Sgs Qualipalm Oilpalm Plantation Management

SGS QUALIPALM Doc. Number:

(Associated Document) Doc. Version date: 5 May 2007 Page: 1 of 59

OILPALM PLANTATION MANAGEMENT VERIFICATION REPORT

Report Nr: MY01910-Carotino Assessment Report MA2009 Report Date: 8 March 2010

Client: CAROTINO SDN BHD (069046-T)

RSPO membership #: 026-06(0)

Web Page: www.carotino.com

Unit 30-08, Mail Box 238, Menara Landmark, No.12, Jalan Ngee Heng, 80000, Johor Address: Bahru, Johor

Telephone: 07-2231633

Country: Malaysia

Plantation Company Carotino Sdn Bhd Evaluated: Total Plantation Area 10,243.5 hectares

Company Contact Mr Tan Ah Aia Mr Nadarajah Rethanam Person: Plantation Controller Mill Manager Head office: Mill: Unit 30-08, Mail Box 238, Menara Landmark, No.12, Carotino Palm Oil Mill Address: Jalan Ngee Heng, 80000, Johor Bahru, Johor Srijaya, 26030 Kuantan Pahang Tel: 07-2231633 09-4813105

Fax 07-2241546 09-4813104

Email: [email protected] [email protected]

Evaluation dates:

Pre-assessment 2 – 5 Sept 2008

Main Assessment 11 – 15 May 2009

Surveillance 1

Surveillance 2

Surveillance 3

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TABLE OF CONTENTS

1. INTRODUCTION ...... 5 2. COMPANY BACKGROUND ...... 6 2.1 Ownership ...... 6 2.2 Organisational Structure...... 6 3. Other oil plam plantations owned by the company and plan for certification under rspo p&c ...... 6 4. PREPARATION FOR THE EVALUATION ...... 7 4.1 Schedule ...... 7 4.2 Team ...... 7 5. THE EVALUATION ...... 8 5.1 Opening meeting...... 8 5.2 Document review...... 8 5.3 Sampling and Evaluation Approach ...... 8 5.4 Field assessments...... 8 5.5 Summing up and closing meeting ...... 10 6. STAKEHOLDERS NOTIFICATION & CONSULTATION...... 10 7. BACKGROUND INFORMATION OF CAROTINO CERTIFICATION UNIT ...... 12 7.1 Introduction ...... 12 7.2 Landscape view of the land use and HCV areas in the region around the estates...... 12 7.3 Land administration and settlement in the region...... 14 7.4 Soil Suitability...... 18 7.5 Rainfall ...... 19 7.6 Topography, local site aspects and tracks of field inspection teams...... 20 8. GENERAL FINDINGS OF FIELD EVALUATION ...... 25 9. EVALUATION RESULTS...... 31 9.1 Findings related to the general MYNI 2008 ...... 32 PRINCIPLE 1: Commitment to transparency ...... 32 PRINCIPLE 2: Compliance with applicable laws and regulation...... 33 PRINCIPLE 3: Commitment to long term economic and financial viability...... 35 PRINCIPLE 4: Use of appropriate best practices by growers and millers:...... 36 PRINCIPLE 5: Environmental responsibility and conservation of natural resources and biodiversity...... 42 PRINCIPLE 6: Responsible consideration of employees and of individuals and communities affected by growers and mills...... 47 PRINCIPLE 7: Responsible development of new plantings ...... 53 PRINCIPLE 8: Commitment to continuous improvement in key areas of activity...... 54

------SGS (Malaysia) Sdn. Bhd Unit 10-1 10 th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com

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10. CHAIN OF CUSTODY...... 55 11. SUMMARY OF CORRECTIVE ACTION REQUESTS (CARs) ...... 57 12. ASSESSMENT DECISION...... 58 13. ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY AND FORMAL SIGN-OFF OF ASSESSMENT FINDINGS...... 58 14. RECORD OF STAKEHOLDER COMMENTS AND INTERVIEWS ...... 59

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LIST OF ABBREVIATIONS

CAR Corrective Action Request CHRA Chemical Health Risk Assessment CPO Crude Palm Oil DID Department of Drainage and Irrigation, Malaysia DOE Department of Environment, Malaysia EFB Empty Fruit Bunch EIA Environment Impact Assessment EMS Environmental Management System EQA Environmental Quality Act ERT Endangered, Rare and Threatened species ESA Environmentally Sensitive Area FFA Free Fatty Acids FFB Fresh Fruit Bunches FR Forest Reserve Ha Hectare HCV High Conservation Value HDPE High Density Polyethylene IPM Integrated Pest Management ISO International Organisation for Standardisation IUCN International Union for Conservation of Nature and Natural Resources JCC Joint Consultative Committee JUPEM Jabatan Ukur dan Pemetaan Malaysia (Department of Survey and Mapping Malaysia) K Potassium kW Kilowatt M Meter Mg Magnesium Mm Millimeter Mt Metric ton MYNI Malaysia National Interpretation N Nitrogen NGO Non Governmental Organisation OA Orang Asli (Indigenous People) OER Oil Extraction Rate OSH Occupational Safety & Health P Phosphate P & C Principles and Criteria PK Palm Kernel POME Palm Oil Mill Effluent PPE Personal Protective Equipment PT Pejabat Tanah (Coding for Pahang Land Office) SOP Standard Operating Procedures Sdn Bhd Sendirian Berhad (Private Limited) SEIA Social and Environment Impact Assessment Sg Sungai SGS Societe Generale de Surveillance SOP Standard Operating Procedures SPC Senior Plantation Controller USECHH Use and Standards of Exposure of Chemicals Hazardous to Health WHO World Health Organisation yr Year

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INTRODUCTION

The purpose of the evaluation was to evaluate the operations of Carotino Sdn Bhd oil palm mill and plantations located in Pahang, Malaysia, against the requirements of the QUALIPALM Programme, the SGS Group’s verification programme for compliance to RSPO P&C MYNI 2008 requirement.

1. SCOPE OF VERIFICATION The details of the Crude Palm Oil (CPO) mill and the oil palm plantations included in the scope of this assessment are presented in Table 1.1 and Table 1.2 below.

Table 1.1: Summary of CPO and PK production by Carotino mill

MILL: CAROTINO PALM OIL MILL

Mill location Capacity FFB input CPO output PK output Sri Jaya, Pahang 30 TPH 150,000 tonnes 30,300 tonnes 7,700 tonnes

Table 1.2: Summary of production area and annual production of Fresh Fruit Bunches (FFB) by Estates

NAME OF HOLDING LOCATION PLANTATION AREA AVERAGE (Name of nearest ANNUAL town) Non PRODUCTION Production OF FFB productive (ha) (METRIC TON) (ha)

Asia Oil Palm Estate Sri Jaya, Pahang 2,113.3 27.5 40,000

Pahang Oil Palm Sri Jaya, Pahang 2,013.6 127.1 30,500 Estate Maran Estate Sri Jaya, Pahang 1,977.1 163.7 28,400 Hwa Li Estate Div. 1 Keratong, along 2,088.7 73.2 50,000 Segamat-Kuantan Highway. Hwa Li Estate Div.2 Along Bahau to 1,528.7 130.5 48,000 Segamat-Kuantan Highway Total 9,721.4 522.1 196,900

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The Carotino mill sourced FFB only from the above mentioned group estates belong to the JC Chang Group. The estates produced surplus of FFB to the extent that significant portion of fruits harvested by Hwa Li Divisions 1 and 2 estates are sold to other mills.

2. COMPANY BACKGROUND 2.1 Ownership Carotino oil mill and its supply base estates are owned and operated by JC Chang Group of companies, a Malaysian base conglomerate specialised in oil palm plantation and refineries. Legal ownership of the lands within the scope of this assessment is as follows: • Hwa Li Division 1 – under 13 different PTs which are lands under the ownership of Syarikat Keratong Sdn Bhd, a wholly owned company under JC Chang Group. • Hwa Li Division 2 – a single title PT 2389 HSD 2850 owned by Carotino Sdn Bhd • Maran Estates – under 6 titles belonging to Richley Corporation Sdn Bhd, which is under Asia Oil Palm Sdn Bhd • Asia Oil Palm Estate – under 6 land titles owned by Asia Oil Palm Sdn Bhd, a company under JC Chang Group • Pahang Oil Palm Estate – land belongs to Pahang Enterprise Sdn Bhd, a wholly owned company under JC Chang Group.

2.2 Organisational Structure Organisation and management structure of the Carotino mill and its certification unit are shown in Appendix 1 and Appendix 2 attached to this report.

3. OTHER OIL PLAM PLANTATIONS OWNED BY THE COMPANY AND PLAN FOR CERTIFICATION UNDER RSPO P&C

The current verification exercise is undertaken only for Carotino Oil Mill and its supply base from the Group’s estates in Peninsular Malaysia. JC Chang Group owns and operates 3 other palm oil mills for processing FFB sourced from its 12 oil palm estates located in Lahad Datu, Sabah, Malaysia.

The Carotino certification unit is the first to undergo assessment under the RSPO certification programme. The company’s time bound plan for certification of other certification units is as summarised in Table 3.1.

Table 3.1: JC Chang Group’s time bound plan for RSPO certification PLANTATION MANAGEMENT UNITS UNDER JC CHANG GROUP OF COMPANIES MANAGEMENT AND ITS PLAN FOR CERTIFICATION

Plan for Estates Size (ha) Location certification Asia Mill & Estates 9,325 Lahad Datu, Sabah Mid 2010 Melewar Mill & Estates 12,980 Lahad Datu, Sabah End 2010

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Tungku, Lahad Mid 2011 Takon Mill & Estates 6,263 Datu, Sabah TOTAL 28,568

The certification plan developed by the company is quite challenging but the company has made good progress to date where at least one unit is undergoing assessment. The group is planning to bring its entire certification unit to certification by mid 2011. The company has good infrastructure and resources as well as commitment from the top management in making the plan a reality. SGS is in the opinion that the plan made is reasonable and achievable.

4. PREPARATION FOR THE EVALUATION

4.1 Schedule The Evaluation was preceded by a pre assessment of the certification unit carried out in September 2008. A report outlining the weaknesses that needed to be addressed was submitted to the company and the company has proactively engaged a consultant to assist them in closing out the gaps. Prior to the main assessment, communication with the management is made to prepare for the logistics as well as to ensure that sufficient time to cover specific areas/critical activities that were identified during the pre-assessment.

4.2 Team The experience and qualification of the audit team members are as summarised in Table 4.1 below: Table 4.1: Summary experience and qualification of the audit team member Evaluation The team member background Team Team Leader Salahudin Yaacob has post graduate degree in Environment and Natural Resources management Environment and currently head Natural Resources certification programme in SGS Malaysia. Trained as a botanist, Social the team leader has gathered more than 10 years of auditing especially in the forestry sector. As a lead auditor in forest management and chain of custody of forest products, he is well versed in certification process and management of certification scheme. Also trained as lead auditor under EMS and SA8000 system. Has participated in RSPO Lead Auditor Training Course and conducted a number of RSPO audits in Malaysia. Lead Auditor / Tunku Nazim Tunku Yaacob is a graduate in Ecology with more than 30 years experience in Plantation Expert ecology, wildlife management and oil palm plantation management. Tunku is a trained ISO 14000 lead auditor and expert in ecology, biodiversity, landuse and management planning. Has gathered many years experience of auditing in forest management, oil palm industry and other natural resources sector at national and international levels. Has attended RSPO Lead Auditor Training Course and conducted numerous oil palm plantation operations against RSPO requirement and other certification/verification schemes in Malaysia and Indonesia. Sociologist Lim Hin Fui, PhD. Dr Lim is a sociologist by qualification and has been involved with social work for more than 30 years. He has conducted many anthropological studies on local communities, particularly Orang Asli in Peninsular Malaysia and other local groups in Sabah and Sarawak. Dr Lim is an experienced auditor particularly in forest certification programmes having involved in the certification for the last 7 years. Auditor Norashikin Rasikon, B.Sc. Holds a graduate degree in forestry and has been involved in certification for the last two years. Trained under ISO system, chain of custody evaluation and

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SA8000. Currently entrusted in preparing documents for certification systems and responsible for maintaining records and reports in compliance to accreditation requirements under various certification schemes. She is responsible for reviewing availability of relevant documentation in compliance to the RSPO requirement as well as gathering information particularly on social aspects.

5. THE EVALUATION The Evaluation was preceded by a pre-assessment carried out in September 2008. A total of 21 CARs were raised in the pre-assessment with 11 major non compliances to the MYNI. Following RSPO standard procedures, public announcement and stakeholder consultation was made at least 4 weeks prior to field assessment. At least 80 key stakeholders were identified and contacted by SGS for their comments on the assessment to be carried out. The steps for conducting main assessment are as outlined below.

5.1 Opening meeting An opening meeting was held at Carotino Mill Sdn Bhd, Sri Jaya, Kuantan, Pahang on 11 May 2009. The scope of the evaluation was explained and schedules were determined. Record was kept of all persons that attended this meeting.

5.2 Document review A review of the main plantation management documentation was conducted to evaluate the adequacy of coverage of the RSPO MYNI requirements. This involved examination of policies, management plans, systems, procedures, work instructions and record controls.

5.3 Sampling and Evaluation Approach Schedule for field visits were determined during the opening meeting after briefing given by the Carotino management. Focus of the visit was to sample the implementation of management practices and procedures.

5.4 Field assessments Field assessments aimed to determine how closely activities in the field complied with documented management systems and RSPO MYNI requirements. Interviews with staff, operators and contractors were conducted to determine their familiarity with and their application of policies, procedures and practices that are relevant to their activities. A carefully selected sample of sites was visited to evaluate whether practices met the required performance levels. As part of effort to cover more areas, the verification team sometimes split and works independently. The activities and areas visited on daily basis by the audit team are as tabulated in the Table 5.1.

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Table 5.1: Field audit schedule Date Area visited Notes 11 May Opening meeting at Carotino Introduction of the audit team and explanation 2009 mill on the main assessment. Document review Briefing on the estate and mill management given by the managers. Document review.

Scheduling of the field audit. Visit to Carotino mill at Review of documentation. Pahang Estate Visit to the mill and observe implementation of the raw material received, processing, CPO production, waste management, health and safety and record maintenance. 12 May Visit to Hwa Li 1 Estate Areas covered include harvesting area, chemical storage, chemical spraying, replanting, waste management system, boundary demarcation, workers accommodation.

Meeting with District Forest Explanation on the audit and general discussion Office and JHEOA officers on the Carotino’s management of the resource in Kuala Rompin and its association/ communication with stakeholders. Issues pertaining to the operation in the area which is bordering HS Lesong and an Orang Asli Village (Kg Pasal).

Visit to Hwa Li 2 Estate Visit to the Orang Asli village (Kg Pasal), interview with workers representatives, workshop, chemical storage and general plantation operation such as harvesting and manuring. 13 May Visit to Asia Estate Areas covered include clinic, local Visit to Pahang Estate communities, educational forest areas, riparian, nursery, replanting, harvesting and waste management. 14 May Maran Estate Areas covered include local communities, educational forest areas, riparian, nursery, replanting, harvesting and waste management. 15 May Closing meeting Preliminary results of the assessment exercise were presented to the Carotino’s management.

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5.5 Summing up and closing meeting At the conclusion of the field evaluation, preliminary findings were presented to company management at a closing meeting held on 15 May 2009. Any areas of non-conformance with the RSPO requirement were raised as one of two types of Corrective Action Request (CAR):

Major CARs - which must be addressed and re-assessed before certification can proceed

Minor CARs - which do not preclude certification, but must be addressed by the following surveillance, otherwise will be raised as a Major.

6. STAKEHOLDERS NOTIFICATION & CONSULTATION A wide range of stakeholders were contacted 4 weeks before the planned evaluation to inform them of the evaluation and ask for their views on relevant oil palm plantation management issues. These included environmental and social interest groups, local government agencies and authorities as well as workers’ unions. During the assessment meetings and discussions were also held with relevant stakeholders including worker’s union leaders, local community leaders, contractors as well as relevant authorities. Stakeholders that were contacted prior to the assessment are as listed in Table 6.1.

Table 6.1: List of stakeholders contacted 1. Contractors/vendors/suppliers Sin Lean Hing Sdn Triumphal Motor Co. Sdn Bhd ELS Tyre Services Sdn Bhd Bhd Sunlight Engineering Work Teck Guan Estate Sdn Bhd Behn Meyer & Co (Malaysia) Sdn Bhd Supply Sdn Bhd Hiab Sdn Bhd Union Harvest Brite-Tech Corp Sdn TCIM Sdn Bhd Bhd Marketing Sdn Bhd Keletrikan Motor Tong Lim Sabilah Holdings JC Siow Weighing Sdn Bhd Sin Tong Hup Engineering Sdn System Sdn Bhd Bhd Cheong Tong Motor C H Liew Engineering Works Sdn Bhd Tractor Malaysia Sdn Bhd Services Kian huat Enginering Uniboon Trading Sdn Bhd Klinik Yeo Sdn Bhd & Agriculture Suburban Properties Sdn Bhd Klinik Medic & Surgeri Supplier Kuantan Trading Oil Mill Sdn E-Plus Stationery and CCM Fertilizers Sdn Bhd Office Supply Bhd Kien Hin Saw Services Zonelite Electrical Sdn Indah Agro sdn Bhd Syarikat Logam Jaya Bhd Sri jaya Hardware Kedai Loong Hin Lit Tat Engineering Sdn Sdn Bhd Bhd Yi Cheng Machinery Avery Malaysia Sdn Bhd

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Applied Agricultural Laj Kejuruteraan Sdn Bhd Agromate (M) Sdn Bhd Resources Sdn Bhd Sri Jaya Limestone Sdn Bhd My Crop Sdn Bhd Iron Ore Mine 1, Malaco Mining Sdn Bhd Wong Ah Dek Kuantan Construction Mega Building and Iron Ore Mine 2, Construction Works Sdn Bhd Eng Lee Sing Sdn Bhd Kuantan

2. Local Community Head Ketua Kampong Ketua Kampong Orang Asli Kg Bakapor Pasal

3. Authorities Jabatan Alam Sekitar Jabatan Kesihatan Daerah Lembaga Minyat sawit – Kuantan, Pahang Rompin Malaysia, Kuantan Pejabat Tenaga Kerja Hospital Segamat Pertubuhan Keselamatan Sosial (Perkeso), Pekan, Pahang Pejabat Hutan Daerah, Rompin Segamat Jabatan Imegresen, Pejabat Perhilitan, Rompin Kuantan, Pahang Kumpulan Wang Pejabat Perdagangan Dalam Simpanan Pekerja, Jabatan Kesihatan Negeri, Segamat Segamat dan Keselamatan Pekerja (DOSH), Pejabat Daerah Rompin Suruhanjaya Tenaga, Kuantan Pejabat Haiwan Rompin Kuantan Jabatan Bekalan Elektrik dan Gas, Kuantan

4. Non governmental organisation WWF Malaysia Malaysian Nature Society Incorporated Society of Planters (ISP) Consumer Malaysia Croplife & Public Association of Health Association Malaysia Red Crescent Society Penang (CAP) Sahabat Alam Malaysia World Conservation Environmental Tenaganita Management and Society (WCS) Wetlands International Research (Ensearch) Womens Aid (Malaysia) Environmental Organisation Regional Environment Protection Society National Consumers Awareness Cameron Highland Complainst Centre Centre for Orang (REACH) Asli Concern (COAC) All Women Action Society (AWAM)

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7. BACKGROUND INFORMATION OF CAROTINO CERTIFICATION UNIT

7.1 Introduction

Carotino oil palm estates subjected to the evaluation could be clearly divided into two distinguished blocks. First block comprised of Asia Oil Palm Estate (AOPE), Pahang Oil Palm (POP) and Maran Estate are located north of Srijaya town. This area is surrounded by other oil palm estates or natural areas such as forest reserve or stateland forest. Also in the vicinity are mining areas that involve total land clearing and subsequent mining operation. The second block is the Hwa Li 1 and Hwa Li2 which is located about 100 km south of the first block. Hwa Li 2 is located at the tri-state boundary (Negeri Sembilan, Johor and Pahang) while Hwa Li 1 is further east bordering Hutan Simpan Lesong within Rompin District. This field inspection that took place between 11 – 15 May 2009 covers all estates and the Carotino mill. Table 7.1 tabulates age profiles of each estate being evaluated.

Table 7.1: Age Profiles of Each Estate in 2009

Age category (year) AOP (ha) POP (ha) Maran(ha) Hwa Li 1 (ha) Hwa Li2 (ha) Total (ha) < 2.5 0 695.3 576.7 0 0 1,272.0 2.5 - 5 268.0 200.3 365.6 0 0 833.9 6 – 10 0 783.9 0 1,462.0 0 2,245.9 11 - 20 1,690.8 193.5 122.3 171.3 1,528.7 3706.6 21 - 25 0 0 0 0 0 0 > 25 154.5 140.6 912.4 455.4 0 1,662.9 Total cultivated 2,113.3 2,013.6 1,977.1 2,088.6 1,528.7 9,721.3 *Total not cultivated 27.5 127.1 163.7 73.2 130.5 522.1 * Total not cultivated includes areas set aside as nursery, football field, building and others, TNB line and roads.

7.2 Landscape view of the land use and HCV areas in the region around the estates.

The purpose of taking a landscape view is to better understand how the palm oil production unit receives and impacts the environmental resources, goods and services of the region and so target issues for the field inspection. To approach sustainability, the expectation is that the estates and mills use these resources efficiently and equitably, impose minimal constraints on natural biological processes, and make efficient and equitable use of the capacity of the local ------SGS (Malaysia) Sdn. Bhd Unit 10-1 10 th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com

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environment to attenuate their wastes – gas emissions to the air, effluent discharged to water and solid waste disposed to the ground. In addition, the estates and mills are expected to be of some benefit to the local economy and society.

Map 1: Land use at the landscape level around the Carotino estates. (Source Dept. Agriculture.)

Map 1 above, illustrates the land-use pattern surrounding the Carotino oil palm estates in southern Pahang at 2002. North is at the top and the grid is metric. Since 2002 relatively little land-use change would have taken place at the landscape level. The five component estates in this assessment are in two groups. Asia Oil Palm Estate (AOP), Pahang Oil Palm Estate (POP) and Maran Estate (ME) are in the north and Hwa Li 1 (HL1) and Hwa Li 2 Estate (HL2) to the south. The landscape issue of interest for this assessment can be viewed through ‘high conservation values ’ (HCV) which concern: biological diversity (HCV 1, 2 & 3), natural

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resource quality and availability (HCV4), as well as the use of land for economic benefits (HCV5). Cultural value (HCV6) need to be viewed at a larger scale. Issues of concern include: • The large contiguous area of oil palm and its effect on ecological imbalance and crop pest management (HCV2, 3 & 5); • ‘biological corridors’ between the forest blocks adjacent to AOP, POP and ME (HCV1,2 & 3); • The isolated lowland forest to east (HCV2 & 3), and rubber areas (HCV5) usually associated with small cultivators to the west of HL2; and • The Lesong Forest Reserve on 3 sides of HL1, which borders with Endau-Rompin National Parks and is recognised as an area of high biodiversity (HCV1, 2, 3 & 4).

7.3 Land administration and settlement in the region.

Map 2 and Map 3 below shows the locality of the estates with regards to administration districts. All estates are outside local authority areas except for HL 2 Estate which is within the Majlis Daerah Bera area, created in 2000. HL 2 would be expected to have consulted with Majlis Daerah Bera on the issues of current management concern for the local authority.

POP, AOP and ME are in the Mukim of Ulu Lepar in Kuantan District, HL2 in Bera in Bera District, and HL1 in Keratong, Rompin Distirct. In the 11 year period between the 1980 and 1991 census, the populations in these districts were all growing at rates that exceeded the state and national averages (see Table 1 below). This was the period when oilpalm estate development was at its peak and supporting local population growth in these rural areas. The average annual population growth then for Ulu Lepar was 14.1% compared to 2.7% for the state and 2.6% for the country at the same time. The other districts where the estates are situated also saw population growth exceeding the state and national averages. In the period that followed, 1991 to 2000, the average annual population growth rate had declined to 1.9% for the state and 1.5% for the country, with local growth rates exceeding state and national averages in Ulu Lepar and Keratong, but not Bera (Table 7.2).

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Map 2: Local authority areas. ( Source: Dept. Statistics.)

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Map 3: Location of Catotino Estates in respect to the Districts ( Source; Department of Statistics)

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Table 7.2: Population census data of the districts between 1980 - 2000 ( Source Statistics Dept.)

Average annual Census dates growth Distict Mukim 1980 1991 2000 80-91 91-2000 Ulu Kuantan Lepar 3,055 14,399 17,028 14.1% 1.9%

Rompin Keratong 18,750 49,376 63,778 8.8% 2.8%

Bera Bera 17,247 32,444 36,035 5.7% 1.2%

Pahang 768,801 1,036,724 1,229,104 2.7% 1.9%

Malaysia 13,136,109 17,566,982 20,139,132 2.6% 1.5%

Census figures suggest that extraordinary population growth rates in the past which were stimulated by estate development are now relatively stable. From a landscape perspective, it would not be expected to see a competing local community demand for land in these areas. The trend for Bera suggests local population is beginning to move away. Bera has an annual growth rate lower than the state and national average. Since we have to assume that births and deaths in the Mukim follow the national average, this decline is thus due to out-migration. Since availability of local labour is an essential component for sustainability, this implies that the estates will either continue to depend on immigrant labour from foreign sources or have to improve their attractiveness to secure available labour from local sources.

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7.4 Soil Suitability.

Map 4: Regional soils and drainage.(Source: Dept. of Agric)

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Map 4 above, overlays the site of the estates on a reconnaissance level soil survey map of the region. Most of the soils on the estates are described as sedentary soils on undulating plains, with some riverine soils in the lowest parts of the estates. From the information derived from map 4, the estates appear to be located on: Class 2 soils – soils with one or more moderate limitation , and Class 3 soils - soils with one serious limitation . These limitations included: nutrient imbalance, gradient, soil texture and drainage. To ensure sustainable production, all these limitations have to be addressed through block design, field preparation and continuous maintenance.

The 2 northern estates (AOPE & POPE) all drain eastwards into the Sg. Lepar. This river has built up mineral sediments and drowned valleys along its length. Similar situation exists for HL2 which drains westwards into the Sg. Segamat and HL1 drains into the Sg. Rompin. The lower reaches of these rivers would receive impacts on improper management and operation within the estates. The concern would be for potential target human and non-human populations as well as wetland ecosystems. It should be noted that one of the environmental services provided by river is their capacity to attenuate and break down waste chemicals and organic compounds. The sustainability of this kind of environmental services, which is shared with other stakeholders, would be compromised if the local capacity for attenuation is not managed and utilized proportionately.

7.5 Rainfall

Figure 1: Reg ional rainfall from January to November with two months interval in

between ( Source Nat. Env. Agency, Sing.)

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The estates receive an ‘east coast’ rainfall pattern with a peak at the end of the year. Average monthly rainfall for the region exceeds a nominal monthly value for evapo-transpiration of 110mm. This year experienced a dry period in February. It is expected that there would be sufficient rainfalls to support sustainable production.

7.6 Topography, local site aspects and tracks of field inspection teams. The topography of the AOP and POP estates are roughly shown in Map 5 and Map 6. The dotted line shows the track taken by the audit team during the assessment. In general, the area is flat with minimal sloppy areas particularly at the southwest of AOP.

Map 5: Topography and aspects around the AOP area

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AOP has been developed on both sides of the Sg. Remi that flows eastward into Sg Lepar. Elevation range is between 50 and 200m with patches of steep slopes on the southwest boundary and low-lying alluvial areas in the middle along the Sg.Remi and the Sg. Lepar on the eastern boundary. Together with POP, the estate surrounds and enclave area occupied by local community stakeholders. To the north and west are FELDA estates. To the south west and south is a buffer of stateland forest that separates the estate form the Berkelah Forest Reserve. The area across the Sg. Lepar to the North West is also stateland forest. Both these areas have been repeatedly logged. (See aspects on state below).

Map 6: Topography and aspects around the POP area

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The topography in and around POP is similar to AOP. Since the Sg. Lepar meanders, areas along the eastern boundary would be expected to be at risk from back flooding from the river, and inundation of the low-lying areas of the estate. There has been repeated logging in the state land areas to the south which may have reduced water quality in the streams entering the estate from the south. The state land to the northeast was once proposed by the Jab PERHILITAN (Wildlife Department) as the Ulu Lepar Wildlife Reserve , and was once known to hold a local population of Sumatran Rhinoceros (HCV1). Until recently, this area was given effective protection by the State Forest Department, but has since been logged. Recent wildlife surveys suggest the Rhinos may now be locally extinct. However, other threatened wildlife will still survive in the area. To the south, there has been extensive mining activity. The streams from these mining areas enter the estate and may carry suspended sediments and minerals where without proper mitigation measures, the impacts could reach far downstream..

Map 7: Topography and aspects around Maran Estate

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General topography and landuse surrounding Maran Estate is show in Map 7. Maran Estate is generally low-lying with streams from the south and west flowing through the estate to the Sg.Lepar in the east. To the west are limestone hills protected within the Berkelah Forest Reserve. Maran Estate does not share a boundary with the forest reserve, but is separated by a narrow buffer of state land. To the north is mining activity on state land. Since streams flow into the estate from this area of state land, there is the same concern for quality of environmental controls at the mine. To the west, the state land forest in the flat area up to the limestone hill has been cleared. The Sg. Berkapur, which flows through the estate, enters the adjacent Ladang Sekilau, flowing past their housing areas and onto Kg. Paya Rambutan. To the east, the estate boundary includes an ox-bow lake now separated from the Sg.Lepar. This area has been identified by stakeholders as a significant wetlands area (HCV3).

Map 8: Topography and aspects around Hwa Li 1

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As shown in Map 8, Hwa Li 1 Estate is bordered by Ladang Suburban to the west, and surrounded on the other 3 sides by the Lesong Forest Reserve. The parts of the reserve that are adjacent to the estate have been gazetted as water catchments, which under current forestry management practices, are not logged. Effectively, the estate is surrounded on 3 sides by an HCV1 protected area. Flowing through the estate from east to west is the Sg. Jekatih that flows into a neighbouring oil palm Suburban Estate. Main access to the estate is from the southwest corner. This road passes through state land forest, but does not appear to pass through any area of forest reserve.

Hwa Li 2 (Map 9) is located at the tri state boundary of Pahang, Negri Sembilan and Johor). The western boundary of the estate is the Sg. Palong which also forms as State boundary between Pahang and Negeri Sembilan.

Map 9: Aspects and topography around Hwa Li 2 Estate

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The river itself is outside the estate, and beyond estate management control. This separates the estate from the FELDA Tanah Palong Lapan in Negri and Kg. Jeram Panjang to the south. There is a land boundary along the south with FELDA Palong Timur. To the north is an Orang Asli area of Kg.Pasal. The map of the Orang Asli area was provided by the JHEOA through the State Forest Dept. It is drawn at a small scale and though this is show an overlap with parts of the estate, this is understood to be a map artifact and there is no actual boundary dispute. Since the FELDA settlers are a managed economic community, any impact to the local community from the estate would be minimal. The nearest community that could be an important stakeholder as far as the estate management is concern is the nearby Kg.Pasal, an Orang Asli settlement. To the north east, there is a buffer of state land on a relatively steep slope that separates the estate from the Bukit Kerisik Forest Reserve. Despite the slope of the area, this is classed as ‘production’ forest. Streams from this area enter the estate.

8. GENERAL FINDINGS OF FIELD EVALUATION

An overview is given here of the general findings from the field inspection. For details, see the discussion on the findings described under each RSPO criteria below.

Information on risk aspects at the mill is posted on the mill’s notice board and staff and visitors are provided with suitable PPE required. As part of guidance to workers to avoid dangerous areas, pathways within the mill were marked. The heavy traffic areas for the capstan and crane were marked on the ground. Fire extinguishers were provided at strategic locations within the mill (Photo 1). Copies of SOPs are made available at each workstation with support information depending on the risk, for example, CPR response to electrocution. Based on records, staff at the mill have been provided with the awareness raising and training on various aspects of OSH. Areas of high risk in term of noise is mapped accordingly (Photo 2)

Photo 2: Fire extinguishers are placed Photo 1: map showing location of high risk areas within the mill at strategic locations.

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The feeder ramp is ribbed to catch dirt, which illustrates that though this is not a new mill, there has been an on-going effort to improve product quality with new facilities. Average OER of 20.6 % is acceptable considering the age of the mill. Equipment selection is appropriate for the scale of operations, and the operations and maintenance practices were observed to be at or above industry norms. Fibre and shell were automatically fed to the

boiler, controlled by steam pressure sensors. This Photo 3:6: EFB feeder ramp regulates the amount of fuel consumed, thus reduces the unnecessary burning that could generate excessive CO and CO2 emission (Photo 4). Ideally, fibre fuel would be stored further away from the boilers, but with minimal back-flames from reduction burning, fire risk may be low. The mill is currently incinerating EFB (with approval from DOE) and exporting the ash to the field. The incinerator appears to be working efficiently, with minimal nuisance of fly-ash. However, unless the receiving estate can justify the use of ash, the exercise only serves to reduce volume and transport costs for a waste product, while contributing to GHG. Based on observation and statistical information of water quality monitoring, POME treatment system in place was found effective in reducing suspended matter, COD and BOD (Photo 5).

Photo 7: Clear water at the final treatment pond Photo 4:5: Stack emission at the mill

At the time of field evaluation, a final treatment plant for the POME was being constructed. This would use mechanical and biological filters on the effluent prior to land application. The new facility was reported to be capable of reducing BOD to below 50 PPM.

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In the estates, some of the boundary marker stones have been recovered and areas where the original planting crossed estate boundary and encroached into river reserves, have been corrected. But this exercise has not been completed for all estates. At Hwa Li 1 which has a common boundary with the Lesong Forest Reserve (Photo 6), the boundary has no official boundary stones place by the Land Survey and Mapping Department (JUPEM).

It should also be noted that this particular boundary is protected by both dry moat and electric fence to control elephants coming in from the surrounding forests. Despite non-lethal attempts to control, elephant damage has created some locally significant production losses. The elephant is considered endangered, but not critically so is not defined as an HCV1 species. It is reported that discussion has been made with the Wildlife Department on the option for translocating individual problem elephants away from the Lesong Photo 8: Clear demarcation of forest reserve boundary at Hwa FR area. This discussion should be shared Li1 Estate with other stakeholders with a general interest in wildlife, or expertise in elephants. This will avoid negative stakeholder response and better ensure a long-term solution that creates the minimal negative impact on endangered species is reached. Other aspects of Integrated Pest Management (IPM) are being addressed through field monitoring programmes, promotion of beneficial plants for the predators of pests, provision of nest boxes for barn owls, as well as supplementary spraying where considered necessary. In common with most east coast estates, problems with leaf-eating pests are relatively minor. As elephants are attracted to estates from the surrounding forests, so too are predators of leaf-eating insects. But as the forest patches on the state land surrounding the estates are cleared, this current benefit provided by the presence of natural forest may not be there for long. In the near future, the estates may need to prepare to be more self-reliant for IPM controls by creating their own habitat for predators of leaf and fruit pests. Where there are large rivers flowing through or along the boundary of the estates, these rivers have been marked with notices to remind to staff to avoid applying agrochemicals to the area involved (Photo 7). Where replanting has been recently undertaken, these areas are not planted. Instead, natural vegetation is encouraged to rehabilitate the riverine buffer.

Photo 9: Riverbuffer is identified for protection

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It was observed that there are river banks that have been damaged and subjected to erosion where the estate management is actively rehabilitating through replanting with native riverine vegetation primarily for stabilising the soils, as well as to attract wildlife (Photo 8). This attempt at rehabilitating the river banks will serve multiple purposes and potentially contributing towards a functional ‘biological corridor’ along rivers that cross the estate as well as providing potential habitat space for the predators of crop pests. Steeper areas are terraced and the estates build ‘smiling’ terraces to help divert silt eroded by run- off water back on to the terraces. But the amount of ‘back cutting’ on the terraces may not be sufficient for the erosion risk of the local soils in the area as many of the terraces appear to have reached their maximum capacity to trap sediments. Semi-detailed soil mapping has been done but this may need improvement so that it could be used to differentiate the soil types for their conservation management requirements. An additional concern is that local steep areas have been cleared and planted in ravines where future Photo 10: Planting on riverbank with native species soil conservation may prove challenging. Thus, further improvement may need to be made to coordinate field information with planning as a tool for guiding and supervising the contractors during replanting. It should be noted that as a general rule, ground cover in replanting areas was well established. Noted also were remnants of natural vegetation which provide a potential habitat service for birds that predate on rats. It was also observed that old palm trunks and fronds have been cleared from the replanted sites. To avoid burning, the old palms are pushed over, mechanically chipped and then buried to reduce risk of breeding rhinoceros beetles (Photo 9). In localised areas, low levels of erosion from slopes and accumulation of sediments in stream beds is a chronic problem (Photo 10). This needs to be addressed with management techniques that suit local soil conditions. At present, there is no monitoring for the sources and rate of soil loss tPhoto 11: Old palms are felled and the trunks are hchipped and left to rot onsite r ough erosion. It is not known which soil types and areas are most at risk and which field practices contribute to soil erosion, the associated nutrient loss and eutrophication of streams.

Photo 12 : Without proper measures, top soil will be eroded down the slope

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In areas with significant slopes, fronds may not always be stacked along contours (Photo 11). It is understood, that frond stacking direction is sometimes alternated as a response to soil erosion control; however collapsing individual platforms, exposed roots bases and leaning palms suggest that this approach may not be sufficient to control erosion.

Surface run-off water carries sediments and nutrients into water reducing water quality. Water quality is also impacted by leachates from improper waste disposal (Photo 12).

Photo 13: Fronds were stacked along the contours as part of measures to minimise erosion

Current waste disposal management does not have an adequate set of SOPs for their construction, Photo 14: Improper disposal of boiler ash operations and closure. Nor are there guidelines for the selection of waste disposal sites. Waste management is a public health issues as well as an environmental management issue.

The workers were observed to use adequate PPEs appropriate to their general duties (Photo 13). In general, workers appear to be comfortable with the equipment issued and know how to use it. It was noted that some of the goggles in use were prone to ‘fogging’ and the use of dust masks may be of limited benefit to the sprayers. This indicates there is still room for discussion among staff and workers on opportunities for further improvement through existing discussion mechanisms. For sprayers, their PPE is washed and dried after use. Water is available in the mixing area for emergency body wash. Following procedures, chemical containers are rinsed as required and the empty containers stored pending final disposal. In general, estate workers appeared to understand their SOPs and are consistent in their practice. OSH requirements were Photo 15: Sprayers were observed with observed by the workers. proper apron, glove, face mask and rubber boots

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In the more accessible areas, the field were well maintained with clean circles and weeds kept under control. But some of the more remote areas showed signs of poor field supervision and a lower quality of work. This can be taken as a symptom of the difficulties of constantly maintaining sufficient workers and motivating those workers on hand to perform to a consistent quality. Lower standards for fertiliser application, delayed VOP control and maintenance of circles and ineffective protection of eroding slopes are among the indicators that suggest maintaining sufficient capacity among workers may be a future issue that could have an impact on sustainability.

Photo 14: Mechanised harvester used in some estates Photo 15: Drip irrigation system used was proven to as part of effort to minimise demand of manpower safe water and control fertiliser application in the nursery

To address future sustainability of workers, the estates are looking towards mechanisation of some of the operation. Mechanised collection of FFB for harvesting has been implemented to increase the efficiency of the harvesting teams. Illustrated in the picture above is the machine that can be used in on different soil conditions (Photo 14). Carotino is conducting trials with new planting material. Though nursery practices could be improved – lining and use of larger bags, clonal planting material offers the promise of improved fruit and nut quality. The company use individual drip irrigation in the nursery to ensure optimal water and nutrients feed for the individual seedlings as well as making savings on water use and pumping effort (Photo 15).

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A summary of the impressions gained from the field visit are given below, with further details given in the discussion on the individual criteria of the MYNI. The impression gained is that the company has identified objectives and implemented work practices that indicate it wished to move towards sustainability. There appears to be a willingness to take responsibility for their environmental foot print, and develop their capacity to address the RSPO principles for sustainability. The indicators that support this opinion include: The estates and mill appear to have a history of effective management and field evidence suggest they have not experienced periods of neglect that could cause chronic impact to long term sustainability. Fields, even when old are productive, and missing points appear to be in areas damaged by elephants or at risk of flooding. A ‘zero burning’ policy is in place and being supported through management practices during replanting. IPM has been accepted as a practice, with effort to reduce chemical use. The mill, though not new, appears to perform efficiently, and comfortably meet environmental and safety standards. It appears to be maintained by a well motivated and competent team. Continuous investment in mill facilities has helped it move towards compliance with standards expected by RSPO. SOPs are documented, accessible and training provided. Training seems effective but it is recognised that there are still local lapses in field performance. There are systematic mechanisms to discuss OSH and work matters for each level of operations including workers. The company is making efforts to ensure future crop quality through current trials with clonal material, and address efficient use of harvesters through mechanisation trials. Water quality monitoring for major rivers is being done and riverine restoration is taking place along those major rivers. Water management skills are adequate for local conditions. And at replanting, areas along water courses and ravines have been conserved.

The areas identified as weaknesses where improvement is required include: Management of waste – domestic as well as wastes from processes. Currently some wastes from estate operations are being stored, since there is no prescription for final disposal. Soil erosion is not monitored and capacity building for prevention and remediation is still required. Further growth to monitor field performance and work quality is needed, and improve understanding among workers for work quality at all levels of estate practice; but it is understood that under the current employment model for limited-term foreign labour, this may not be practical. And in anticipation of less benign future conditions for IPM, capacity to monitor and manage the ecological condition of the estates will need further investment.

9. EVALUATION RESULTS

Results of the evaluation are tabulated below. The findings made under each criterion are discussed where non compliances raised are raised against individual indicator of the MYNI

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2008. Classification of the non Compliance to the RSPO requirement is categorised as tabulated in Table 9.1 below. Table 9.1: Criterion of Non Compliance and Explanation

Level of Non Compliance Explanation Minor CAR The management system applied complies with parts of the requirement or the system was inconsistently implemented. Improvements are required. Minor non compliance to the stated requirement Inconsistencies in documentation and implementation Will not prohibit recommendation for certification Major CAR The management system failed to comply with the requirement or the written policy, procedures etc were not implemented. Major non conformance resulting in breakdown of the whole system Major failure in documentation and implementation Will prohibit recommendation for certification

9.1 Findings related to the general MYNI 2008 Summary of the assessment findings under each criteria were presented to the company management at a closing meeting held on 15 May 2009. Tabulated below are detailed findings that described the compliance and non compliances (raised as CAR) under each criterion.

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Criterion 1.1 Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation on decision making. Carotino Sdn Bhd has a website for promotion of its products. The website also contain brief information about the company’s corporate structure, its policy and management objectives. Summary of management plan available on website that include social and environmental issues “Guidelines on mechanism for information requests by stakeholders” have been documented. Procedures for handling stakeholders are available. The company maintain a ------SGS (Malaysia) Sdn. Bhd Unit 10-1 10 th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com

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file on stakeholder comments/requests and has established a system to record the comments/requests and actions taken to address it. The available stakeholder list contains the name, address and contact number of individuals and agencies relevant to the mill and estates operation. Carotino mill located in Srijaya only sourcing FFB from own estates that currently being evaluated. The mill does not purchase FFB from and does not deal with out-growers or smallholders. In fact, some of the FFB generated by Hwa Li 2 estate are being sold to other mill due to surplus at the Carotino mill.

Criterion 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes.

It was observed during the assessment that the company has clear land titles on all the land / estates involved. Standard operation procedures are also available. Management plan summarizing the company policies and good management practices are now publicly available on the website ( www.carotino.com ). Policies, SOPs, work instructions etc are pasted on notice boards at the estate and mill for workers and public view.

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Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. List and copies of legal documents and international treaties and agreements are available Current valid licenses and permits are framed and displayed in the mill and estate offices Complete list of legislation and regulation relevant to oil palm plantation management and mill operation is available. At the time of assessment, it was observed that copies of relevant legal documents are available. Mechanism to track changes in legal requirements has been developed and the personnel responsible for monitoring compliance to laws & regulations are formally identified in the guideline. It was observed that the company have the necessary renewable permits pertaining to crop production and milling which are displayed in the form of certificates in mill and estate offices. Legal requirements for machinery maintenance and power generation have also been complied with where records of inspection and communication with relevant authorities are maintained.

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Criterion 2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights.

There are clear land tenureship documents for all estates under the group, as tabulated below. • Hwa Li Division 1 – under 13 different titles (or PT numbers) which are lands under the ownership of Syarikat Keratong Sdn Bhd, a wholly owned company under JC Chang Group. • Hwa Li Division 2 – a single title PT 2389 HSD 2850 owned by Carotino Sdn Bhd • Maran Estates – under 6 titles belonging to Richley Corporation Sdn Bhd, which is under Asia Oil Palm Sdn Bhd • Asia Oil Palm Estate – under 6 land titles owned by Asia Oil Palm Sdn Bhd, a company under JC Chang Group • Pahang Oil Palm Estate – land belongs to Pahang Enterprise Sdn Bhd, a company under JC Chang Group Current activities on the land complied with legal landownership title where it was specifically spelt out that the land is to be planted with oil palm. The audit team observed adequate physical demarcation on the ground (i.e. boundary markers) but apart from Hwa Li 2 and Maran Estate, other estates are without boundary stones (Minor CAR-01). It was however observed that the estate boundaries are clearly marked where drains were dug. Electric fencing was erected along boundaries bordering natural areas such as Forest Reserve. Active communication in the forms of letters with the land surveyor and land office were also observed showing commitment of the management to formally survey and demarcate the estate boundaries.

Criterion 2.3 Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent.

All plantations were established long time ago (in 1960s/70s) and they did not diminish the legal rights, or customary rights, of other users in the vicinity at the time of planting. The lands planted were all alienated lands belong to a specific owner prior to planting. There were no records to suggest that the use of the land for oil palm planting by Carotino diminish the legal or customary rights of communities living in the vicinity of the estates. Nevertheless, the surrounding communities are allowed access to plantation roads to commute from one village to another or for their daily needs. The following communities are within the vicinity of the Carotino estates: • Orang Asli in Kg Pasal (at the fringe of Hwa Li 2), • Kg Tomsel Anak Sungai Bekapor and Kg Ulu Sungai Bekapor (outside Maran Estate) • Malay community (50 households in Kg. Mengapur at the fringe of Maran Estate) Clear physical boundary demarcation with legal land title was observed during site visits. There were no dispute/claims by the neighbours on the estate’s land.

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Criterion 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability.

Annual budgets for the mill and estate operations are available. Budgets included limited (less than 0.1%) allocations for social & environmental/ biodiversity conservation programme. This relatively low percentage of allocation is due to accounting system used. If budget for other activities (currently placed as other development expenditure) related to social & environmental/biodiversity conservation is taken into consideration, the percentage will be higher. The annual plan in the form of annual budget determined by the Headquarters for each estate is available. The budget include allocation for the operation, estimate on expenses for harvesting, social programmes as well as possible environmental safeguards. The annual plan combined with the maps indicating the boundary, planting blocks, topography, drainage, access roads and infrastructures within the estate forms the plantation management plan for the whole certification unit is available. Crop production is monitored on a block by block basis for individual estates and a feedback mechanism is in place to capture the crop production trends and used to support plan for continuous improvement. Through visits by the Plantation Controller and Plantation Adviser, the internal monitoring was carried out where ‘plantation visiting report’ is produced. The report focused on performance of the estate compare to target and make recommendation for improvement. Replanting programme for all the estates is available as follows:

Estate 2007 2008 2009 2010 Maran 0 197.0 186.3 193.4 Asia 0 0 0 0 Hwa Li 1 0 0 0 0 Hwa Li 2 0 0 0 0 Pahang 304.3 191.0 200.00 0 Total 304.3 288.0 386.3 193.4

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Criterion 4.1 Operating procedures are appropriately documented and consistently implemented and monitored

A set of SOP has been drafted with copies posted at work stations and muster areas. There is a register of the SOPs and notes on their current status viewed in the “ Policy File” . SOPs were viewed in English and Bahasa Malaysia an example of which would be the “ Panduan dan Operasi Keselamatan untuk Mencegas Bateri” . It should be noted that the workforce include nationals from Indonesia, and the Indian sub-continent. SOP are not comprehensive, but where the work subject is concerned with the operation of machinery, powered equipment, handling of agro-chemicals, use of PPE, issues concerning OSH, activities regulated by laws, as well as every-day crop handling and estate maintenance, the SOPs have been drafted. In addition, documented procedures also include numerous guidelines (see 4.3.1) and works instructions for specific activities. These are considered to be appropriate documentation for the present, with guidelines being sufficient to provide the objectives for work tasks and the flexibility to be adapted for individual field conditions.

The current strength is that SOP is in place and being effectively transmitted (see 4.6.4, 4.8.1) and practiced. The weaknesses relevant to operating procedures relates to a lack of a systematic monitoring mechanism that is a part of a system for making continuous improvement In general, systematic monitoring on the suitability of the SOP or guidelines themselves is not in place to allow further improvements in the documentation system (Minor CAR-02) . Work quality itself is monitored within each working circle, with further monitoring through the Agronomic and Plantation reports. These reports generally identify remedial activities, when needed, for the activities observed.

Criterion 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to a level that ensures optimal and sustained yield.

The company practiced zero burning and applied EFB, boiler ash and POME into the field and evidence of monitoring where it is applied. At the time of the assessment, the company is putting in place a new treatment plant and piping system to allow POME field application to irrigate wider areas. Annual fertiliser recommendation is stated in the budget with the appropriate allocation. Application progress is recorded by date and block and mentioned in the half-yearly review Examples include: “ Progress Report May 08 – Nov 08” . Annual leaf sampling and sampling for soil nutrients have been undertaken with most recent records viewed. Currently, no POME is being applied to the field while new pipes are being laid to the fields and further investment made to reduce BOD through POME treatment. EFB and ash application are planned by blocks, and monitored by direct supervision of work. Ground cover is established in replanting areas to protect soil nutrients from excessive leaching by rain water run-off, and soft weeds are tolerated in the fields for the same beneficial effect. There is Zero-burning policy in place and field observations indicate compliance is consistent. The practice in replanting areas is to chip the palm stems, and bury them in the fields to conserve organic matter and nutrients in situ while reducing risk of breeding rhinoceros beetles.

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The company applied methods to minimise soil erosion and maintaining soil fertility (e.g. ‘smiling’ terraces and cover crop for replanting). Plantation Visit Report prepared by Plantation Adviser providing recommendation on management improvement is available.

Criterion 4.3 Practices minimise and control erosion and degradation of soils. Field observations generally indicate that soil mass is being effectively conserved by the current management practices. Currently, blocks scheduled for new planting are surveyed prior to work, slope inclination measured, areas requiring terraces mapped and areas considered too steep for planting identified. SOPs are in place for terracing and other practices to conserve soil mass from erosion. These include ‘smiling terraces’ where run-off from roads is diverted back to the terraces, silt pits, etc. There are steep areas exceeding 25 o within the estates where old palms have been felled and the area either been replanted or set aside without being planted. Such areas will probably require management practices beyond those normally employed on less steeper slopes. The company has developed a document ‘Guidelines on Managing Steep Areas Planted with Oil Palms’ to guide management of such areas. These areas of high erosion risk are essentially HCV4 areas and need conservation management. Maps that identify soil management classes – soil types and slope classes were viewed for Hwa Li 1 and are reported for each estate. But these maps have not been revised to identify the locations and measure the extent of fragile soils. To avoid bare ground, field practices include planting ground cover, and encouraging non- competitive soft weeds. An annual road maintenance programme is routinely prepared, and a five-year road resurfacing programme in place that follows the replanting schedules where applicable. There is no peat in any of the Carotino estates. All the estates are on dry undulating lowland area. Among the strengths is that ‘Best Management Practices’ mentioned in RSPO guidance for fragile soils are all consistently applied with one exception – contour stacking. It is practiced, but not for all slopes including slopes at risk of erosion along harvester paths. This inconsistent practice suggest two possible weaknesses: the lack of a systematic and objective approach to monitoring the occurrence and rate of soil erosion’; and a lack of a systematic management decision making process that can evaluates between two apparently conflicting objectives of soil conservation and the alignment of harvester paths.

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Criterion 4.4 Practices maintain the quality and availability of surface and ground water The major water courses including the main streams that flow through the estates are managed and monitored for their conservation. A buffer zone on both banks has been identified, mapped and marked in the field prior to replanting. SOPs for the management of these areas prohibit the use of agrochemicals, with field workers trained appropriately. In POPE, the buffer zones have in places been planted with native species including figs- Ficus fistulosa , and Petai Jawa -Ipil-ipil . Areas in ravines with seasonal streams have also been identified for supporting management. However, not all areas waiting replanting have had their permanent streams identified and mapped for riparian conservation nor the smaller streams occur in areas that have been replanted prior to the current SOP, have been considered for remedial attention. ( Minor CAR -03) The issue seems to be a lack of clear working definition of a water course. Guidelines produced by state authorities are silent on streams less than 3 m width, but smaller streams still need to be protected to support the RSPO standard. Impoundments have been constructed across streams arising within the estate, but there are no dams or weirs across major waterways or waterways that pass through the estates. Water quality sampling is made in major streams that pass through the estate. Daily entries of rainfall are made into the “ Rainfall Record” book and the summarised monthly data since 2001 are available. At the mill, water usage is monitored using calibrated meters after filtration. There is no metering of the raw in-coming water. The amount of water consumed at the mill is reported as tonnes per tonnes FFB processed. The mill also supplies the estate and domestic users at the Pahang Oil Palm Estate (POPE).

Criterion 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques.

The “ Guidelines on Integrated Pest and Disease Management of Oil Palm” is the primary document for the IPM system. This covers subject areas that include: monitoring, chemical controls, calibration of spraying equipment, management of leaf-eating caterpillars, rats, ganoderma, management for barn owls, etc. The extent of IPM implementation is monitored and the results recorded include: the census on Barn Owl occupation of nests and breeding status; pesticide usage; progress for planting species beneficial to the predators of pests; monitoring the use of pesticides; recording the use of, and application sites for rat bait; monitoring pest damage to crop in the field. Included in IPM resources is the use of non-lethal trenches and electric fences to dissuade intrusion into the estate by elephants. The field data collection for monitoring the incidence and severity of pest events has been recently standardised using common data entry forms. A record is maintained of the amounts, dates and blocks where pesticides have been ap plied. This includes the use of rat bait; Chlorpyrifos for termites, Cypermethrin for rhinoceros beetles, Armitraz for red spider mites, etc. Pesticide usage is reported in the “ Monitoring of Pesticide Usage” in units per tonne FFB and per tonne CPO produced. This is updated every 3 months. In the period July – September 08, the rate was 0.15 gm per tonne CPO and between January – March 09 the rate was 0.14 gm per tonne CPO. There are no small holders or growers that require IPM training. The company demonstrates its strengths by pro-actively seeking opportunities to reduce the ------SGS (Malaysia) Sdn. Bhd Unit 10-1 10 th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com

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use of chemicals – options to use biological controls to control rhinoceros beetles population. A possible weakness could include the lack of data, analysis and mapping of sub-critical incidences of pest damage to monitor and prepare for potential ‘hot spots’ for future pest problems. Essentially the estates have a deterministic approach to IPM that substitutes the prophylactic use of chemicals with biological or physical means, and reacting pest damage exceeds critical thresholds. Another area of potential weakness involves stakeholder consultation. Since the source of potential pests include neighbouring land, consultation with the stakeholders to integrate local IPM effort concerned could be beneficial. Concerning the low frequency but persistent intrusion by elephants, the Jabatan PERHILITAN -the agency responsible for wildlife management, has been consulted but not NGOs who may have an interest in wildlife conservation.

Criterion 4.6 Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified the national Best Practices guidelines. Where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented .

A written justification for agrochemical use can be seen in “ Justification for: Weedicide usage; insecticide/rodenticide usage” . The chemicals listed for use by the estates are registered under the Pesticides Act 1974 and are referred to in the Chemical Health Risk Assessment (CHRA) with the exception of ‘Pursuit 50A’. It was reported that ‘Pursuit 50A’ was not currently in use by the estates. The miss-match of lists suggests that the inadequate implementation of the procedure for the listing of chemicals and the identification of their risks. (Observation) . Storage of chemicals was observed to be consistently in compliance with the Occupation Safety and Health Act 1974. Information on the usage and hazards of chemicals was sourced from the suppliers and translated into Bahasa Malaysia, and displayed at the workstation – chemical store. This information has been explained to the workers concerned by the supervising staff for the working level, and they in turn were trained by the estate management. A record for training for the use of ‘Racun’ was viewed for 27/04/09 with a follow-up training exercise on 05/05/09. Attendance records and training materials were available. The annual medical surveillance is carried out in compliance with “Guidelines on medical surveillance” DOSH , with reports by the responsible medical officer is available. No women are currently working as sprayers, and no WHO Type 1 chemicals are stored or used by the estate. The last bottle in stock was a liter of ‘Cobra’ - a 1b chemical, which has been returned to the supplier. No spraying from aircraft is practiced and there has been no request yet for CPO testing by purchasers. The current book that records pesticide use has entries that go back to 01/11/07. The record identifies the active ingredients, blocks sprayed, amounts applied and any follow up application. The strength of the estates is that they have the will and resources to take a responsible approach to the use of chemicals. The only possible weakness maybe that the system that would begin with the register of aspects of estate activities and the potential effects and impacts (see 5.1) is not well documented. This register should be related to a potential list of

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chemicals that could be used and the CHRA for those chemicals and implications for OSH. All these should be subjected to periodic reviews and updating.

Criterion 4.7 An occupational health and safety plan is documented effectively communicated and implemented. Health and Safety Policy and Prosedur Bekerja dengan Selamat are available . A health and safety committee with membership from the management and workers is formed at the mill and estate level. Carotino Sdn Bhd has adequately documented the occupational health and safety plan, which includes a health and safety policy, work procedures, training, and monitoring system. The implementation of health and safety policy and procedures are considered adequate. Accident records are adequately maintained. It was evident that the mill has taken additional step to form an emergency response team. Monthly accidents records are compiled and submitted to Jabatan Kesihatan & Keselamatan Pekerjaan (JKKP) Pahang. Of the 70 mill workers, 35 are Malaysians and have SOCSO while the 40 foreign workers are covered under Foreign Workers Compensation Scheme Policy, as per the Workmen Compensation Act 1952 and Workmen’s Compensation (Amendment) Act 1976, which includes repatriation expenses and personal accident coverage (accidental death, permanent total disablement, temporary disablement and medical expenses). In all estates and mill site, sign boards on health and safety are displayed at appropriate places such as main entrance, management office, workshop area, along main road and workers’ quarters. Workers have been adequately trained in safe working practices and PPE supplied for all workers, both in the estates and mills. There is a daily briefing by the assistant manager during the morning muster call for workers prior to commencing work, during which workers are reminded of OSH requirements and their PPE checked, to reduce consumption of water and power; and raise awareness to workers on RSPO and matters related to their welfares (such as levy increase, cleanliness). Besides, small groups based activity (for harvesters, sprayers, manuring workers, drivers and general workers) discussions are also held from time to time. Records on muster announcement are available. The workers are also tested on their knowledge on RSPO, safety and health measures to be taken from time to time. In Hwa Li1, Hwa Li 2, Pahang Oil Palm Estate and Asia Oil Palm Estate, discussion with workers indicated that they have better understanding on RSPO, especially on health & safety and cleanliness of the environment. Field visits in the estates showed that workers wore PPE while performing tasks such as fruit harvesting, spraying and manuring. In addition, all “mandors” are given first aid kit before daily work commencement. The estate management has also increased their annual budget on OSHA PPE. In Pahang Oil Palm Estate, the budget allocated for this item increased from RM5, 000 (2007/2008) to RM8, 000 (2008/2009). The “ Safety and Health Plan” (SHP) document was viewed. This includes a policy on the health and safety which is filed together with other policies available for public viewing. A safety and health risk assessment has been carried out and is documented. There is an awareness and training programme which involves safe working practices, precautions related to the equipment employed and the use of PPE. The workers do a health & safety self-

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evaluation after each training session. PPEs are issued to workers, but there is no evidence to link the PPE issued to a hazard assessment for the activity (Observation) . The SHP identified the persons responsible for OSH in the estate and OSH meeting records were viewed in the Jabatan Keselamatan dan Kesihatan Perkerja (JKKP) meeting file. The SHP discusses accident and emergency procedures and these have been presented to staff in training sessions. Workers are given training in the use of First Aid and First Aid boxes are provided for each work station and to work supervisors in the field. An accident investigation file is maintained with completed “ Borang Permeriksaan Kemalangan, - Laporan Kemalangan” . The JKKP have a form to record accident and chemical poisoning. The LTA records are maintained with the current records going back to Feb 2008. Data is summarized as: 1) fatality rate, 2) incident rate, 3) frequency rate, 4) severity rate. All workers are covered by insurance where the relevant insurance policy was observed “Foreign workers compensation scheme policy. No: xxxxxxx). Local staffs are covered by SOCSO where up to date receipt of payment is available. In addition, the local staffs are also covered by insurance but the details of the insurance policy are maintained at the company’s head quarters. The current strength of the estates and mill is that they have the ability and the support from the staff and workers to address OSH issues. With such support plus advises and monitoring from the JKKP, the OSH application at all level could be strengthened and improved. The weakness as noted in the observation above is that without a register of aspects of estate and mill activities (see 5.1), there is no base line information on which to relate potential hazards, assessment risks and criteria for suitable PPE.

Criterion 4.8 All staff, workers, smallholders and contractors are appropriately trained

The file on “ Training programme” was viewed. This contains data on the types and dates of training session given, with the individuals who attended and a self evaluation by each individual on the new knowledge that they could internalize from each session. However, there is no data kept for each worker on the training they have not received, nor is their data from systematic monitoring of their working performance after training to ensure training has been appropriate ( Observation ). It was reported that Estate Hospital Assistants (EHA) were given training on chemical use and the law by the doctor concerned with CHRA. As in all work places, there are inevitably some minor lapses in operating procedures – un attended and unsheathed harvesting knives, but as a rule, workers and staffs have accepted training according to documented procedures. The weaknesses include: formal training schedules that cannot be frequent enough to match the rate of movement of workers between jobs, making workers reliant on supervisor/peer training in their working sections; the absence of a systematic monitoring that evaluate worker’s performance after training, which evaluates the effectiveness of both the training given and the need for remedial training . Training programme and training records are available. However, the individual training record that could lead to evaluation and monitoring of performance for the training need of each worker is not properly maintained (Observation ). At the mill level, evidence on training program, assessment & records of training for employees are kept for lab staff (CHRA), storekeeper (CHRA),engine drivers (CHRA), ------SGS (Malaysia) Sdn. Bhd Unit 10-1 10 th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com

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Boilermen (CHRA), electrician (CHRA & welding, workshop staff (CHRA & OSHA), 2 supervisors & 38 workers (CHRA & OSHA, power point presentation). RSPO training for all staff and workers was also conducted in early 2009. In this special training, RSPO standards (i.e. Piawaian RSPO Ladang Pahang ) was laminated and placed in their residences. Record showed that the standards include the use of PPE, cleanliness, hunting prohibition, no open burning, prohibition of illegal activities and other health and safety measures to be observed. Discussion with some of the workers showed that adequate training has been given to the workers. In general, workers were able to explain what RSPO is and their role in achieving RSPO requirements. In all estates, training programme is planned and implemented as demonstrated by two estates. In Hwa Li Oil Palm Estate Division 1, records showed that the annual training program in 2009 comprises first aid training, internal training for tractor drivers on tractors maintenance, in-house training for manuring gang, in-house training for harvesters, fire drill training, and in-house training for herbicide sprayers. Attendance list signed by trainees and trainer for each training is kept in file. The participants are tested verbally on their understanding of the training. In Hwa Li Oil Palm Estate Division 2, plan is made for training of drivers and manuring workers, spraying and harvesting workers, with details such as month of training, target group, workers involved, subject matter and trainer. Attendance list is documented. Field discussion with seven Indonesian workers (2 harvesters, 3 sprayers and 2 manuring workers) in Pahang Oil Palm Estate and Asia Oil Palm Estate said that they were given proper training before task commencement. The supervisors explained and demonstrated to them the best practices to ensure their health and safety while performing their tasks. They were provided safety helmet, ear plug, goggle, mask, apron, gloves, sickle and chisel cover before commencing the related relevant tasks. The health and safety training for the workers has brought encouraging responses. According to the hospital assistant (HA) in-charge of Asia Oil Palm Estate, Pahang Oil Palm Estate and Maran Oil Palm Estate, with the implementation of RSPO requirements on PPE, the number of injury caused by falling fruits and fronds has reduced in the last two years.

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Criterion 5.1 Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. It is noted that all estates and the mills were established prior to the legal requirement of an EIA. In 2008, the “ Social and Environmental Impact Assessment” (SEIA) was prepared which provided a generic list of potential effects from company activities and proposed some mitigation measures. Though this document can be used as the basis for identifying the general aspects for developing an approach to taking environmental responsibility and conservation of natural resources, it is too weak to support management needs. It does not present: a systematic risk assessment of estate and mill activities; the systematic identification of the social, environmental and biological aspects that could arise from these activities; an identification of

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the effects and mapping of site of potential impacts; an identification and mapping of site- specific pathways and targets; and schedule and methods for review and update. The current SEIA does outline some actions for mitigating negative impacts – biodiversity, waste, mitigation of pollution, continuous improvement, but because an absence of a system aspects list, there is no mechanism to assess how comprehensive is the list for mitigating activities. Also there is no record that the SEIA descriptive assessment and proposals for mitigation were presented for stakeholder consultation and review. In summary, there is a general lack of environmental improvement plan that were developed through stakeholder consultation ( Minor CAR-04). Since there are no outstanding social issues concerning local community and workforce, or on-site biodiversity concerned issues affecting HCV 1, 2 or 3 issues that would probably have been raised through stakeholder consultation, the inadequacies of this document are considered as technical rather than material that is why the issue raised is not considered as major. The strength is that there is a document that constitutes a first public statement on potential aspects of the activities in the estates and mill. The weakness is that this document makes no attempt to systematically review activities, identify aspects and site-specific impacts, site- specific mitigation proposals, and present the documents for stakeholder review and consultation.

Criterion 5.2 The status of rare, threatened or endangered species (ERTs) and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations A “ Conservation Assessment of Carotino’s Peninsular Malaysia Estates Conservation Values and recommendations” has been prepared that identifies habitat areas of significance within the estates and makes recommendations for their conservation. This includes a timetable for implementation of riverine buffers and suggests support for the conservation of lowland forest and karst areas surrounding the estates. But the report does not give any maps to identify the location and extent of potential HCV areas within the estate nor regard the estate as a stakeholder which would also have its own HCV interests – HCV to support IPM ( Minor CAR-05) . There is a general prohibition on hunting and fishing within the estate. Information signs are posted and the control practice is being effectively implemented. Strengths include management of riverine buffers and recommendations for the restoration of vegetation along the river banks. This should improve the capacity of the soil in the buffer areas to attenuate agrochemicals in soil water before they can enter waterways as well as trap sediment in surface run-off. Restoration of vegetation should also help reinforce the banks against erosion from flood pulses. The field study undertaken on ERTs showed strengths in bird species, but made comparatively little effort to assess the status of mammals, reptiles, amphibians in the estate and immediate adjacent areas. Considering elephant are a threatened species (IUCN En C2 a (ii)) and a crop pest at Hwa Li 1, mention would have been expected of their status in the Lesong Forest Reserve, and discussion on the role of the estate in relation to regional conservation management. The general weakness is that there is little information and guidance for estate management action for ERTs management on the estate and the immediate adjacent areas.

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Criterion 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner.

The “ Guidelines on Waste Management” state the objectives and outline procedures for waste management on the estates. This includes wastes subject to regulated disposal as well as wastes from domestic, and other non-regulated sources. While the current document provides guidelines for the management of all scheduled wastes currently used by the estates (disposed according to EQA 1974 (Scheduled Wastes) Regulations 2005 ), it does not make reference to a comprehensive register of wastes nor identify their potential sources (see 5.1) ( Minor CAR -06) . Among the omissions for waste products and sources, examples include: Green House Gases (GHG); disposal of buffalo carcases; building demolition and construction, etc. Operating procedures cover the management of wastes from agro-chemicals and their containers and material recovery is practiced through waste separation and recycling. These contribute towards the avoidance and reduction of pollution. With the exception of Hwa Li 2 Estate, all estates are outside local authority waste management areas. Hwa Li 2 is inside the controlled by Majlis Daerah Bera (Bera District Council). Though there was no documentation to indicate the estates had consulted with local authorities on requirements for waste management in a Majlis Daerah’s controlled area, observations indicate that current practices for waste storage, collection and disposal are in line with, or exceed practices in similar areas managed by the authorities. Significant effort is made to capture waste from crop residues and put back for beneficial use. This includes non-oil mill output: EFB either as fibre or as nutrients from incinerator ash (reported to be in demand to reduce the use of EFB in areas at risk from rhinoceros beetle damage); boiler ash; fibre and shell. Fronds are stacked and left to rot in the field. Empty bunches and stalks are re-applied to the field. Biomass from replanting is buried in trenches in the field which minimises the nutrient loss and eutrophication of local waterways as well as to avoid pests. POME from the mill are applied in limited areas in the field while tertiary treatment facilities are being built for further processing of POME and piping system are laid to spread the field application to cover more areas. The strength demonstrated is that the company can develop and consistently comply with their SOP for managing identified wastes. The possible weakness is that without the baseline information a register of aspects and impacts, not all the types and sources of waste have been identified and their significance assessed (pls see 5.1).

Criterion 5.4 Efficiency of energy use and use of renewable energy is maximised.

Currently the major use of renewable energy is from the use of fibre as a fuel to generate steam in the mill. At present, the amount of the fibre fuel used is estimated as proportion of the measured crop received, minus the quantity of the fibre transported out and applied in the field. The fibre used for fuel is fed automatically into the firing chamber of the boilers according to the demand for steam pressure. Observations suggest the fuel feed controls are well adjusted and thus use of fuel is efficient – no smell of fuel burning in reducing conditions, no black smoke from the stacks or carbon deposits around doors and inspection holes to the firing chamber. However, despite the impressive operating performance at this 30-year old mill, the mill operators have no mechanism to directly monitor the rate of consumption of renewable energy and thus they have no baseline data from which they can plot trends in energy use and thus ensure energy use is maximized. ( Minor CAR-07)

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A minor use of renewable energy is at the remote guard posts which have been provided with solar panels to replace the small fossil fuel generators used previously. Fossil fuel use is carefully monitored and daily records kept which summarise fuel use per tonne of CPO. Currently the data available has not been used to identify trends. (See 5.6 below) There is no mention of plans to use biodiesel for estate and mill operations, but it is reported that a methane recovery facility is planned for POME treatment with use of the gas in the mill. The strength of the estates and mill are that they are manned by competent staff who can maintain and operate their equipment efficiently. Cost control for fuel used has been a traditional concern and efforts made to find ways to reduce fuel demand and thus expenditure. The weakness here is that because renewable fuels have no direct cost, there has been no directive to maximize efficiency and thus investigate options for metering. The challenge that needs to be met is the incorporation of an effective and affordable mechanism to meter renewable fuel use, and the models to use the data collected to improve the management of fuel use.

Criterion 5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN Guidance or other regional best practice.

The company has a zero burning policy which is promoted to the staff an d workers. Observations in the field indicate there is full compliance with the policy in areas being replanted and for the disposal of estate wastes. It was however noted that the EFB incinerators at the mill were still in use (with current approval from the DoE). These produce ash which is reported to be in demand and use in those areas of the estate where EFB application would increase the risk of rhinoceros beetle damage to the palms. As a product in demand, the ash is considered in this assessment to be a by-product from incineration rather than as waste whose volume is being reduced by incineration. If the demand for the ash were no longer required or justifiable, incineration would be considered to be waste disposal. In the field being replanted, old palms are pushed over, chipped and the biomass buried in inter-row trenches. At present, the incidence of pests and disease in the fields being replanted are considered to be acceptable, and the use of fire to clear the fields is not required. Full compliance indicates the company has the strengths to set policy goals and translate these into field practices. There are no current weaknesses for this standard.

Criterion 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored.

There company has developed a ‘Guidelines on pollution mitigation plans for estates’ that form as a guidance for the developing, implementing and monitoring of appropriate plans for reducing pollution and emission in the estates. Subject areas covered include: diesel storage, workshops, generators, tractors, used lubrication storage, chemical mixing, sewage leaks, siltation of drains, etc. However, without a comprehensive baseline document on aspects and impacts, it is not known if the mitigation measures discussed cover all potentially polluting activities (see 5.1 above). The first draft of the document plan was prepared for this year. No date has been set for an ------SGS (Malaysia) Sdn. Bhd Unit 10-1 10 th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com

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annual review of the plan. Though no specific mention is made for green house gases (GHG), there are in progress activities that should mitigate its emission. These include the installation of facilities to capture methane from POME treatment. Efficient fuel/air management of the boiler minimises sub-stoichiometric combustion producing CO. The company use buffalo for fruit evacuation in all the oil palm estates apart from Maran Estates, making a direct reduction in demand for diesel fuel and associated emissions. The company has recorded diesel consumption in each estate and mill. Record of diesel consumption between July 08 – February 09 are as follows:

Estate FFB production Total consumption Diesel consumption (MT) (litre) per ton production

AOP 29,756 123,845 4.16

POP 23,653 82,780 3.5

Maran 19,513 136,084 6.7

Hwa Li1 35,997 119,450 3.3

Hwa Li2 33,102 277,101 8.4

It should be noted that the presence and extent of replanting work will skew the annual ratio of diesel consumed per tone CPO/FFB making comparisons between estates not useful. However, it is interesting to note that Hwa Li1 and Hwa Li2 are located at least 3 hrs drive to the Carotino mill. Hwa Li1 delivers most of the fruits to nearby mill while 80 % of Hwa Li2 fruits are delivered to Carotino mill. Between the same periods, Carotino oil mill has received and processed a total of 98,584 MT of FFB producing 20,321 MT of CPO. The process has consumed 76,741 liter of diesel. As described in the earlier sections of this report, there are no peat soils within any of the estates under this certification unit.

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Criterion 6.1 Aspects of plantation and mill management, including replanting, that have social impacts are identified in a participatory way and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. Scoping note on SEIA is available that include some evidence of stakeholder consultation. More comprehensive documentation that include maps and identification of communities and neighbours need to be made available ( Minor CAR-08 ). The estates and mill set up Joint Consultative Committee (Jawatankuasa Perundingan Bersama) and Gender Committee. In Hwa Li Oil Palm Estate Division 1, records showed that the Joint Consultative Committee plans quarterly meetings in 2009. Attendance list signed by all attendants is kept in the file. Meeting minutes in local language (Malay) dated 18 February 2009; include welfare, health and safety of workers, sexual harassment, use of PPE and awareness on maintenance of clean and healthy environment. Similarly, the Gender Committee in this estate also plans to have quarterly meeting. Records showed that during the meeting of this committee on 16 February 2009, among the issues discussed are sexual harassment, women’s welfare and activities to be carried out for 2009 proposed.

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Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or mills, local communities and other affected or interested parties.

The company has a comprehensive list of stakeholder relevant to the mill and estate operation. Complaints and grievances procedure is in place, i.e. via the establishment of JCC, H& S Committee & Gender Committee. Records of consultation with stakeholders are available. Mechanisms for communication and consultation with employees and other stakeholders have been established. These mechanisms include Joint Consultative Committee, Health & Safety Committee, Gender Committee, Complaints and Grievance Procedure, Suggestion Box. For committees, objectives, membership, selection of committee representative from workers, frequency of meeting, agenda of meeting, refreshment after meeting and actions to be taken on matters discussed. The mechanisms are implemented in all estates and mill. Mechanism is also set up to communicate with other stakeholders living in the vicinity of all estates. Available minutes of meeting showed that the JC Chang Group estates/mill, Sri Jaya, Pahang organised communication with local stakeholders in the regions, namely Sri Jaya Village head and his committee members, Ketua kampong of Kg. Mengapur, managers of Kema Development Sdn Bhd Plantation/Mill, Bakti Juwita Sdn Bhd Iron Ore Mine, Malaco Mining Sdn Bhd Copper Mine, Felda Lapar Utara Plantation. The meeting was attended by 25 participants to discuss matters affecting each other and local communities such as construction of alternative road and replacement of Sri Jaya bridge.

In Hwa Li Oil Palm Estate Division 1, there is no local community in the nearby area; the management had consultation with other estates in the region (Suburban Properties Sdn Bhd, Harn Len Corporation Bhd, Kuantan trading Co. Sdn Bhd) on 15 April 2009. Issues related to RSPO certification and common access road and boundary sharing were discussed. Feedbacks from these estates are kept in file entitled “Stakeholders – Neighbouring Estate Mill”.

In Hwa Li Oil Palm Estate Division 2, meeting minutes of the Joint Consultative Committee on 18 March 2009 showed that issues discussed include what is RSPO, use of suggestion box, health & safety.

The four workers in Ladang PERKIM Pahang (150 acres), located between Pahang Oil Palm Estate and Asia Oil Palm Estate, claimed that their source and quality of river water is not affected by the estate operations.

According to the manager of Felda Lepar Utara 2, annexed to Asia Oil Palm Estate, the manager of latter consulted him from time to time, particularly with regards to the RSPO certification. He subsequently took steps to inform his 180 foreign workers (60% Indonesian and 40% Bangladeshi) not to hunt or fish in Asia Oil Palm Estate.

In a letter dated 22 April 2009, the manager of Pahang Oil Palm Estate offered the Training Centre (Department of Orang Asli Affairs) in Paya Bungor (a few km from Sri Jaya town) employment opportunities for the Orang Asli.

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Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties. Complaints and Grievances Procedure and SOP on Mechanism for Complaints and Grievances are available. Under this SOP, what is grievances, who are the complainants, redress of grievance, freedom from retaliation, consolidation of grievance and grievance procedure are outlined. The procedures and mechanisms are displayed on the office notice boards. Interview with workers and communities showed no major issues. At estate level and mill level, a joint consultation committee was formed. In the minutes dated 18 December 2008 and 6 May 2009, the chairman of the mill management (located in Pahang Oil Palm estate) encouraged the staff to or Jawatankuasa Persidangan Bersama Majikan dan Pekerja 2009-2010 to raise issues related to welfare, rate of pay and facilities provided by the companies such as maternity payment, sick entitlement, vacation leave pay (VLP), retirement benefits, Socso, EPF, yearly bonus, leave entitlement, workmen compensation insurance and group personal insurance. Matters related to water and electricity supply for household consumption were also discussed. Workers are encouraged to make use of the other mechanisms outlined in Criterion 6.3 in dealing with complaints and grievances. Evidences on grievances and complaints are kept with details such as date, grievance, complainant and action taken by all estates and mill.

Criterion 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions. SOP for Identifying Legal and Customary Rights and Identifying People Entitled to Compensation is available. The SOP included identification procedure, calculating and distributing fair compensation procedure and documentation on outcome of compensation.

No evidence on dispute on legal and customary rights. No claim on estate land.

There is no reported case of dispute with any parties which have resulted in payment of compensation ever occurred. The individual estates recognised management by customary users and provide material support for the maintenance and places of worship (Muslims, Chinese and Hindu) located within the estate’s land.

In Hwa Li Oil Palm Estate Division 2, the Orang Asli community in Kg Pasal did not make any claim on their customary rights within the estate area. The headman of this village said that Hwa Li Oil Palm Estate Division 2’s management respects and recognises the customary land of villagers in the nearby areas. Such discussion has yet to be properly documented. Discussion note showed that the estate management had discussion with the nearby Ladang Pertanian Kelapa Sawit (Pahang) Sdn Bhd on 23 February 2009 where access road, water supply, deduction of levy and bridge and culvert in main access road was discussed.

Similarly, Orang Asli at Kg. Tomsel Anak Sg. Bekapor and Kg. Ulu Sg. Bekapor, located ------SGS (Malaysia) Sdn. Bhd Unit 10-1 10 th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com

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about 5 km away from nearest boundary of Maran Oil Palm Estate, also did not make compensation claim as their customary land is located outside Maran Oil Palm Estate.

Criterion 6.5 Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages. Guidelines on Terms and Conditions of Employment for Estate Workers are available. The guidelines include contract agreement, wages and other employment benefits, workers’ repatriation, workers’ passport. Employment agreement and related conditions is available. There are terms of reference or signed contracts between employers and employees stipulating the position, working hours, type of work, location of work, workers’ responsibility, wages, allowances, holidays, rest days, annual leave, fringe benefits, levy deductions (for foreign workers), dismissal, etc. Clear and transparent remuneration system is in place. Workers were issued with pay slips every time salary payment is made where wage and deduction made is clearly printed. In the estates, the wage rates of different categories of harvesting activities are available. The wage rates may differ slightly between estates depending on the terrains and difficulty of task.

As for the foreign workers, personnel information is kept in appropriate file with details on the rate of payment and benefits. For foreign workers, employment contract kept contain details information on job title, minimum basic pay, shift allowance and average overtime per month, yearly medical check-up, leave benefits and insurance. In Hwa Li Oil Palm Estate Division 2, pay slips showed field workers received RM1, 200 (harvesting worker) and RM969 (general worker). Discussion with workers showed that they are satisfied with the income received. In Pahang Oil Palm Estate, a harvester received between RM600 and RM1, 200 a month, depending on the fruiting conditions. In this estate, 2 contract manuring workers revealed that they each receives about RM600-RM800 a month while another 2 contract sprayers indicated that monthly income received is about RM 600 each. Workers are generally happy with the salaries received. Discussion with workers at the quarters in the estates showed that management provided satisfactory housing, water supply, electricity supply and welfare amenities to all the workers. Workers also have access to potable water (the company provides water tanks), segregated sanitary and bathing facilities and electricity.

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Criterion 6.6 The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under the law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel.

The company does not provide restriction for Malaysian workers to form workers union. Foreign workers are subjected terms and conditions of employment which restrict them from having association. In all estates and mill, a published statement in local language recognising freedom of association was placed on the notice board of the management office. The statement reads “Pekerja-pekerja bebas untuk mengikut atau menyertai mana-mana agensi berdaftar di bawah undang-undang Malaysia. Kenyataan ini adalah sebagai tambahan kepada kontrak pekerja yang sedia ada. Daripada Pihak Pengurusan ”. A total of 21 office staff is members of All Malaysian Estate Staff Union. Carotino allows workers to join trade union. A clerical staff at the mill office said that she has been the member of this trade union for the last 7 years. According to her, the company did not forbid workers to be members of trade union.

Criterion 6.7 Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions.

Carotino does not employ persons under 16 years old. Personal information of workers showed that all workers are above 16 years old. There is no evidence of use of child labour in mill and estate operation. The mill and estates maintain a complete register of workers with the individual details including date of birth. There was no evidence of under age (below 16 years) worker operating in the estates. Records maintained to confirm ages of workers. Youngest registered worker as 21 years old (foreign worker) and 39 year old (local Malaysian worker). In Hwa Li Oil Palm Estate Division 2, record showed the youngest local worker is 21 years old. In Maran Oil Palm Estate, of the total 13 Malaysian workers employed, the youngest is 24 years old while among the 170 foreign workers, the youngest is 20 years old.

Criterion 6.8 Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited. Equal Opportunities Policy is documented and is translated into the Malay language ( Polisi Kesamaan Peluang ) and placed on the notice boards of the management offices. Observations indicated that the policy is put into practice. Discussion with one Orang Asli (Jakun, aged 29, with 9 years working experience as a storekeeper in Hwa Li Oil Palm Estate Division 1) showed that the management does not discriminate even though he is an Orang Asli. He started working as a field worker in 2000 and was promoted to store keeper in 2005, earning a monthly income of RM1, 500. Just like other workers, he also enjoyed the benefit of housing, water and electricity supply, medical claims based on bills for all family members. The monthly pay slip of another Orang Asli worker showed that every month he receives RM860 as basic wages, RM210 transport allowance, RM10 fuel allowance, RM150 remote allowance. Deduction was made for RM153 (EPF) and RM5.25 (SOCSO). Another discussion with two Indonesian workers indicated that they did not experience any discrimination on wages, housing facilities and welfare compared to their ------SGS (Malaysia) Sdn. Bhd Unit 10-1 10 th Floor Bangunan Malaysian Re, No 17 Lorong Dungun Damansara Heights (Co. No. 10871-T) 50490 Kuala Lumpur Malaysia. t +6 (03) 2095 9200 f +6(03) 2093 8202 www.sgs.com

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Malaysian counter parts. In Hwa Li Oil Palm Estate Division 2, of the 139 foreign workers (135 Indonesian & 4 Indians), discussion with 4 Indonesian workers (3 males and 1 female) showed that the management practises equal opportunities policy. Discussions with field workers in other estates showed the foreign workers are not discriminated against.

Criterion 6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied. Sexual Harassment Policy is in place and displayed. The policy was also written in the Malay language and displayed on the notice boards. No evidence or practices that contradict this policy were observed. Discussion with female staff shows that the company provide fair and just treatment to women. Grievance mechanism for sexual harassment is in place, with the formation of the Gender Committee. A SOP on “Mechanism for the Prevention and Eradication of Sexual Harassment and Violence in the Work Place” is also in place. The SOP includes preventing sexual harassment in workplace, rationale, what is sexual harassment, forms of sexual harassment, strategies to prevent sexual harassment, a clear sexual harassment policy, monitor the work place regularly, take all complaints seriously, guidelines for handling complaints on sexual harassment. No cases of harassment against women. Discussion with female staff in Hwa Li Oil Palm Estate Division 1, Hwa Li Oil Palm Estate Division 2 and Maran Oil Palm Estate showed that there is no incidence of sexual harassment. The female staff expressed that they felt comfortable and safe working in the estates.

Criterion 6.10 Growers and mills deal fairly and transparently with smallholders and other local businesses.

Carotino palm oil mill only processes FFB sourced from own plantation as such the company does not deal with smallholders and all operations within the estates are carried out by the company.

Criterion 6.11 Growers and millers contribute to local sustainable development wherever appropriate. Records of annual educational subsidies. The estate and mill managements provide various additional benefits to their staff, particularly in relation to their educational welfare. Free transportation is made available for children to attend primary and secondary schools in the nearby areas. A primary student receives RM200 a year and a secondary student RM300 a year as educational subsidy. Records in Maran Oil Palm Estate showed that parents received the cash from the management. For this estate, a total of RM4, 200 was spent between July and December 2008. There are evidences of contribution to the Orang Asli community during needs. The Orang Asli in Kg. Pasal near to Hwa Li Oil Palm Estate Division 2 confirmed that the management assists the villagers by transporting water to the village in time of water shortage. The management also helped in minor village repairs when needs arise. Contribution was extended to JKKK Sri Jaya for maintaining the access road. In a letter dated 6 January 2009 by Jawatankuasa Kemajuan & Kelamatan Kampung Sri Jaya , Carotino Sdn Bhd contributed RM80, 000 (from mill, Pahang Oil Palm Estate, Asia Oil Palm Estate and Maran Oil Palm Estate) for the maintenance and management of the

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temporary access road between Taman Emas and Multipurpose Hall, Sri Jaya. Records from Maran Oil Palm Estate and Pahang Oil Palm Estate showed that a total of RM40, 000 was paid by cheques to JKKK Sri Jaya. Besides, Carotino Sdn Bhd also maintains the road leading Sri Jaya to the estates, thus also benefiting smallholders using the road. Records showed that between July 2008 and March 2009, Maran Oil Palm Estate spent RM66, 777 on maintaining the main access road from Sri Jaya to the estate.

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Criterion 7.1 A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management and operations.

This Principle is not applicable as all Carotino oil palm plantations in Pahang were all planted since 1970s. The lands are either purchased from other companies or developed by the Group in 1970s. Currently, the company only carried out limited replanting in some of the estates. There are no new plantings within the certification unit and the company is only involved in re-planting programme after felling of old palms and there is no plan for expansion.

Criterion 7.2 Soil surveys and topographic information are used for site planning in the establishment of new plantings, and the results are incorporated into plans and operations. Not applicable. All estates have been planted since 1960s/1970s.

Criterion 7.3 New plantings since November 2005 have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values.

Not applicable

Criterion 7.4 Extensive planting (to be determined by SEIA) on steep terrain, and/or on marginal and fragile soils, is avoided.

Not applicable

Criterion 7.5 No new plantings are established on local peoples’ land without their free, prior and informed consent, dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions..

Not applicable

Criterion 7.6 Local people are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreements.

Not applicable.

Criterion 7.7 Use of fire in the preparation of new plantings is avoided other than in specific situations, as identified in the ASEAN Guidance or other regional best practice.

Not applicable

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Criterion 8.1 Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations.

Pesticide use is carefully controlled and applied in response to monitoring. IPM methods have been incorporated into operating practices with provision of nesting boxes for barn owls and establishing plants beneficial to the predators of crop pests. However, in young planting areas, poison rat bait is still applied to protect the palms at this vulnerable stage. No information has been provided on investigation to seek alternative non-chemical mitigating measures. To further reduce the need for application, the company is beginning trials on biological control methods such as the use of Metarhizium fungus to control rhinoceros beetles population and potentially reduce the use Cypermethrin . It was noted in 4.6 that there is a miss-match between the chemical listed for potential use on the estates and the CHRA. At present, the company does not have a programme to systematically review chemical use for continuous improvement in CHRA, and biological and environmental protection. But without a systematic review of the aspects and impacts assessment of estate and mill activities to identify the activities where chemicals including pesticides, and ensure all related documentation for social and biological plans are updated, continuous improvements will be difficult to sustain. There is a current version of “ Social and Environmental Impact Assessment” (SEIA) but as noted in 5.1, this is not considered complete and is in need of review in order to ensure a comprehensive examination of aspects and impacts from estate and mill activities is made to improve the adequacy of the current plan, and identify where gaps may still exist. Efforts are in place to separate and, where possible, recycle materials from the scheduled and non-scheduled waste streams (See 5.3). Agricultural by-products exported with the crop from the estates to the mill are either used as renewable fuel for power generation or returned to the field as fibre or ash. Effort is made in mill to maximise oil-extraction from mill by-product. A pollution prevention plan is in place, (see 5.6). Investment is currently being made to further reduce emissions –lower BOD, to water from POME and through investment in facilities to capture methane -lower climate changing emissions to air. Social impacts are mentioned in the current version of the SEIA, however, the findings and recommendations of this document were not been presented for stakeholder review (See 6.1) Scoping note on SEIA is available with some evidence of stakeholder consultation. However, the documents currently available do not include detail maps that identify the communities and neighbours need to be made available (Minor CAR-08) as part of system to initiate improvement. The company has demonstrated strength in the areas that deal with efficient crop production, harvesting practices, field maintenance, mill operations as well as staff and worker management and subjects that require legal compliance. The weakness, on the other hand are in organising the management systems that can assess estate and mill activities for aspects and impacts, collect and update the necessary data and synthesise this into information for making management decisions. This includes data on: social issues, support for biodiversity and reduction of impacts on the environment. The company lacks a system that would allow adaptive management cycles that:

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• can make systematic assessments of estate and mill activities for potential effects, • screen those effects for impacts on society and the environment, • set thresholds to identify significant impacts, • identify the source, pathways and targets of those impacts so that mitigation measures can be designed, • set the indicators and methods to monitor for effective management,

• establish a systematic mechanism to evaluate monitoring records and revise mitigation measures at regular intervals.

10. CHAIN OF CUSTODY

Fresh Fruit Bunches (FFB) produced by the plantation are transported to and processed at Carotino Oil Mill which is located within the Pahang Estate, Sri Jaya, Pahang. The mill with a moderate capacity of 30 metric ton FFB per hour received and processed only raw materials (FFB) from own estates as described in this report. In fact, based on over capacity, FFB produced by Hwa Li 2 Estate are sent to other oil mill. Summary records of FFB production from each estate since 2003 are as tabulated in Table 10.1 below. Table 10.1: Summary records of FFB production (metric ton) from each estate since between July to June every year since 2003 Estate 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 AOPE 19,487 27,640 31,533 25,709 39,157 POPE 24,334 25,755 29,689 29,531 33,013 Maran Estate - 21,228 29,103 29,877 26,843 Hwa Li1 19,530 26,510 32,632 31,551 49,629 Hwa Li2 46,119 46,022 48,110 44,973 53,555 Total 109,478 147,355 171,067 161,641 202,197

From the plantation, the FFB were delivered by trucks where details on the delivery documents allow traceability of the fruits to harvesting block in each estate. Records of FFB deliveries and input into the processing line are well maintained by the company. Similarly, records of CPO and palm kernel out put are also maintained on daily basis. Summary record of CPO and PK output from the Carotino Oil is as presented in Table 10.2. Table 10.2: Summary record of CPO and PK output from the Carotino Oil mill between Jul 08 – March 09

Jul 08 Aug 08 Sept 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb09 Mar 09 Total FFB received 14,508 14,689.8 11,404.7 12,754.7 13,042.2 12,384.9 10,716.0 9,082.8 11,452.6 110,035.7 CPO 2,914.2 2,977.5 2,350.6 2,696.0 2,749.7 2,607.6 2,194.1 1,830.9 2,294.9 22,615.5 production OER (%) 20.1 20.3 20.6 21.1 21.1 21.1 20.5 20.2 20.0 20.6 PK 845.9 829.8 645.1 705.0 799.1 746.1 659.1 559.4 709.7 6,499.2

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As far as chain of custody is concern, the mill (and the plantation) currently does not have a documented standard operation procedures (SOP) that identify the critical control points (CCPs) and described the method used in identifying, segregating and recording at each point identified. This is not a critical issue since the mill only sourced FFB from own estates which is subjected to the evaluation. The SOP document helps in formalizing the system, cite the records and data involved at each stage and identify the person in charge (or the management representative) responsible for the implementation and maintenance of the whole system and ensuring its integrity. The mill now has four CPO storage tanks to store CPO produced. The company also maintains clear records of incoming and outgoing through stock control. All CPO are dispatched to buyers via truck / tanker with proper sales and delivery documents in place. Each truck / tanker was properly sealed prior to leaving the mill. The seal number is recorded in the delivery document together with the volume and the buyer’s name.

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11. SUMMARY OF CORRECTIVE ACTION REQUESTS (CARS) Follows are summary detail of CARs issued:

CAR # Indicator CAR Details

01 2.2.3 Physical demarcations on the ground (i.e. boundary markers) are adequate but apart from some sections in Hwa Li2 and Maran, other areas are without boundary stones.

02 4.1.2 Inadequate evidence of systematic monitoring of the SOPs to ensure effectiveness of its implementation to generate continuous improvement.

03 4.4.1 Buffer zones are identified and demarcated along main rivers but minor streams are not consistently marked.

04 5.1.2 Lack of environmental improvement plan that has been developed through stakeholder consultation.

05 5.2.2 A “ Conservation Assessment of Carotino’s Peninsular Malaysia Estates Conservation Values and recommendations” has been prepared that identifies habitat areas of significance within and surrounding the estates and makes recommendations for their conservation. But the report does not provide maps that identify the location and extent of potential HCV within the estate that could possibly support the implementation of IPM.

06 5.3.1 Waste management plan does not identify ALL waste products and sources of pollution suggesting that the document was not produced as a result of full screening of the impact and aspect of the mill and estate operation.

07 5.4.1 Efforts has been made to estimate the renewable energy used in the boiler but this estimate is not sufficient to monitor the energy used and observe trend.

08 8.1.5 Scoping note on SEIA is available with some evidence of stakeholder consultation been conducted. More comprehensive documentation that include maps and identification of communities and neighbours need to be made available as part of tools for monitoring continuous improvement on social elements.

Note: Major CAR, if any, will be identified with ‘M’.

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12. ASSESSMENT DECISION

The assessment has resulted in the issuance of 8 Minor Corrective Action Requests. Details of the CAR and the objective evidence are as listed in Appendix 3.

With no outstanding Major CAR, the Carotino Sdn Bhd’s management of Carotino Palm Oil Mill and its supply base estates in Pahang, Malaysia, is now recommended for the certification against the RSPO P&C MYNI requirements. The issues highlighted as Minor CARs must be adequately addressed and the adequacy of the actions taken need to be verified during the first surveillance visit to be conducted within 12 months from the date of assessment.

13. ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY AND FORMAL SIGN-OFF OF ASSESSMENT FINDINGS

It is acknowledged that the assessments cited in this report have been carried out as stipulated and we confirm the acceptance of the assessment report contents including assessment findings.

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14. RECORD OF STAKEHOLDER COMMENTS AND INTERVIEWS

As described in the earlier sections of this report, letters were sent to stakeholders as apart of process for informing them on the assessment to be carried out as well as a mechanism to solicit comments. During the assessment, discussion and consultation were held with a number of agencies, communities, workers etc. Follows are the comments/issues received or highlighted by the stakeholders and responds from the audit team:

Nr Comment Response Main Evaluation 1 Hwal Li1 is bordering logged The company has dug out trenches along its over Hutan Simpan Lesong boundary plus the electric fences to tackle the which is rich in chengal and elephant problem. This means that the boundary is merbau. The area north of Hwa clearly marked and no access from the estate into Li1 estate is highly vulnerable the forest. The estates also have a number of and has been subjected to number security gates at the outer boundary to prevent illegal logging cases. The estate outsiders from entering the estate without purpose. management cooperation in ensuring that their property is not being used as access point by the illegal loggers.

2 Orang Asli villagers in Kg. Pasal The company should continue to have good felt that Hwa Li Oil Plam Estate relationship with the nearby stakeholders. Division 2 is very helpful to them in time of needs. 3 The headman of Kg. Mengapor, The company took appropriate action and this was located near to Maran Oil Palm appreciated by the villagers. Estate, requested the estate to repair the main access road near to the village to avoid flodding. 4 The manager of Felda Lepar The sharing of experience on RSPO preparations Utara 2 commented that the and seeking cooperation from other stakeholders manager of Asia Oil Palm Estate are important to encourage more estates going for had regularly visited and RSPO certification. discussed matters related to RSPO, operation and workers.

END OF REPORT

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