information on the average EPA and DHA content of its salmon. The company also lacks disclosure on a target to increase the use of alternative feed ingredients, informed by risk assessment, or any progress towards such a target.

The company does not disclose data on escapes, nor does it disclose the financial cost of all escape events or provide a discussion on escapement prevention. Finally, the company does not disclose a time-bound target for zero escapes.

The company participates in biodiversity restoration through mangrove restoration, having planted 3,000 mangrove trees. It highlights benefits such as reduced soil erosion and habitat provision. However, it does not provide information on eliminating human-wildlife conflict or specify a time-bound target for this goal.

The company does not disclose a management plan in the event of algal blooms.

The company discloses a sustainability performance target for its Sustainability-linked Bond (SLB) issued in 2021, informed by a Life Cycle Assessment (LCA) using the cradle-to-gate method. This assessment, which spans from animal feed production to domestic poultry product sales, highlighted water as a key environmental concern, and included a water scarcity footprint assessment that guided the strategic location of recycling facilities. In 2020, the company engaged a third-party LCA consultant to identify water-stressed areas and quantify its water scarcity footprint, receiving a "Robust" result. However, details of at-risk operating locations were not disclosed. By 2023, the company scaled up the LCA to incorporate extensive data from all poultry operations in Indonesia, earning recognition for ongoing risk assessment efforts. Future reports are encouraged to include details around the scope and conclusions. The company remains committed to water sustainability through recycling and conservation initiatives, such as rainwater harvesting systems, to minimise freshwater and groundwater withdrawal. A project initiated in 2021, funded by its SLB, aims to build nine water recycling facilities, with eight completed by December 2024. It reports a total water consumption of 18.368 million m³ for the reporting year.

The company does not disclose a time-bound water reduction target to reduce total water withdrawals at facilities in the reporting year.

The company reports a total water withdrawal of 20,951 megalitres (ML) for 2023, distributed as follows: 9,724 ML from groundwater, 32,061 ML from surface water and other sources, 7,728 ML from seawater and other sources, 43 ML from rainwater, and 1,395 ML from third-party sources. These figures include production, offices, and domestic usage, though the universality across operations is unconfirmed. Water withdrawal increased from 18,899 ML in 2022, and total consumption rose from 16,795 ML to 18,368 ML, attributed to expanded data scope incorporating operations in Bangladesh and new units. The company has invested US$24 million in sustainability initiatives, over half focused on enhancing production systems. This includes building closed-house commercial farms, wastewater management, improving animal health and welfare, and adopting new technologies. Nevertheless, it does not disclose CAPEX or OPEX details specifically related to water. External audits were conducted for three new recycling facilities, but there is no confirmation of third-party auditing for water withdrawal or consumption data. While the company responded to the 2023 CDP Water Security survey, its response is not publicly available. Additionally, the company does not categorise water withdrawals or consumption by water stress level.

The company does not address water usage in its feed supply chain. It does not discuss comprehensive guidance, support, or incentives offered to suppliers/growers on water usage and has not established a partnership with a third party to input into sourcing/farming strategy.

The company does not disclose feed water intensity or the proportion of feed sourced from water-stressed areas. Furthermore, the company does not provide evidence that it is investing in sustainable feed production from a water-use perspective.

The company does not disclose the proportion of animal protein commodities produced or sourced in water-stressed areas. While it aims to alleviate water scarcity, reduce pollution, and promote water circularity by constructing nine water recycling facilities in Indonesia and installing flow meters, there is uncertainty about whether it has a sustainable agricultural policy specifically addressing water usage in animal farming operations and supply chains. The company prioritises investment in training programmes to empower approximately 10,000 contract farmers across Japfa Emerging Asia. It provides essential resources such as DOCs, feed, medication, and technical guidance, as well as recommending successful farmers to banks for financial support. Although the company details farmer engagement across its subsidiaries, it does not specifically address engagement on water use in animal farming.

The company does not disclose having established partnerships with third parties to input into sourcing/farming strategy, including water use.

In 2023, the company did not receive sanctions for environmental non-compliance. It has not provided information on whether it identifies processing facilities in areas with high and medium water stress concerning quality. The company implements measures to mitigate wastewater pollution by installing treatment plants to purify wastewater before discharge. Its Sustainability Linked Bond includes a key performance indicator focused on water sustainability, with plans to construct nine recycling plants by December 2024 to reuse treated wastewater. However, the company does not disclose a time-bound target for reducing wastewater volume or improving its quality, nor has it set a volume-related target for wastewater discharge.

The company distinguishes between discharged freshwater and other water in its poultry and aquaculture operations but does not disclose wastewater quality based on standard effluent metrics. It reports wastewater volumes per business division, with the poultry unit discharging 2,141 megalitres and the aquaculture unit 442 megalitres in 2023. The company has not disclosed whether its water data is audited by a third party. Although it submitted the Water Security 2023 assessment, the score is not publicly available.

The company does not disclose having improved the wastewater quality at the aggregate level compared to the previous reporting period or reduced the volume of wastewater discharged.

The company does not address nutrient management in its code of conduct. It does not disclose a requirement for feed suppliers to have a nutrient management plan in place, nor does it provide guidance, support, or incentives to suppliers/growers on nutrient management or fertiliser use in crop production.

The company does not invest in sustainable feed production to improve nutrient management or disclose information about pesticide use in its feed supply chain.

The company processes manure into fertiliser in collaboration with licensed third parties. In India, farm manure is managed by licensed third-party processors. In Indonesia, the company has started a project using biodigesters to convert poultry manure into fertiliser. In 2022, its subsidiary, PT Japfa Comfeed, disclosed the use of biogas from a poultry farm to power heaters and generators, with plans to extend this initiative to other farms. However, this information is absent from the latest report. The company does not conduct risk assessments to identify areas vulnerable to nutrient pollution.

The company does not make site-specific nutrient management plans part of its supplier’s contractual agreement or its own farms management. Nor does it provide technical or financial support to suppliers or its own farms to develop nutrient management plans and improve manure storage.

The company does not disclose whether it integrates nutrient management performance into incentive schemes for farmers. It indicates that in India, its manure is sent to licensed third parties for processing into fertiliser, and in Vietnam, manure processing is similarly outsourced. However, no further details are provided on these initiatives. The company reports using feed formulations to minimise excess nutrients in manure from chickens, fish, and shrimp. Furthermore, the company has not disclosed information on a community engagement plan related to pollution management in its operational areas.

The company selects sites based on water quality and flow, although risk assessment details are not disclosed. The company utilises aquafeed broadcasters, floating feeds, and feed-retaining nets to reduce waste. A subsidiary has developed a low phosphorus feed to minimise environmental organic loading. Two sites with ASC certification reportedly do not discharge sludge into public waterways, but whether this applies to other sites is uncertain. While the company monitors parameters such as phosphorus and nitrogen in water, it does not disclose specific levels.

The company does not disclose information on the treatment of effluent pond water before discharge. Despite holding ASC certification for two sites and adhering to ASC effluent water metrics, it does not disclose metrics for other locations. The company reports compliance with government regulations and standards regarding wastewater discharge but does not confirm a neutral impact on water resources. While the company's "ACT FOR SUSTAINABLE AQUACULTURE" campaign aims to promote water conservation, the details on the program's scope and stakeholder engagement are insufficient. It is unclear if the campaign involves local stakeholders in discussions about nutrient management, ecological impact, and resident well-being.

The company has issued a statement on antibiotic stewardship, acknowledging the risks of antibiotic resistance and confirming veterinary supervision for antibiotic administration. However, it continues to use antibiotics as growth promoters in India and Vietnam and does not specify its practices by species. While the company states there is no use of antibiotics for growth promotion in Indonesian operations, it does not disclose which antibiotics are included in this policy, which is implied to relate to poultry. The company lacks a company-wide antibiotics policy, and in Vietnam and India, products are free from antibiotic residues only to meet food safety legislation. The company implements biosecurity, sterilisation measures, vaccination programmes, and incorporates prebiotics and probiotics in poultry and shrimp feed to minimise dependence on antibiotics.

The company reports a 31% reduction in antibiotic usage in 2023 compared to the previous year. However, it does not disclose actual quantities used, detailed by type or class, nor provide reasons for antibiotic use during the reporting period. Additionally, there is no indication that its antibiotic-related data is subject to third-party audit.

The company supports the Five Freedoms of animal welfare and conducts structured training programmes on animal health monitoring, biosecurity, and livestock business management. It engages in educational and developmental programmes to promote animal welfare through partnerships with universities, such as Universitas Gadjah Mada and IPB University. These collaborations provide practical knowledge in animal care, health monitoring, and biosecurity, exemplified by the Japfa Poultry Health Research Farm at IPB University. However, the company does not disclose actions taken in the event of a breach in its animal welfare policy.

The company maintains appropriate stocking densities and uses closed-house systems to ensure animal comfort, but lacks detailed statements on movement restrictions and practices against close confinement, such as gestation crates, cages, and tethering. It does not commit to avoiding routine mutilation. While the company transports day-old chicks in ventilated vans and selects efficient routes to minimise distress, it does not disclose transport times for broilers or other species. Stunning procedures are used for chickens to ensure humane treatment, but the company does not disclose stunning commitments for other species. It also fails to provide information on environmental enrichment initiatives for fostering a positive state for animals. The company selects breeds that balance production and welfare traits, choosing the "Ayam Kampung Super," a crossbreed suitable for Indonesia's tropical conditions and local preferences, ensuring robust health and growth rates.

The company participates in at least one animal welfare farm assurance programme. It holds Vietnamese Good Agricultural Practices (VietGAP) certification, which is issued and overseen by the Vietnamese Ministry of Agriculture and Rural Development (MARD), covering its operations in Vietnam. Additionally, it possesses several other local certifications in Indonesia. Although the company does not specify the number of farms certified by VietGAP, it can be implied that a significant portion of its operations are certified.

The company does not disclose information on animal welfare certifications or assurance programs for its beef operations.

The company does not disclose information about key animal welfare risks in pork. It breeds "Ayam Kampung Super" chickens on its Indonesian farms, a crossbreed known for a slower growth rate than standard broilers.

The company actively manages water quality and implements protocols to enhance thermal and physical comfort, health monitoring, and reduce stress during handling. It employs trained staff to use minimal and single-time handling methods for day-old chicks in India, specifically during vaccination. In its aquaculture operations, it reduces stress by minimising handling during breeding and harvesting. However, the company does not disclose the stunning techniques used in its aquaculture practices.

The company does not disclose sufficient information to ascertain if it ensures a stocking density of lower than 17 kg/m³ for salmon at all times.

The company utilises biofloc systems, which employ microorganisms to break down organic waste, thereby maintaining high water quality and enhancing the environment for the fish.

The company does not disclose the mortality rate for shrimp.

The company has not disclosed the number of disease outbreaks over the past three years. It uses water disinfection methods including ozone treatment, ultrafiltration, and ultraviolet (UV) treatment. However, the company does not provide information on the use of nets, grills, screens, or barriers to filter water inlets on its farms.

The company prohibits human rights violations but does not address adherence to internationally recognised conventions, such as the International Bill of Human Rights.

The company does not discuss how it monitors, assesses, and mitigates actual and potential human rights risks in its operations or supply chain.

The company does not disclose whether it has identified any human rights risks in its operations through human rights due diligence.

The company prohibits forced and child labour. A subsidiary, PT Japfa Comfeed Indonesia Tbk, also prohibits discrimination. However, the company does not explicitly commit to paying a living wage to all employees or prohibiting harassment. Furthermore, it does not state that it monitors adherence to working condition policies through audits. The company's Supplier Code of Conduct mandates that suppliers prohibit discrimination, harassment, child labour, and forced labour. PT Japfa Comfeed Indonesia Tbk provides full wages to contractors and permanent employees during certain leaves, including menstrual illness. However, it is unclear if this "special leave" covers other sicknesses. Clarification on this matter in the company's public disclosures is advised.

The company reserves the right to assess supplier performance to ensure compliance with its Supplier Code of Conduct, but it is unclear if audits are actually conducted for verification. The company has implemented a grievance mechanism, Japfalert, for its operations, suppliers, and business associates. This allows whistleblowing reports via internet, post, or direct manager, although it is unclear if anonymous reports are possible or if the policy involved stakeholder consultation. The mechanism extends to suppliers, but the company received one whistleblowing complaint during the reporting year without providing case categorisation.

The company prioritises occupational health and safety (OHS) with an OHS Committee that includes employee representatives to ensure compliance with regulations. Although it implements ISO 45001 standards, only two feed plants are certified. Health and safety committees are present in all countries of operation, with 10% of employees as representatives. However, the extent of site coverage within regions is unclear. The company emphasises the responsible use of antibiotics to address antibiotic resistance, promoting a balance between disease prevention, treatment, antimicrobial resistance, animal welfare, and sustainable farming practices. However, a formal assessment for antimicrobial resistance (AMR) hazards is recommended.

The company reports injury rates for its operating regions, with rates of 4.29 in Indonesia, 0.30 in Vietnam, 0.48 in Myanmar, 5.89 in Bangladesh, and 0 in India. In 2022, reported injury rates were 2.62 in Indonesia, 0.00 in Vietnam, 0.53 in Myanmar, and 0.00 in India, indicating an overall increase. The company experienced one fatal injury in its Indonesian operations during the reporting year, compared to 0 fatal injuries in 2022. Data excludes Bangladesh for this comparison. The company discloses an average turnover rate of 14%, broken down by gender and age group, but does not provide turnover rates by seniority level.

The company supports employees' freedom of association but has disclosed that there are no labour unions in Indonesia, without providing information about unionisation in other regions. Additionally, it does not describe measures taken to support employee rights. It expects suppliers to respect employees' rights to associate and engage in collective bargaining through legally established unions.

The company does not disclose the percentage or number of workers covered by collective bargaining agreements, nor does it commit to supporting collective bargaining rights. It reports employing 21,382 permanent and 16,286 contractual full-time employees across all regions but does not provide information on part-time employees outside its Indonesian operations.

The company states that its owned slaughterhouses and food processing units are certified under FSSC 22000, recognised by the Global Food Safety Initiative (GFSI). Additionally, it holds the Marine Stewardship Council Chain of Custody certification. However, the company does not specify whether all its facilities meet FSSC standards, nor does it disclose if its suppliers are expected to hold a GFSI certification or the proportion of suppliers that are certified.

The company does not report the number or frequency of food safety audits conducted during the reporting year. It also does not specify associated corrective action rates, nor does it disclose whether it has implemented or is in the process of developing consumer-facing technology for food safety.

The company gathers customer feedback through surveys and hotlines, addressing it as required. Food safety certifications are identified as a material risk, but there is no explicit disclosure of a product recall system. The company reports zero recalls for animal protein products in both poultry and aquaculture operations in Indonesia during the last reporting period.

The company reports no market bans affecting its products in the latest reporting period.

The company's Sustainability Committee, which includes the CFO and CEO, oversees climate-related risks, opportunities, and the implementation of the sustainability strategy. It conducted a materiality assessment in 2023, identifying ten key issues, largely unchanged from 2022. The new areas are Responsible Suppliers and Contract Farmers, and Food Traceability and Product Labelling. Other material issues include providing nutritious and affordable food, consumer health and safety, food safety certifications, managing product recalls, upholding an anticorruption policy, adhering to ethical working principles, efficient use of resources for climate resilience, and occupational health and safety. Additionally, the company reports board member Kevin John Monteiro possesses expertise in ESG and sustainability reporting, though it does not disclose board-level expertise in food safety. Gabriella Santosa, from the senior management team, is noted for her expertise in innovation.

The company claims its long-term incentive plans promote continuity and sustainability, yet it is unclear if executive compensation is linked to sustainability metrics. The company collaborates with various national and international industry bodies to support its sustainability goals, but it does not disclose the specific topics or its stance on these engagements. It holds memberships with multiple associations, including the Shrimp Club Indonesia and the Indonesian Poultry Farmers Association, among others, totalling partnerships with 22 industry bodies and trade associations. The company has not disclosed a commitment to align its policy engagement activities with the goal of limiting global temperature rise to 1.5°C.

The company undertakes innovation projects focused on packaging and waste management, including developing packaging in its Indonesian operations that uses less material while maintaining durability. It reports partnering with Universitas Gadjah Mada on a project using black soldier fly maggots to convert poultry waste into larvae for catfish feed. The company also uses industry and peer benchmarking in its materiality assessment to evaluate environmental and social risks.

The company does not explicitly acknowledge that protein diversification is a material business issue. Furthermore, it has not yet set a time-bound target to diversify protein sources, nor does it report revenue or sales linked to alternative protein sources.

The company does not indicate an approach to diversifying its product range to include plant-based and alternative protein options.