Energy & Climate Change

We recognise the urgency to mitigate climate change and are committed to reducing our energy consumption, hence our GHG emissions intensity, to play our part in global efforts towards this end. We have applied various initiatives to improve our energy performance across our value chain, from manufacturing, packaging, storage and logistics, to end use and disposal.

F&N efficiently oversees energy usage across our operations and the entire value chain by adhering to our “Energy & Climate Change Management Strategy”. All our operations in Malaysia and Thailand are guided by the following principles:

  • Fulfil and enhance the energy management system as energy conservation is one important part of our operations
  • Well manage and utilise energy conservation technology and best practices as part of our continuous improvement
  • Implement and improve energy management system to comply with relevant laws and regulations
  • Conduct energy improvement programme to optimise business operations
  • Promote, support and manage energy conservation efficiently

Energy Efficiency

Enhancing the energy efficiency of our operations is not only a smart business move but also aligns with our commitment to reducing GHG. F&N is dedicated to expanding our efforts in reducing GHG emissions by optimising energy efficiency across our operations and supply chain. Throughout the year, our manufacturing team proactively identified opportunities to implement various energy-efficiency improvement initiatives.

As part of our improvement process, we conduct internal energy audit to assess and improve efficiency in our production processes. Through the internal audit, our team of engineers identify improvement opportunities and operational controls to reduce energy use through innovative technology or renewable energy sources. Each manufacturing site has a dedicated team to monitor and evaluate energy consumption to drive further improvement in weekly sustainability meeting. We report our energy usage to the relevant Ministries in respective countries and our sites in Thailand participate in ISO 50001: Energy Management and other external audits.

To ensure effective implementation of energy efficiency measures, environmental awareness and energy efficiency trainings are provided to our employees. This training aims to create awareness about the importance of energy conservation and how can employees play a role in energy efficiency.

Usage of Renewable Energy

In our on-going efforts to achieve our 2025 targets for reducing energy consumption and GHG emissions, we have prioritised the development and utilisation of renewable energy sources. Specifically, we have been gradually implementing solar photovoltaic (PV) systems at our facilities in Malaysia and Thailand. This initiative aligns with our overall strategy to decrease our reliance on fossil fuels and minimise our carbon footprint.

In April 2020, we commissioned our first solar PV system in our Rojana plant with a generating capacity of 1MWp. In FY2022, we completed the installation of solar roofs at our Shah Alam, Pulau Indah and Bentong plants with a total capacity of 10MWp. This has replaced at least 20% of our total electricity needs in Malaysia with clean energy. In the same year, we have also installed solar roof at our dairy plant in Wang Muang with a capacity of 1MWp. The solar PV systems at three Malaysia plants and two Thailand plants have made a significant impact by reducing the amount of electricity usage from the grid by over 14 million kWh per year, with an estimation reduction of 10,000 MT CO2e in GHG emissions per annum. Additionally, we have plans to expand this initiative by increasing the capacity of solar roofs in near future, further underlining our commitment to energy efficiency and environmental sustainability.

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.
Our 2025 Commitments
Energy & Climate Change
  • Reduce the Group’s energy intensity ratio at our plants by 8% from 2020 by 2025
  • Reduce the Group’s GHG emissions intensity ratio at our plants by 8% from 2020 by 2025
Energy Consumption from FY2019 – FY2023
Unit FY2019 FY2020 FY2021 FY2022 FY2023
Total Non-renewable Energy Consumption GJ 1,057,834

(~293,866.29 MWh)

1,057,834

(~255,511.27 MWh)

1,008,594

(280,187.41 MWh)

1,028,954

(~285,843.32 MWh)

989,294

(~273,992.47 MWh)

  • Non-renewable fuels purchased and consumed
710,763 604,338 679,716 699,418 683,778
  • Non-renewable electricity purchased
347,701 315,428 328,878 329,535 302,516
Total Renewable Energy Consumption 2,598  5,077 10,861 44,610
  • Renewable energy purchased
2,598

(~721.72    MWh)

5,077

(~1,410.39 MWh)

10,861

(~3017.27 MWh)

44,610

(~12,392.66 MWh)

Greenhouse Gas Emissions from FY2019 – FY2023
Unit FY2019 FY2020 FY2021 FY2022 FY2023
Direct GHG Emissions

(Scope 1)

MTCo2e 40,639 34,390 38,089 38,022 36,217
Indirect GHG Emissions

(Scope 2)

40,954 37,221 38,808 38,440 35,372
Indirect GHG Emissions

(Scope 3)

*Our public reporting of indirect GHG emissions (Scope 3) started in FY2022.

*The top 3 most relevant sources of scope 3 emissions to our organisation were identified as below:

  • Fuel- and energy-related activities (not included scope 1 and scope 2)
  • Purchased goods and services (upstream)
  • Waste generated in operations
994,464 740,881
  • Category 1 – Purchased goods and services
971,510 507,451
  • Category 3 – Fuel- and Energy-Related Activities
22,327 216,640
  • Category 5 – Waste Generated in Operations
627 16,790

The environmental data from FY2019 to FY2023 covers all the Group’s operations in Malaysia and Thailand.