Best Management Practices

SIPEF’s agricultural practices are built on over a century of experience, long-standing certification compliance, and a culture of innovation and continuous improvement. These standards are consistently applied across the Group’s operations and extended to third-party smallholder suppliers.

To reduce environmental impact, SIPEF implements Best Management Practices (BMPs), alongside regenerative and circular approaches that reuse production and processing by-products wherever possible.

Production efficiency 

Oil palm is a perennial crop with higher yield potential and lower land and input requirements than most annual oil crops. It also supports greater biodiversity within production areas compared to widely cultivated annual crops such as soybean, rapeseed, sunflower and maize.

SIPEF builds on these advantages through strategic site selection, improved planting materials and operational innovation. The Group remains committed to advancing practices that reduce the land required per tonne of product and lower the use of agrichemicals per unit of cultivated area.

Soil Management 

Soil Health and Integrated Pest Management

SIPEF is committed to reducing reliance on inorganic fertilisers while maintaining or improving yields. Organic matter is consistently returned to the soil, particularly in the estates. For example, empty fruit bunches (EFB) and compost are applied to mineral soils. At Bukit Maradja palm oil mill, EFB and palm oil mill effluent are composted at scale, replacing equivalent amounts of inorganic fertilisers where compost is applied. Soil erosion is prevented through cover crops, especially during replanting. Burning is prohibited in the field and has not been practised for over 30 years.

Integrated pest management (IPM) techniques are employed for both SIPEF’s oil palm and banana operations. Pest management is critical for protecting crops and optimising yields, and IPM is an approach that encourages natural pest control mechanisms. In prioritising IPM, SIPEF aims to reduce its reliance on plant protection products, focusing on careful consideration of chemical and pesticide applications that minimise risks to people and ecosystems.

Pests are controlled through Integrated Pest Management (IPM) plans, specific to each region and crop. These plans are based on regular monitoring of the plantations, to determine when an intervention is necessary. The objective is not to eradicate pests, but to maintain them below acceptable thresholds. The first line of defence against natural pests is nature itself. IPM relies on natural predators of pests and antagonistic plants. Chemicals are also used, in a controlled manner and are assessed annually for their relevance.

SIPEF’s best practices in agrochemical management align with the requirements of both the Roundtable on Sustainable Palm Oil (RSPO) and Rainforest Alliance certification programmes. The core principles of these programmes include the promotion of IPM, reducing reliance on harmful chemicals and the prohibition or restriction of highly hazardous pesticides, including paraquat and those classified by the World Health Organisation as Class 1A or 1B or listed under the Stockholm or Rotterdam Conventions. SIPEF adheres to these standards, ensuring safer and more sustainable practices throughout its operations.

For oil palm operations: compliance with the requirements of the RSPO standard, including but not limited to, no use of paraquat, no use of chemicals listed under the Stockholm Convention and Rotterdam Convention or World Health Organisation (WHO) Class 1A and 1B pesticides unless authorised as per RSPO standard requirements.

For banana operations: compliance with the requirements of Rainforest Alliance, including but not limited to, their List for Pesticide Management, List of Prohibited Pesticides and List of Obsolete Pesticides. SIPEF continues to apply agrochemicals responsibly by supporting both productivity and environmental safeguards across its oil palm and banana plantations. Measured applications across all its plantations help optimise soil health and reduce chemical dependency, particularly through increasing reliance on organic fertilisers and prudent pesticide use tailored to site-specific needs.

In addition, SIPEF monitors the active ingredients (AI) applied, ensuring transparency and alignment with relevant certification standards such as RSPO and Rainforest Alliance. This encompasses the full range of agrochemicals including pesticides, herbicides, fungicides and insecticides applied in a targeted and accountable manner.

In 2024, SIPEF applied 0.71 kg AI/hectare of pesticides, 0.09 kg AI/hectare of adjuvants and 0.55 tonnes/hectare of inorganic fertiliser in Papua New Guinea. In Indonesia, the applications were 1.73 kg AI/hectare of pesticides, 0.02 kg AI/hectare of adjuvants and 0.82 tonnes/hectare of inorganic fertiliser. These practices reflect site-specific needs and a commitment to responsible input use. In Indonesia, increased use of insecticides has been necessary to combat outbreaks of leaf-eating pests in North and South Sumatra. These outbreaks have escalated due to dry weather conditions, prompting the application of insecticides as a last resort, in conjunction with pest population monitoring. We continue to prioritise the multiplication of natural pest predators by expanding areas of beneficial plant species known to serve as food sources for the predators.

The safety and wellbeing of SIPEF’s employees remain a top priority. All chemical handlers, including sprayers, receive extensive training in safe application techniques and are required to wear full Personal Protective Equipment (PPE) at all times during handling or spraying activities. Additionally, they undergo regular medical checks to ensure continued occupational health and to detect early signs of exposure-related conditions. These efforts contribute to a safer working environment for all employees.

Organic Soil Management 

Since December 2015, SIPEF has been committed to no new plantings on peat of any depth. In areas with previously developed organic soils, SIPEF applies best management practices in line with RSPO peatland management guidance and local regulations. These practices are implemented to preserve soil integrity, ensure environmental compliance and prevent further degradation.

A core element of SIPEF’s approach is the implementation of RSPO-compliant drainability assessments in applicable cultivated organic soil areas. These assessments evaluate the potential for future subsidence and flood risk in peatlands, enabling SIPEF to proactively adjust its management practices. The aim is to minimise subsidence rates and extend the productive lifespan of plantation areas on organic soils.

All organic soil areas under SIPEF’s own operations have undergone a full drainability assessment. In 2024, SIPEF’s oil palm operations in Indonesia include approximately 17,000 hectares of cultivated organic soils, managed in accordance with sustainability standards and regulatory requirements. This area has remained unchanged since 2023.

Beyond drainability, SIPEF also actively manages hydrology and soil conditions through continuous monitoring and adaptive practices. Hydrology assessments are routinely carried out to support water level control, while soil management protocols are implemented to maintain productivity and ecological balance.

Water management 

SIPEF’s water management approach focuses on maintaining water availability and quality for both operational needs and the surrounding communities and ecosystems. Water use is closely tracked across SIPEF’s operations, with ongoing efforts to improve efficiency in both field and processing operations.

As part of SIPEF’s commitment to sustainable water management, the company is implementing rainwater harvesting systems at all palm oil mills. This initiative aims to reduce water withdrawals. In line with this, SIPEF has set a target to achieve a reduction of 168,000 m3  in water withdrawal from its palm oil mill operations by 2030, using 2025 as the baseline.

Wastewater discharge and irrigation practices are managed carefully to minimise environmental impact. All facilities are equipped with appropriate treatment systems and discharge parameters are maintained within the limits of legal and certification standards.

Carbon footprint 

SIPEF's GHG emissions 

As an agricultural company, SIPEF has a goal to reduce its GHG emissions and build long-term climate resilience. To achieve this goal, the Group will implement a comprehensive climate transition plan that integrates sustainable energy practices, circular economy principles, optimised land use and water resource management, while protecting biodiversity. This approach contributes to fostering a sustainable, low-carbon future for the oil palm industry.

SIPEF's operations generate GHG emissions mainly from land use change including cultivation in organic soils, palm oil mill effluent (POME) and inputs for the operations such as fuel and fertilisers. Approximately 98% of SIPEF’s GHG emissions come from the cultivation and processing of oil palm products. Banana production does not make a big contribution, accounting for just 2% of SIPEF’s overall gross GHG emissions.

Climate Change Mitigation and Energy

To address impacts identified in relation to climate change, SIPEF is actively adopting innovation and good management practices in cultivation and processing to avoid or reduce GHG emissions. These practices include the following:

• Land use: SIPEF has completed HCV-HCSA assessments to identify areas that can be developed within its own operations, while continuing to protect and conserve high carbon stock areas including organic soils identified within SIPEF’s operations. The Group has also implemented fire prevention and management measures in its oil palm operations. In certain instances where land that communities might otherwise develop is designated for conservation, SIPEF may mitigate the impact by purchasing or leasing the property from local landowners, ensuring they receive financial benefits.
• Methane reduction: Methane capture equipment will be installed in all SIPEF palm oil mills by 2030. Looking ahead, SIPEF is also exploring the possibility of harnessing biogas from the methane capture facilities for the production of bio-compressed natural gas (bio-CNG), with construction of the Group’s first bio-CNG plant at Perlabian palm oil mill in North Sumatra, Indonesia starting in 2025. Comprehensive safety protocols have been implemented to safeguard the wellbeing of employees operating biogas plants.
• Renewable energy: SIPEF generates renewable energy from the by-products of milling operations (fibres and shells) to power operations and employee compounds using steam turbines. Additionally, at one of its mills, the Group uses methane capture from POME and a biogas generator to produce electricity.

Further information will be made available upon completion of the climate change transition plan.

More details about SIPEF’s Best Management Practices and their impacts can be found in SIPEF’s Integrated Annual Report.