SML Talks Reza Abdulmajid Preview 3

Summary

The transcript features an interview with Pak Reza, Chief Risk Officer and Chief Sustainability Officer at Sinar Mas, where he discusses the company’s approach to risk management and sustainability. Pak Reza explains how Enterprise Risk Management (ERM) helps the business identify and mitigate risks to achieve objectives. He also highlights the close integration between sustainability and risk management, emphasizing the company's efforts to address climate change, improve governance, and meet stricter regulations. Over the years, Sinar Mas has successfully adapted to these changes, improving its sustainability rating and focusing on green development and social responsibility.

Takeaways

• 😀 Risk management is seen as a business partner, helping to identify and mitigate risks to achieve business objectives without hindering growth.
• 😀 Enterprise Risk Management (ERM) was officially established at Sinar Mas when Pak Reza joined in 2013 and was tasked with its implementation.
• 😀 ERM focuses on identifying potential risks across the entire business, including regulatory compliance and business continuity management.
• 😀 The number of risk profiles at Sinar Mas has grown from 10 to 23 as the company expanded, reflecting the increasing complexity and scope of risk management responsibilities.
• 😀 Sustainability and risk management are closely tied, with ERM supporting sustainability efforts by identifying and managing environmental, social, and governance (ESG) risks.
• 😀 Pak Reza's journey into sustainability began in 2016 due to mandatory sustainability reporting for listed companies in Singapore, eventually leading to his appointment as Chief Sustainability Officer.
• 😀 Sinar Mas integrates sustainability management with risk management to ensure business continuity while mitigating environmental, social, and governance risks.
• 😀 The company follows international standards like the Global Reporting Initiative (GRI) for sustainability reporting and ensures that sustainability efforts are aligned with business objectives.
• 😀 Climate change is a key focus within the environmental component of sustainability, and its impact on business activities is a significant concern for Sinar Mas.
• 😀 Regulatory pressure and increasing demands from tenants, investors, and other stakeholders make ESG practices critical to maintaining business and attracting new opportunities.
• 😀 Sinar Mas has consistently improved its ESG rating, moving from a moderate risk category to a low-risk category by 2023, reflecting its successful sustainability initiatives.

Q & A

What is the role of risk management in a business?

Risk management acts as a partner to the business, helping to identify and mitigate risks so that business objectives can be achieved without hindering growth. It ensures that risks are addressed in a way that allows businesses to continue operations while minimizing potential losses.

What is Enterprise Risk Management (ERM) and why is it important?

Enterprise Risk Management (ERM) is the process of identifying and managing risks across the entire business. It helps businesses understand the risks they face and how to mitigate them to achieve their goals. ERM is important because it enables businesses to manage uncertainty while pursuing strategic objectives.

How has the scope of Enterprise Risk Management (ERM) expanded at Sinar Mas over time?

Since its establishment in 2013, ERM at Sinar Mas has grown significantly, from 10 or 11 group divisions to 23 by 2023. This expansion reflects the rapid growth of the business and the increasing complexity of its operations, requiring more comprehensive risk management strategies.

What is the relationship between ERM and sustainability at Sinar Mas?

ERM and sustainability are closely linked. Both focus on understanding risks, including environmental, social, and governance (ESG) factors, and how to mitigate them. As sustainability issues like climate change impact business operations, ERM helps Sinar Mas address these risks effectively to ensure long-term success.

What is the role of sustainability champions at Sinar Mas?

Sustainability champions are key individuals at each business unit within Sinar Mas who help implement and monitor sustainability initiatives. They play a critical role in ensuring that sustainability goals are achieved at the operational level and help gather data for reporting purposes.

Why did Sinar Mas focus on sustainability starting in 2016?

Sinar Mas began focusing on sustainability in 2016 because of regulatory changes, including Singapore's requirement for listed companies to report sustainability. This prompted Sinar Mas to establish structured sustainability practices, which included aligning with international sustainability reporting standards.

How does Sinar Mas ensure compliance with sustainability regulations?

Sinar Mas ensures compliance by staying informed about evolving regulations and aligning its practices with recognized standards, such as the Global Reporting Initiative (GRI). This proactive approach allows the company to adjust to new rules efficiently and integrate sustainability into its operations.

What is the importance of climate change in Sinar Mas's sustainability efforts?

Climate change is a key environmental factor that affects Sinar Mas's sustainability strategy. The company is focused on reducing its environmental impact, managing risks associated with climate change, and aligning its operations with global efforts to mitigate environmental damage.

How does Sinar Mas manage the impact of climate change on its business?

Sinar Mas addresses climate change by developing strategies to minimize its environmental impact, both through internal efforts and by complying with increasingly stringent regulations. The company also works to ensure that its operations are resilient to climate risks.

What has been the progress of Sinar Mas in terms of its sustainability rating?

Since 2021, Sinar Mas has significantly improved its sustainability rating. It moved from a moderate rating to being recognized in the low-risk category, achieving a rating of 14.5 in 2023. This reflects the company's growing commitment to sustainability and the recognition of its efforts in the global market.