At AFI we respect human rights and do not tolerate any form of modern slavery. However, we recognise that no supply chain is without risk of modern slavery, and it is our responsibility to ensure we understand these risks and work in partnership with our suppliers, contractors, partners, and customers to identify and mitigate them.
Our Organisation
Acacia Forest Industries Sdn Bhd (AFI) is a plantation forestry company that was formed as a Joint Venture company in 2003 between Sabah Forestry Development Authority (SAFODA), a Sabah Government department set up for plantation forestry development projects in Sabah, and a private company, now known as Hijauan Bengkoka Plantations Sdn Bhd (HBP). AFI is governed in equal parts by a Board of six Directors, with the Chairman of the AFI Board nominated by SAFODA. The AFI management team is led by the General Manager who reports to the AFI Board. AFI is involved in plantation forestry on Government Gazette land in the Bengkoka peninsular in North East Borneo. AFI is operated as a sustainable and responsible plantation forestry company planting fast-growing tropical hardwoods of predominantly Eucalyptus species for sale into the Saw Log and Chip Log markets. It replants every tree that is harvested and will continue to do so until 2060.
Our Markets
We believe that the logs we sell should only be used in ways that add value to society and are not harmful to the environment. For us, this means selling exclusively to responsible customers who share our values and ideals. We are committed to ensuring that our customers have confidence in the products they purchase from us, knowing they are responsibly grown and harvested through our certification process. This approach allows us to build closer, more meaningful relationships with a smaller group of suppliers and contractors, providing greater visibility over our supply chain and enabling us to work closely with them to ensure they meet our ethical and sustainability standards.
Our Supply Chains
As a plantation forestry company, we sell our log products into the Malaysian and regional markets, where they are converted into products for the global market. In managing and growing , the trees that produce these logs, we work with numerous suppliers who provide materials and services not for resale, as well as contractors who assist in planting, maintaining our forests, and transforming mature trees into logs for sale to our customers. Currently, we source goods and services from key suppliers, and rely on contractors for tree growth, harvesting, transportation, and shipping of our logs to market.
Our Targets and Commitments
Our commitment to respecting human rights is an integral part of our long-term sustainable growth plan. We have set the following targets to promote and uphold human rights and address modern slavery risks:
– Ensure all goods suppliers meet our ethical and environmental standards. To do so, we require all suppliers to complete a questionnaire outlining their commitment to respecting human rights.
– Ensure all contractors meet our ethical and environmental standards. This includes mandatory training on these standards and regular audits to ensure compliance.
Our Company Policies
Our Human Rights Policy sets out our commitment to respect human rights, in line with international agreements and guidelines including: ILO Convention N.87, ILO Convention N.98, Malaysian Criteria and Indicators for Sustainable Forest Management (MC&I SFM) Standard, the United Nations Guiding Principles on Business and Human Rights; the International Bill of Human Rights (which includes the Universal Declaration of Human Rights); the UN Global Compact; the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work; the Children’s Rights and Business Principles and UN conventions on the elimination of discrimination, and the UK Modern Slavery Act of 2015. Furthermore, AFI subscribes to and supports the nine elements of the Ethical Trading Initiative Base Code.
AFI is implementing an Integrity Pact with its contractors and suppliers, which outlines the ethical standards and human rights commitments required based on the ILO Fundamental Conventions on worker rights. Compliance with these standards is monitored through an ethical audit process (see Audit Processes).
Our whistle-blower policy allows staff, contractors, and suppliers to report concerns about modern slavery and other human rights violations. All reports made to the Compliance Officer (Chief Financial Officer), responsible for managing AFI, are thoroughly investigated and followed up on. The outcomes of these investigations are then reported to the Audit Committee of the Board of Directors. The Audit Committee meets at least once a year, or as needed, and oversees compliance with regulations, good governance, and evaluates the adequacy of the Company’s internal control environment.
To date, no reports related to modern slavery or human rights violations have been made through our whistle-blower process or other reporting channels. We require suppliers and contractors to establish channels through which workers can communicate openly and share grievances with management, without fear of reprisal, intimidation, or harassment. This requirement is included in our contractor agreements. As part of our ethical audits, we verify that contractors have effective grievance mechanisms in place (see Audit Processes).
Malaysian Legislation
Malaysia has enacted the Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act 2007 (Act 670) and the Penal Code (Act 574), which includes provisions on Kidnapping, Abduction, Slavery, and Forced Labour (sections 357-374). The country has committed to ending forced labour, modern slavery, and human trafficking, as pledged at the 72nd United Nations General A’ssembly in New York. Malaysia also has a National Action Plan on Anti-Trafficking in Persons (2016-2020) and has ratified the 2015 ASEAN Convention Against Trafficking in Persons (ACTIP).
Audit Processes (Due Diligence)
AFI is currently undergoing certification against the MC&I SFM standard and is subject to annual surveillance audits by an MTCC-accredited certification body. Additionally, AFI is audited annually by the Sabah Forestry Department for the Malaysian Timber Legality Assurance System (TLAS) certification.
The most significant human rights and modern slavery risks for AFI are within our supply chain. To mitigate these risks, AFI conducts monthly audits of its forestry contractors and audits external suppliers every two years. These audits use checklists that include AFl’s ethical standards and human rights commitments, as mentioned previously. While all our contractors have been trained on our policies and procedures, we conduct regular audits to ensure compliance. This includes annual third-party audits by the Malaysian Timber Certification Scheme (MTCS) and TLAS.
AFI requires suppliers and contractors to address non-conformances promptly and ensure the welfare of workers. We track the effectiveness of their performance through our audit program, monitoring the number and types of non-conformances found and resolved (see Effectiveness of Measures: Contractor Audit Results).
Our Bongkol Forestry Office has held, and will continue to hold, workshops for contractors on human rights and ethical standards. As part of our community strategy, we engage with key community leaders and stakeholders in the Gazette area under AFl’s control. We also support community groups, educational organizations, and employee workers’ committees to understand the issues they face, promote workers’ rights, and support local communities wherever we operate.
Risk Assessment
AFI uses a web-based Event Management System called “People Tray” to record the results of all our audits. This system requires management oversight to ensure that all reported events are accurately described, root causes are identified, and appropriate controls are implemented to mitigate or prevent re-occurrence. The system maintains a history of events, and management conducts risk assessments to identify potential risks to the business. Those identified as extreme risks are reported to the AFI Board at each board meeting, along with the actions management has taken to reduce, mitigate, or eliminate these risks.
Although our internal controls and practices are robust, we work with many suppliers and contractors in our supply chain. As a result, we take a risk-based approach to preventing modern slavery and human rights violations, including health and safety issues, within our supply chain.
Effectiveness of Measures: Contractor Audit Results
AFI aims to elevate ethical standards in our supply chain through contractor engagement and ethical audits (see Audit Processes). We monitor the effectiveness of our audit program by implementing a grading system to assess contractor performance and tracking the number of non-conformances identified and resolved. Over time, we aim for our contractors to meet internationally recognized standards. Most non-conformances relate to health and safety issues, such as the use of Personal Protective Equipment (PPE), fire safety concerns (e.g., provision of fire extinguishers), and hygiene or housekeeping practices in remote forestry camps.
Training and Awareness
AFI is committed to raising awareness of modern slavery and ethical sourcing issues among employees, particularly those responsible for overseeing our modern slavery audits, as well as those involved in procurement and purchasing products and services on behalf of AFI. It is crucial that our procurement and operations teams are equipped to identify warning signs of modern slavery and understand the potential impact of our actions on workers in our supply chain. For instance, employees are encouraged to avoid setting unrealistic operational targets that could lead to excessive overtime. All AFI staff and contractors have received training on preventing modern slavery within our operations.
Future Plans
Through our Contractor Development Project, we will continue to identify risks and conduct audits to address potential modern slavery and human rights abuses. Over the next year, our key priorities include:
Rolling out contractor development programs and follow-up ethical audits for all our contractors.
Expanding and implementing our modern slavery and ethical training programs for all employees.
John Mervyn Baxter
General Manager
16 December 2024