Corporate Governance

Sustainability Statement

1. About this Sustainability Statement

In Hup Seng Industries Berhad’s (“HSIB”or “the Group”) progress of sustainability journey, the Group is pleased to present the fourth annual sustainability statement (“the Statement”) which provides a comprehensive overview of the Group’s approach to sustainability development.

 

The disclosures in this statement have been prepared in accordance to Global Reporting Initiative (“GRI”) G4 – Core Option Guidelines as the basis for the Group’s economic, environmental and social (“EES”) disclosures. Following the GRI guidelines, we address material issues or those that reflect significant EES impacts, and those issues that substantively influence the assessments of our stakeholders. The Statement, which showcases our sustainability progress for the period from 1st January 2020 to 31st December 2020 complies with the Sustainability Reporting Guide (“SRG”) as well as toolkit issued by Bursa Malaysia Securities Berhad (“Bursa Malaysia”).

 

The statement encompasses four key companies within the Group, namely HSIB, Hup Seng Perusahaan Makanan (M) Sdn. Bhd., Hup Seng Hoon Yong Brothers Sdn. Bhd. and In-Comix Food Industries Sdn. Bhd. These companies contribute the entire part of the Group’s environmental and societal impact.

 

Full details of the Sustainability Reporting are available here.

2. Sustainability governance structure

Sustainability requires a top-down approach where the Board of Director play a pivotal role in leading the Group towards achieving its goals and targets. We have established a governance structure for effective oversight and implementation of sustainability initiatives. The sustainability committee is setup to incorporate sustainability into the Group’s business processes and prepare the Group’s sustainability reporting. A sustainability coordinator works closely with representatives across various business functions to implement sustainability programmes and initiatives.

 

3. Materiality assessment

 

In line with Bursa Malaysia’s SRG, we conducted a materiality assessment through data analysis and stakeholder engagement to gather insights on material related to EES issues. Creating the right communication platform is important to the Group and an open channel of communication is maintain to ensure that their concerns are addressed. The table below shows the types of engagement for each stakeholder and their frequency.

Identifying the Group’s EEC matters that have material impact is key to formulate and implement sustainability strategies. We reviewed and retained all 46 material sustainability matters that were identified in FY 2019 as they continue to be relevant to our stakeholders and have significant impact to our Group's business operations. Having completed the assessment of the 46 material matters, we identified 10 material matters and they are shown below:-

4. Managing Sustainability

i. Economic/ Economic performance

 

FY2020 has been a challenging year for the Group due to the COVID-19 pandemic and the Movement Control Order (“MCO”) which led to a slowdown on business activities. Nevertheless, the Group has managed to generate RM327.3 million in revenue which was a 5.7% increased from FY2019’s revenue.

We have adopted a dividend policy that will distribute an annual dividend pay out of at least 60% of the annual profit after tax to the shareholders. We believe that such pay out rate will better reward the shareholders and be positively received by the investors.

ii. Environment/ Materials

We work with our partner and production personnel to recover and recycle the waste materials and packaging in our manufacturing processes. The Group is proactively developing management approaches to address the waste generated in our business operations. The following is our effort to reduce material usage and hence the waste production:


1. Reduce packaging wastage at the source; and
2. Recover waste materials and sell them to licensed scrap collectors for re-cycling.

 

The Group also strives to reuse and recycle waste and sent approximately 661,710 kg to scrap collectors for recycling in this reporting period. This marked a decrease of 18,195 kg since FY2019.

iii. Environment/ Energy

The Group’s focus on energy efficiency is towards managing electricity consumption especially in the Group’s production area. To reduce our energy consumption, we are constantly raising awareness among factory employees on strengthening standard routines and installing energy efficient equipment.


We have implemented electrical energy management initiative to reduce the electricity consumption of our plant and the energy intensity of our products. There has been a reduction in electricity consumption in our manufacturing process.

iv. Environment/ Environmental compliance

The proper disposal of production waste is essential to regulate the environmental impact of the Group’s operation. Scheduled waste generated by the waste water treatment such as sludge residues, disposed containers, spent hydraulic oil, laboratory chemical waste and Chemical Oxygen Demand (“COD”) Vial are collected by a licensed contractor and transported to a certified facility for disposal, in compliance with the Environmental Quality (Scheduled Waste) Regulations 2005.


Apart from the above, the Group also conducted the following:

  • Compliance with Chimney Air Emission for fume hood testing, required under Environmental Quality (Clean Air) Regulations 2014;

  • To monitor emissions from the Chimneys of Ovens with reports submitted to Department of Environment;

  • An air emission monitoring for Generators in compliance with Environmental Quality (Clean Air) Regulations 2014; and

  • A sewage discharge report in compliance with standards of the 2009 Environmental Quality (Industrial Waste Water) Regulations.

In the reporting period, the Group have had zero incidents of non-compliance in matters relating to solid
waste and effluent.

v. Social/ Occupational health and safety

The Group are looking to continuously improve the OHS management system and assess its effectiveness to reduce any potential hazards at the work place. Our goal is to reach alignment on a common safety practice and continuously improve safety performance throughout the system.


Following steady and significant improvements in our safety performance during the year, no on-site fatalities were reported and our on-site lost-time injury was maintained at 5 cases (2019: 5 cases).

 

COVID-19 response

In light of the COVID-19 pandemic, subsidiaries of the Group, namely HSPM, HSHY and ICFI had in March 2020, set up the COVID-19 Emergency Response Protocol Committee (“ERP”) to address any critical issue caused by the pandemic.


The pandemic has profoundly changed the Group’s OHS management approach across the organisation. New Standard Operating Procedures were put in place as instructed by the Ministry of Health.

vi. Social/ Training and development

Our employees are the strength of the Group. We continue to groom our team and promising talents through various programmes to help our people build a fulfilling career with the Group. We conduct annual training needs analysis to identify the gap in our employees’ competencies. Thereafter, we aim to close the gap through training with effectiveness measured pre and post-training. We provide annual performance appraisal for all employees.


Due to MCOs and CMCOs, training was conducted only during non MCOs period and under controlled SOPs provided by MOH. The Group spent about 10,281 hours on training during the year 2020, a reduction of 37.7% when compared to 2019 of 16,509 hours.

vii. Social/ Diversity and equal opportunity

Our recruitment and selection process are fair, objection and without discrimination. We focus in unleashing the potential of all our employees, regardless of gender, age and background. This is one of the most important contributions that our Group brings to the community. This also helps to make our business more sustainable by building a robust pipeline of future business leaders. Due to the MCOs and CMCOs, promotion activities were temporarily stopped effective May 2020, no renewal contracts with promoters were effected resulting in the higher than usual annual employee turnover rate of approximately 2.2% (2019: 1.6%).


We will renew promoters’ contract once the pandemic situation is improved and upon MOH relaxing related SOPs.

viii. Social/ Quality and Healthy food

We continuously develop and produce crackers, biscuits and cookies using healthy ingredients and adopting high quality production process. As an official recognition of some of our quality products, we have been granted the International Quality Award by Monde Selection, Belgium. This is one of the most prestigious awards on product quality in the world and we have been receiving it since 1994 for our products.

ix. Social/ Nutrition labelling

We provide transparent nutrition information on all our products packaging. We believe by providing factual, meaningful and understandable information as a reference, the consumers can choose the consumption level to meet their specific requirements.


Currently, all our products provide the nutrition information and calorie intakes so that consumers can make choices that fit their lifestyles.

x. Social/ Food safety

As a food producer, safety and quality of our production is imperative. We are committed to produce safe and high-quality food, follow stringent product and ingredient standards designed to ensure the safety and quality of all our products. Our quality management programmes help us to identify and mitigate potential risks and drive improvement. Our Group’s centralised procurement unit ensures high quality and safety in raw materials by adhering to the procurement policies. The centralised procurement unit also makes sure the Group complies with other regulatory requirements.
 

We are certified under the certification schemes of TQCSI, Australia on the ISO 22000:2018 Food Safety Management system, FSSC 22000 in 2020, HACCP management system as well as ISO 9001:2015 Quality Management system which is certified under certification schemes of KIWA, Italy. In addition, we have obtained HACCP, GMP and MeSTI Certifications
through Malaysia’s Ministry of Health to demonstrate our commitment towards food safety and quality to ensure consumer confidence and meet the export requirement for obtaining Health Certificate.

5. Key performance data

Our sustainability framework is aligned with value chain and is customised towards the needs of our market. We aim to report our sustainability performance annually to communicate and be accountable to our valued stakeholders. We plan to improve our sustainability milestones by constantly seeking feedback from our stakeholders, refining our business processes and extracting meaningful and high-quality data from our systems for this sustainability reporting. Below is our key performance data:

Economic

* The performance data has been restated in financial year ended 31 December 2020.

Environment

Social