Sustainability Statement
  1. About this Sustainability Statement


    In Hup Seng Industries Berhad’s (“HSIB” or “the Group”) journey towards building a sustainable impact on the economy, environment and surrounding community, the Group is pleased to present its second Sustainability Statement (“the Statement”).

    The Global Reporting Initiative (“GRI”) G4 – Core Option Guidelines have been used as the basis for the preparation of the Group’s economic, environmental and social (“EES”) disclosures. Following the GRI guidelines, we address material issues or those that reflect significant EES impacts, and those issues that substantively influence the assessments of our stakeholders. The Statement, which showcases our sustainability progress for the period from 1st January 2018 to 31st December 2018 complies with the Sustainability Reporting Guide (“SRG”) as well as toolkit issued by Bursa Malaysia Securities Berhad (“Bursa Malaysia”).

    The statement describes the scope and boundary of our sustainability disclosure, providing an overview of the management approach, details of the sustainability framework and the initiatives undertaken. It covers four key companies, namely HSIB, Hup Seng Perusahaan Makanan (M) Sdn. Bhd., Hup Seng Hoon Yong Brothers Sdn. Bhd. and In-Comix Food Industries Sdn. Bhd. These companies contribute the entire part of the Group’s environmental and societal impact.

    Full details of the Sustainability Reporting are available here.
  2. Sustainability governance structure


    A robust governance structure is crucial to ensure we achieve our sustainability commitments. The Board of Directors leads the initiative to embed material sustainability considerations into the Group’s strategy. Subsequently, a sustainability project committee is setup to incorporate sustainability into the Group’s business processes and prepare the Group’s sustainability reporting. A sustainability coordinator works closely with representatives across various business functions to implement sustainability programmes and initiatives.
  3. Materiality assessment


    In line with Bursa Malaysia’s SRG, we conducted a materiality assessment through data analysis and stakeholder engagement to gather insights on material related to EES issues. Creating the right communication platform is important to the Group and an open channel of communication is maintain to ensure that their concerns are addressed. The table below shows the types of engagement for each stakeholder and their frequency.

    Stakeholders Frequency Types of Engagement Focus
    Ongoing                          Survey form Customer's satisfaction
    Ongoing Survey form Vendor performance feedback
    Tele-conversation
    Annually Performance review Professional development & appraisal
    Employees events
    Quarterly Quarterly announcement Quarterly performance
    Annual Annual General Meeting Annual performance
    Ongoing Compliance with Food Regulations 1985 Corporate governance
    Ad-hoc Corporate and brand events Brand awareness
    Ad-hoc Round table discussion Corporate governance
    Ongoing Corporate social responsibility programme Corporate governance
    Ongoing Product campaigns Brand awareness
    Social media
    Annual Member participation in key associations Key inputs to trade-related regulations
    Annual Regulatory filings Statutory compliance
    Ad-hoc Research survey Academic research

    From a total of 46 materiality aspects, we have identified 10 as material and significant to our Group’s business operations and they are shown below:-
    Return on equity and earnings per share
    The impact on environment caused by our business operations
    Countering climate change has become a business priority and no longer an option
    As a leader in food processing, environmental regulation compliance is vital to the community around our plants
    Minimise injury is our goal in workplace safety
    Develop future leaders through training programme
    We are an equal opportunity employer who believes in diverse background that can contribute to making better decisions
    We strive to continuously develop new products with healthier ingredients
    Correct labelling to be printed on packaging and is in compliance with respective countries’ regulations
    Our products have passed the various certification processes to ensure safety compliance
  4. Managing sustainability

    1. Economic / Economic performance


      Our shareholders and banking partners provide us with economic resources to operate and expand in our market place. We are committed to meet the financial commitment towards them through good governance and stewardship of the Group’s financial affairs.

      We have adopted a dividend policy that will distribute an annual dividend pay out of at least 60% of the annual profit after tax to the shareholders. We believe that such pay out rate will better reward the shareholders and be positively received by the investors.
    2. Environment / Materials


      We work with our partner and production personnel to recover and recycle the waste materials and packaging in our manufacturing processes. The Group is proactively developing management approaches to address the waste generated in our business operations. The followings are four ways we aim to reduce our material usage and hence the waste production:
      1. Reduce packaging at the source;
      2. Turn waste into a resource;
      3. Use packaging materials made from sustainable resources; and
      4. Engage consumers.
      We recycled 714 tonnes of production waste in 2018 and was sold as scrap to various scrap vendors. We are working closely to improve our current waste management initiatives as well as to develop strategies to drive results.
    3. Environment / Energy


      Climate change is an issue that we cannot neglect as it is relevant to our business and supply chain. We aim to contribute to climate change control via using the best mix of energy sources while improving the energy intensity of our manufacturing processes. To reduce our energy consumption, we are constantly raising awareness among factory employees on strengthening standard routines and installing energy efficient equipment.

      We have implemented electrical energy management initiative to reduce the electricity consumption of our plant and the energy intensity of our products. There has been a reduction in electricity consumption in our manufacturing process.

      The Group had converted the existing two (2) baking lines fired by liquefied petroleum gas to natural gas as its source of fuel effective July 2018 which has a lower emission of carbon dioxide (“CO2”) per Kilowatt Hour (“KWH”).

      The Group has successfully reduced its energy consumption by 3.8%, which in turn reduces the CO2 emission by 4.2%.
    4. Environment / Environmental compliance


      We commit to comply with all applicable environmental regulations. Our formalised principles and policies provide a clear guidance on environmental issues and ensuring they are upheld throughout the Group. Total transparency with regulators is what we strive for. This also includes efforts to reduce our environmental impact, for example the handling of packaging material.

      Our plant achieves full compliance annually and has no fine or penalty imposed by regulators. The Group adopts a pro-active approach to environmental challenges, undertake initiatives to promote greater environmental responsibility and encourage the development of food technologies with better environmental performance.
    5. Social / Occupational health and safety


      Our occupational health and safety system includes all our employees, both full-time and part-time. Our industry is highly labour intensive and involves working with complex machineries. Hence, our occupational health and safety has been given the top priority and management attention. Our goal is to reach alignment on a common safety practice and continuously improve safety performance throughout the system.

      In 2018, we conducted Emergency Response Plan and provided audiometric tests for workers, with followup doctor consultations where impairments were identified. Following steady and significant improvements in our safety performance during the year, our on-site lost-time injury has reduced to 5 cases (2017: 9 cases).

      However, in transport and road safety, we sadly recorded one fatal road accident, causing an accidental death of one of our driver; our lost time injury frequency rate (number of injuries per million working hours) is at 1.7 (2017: 2.8).
    6. Social / Training and development


      We continue to groom our team and promising talents through various programmes to help our people build a fulfilling career with our company. We conduct annual training needs analysis to identify the gap in our employees’ competencies. Thereafter, we aim to close the gap through training with effectiveness measured pre and post-training. We contributed 1% of our payroll to Human Resources Development Fund to enhance the productivity of our employees.

      We invested substantially during the year under review on various training and development programmes for employees across the Group, where a total of 11,356 hours (2017: 14,422 hours) were routed into training. Due to tight production schedules, one training course originally plan at the end of year 2018 was forced to be re-scheduled to 2019.
    7. Social / Diversity and equal opportunity


      We are an equal opportunity employer. We focus in unleashing the potential of all our employees, regardless of gender, age and background. This is one of the most important contributions that our Group brings to the community. This also helps to make our business more sustainable by building a robust pipeline of future business leaders. This is evident in our low annual employee turnover rate of approximately 2.3% (2017: 2.5%).

      As a caring employer, we strive to create a conducive working environment for all our employees. Annual sports activities are organise to promote a healthy lifestyle. Annual dinner event is organised to foster close relationship amongst employees.
    8. Social / Quality and Healthy food


      We continuously develop and produce crackers, biscuits and cookies using healthy ingredients and adopting high quality production process. As an official recognition of some of our quality products, we have been granted the International Quality Award by Monde Selection, Belgium. This is one of the most prestigious awards on product quality in the world and we have been receiving it since 1994 for our products.
    9. Social / Nutrition labelling


      We provide transparent nutrition information on all our products packaging. We believe by providing factual, meaningful and understandable information as a reference, the consumers can choose the consumption level to meet their specific requirements.

      Currently, all our products provide the nutrition information and calorie intakes so that consumers can make choices that fit their lifestyles.
    10. Social / Food safety


      As a food producer, safety and quality of our production is imperative. We are committed to produce safe and high-quality food and follow stringent product and ingredient standards designed to ensure the safety and quality of all our products. Our quality management programmes help us to identify and mitigate potential risks and drive improvement. Our Group’s centralised procurement unit ensures high quality and safety in raw materials by adhering to the procurement policies. The centralised procurement unit also makes sure the Group complies with other regulatory requirements.

      We are certified under the certification schemes of TQCSI, Australia on the ISO 22000 Food Safety Management system, HACCP management system as well as ISO 9001:2015 Quality Management system which is certified under certification schemes of KIWA, Italy. In addition, we have obtained HACCP and GMP certification through Malaysia’s Ministry of Health to demonstrate our commitment towards food safety and quality to ensure consumer confidence and meet the export requirement for obtaining Health Certificate.
  5. Key performance data


    Our sustainability framework is aligned with value chain and is customised towards the needs of our market. We aim to report our sustainability performance annually to communicate and be accountable to our valued stakeholders. We plan to improve our sustainability milestones by constantly seeking feedback from our stakeholders, refining our business processes and extracting meaningful and high-quality data from our systems for this sustainability reporting.
    Below is our key performance data:

    Aspect GRI Standards Details 2016 2017 2018
    Economic
    201-1 Direct economic value RM 286 mil RM 300 mil RM 307 mil
    201-1 Total number of factories 2 2 2
    201-1 Operating costs RM 219 mil RM 240 mil RM 249 mil
    201-1 Taxes RM 17 mil RM 15 mil RM 15 mil
    201-1 Net Profit RM 49 mil RM 44 mil RM 43 mil
    201-1 Earnings per share RM 0.062 RM 0.056 RM 0.054
    201-1 Net dividends per share RM 0.060 RM 0.060 RM 0.060
    Environment
    301-2 Materials used by weight 31 thousand tonnes 32 thousand tonnes 34 thousand tonnes
    301-3 Reclaimed products and their packaging materials 622 tonnes 671 tonnes 714 tonnes
    302-1 Energy consumption within the organisation 37 mil kwh 40 mil kwh 39 mil kwh
    302-3 Energy intensity 1,200 kwh per tonnes 1,200 kwh per tonnes 1,140 kwh per tonnes
    Social
    403-2 Lost time injury frequency rate 3.4 2.8 1.7
    404-2 Average hours of training per year per employee 9.5 hours 10.1 hours 7.8 hours