Sime Darby Plantation : GHG Inventory Methodology Statement

SIME DARBY PLANTATION	GHG INVENTORY METHODOLOGY STATEMENT

23 APRIL 2023

SIME DARBY PLANTATION	GHG INVENTORY METHODOLOGY STATEMENT
TABLE OF CONTENTS
INTRODUCTION	2
Article I.		Carbon Emissions Calculation Methodology	4
Section 01	Scope 1: Direct Emission - Forest, Land and Agricultural (FLAG)	4
(a)	Land Use Change	4
(b)	Peat-related Emissions	5
(c)	Managed Soils	6
(d)	Fertiliser	7
(e)	Manure Management	8
(f)	Enteric Fermentation	9
(g)	Fuel Consumption	10
Section 02	Scope 1: Direct Emission - Energy and Industrial (E&I) Processes	11
(a)	Effluent treatment and Composting	11
(b)	Fuel Consumption	14
Section 03	Scope 2: Energy Indirect emissions - Energy & Industrial (E&I) Processes	15
(a)	Purchased electricity	15
(b)	Purchased Steam	16
Section 04	Scope 3: Other indirect emissions - FLAG	17
(a)	Category 1: Purchased Goods and Services	17
Section 05	Scope 3: Other indirect emissions - Energy & Industrial (E&I) Processes	20
(a)	Category 1: Purchased Goods and Services	20
(b)	Category 2: Capital Goods	22
(c)	Category 3: Fuel and Energy-related Activities	23
(d)	Category 4: Upstream Transportation and Distribution	24
(e)	Category 5: Waste Generated in Operations	25
(f)	Category 6: Business Travel	26
(g)	Category 7: Employee Commuting	27
(h)	Category 8: Upstream Leased Assets	28
(i)	Category 9: Downstream Transportation And Distribution	29
(k)	Category 10: Processing of Sold Products	30
(l)	Category 11: Use of Sold Products	32
(m)	Category 12: End-of-life Treatment Of Sold Products	33
(n)	Category 13: Downstream Leased Assets	34
(o)	Category 14: Franchises	35
(p)	Category 15: Investments	36
Section 06	Carbon Removals	37
(a)	Scope 1 and Scope 3 - Carbon Removals	37
Section 07	Refinery Emissions Intensity	38
(a)	Refinery Emissions Intensity	38
Section 08	Glossary	39
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SIME DARBY PLANTATION	GHG INVENTORY METHODOLOGY STATEMENT

INTRODUCTION

This document outlines the boundaries, calculation rationale, methodology, key assumptions, and key references used in accounting Sime Darby Plantation's (SD Plantation) Scope 1, 2 and 3 greenhouse gas (GHG) emissions inventory as published in our 2023 Sustainability Report and available on SD Plantation's website.

The quantification methodology for our Scope 1, 2 and 3 emissions are aligned with internationally recognised methodologies, such as the Greenhouse Gas Protocol (GHG Protocol) Corporate Accounting and Reporting Standard, GHG Protocol Scope 3 Calculation Guidance, the draft GHG Protocol Land Sector and Removal Guidance (Draft for Pilot Testing and Review, September 2022) and 2019 IPCC Refinement guidelines.

Different scopes of emissions

The GHG Protocol Corporate Accounting and Reporting Standard categorises GHG emissions into three (3) scopes:

• Scope 1: Direct Emissions - Emissions from sources owned or controlled by the reporting entity
• Scope 2: Energy Indirect Emissions - Emissions from the generation of imported electricity, heat or steam consumed by the reporting entity
• Scope 3: Other Indirect Emissions - Emissions, other than energy indirect emissions, which are a consequence of the reporting entity's activities, but arise from emissions sources that are owned or controlled by other organisations.

Defining boundaries

The "operational control" approach is applied in preparation of SD Plantation's emissions inventory. SD Plantation emissions cover two sectors which are:

• FLAG (Forest, Land and Agriculture): All emissions related to agriculture to the farm gate (excluding processing) i.e. land use change, managed soils, enteric fermentation, fertilisers and fuel use in estates
• Energy & Industrial: Emissions from operational activities beyond the farm gate, i.e. emissions from fossil fuels combustion and processing of agricultural products in mills and refineries

SD Plantation reports three (3) of the six (6) greenhouse gases, namely carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) as these are material to SD Plantation operations. Fugitive HFC emissions (from refrigeration & air conditioning systems) represent 0.01% of SD Plantation's total scope 1 and scope 2 emissions and have been excluded. The nature of SD Plantation's operations does not release PFC, SF6 and NF3 emissions, as we do not use these fluorinated compounds in our operations. For reporting, all the relevant greenhouse gases will be converted as carbon dioxide equivalent (tCO2e) emissions by using the respective greenhouse warming potential.

Our boundary includes operating assets that SD Plantation has operational control, of which 100% of the Scope 1 and 2 emissions are accounted. The following operations are included in SD Plantation's GHG inventory:

• Our upstream operations encompass estates and palm oil mills located in Malaysia, Indonesia (Minamas Plantation), Papua New Guinea and the Solomon Islands (New Britain Palm Oil Limited)
• Our downstream operations, represented by Sime Darby Oils (SDO)
• Headquarters and Sime Darby Plantation Research & Development (R&D) office

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SIME DARBY PLANTATION	GHG INVENTORY METHODOLOGY STATEMENT

We account for operations that we do not have direct operational control but are part of our value chain as Scope 3. This includes upstream emissions relating to the goods and services that we purchase and downstream emissions relating to the transportation, use, processing, and end-of-life of our sold products. We apply the same boundary when accounting for third party emissions where relevant Scope 1 and 2 emissions are accounted for based on an operational control basis.

Base year recalculation

SD Plantation has set FY2020 as the base year for our greenhouse gas (GHG) emission calculations for SD Plantation's Net Zero commitments. SD Plantation's definition of significance threshold is 5% and this threshold is applied for deciding on base year GHG emissions recalculation to account for significant changes, in accordance with the GHG Protocol's guidance on recalculating base year emissions. The significant impact of the following cases shall trigger recalculation of SD Plantation's base year emissions:

• Structural changes - Structural changes such as mergers, acquisitions, and divestments that significantly impact our base year GHG emissions may trigger the adjustment of the base year emissions. Emissions should be recalculated for the entire year for the base and current year. If complete and accurate data are not available, recalculation may be carried out in the following year.
• Calculation methodology changes - Updates in calculation methodology and emission factors as well as improved data access that result in a significant impact on the base year GHG emissions may trigger the adjustment of the baseline.
• Data errors - The discovery of a significant error, or several cumulative errors that are collectively significant may trigger the adjustment of the baseline.

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SIME DARBY PLANTATION	GHG INVENTORY METHODOLOGY STATEMENT

Article I. Carbon Emissions Calculation Methodology

This section describes the calculation boundaries as well as exclusions, methodologies, assumptions, and references used to calculate emissions for Scope 1, 2 & 3 emissions.

Section 01 Scope 1: Direct Emission - Forest, Land and Agricultural (FLAG)

1. Land Use Change

Description: Emissions (primarily from carbon stock losses) due to land conversion or land use change (LUC) on land owned/controlled by SD Plantation in the past 25 years.

Calculation boundary: Covers land conversion activities of oil palm plantations in Malaysia, Indonesia, Papua New Guinea and Solomon Islands as well as rubber plantations in Malaysia.

Exclusion: Sugarcane plantation

Rationale: LUC emissions from sugarcane operation are immaterial.

Calculation Methodology: Emissions from LUC are computed based on the land area replanted/planted (in hectare) experiencing LUC multiplied by the change in carbon stock before and after LUC activity. The change in carbon stock will be dependent on the previous land use prior to replanting/planting. The N2O emissions from LUC are calculated based on two factors - N2O emissions from peatland (calculated by multiplying the peatland planted area with the direct N2O emission factor) and emissions from the amount of nitrogen mineralised due to the change in soil organic carbon between the beginning and the end of the crop cycle.

Significant assumptions: The determination of the previous land use for certain planted areas involve significant judgment by internal experts which involves direct observation and/or analysis of satellite images and geo-spatial data.

References:

• IPCC 2019 Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories Vol 4
• Greenhouse Gas Protocol Land Sector and Removals Guidance (Draft for Pilot Testing and Review, September 2022)
• RSPO Historical CO2 Emissions from Land Use and Land Use Change from the Oil Palm Industry in Indonesia, Malaysia and Papua New Guinea.

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SIME DARBY PLANTATION	GHG INVENTORY METHODOLOGY STATEMENT

1. Peat-relatedEmissions

Description: CO2 emissions from draining of peatlands to plant oil palm and continuous N2O emissions from planting on peat soil.

Calculation boundary: This emissions source covers oil palm plantations in Malaysia, Indonesia, Papua New Guinea and Solomon Islands. No planting on peatland occurs for SD Plantation's rubber, sugarcane and other crops.

Exclusion: N/A.

Rationale: N/A.

Calculation Methodology: CO2 emissions from peat oxidation is calculated by multiplying the hectarage planted on peat, drainage depth and emission factor. The N2O emissions from peat is calculated by multiplying the hectarage planted on peat with the emission factor, which is then subsequently converted to CO2.

References:

• Current and future CO2 emissions from drained peatlands in Southeast Asia, Hoojier et al. (2009);
• IPCC 2006 Vol 4 Chapter 11
• IPCC 2019 Supplement to IPCC 2006 Guidelines for National Greenhouse Gas Inventories: Wetlands and PalmGHG v4.

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SIME DARBY PLANTATION	GHG INVENTORY METHODOLOGY STATEMENT

1. Managed Soils

Description: Soil management emits N2O due to the nitrogen inputs (i.e. crop residues) to soils. There are two types of N2O emissions, direct and indirect. The indirect emissions arise from leaching and volatilisation of nitrogen inputs. The direct emissions arising from N2O emissions from synthetic fertiliser inputs is covered in the next section.

Calculation boundary: This emission source covers oil palm plantations in Malaysia, Indonesia, Papua New Guinea and Solomon Islands as well as rubber plantations in Malaysia. In Papua New Guinea, cattle rearing activity takes place on the same land as our oil palm plantation.

Exclusion: Sugarcane plantation.

Rationale: Indirect N2O emissions arising from managed soil in sugarcane operation is immaterial.

Calculation Methodology: The emissions are computed from several factors of nitrogen inputs:

• The amount of nitrogen mineralised due to the change in soil organic carbon between the beginning and the end of the crop cycle. This factor is calculated using the 1999 and 2023 replanted hectarage multiplied by emission factors and the difference is the difference between nitrogen mineralised in year 2023 and year 1999.
• The amount of nitrogen from crop residues such as fronds and trunks left on the ground during maintenance or replanting.
• The amount of nitrogen from mulching of Empty Fruit Bunch (EFB), the application of treated POME (estimated from volume of FFB processed) and the application of compost onto soils.
• The amount of nitrogen sourced from the unmanaged dung and urine left on the soils from the cattle rearing activity. The amount of nitrogen from these sources is then multiplied by direct and indirect N2O emission factors.

Significant assumptions:

• For Indonesia estates, the 1999 planted hectarage is assumed to be the same as 2001 as this was the year when Kumpulan Guthrie Berhad, a wholly owned subsidiary of SD Plantation, acquired Salim Plantation, laying the foundation of modern day Minamas Plantation.
• For the application of EFB to soil, it is assumed that the EFB supplied from mills are applied to nearby estates.

References:

• IPCC 2019 Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories Vol 4
• Greenhouse Gas Protocol Land Sector and Removals Guidance (Draft for Pilot Testing and Review, September 2022)

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SIME DARBY PLANTATION	GHG INVENTORY METHODOLOGY STATEMENT

1. Fertiliser

Description: Emissions from the application of synthetic fertilisers onto soil on land that SD Plantation owns/controls.

Calculation boundary: The emissions are calculated based on the consumption of fertilisers multiplied by the emission factors specific to a selected type of fertiliser applied in SD Plantation's estates. The emission factors are dependent on the nitrogen content of each type of fertiliser.

Where required, the CO2 emission from liming demand will be included in the emission. Liming demand refers to the amount of agricultural lime needed to raise the pH level of soil to a desired level for optimal plant growth.

Exclusion: Sugarcane plantation.

Rationale: Emissions from application of synthetic fertilisers on Sugarcane plantations are immaterial.

Significant assumptions: Liming demand is used together with the following fertilisers: NPK7, NPK 10, NPK 11, NPK 12, NPK 13, NPK 14, NPK 15, NPK 16, NPK 17, NPK 18 and NPK 19. The CO2 emissions from liming activities for all of the NPK types are calculated using the same emission factor as NPK15, with the assumption that the rate is comparable.

References:

• IPCC 2019 Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories Vol 4
• Energy efficiency and greenhouse gas emissions in European mineral fertilizer production and use published by Fertiliser Europe (2011)

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SIME DARBY PLANTATION	GHG INVENTORY METHODOLOGY STATEMENT

1. Manure Management

Description: Methane emissions from manure left uncovered on land are that SD Plantation owns/controls (direct and indirect N2O emissions from manure left unattended on the ground are accounted for under managed soils category).

Calculation boundary: This emissions source covers the cattle rearing activity that takes place on the same land as oil palm plantations located in Papua New Guinea.

Exclusion: N/A

Rationale: N/A

Calculation Methodology: The emissions are calculated based on the month-end average number of cattle heads multiplied by the manure management emission factors.

References: IPCC 2019 Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories Vol 4; and Greenhouse Gas Protocol Land Sector and Removals Guidance (Draft for Pilot Testing and Review, September 2022).

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SIME DARBY PLANTATION	GHG INVENTORY METHODOLOGY STATEMENT

1. Enteric Fermentation

Description: Emissions from CH4 produced in ruminant livestock cattle as a by-product of enteric fermentation where carbohydrates are broken down by bacteria in the cattle's digestive tract. These emissions come from cattle owned by SD Plantation.

Calculation boundary: This emissions source covers the cattle rearing activity that takes place on the same land as oil palm plantations located in Papua New Guinea.

Exclusion: N/A.

Rationale: N/A.

Calculation Methodology: The emissions are calculated based on the month-end average number of cattle heads multiplied by the enteric fermentation emission factor.

References: IPCC 2019 Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories Vol 4; and Greenhouse Gas Protocol Land Sector and Removals Guidance (Draft for Pilot Testing and Review, September 2022).

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