Company sets net-zero emissions Target for 2040

KUALA LUMPUR, 25 SEPTEMBER 2026 —

IOI Corporation Berhad has outlined its comprehensive pathway toward achieving net zero greenhouse gas emissions by 2040, anchored by its Climate Change Action initiative.

The long-term action plan, first introduced in 2019 to mitigate and reduce emissions across the group's diverse operations, aligns with the recommendations of the Task Force on Climate-Related Financial Disclosures and the International Sustainability Standards Board's climate disclosures.

The strategic roadmap integrates environmental governance directly into the corporate structure. The Board Sustainability Committee maintains oversight over the strategy and development of the initiative, reporting directly to the board. The committee is led by an independent non-executive director who serves as the group's climate champion, working alongside two other board members to ensure that all related activities are holistically integrated into the group's strategy and business model.

To strengthen its financial and operational resilience, the company adopted TCFD recommendations in 2021 across four thematic areas covering governance, strategy, risk management, and metrics and targets. IOI conducted a quantitative group-wide climate change assessment in 2021 with an expert TCFD consultant to identify transition and physical risks, enabling climate impact valuations aligned with TCFD recommendations.

Further modeling of transition and physical risks was conducted using climate scenarios including RCP 2.6, RCP 4.5, and RCP 8.5 until 2050, drawing on both internal data and inputs from international climate organizations and third parties.

The group utilizes Internal Carbon Pricing as a risk mitigation tool to prepare for climate-related events such as resource availability and supply chain disruptions, while planning decarbonization projects. IOI has established an internal shadow price that considers future regulations and costs across all emissions scopes for investments in its Climate Change Action initiative.

The pricing is set at RM 60 per metric ton of CO2 equivalent for plantations, RM 80 per metric ton for resource-based manufacturing in Malaysia, and EUR 30 per metric ton for operating sites in Germany, with details on financial investments available on page 155 of the financial section of the 2023 annual report.

IOI is currently on track to meet its mid-term target in 2030, leaning on nature-based and engineered solutions to continually cut emissions. These measures include enhancing rehabilitation, planting trees in conservation areas, and installing additional methane capture facilities.

As a founding member of the Roundtable on Sustainable Palm Oil, the group calculates greenhouse gas emissions using the GHG Protocol methodology via RSPO PalmGHG for its plantation division and ISO 14064 for its refinery and oleochemical operations.

Emissions intensity has fallen compared to previous years due to the inclusion of carbon sequestration for 26,297 hectares of palm trees aged over 25 years and the repair of two methane capture facilities. Additional reductions are expected from upcoming solar farm projects within the plantation division as an alternative renewable energy source.

The edible oils division, comprising IOI Edible Oils and IOI Pan-Century Edible Oils, has consistently exceeded its target of achieving a 34% reduction in emissions by 2025 through automation, lower power consumption, and efficiency gains.

IOI Edible Oils achieved notable emissions reductions this year by implementing low-carbon initiatives and innovative solutions. These efforts involved upgrading infrastructure and equipment, adopting process modifications, enhancing energy efficiency, embracing digitalization and automation, reducing waste through the 7Rs concept, and utilizing renewable biomass energy.

Meanwhile, oleochemical emissions rose 10% from the baseline in fiscal year 2024 due to higher volumes of value-added derivatives compared to basic oleochemicals, though the commissioning of a higher-efficiency production plant at IOI Acidchem slightly reduced emission intensity over the last financial year.

Further efficiency measures are underway, including plans for a new co-generation plant at the IOI Oleochemical Prai site and future solar panel installations. Agronomic practices such as precision and regenerative agriculture are continually implemented to reduce fertilizer and pesticide usage while maintaining high yields, which ultimately lowers emissions.

The group also practices circularity by recycling palm biomass into natural fertilizers, with empty fruit bunches used to generate green electricity that sustains 98% of its mills' energy needs, while explorations into converting palm by-products into sustainable wood products and paper pulp continue.

Because methane emissions from palm oil mill effluent treatment are a major contributor to operational emissions, IOI has commissioned two biogas plants at the Pukin Palm Oil Mill in Johor and the Ladang Sabah Mill in Sandakan to capture methane gas. The group operates 10 methane capture facilities in total, with two more under development.

Operations and quality assurance teams are also collaborating with external researchers and consultants to test alternative reduction methods, including the use of geosynthetic fiber greentubes to reduce biochemical oxygen demand in palm oil mill effluent, a study currently underway to demonstrate methane reduction results.

Formalizing its broader climate commitments, IOI subscribed to the Science Based Target initiative in the Forest, Land and Agriculture sector on March 6, 2023, with a formal announcement delivered during an inaugural panel discussion on March 21, 2023. The group is currently in the second stage of target setting, developing and submitting reduction targets for validation, with progress tracked on the SBTi Target Dashboard.

Related: IOI Corporation Berhad