Energy & Climate Change

Innovation & Research & Development

We review our current system processes to improve efficiency in our plants through innovation to reduce GHG emissions. We also look towards our operational employees on ground who are most familiar with the gaps in our production processes to enhance our productivity, quality, cost, delivery, safety, ethics and environment. Our Dairies Thailand team organised its annual World Class Manufacturing – Excel as One Convention 2023, which encouraged manufacturing teams to propose and implement innovative and cost-saving initiatives. Past innovative ideas initiated through the convention are:

Malaysia: Chilled Plant

Concern over quality of our incoming fresh milk due to the limitation of shelf life has elevated during shipping delays, leading to an ever-changing production plan of chilled line at Pulau Indah plant. The lockdown period in Malaysia has further impacted production hours and costs. With this, the team has proposed and implemented a project:

• To reduce carbon footprint and achieve energy savings by optimising the freezer temperature
• To improve production yield through simplifying process and better control of materials
• To facilitate smart production planning through cross-functional collaboration
• To simplify work through digitalisation of record documentation

Thailand: Digital platform for milk farmers

To maintain the quality of fresh milk, the team developed a digital platform to support the milk collecting centres and farmers to improve milk quality and to encourage traceability from farm to factory. After implementation, the receiving time of the raw milk was reduced significantly by 70%. The second solution is to develop a new method of milk transportation to simplify running routes, reduce environmental impact and monitor raw milk data by real time. This new milk transportation method can reduce more than 200,000 kg CO2 emission per year.

Climate-related Renumeration

To ensure accountability for sustainability and climate-related actions, we have integrated climate change-related key performance indicators (KPIs) and monetary incentives into all employees’ targets, including the Management. These incentives include:

• Energy reduction target as part of the KPIs in the annual variable compensation plan for all employees (including senior executives)
• Water reduction target as part of the KPIs in the annual variable compensation plan for all employees (including senior executives)
• Energy reduction and water reduction targets, together with 2 other metrics (Employee Safety, Health & Well-being, Human Capital Development), weighted at 15% of the annual variable compensation plan.
• Performance KPIs in energy and water reduction for manufacturing team, including progress and completion of GHG reduction initiatives.

Internal Carbon Pricing

In 2024, we introduced an Internal Carbon Pricing (ICP) mechanism as a strategic tool to assess and account for the carbon impact of our business activities. Going forward, all new capital expenditure (CAPEX) decisions will integrate environmental considerations, underscoring our commitment to achieving net-zero emissions.

The ICP framework enables the organisation to:

• Undertake comprehensive cost–benefit analyses that incorporate carbon implications;

• Enhance energy efficiency and accelerate low-carbon investments;

• Incentivise the integration of climate-related considerations into decision-making and risk management processes;

• Identify and capture emerging low-carbon opportunities;

• Inform long-term strategy development and financial planning;

• Navigate evolving regulatory requirements with greater resilience;

• Support the reduction of upstream value chain emissions;

• Facilitate the setting and achievement of climate-related policies and targets;

• Establish a structured carbon offset budget; and

• Stress test investments against future climate scenarios.

By embedding ICP into our business planning and investment evaluation processes, we strengthen our ability to balance financial performance with environmental stewardship, thereby positioning the organisation for sustainable growth in a transitioning global economy.