KPS’ sustainability initiatives are categorised under the different pillars of education, entrepreneurship, environment, safety and health, as well as philanthropy. Among the programmes under education include the CerDik programme, as pictured.
TO continue thriving in today’s resource-limited world, ensuring sustainability has become a way of ensuring longevity.
Moreover, as the role of corporate citizens comes under greater scrutiny for their obligations to society and stakeholders’ expectations, it is undoubtedly important for businesses to consider their economic, environmental and social (EES) impact, in line with the United Nations’ Sustainable Development Goals (UNSDGs).
Kumpulan Perangsang Selangor Bhd’s (KPS) deputy chief executive officer Suzila Khairuddin and investor relations and strategic communications director Zul Mawardi speak with The Star on KPS’ business strategy.
This includes driving and maintaining sustainability processes across the group, as well as transforming the traditional approach to value creation to help stimulate the triple bottom line: people, profit and planet.
In 2021, KPS organised the KPS Sustainability Challenge virtually.
Q: What does sustainability mean to you?
Suzila: Sustainability is the only way we can keep doing what we do today as a business entity and a member of society, now and for the generations to come. We have limited resources, whether they are natural resources or financial resources, or other resources that we have been blessed with. We must figure out how to use them in the right and responsible way.
Zul: Sustainability is about doing more with less. It is about moving with the times and being able to stay relevant and evolve, so that we can stay in business and accommodate our wants and expectations, as well as that of the next person. This means considering the economic, environment, social and governance imperatives of the present and those of the future.
What role does sustainability play in KPS’ overall strategic plan? How has sustainability become an important driver in your business strategy?
Suzila: Sustainability clarifies the direction in which KPS needs to move, setting the foundation for our strategies in achieving the outcomes of our corporate vision and missions. That is our first approach to sustainability.
The second approach requires embedding considerations of sustainability aspects – economic, environment, social and governance – into our business activities, following which the next thing to do is adopting sustainable practices in our business operations.
Our final approach to sustainability is generating positive impact in the communities.
Why is sustainability becoming an important component of our strategic thinking? Well, resources are limited and they are no longer cheap. Besides, we need to leave some for the next generation.
KPS also engages in sport development initiatives, such as the KPS Youth Cycling event.
How do you integrate the aspects of ESG into your business? And how does the integration, in turn, map against the UNSDGs?
Suzila: The first phase is setting the tone from the top, from the board. The second is the grind, the implementation phase. A lot of planning and efforts are involved here. It includes:
> Governance, where the board and management oversees EES and environmental, social and governance (ESG) aspects is strengthened
> Materiality assessment, where we identify and prioritise material EES and ESG issues that we should focus on
> Strategy, where we develop the sustainability strategy that covers these aspects. The strategy is guided by the overarching KPS missions, pragmatically incorporating the aspects into strategic planning. We then set the KPIs to measure the EES and ESG performance
> The last phase is communication, where we report our disclosure. We engage SIRIM-QAS, a third party, to undertake independent assurance on our sustainability data, findings and report.
We map our sustainability on six UNSDGs, which are SDG 3: Good Health and Well-being, SDG 4: Quality Education, SDG 8: Decent Wage and Economic Growth, SDG 11: Sustainable Cities and Communities, SDG 12: Responsible Consumption and Production, as well as SDG 13: Climate Action.
Suzila said that sustainability clarifies the direction in which KPS needs to move, setting the foundation for its strategies in achieving the outcomes of its corporate vision and missions.
How is your approach to sustainability supported throughout the group?
Suzila: The sustainability culture is further supported by the adoption of sustainability policies at the company and subsidiary level to help steer our business in consideration of ESG risks and opportunities, providing guidance on developing action plans that adheres to the approved strategic direction of the group.
Given the plurality of KPS missions and corporate objectives, have you ever faced any internal challenges when championing sustainability at KPS?
Suzila: At the beginning, perhaps. When the concept was still new and many still had the thinking that embracing sustainability is tantamount to sacrificing profitability. But now, the understanding has been aligned to a broader corporate objective towards sustainable growth and the culture is fully embraced.
What was your key focus on sustainability aspects this year, considering the lingering impact of the pandemic?
Suzila: In general, the focus does not veer much from what you have just mentioned.
The materiality matters for the group’s business remain the same. But especially during a period of uncertainty and ambiguity, business resilience, strategic agility and risk mitigation plan are the key economic areas of focus in ensuring a sustainable economic system within the group.
Disruption in the supply chain was top on our risk register, given its hold on input cost and consequence on profitability.
Yes, given our exposure in the manufacturing sector, it is on us to minimise our environmental footprint by focusing on waste management and energy efficiency as well as managing the greenhouse gas (GHG) emissions.
Ensuring job security, safety and the well-being of our employees and supporting the welfare of the members of the communities are amongst the focus on the social aspect.
What are some of the targets of your sustainability efforts this year?
Suzila: The group’s materiality assessment encouraged us to take a serious approach to sustainability by analysing, understanding and prioritising economic, environment, social and governance issues. Our sustainability efforts are KPI-ed. This year, there will be 100 sustainability targets: eight from the economic aspect, 39 for the environment and 53 social aspects.
Some of the KPIs are: (1) Assessment of suppliers under the environmental standards, which is under the economic pillar; (2) Reuse of packaging and recycling of ink and glue sludge into fertilisers, as part of our efforts to manage waste in a circular economy, as well as (3) Managing our energy consumption. These are under the environmental pillar. Lastly, protecting the safety and health of our workers and monitoring stringent quality control of our products.
Can you elaborate on your sustainability initiatives?
Suzila: The group’s sustainability initiatives are categorised under several different pillars, which encompass education, entrepreneurship, environment, safety and health, as well as philanthropy.
> Education:
In KPS, through the education pillar, our objective is to assist in the development of talent and skills of targeted stakeholders by promoting creativity and a disciplined thought process for innovation amongst youths. KPS also targets to address the gap in the education system such as the issue of literacy, skills, self-esteem and self-confidence. Some programmes under education include the CerDik Programme, Graduate Attainment Programme and Job Training and Celik Futuristik Programme.
Under its entrepreneurship pillar, KPS conducts the Caregiver Training Programme, among others.> Entrepreneurship:
Under the entrepreneurship pillar, KPS aims to assist in the promotion and enablement of business opportunities by developing new products or services that offer benefits to the members of society.
Other than that, we also want to enhance the vocational skills and business projects that elevate social economic status. Currently, there are three programmes under entrepreneurship, which are the Caregiver Programme, Livestock Training Programme and Technical Training Post-Natal Services.
> Environment, safety and health:
KPS also emphasises the community, environment, safety and health pillar in our sustainability goal, which is to assist in the improvement of the quality of life and care of the environment. Our target under this pillar is to ensure environmental sustainability, support spiritual health, as well as promote and nurture a healthy lifestyle.
A lot of programmes have been organised by KPS to assist the targeted stakeholders under this community, environment, safety and health pillar. The main initiative under community development is a sports programme that focuses on the underprivileged communities like badminton and swimming training programme for students with disabilities.
Under the environment, safety and health part, there are two areas that have been initiated by KPS and its subsidiaries. In 2021, KPS organised the KPS Sustainability Challenge and the KPS Road Safety Programme.
Not just that, KPS’ subsidiaries (CBB,CPI and Toyoplas) have come out with a few initiatives such as energy efficiency and waste management Initiatives.
> Philanthropy:
Other than the pillars mentioned above, KPS also assists the stakeholders, especially the underprivileged community, via philanthropy initiatives. As of Oct 31, 2021, KPS has contributed RM593,717 to various channels and collaboration with a lot of associations, non-governmental organisations and other relevant agencies.
At the group level, what percentage of your capital expenditure is related to sustainability?
Suzila: We target between 1% and 2% of profit before tax.
On the circular economy, while it is still in the early stages of the agenda, how do you know that you are moving forward?
Suzila: We are on track with our reduce, reuse and recycle programmes, including practising responsible waste management at our manufacturing operations.
For example, CBB practises zero-waste in its paper-based production, reflecting its total adoption of a circular economy in optimising resources.
All raw or input materials are either used in production, recycled for other use, or sent to an external recycling company.
As part of its sustainability KPI, CBB, in 2020, set out to recycle 100% of its trim waste from its carton box production to manufacture moulded pulp casings. In 2020, 741,849 kg of carton trim waste was recycled and turned into moulded pulp casings. And this effort generated revenue of RM5,627,208.13.
How green are your products? How can KPS become a greener company?
Suzila: KPS believes that as a responsible entity, it is necessary to uphold sustainability and navigate towards a greener economy. We are proactively looking into increasing our green footprint and reducing the environmental impact of our products and processes.
To put that into perspective, for instance, in CBB, whose main business activity is packaging, 90% of paper use is FSC-certified. Toyoplas, whose main business is injection moulding, reuses box packaging by its overseas suppliers.
CPI, whose main business is also injection moulding, commits to reducing rejection rate in its production line. And King Koil Manufacturing West commits to optimising its energy consumption.
As far as exerting efforts to be greener, yes, we are on track and in the right direction. We have implemented a more structured approach to handling waste at our manufacturing facilities with the following aims to seek growth through sustainability:
> Enhancing circular economy in our manufacturing processes
> Recycling reduces disposal costs and improves the bottom line
> By understanding the amount and types of waste we produce puts us in a better position to find ways to reduce hauling costs and negotiate for waste and recycling services that fit our needs
> Reusing and recycling to conserve natural resources, including trees, metals and water
> Waste prevention and recycling offer significant potential in reducing GHG emissions
What is your carbon footprint?
Suzila: We recognise the climate-related risks and opportunities to our business. To strategise our approach to climate action, it is important to identify our sources of emissions. As we are in the manufacturing line, our primary emission sources come from raw materials, as well as operational processes including fuel and energy consumption.
This year, we will be establishing a carbon inventory baseline, followed by identifying strategic initiatives for related operations within the group. KPS will start its emission profiling by measuring and monitoring Scope 1 and Scope 2 GHG emissions in our operations.
Understanding our emission profile is imperative in developing mitigation and adaptation measures.
What is your take on the race to a net-zero future?
Suzila: The pressing issue to cut emissions and race towards a net-zero economy, as discussed in the 26th UN Climate Conference makes it more important for KPS to adopt a sustainable business framework and climate action strategy.
KPS plans to analyse its climate-related risks, including both transitional and physical risks, in the next two years. But considering that we have just begun our sustainability journey two years ago, our ESG practices have yet to mature. We still have a lot to work on.
Considering Covid-19 and the havoc it has wreaked on the ecosystem, how sustainable is your business today?
Suzila: The pandemic has forced us to change the way we work. We have found ways to innovate some of our processes and operations given the scarcity of resources.
And at some part of our business, we have accelerated digital transformation.
So, we have been addressing the impact of the pandemic on the health and safety of our workers, supply chain stability, workforce availability and ultimately, on our financials. More importantly, how to make these aspects of our business more resilient, so that we can build back better.
Sustainability is about doing more with less, Zul said, adding that it is also about moving with the times and being able to stay relevant and evolve to stay in busness and accommodate expectations.
Considering these aspects and our commitment to ESG, without excluding the short-term challenges, yes, we are sustainable.
A final question for Zul. Further to your earlier response on what sustainability means to you, what have you done to embrace sustainability at the personal level?
Zul: Well, I take public transportation to work.
One litre of petrol weighs about 750g, 87% or 652g of which is carbon. On the 2.67 factor, it requires about 1,740g of oxygen to burn or combust that carbon into carbon dioxide (CO2). So now, there are about 652g plus 1,740g, or 2,392g, of CO2 for every litre of petrol my car consumes.
Putting this information into perspective, my car gives me about 100km for every 7.7 litres of petrol I pump into it.
So, by not driving, I prevent 7.7 x 2,392g/100km or 184g of CO2 from being released into the atmosphere for every one kilometre that I am not driving.
I live in Kuala Lumpur. That means I would have commuted for about 60km return daily. So, in a year, by not driving to work, I prevent 184g x 60km x 20 days x 12 months = 2,649,600g or 2,650kg or roughly 2.6 metric tonne of CO2 from being released into the atmosphere and trap the heat on earth we all know as global warming.
