Governance and Ethics
- Better BusinessBetter Business
- Economic PerformanceEconomic Performance
- Governance and EthicsGovernance and Ethics
- InnovationInnovation
- Supply Chain StewardshipSupply Chain Stewardship
- Product StewardshipProduct Stewardship
- Public PolicyPublic Policy
Sustainability at F&NHB is governed by our Board, which is kept updated on our performance by our Sustainability Management Committee (SMC) that oversees a Sustainability Development Working Team. Our governance framework ensures both that: 1) sustainability policies approved by the Board are implemented on the ground; and that 2) performance on the ground is reported to the Board. At the Board, sustainability is overseen by the Sustainability & Risk management Committee as our sustainability strategies support F&NHB’s risk management.
At F&NHB, we focus on three key areas in overall risk management framework:
- Business Operational Risks
- Integrating material sustainability issues
- Emerging risks which may impact us in mid or even long-term basis
We have integrated the material sustainability issues into our overall risk management framework by identifying specific risks, opportunities, and key priorities for the financial year to drive our strategic decisions. Specific sustainability risks are managed as part of the Enterprise Risk Management. This helps us to develop better products and create more meaningful value for our stakeholders.
Risk appetite and risk tolerance statements are reviewed by the SRMC and approved by the Board annually. At the end of the financial year, the Board receives assurance from the CEO and Chief Financial Officer that the risk management and internal control system in place for the Group is adequate and effective to address risks which the Group considers relevant and material to its operations through the ERM Validation Report and Comfort Matrix.
For the managing of risk management activities, we apply the “Three-lines of Defence” model as follows:
- First line of defence: Day-to-day Management of Risk from Key Activities
- Second line of defence: Risk Oversight, Frameworks and Policies
- Third line of defence: Independent Assurance
Innovation is critical to maintaining leadership and competitive advantage in a rapidly evolving market. During product development and approval process, we consider the below risks:
- High investment costs in R&D & equipment with uncertain commercial returns
- Balancing between the risk of non- acceptance by consumers & the risk of being overtaken by competitors
- Replication & improvement by competitors riding on products, processes, and packaging of innovator
Considering the above risks, we have implemented several initiatives:
- Continuous products development to meet the changing needs and preferences of consumers and to deliver high-quality products, with the right nutritional values and tastes
- Collaborate with research institutes to access cutting-edge research and scientific studies
- Offer innovative packaging formats to reduce environmental footprint, as well as appeal to consumers’ demand for convenience and flexibility without comprising product quality and integrity.
Two of our key risks are as below:
| Key Risk | Description | Mitigation Actions |
| Significant increase in commodity/ key material prices | Risk associated with anticipation/ actions taken in responding to the increase in commodity prices which could be due to abrupt shocks to the supply and demand of systematically important commodities at a global scale |
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| Business circumstances and competition risk | Unfavourable market conditions and/or stiffer competition which adversely impacted the ability to offset higher costs and maintain/ improve margins. |
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| Emerging Risks | Climate Change Risk | Risk from disruptive digital technology and disruption |
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| Description | The Malaysian government’s emphasis on the energy transition aligns with global efforts to combat climate change and underscores Malaysia’s commitment to a sustainable and prosperous future. For instance, Malaysia had revised the Nationally Determined Contribution (NDC) to reduce the intensity of greenhouse gas (GHG) emissions by 45 per cent by 2030 compared with 2005 levels.
The globalisation of the world’s economy is vulnerable and prone to the impacts of climate change such as fires, floods, heat waves, windstorms, cold fronts etc which may result in loss of human life, damage to ecosystems, destruction of property and/or financial loss at a global scale. The volatility of global weather disruption may influence the economic activities. As such, any significant increase in prices of commodities and materials could materially affect the cost and profitability of our products. It is therefore a new risk that may occur in the future and affect F&N’s business operations. |
Like many industries, food and beverage industry is prone to be affected by the development and employment of technologies and innovations to increase production efficiency, decrease the dependence on human labour, save costs for the business in the long run, and respond to the ever-changing demand of consumers. Hence, there is a risk which the company could not adapt itself to keep pace with technological advancement in terms of products, business model, and route-to-market resulting in significant impact on the Company in the long run. |
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We have in place various policies and guidelines that ensure a high level of integrity across the organisation such as our Anti-Bribery and Anti-Corruption (ABAC) Policy, Code of Business Conduct and Human Rights Policy. These are aligned with the UN Guiding Principles on Business and Human Rights, International Labour Organisation (ILO) guidelines, Thailand’s Labour Protection Act and Malaysia Employment Act 1955.
Policies are communicated through internal mobile app, intranet, training sessions and new employee on-boarding sessions. Our Risk Management team works closely with Human Capital team to roll out and ensure completion for the Integrity Pledge & Conflict of Interest (COI) Declaration, as part of the implementation of the codes and practices. Our Human Capital team ensures completion of compliance modules by enforcing that they are mandatory and non compliance will affect their appraisal during the financial year.
Any violation of Code can be reported via these mechanisms, managed internally by F&N:
- Email to [email protected]
- Email to [email protected]
- Any reporting mechanism provided in existing F&NHB’s policies.
The mechanisms provide internal and external parties with a way to raise concerns on our business conduct. We ensure non-anonymous parties are treated confidentially, and that reported cases are investigated through internal channels of communication. The reporting party will be kept informed of the case outcome, including follow-up actions to assure our external stakeholders.
At F&NHB, we launched risk and compliance training modules via our online E-learning platform, including Whistleblowing, Code of Conduct, Fraud Prevention Records Management, Bribery Prevention, Business Ethics and Integrity The training is compulsory for employees across F&NHB group. Various regular focused training for all employees aim to raise awareness level and enhance skill on risk management and constant updates linked to our key material issues and risks, which are: – occupational health & safety to manage productivity risk from injuries, occupational diseases, lost days and fatalities by conducting regular safety training and awareness programmes – cyber security to manage risks from cyber criminals which may compromise data integrity and even leakage of confidential information by conducting regular training and constant updates related to cyber threats to maintain awareness level.
The Regular risk management education, is included as part of training programmes attended by our Board of Directors. This is in compliance with the Listing Requirements of Bursa Securities. The risk training and knowledge sharing sessions covered risks related topics such as Resurgence, Recalibration and Risk – the World in Transition, Risk Management in Technology, Risk Based Capital Framework for Insurers and Takaful Operators, iRAC (Integrity, Risk, Assurance, Compliance), Non-Executive Global Mandatory Training – Trimester 1, Health Safety & Well-Being, Risk Management, Cyber Data Privacy and Non-Executive Global Mandatory Training – Trimester 2, Financial Crime Risk, Anti-Money Laundering, Sanctions, Fraud, Tax Transparency, Climate Risk.
As part of compliance system, the anti corruption system is audited once every 4 years. The corporate governance related matters are audited by our Internal Audit department every year.
Senior executive’s level has a performance-based compensation that is linked to the risk management KPIs, as aligned with F&N sustainability strategy. There are 4 key indicators, which are Energy & Climate Change – Climate Risk, Water – Water Availability Risk, Occupational Health & Safety – Safety Risk on employees, and Human Capital – Talent Management & Succession Planning. The annual financial incentives (bonus) are determined based on the achievement of risk management plan of sustainability strategies, including increasing risk awareness among employees about occupational health and safety to achieve zero lost time injury frequency rate, level of risk responding to climate change by improving energy intensity ratio, effectiveness of risk mitigation and prevention by improving water intensity ratio to manage water risks, which can help to fulfill our 2025 group sustainability achievements.