Background

Global demand for palm oil has increased significantly, particularly due to its growing use as a renewable energy source. This has led to the rapid expansion of oil palm plantations worldwide, resulting in deforestation, environmental degradation, and the loss of biodiversity. In addition, concerns have arisen regarding unfair labor practices, the exploitation of smallholder farmers, and adverse impacts on local communities and society. These issues have prompted increasing opposition to palm oil and palm oil-based products in many countries, particularly across Europe. Recognizing these global sustainability challenges, and given that oil palm fresh fruit bunches (FFB) are the Company's primary raw material, the Company is committed to promoting the sustainable production and procurement of palm oil. Accordingly, the Company aligns its operations with internationally recognized sustainability standards to support responsible environmental stewardship, respect for human rights, and sustainable economic development throughout the palm oil supply chain.

SMO supports and promotes sustainable livelihoods for independent smallholder oil palm farmers by organizing farmer groups and facilitating their membership in the Roundtable on Sustainable Palm Oil (RSPO). The Company provides training and technical knowledge to help farmers cultivate oil palm in accordance with RSPO standards, thereby contributing to the production of sustainable palm oil. This initiative promotes sustainability across all three dimensions—economic, social, and environmental—while enhancing the capacity of smallholder farmers to adopt responsible agricultural practices. The Company also aims to ensure that its members produce oil palm in a manner that is safe for themselves, their communities, and the environment, complies with applicable laws and regulations, and maximizes operational efficiency and long-term benefits for all members.

Sustainable Raw Material Sourcing in 2025

As of 2025, the Company has established three community enterprise groups to apply for membership in theRoundtable on Sustainable Palm Oil (RSPO). Details of the RSPO members and the total cultivated oil palm plantation area as of 2025 are presented below.