Daibochi, a leading flexible packaging converter in the ASEAN region for globally renowned clients in the food and beverage (“F&B”) and fast-moving consumer goods (“FMCG”) sectors, is committed towards integrating sustainable practices into the Group’s business. As a responsible corporate citizen, we conduct our business in a professional and ethical manner, through effective management of Economic, Environmental and Social (“EES”) matters to create long-term value for all our stakeholders.

The Sustainability Statement highlights the management of the Group’s EES matters for the financial period from 1 January 2018 to 31 July 2019 (the “Financial Period”/ “FPE 2019”). The information herein refers to our manufacturing operations in respect of:

(a) Daibochi Berhad (“Daibochi Malaysia”/ the “Company”)’s and
(b) the Group’s subsidiary: Daibochi Packaging (Myanmar) Company Limited (“Daibochi Myanmar”), which commenced operations in July 2017 (wherever relevant/where data is available). 

Sustainability Governance

The Board of Directors (the “Board”) sets the “tone at the top” for a strong sustainability culture whilst Management ensures that ethical/social values and good environmental practices are cascaded throughout the entire organisation. The Group’s Sustainability Policy was approved by the Board in November 2018, affirming the Board’s commitment towards building a sustainable business:

Stakeholder Engagement

We recognise that our stakeholders are important to the Group’s long-term growth. Hence, sustainability issues that are of interest/relevant to them are important to our business. Our key stakeholders and their areas of interest based on our various engagements with them are set out below:

Material Sustainability Matters

Daibochi’s material sustainability matters have been identified based on an analysis of matters which are most material and relevant to our business and those considered important to our stakeholders. We have also aligned our sustainability agenda with the United Nation’s Sustainable Development Goals (“SDGs”) which are most relevant to our operations.

Materiality Matrix

The 12 material sustainability matters identified above are ranked according to the highest priority and categorised to 4 key themes, namely People, Environment, Economic Performance and Local Communities as depicted below:

People

At Daibochi, our employees are our greatest assets and key to our success. We nurture our employees in an environment where they are treated with dignity and respect, whilst enhancing their economic well-being and professional development. The Group’s corporate culture is premised on the following core values:

Core Values 

• Comply with laws, rules and regulations
• Conduct business with honesty and integrity
• Treat employees fairly, with dignity and respect
• Employees must act in the best interest of the Company
• Conduct business in an environmentally responsible manner

Information on Daibochi’s Workforce

211 of our employees (26%) have been a part of the Daibochi Malaysia team for more than 10 years.

Fair and Equitable Workforce

Daibochi provides an inclusive working environment by fostering a culture of personal ownership and facilitating the pursuit of excellence for all employees. We promote a workplace that is free of any form of harassment that can interfere with the performance of our employees’ duties.

We believe in the inherent strength of a diversified workforce as reflected in the Company’s Workplace Diversity Policy. Female employees are given equal opportunities to perform and excel at work and are well represented across all levels of the organisation. Female employees account for 17% and 23% of our workforce in Malaysia and Myanmar respectively. There is currently one (1) female Independent Non-Executive Director on the Board and one (1) female within our five (5) members of Senior Management team (excluding the Executive Directors).

Daibochi complies with all applicable labour laws, rules and regulations in the countries in which the Group has operations. We only employ persons who are 18 years of age and above and expect our suppliers, contractors, agents and business partners to uphold the same labour standards.

Daibochi offers fair and competitive remuneration based on our employees’ performance, roles and responsibilities. This is to ensure that we remain competitive in attracting, motivating and retaining talent which is important to our sustained growth. We also comply with the minimum wage law in the countries that we operate in. Any promotion or increase in pay is based on merit i.e. the blend of competencies, qualifications and jobrelated skills, regardless of gender, age and cultural background. Approximately 43% of the Company’s workforce in Malaysia are non-Malaysians and they are accorded similar working conditions as our local employees, including access to benefits/incentives, medical care and free accommodation.

During FPE 2019, the Company eased the burden of some deserving employees with school-going children by providing them with financial aid for the 2018 and 2019 school sessions. 27 educational awards were given to employees’ children to reward them for their outstanding academic performance. Social/recreational activities i.e. annual dinners, festive celebrations, team buildings and family day events were organised during the Financial Period to promote camaraderie amongst employees.

Occupational Safety and Health

Creating a healthy and safe environment for our employees, contractors, service providers, customers and visitors to our manufacturing facilities remains a priority and this commitment is manifested in Daibochi’s Safety and Health Policy.

The Company’s Safety and Health Committee (“SH Committee”) is entrusted with cultivating safe workplace practices, including developing and administering safety policies, conducting annual safety audits of our manufacturing sites and ensuring compliance with Occupational Safety and Health Administration laws and regulations. The SH Committee regularly reviews safety performance results, occupational illness and injury incidents, workplace hazards, incident mitigation and prevention measures and conducts regular inspections to check that safety and health standards are met. Personal protective equipment is provided to all concerned workers to reduce potential occupational hazard exposure. Contractors are expected to comply with our health, safety and environmental standards and briefings in relation thereto were held during the Financial Period.

The Company’s SH Committee adhered to all standard operating procedures in relation to major accident cases during FPE 2019. Meetings were held on an immediate basis, whilst complete investigations of the accidents, including corrective and preventive actions were undertaken. Particulars of the accidents were then reported at the Company’s monthly assemblies to create awareness and instil a safety culture amongst employees. Reviews were also carried out on a quarterly basis by the SH Committee and reported to Management.

During the Financial Period, the SH Committee continued to provide regular training sessions in relation to fire safety, chemical spills, machine safety and accident-prevention to ensure a high degree of preparedness to respond to workplace safety incidents. 100% of the Company’s production employees attended these training sessions. Safety briefings were also held for Daibochi Myanmar’s employees. Furthermore, the Company collaborated with the Fire Department and organised fire drill exercises to prepare employees for speedy evacuation in the event of fire emergencies. As a result of our safety and health initiatives and proactive engagements with employees and contractors, we achieved our target of zero fatalities and occupational illness in our manufacturing plants. The data is as follows:

Note: Daibochi Malaysia’s data is calculated based on the Department of Safety and Health requirements and the relevant regulations governing occupational safety and health.

At the Company’s “World Earth Day, Safety & Health Week 2018 and 2019” held from 23 April 2018 to 27 April 2018 and 22 April 2019 to 26 April 2019 (“SH Week”), the SH Committee organised various seminars/talks on safety and health. Employees attended talks given by the officers from Government departments in relation to handling of chemicals, workplace and road safety.

The SH Committee also arranged for health screenings and talks to educate employees on best practices and habits to encourage a healthy and balanced lifestyle during the SH Week. A “No Smoking Day” campaign was organised to create awareness of the hazards of smoking. The focus of these programmes was to enhance health awareness and encourage employees to make positive lifestyle changes.

During the Financial Period, the Company continued to encourage our employees to adopt a good work life balance. Sports and recreational activities were organised by our in-house Sports and Recreational Club to nurture a healthy workforce. The Company also maintained the practice of distributing complimentary fresh fruits to employees twice a week at the staff canteen to promote a healthy lifestyle.

Talent Management

At Daibochi, our employees’ personal development continues to be our priority. Employees are offered a wide variety of learning/development opportunities that enhance their skills and focus on their growth and future performance. The Company’s Training Department has a dedicated yearly budget and works with various divisions to ascertain competency gaps and identify training programmes suitable for employees. Our aim is to retain the best talent, provide opportunities for growth and learning whilst focusing on local employment and enhancing the presence of women in the workforce.

During the Financial Period, various training sessions were conducted to motivate and enhance the morale of our production team. Employees also attended external training sessions to stay abreast of evolving issues relevant to their job scope. These programs promote the development of our workforce and equip them with the relevant skills for career growth. The Company also offers technical training to Daibochi Myanmar’s employees at our manufacturing plants in Malaysia to enhance their skills in various production processes.

Environment

Daibochi strives to adopt environmental best management practices in our production process according to the parameters set out in the Malaysian Environment Quality Act 1974 (“EQA 1974”) and the Myanmar Environmental Conservation Law 2012. Our ISO 14001 environmental management certification signifies our commitment to minimise the impact on the environment and conserve natural resources. To this end, Daibochi’s sustainability agenda focuses on eco-friendly environmental management practices in line with our “Environmental Cares Policy” which is based on the following principles.

• Continuous improvement of environmental preservation activities
• Complying with environmental laws and regulations
• Recycling and utilising materials which are recyclable
• Practising waste minimisation concepts of reducing, reusing and recycling
• Enhancing environmental awareness in the workplace
• Setting objectives to address significant environmental impacts due to our business activities.

Waste Management

The Company has engaged the services of licensed contractors approved by the Department of Environment (“DOE”) for scheduled waste disposal in compliance with the Environmental Quality (Scheduled Wastes) Regulations 2005. Various discarded raw materials are recycled to reduce waste, while non-reusable waste materials are sold to waste collectors. The Company provides facilities such as dedicated bins where cardboards, paper, aluminium cans and other discarded materials are collected for recycling purposes. Recyclable waste from our Myanmar manufacturing plant is sold to a contractor to ensure proper disposal. We also create additional value from our production waste through recycling plastic pellets or resin for other manufacturing uses i.e. in the injection moulding industry for household products, including waste bins and plastic chairs.

Daibochi Malaysia has been committed to zero landfill for the past 10 years. Non-recyclable production waste is delivered to a third-party waste-to-energy incineration facility and is free of asbestos, scheduled waste or any hazardous materials. The materials are converted into alternative fuel types, effectively eliminating the need for landfills which are associated with increased greenhouse gas production. The data is set out in the table below:

Management of Emissions and Materials/Substances

• Trained and qualified personnel to closely monitor all emissions such as air and water discharge.
• Emissions from our vehicles and transporters are within regulatory limits.
• Hazardous substances and chemical containers are clearly identified, located in designated areas, closed when not in immediate use and disposed properly.
• Stringent monitoring measures to prevent spills during handling and transportation of hazardous materials for safety purposes.
• Air emission monitoring and monthly industrial effluent testing.
• Yearly site visit by the DOE to ensure environmental compliance in accordance with the EQA 1974.

Management of Energy and Water

We have undertaken the following initiatives to optimise energy consumption:

• A total of 62 units of E-Savers were installed since 2014 in key production machineries across our manufacturing plants in Malaysia. 1 unit of E-Saver was installed in our Myanmar manufacturing plant. This enables us to optimise heat-management and reduce the amount of electricity used per machine.
• Accelerate the use of automation within our facilities to ensure that our production lines operate at optimal levels.
• Planned plant or machine shutdown during low demand periods.
• Review of temperature requirements to optimise temperature settings.
• Replacement of existing equipment parts with newer/more energy efficient parts, wherever necessary.
• Maintenance and replacement of electrical appliances/lighting fixtures to maximise energy efficiency.
  

Our commitment to sustainability also extends to water conservation. During the Financial Period, we continued with our ongoing efforts to optimise water usage in relation to our chilling process and engaged in rainwater harvesting for re-use in cleaning/washing and gardening activities.

Environmental Awareness

We encourage green activities in the workplace and support environmental conservation efforts in the community. Daibochi Malaysia’s employees continue to participate in recycling activities through our “Green Day” campaign every Tuesday and Thursday. They are encouraged to bring waste such as plastic, paper, tin, discs, used batteries or clothing to be sent to the Tzu Chi recycling centre. Employees are encouraged to practise the 5R’s – ‘Refuse, Reuse, Reduce, Repair and Recycle’ in their daily activities.

We lead by example to encourage prudent electricity usage by switching off the lights in the office during scheduled breaks. Employees were encouraged to observe and participate in “Earth Hour” on 24 March 2018 and 30 March 2019 from 8.30pm to 9.30pm and advised to switch off lights and electrical equipment during that hour at their homes to promote awareness on environmental sustainability. Employees are also advised to practice conscientious usage of water to minimise wastage.

Economic Performance

The Group remains dedicated to enhancing business performance, deliver superior and innovative products to our customers and create shareholders’ wealth by embracing responsible business practices.

Business Performance

We remain committed to deliver strong business performance to meet our shareholders expectations. Our key financial highlights for the Financial Period are as follows:

Daibochi had on 14 May 2019, announced an adjustment to its dividend policy to pay out annual dividend of not less than 30% of the Group’s normalised reported net profit attributable to shareholders for the financial year. The adjustment caters to future capital requirements as Daibochi embarks on a more aggressive growth path in line with the strategic direction of its holding company, Scientex Berhad (“Scientex”). Daibochi believes in providing sustainable dividends to shareholders consistent with the Company’s earnings growth whilst maintaining an efficient capital structure and ensuring adequacy of funds for its continuous growth. Details on the Group’s operational highlights and growth strategies are furnished in the Management Discussion and Analysis available in this Annual Report.

The Board values its dialogue with shareholders, the investment community and other stakeholders. General meetings are the principal forum for dialogue with shareholders and provide them the opportunity to seek clarifications on the Group’s operations, performance and strategies. All the Directors were present to engage directly with the shareholders of the Company during the Annual General Meeting held on 8 June 2018 and the Extraordinary General Meetings held on 11 July 2019 and 4 October 2019 to seek shareholders’ approval in respect of the acquisition of Mega Printing & Packaging Sdn Bhd and recurrent related party transactions.

As testament to the Board’s commitment towards good corporate governance and disclosures to shareholders, the Company received the “Best in Transparency” award in the RM500-RM950 million category at the Best Under Billion Awards 2018 organised by Focus Malaysia and the “Excellence Award for Overall CG & Performance (Market Capital between RM300 Million to RM 1 Billion)” at the MSWG-ASEAN Corporate Governance Awards 2018. 

Fair Operating Practices

We recognise that responsible business conduct ensures the long-term viability of our business. In this regard, we conduct our business according to the highest ethical standards by upholding professionalism in our relationship with customers, suppliers, shareholders and other stakeholders in line with the core principles enshrined in our Code of Conduct and Ethics (“Code”). The Code also requires that we conduct our business with honesty and integrity and upholds Daibochi’s zero tolerance policy towards fraud, bribery and corruption.

In line with this commitment, the Company has a Whistle-blowing Policy in place to provide an avenue for employees and stakeholders to report, in good faith, genuine concerns about unethical behaviour and improper conduct within the Company without fear of reprisal. There were no unethical behaviour/improper conduct/concerns reported to the Independent Non-Executive Directors during the Financial Period. The Company also has a Competition Law Compliance Policy which provides guidance to employees in their dealings with competitors in relation to anti-competitive practices to ensure that we compete fairly and ethically in the marketplace. In addition to the aforesaid, the Company adopted an Anti-Corruption and Anti-Bribery Policy in October 2019. 

We also monitor and evaluate risks on an ongoing basis as part of our sustainability commitment. In this regard, we have sound risk management and internal control systems in place to safeguard shareholders’ investments, the Group’s assets and the interest of other stakeholders.

The Group’s Corporate Governance Overview Statement and Risk Management and Internal Control Statement in this Annual Report and the Corporate Governance Report at https://scientexpackagingak.com.my/corporate-governance/ provide further details on good governance and risk management.

Local Communities

Social Responsibility

At Daibochi, we remain dedicated to fulfilling our role as a responsible corporate citizen by ensuring the creation of sustainable value and benefits through our economic activities.

We understand our role in economic development and believe that we have a responsibility in bringing a positive impact on the community and the areas in which we operate. We contribute to the development of local economies by creating jobs, boosting skills, sourcing from local suppliers (wherever possible) and paying taxes. Our Malaysian manufacturing plant employs 452 Malaysian employees (57% of our total workforce) whilst our Yangon operations has a total of 150 local Myanmar employees (almost 100% of the total workforce). 70% of our raw materials suppliers are based in Malaysia. During the Financial Period, the Company continued to provide the poor/marginalised community in Melaka with supplementary work and income by collaborating with a non-profit organisation in respect of an assembly project and to supply a portion of our fresh fruits’ requirements in the staff canteen.

Daibochi strives to make a positive impact on the community by encouraging and supporting employees’ participation in various community activities. During FPE 2019, we organised blood donation campaigns at the Company’s premises. This noble cause received good response from the workforce and encouraged the culture of voluntary blood donation as well as giving back to the community. Daibochi Myanmar contributed to charity as part of our social responsibility initiative.

Furthermore, each year, we recruit students from colleges, technical schools and universities for our internship programme. There were 38 trainees attached to the Company for their industrial training during the Financial Period. These trainees were provided with comprehensive hands-on training to equip them with the knowledge and skills needed in their future career pursuits. We also seek to employ some of these trainees if there are vacancies available in the Company.

Compliance

We ensure that our business operations adhere to good manufacturing practices and comply with existing regulatory requirements through continuous monitoring and audits. To the best of our knowledge, there were no reported incidents of non-compliance with the applicable laws, regulations or standards and the Group was not penalised in relation thereto during the Financial Period.

Sustainability Journey

Daibochi is optimistic that the Group’s commitment to sustainability places us in a stronger position for future growth. Moving forward, we will enhance collaborations with Scientex by leveraging on R&D as well as with our customers, to develop a wider range of sustainable and innovative packaging solutions. We will also continue to monitor/manage our environmental concerns and engage in sustainability best practices in the management of our business.

We recognise that sustainability is an ongoing journey and will work progressively towards presenting a balanced report on the management of EES matters for our stakeholders.