Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 1 of 94 Re-certification (Transfer CB)

Kuala Lumpur Kepong Berhad

RSPO Membership No: 1-0014-04-000-00

PLANTATION MANAGEMENT UNIT Changkat Chermin Grouping , ,

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RE-CERTIFICATION ASSESSMENT

PUBLIC SUMMARY REPORT

KUALA LUMPUR KEPONG BERHAD

RSPO Membership No: 1-0014-04-000-00

PLANTATION MANAGEMENT UNIT Changkat Chermin Grouping Ayer Tawar, Perak, Malaysia

Certificate No: RSPO 931588 Issue Date (Re-Cert): 10 Sep 2018 Expiry date: 09 Sep 2023

Assessment Type Assessment Dates Re-Certification Assessment (Transfer CB) 21–25 May 2018 Annual Surveillance Assessment (ASA-01) Annual Surveillance Assessment (ASA-02) Annual Surveillance Assessment (ASA-03) Annual Surveillance Assessment (ASA-04)

Intertek Certification International Sdn Bhd D-28-3, Level 28, Menara Suezcap 1, No. 2, Jalan Kerinchi, Gerbang Kerinchi Lestari, 59200 Kuala Lumpur, Malaysia. Tel: +00 (603) 7931 0032 Fax: +00 (603) 7931 0419 Email: [email protected] Website: www.intertek.com

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TABLE OF CONTENTS

Section Content Page No 1.0 SCOPE OF ASSESSMENT 4 1.1 Introduction 4 1.2 Location (address, GPS and map) mill, estates and hectarage 4 1.3 Description of supply base (fruit sources) 5 1.4 Year of plantings and cycle 5-8 1.5 Summary of Land Use – Conservation and HCV Areas 9 1.6 Other certifications held and Use of RSPO Trademarks 9 1.7 Organizational information/contact person 9 1.8 Tonnages Verified for Certification 10 1.9 Time Bound Plan and Multiple Management Units 11 1.10 Abbreviations Used 12 2.0 ASSESSMENT PROCESS 13 2.1 Assessment Methodology, Plan & Site Visits 13 2.2 Date of next scheduled visit 13 2.3 Qualifications of the Lead Assessor and Assessment Team 13 2.4 Certification Body 13 2.5 Process of Stakeholder consultation 14-15 3.0 ASSESSMENT FINDINGS 16 3.1 Summary of findings 16-52 3.2 Status of Identified Noncompliance and Corrective Actions, Observations 52-59 and Identified Positive Elements 3.3 Summary of Feedback Received from Stakeholders and Findings 59-61 4.0 ASSESSMENT CONCLUSION AND RECOMMENDATION 62 4.1 Acknowledgement of Internal Responsibility and Confirmation of Assessment 62 Findings

4.2 Intertek RSPO Certification Details for the PMU 63-64

APPENDICES Appendix A Qualifications of the Lead Assessor and Assessment Team 65 Appendix B Assessment Plan 66-68 Appendix C Maps of location – Mill and Estates 69-84 Appendix D Photographs at the PMU 85 Appendix E Time Bound Plan 86-94

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1.0 SCOPE OF ASSESSMENT

1.1 Introduction This Re-certification Assessment was conducted on the Plantation Management Unit (PMU) Changkat Chermin Grouping of Kuala Lumpur Kepong Berhad (hereafter abbreviated as KLK), on 21-25 May 2018, to assess the organization’s operations of the mill and its supply bases for compliance against the RSPO Principles and Criteria (Apr 2013), Malaysian National Interpretation (MYNI 2014) and the RSPO Supply Chain Certification Standard (Jun 2017) for the Palm Oil Mill.

The plantation management unit (PMU) or management unit is equivalent to a certification unit as defined in the RSPO Certification Systems Document. Each PMU consists of one mill and its supply bases which are made up of estates owned and/or managed by KLK.

1.2 Location (address, GPS and map) of palm oil mill and estates The Changkat Chermin Grouping consists of one (1) palm oil mill, namely Changkat Chermin Palm Oil Mill and eleven (11) estates as indicated in Table 1 below, which includes the addresses and GPS locations of the mill and estates. The location maps are provided in Appendix C. Table 1: Address of Palm Oil Mill, Estates and GPS Location

GPS Reference No. Name of Mill / Estates Address Latitude Longitude Changkat Chermin Palm Oil Mill Batu 13½, 32400 Ayer Tawar, Perak, Malaysia N 4°16’29.7’’ E 100°47’5.9’’ (Capacity: 60 MT/hour) 1 Changkat Chermin Estate Batu 13½, 32400 Ayer Tawar, Perak, Malaysia N 4°18’16’’ E 100°47’48’’ 2 Estate Batu 12 Lekir, 32020 , Perak, Malaysia N 4°7’12’’ E 100°46’47’’ Bt 18, Kg Jering, 32400 Ayer Tawar, Perak, 3 Raja Hitam Estate N 4°21’2’’ E 100°46’25’’ Malaysia Jalan Seputeh – Batu Hampar, 32800 , Perak, 4 Glenealy Estate N 4°27’31’’ E 100°55’50’’ Malaysia 5 Allagar Estate Ladang Allagar, 34800 Trong, Perak, Malaysia N 4°35’57’’ E 100°44’8’’ 6 Serapoh Estate Ladang Serapoh, 32800 Parit, Perak, Malaysia N 4°31’15’’ E 100°53’30’’ Ladang , 33700 , 7 Kuala Kangsar Estate N 4°46’0.32’’ E 100°51’0.16’’ Perak, Malaysia 8 Pinji Estate Ladang Pinji, 31500 Lahat, Perak, Malaysia N 4°30’12’’ E 101°5’19’’ Ladang Batu Dua, P.O. Box 1027, 30820 , 9 Batu Dua Estate N 4°28’43.5’’ E 101°4’29.3’’ Perak, Malaysia Ladang , P.O. Box 1027, 30820 Ipoh, 10 Menglembu Estate N 4°33’43.956’’ E 101°2’23.82’’ Perak, Malaysia Ladang Kampar, Peti Surat 20, 31907 Kampar, 11 Kampar Estate N 4°16’8.492’’ E 101°6’34.233’’ Perak, Malaysia

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1.3 Description of supply base (fruit sources)

The supply base i.e. FFB sources to the POM at Changkat Chermin Grouping PMU are currently from the abovementioned estates of this PMU and other certified KLK Groupings estates. The FFB from the PMU estates and other certified KLK Groupings estates are certified FFB. There are no FFB from Outside Crop Producers (OCP), which are considered as non-certified FFB. Details of the planted hectarage for the FFB supply to the PMU are as shown in Table 2 below.

Table 2: Estate Area Summary

Area Summary (ha) Area Summary (ha) No. Estate (Year 2016) (Jan - Dec 2017) Certified Area Planted Area Certified Area Planted Area 1 Changkat Chermin Estate 2,530 2,488 2,530 2,488 2 Lekir Estate 3,311 3,266 3,311 3,266 3 Raja Hitam Estate 1,497 1,445 1,497 1,445 4 Glenealy Estate 1,059 798 1,059 828 5 Allagar Estate 805 776 773 746 6 Serapoh Estate 936 715 936 715 7 Kuala Kangsar Estate 1340 701 1340 701 8 Pinji Estate 790 630 790 667 9 Batu Dua Estate 158 134 158 150 10 Menglembu Estate 266 42 266 42 11 Kampar Estate 754 705 754 705 Total: 13,446 11,700 13,414 11,753 Note: This Assessment covered the overall land use for oil palm plantation areas, and the identified Conservation / unplantable areas including HCV (if any) marked out at the estates.

1.4 Summary of plantings and cycle The age profile of the planted oil palms is as shown in Table 3. Table 3: Age Profile of Planted Oil Palms (Year 2017) * Mature OP Total (ha) Year of Cycle of Immature OP (ha) Estate Name (ha) – Above 3 Planting Planting – 3 years & below years Changkat Chermin Estate 2001 2nd 48 - 48 2005 2nd 440 - 440 2006 2nd 460 - 460 2007 2nd 486 - 486 2009 2nd 276 - 276 2010 2nd 306 - 306 2011 2nd 263 - 263 2013 2nd 209 - 209

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Lekir Estate 1999 1st 57 - 57 2001 1st 328 - 328 2002 1st 878 - 878 2003 1st 173 - 173 2004 1st 206 - 206 2008 2nd 8 - 8 2009 2nd 290 - 290 2011 2nd 256 - 256 2012 2nd 201 - 201 2014 2nd 325 - 325 2016 2nd - 150 150 2017 2nd - 166 166 2018 2nd - 228 228 Raja Hitam Estate 2002 2nd 249 - 249 2003 2nd 192 - 192 2004 2nd 400 - 400 2006 2nd 250 - 250 2007 2nd 354 - 354 Glenealy Estate 1992 1st 20 - 20 1994 1st 44 - 44 1995 1st 21 - 21 1996 1st 10 - 10 1999 1st 39 - 39 2001 1st 97 - 97 2002 1st 96 - 96 2005 1st 34 - 34 2006 1st 46 - 46 2011 1st 19 - 19 2012 1st 40 - 40 2014 1st 35 - 35 2015 1st - 96 96 2016 1st - 108 108 2017 1st - 123 123 Allagar Estate 1997 2nd 19 - 19 1998 2nd 121 - 121 1999 2nd 49 - 49 2000 2nd 65 - 65

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2001 2nd 26 - 26 2002 2nd 34 - 34 2003 2nd 46 - 46 2004 2nd 76 - 76 2005 2nd 44 - 44 2007 2nd 65 - 65 2008 2nd 69 - 69 2010 3rd 36 - 36 2012 3rd 60 - 60 2016 3rd - 36 36 Serapoh Estate 1996 1st 40 - 40 1997 1st 15 - 15 1998 1st 32 - 32 1999 1st 84 - 84 2000 1st 28 - 28 2001 1st 91 - 91 2002 1st 79 - 79 2003 1st 89 - 89 2004 1st 76 - 76 2007 1st 73 - 73 2008 1st 15 - 15 2009 1st 27 - 27 2011 1st 16 - 16 2014 1st - 50 50 Kuala Kangsar Estate 1997 2nd 43 - 43 1999 2nd 29 - 29 2000 2nd 53 - 53 2001 2nd 65 - 65 2002 2nd 104 - 104 2003 2nd 131 - 131 2004 2nd 87 - 87 2005 2nd 51 - 51 2006 2nd 39 - 39 2010 2nd 19 - 19 2013 2nd 37 - 37 2014 2nd 43 - 43 Pinji Estate 1993 1st 6 - 6

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1996 1st 12 - 12 1998 1st 81 - 81 1999 1st 32 - 32 2000 2nd 79 - 79 2001 2nd 140 - 140 2006 2nd 40 - 40 2011 2nd 28 - 28 2012 2nd 4 - 4 2014 2nd 38 - 38 2015 2nd - 53 53 2016 2nd - 54 54 2017 2nd - 100 100 Batu Dua Estate 2000 1st 43 - 43 2003 1st 46 - 46 2010 1st 12 - 12 2014 1st - 17 17 2016 1st - 16 16 2017 1st - 16 16 Menglembu Estate 1999 1st 42 - 42 Kampar Estate 1989 1st 102 - 102 1990 1st 72 - 72 1991 1st 33 - 33 1992 1st 56 - 56 1993 1st 13 - 13 1995 1st 28 - 28 1997 1st 21 - 21 1998 1st 39 - 39 2000 1st 74 - 74 2014 2nd - 82 82 2016 2nd - 110 110 2018 2nd - 75 75 Total 10,273 1,480 11,753

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1.5 Summary of Land Use - Conservation and HCV Areas The summary of Conservation and HCV Areas as identified in the PMU during this assessment is as shown in Table 4 below: Table 4: Conservation and HCV Areas

# Statement of Land Use (Ha) Year 2016 Year 2017 Hectarage – Ha Hectarage – Ha 1 Planted Area (ha) – Oil Palm 11,700 11,753 - Mature (Production) 10,210 10,273 - Immature (Non-Production) 1,490 1,480 2 Conservation Area (ha) - comprising buffer zones along small streams, hilly areas, 147.81 147.81 swampy and unplantable areas 3 HCV Area (ha) - comprising buffer zones near river riparian, forest 0 0 reserves, water catchments, burial & religious sites

1.6 Other certifications held and Use of RSPO Trademarks KLK-Changkat Chermin Grouping is also certified to the International Sustainability and Carbon Certification (ISCC). The RSPO’s trademarks and logo are not being used by the PMU audited. Instructions for use were provided and acknowledged by the PMU through a signed Memorandum of commitment agreeing to adhere to the latest “RSPO Rules on Communications & Claims” during the assessment.

1.7 Organizational information / Contact Person

At Head Office: Mr. Sin Chuan Eng Sustainability Head Ms. Lee Kuan Yee Senior Sustainability Manager (Plantations) Kuala Lumpur Kepong Berhad Wisma Taiko, 1, Jalan S.P. Seenivasagam, 30000 Ipoh, Perak Darul Ridzuan, Malaysia Tel: +605-240 8000, 241 7844 Fax: +605-240 8114 Email: [email protected]

At KLK Changkat Chermin Grouping - PMU: Mr. Mohd. Hadzri Arshad Palm Oil Mill Manager Kuala Lumpur Kepong Berhad

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1.8 Tonnages Verified for Certification

1.8.1 The breakdown of all the suppliers and their tonnages of FFB supplied to the POM at Changkat Chermin Grouping based on the reporting period for current assessment are as shown in Table 5 below:

Table 5: Tonnages Verified for Certification (Jan to Dec 2017) FFB Processed Main Receiving Palm RSPO P&C # Estate /Supplier (MT) Oil Mill Certification By CB A PMU Estate: 1. Changkat Chermin Estate 74,264.89 2. Lekir Estate 66,830.61 3. Raja Hitam Estate 43,850.20

Glenealy Estate 4. 14,732.99

5. Allagar Estate 13,484.15

6. Serapoh Estate 17,643.12

Kuala Kangsar Estate 7. 6,816.29

KLK Changkat 8. Pinji Estate 11,953.34 Intertek Chermin Palm Oil Mill 9. Batu Dua Estate 3,205.32 10. Menglembu Estate 1,478.75 11. Kampar Estate 11,402.57 Sub-Total Changkat Chermin 265,662.23 Grouping Estates: B Other KLK Certified Estates: KLK Batu Lintang CuC 1 Subur 711.18 Palm Oil Mill KLK Batu Lintang CuC 2 Batu Lintang 129.27 Palm Oil Mill KLK Tanjong Malim CuC 3 Bukit Katho 181.67 Palm Oil Mill Sub-Total Other certified Estates: 1,022.12 Total Certified: 266,684.35 C External / Other Suppliers: 1 - 0 Sub-total from OCP: Non- 0 certified:

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1.8.2 Total annual tonnages of FFB supplied from the supply base to Changkat Chermin Grouping POM during the previous period, current assessment and projected period are as shown in Table 6 below:

Table 6: Annual Tonnages of FFB FFB Processed in FFB Processed in FFB for Processing Estate / Supplier Year 2016 Year 2017 in Year 2018 - Actual - Actual - Projected MT % MT % MT % Changkat Chermin Grouping 202,105.74 99.76 265,662.23 99.62 270,711 100 Certified PMUs under KLK Group 491.60 0.24 1022.12 0.38 0 0 OCP - Uncertified 0 0 0 0 0 0 Total 202,597.34 100 266,684.35 100 270,711 100 SCCS Model for POM IP IP IP

1.8.3 The annual certified tonnages of CPO and PK production by the PMU from the supply base/suppliers as assessed and verified during the current assessment are detailed as shown in Table 7 below:

Table 7: Annual Certified Tonnages of CPO and PK

Year 2016 Year 2017 Year 2018 POM - Actual - Actual - Projected Total Certified FFB 202,597.34 266,684.35 270,711 Processed (MT)

Total Certified CPO OER: OER: OER: 43,251.76 54,019.82 59,556 Production (MT) 21.35% 20.26% 22.00%

Total Certified PK KER: KER: KER: 9,224.98 12,370.38 12,723 Production (MT) 4.55% 4.64% 4.70%

The POM has established and maintained procedures for the book keeping and monitoring requirements for the CPO at the mill. It is verified the POM has procedures for the “Identity Preserved – IP” model in accordance with the RSPO Supply Chain Certification Standards (SCCS) requirements. Verified activities and checked items for the SCCS of the POM are reported in section 3.1.1.

1.9 Time Bound Plan and multiple management units

The Time Bound Plan (TBP) includes the subsidiaries, mills and estates owned by KLK except for the Paloh Palm Oil Mill in Johor and Mill 1 in Sabah. These two mills are excluded from the TBP as they are meant for out growers and smallholders. This exclusion has been communicated to RSPO in year 2015.

All the palm oil mills and estates in Malaysia have been certified. The TBP indicated the status and progress of the palm oil mills and estates in Indonesia, which is monitored by Pak Stephen and reviewed every 3 months with the Sustainability Head based in KLK Office in Ipoh, Perak, Malaysia.

The TBP is achievable, unless otherwise, due to unforeseen circumstances. The various risks that may affect the achievement of the TBP include: • Appointment of certification bodies and their availability. • Uncertainties relating to the Laws and Regulations in Indonesia. • In Indonesia, ISPO precedes other certification standards. • In Indonesia, there are difficulties in the mobilizing internal resources due to its geographical locations. Details of the updated TBP as submitted by KLK and reviewed by Intertek are shown in Appendix E.

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KLK had conducted an internal audit on the uncertified units or holdings to determine compliance against Clause 4.5 (Minimum requirements for multiple management units) of the RSPO Certifications Systems for Principles & Criteria (Jun 2017). The Internal audit reports had identified the issues involved, on-going corrective actions and monitoring. The Joint Venture in Liberia does not required internal audit by KLK as it is part of Equatorial Palm Oil PLC (EPO), which is a stand-alone entity (KLK owned a 20.1% stake in EPO and a 50% stake in the Joint Venture, Liberian Palm Developments Ltd. The remaining 50% in Liberian Palm Developments is owned by EPO).

Uncertified Units in Indonesia are: Indonesia - Region Name of POM Name of Estate Kaltim Berau Kebun Malindomas Perkebunan, Kebun Hutan Hijau Mas, Kebun Anugrah Surya Mandiri Riau Nilo 2 Kebun Mutiara Belitung Parit Sembada Kebun Alam Karya Sejahtera Kalteng KMA Kebun Karya Makmur Abadi Kalteng MAP Kebun Mulia Agro Permai Kebun Menteng Jaya Sawit Perdana

The latest TBP dated 06/05/2018 was reviewed and changes were verified during the assessment. In Kaltim region, the Berau POM is targeted to be certified by end 2018. In Riau region, Kebun Mutiara of Nilo 2 POM had been audited in Mar 2018 and awaiting certificate. In Belitung region, Kebun Alam Karya Sejahtera of Parit Sembada POM is targeted to be certified by end 2018. For the Sumatra Utara region, the Gohor Lama and Padang Bharang mills been merged and named as Stabat mill. In Kalteng region, the KMA and MAP mills are targeted to be certified by end 2018.

1.10 Abbreviations Used

CB Certification Body LTA Lost Time Accidents CHRA Chemical Health & Risk Assessment Intertek Intertek Certification International Sdn Bhd CPO Crude Palm Oil KLK Kuala Lumpur Kepong Berhad CSDS Chemical Safety Data Sheets MSDS Material Safety Data Sheets CSPO Certified Sustainable Palm Oil MTCS Malaysia Timber Certification Scheme CSPK Certified Sustainable Palm Kernel NCR Non-Conformance Report EFB Empty Fruit Bunch NGO Non-Government Organization EHS Environmental Health & Safety OER Oil Extraction Rate EIA Environmental Impact Assessment OHS Occupational Health & Safety Programme for the Endorsement of Forest Effluent Treatment Plant ETP PEFC Certification FFB Fresh Fruit Bunch PK Palm Kernel GAP Good Agriculture Practice PMU Plantation Management Unit HCV High Conservation Values POM Palm Oil Mill IPM Integrated Pest Management POME Palm Oil Mill Effluent ISCC International Sustainability & Carbon Certification PPE Personal Protective Equipment IUCN International Union for Conservation of Nature SCCS Supply Chain Certification Standard KER Kernel Extraction Rate SOP Standard Operating Procedures

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2.0 ASSESSMENT PROCESS

2.1 Assessment Methodology, Plan and Site Visits

Since 19 Apr 2018, Intertek has initiated public communications and notifications and invited the relevant stakeholders before the assessment to provide feedback and comments on their concern (if any) on Changkat Chermin Grouping regarding the environmental, biodiversity, community development and other relevant issues.

The Assessment team conducted the current assessment on 21-25 May 2018, in which 4 out of the 11 estates of Changkat Chermin Grouping, namely, Kampar Estate, Pinji Estate, Lekir and Raja Hitam Estate as well as the palm oil mill were assessed for compliance against the RSPO requirements. The sampling design applied for the assessment include the mill and a minimum sample of x estates, where x = (0.8√y) x (z), where y is the number of estates and where z is the multiplier defined by the risk assessment. A high risk multiplier of z=1.4 is set for this PMU due to this assessment being a re-certification and transfer from another CB which require a greater focus on potential risks in relation to social, environmental and biodiversity issues.

During the on-site assessment, relevant documents and records, including Standard Operating Procedures (SOP), management plans, hectarage development, FFB, CPO and PK production, oil palm age profile, operational controls and measures, operational data and records, training records, etc. were reviewed and verified for compliance. The Assessment team using the process approach auditing technique covered the palm oil mill and estate operations, agricultural practices, pest management, pesticide and fertilizer application, occupational health and safety, social accountability, environment and other requirements. Stakeholders’ interviews were conducted during the assessment and feedback obtained as part of information and evidence gathering. (See section 2.5 Process of stakeholder consultation).

Changkat Chermin Grouping POM was also assessed against the requirements of RSPO Supply Chain Certification Standard for CPO mill. This part of the assessment covered the verification of implementation of documented procedures and availability of records to demonstrate compliance against all the elements for the “Identity Preserved – IP” Model requirements. These include documented procedure, purchasing and goods in, record keeping, sales and goods out, processing, monitoring and traceability of the CSPO and CSPK quantities, training for staff and claims.

The details of the Assessment Plan (actual on-site) are provided in Appendix B.

After completion of the on-site field assessment, Intertek also performed the evaluation of conformity against the RSPO Certification System requirements for CB. The assessment report, findings and associated documents were evaluated through an independent review by the Intertek Internal Technical Reviewer/Panel (and an External Peer Review in the case of an Initial Assessment or Re-certification Assessment) prior to the approval of this report and decision on continued certification by Intertek.

2.2 Date of next scheduled visit

The next scheduled visit will be the Annual Surveillance Assessment to be carried out within a 12-month period prior to the annual certificate anniversary date.

2.3 Qualifications of the Lead Assessor and Assessment Team

Competency details of the Lead Assessor and Assessment Team are given in Appendix A.

2.4 Certification Body

Intertek Certification International Sdn Bhd is part of the Intertek Group, which is a worldwide technical services organization dedicated to reducing clients' risks by providing technical inspection services, management system certification in quality, environmental, occupational safety & health and product certification, RSPO SCC, ISCC, Marine Sustainability Chain-of-Custody, MTCS and PEFC Chain-of Custody certification in applicable industry sectors including the agricultural and forestry sectors. Intertek operates globally providing clients with a wide-ranging technical inspection expertise and access to thousands of skilled specialists worldwide. Intertek Group’s certification business is ranked in the top 10 worldwide, and is available globally offering certification across a wide range of industries.

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2.5 Process of stakeholder consultation

Stakeholder consultations began with notification of the upcoming assessment through the websites of RSPO, KLK and Intertek. E-mails were sent to applicable stakeholders including government agencies, NGOs and local communities. E-mails and telephone enquiries were made prior to the actual assessment and stakeholder’s response and feedback received were followed up accordingly.

During the assessment, stakeholders were interviewed and their feedbacks were recorded. Among the stakeholders consulted were workers, trade union leaders, women representatives; local community leaders, representatives of government departments / agencies, NGOs, suppliers and contractors.

Details on stakeholders’ feedback, PMU response and Intertek verification / comments are provided in section 3.3.

Among the list of key stakeholders consulted was the following:

Government Agencies (by emails) 1. Land and Mines Office, Perak 2. Department of Environment, Perak 3. Department of Forestry, Perak 4. Department of Immigration, Perak 5. Department of Irrigation & Drainage, Perak 6. Department of Labour, Perak 7. Department of Occupational Safety & Health, Perak 8. Department of Wildlife & National Parks, Perak 9. Pertubuhan Keselamatan Sosial (SOCSO), Perak

Statutory Bodies (by emails) 10. Malaysian Palm Oil Board (MPOB) 11. Malaysian Palm Oil Board (MPOB) - Northern Region 12. Malaysia Palm Oil Association (MPOA) 13. Malaysia Palm Oil Association Kuala Lumpur (MPOA)

NGOs (by emails) 14. All Women’s Action Society (AWAM) 15. BCSDM - Business Council for Sustainable Development in Malaysia 16. Center for Orang Asli Concerns COAC 17. Centre for Environment, Technology and Development, Malaysia - CETDEM 18. Eco Knights 19. ENO Asia Environment 20. Environmental Management and Research Association of Malaysia (ENSEARCH) 21. Environmental Protection Society Malaysia (EPSM) 22. Friends of the Earth, Malaysia 23. Future in Our Hands Society, Malaysia 24. Global Environment Centre 25. Institute of Foresters, Malaysia (IRIM) 26. JUST - International Movement for a Just World 27. Malaysian CropLife & Public Health Association (MCPA) 28. Malaysian Environmental NGOs – MENGO 29. Malaysian National Animal Welfare Foundation – MNAWF 30. Malaysia Nature Society, Perak 31. Malaysian Plant Protection Society (MAPPS) 32. National Council of Welfare & Social Development Malaysia - NCWSDM 33. National Union of Plantation Workers (NUPW) 34. Partners of Community Organisations (PACOS) 35. Pesticide Action Network Asia and the Pacific (PAN AP) 36. Proforest - South East Asia Regional Office 37. R.E.A.C.H. - Regional Environmental Awareness Cameron Highlands 38. SUARAM - Suara Rakyat Malaysia 39. SUHAKAM - National Human Rights Society - Persatuan Kebangsaan Hak Asasi Manusia 40. Sustainable Development Network Malaysia (SUSDEN)

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41. Tenaganita Sdn Bhd 42. The Malaysian Forum of Environmental Journalist (MFEJ) 43. TRAFFIC Southeast Asia - Wildlife trade & trafficking monitoring programme 44. Transparency International - Malaysian Chapter 45. Treat Every Environment Special Sdn Bhd. (TrEES) 46. United Nations Development Programme - UNDP Malaysia 47. Wetlands International (Malaysia) 48. Wild Asia Sdn Bhd 49. World Wide Fund for Nature (WWF) Malaysia

Local community (On-site interviews) 50. Consultative Committee & Gender representatives 51. Workers & Workers representatives 52. Village Heads & representatives 53. Suppliers & Contractors representatives

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3.0 ASSESSMENT FINDINGS

3.1 Summary of findings

Principle 1: Commitment to transparency Criterion 1.1 Growers and millers provide adequate information to relevant stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making. Indicators Findings and Objective Evidence Compliance 1.1.1 There shall be evidence that The PMU has established and implemented a documented Complied growers and millers provide adequate procedure SOP 1.0 “Stakeholders Engagement/Negotiation” information Issue/Rev 2/0 dated 01/01/2018 that identified the mechanism for upon request for information on Request and Respond, Consultation & Meeting and Complaint & (environmental, social and/or legal) issues relevant to Grievances. RSPO Criteria to relevant Date of public notification of this assessment of the PMU was made stakeholders for effective participation on 19 Apr 2018. in decision making. There were no further request for information/issues from external Minor Compliance stakeholders. 1.1.2 Records of requests for The PMU had established and maintained an updated site specific Complied information and responses shall be maintained. list of internal stakeholders, external stakeholders, government departments/agencies, consultants, contractors, suppliers, Major Compliance transporters, etc.

The POM and estates have conducted their respective internal and external stakeholders’ consultations. Meeting minutes were adequately maintained. The meetings and consultations were noted to be attended by the various categories of stakeholders. Records of participants and feedback given were maintained and appropriate actions taken. 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. Indicators Findings and Objective Evidence Compliance 1.2.1 Management documents Management documents relating to environmental, social and legal Complied that are made available to the issues were verified to be maintained and available to the public. public shall include, but are not necessarily limited to: The following types of mandatory documents are available to the public upon request: Major Compliance  land titles/user rights,

 occupational health and safety plan,  plans and impact assessments relating to environment and social impacts,  pollution prevention plans,  details of complaints & grievances,  negotiation procedures  continuous improvement plan  Public summary of certification assessment report.  Human Rights Policy. These publicly available documents include key indicators of performance like waste management and disposal plans for the mill and estates.

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Also, Continual Improvement Action Plans include targets for waste reduction and pollution prevention.  Land titles/user rights Copies of all land titles were available and have been maintained at Complied (Criterion 2.2); the POM and Estates. HQ kept the original copies.  Occupational health and safety Safety Policy and HIRARC documented for the mill and estates. Complied plans (Criterion 4.7); The HIRARC for the mill and estates were also reviewed annually. Occupational Safety and Health Plans have been established and documented for the POM and estates. The Plans have been reviewed (annually), up-dated and approved by the respective managers for the mill and estates. The OSH Programme 2018 include the following:  Safety & Health Committee meetings were held quarterly.  Annual medical surveillance,  Accident Reporting & Investigation,  Workplace inspection,  CHRA assessment,  Air compressors annual inspection,  Warning signs,  Chemical Register,  SOP for safe work,  PPE usage,  MSDS/CSDS,  JKKP 8 reporting of accidents annually,  Emergency Response Plan (ERP),  Emergency drills,  Inspections (line site, fire extinguisher, first aid box, chemical store, ELCB, PPE checklist, Vehicle daily inspection, gen set maintenance, ramp inspection, bridge and tanks inspection),  Monthly KPI Report on HSE performance,  Monthly Safety inspection & audit by Safety Officer, CHRA report for POM is still valid and recommendations were verified to have been adhered on-site. Next CHRA assessment scheduled for year 2019. Programmes for protecting workers’ health and safety were satisfactorily implemented.  Plans and impact assessments Environmental aspect and impact assessment had been conducted Complied relating to environmental and and reviewed for the POM and estates. social impacts (Criteria 5.1, Management Action Plan and Continual Improvement Plan 6.1, 7.1 and 7.8); documented and implemented. Social Impact Assessment was also carried out and suitably reviewed by the KLK Sustainability Team together with the respective Mill and Estate Managers. Positive and negative impacts identified. Action plans were documented and implemented.  HCV documentation summary The Assessment report on ‘Internal HCV and Conservation Areas’ Complied (Criteria 5.2 and 7.3); have been conducted and reviewed. The Management Action Plans were implemented and monitored at the respective estates.  Pollution prevention and Pollution Prevention Management Plans have been conducted and Complied reduction plans (Criterion 5.6); reviewed. Action items include mitigation measures for pollution control (smoke emission, POME / effluent discharge), pesticides reduction, scheduled wastes (chemicals, drums, tyres, used PPE, hydraulic oil) and organic/domestic wastes disposal, reuse and recycling (paper, glass, plastic, scrap iron).

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 18 of 94 Re-certification (Transfer CB)

 Details of complaints and The mill and respective estates have maintained the Complaints Complied grievances (Criterion 6.3); and Grievances Logbook. Logbook entries were examined and found to be in order. Employees Consultative Council (ECC) representatives interviewed had confirmed that there were no serious issues.  Negotiation procedures Presently, there is no conflict/dispute requiring negotiation or Complied (Criterion 6.4); compensation pertaining to this criterion at this PMU. Negotiation procedure was maintained The status on the ongoing negotiations on land issues against KLK Group plantations in Indonesia are detailed in Section 1.9: Time Bound Plan.  Continual improvement plans Continual Improvement Plans in key operations for the mill and Complied (Criterion 8.1); estates have been identified, documented and implemented.

 Public summary of certification Public summary of certification assessment reports are available Complied assessment report; from the company upon request.  Human Rights Policy (Criterion The Human Rights Policy was documented and incorporated as Complied 6.13). part of the Sustainability Policy dated 01 Dec 2014 approved by CEO, Tan Sri Dato’ Seri Lee Oi Hian. Copies of the policy found to be displayed at prominent locations in the POM and estates. Briefing and communication to all levels of the workforce, both administrative and operations departments were provided. Criterion 1.3 Growers and millers commit to ethical conduct in all business operations and transactions. Indicators Findings and Objective Evidence Compliance 1.3.1 There shall be a written policy Code of ethical conduct and integrity for mill and estates Complied committing to a code of ethical incorporated as part of the Sustainability Policy dated 01 Dec 2014. conduct and integrity in all operations and transactions, which shall be Copies of the policy were found to be displayed at prominent documented and communicated to all locations in the POM and estates. levels of the workforce and operations. Briefing and communication to all levels of the workforce, both Minor Compliance administrative and operations departments were provided and verified to be recorded and understanding by personnel was confirmed via interviews done at POM and estates during current assessment.

Principle 2: Compliance with applicable laws and regulations Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. Indicators Findings and Objective Evidence Compliance 2.1.1 Evidence of compliance with SOP 2.0 “List & Summary of Applicable Laws and Regulation” Complied relevant legal requirements shall be App 1 Issue 1 / Rev. 1 dated 01/06/2015 established for available. identification, implementation & compliance and review of legal Major Compliance requirements applicable to the company. The company has established a common Legal Register for both mill and estates identifying relevant applicable legal requirements, Licenses, Permits, Certificates and compliances status. Example of the legislations and legal requirements identified in the register as follows: • OSHA and Regulations Act 1994 • Factories and Machinery Act 1967, Regulations 1970 • National Land Code 1965

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 19 of 94 Re-certification (Transfer CB)

• Environmental Quality Act 1974 • Environmental Quality (Scheduled Wastes) Regulations 2005 • Pesticides Act and Regulations Act 149 • Poison Act Regulations 1952 (Act 356) • Industrial Relations Act and Regulation Act 177 • Workmen’s Compensation Act 1952 • Trade Union Act 1959 • Land Acquisition Act 1960 • Sales Tax Act 1972 • MPOB Licence • Diesel and petrol permits • Road Transport Act 1987 (Act 333) • Weight and Measures Act 1972, regulations 16, 28A, 45) The Legal Register covering the applicable local and international laws and regulations is available at the mill and estates and was verified to be reviewed for any relevant updates. Legal compliance checklists used for monitoring the validity and renewal of permit/licenses: Steam engineers (Grade 1 and 2), boilermen and electricians were noted to be with valid certificates from relevant authorities (DOSH and Energy Commission). The POM has maintained a boiler register that indicate the date of commission, cleaned, inspected, tested or repaired. Valid certificates of fitness for boilers, sterilizers, air receivers, thermal deaerator, steam separator, vacuum oil dryer, etc. issued by DOSH. Valid license for diesel generators issued by Energy Commission (“Suruhanjaya Tenaga”). Valid licenses for authorized gas tester (ACT), authorized entrant and standby by person for confined space activities in POM. Occupational Health and Safety Act 1994 – safety and health meetings to be conducted at quarterly intervals. Noise Monitoring Report is available. Legal documents (work permits, passports) of foreign workers in the estates. Insurance coverage is available for foreign workers in the estates. Based on the site observations, interviews and records checked, there was evidence of compliance with the relevant laws, regulations, local and international laws at the POM and estates. There were no cases of any violation or actions imposed by relevant authorities. Statutory returns to relevant authorities found to be in compliance. For examples, JKKP8 for the reporting of incidences and accidents to DOSH and the Quarterly Return Form as per First Schedule of the Environmental Quality (Prescribed Premises) (Crude Palm-Oil) Regulations, 1977. 2.1.2 A documented system, which The listing of all the relevant laws applicable included the Complied includes written information on legal international laws and conventions ratified by the Malaysian requirements, shall be maintained. government are documented in the Legal Register. Minor Compliance The documented system for identifying, determining, reviewing and updating applicable legal and other requirements has been satisfactorily implemented. 2.1.3 A mechanism for ensuring The mechanism for ensuring compliance involved updating (when Complied compliance shall be implemented. necessary) and an annual review with the compliance status Minor Compliance indicated in the Legal Register was implemented.

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 20 of 94 Re-certification (Transfer CB)

The PMU had also conducted internal audits on the POM and estates for determining compliance of its operations with legal requirements and records were maintained. 2.1.4 A system for tracking any Changes and amendment in laws and regulations are monitored Complied changes in the law shall be through the following manner. implemented. • Enquiring the laws books publisher. Minor Compliance • Communication with law/enforcement officers. The PMU subsequently ensured that the changes were adequately updated. Legal Register reviewed on 28/02/2018 included the Animal Welfare Act 2015 (Act 272) effective 18/07/2017. Based on the site observations, interviews and records updated, the system used is appropriate to the operations at the PMU.

Criterion 2.2 The right to use the land is demonstrated, and is not legitimately contested by local people who can demonstrate that they have legal, customary or user rights. Indicators Findings and Objective Evidence Compliance 2.2.1 Documents showing legal Copies of the land titles of estates were maintained and noted to Complied ownership or lease, history of land tenure (confirmation from community be legally owned by the KLK Group. leaders based on history of customary The original copies are maintained by the Corporate Head Office. land tenure, recognised Native The legal use of the land confirmed to be for the cultivation of oil Customary Right (NCR) land) and the palms and agricultural use. actual legal use of the land shall be There were no recorded or known disputes over the ownership of available. the land. Major Compliance 2.2.2 There is evidence that physical It was verified that there has been no change to the stated land Complied markers are located and visibly maintained along the legal boundaries titles and designated use for cultivation of oil palm and particularly adjacent to state land, agricultural use. NCR land and reserves. Locations of several boundary stones and pole markers were Minor Compliance visited and verified to be within the boundary perimeter of the estates. On-site verification confirmed that there has been no planting beyond the legal demarcated boundary areas of the mill and estates. 2.2.3 Where there are or have been There has been no dispute on the land rights in this PMU. As Complied disputes, additional proof of legal such, the process of fair compensation and FPIC is currently not acquisition of title and evidence that required to be applied. fair compensation has been made to The company has SOP 3B “Responsible Development for New previous owners and occupants shall Planting” dated 01/01/2017, which defined the FPIC process for be available, and that these have been acquiring land and disputes management under SOP 3A “Land accepted with free, prior and informed consent (FPIC). Acquisition (For OP Planting)”. Minor Compliance 2.2.4 There shall be an absence of There was no land conflict in this PMU. Not significant land conflict, unless applicable requirements for acceptable conflict resolution processes (see Criteria 6.3 and 6.4) are implemented and accepted by the parties involved. Major Compliance 2.2.5 For any conflict or dispute over There are no land disputes in the PMU. As such the process of Not the land, the extent of the disputed participatory mapping is not applicable for verification of applicable area shall be mapped out in a implementation. participatory way with involvement of affected parties (including neighbouring communities and relevant authorities where applicable).

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 21 of 94 Re-certification (Transfer CB)

Minor Compliance 2.2.6 To avoid escalation of conflict, No evidence that the palm oil operations have instigated violence Not there shall be no evidence that palm in maintaining peace and order in their current and planned applicable oil operations have instigated violence operations. in maintaining peace and order in their current and planned operations. Major Compliance Criterion 2.3 Use of the land for oil palm does not diminish the legal, customary or user rights of other users without their free, prior and informed consent. Indicators Findings and Objective Evidence Compliance 2.3.1 Maps of an appropriate scale Location: All Estates of Changkat Chermin Grouping Major NC# showing the extent of recognised legal, The maps of all the estates need to include latitudes and OCL-01 customary or user rights (Criteria 2.2, longitudes and indicate the legal boundary and landscape of 7.5 and 7.6) shall be developed the neighbouring / surrounding areas of the estates. through participatory mapping involving affected parties (including The lands at the PMU are legally owned by KLK and no other users neighbouring communities where were identified in the land area. applicable, and relevant authorities). The existing estates are not encumbered by any customary land Major Compliance rights and therefore the process of participatory mapping is not required. 2.3.2 Copies of negotiated agreements The lands at the PMU are legally owned by KLK. Records are Complied detailing the process of free, prior and available to show such land acquisition complied with legal informed consent (FPIC) (Criteria 2.2, requirements without infringement of any legal rights that require 7.5 and 7.6) shall be available and free, prior and informed consent (FPIC). shall include: a) Evidence that a plan has been developed through consultation and discussion with all affected groups in the communities, and that information has been provided to all affected groups, including information on the steps that shall be taken to involve them in decision making; b) Evidence that the company has respected communities’ decisions to give or withhold their consent to the operation at the time that this decision was taken; c) Evidence that the legal, economic, environmental and social implications for permitting operations on their land have been understood and accepted by affected communities, including the implications for the legal status of their land at the expiry of the company’s title, concession or lease on the land. Minor Compliance 2.3.3 All relevant information shall be No cases of land claims in this PMU. Not available in appropriate forms and As such this process is not applicable for verification. applicable languages, including assessments of impacts, proposed benefit sharing, and legal arrangements. Minor Compliance 2.3.4 Evidence shall be available to This process is not applicable during current assessment. Not show that communities are applicable represented through institutions or representatives of their own choosing, including legal counsel.

Major Compliance

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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Principle 3: Commitment to long-term Economic & Financial Viability Criterion 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability. Indicators Findings and Objective Evidence Compliance 3.1.1 A business or management plan Business Plans for 3 years (FY Oct 2017/Sep 2018, FY Oct 2018/ Complied (minimum three years) shall be Sep 2019, FY Oct 2019/Sep 2020) for the PMU have been documented that includes, where prepared by the Palm Oil Mill and estates. appropriate, a business case for scheme smallholders. Details of the Business Plans include the following: Major Compliance (1) Staff and Labour requirements; (2) Crop projection; FFB yield/ha trends; (3) Mill extraction rates; OER & KER trends; (4) Cost of Production; Cost/mt FFB trends; (5) Cost of Production; Cost/MT CPO trends; (6) Financial indicators covering cost of labour, supervision, maintenance, depreciation, etc.). (7) Provisions for sustainability efforts and improvement programmes (environmental, social, Occupational Safety & Health, training, etc.). The Mill and Estate Managers monitor the operational performance against Key Performance Indications and targets (costs, FFB yields, quality, productivity, pesticides usage, fertilizers usage, etc.) There is evidence of monitoring of costs against budget to achieve specified targets. Performances are discussed in the monthly meetings held at the PMU and issues and actions needed are recorded for follow up in the next monthly meeting. The records of these meetings were available and verified during the audit. Monthly, quarterly, half-yearly and yearly reports are submitted to the HQ. 3.1.2 An annual replanting programme Annual replanting program for the estates had been prepared for Complied projected for a minimum of five years five years (FY Oct 2017/Sep 2018 to FY Oct 2021/Sep 2022). (but longer where necessary to reflect the management of fragile soils, see The replanting areas (ha) are as follows: Criterion 4.3), with yearly review, shall Estate 2017/18 2018/19 2019/20 2020/21 2021/22 be available. Kampar 0 94 66 96 46 Minor Compliance Pinji 107 0 0 0 0 Lekir 0 0 125 0 139 Raja Hitam 0 0 0 0 0 A replanting cycle of 25 years has been adopted by the group.

Principle 4: Use of appropriate best practices by growers and millers Criteria 4.1 Operating procedures are appropriately documented, consistently implemented and monitored. Indicators Findings and Objective Evidence Compliance 4.1.1 Standard Operating Procedures POM has documented the following procedures: (SOPs) for estates and mills shall be 1. SOPs for Palm Oil Mill operations from reception of FFB, documented. Weighbridge, Loading Ramp, Sterilization, Hoisting & Threshing, Major Compliance Empty Bunch Conveyor, Press & Digester, Clarification, Depericaroer Station, Nut & Kernel, Boiler, Engine Room, Raw Water Treatment Plant, Effluent Treatment Plant, Workshop

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 23 of 94 Re-certification (Transfer CB)

Practices, etc. for the processing until the delivery of processed oil and POME management. 2. Laboratory and Milling Control Handbook (2nd Revision, 1999), 3. Sustainability Manual & SOPs (01 Jun 2015). 4. Procedures for Safe Work Rev. 1/2017- SOPs for safe working practices for all operations in the POM. 5. Guidelines for Hazard Identification, Risk Assessment and Risk Control (DOSH) – OSH Hazards & Risk Assessment on mill activities and HIRARC.

6. Supply Chain Procedure SOP 18.0 Issue 3 / Rev. 2 dated 05/05/2018.

An observation raised concerning the SOPs for Palm Oil Mill operations did not have any issue or revision control status Obs # to ensure that the latest version of these procedures are OCL-01 being used.

The estates have the following SOPs: 1. Group SOP for Estate Operations - Good Agricultural Practices (GAP) that incorporated the policy statement, objective and recommended best practices - The GAPs cover harvesting, field upkeep, nutrition, pests and diseases, conservation, by-product, replanting nursery, field identification, roads and drains. 2. Sustainability Manual & Sustainability SOPs (01 Jun 2015). 3. Guidelines for Hazard Identification, Risk Assessment and Risk Control (DOSH) – OSH Hazards & Risk Assessment on estate activities and HIRARC.

Relevant Key Performance Indicators (KPIs) specified for quality, environment, safety and cost control at the POM and estates. 4.1.2 A mechanism to check Records of implementation of SOPs were verified, which included consistent implementation of procedures shall be in place. system monitoring via internal audits and monitoring of operational activities at the field. Minor Compliance Internal audit on the POM conducted by the Sustainability Team on 03/04/2018. Internal audits on the Kampar, Pinji, Lekir and Raja Hitam Estates conducted by the Sustainability Team on 26/03/2018, 02/04/2018, 05/04/2018 and 03/04/2018 respectively. Corrective actions taken on the non-conformances raised and the non-conformances were closed off.

Monitoring (i.e. daily, weekly and monthly) was done by Field Supervisors and Mandores. Records had been kept by the staff concerned for each operation to monitor the procedure and progress of work and these records would be checked by the Assistant Manager and the Manager regularly.

On-site assessment confirmed that the records were satisfactorily maintained. Location: Pinji Estate Absconded worker incident reported on 31 Mar 2018 at this estate. A police report had been made. However, as to date, Minor NC# the Operating Centre did not report to the Human Resource WN-01 Department (HRD) at HQ in accordance with the SOP so that HRD can submit the necessary documents to Labor Office & Immigration Department.

4.1.3 Records of monitoring and any Records of monitoring and actions taken had been maintained for Complied actions taken shall be maintained and available, as appropriate. more than 12 months at the mill and estates.

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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Minor Compliance Daily Muster chits and briefing records were available at POM and at estates. Actual operational and field activities were verified during on-site audit at the POM and estates. Verified that estates monitoring records on spraying, manuring and harvesting operations were maintained and available at the estates. 4.1.4 The mill shall record the origins The mill received FFB from its own estates and diverted FFB from Complied of all third-party sourced Fresh Fruit other KLK certified estates. There was no FFB from out growers. Bunches (FFB). Verified that the records indicated the source origin of FFB. Major Compliance Criteria 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. Indicators Findings and Objective Evidence Compliance 4.2.1 There shall be evidence that SOPs for GAP as established are maintained and reviewed by the good agriculture practices, as contained in Standard Operating Estate Management. Procedures (SOPs), are followed to Agronomist reports by the Agronomist from Applied Agricultural manage soil fertility to a level that Resources were available for Kampar, Pinji, Lekir and Raja Hitam ensures optimal and sustained yield, Estates dated 17/04/2017, 20/03/2017, 14/08/2017, and where possible. 09/08/2017 respectively. Minor Compliance Annual fertilizer inputs had been reviewed by the Agronomist and monitoring records were also reviewed by the respective Estate management.

GAP for minimization of soil erosion and maintenance of soil

fertility is also maintained via the frond stacking and selective pesticide weeding activities. Soil sampling and leaf sampling records provided guide for the fertilizer application and all recommendations had been properly followed at estate levels. Pesticides spraying records were available and maintained. Samples checked for usage and inventory records for the months between Oct 2017 and Mar 2018. Evidences provided and field audit verified that good agricultural practices were adhered. Location: Pinji Estate It was found that there were a few holes in the roof of the Minor NC# fertilizer store, where bags of fertilizers were stacked directly OCL-01 on the concrete flooring. Although the concrete floor is dry, there were some water mark patches. 4.2.2 Records of fertiliser inputs shall The fertilizer application records at the estates over the past 12 Complied be maintained. Minor Compliance months were checked. The monthly summary of fertilizer applied per hectarage had been verified to be satisfactorily maintained and updated. 4.2.3 There shall be evidence of Leaf sampling and analysis had been carried out annually for Complied periodic tissue and soil sampling to monitor changes in nutrient status. Kampar, Pinji, Lekir and Raja Hitam Estates in Nov 2016, Jan Minor Compliance 2017, Apr 2017 and Mar 2017 respectively. Soil sampling and analysis (a 5 year cycle) carried out for Kampar, Pinji, Lekir and Raja Hitam Estates in Dec 2016, Jan 2017, Mar 2017 and Mar 2017 respectively. The leaf and soil sampling and analysis reports for all the estates audited were sighted. Fertilizer recommendations by the Agronomist for identified estate blocks to sustain the long term soil fertility and nutrient efficiency were satisfactorily followed.

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 25 of 94 Re-certification (Transfer CB)

4.2.4 A nutrient recycling strategy shall EFB mulching had been carried out at immature palms and for Complied be in place, and may include use of mature areas along the inter-row. EFB were spread in one row Empty Fruit Bunches (EFB), Palm Oil layer. Mill Effluent (POME), and palm Records of the quantities of EFB mulching including locations residues. Minor Compliance applied were maintained at the estates. POME is applied to the field in Changkat Chermin Estate, where the POM is located. Criteria 4.3 Practices minimise and control erosion and degradation of soils. Indicators Findings and Objective Evidence Compliance 4.3.1 Maps of any fragile/marginal Based on the soil maps and field visit verification done on-site, Complied soils shall be available. there was no fragile soil or marginal soils on the estates. Major Compliance Soil series were noted as follows: Kampar Estate – Holyrood, Tawar, Lintang, Local Alluvium. Pinji Estate (Home Division) – Holyrood, Malacca, Tandak. Pinji Estate (Hillrise Division) – Serdang, Munchong/Gajah Mati/Terap, Munchong, Bungor, Malacca. Lekir Estate – Bertam, Clay Loam, Gali, Jawa, Puah. Raja Hitam Estate – Alma, Sepayang, Clay Loam. 4.3.2 A management strategy shall be The PMU has a SOP (Best Management Practices) for erosion Complied in place for plantings on slopes control during replanting or any activities involving earth between 9 and 25 degrees unless disturbance. Steps taken for erosion control are soil stabilization, specified otherwise by the company’s run-off control and sediment trapping to mitigate the disturbed SOP. Minor Compliance earth entering waterways. There was no soil erosion noted during the field visit. No soil erosion encountered at estates audited as leguminous cover crop, macuna bracteata was well established. Planting terraces constructed on land with slope more than 6o. 4.3.3 A road maintenance programme Road maintenance programme and budget allocated for year Complied shall be in place. Minor Compliance 2018 are available at the estate. The programme covers road grading, compacting and patching which were progressively implemented. Estate roads were verified to be in satisfactory condition at the fields visited. 4.3.4 Subsidence of peat soils shall be It was confirmed during on-site assessment that there is no Not minimised and monitored. A Applicable documented water and ground cover presence of any peat soil on the estates. management programme shall be in place. Major Compliance

4.3.5 Drainability assessments where There was no peat soil on the estates as confirmed by auditor’s Not necessary will be conducted prior to Applicable replanting on peat to determine the on-site assessment long-term viability of the necessary drainage for oil palm growing. Minor Compliance

4.3.6 A management strategy shall be Based on the estate soil maps and visit to the estates, there were Complied in place for other fragile and problem soils (e.g. podzols and acid sulphate no other fragile and problematic soils on the estates. soils). Minor Compliance

Criteria 4.4 Practices maintain the quality and availability of surface and ground water. Indicators Findings and Objective Evidence Compliance

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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4.4.1 An implemented water Location: POM, Pinji and Lekir Estates. management plan shall be in place. Minor Compliance There is a generic Water Management Plan (SOP 5.0) documented for the POM and estates that include frequency of sampling for water analysis at river, final discharge point, Minor NC# OCL-02 tube wells, etc. However, the POM and estates shall establish, document and implement a site specific Water Management Plan that clearly identify the water sources, monitoring of the impact of activities on the water management and implement appropriate action. For examples, (1) POM – Management of water from tube wells used for FFB processing; (2) Pinji Estate – Presence of monsoon drains that carry water from neigbouring residential areas into the estate; (3) Lekir Estate – Water sampling and analysis is only for B.O.D at identified points of drains / streams leading to rivers outside the estate. The water analysis need to include tests for any chemical residues. The water for domestic use at the POM and all estates is treated water from the government utility department, “Lembaga Air Perak (LAP)”. The treated water supply complies with the Ministry of Health Specification for Drinking Water, which include the requirement of 0 in 100 ml for E.Coli. At Pinji Estate, the water for domestic use at the line site is collected from a nearby temple, which has a connection to piped water supply from LAP. At Pinji Estate, the water from tube wells is only used for a supplement for washing and not for drinking and cooking. At the POM, water from three tube wells used for mill processing. Rainfall data found to be monitored as part of the water management plan. There is no river or waterway passing through Kampar Estate, Pinji Estate and Lekir Estate. There are two rivers (Sungai Kayan and Sungai Tiram) outside Lekir Estate. At Raja Hitam Estate, there is one river (Sungai Anak Machang at the north boundary of the estate and another river (Sungai Raja Hitam) passing through the middle of the estate. Water samples were taken twice a year at the inlet and outlet of the rivers and tested for pH, BOD, COD, Suspended Solids, Ammoniacal Nitrogen and Water Quality Index. Results verified to meet the specified requirements. 4.4.2 Protection of water courses and Appropriate buffer zones with signages and markings had been Complied wetlands, including maintaining and maintained along streams passing through the estates. restoring appropriate riparian and other buffer zones (refer to national best practice and national guidelines) shall be demonstrated. Major Compliance

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4.4.3 Appropriate treatment of mill POME is applied to the field in Changkat Chermin Estate, where Complied effluent to required levels and regular monitoring of discharge quality, shall the POM is located. Effluent water is not discharged into be in compliance with national waterway. regulations (Criteria 2.1 and 5.6). Water samples were taken at monthly intervals at the outlet of the Minor Compliance final discharge at the POM effluent pond. Tests conducted for pH, BOD, COD, Total Solids, Suspended Solids, Oil & Grease, Ammoniacal Nitrogen and Total Nitrogen. Analysis results were noted to be within DOE requirements. (DOE limit of 5,000 ppm max. for land application). Stack emission monitoring by CEMS – Refer to 5.6.3 4.4.4 Mill water use per tonne of Fresh Water usage in the mill from Oct 2017 to Apr 2018 ranged from Complied Fruit Bunches (FFB) (see Criterion 1.17 to 1.98 m3/tonne FFB. The average usage of 1.58 m3/tonne 5.6) shall be monitored. FFB was noted to be at the upper range of the industrial norm of Minor Compliance 1.2 to 1.5 m3/tonne FFB. Criteria 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management techniques. Indicators Findings and Objective Evidence Compliance 4.5.1 Implementation of Integrated IPM Plan for the estates includes the planting of beneficial plants Pest Management (IPM) plans shall be monitored. and control of damage by pest and plant diseases. Major Compliance Location: Pinji Estate The estate did not have a programme for planting of

beneficial plants (Cassia cobanensis, Antigonon leptopus Major NC# and Turnera subulata) for biocontrol. It was also noted that OCL-02 there were frequent cases of bagworms in the region.

Pinji Estate carried out monitoring for sign of new bagworms attack via vigilant observation and reporting by harvesters and regular bagworm census. Treatment by trunk injection of crotophos of methamiddaphos if the bagworns census exceeded the threshold level of > 5 larvae per frond.

The other audited estates have a programme for planting of beneficial plants for biocontrol. Observation: Kampar Estate has an IPM programme that indicated the planted areas for Antigonon leptopus and Obs # Turnera subulata. This programme should be expanded to OCL-01 include the planting of Cassia cobanensis,

Records on areas planted and the planned stretches for planting has been indicated in the estate field map. Barn owl used for the control of rodents (rats). Barn Owl boxes census carried out and location maps available. Rat baiting is appropriately applied according to census results obtained. Verified that there were no cases of infestation by rhinoceros beetles. 4.5.2 Training of those involved in IPM IPM training conducted by for all those involved in IPM Complied implementation shall be demonstrated. Minor Compliance implementation. Training records for staff and workers on IPM implementation for the past 12 months were available and was verified to be satisfactorily maintained at the estate office. Criteria 4.6 Pesticides are used in ways that do not endanger health or the environment. Indicators Findings and Objective Evidence Compliance 4.6.1 Justification of all pesticides Register of agrochemicals use with written justification is available Complied used shall be demonstrated. The use (SOP 6.0 Appendix 2.0 Issue 1 / Rev 0 dated 01/06/2015).

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 28 of 94 Re-certification (Transfer CB) of selective products that are specific Examples of chemicals used are as follows: to the target pest, weed or disease  Glyphosate isopropyl amine 41% – Ally and which have minimal effect on non-  Indaziflam 45.5% - Alion target species shall be used where available. Verified that the specific pesticides had been used to deal with the Major Compliance respective target pest, weed or disease. 4.6.2 Records of pesticides use Records of pesticides and their active ingredients used, LD50, Complied (including active ingredients used and their LD50, area treated, amount of area treated, amount of a.i. applied per ha, and number of active ingredients applied per ha and applications have been maintained. number of applications) shall be provided. Major Compliance

4.6.3 Any use of pesticides shall be The KLK Group Policy for the estate to minimize the use of Complied minimised as part of a plan, and in pesticides in accordance with IPM plan is maintained. accordance with Integrated Pest Management (IPM) plans. There shall The pesticide reduction program is monitored on usage per be no prophylactic use of pesticides, hectare basis. except in specific situations identified There was no prophylactic use of pesticides carried out at the in industry’s Best Practice. estates. Major Compliance

4.6.4 Pesticides that are categorised Since 01/07/2011, no usage of paraquat as stated in KLK Group Complied as World Health Organisation Class Policy. 1A or 1B, or that are listed by the Stockholm or Rotterdam Conventions, and paraquat, are not used, except in specific situations identified in industry’s Best Practice. The use of such pesticides shall be minimised and eliminated as part of a plan, and shall only be used in exceptional circumstances. Pesticides selected for use are those officially registered under the Pesticides Act 1974 (Act 149) and the relevant provision (Section 53A); and in accordance with USECHH Regulations (2000). Minor Compliance

4.6.5 Pesticides shall only be handled, All pesticide operators (there are no contractor’s workers engaged used or applied by persons who have for spraying) have attended training on the safe handling and completed the necessary training and application of pesticides in compliance with Regulation 22 of the shall always be applied in accordance Pesticides Act 1974. with the product label. Appropriate safety and application equipment shall Appropriate safety and application equipment (safety boots, safety be provided and used. helmets, rubber boots, cartridge masks, safety goggles, gloves All precautions attached to the and overalls) have been provided and used by the pesticides products shall be properly observed, operators. applied, and understood by workers All precautions attached to the pesticides (MSDS) have been (see Criterion 4.7). Major Compliance observed, applied and understood by the workers.

Location: Pinji Estate The spraying equipment and sprayers’ PPE were found to be Major NC# stored in the General Store together with other items. Also, OCL-03 sprayers’ aprons were hung to dry near a stack of bags of animal feed for the buffalos.

Observation: Kampar Estate and Pinji Estate have facilities Obs # for the mixing of pesticides, shower and storage area for PPE. However, the one shower room for male and one OCL-02 shower room for female may not ensure the prompt cleaning up of the workers after spraying work when in future there are more that the current number of 7 sprayers.

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Programme and training records verified to be satisfactory. The training include spraying technique, precautions and symptoms of toxic reactions such as skin disorders, rashes, mouth and throat pain, breathing difficulties or nail problems. Verified during field inspection and interviews with workers performing spraying and manuring activities at the estates. Portable warning signboards noted to be displayed at areas of spraying activity (5th Schedule). First Aid Kits found to be available (as per 4th Schedule) at the field blocks during pesticides spraying in the fields. The contents and usage were satisfactorily recorded. 4.6.6 Storage of all pesticides shall be Storage of pesticides found to be kept under lock and key and its Complied according to recognised best use in accordance with the Occupational Safety and Health Laws practices. All pesticide containers shall and Regulation 9 of the Pesticides Act 1974. be properly disposed of and not used for other purposes (see Criterion 5.3). Emergency showers and eye wash are available at the mixing Pesticides shall be stored in area and near the pesticides store in case of accidents and tested accordance to the Occupational Safety to be functional. and Material Safety Data Sheets (MSDS) are available in the store. Health Act 1994 (Act 514) and Regulations and Orders, Pesticides The MSDS are in English and Bahasa Malaysia (understood by Act 1974 (Act 149) and Regulations. the workers). Major Compliance Used chemical containers were either reused as containers for spraying solution. For disposal as scheduled waste, empty pesticide containers are triple rinsed and pierced at the bottom. 4.6.7 Application of pesticides shall be Pesticides had been applied using the Best Management Complied by proven methods that minimise risk Practices that minimize risk and impacts. and impacts. Minor Compliance The pesticide operators found to understand the use of the right nozzle, spray drift, spray quality and run-off. Programme and training records verified to be satisfactory. 4.6.8 Pesticides shall be applied The company has a policy not to carry out any aerial application Complied aerially only where there is documented justification. Communities of pesticides. shall be informed of impending aerial This policy is verified to be adhered at the PMU. pesticide applications with all relevant information within reasonable time prior to application. Major Compliance

4.6.9 Evidence of continual training to The Annual Training Plan includes training on pesticides handling. Complied enhance knowledge and skills of All new pesticides operators were trained before being assigned employees and associated to work with pesticides. In addition, based upon training needs, smallholders on pesticide handling the existing pesticide operators (there are no contractor’s workers shall be demonstrated or made available. (see Criterion 4.8). engaged for spraying) attended continual training to enhance their Minor Compliance knowledge and skills on pesticides handling. Training attendance and records for year 2017 for related personnel were verified to be maintained. Information and safety precautions on the pesticides displayed on the notice board and next to the pesticides in the store. 4.6.10 Proper disposal of waste Scheduled waste had been disposed of through Aliran Segar Sdn. Complied material, according to procedures that Bhd. and Kenep Waste Management Sdn. Bhd. (both are licensed are fully understood by workers and contractors approved by DOE). managers shall be demonstrated (see Criterion 5.3). Records of scheduled waste collection at 180 days interval Minor Compliance verified to be satisfactorily maintained. 4.6.11 Specific annual medical Annual medical surveillance in accordance with OSHA USECHH Complied surveillance for pesticide operators, and documented action to treat related 2000 requirements Schedule 1 and 2 for all pesticide operators in health conditions, shall be all the estates were implemented. demonstrated. Major Compliance

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The CHRA reports for the estates verified to be within the 5 years validity period and recommendations have been satisfactorily followed: (a) Kampar Estate – CHRA report dated 15/12/2017. (b) Pinji Estate – CHRA report dated 18/07/2013. (c) Lekir Estate – CHRA report dated 06/03/2018. (d) Raja Hitam Estate – CHRA report dated 09/06/2016. Latest medical surveillance examination carried out for the workers (including sprayers) exposed to chemicals and pesticides on the following dates: (a) Kampar Estate – 27/09/2017. (b) Pinji Estate –17/01/2018. (c) Lekir Estate – 19/01, 30/01 & 01/02/2018. (d) Raja Hitam Estate – Nov & Dec 2017. Samples of the medical surveillance reports were checked and no abnormalities reported by the Medical Doctor. The medical reports showed that there was no case of low blood cholinesterase levels. All the workers declared by the Medical Doctor as fit for work with pesticides. It is confirmed by the Estate Manager that any worker with health condition considered as unfit for work with pesticides shall be re- designated to other types of field work. No such cases are found in the estates as at the date of assessment. Pesticides operators were interviewed during field visits and feedback received that they do not have any symptoms of toxic reactions such as skin disorders, rashes, mouth and throat pain, breathing difficulties or nail problems. Although there were female manurers, all the sprayers are males. The female manurers knew about not being allowed to do work having exposure to chemicals and pesticides during pregnancy and breast-feeding. Besides the annual medical surveillance, monthly clinical checks every 3 months (to check lungs gastro intestinal, urinary system, nails, skin, etc.) also carried out by Health Assistant on sprayers and records maintained indicate no cases of toxic reactions. 4.6.12 No work with pesticides shall Verified from records, field inspections and interviews that no Complied be undertaken by pregnant or breast- feeding women. pregnant or breast-feeding woman had been offered or engaged Major Compliance in work involving pesticides handling.

Criteria 4.7 An occupational health and safety plan is documented, effectively communicated and implemented. Indicators Findings and Objective Evidence Compliance The occupational health and safety Occupational Safety and Health (OSH) plan in compliance with Complied plan shall cover the following: OSH Act and Factory & Machinery Act 1967 was documented and implemented. 4.7.1 An occupational health and OSH Policy found to be clearly displayed at POM and in the safety policy shall be in place. An occupational health and safety plan estate office. Adequate posters, regulations, newsletters were covering all activities shall be prominently displayed on notice boards. Interviewed workers documented and implemented, and its demonstrated awareness towards occupational safety and health. effectiveness monitored. The Safety & Health Officer is in charge of safety and health Major Compliance planning, operation & coordination. Mill & Assistant Mill Managers and Estate Managers / Assistant Estate Managers are also directly involved. Records on training had been verified at the POM and estates. Analysis on the understanding of training by the workers had been verified.

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4.7.2 All operations where health and Risk assessment carried out on operations where health and Complied safety is an issue shall be risk safety is an issue in order to determine the significant hazards. assessed, and procedures and actions Significant hazards determined and documented include noise shall be documented and implemented exposure, pesticides/ chemicals exposure, accident, fire. to address the identified issues. All precautions attached to products shall Procedures and actions implemented to mitigate the hazards. be properly observed and applied to Assessment of noise levels in the POM was done on 11/06/2014 the workers. and Consultant Report is available. Work areas identified with Major Compliance high noise levels are the boiler station and engine room where noise level exceeded 85 db. Mill management have taken steps to reduce the noise levels by construction of a room to isolate the gen sets, reducing the exposure time to high noise and mandatory use of both ear plugs and ear mufflers. Annual audiometric test conducted for all mill staff and workers. The latest audiogram was carried out for all 95 POM employees on 04&05/05/2017. There were 6 employees whose audiometric reports indicated moderate hearing impairment and audiometric re-test carried out within six months. The OSHA Doctor submitted the audiometric report and JKKP 7 to JKKP Putrajaya and Perak. The audiometric re-test report stated that there is no noise induced hearing loss (NIHL) and recommendation to reduce noise exposure for these workers. The Doctor will only refer worker with Induced Hearing Loss to SOCSO for benefits in accordance with the regulations. Baseline audiogram and occupational and medical history records of workers maintained. The employees exposed to high noise levels were interviewed. The workers are aware of the danger of hearing loss due to prolonged exposure to high noise. The workers knew about the complaints process and mechanism available. “Permit to work” system applied at the POM. Staff and workers have been trained and certified by NIOSH for gas entrant and stand-by involving work in confined space. Appropriate PPE (safety boots, safety helmets, rubber boots, cartridge masks, safety goggles, gloves, overalls, ear plugs, ear mufflers) verified to be provided to and being used by the workers. Associated training provided to address safety and health issues. Warning signs sighted at high noise areas and ear plugs and ear mufflers to be worn. There are also warning signs to use other PPE such as helmet and safety boots. An audit for determining compliance with the minimum standards had been conducted on all types of PPE used. Adequate fire extinguishers and hose reels found to be located at strategic locations, operational and maintained in good conditions. Location map of fire extinguishers is available. First Aid equipment was available at POM, estates and at worksites. Samples of First Aid box was checked and contents found to be complete and in usable order during field visit. Training for workers in First Aid was carried out in the mill and estates and records maintained. The POM and estates have established their accident reporting KPI and incident monitoring implemented. Yearly reporting of JKKP8 regulations was submitted to JKKP on time, i.e. in January of each year. Supporting documentations and evidences of cases reported are maintained and adequately followed up including status of compensation payments made to victims / workers. The Safety & Health Officer maintains records on the rate of

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accidents to workmen, trends in rate of accidents, fatalities and non-fatalities captured to prevent mishaps. Verified that additional HIRARC reviews also made by the Safety & Health team upon occurrence of incidences or accidents. 4.7.3 All workers involved in the Training programme planned for year 2018 has included all operation shall be adequately trained categories of workers. in safe working practices (see Criterion 4.8). Adequate and Appropriate trainings on safe working practices are planned for: appropriate protective equipment shall - workers exposed to machinery and high noise levels, be available to all workers at the place - workers working in confined space, of work to cover all potentially - harvesters and loaders, hazardous operations, such as - pesticides operators and manurers . pesticide application, machine operations, and land preparation, Records of the trainings conducted in year 2017 are available and harvesting and, if it is used, burning. trainings held included firefighting, fire drill, first aid training, Major Compliance Emergency Response Team training and SOP training for sprayers, manurers, harvesters, loaders, tractor drivers, contractors and contractors’ workers (for FFB transportation). The above trainings were conducted and records were maintained. Evaluations were carried out on each of the trainings to determine its effectiveness.

Location: Lekir Estate

During site visit to the FFB ramp, one worker was found Major NC# handling FFB on top of lorry without wearing the appropriate WN-01 helmet and harness to protect himself from potential injury. 4.7.4 The responsible person/persons The responsible person (usually the Mandore or Headperson) had Complied shall be identified. There shall be been identified. Records of regular meetings between the records of regular meetings between responsible person and workers to discuss about health and the responsible person/s and workers. safety had been verified to be satisfactory. Understanding of the Concerns of all parties about health, safety and welfare shall be discussed safety and health requirements was also verified during interviews at these meetings, and any issues at field visit with the respective mandores available on duty. raised shall be recorded. Major Compliance

4.7.5 Accident and emergency Accident and emergency procedures had been written in English Complied procedures shall exist and instructions and Bahasa Malaysia and briefed to staff, workers, contractors shall be clearly understood by all and visitors. workers. Accident procedures shall be Workers trained in First Aid were present in the mill and field available in the appropriate language of the workforce. Assigned operatives operations. First Aid Kits are kept unlocked for emergency use. trained in First Aid should be present First Aid Kits were available at worksites and contents were in both field and other operations, and checked to be sufficient. Records on all accidents had been first aid equipment shall be available verified to be maintained satisfactorily. at worksites. Records of all accidents Quarterly review on accident cases had been carried out during shall be kept and periodically quarterly meeting of Safety, & Health Committee. Records on the reviewed. status of follow up done were updated. Minor Compliance

4.7.6 All workers shall be provided Medical care had been provided to all the workers. Complied with medical care, and covered by accident insurance. Local workers are covered by SOCSO, whereas foreign workers Minor Compliance are covered by Foreign Workers Compensation Scheme with insurance company. 4.7.7 Occupational injuries shall be Records on Lost Time Accident (LTA) metrics for year 2017 was Complied recorded using Lost Time Accident (LTA) metrics. verified to be satisfactorily maintained. Minor Compliance No cases of incidences and accidents for year 2017 as reported in the JKKP8 submitted to DOSH. Criteria 4.8 All staff, workers, smallholders and contract workers are appropriately trained.

Indicators Findings and Objective Evidence Compliance

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4.8.1 A formal training programme Training on RSPO P&C and RSPO Supply Chain were conducted Complied shall be in place that covers all aspects of the RSPO Principles and in Mar 2018. Interviews confirmed the satisfactory level of Criteria, and that includes regular understanding on the requirements. assessments of training needs and Training for various categories of operators, including all field and documentation of the programme. office staff, with regards to their duties and training needs had Major Compliance been reviewed on annual basis and appropriate training including

‘on-job’ training / supervision and briefings were satisfactorily documented. This was further confirmed during interviews done with sampled workers at the POM and estates. 4.8.2 Records of training for each Records of training provided for each employee, including new Complied employee shall be maintained. Minor Compliance employees were available and found to be satisfactorily maintained.

Principle 5: Environmental responsibility and conservation of natural resources and biodiversity Criteria 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 continual improvement. Indicators Findings and Objective Evidence Compliance 5.1.1 An environmental impact Environmental aspect and impact assessment had been Complied assessment (EIA) shall be documented. conducted and reviewed for the POM and estates on the following Major Compliance dates: (a) POM on 01 Mar 2018. (b) Kampar Estate and Pinji Estate on 01 Jan 2018. (c) Lekir Estate on 02 Mar 2018. (d) Raja Hitam Estate on 01 Mar 2018 The scope of assessment had included the management of mill effluents, management of pests and disease (IPM), maintenance of roads, drainage system fertilizing, spraying, transportation of FFB, schedule waste and garbage disposal, accordingly to the local requirements. The report had also included the action plans and recommendations to mitigate the negative effects and to promote the positive ones. The assessment had also included the relevant stakeholder to identify impacts and develop the mitigation measures such as relevant conservation activities applicable to the mill and estates. 5.1.2 Where the identification of The environmental management plan is in place and documented. impacts requires changes in current practices, in order to mitigate negative This includes the potential impacts and measures to mitigate the negative impacts. The identification of responsible person was effects, a timetable for change shall be developed and implemented within a also included.

comprehensive action plan. The action The environmental management plan is being implemented plan shall identify the responsible satisfactorily and effectively. person/persons. Minor Compliance At Raja Hitam Esate, the riparian marker and signages are Obs# already faded and difficult to visualize. SH-01

At Lekir Estate, it was observed that the demarcation on the extent of the riparian zones was not indicated on the ground. The drains leading to the natural water courses, Sungai Obs# Kayan and Sungai Tiram (located outside the estate) was SH-02 without the extent of the riparian marker. The location of the water sampling points was also not indicated on the map, and possibly on the ground. (This was originally a Minor NC that was re-graded as an observation after a decision by an Independent Panel on the

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disputed NC to re-grade the finding for follow-up at next assessment). 5.1.3 This plan shall incorporate a The monitoring of the documented environmental improvement Complied monitoring protocol, adaptive to plans is ongoing. operational changes, which shall be Implementation and monitoring of the documented environmental implemented to monitor the effectiveness of the mitigation improvement plans was reviewed on Jan 2018. The review has measures. The plan shall be reviewed taken into consideration the mitigation of negative impacts and as a minimum every two years to promotion of positive ones. reflect the results of monitoring and At the POM, the POME, ash and EFB is being delivered/recycle to where there are operational changes that may have positive and negative the plantation for fertiliser and moisture retention purposes. environmental impacts. Record on the delivery and usage of POME and EFB was made Minor Compliance available during the audit. At estates visited (Kampar estate, Pinji estate, Raja Hitam estate and Lekir estate), it was found that the disposal of plantation waste materials was properly monitored and recorded. The waste materials (mostly fertilizer bags and plastics) were recycled and recorded in a register book. Stacking of fronts was also done effectively. Monitoring and implementation of the environmental improvement plan were adhered to and found to be effectively implemented. Criteria 5.2 The status of rare, threatened or endangered species and other 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 operations managed to best ensure that they are maintained and/or enhanced. Indicators Findings and Objective Evidence Compliance 5.2.1 Information shall be collated in a HCV assessment for all estates visited were conducted in house High Conservation Value (HCV) assessment that includes both the by the sustainability team and documented in reports 2 Feb 2018, 1 Mac 2018, 2 Mac 2018 and 22 Mac 2018. There was no HCV planted area itself and relevant wider landscape-level considerations (such present inside the area at both the POM and estates. as wildlife corridors). The exercise has also taken into consideration all aspects of Major Compliance environmentally sensitive areas such as pond that is inside the management areas. Visits to site confirmed that all estates are surrounded by oil palm estates, belonging either to other companies or smallholders.

Perimeter boundaries bordering the estates with other lands were

well demarcated with markers. Trenches were also dug to clearly demarcate the perimeter boundary of the estates. At some instances, estate roads also serve as perimeter boundary. Location: Kampar, Pinji and Lekir Estates The existence of certain conservation areas / environmentally sensitive areas in the HCV assessment report of the following estates have not been consistently identified and recorded. For example, surau and temple were mentioned in Major NC# an estate but not in another estate. SH-01 1. At Kampar Estate - The existence of swamps has not been included as management areas although it was indicated in the map. 2. Pinji Estate - The flood prone areas at Hillrise Division were not taken into consideration as management areas. 3. Lekir Estate - The presence of stone/rocky area was not included in the management areas. 5.2.2 Where rare, threatened or Record showed no presence of the HCV/RTE within their Complied endangered (RTE) species, or HCVs, plantation boundary. However, occurrence of RTE, if any, will be are present or are affected by recorded. Nevertheless, a monitoring plan is in place and plantation or mill operations, measures being taken to maintain/enhance the surrounding appropriate measures that are

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Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 35 of 94 Re-certification (Transfer CB) expected to maintain and/or enhance management area. The measures were actively implemented and them shall be implemented through an on-going monitoring being done. action plan. Major Compliance Regular patrols within the mill and estates were being carried out and findings recorded by the respective Estate executives to monitor the management areas. Monitoring and control of any illegal hunting, fishing or collecting activities was also implemented. Also, signage that prohibit hunting, fishing and water polluting activities were verified on-site, found to have been satisfactorily maintained. 5.2.3 There shall be a programme to Program to educate the workforce about the status of RTE is in Complied regularly educate the workforce about place. the status of these RTE species, and The training program on the awareness of this subject matter was appropriate disciplinary measures conducted and extended to include officials and workers of the shall be instituted in accordance with company rules and national law if any estates. All estates visited had extended the awareness program. individual working for the company is Training has been conducted on 12 Feb 2018 and 13 Mac 2018 found to capture, harm, collect or kill and also on 2 May 2018. Record on the training program was these species. made available during the audit. Minor Compliance There was also evidence of commitment to discourage any illegal or inappropriate hunting, fishing or collecting activities via the signage erected around the affected areas which prohibit such activities. 5.2.4 Where an action plan has been The status of HCV and RTE species that are affected by Complied created there shall be ongoing plantation or mill operations was documented and reported; monitoring: • The status of HCV and RTE species Management plans were established and on-going monitoring was that are affected by plantation or mill done by the Estate Managers. operations shall be documented and The overall management and status of HCV/RTE at the estates reported; were reviewed and monitored and is ongoing. • Outcomes of monitoring shall be fed back into the action plan. Verification made during on-site assessment found it to be Minor Compliance effectively implemented. Currently, there is no such occurrence of RTE species in their estates. 5.2.5 Where HCV set-asides with It was verified that there has been no instance of HCV set-aside Complied existing rights of local communities have been identified, there shall be that conflicts with the rights of local communities at the estates evidence of a negotiated agreement and mill. that optimally safeguards both the HCVs and these rights. Minor Compliance

Criteria 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. Indicators Findings and Objective Evidence Compliance 5.3.1 All waste products and sources All waste products and sources of pollution were identified and Complied of pollution shall be identified and documented. Waste generated at both the mill and estates are documented. identified in the document “Environmental Aspect & Impact Major Compliance Assessment”. The documentation and identification of all the waste products such as scheduled waste, domestic waste , clinical waste and recyclable waste such as metal, plastic, mill waste and polluting materials e g. EFB, POME, Stack emissions and Boiler ashes were maintained and monitored at the mill. Scheduled Waste identified included spent hydraulic oil (SW 305), spent lubricant oil (SW 306), used chemical containers/drums (SW 409), used filters (SW 410), clinical waste (SW 404) and used batteries (SW 102). Records on the usage and disposal were well recorded and documented.

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Segregation of wastes i.e. general wastes and scheduled wastes was verified to be satisfactory carried out in the mill and estates. Proper storage areas were identified for the storage of the recyclable wastes at the mill and estates. 5.3.2 All chemicals and their At the mill, the disposal of used chemicals and containers were Complied containers shall be disposed of responsibly. done in accordance with their schedule on waste management as planned. Major Compliance Stores for scheduled waste were inspected and audited at site i.e. mill, and disposal was done by scheduled waste disposal company (TexCycle Sdn Bhd) authorized and licensed by Department of Environment. The mill has a proper Scheduled Waste Store for storing scheduled waste until time of disposal by DOE authorized waste disposal contractor. An inventory on all the chemical and containers used was available and up to date. 5.3.3 A waste management and The waste management and disposal plan were in place at both disposal plan to avoid or reduce pollution shall be documented and the mill and estates. It has been documented and implemented as required and is being carried out responsibly. implemented. Minor Compliance Segregation of wastes i.e. general wastes and scheduled wastes

was verified to be satisfactory carried out. Proper storage areas were identified for the storage of the recyclable wastes at the estates and mill. Appropriate secondary containment for the diesel skid tanks, chemical and scheduled waste storage areas

was verified to be maintained at the mill.

Scheduled waste disposal at estates was done by an appointed contractor that is licensed by the Department of Environment (Aliran Segar Sdn Bhd, Kenep Waste Management Sdn Bhd, PrimeChem Sdn Bhd). Latest disposal consignment was on the 13/23 Mac 2018 and 16 April 2018 and 17 May 2018. Records were made available for audit. The mill effluent was finally discharge for land application, with approval from the Department of Environment, vide license number: 004218 valid till 30 Jun 2018. The solid waste management and disposal plan using landfills was available at the estates. The landfill is used mainly for

disposal of household/line site waste. Landfill management is satisfactory. Recycling of crop residues / biomass i.e. EFB and POME had been implemented. Management of EFB application plans and progress reports were verified to be satisfactory. Recycling bins of three different colour codes for specific recycle waste were available in the mill and estates.

Location: Pinji Estate

The management and disposal of household waste at the line Minor NC# site was not effectively implemented. It was observed that household waste material and plastic bottles were strewn at SH-01 the line site compound. Obs# Observation: The management of the landfill at Lekir estate can be further improved. SH-03 Criteria 5.4 Efficiency of fossil fuel use and the use of renewable energy is optimised.

Indicators Findings and Objective Evidence Compliance 5.4.1 A plan for improving efficiency of Monthly record on energy consumption for both renewable and Complied the use of fossil fuels and to optimise non-renewable sources were kept and documented. It is

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Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 37 of 94 Re-certification (Transfer CB) renewable energy shall be in place and monitored to optimise use of renewable energy. Data is being monitored. compiled for comparison and control for future improvement. Minor Compliance Visit to the mill showed evident that they are compiling the data, document it for further action to improve on their efficiency of using the renewable and non-renewable energy. At the mill, the monthly record was tabulated to show/record the amount of FFB processed, CPO produced, palm kernel produced, the usage of water, diesel usage, electrical power usage, fiber & shell usage and also the B.O.D level of the effluent discharge. Apart from using diesel, electricity generation was through steam turbine and boiler where Palm fiber and PK shells were used as renewable energy/fuel. At the estates, diesel consumption was also monitored on a monthly basis. It was verified that energy usage are being monitored especially at the mill for better control and comparison of trends. Criteria 5.5 Use of fire for preparing land or replanting is avoided, except in specific situations as identified in the ASEAN guidelines or other regional best practice. Indicators Findings and Objective Evidence Compliance 5.5.1 There shall be no land Estates and mill had observed the policy of ‘Zero open burning’ Complied preparation by burning, other than in specific situations as identified in the for any replanting, if any, at the estates. ‘Guidelines for the Implementation of Field inspections made at the estates, showed no evidence of the ASEAN Policy on Zero Burning’ open burning. 2003, or comparable guidelines in other regions. Major Compliance

5.5.2 Where fire has been used for The estates adhered to the ‘zero burning ‘policy for replanting at Complied preparing land for replanting, there shall be evidence of prior approval of the estates. The old trees were chopped and left to rot at site. the controlled burning as specified in Also, there was no evidence of any burning of domestic waste at ‘Guidelines for the Implementation of the housing line. the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions. Minor Compliance

Criteria 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored. Indicators Findings and Objective Evidence Compliance 5.6.1 An assessment of all polluting Assessment on all polluting activities including gaseous Complied activities shall be conducted, including emissions, particulate and effluent has been made and gaseous emissions, particulate/soot documented. emissions and effluent (see Criterion Monitoring of mill gas emissions is being done online using the 4.4). Major Compliance Continuous Emissions Monitoring System (CEMS). Report showed evident that the emission is within the permissible limits of DOE as verified by documents made available during the on site visit to the mill. POME treatment, monitoring and land application is monitored, maintained and adhered to DOE regulations. Records were made available at both the POM and estates during the audit.

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5.6.2 Significant pollutants and Identification of significant pollutants and greenhouse gas (GHG) Complied greenhouse gas (GHG) emissions shall be identified, and plans to reduce emissions has been done and documented. e.g. POME, diesel / or minimise them implemented. fuel, water, chemical and fertilizer. Their usage have been Major Compliance recorded and documented at both the POM and estates. Fibre and shell is being used as fuel for the boiler, as substitute for energy and as a measure to reduce the use of diesel at the POM. The plan has been implemented but the changes have not been very significant. Also at the estates, the use of chemicals is only done when necessary and when there is no other option available. 5.6.3 A monitoring system shall be in Monitoring and reporting of the significant pollutants to water, Complied place, with regular reporting on progress for these significant gaseous emissions to air and contamination on land are in place. pollutants and emissions from estate Tools and systems used include the DOE online CEMS and mill operations, using appropriate monitoring for air emissions, boiler stack monitoring done once tools. every 3 months (latest report dated 15 Mac 2018). The schedule Minor Compliance waste disposal (latest dated 8 Feb 2018 2018) were adhering to DOE requirements. Water quality at discharge points was also monitored as per DID regulations, Raw/waste water was analyse quarterly while the treated water being analysed twice yearly and complied to the requirements. Water samples at the final discharge point were regularly taken and tested by mill environment officer in charge and analysed monthly to ensure compliance to DOE requirements at final discharge points. The water samples were sent for analysis. Records are maintained and verified on-site the B.O.D to have met the permissible regulatory limits. Palm GHG summary report has also been documented for tabulated for financial year period (Oct 2016 – Sep 2017) using RSPO PalmGHG v 3.0.1.

Principle 6: Responsible consideration of employees, and of individuals and communities affected by growers and mill Criterion 6.1 Aspects of plantation and mill management that have social impacts, including replanting, 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 continual improvement. Indicators Findings and Objective Evidence Compliance 6.1.1 A social impact assessment Social impact assessment (SIA) was conducted at respective Complied (SIA) including records of meetings estates, via annual stakeholder meeting. shall be documented. SIA reports sampled & found it sufficiently covered the topics of Major Compliance access & use rights, economic livelihoods & work conditions, subsistence activities, cultural & religious values, health & educational facilities, other community values resulting from changes. 6.1.2 There shall be evidence that the The group had considered issues of social impact to workers and Complied assessment has been done with the affected communities. Records of meeting with stakeholders participation of affected parties. indicated discussions held were generally on matters pertaining to Major Compliance working conditions, infrastructure maintenance, access roads, cultural/festival activities, health facilities and other community concern. Women’s committee and trade union representative meetings were organized; survey questionnaires used; attendance list and photos of the session were kept to demonstrate participatory

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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assessment. 6.1.3 Plans for avoidance or mitigation Comments or feedback received during meetings or surveys Complied of negative impacts and promotion of organized by the POM and its estates, time table of activities were the positive ones, and monitoring of established with target date on implementation and persons impacts identified, shall be developed assigned (mainly respective estate managers). in consultation with the affected parties, documented and timetabled, including responsibilities for implementation. Major Compliance 6.1.4 The plans shall be reviewed as a The plans were reviewed once every 2 years, together with Complied minimum once every two years and affected parties, including workers, via internal stakeholder and updated as necessary, in those cases trade union representative meetings. Last review was done in Jun where the review has concluded that 2016 with evidence of participation of affected parties. changes should be made to current practices. There shall be evidence that the review includes the participation of affected parties. Minor Compliance 6.1.5 Particular attention shall be paid No smallholder scheme involved at the PMU. Not to the impacts of smallholder schemes applicable (where the plantation includes such a scheme). Minor Compliance Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties. Indicators Findings and Objective Evidence Compliance 6.2.1 Consultation and communication List of local communities, & other affected interested parties Complied procedures shall be documented. identified. Major Compliance KLK Grievance Procedure was available online as below: 1. http://www.klk.com.my/wp- content/uploads/2016/06/GrievanceProcedure.pdf 2. http://www.klk.com.my/sustainability/grievance-procedure/ 3. http://www.klk.com.my/sustainability/egrievance-form/ FPIC approach adopted as part of communication & consultation with relevant stakeholders. 6.2.2 A management official Designated personnel nominated to be management official for Complied responsible for these issues shall be handling communication and consultation with affected parties. nominated.

Minor Compliance 6.2.3 A list of stakeholders, records of The list of stakeholders, communication and actions taken were Complied all communication, including maintained in file. Consultations with various stakeholders held confirmation of receipt and that effort and meeting minutes were recorded in the logbook. Evidence of are made to ensure understanding by actions taken in response to inputs from stakeholders. affected parties, and records of actions taken in response to input from stakeholders, shall be maintained. Minor Compliance Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all affected parties. Indicators Findings and Objective Evidence Compliance

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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6.3.1 The system, open to all affected Both the POM and estates have established complaints and Complied parties, shall resolve disputes in an grievances procedure and they were all well implemented. effective, timely and appropriate Stakeholder logbooks were sighted in all audited estates and manner, ensuring anonymity of actively used by workers. complainants and whistleblowers, where requested. Timelines for response to complaints and grievances are Major Compliance indicated in the logbook, e.g. 2-3 days for minor request. Stakeholder logbooks were prepared for logging any dissatisfaction, & complaint. Women’s committee meeting organized every 6 monthly, while NUPW meeting organized annually. Sustainability Policy documented, including protection towards complainants as well as whistleblowers. 6.3.2 Documentation of both the The PMU had a system for handling compensation claim in an Complied process by which a dispute was effective, timely and appropriate manner. So far, no dispute resolved and the outcome shall be reported as noted during on-site interviews with the workers. available. Major Compliance Criterion 6.4 Any negotiations concerning compensation for loss of legal, customary or user 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. Indicators Findings and Objective Evidence Compliance 6.4.1 A procedure for identifying legal, There was no issue related to legal, customary, or user rights over Complied customary or user rights, and a the land developed by each estate visited. No such compensation procedure for identifying people claimed from any stakeholders. Internal procedure for identifying entitled to compensation, shall be in people entitled to compensation established as in SOP 3A. place. Major Compliance 6.4.2 A procedure for calculating and The KLK Group had documented procedure for calculating and Complied distributing fair compensation distributing compensation. The procedure was written in Land (monetary or otherwise) shall be acquisition (for OP planting) SOP 3A, dated 1 Jan 2017. established and implemented, monitored and evaluated in a The procedure specified the compensation shall take into account participatory way, and corrective issues such as proof of legal versus communal ownership in actions taken as a result of this ethnic group, communities’ period of residing and origins and evaluation. This procedure shall take gender difference in the ability to claim rights. Through the into account: gender differences in the interview with management & estate workers, no dispute by any power to claim rights, ownership and parties reported at the PMU. access to land; differences of transmigrants and long-established communities; and differences in ethnic groups’ proof of legal versus communal ownership of land. Minor Compliance 6.4.3 The process and outcome of any To date, there was no dispute by any parties reported. Complied negotiated agreements and compensation claims shall be documented, with evidence of the participation of affected parties, and made publicly available. Major Compliance Criterion 6.5 Pay and conditions for employees and for contract workers always meet at least legal or industry minimum standards and are sufficient to provide decent living wages. Indicators Findings and Objective Evidence Compliance

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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6.5.1 Documentation of pay and Employment offer letters and work contracts for local staff and Complied conditions shall be available. foreign workers were provided and verified during site visit. The Major Compliance pay slips for workers at the estates and mill were verified which contain necessary information and could be easily understood by the workers, e.g. type and rate of works completed, days offered, days worked, days absent, total deduction. Legislative requirement for minimum wage applied in Peninsula Malaysia was RM1,000 per month or RM 38.46 per day rate (26 working days). Sampling of field workers’ pay slips revealed that the calculation of pay was clearly itemized, correctly calculated. For instance, normal working day rate, normal working day overtime rate, rest day work, rest day work overtime, public holiday work, public holiday work overtime, annual leave pay in December, sick leave pay and applicable deductions. 6.5.2 Labour laws, union agreements All employment contracts are in languages understood by the or direct contracts of employment workers, e.g. in Bahasa Indonesia for Indonesian workers, in detailing payments and conditions of Bengali language for Bangladesh workers and in Tamil language employment (e.g. working hours, for Indian workers. Through interviews with field workers, deductions, overtime, sickness, including foreign workers, it was verified that the contracts were holiday entitlement, maternity leave, clearly understood by the foreign workers when they were able to reasons for dismissal, period of notice, give correct responds on daily minimum rate, medical entitlement, etc.) shall be available in the languages understood by the workers public holiday entitlement and pay for work during public holiday. or explained carefully to them by a Woman staff interviewed, whom revealed that during her management official. maternity leave for 2 months, her salary was also consistently Major Compliance paid as per contract. Pinji Estate, Lekir Estate, Batu Hitam Estate: Foreign workers from India, & Bangladesh signed 2 Major NC# employment contracts (one in English version, another one WN-02 with translated copy of either Tamil or Bangla). Comparing both English version & translated version copies, the numbering & its content were found different. 6.5.3 Growers and millers shall The PMU had provided adequate housing, water supplies, Complied provide adequate housing, water medical, educational and welfare amenities in accordance with supplies, medical, educational and Local Workers’ Minimum Standard of Housing and Amenities Act welfare amenities to national 1990 to the workers. standards or above, where no such public facilities are available or Housing, electricity and water supply accessible. The workers were staying in the housing quarters provided by the Minor Compliance PMU. No rental charges imposed by the PMU. Some old quarters were in the progress of upgrading. Each estate office was also involved in the maintenance of the houses. Electricity and clean (town) water are supplied for 24 hours daily. The housing quarters were inspected by the Medical Assistant once a week. Schools Tamil primary school was located near entrance to Pinji estate. There was no school inside of any estates. Government schools were available nearby each estates. School buses were allowed to enter and exit to ferry the school children to and from the schools. Medical clinics Some estates were equipped with clinic, some didn’t. Those visited estates & POM were located near to the town which accessible to private clinic & hospitals. Clinic inside Pinji estate visited, & found to be suitably equipped, & managed by qualified medical assistant. Medical services were provided for free to all workers. Medical fees or any treatment due to work nature were paid off by management of PMU.

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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6.5.4 Growers and millers shall make Estates and palm oil mill were located not far from town, where it Complied demonstrable efforts to monitor and is easily accessible to adequate and affordable food. improve workers’ access to adequate, sufficient and affordable food. Minor Compliance Criterion 6.6 The employer respects the rights 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 law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel. Indicators Findings and Objective Evidence Compliance 6.6.1 A published statement in local Management of KLK established & documented ‘Sustainability Complied languages recognising freedom of Policy’, dated 01 Dec 2014, which was published, & displayed at association shall be available. estates office, & oil mill, concerning freedom of association & right Major Compliance to collective bargaining. Workers were allowed to join National Union for Plantation Workers (NUPW) to voice out their concerns & feedback whenever required. 6.6.2 Minutes of meetings with main The PMU allowed the workers to join National Union for Plantation Complied trade unions or workers Workers (NUPW) and periodic meetings of NUPW representatives shall be documented. representatives with the PMU management organized. Meeting Minor Compliance minutes were evident from estate management. Workers were freely accessed to those minutes from estate office. Criterion 6.7 Children are not employed or exploited. Indicators Findings and Objective Evidence Compliance 6.7.1 There shall be documentary Management of KLK established & documented ‘Sustainability Complied evidence that minimum age Policy’, dated 01 Dec 2014, which included policy of not requirements are met. employing child labour at the estates & oil mill. During site visit to Major Compliance estates, payroll, oil mill facilities, there was no evident to show that child labour were being employed to work. Minimum age of 18 as per Employment Act had been defined & strict adherence followed and verified. 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. Indicators Findings and Objective Evidence Compliance 6.8.1 A publicly available equal Management of KLK established & documented ‘Sustainability Complied opportunities policy including Policy’ dated 01 Dec 2014, which specified policy of equal identification of relevant/affected opportunities, & identification of relevant/affected groups in the groups in the local environment shall local environment. This policy was made publicly available & be documented. displayed at prominent area at estates & oil mill. Inspections Major Compliance including interviews in the estates, sampling of the employment records including foreign workers, pay slips and deductions of wages (according to law) confirmed that this documented policy had been implemented. 6.8.2 Evidence shall be provided that Based on interviews and feedback from the local staff, women, Complied employees and groups including local foreign workers (comprised of Bangladesh, Indian, Nepalese, communities, women, and migrant Indonesian), review of NUPW meeting minutes & stakeholder workers have not been discriminated logbooks, allocated housing, pay mode, it was verified that there against. was no issue of discrimination at the PMU. Major Compliance 6.8.3 It shall be demonstrated that ‘Sustainability Policy’, dated 01 December 2014 documented & Complied recruitment selection, hiring and practiced. promotion are based on skills, capabilities, qualities, and medical Recruitment of workers were centrally managed by HQ located at

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 43 of 94 Re-certification (Transfer CB) fitness necessary for the jobs Ipoh. Promotion was based on skills, capabilities, qualities, & available. medical fitness. Training programmes organized for upgrading Minor Compliance skills of workers. Formal evaluation of training effectiveness conducted for workers. Each estates & oil mill kept record of their employees’ work credentials & medical cards. No evidence of discrimination on promotion or demoted based on individual preferences, political stand, sex, job ranking, race and nationality. Criterion 6.9 There is no harassment or abuse in the work place, and reproductive rights are protected. Indicators Findings and Objective Evidence Compliance 6.9.1 A policy to prevent sexual and all The published statements of policy which recognised zero Complied other forms of harassment and tolerance on sexual harassment and violence was documented in violence shall be implemented and ‘Sustainability Policy’, dated 01 Dec 2014. communicated to all levels of the workforce. There were women committees at both estates & oil mill, which specifically to address areas of concerns to women. These committees were headed by the lady executive and members Major Compliance were representatives from all areas of work. In-house training organized for creating awareness of sexual harassment & violence. Notice boards displayed further reading references on these topics. Regular meetings organized from such women committees, & minutes retained. Interview sessions organized with women committees head, & revealed that there was no case of sexual harassment & violence reported so far from estates & oil mill visited. 6.9.2 A policy to protect the The management of the estates and POM were aware that Complied reproductive rights of all, especially of pregnant and breastfeeding women shall be refrained from work women, shall be implemented and associated with potentially hazardous chemicals. The said communicated to all levels of the ‘Sustainability Policy’ had been clearly communicated & made workforce. aware to the women of their reproductive rights. Interview conducted to woman whom returned from maternity, & revealed Major Compliance that no restriction of giving birth in whatsoever condition. 6.9.3 A specific grievance mechanism Grievance handling process steps were documented & displayed Complied which respects anonymity and at estate & oil mill offices. That document addressed respects protects complainants where anonymity & protected complainants where requested. Complaint requested shall be established, logbook established & it was handled by respective estate implemented, and communicated to all levels of the workforce. manager and palm oil mill manager.

Minor Compliance Criterion 6.10 Growers and millers deal fairly and transparently with smallholders and other local businesses. Indicators Findings and Objective Evidence Compliance 6.10.1 Current and past prices paid for FFB prices were publicly displayed at the POM based on current Complied Fresh Fruit Bunches (FFB) shall be prices as determined by MPOB. These prices were available publicly available. publicly access at MPOB website. No smallholders involved within Minor Compliance the supply base. 6.10.2 Evidence shall be available that Price mechanism was generally understood by the industry Complied growers/millers have explained FFB players as the POM was using FFB prices set by the MPOB. No pricing, and pricing mechanisms for smallholders involved within the supply base. FFB and inputs/services shall be documented (where these are under the control of the mill or plantation). Major Compliance

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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6.10.3 Evidence shall be available that Based on employee contracts and meeting minutes, it was Complied all parties understand the contractual evident that all relevant parties were well aware of the content of agreements they enter into, and that the contractual agreements. Interviews with parties concerned contracts are fair, legal and confirmed that business practices with local businesses were transparent. conducted in a fair and transparent manner. Work tenders were Minor Compliance open to appropriate parties and reviewed by Tender Committee before approval. The contractors were monitored during work in progress to follow safety requirements. 6.10.4 Agreed payments shall be The PMU had a policy to ensure agreed payments were made in Complied made in a timely manner. a timely manner as per the contract agreement made. Payments Minor Compliance are made on time according to common practice of 60-day grace period. Criterion 6.11 Growers and millers contribute to local sustainable development where appropriate. Indicators Findings and Objective Evidence Compliance 6.11.1 Contributions to local Several contributions to local development had been provided development that are based on the based on the results of consultation with local communities. This results of consultation with local included new housing built at Lekir estate; donation to neighboring communities shall be demonstrated. schools, prayer house, hampers for sport events; new community Minor Compliance hall built at Raja Hitam estate. About 50% of local communities were being employed as workers.

Observation: Minor broken roofing condition observed from OBS# Creche at Pinji Estate. Timely maintenance should be planned. First aid box should be readily available. WN-01 6.11.2 Where there are scheme Not applicable. No scheme smallholders were associated with Not smallholders, there shall be evidence KLK Changkat Chermin PMU. applicable that efforts and/or resources have been allocated to improve smallholder productivity Minor Compliance Criterion 6.12 No forms of forced or trafficked labour are used. Indicators Findings and Objective Evidence Compliance 6.12.1 There shall be evidence that no Sustainability Policy established to include ‘no to forced or Complied forms of forced or trafficked labour are trafficked labored used’. Definition of forced labor specified. used. Supply of estate workers were centrally managed by KLK Head Major Compliance Office based in Ipoh. Process of recruiting foreign workers were handled with the approval from the Immigration Office. Based on records verified and interviews with the workers, it was verified that there was no incident of forced or trafficked workers in KLK estates or POM. Passports of workers were being retained by themselves. Contract terms for each foreign workers specified & practiced. Return tickets to their homeland were paid by KLK management. No penalties imposed for foreign workers being terminated before contract expired, but instead warning letter issued if found any misconduct. 6.12.2 Where applicable, it shall be No contract substitution reported as verified through sampling Complied demonstrated that no contract interviews with field workers. Employment contract was signed by substitution has occurred. workers. Authenticity of the contract verified with the presence of Minor Compliance workers during interview session.

6.12.3 Where temporary or migrant The policy statement documented in ‘Sustainability Policy’, dated Complied workers are employed, a special 01 Dec 2014, referred both local and foreign workers as it

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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labour policy and procedures shall be addressed that management commitment to ensure the rights of established and implemented. all employees, including contract, temporary and migrant workers Major Compliance without discrimination. Decent living condition, including pay & housing condition verified. Freedom of association as earlier mentioned permitted not only to the local workers but also to the foreign workers. Criterion 6.13 Growers and millers respect human rights. Indicators Findings and Objective Evidence Compliance 6.13.1 A policy to respect human KLK group published Sustainability Policy on last 01 Dec 2014, Complied rights shall be documented and which addressed the commitment to support the Universal communicated to all levels of the Declaration of Human Rights established by United Nations. This workforce and operations (see Criteria policy was communicated to all workers via training and briefing. 1.2 and 2.1). There was no outstanding case of human right violation. Major Compliance

Principle 7: Responsible development of new plantings Todate the PMU has not carried any new plantings after Nov 2005 which may be applicable under requirements of the RSPO New Planting Procedure.

The requirements of Principle 7 were verified to be ‘Not applicable’ to this PMU during this assessment.

It was verified during current on-site assessment that the PMU has declared and submitted its Land Use Change details for analysis for its plantings since Nov 2005 as per the calculations specified in the RSPO PalmGHG v 3.0.1. The record of submission made to the RSPO Secretariat for the current year was done on 10 Mar 2018.

See Summary of Net GHG Emissions submitted by the POM in the Tables below.

Based on the details provided in the record of submission, it is also verified that there is no potential liability under the RSPO Remediation and Compensation Procedure at this PMU.

SUMMARY OF NET GHG EMISSIONS

All information and data below as submitted by the POM was verified against the retrieved summary report generated through PalmGHG Calculator Version 3.0.1.

GHG Table 1: Summary of Net GHG Emissions (FY Oct 2016 – Sep 2017)

Emissions per Product tCO2e/t Product CPO 0.92 PK 0.92

Production t/yr FFB processed 255,368.39 CPO Produced 52,221.7

Extraction % OER 20.45 KER 4.67

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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GHG Table 2: Summary of Net GHG Emissions

Land use ha OP planted area 15210 OP planted on peat 0 Conservation (forested) 0 Conservation (non-forested) 150 Total 15360

GHG Table 3: Summary of Field Emissions and Sinks

Own Crop Group 3rd Party Total tCO2e tCO2e/ha tCO2e tCO2e tCO2e tCO2e tCO2e tCO2e/ha Emissions Land Conversion 96017.1 9.2 - - - - 96017.1 9.2 *CO2 Emissions 15,202.58 1.37 - - - - 15,202.58 1.37 from Fertiliser **N2O Emissions 11,020.69 0.96 - - - - 11,020.69 0.96 Fuel Consumption 812.65 0.08 - - - - 812.65 0.08 Peat Oxidation 0 0 - - - - 0 0 Sinks Crop -92288.71 -8.86 - - - - -92288.71 -8.86 Sequestration Conservation 0 0 - - - - 0 0 Sequestration Total 30764.31 2.75 - - - - 30764.31 2.75

GHG Table 4a: Summary of Mill Emissions and Credits

tCO2e tCo2e/tFFB Emissions POME 27,443.16 0.11 Fuel Consumption 108.36 0 Grid Electricity 879.72 0 Utilisation Credits Export of Grid 0 0 Electricity Sales of PKS 0 0 Sales of EFB 0 0 Total 28,431.24 0.11

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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GHG Table 4b: Palm Oil Mill Effluent (POME) Treatment

Divert to compost 0 % Divert to anaerobic digestion 100 %

GHG Table 4c: POME Diverted to Anaerobic Digestion

Divert to anaerobic pond 100 % Divert to methane capture (flaring) 0 % Divert to methane capture (electricity generation) 0 %

Principle 8: Commitment to continual improvement in key areas of activity

Criteria 8.1 Growers and millers regularly monitor and review their activities, and develop and implement action plans that allow demonstrable continual improvement in key operations. Indicators Findings and Objective Evidence Compliance 8.1.1 The action plan for continual The POM has identified and implemented the following Complied improvement shall be implemented, Continual Improvement Action Plans for the FY Oct 2017 – Sep based on a consideration of the main 2018: social and environmental impacts and opportunities of the grower/mill, and 1. Reduce GHG emission – service mill vehicles regularly and shall include a range of Indicators briefing on energy saving (Grid electricity). covered by these Principles and 2. Waste reduction – briefing on recycling programme. Criteria. The estates have identified and implemented the following As a minimum, these shall include, but Continual Improvement Action Plans for the FY Oct 2017 – Sep are not necessarily be limited to: 2018: • Reduction in use of pesticides(Criterion 4.6); 1. Chemical usage reduction – • Environmental impacts (Criteria 4.3, (a) Planting of beneficial plant 5.1 and 5.2); (b) spraying pump calibration. • Waste reduction (Criterion 5.3); 2. GHG Reduction – reduce usage of energy from diesel and • Pollution and greenhouse gas (GHG) electricity. emissions (Criteria 5.6 and 7.8); • Social impacts (Criterion 6.1); 3. FFB Yield optimization – • Encourage optimising the yield of the (a) Loose fruit collection, supply base. (b) Regular monitoring of soil nutrient and soil moisture, Major Compliance (c) Adherence to fertilizer programme from AAR. 4. Waste reduction – Briefing on recycling programme. Social Continual Improvement Action Plans for the POM and estates include the following: 1. Upgrade workers quarters at Kampar Estate – 3 bedrooms – 6 blocks x 2 units per block. 2. Road maintenance – patching of road damage. 3. Contributions to local communities. 4. Construction of one new sepak takraw / volleyball court at Raja Hitam Estate, Evidence of results was available for the above continuous improvement action plans.

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3.1.1 Supply Chain Certification Standards Findings - on CPO Mill

The Supply Chain module applied at Changkat Chermin Grouping POM during this assessment is Module D – CPO Mills: Identity Preserved (IP).

Details of findings are as follows:

5. General chain of custody requirements for the supply chain Findings and Compliance Objective Evidence 5.1 Applicability of the general chain of custody requirements for the supply chain 5.1.1 Legal ownership and physical handling of RSPO Certified Sustainable oil palm Yes Complied products at a location under the control of the organization including outsourced contractors. 5.1.2 Trader and/or distributor shall pass on the certification number of the product Not applicable Complied manufacturer and the applicable supply chain model. 5.1.3 Member of the RSPO and shall register on the RSPO IT platform. Yes Complied 5.1.4 Processing aids do not need to be included within an organization’s scope of No processing aids Complied certification. 5.2 Supply chain model 5.2.1 Same supply chain model as its supplier Identity Preserved (IP) Complied 5.2.2 Combination of supply chain models Only IP Complied 5.3 Documented procedures 5.3.1 Written procedures and/or work instructions Yes Complied 5.3.2 Internal audit procedure and internal audit conducted to determine compliance. Yes Complied 5.4 Purchasing and goods in 5.4.1 Purchases of RSPO certified oil palm products with all the specified information. Yes Complied 5.4.2 Mechanism for handling non-conforming oil palm products and/or documents. Yes Complied 5.5 Outsourcing activities 5.5.1 Outsourcing of activities Not applicable Complied 5.5.2 Outsourcing within the scope of its RSPO SC certificate Not applicable Complied 5.5.3 Names and contact details of all contractors used for the processing or physical Not applicable Complied handling of RSPO certified oil palm products. 5.5.4 Names and contact details of new contractor used for the processing or physical Not applicable Complied handling of RSPO certified oil palm products. 5.6 Sales and goods out 5.6.1 Sales of RSPO certified oil palm products with all the specified information. Yes Complied 5.7 Registration of transactions 5.7.1 Transaction registered in the RSPO IT platform and confirmed upon receipt. Yes Complied 5.7.2 RSPO IT Platform: Shipping Announcement, Traceability, Confirming Shipping Yes Complied Announcements. 5.8 Training 5.8.1 Training plan on RSPO SC Standards requirements and records of the training. Yes Complied 5.8.2 Appropriate training shall be provided Yes Complied 5.9 Record keeping 5.9.1 Accurate, complete, up-to-date and accessible records and reports maintained. Yes Complied 5.9.2 Retention times for all record and reports. Yes Complied 5.9.3 Volume purchased (input) and claimed (output) over a period of twelve (12) Yes Complied months. 5.10 Conversion factors 5.10.1 Conversion rate shall be applied to provide a reliable estimate for the amount Yes Complied of certified output available from the associated inputs. 5.10.2 Conversion rates shall be periodically updated. Yes Complied 5.11 Claims 5.11.1 Claims shall be in compliance with the RSPO Rules on Market Yes Complied Communications and Claims. 5.12 Complaints 5.12.1. Documented procedures for collecting and resolving stakeholder complaints. Yes Complied 5.13 Management review 5.13.1 Appropriate frequency of management review. Yes Complied

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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5.13.2 All the specified inputs for the management review. Yes Complied 5.13.3 All the specified outputs from the management review. Yes Complied

Model D – CPO Mills: Identity Preserved (IP) D.1 Definition Indicators Findings and Objective Evidence Compliance D.1.1 The POM only processed certified FFB from its own supply Complied A mill is deemed to be Identity base (see Section 1.3). Preserved (IP) if the FFB used by the It was verified that there was no sources of FFB from any mill are sourced from its own supply outgrowers or independent suppliers / smallholders. base certified to the RSPO Principles The CPO Mill is therefore applying the Identity Preserved (IP) and Criteria (RSPO P&C). model. Certification for CPO mills is necessary to verify the volumes and sources of certified FFB entering the mill, the implementation of any processing controls (for example, if physical separation is used), and volume sales of RSPO certified products. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. If a mill processes certified and uncertified FFB without physically separating the material then only Module E is applicable. D.2 Explanation Indicators Findings and Objective Evidence Compliance D.2.1 The estimated tonnage of CPO and PK products that could Complied The estimated tonnage of CPO and potentially be produced by the POM is recorded in this PK products that could potentially be Assessment Report. produced by the certified mill must be This figure represents the total volume of certified palm oil recorded by the certification body (CB) product (CPO and PK) that the certified mill is allowed to deliver in the public summary of the P&C in a year. certification report. This figure represents the total volume The actual tonnage produced has been recorded in each of certified palm oil product (CPO and annual assessment report (see Section 1.8.2 Table 6 and PK) that the certified mill is allowed to Section 1.8.3 Table 7). deliver in a year. The actual tonnage produced shall then be recorded in each subsequent annual surveillance report. D.2.2 The POM meets all registration and reporting requirements for Complied The mill must also meet all registration the appropriate supply chain through the RSPO Supply Chain and reporting requirements for the managing organization (RSPO IT platform). appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim). D.3 Documented procedures D.3.1 A documented Supply Chain Procedure SOP 18.0 Issue 3 / Complied The site shall have written procedures Rev. 2 dated 05/05/2018 has been established and and/or work instructions to ensure the implemented. implementation of all the elements The procedure covered the implementation of all elements of IP specified in these requirements. This Model that include Organization Chart, Management Functions shall include at minimum the following: & Job Descriptions, FFB Delivery to mill, CPO/PK Delivery to customer, Record Keeping, Training, Claims. a) Complete and up to date The documented procedure and its implementation confirmed Complied procedures covering the to have complied with all the specified requirements of Identity Preserved (IP) Module D that include controlling the FFB

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Report No.: R9315/18-1 Kuala Lumpur Kepong Berhad, Changkat Chermin Grouping Page 50 of 94 Re-certification (Transfer CB) implementation of all the elements in receipt, processing, sales, CPO and PK dispatch, and records these requirements keeping. b) The role of the person having The POM Mill Manager, Mr. Mohd. Hadzri Arsad has been Complied overall responsibility for and authority appointed as the person in charge for the overall responsibility over the implementation of these and authority for implementation and compliance with the requirements and compliance with all documented procedure. He is assisted by the Assistant Mill applicable requirements. This person Manager, Mr. Chia Boon Huat. shall be able to demonstrate They and other relevant staff under his charge demonstrated awareness of the site’s procedures for competence, skill and knowledge of the RSPO Supply Chain the implementation of this standard. Certification Standard requirements and its implementation. Interviews of the relevant staff confirmed their knowledge of the RSPO Supply Chain Certification requirements for the respective areas of operations. The Palm Oil Mill Organization Chart and job responsibilities of employees (Mill Manager, Assistant Mill Manager, Mill Engineers, Mill Assistant Engineers, Operations Supervisor, Weighbridge Operator, Laboratory Chemist, FFB Grader and clerks) have been suitably defined in the SOP. D.3.2 The SOP covers the receiving of FFB and verification of Complied The facility shall have documented documents (delivery notes) to determine the origin, quantity and procedures for receiving and quality of the FFB. All supplies of FFB were subjected to processing certified and non-certified verification of documents and quality checks by weighbridge FFBs. personnel. The Weighbridge Ticket for FFB indicated the date, vehicle number, estate & field number and weight. For the year 2017, the POM only received and processed certified FFB only from the KLK Changkat Chermin Grouping estates and FFB diverted from other certified KLK Groupings estates. The POM did not receive any non-certified FFB from other sources or suppliers. D.4 Purchasing and goods in Indicators Findings and Objective Evidence Compliance D.4.1 The Mill had maintained record of tonnages and supply source Complied The facility shall verify and document of certified FFB from the respective estates at the weighbridge the tonnages and sources of certified station, in the dispatch chit and weighbridge ticket and these and non-certified FFBs received. entered into the computer system. There were no non-certified FFBs. D.4.2 The documented Supply Chain SOP has specified that the Complied The facility shall inform the CB responsible POM personnel shall check production quantity immediately if there is a projected against the certified amount and notify RSPO, the CB and overproduction of certified tonnage. Sustainability Department of any projected overproduction of certified tonnage. So far, there is no projected overproduction. D.5 Record keeping Indicators Findings and Objective Evidence Compliance D.5.1 The records and reports are available from the computerized Complied The site shall record and balance all system. Also, hard copies of records and reports are properly receipts of RSPO certified FFB and filed and readily accessible. Inspection of records and reports deliveries of RSPO certified CPO and at the Mill confirmed these were accurate, complete and PK on a three-monthly basis. updated daily. As per the SOP, the records and reports are archived and stored in the Mill Office for a minimum period of 5 years. Traceability was verified for the Production Report for Jan – Dec 2017 from the related records (FFB Delivery Note, Weighbridge Ticket, FFB & Truck Daily Summary, Production Report, CPO & PK Storage Report, and CPO & PK Delivery Orders. Transaction documents and bookkeeping of CPO and PK are done daily and monthly summary report of FFB receipt, FFB

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processed, CPO production, PK production and balance stocks submitted to the Head Office. The weighbridges at the Mill are duly calibrated and calibration certificates found to be in order. CPO is delivered to KL-Kepong Oleomas Sdn Bhd at Pulau Indah, Palm Oleomas (Rawang) Sdn Bhd at Rawang, Palm Oleomas (Klang) Sdn Bhd at Klang and external buyers. There is no Palm Kernel mill for production of PKO at the POM. PK sold and delivered to external buyers. Deduction and conversion ratios for the volumes of CPO and PK delivered from the Palm Oil Mill have been appropriately done and recorded. A tonnage balance recording system that shows FFB deliveries, CPO and PK production and dispatch is balanced every 3 months. D.6 Processing Indicators Findings and Objective Evidence Compliance D.6.1 Confirmed from records that Changkat Chermin POM only Complied The site shall assure and verify received and processed certified FFB for the last 12 months till through documented procedures and audit time. record keeping that the RSPO certified The processing facility has established and implemented a oil palm product is kept segregated clear procedure and mechanism for the IP module. from non-certified material including Review and on-site verification confirmed that the mechanism during transport and storage. was implemented and in compliance with the module requirements at the mill including transport and storage. D 6.2 Documents and records provided documented evidence for the Complied The objective is for 100 % segregated FFB receipt and processed, CPO and PK produced to be material to be reached. traceable to certified material. The product type and supply chain module indicated as CSPO/IP and CSPK/IP on relevant documents was verified to be correctly stated.

3.1.2 Status on Supply Chain on POM: Based on the documents and records presented during the on-site verifications made, it is concluded that the Changkat Chermin POM has been able to comply with the requirements of the RSPO SCCS under the ‘IP’ module and is thus eligible for ‘IP’ trading for its palm products for year 2017 and 2018.

3.1.3 Monitoring of Certified Products traded: Trading of the CSPO and CSPK was performed via RSPO PalmTrace by the KLK Group HQ. Based on the records maintained at the POM, the traded volumes relied on internal communications of the trading done by the KLK Group HQ, on the CSPO and CSPK delivered as verified during assessment for Jan – Dec 2017 are as follows:

Details as per RSPO Certification System Document CPO (MT) PK (MT) Last year's (Projected) – Certified volume (RSPO Certified) 54,019.82 12,370.38

(1) Last year's Actual sold volume (RSPO Certified) 44,483.62 12,272.54 (2) Last year's Actual sold volume 4,352.82 0 *(Other Schemes Certified) (3) Last Year's Actual sold volume **Conventional 806.40 0 Total for Last Year’s volume – Actual (1+2+3) 49,642.84 12,272.54

New (Projected) Certified Volume (RSPO Certified) 59,556 12,723

Notes:

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* The non PalmTrace volumes under ‘Other Schemes certified’ is basically ISCC.

** Remaining volumes traded are not claimed under ‘Certified’ and traded as ‘Conventional’ volume.

3.2 Status of Identified Noncompliance and Corrective Actions, Observations and Positive Elements. The status of the Noncompliances (NCR) and Observations (OBS) identified against the MYNI Compliance Indicators is as per the details below: Assessment Type Year Noncompliance Observations Follow up status (NCR) (OBS) Surveillance Assessment - 04 2017 1 (0 Major, 1 Minor) 0 Corrective action (by Control Union Certifications) verified to be taken and is effective. Re-Certification Assessment 2018 10 (6 Major, 4 Minor) 6 Next assessment (Transfer to Intertek)

3.2.1 Year 2017, Surveillance Assessment - 04: 0 Major

3.2.2 Year 2017, Surveillance Assessment - 04: 1 Minor NC raised under Criterion 4.1 by previous CB: “Stated in the safe uses and storage of agrochemical/chemical procedure dated 1st June 2015 that mill need to ensure that proper housekeeping is carried out to avoid cross contamination and accident. However, during the site visit at the chemical store, lubricant store and schedule waste store of Changkat Chermin Mill, noted housekeeping is not in good condition and unused metals are scattered everywhere that can lead of contaminations and accident.” Verification (for corrective action and effectiveness): Corrective action satisfactorily addressed the non- conformance and NC closed off.

3.2.3 Year 2017 Surveillance Assessment - 04: 0 Observation

3.2.4 Year 2018 Re-certification / Transfer CB: 6 Major NCRs NCR MYNI Details of NCR Indicator Major 2.3.1 Date issued: 25/05/2018 OCL-01 Indicator requirement: Maps of an appropriate scale showing the extent of recognised legal, customary or user rights (Criteria 2.2, 7.5 and 7.6) shall be developed through participatory mapping involving affected parties (including neighbouring communities where applicable, and relevant authorities). Nonconformance: Location: All Estates of Changkat Chermin Grouping The maps of all the estates need to include latitudes and longitudes and indicate the legal boundary and landscape of the neighbouring / surrounding areas of the estates. Root Cause and Corrective Action: Root Cause: The stakeholder map which indicate the landscape of the neighboring / surrounding areas of the estate was available during audit time. However, latitudes and longitudes were not indicated accordingly in the map.

Corrective Action: Estate management has indicated the GPS coordinates as shown in the attached maps for all the estates of Changkat Chermin Grouping.

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Verification (Corrective Action): Off-site verification carried out. The maps in digital format with the necessary details have been submitted for incorporation in the RSPO audit report. The corrective action satisfactorily addressed the non-conformance. NC status verified by auditor: Closed by OCL Date closed: 04/07/2018 Verification (for effectiveness): Next assessment.

NCR MYNI Details of NCR Indicator Major 4.5.1 Date issued: 25/05/2018 OCL-02 Indicator requirement: Implementation of Integrated Pest Management (IPM) plans shall be monitored. Nonconformance: Location: Pinji Estate The estate did not have a programme for planting of beneficial plants (Cassia cobanensis, Antigonon leptopus and Turnera subulata) for biocontrol. It was also noted that there were frequent cases of bagworms in the region. Root Cause and Corrective Action: Root Cause: Estate management had planted beneficial plant (e.g., Antigonan leptopus). However, management did not have a beneficial plant programme.

Corrective Action: Management has established the Beneficial Plant Programme for the upcoming years to increase biocontrol in order to prevent palm infections such as bagworm attacks. Verification (Corrective Action): Off-site verification carried out. Pinji estate submitted the Beneficial Plant Programme with maps indicating the current and future plantings. The corrective action satisfactorily addressed the non-conformance. NC status verified by auditor: Closed by OCL Date closed: 04/07/2018 Verification (for effectiveness): Next assessment.

NCR MYNI Details of NCR Indicator Major 4.6.5 Date issued: 25/05/2018 OCL-03 Indicator requirement: Pesticides shall only be handled, used or applied by persons who have completed the necessary training and shall always be applied in accordance with the product label. Appropriate safety and application equipment shall be provided and used. All precautions attached to the products shall be properly observed, applied, and understood by workers (see Criterion 4.7). Nonconformance: Location: Pinji Estate The spraying equipment and sprayers’ PPE were found to be stored in the General Store together with other items. Also, sprayers’ aprons were hung to dry near a stack of bags of animal feed for the buffalos.

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Root Cause and Corrective Action: Root Cause: The previous PPE Drying Area was dismantled to build a new tractor parking garage. Estate management had designated a temporary area to dry the PPE and to store spraying equipment in which found improper during audit time.

Corrective Action: Management has re-designated the PPE Drying Area which is separated from General Store and animal feed. Verification (Corrective Action): Off-site verification carried out. Pinji Estate submitted a photo of the separate area designated for the drying of PPE of sprayers and record of training conducted on 11/06/2018. The corrective action satisfactorily addressed the non-conformance. NC status verified by auditor: Closed by OCL Date closed: 04/07/2018 Verification (for effectiveness): Next assessment.

NCR MYNI Details of NCR Indicator Major 5.2.1 Date issued: 25/05/2018 SH-01 Indicator requirement: Information shall be collated in a High Conservation Value (HCV) assessment that includes both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors). Nonconformance: Location: Kampar, Pinji and Lekir Estates The existence of certain conservation areas / environmentally sensitive areas in the HCV assessment report of the following estates have not been consistently identified and recorded. For example, surau and temple were mentioned in an estate but not in another estate. 1. At Kampar Estate - The existence of swamps has not been included as management areas although it was indicated in the map. 2. Pinji Estate - The flood prone areas at Hillrise Division were not taken into consideration as management areas. 3. Lekir Estate - The presence of stone/rocky area was not included in the management areas. Root Cause and Corrective Action: Root Cause: Management had conducted assessment for all estates and theirs surroundings. However, certain areas which do not need any proper management were not included inside the Management Area Plan.

Corrective Action: Management has included those areas in the Management Area Plan. Verification (Corrective Action): Off-site verification carried out. The Management Area Plans of Kampar, Pinji and Lekir Estates that include the various conservation areas / environmentally sensitive areas were submitted. The corrective action satisfactorily addressed the non- conformance. NC status verified by auditor: Closed by OCL Date closed: 04/07/2018 Verification (for effectiveness): Next assessment.

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NCR MYNI Details of NCR Indicator Major 4.7.3 Date issued: 25/05/2018 WN-01 Indicator requirement: Adequate & appropriate protective equipment shall be available to all workers at the place of work to cover all potentially hazardous operations, such as pesticide application, machine operations, & land preparation, harvesting, if it is used, burning. Nonconformance: Location: Lekir Estate During site visit to the FFB ramp, one worker was found handling FFB on top of lorry without wearing the appropriate helmet and harness to protect himself from potential injury. Root Cause and Corrective Action: Root Cause: Estate management had provided the necessary training and PPE to the respective workers. However, management had negligence that the worker was not wearing proper PPE when work.

Corrective Action: Management has retrained and emphasized to the workers to wear proper PPE during work. Evidence of training conducted: photos of training conducted on 12/06/2018, training attendance and record of PPE issuance.. Verification (Corrective Action): Off-site verification carried out. The estate submitted evidence of the training conducted. The corrective action satisfactorily addressed the non-conformance. NC status verified by auditor: Closed by OCL Date closed: 04/07/2018 Verification (for effectiveness): Next assessment.

NCR MYNI Details of NCR Indicator Major 6.5.2 Date issued: 25/05/2018 WN-02 Indicator requirement: Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc.) shall be available in the languages understood by the workers or explained carefully to them by a management official. Nonconformance: Location: Pinji, Lekir and Raja Hitam Estate Foreign workers from India and Bangladesh signed two employment contracts (one in English version and another one with translated copy in either Tamil or Bangla). Comparing both English version and translated version copies, the numbering and its content were found to be different.

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Root Cause and Corrective Action: Root Cause: All workers had signed the employment contract in both language version. However, estate management had accidentally provide the old version of employment contract for some workers.

Corrective Action: Management has checked and ensure that the latest version of employment contract is provided and signed by workers.

Verification (Corrective Action): Off-site verification carried out. The estates submitted a revised version of direct employment contract in Bangladeshi language and the submission is sufficient to close the NC. The corrective action satisfactorily addressed the non-conformance. NC status verified by auditor: Closed by OCL Date closed: 04/07/2018. Verification (for effectiveness): Next assessment.

3.2.5 Year 2018 Re-certification / Transfer CB: 4 Minor NCRs NCR MYNI Details of NCR Indicator Minor 4.2.1 Date issued: 25/05/2018 OCL-01 Indicator requirement: There shall be evidence that good agriculture practices, as contained in Standard Operating Procedures (SOPs), are followed to manage soil fertility to a level that ensures optimal and sustained yield, where possible. Nonconformance: Location: Pinji Estate It was found that there were a few holes in the roof of the fertilizer store, where bags of fertilizers were stacked directly on the concrete flooring. Although the concrete floor is dry, there were some water mark patches. Root Cause and Corrective Action: Root Cause: The store was old which adjacent to the new fertilizer store.

Corrective Action: Estate management has patched the roof to prevent water leakage’ Verification (Corrective Action): Off-site verification carried out: Corrective Action Plan (CAP) shall be verified for closure and effectiveness at the next surveillance assessment. NC status verified by auditor: CAP accepted by Date closed: Next assessment. OCL Verification (for effectiveness): Next assessment.

NCR MYNI Details of NCR Indicator Minor 4.4.1 Date issued: 25/05/2018 OCL-02 Indicator requirement: An implemented water management plan shall be in place.

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Nonconformance: Location: POM, Pinji and Lekir Estates. There is a generic Water Management Plan (SOP 5.0) documented for the POM and estate that include frequency of sampling for water analysis at river, final discharge point, tube wells, etc. However, the POM and estates shall establish, document and implement a site specific Water Management Plan that clearly identify the water sources, monitoring of the impact of activities on the water management and implement appropriate action. For examples, (1) POM – Management of water from tube wells used for FFB processing; (2) Pinji Estate – Presence of monsoon drains that carry water from neigbouring residential areas into the estate; (3) Lekir Estate – Water sampling and analysis is only for B.O.D at identified points of drains / streams leading to rivers outside the estate. The water analysis need to include tests for any chemical residues. Root Cause and Corrective Action: Root Cause: A generic Water Management Plan (SOP 5.0) was available during audit time. However, site specific plan was not available.

Corrective Action: Site specific water management plan is prepared by the respective POM and estates management. Verification (Corrective Action): Off-site verification carried out: Corrective Action Plan (CAP) shall be verified for closure and effectiveness at the next surveillance assessment. NC status verified by auditor: CAP accepted by Date closed: Next assessment. OCL Verification (for effectiveness): Next assessment.

NCR MYNI Details of NCR Indicator Minor 5.3.3 Date issued: 25/05/2018 SH-01 Indicator requirement: A waste management and disposal plan to avoid or reduce pollution shall be documented and implemented. Nonconformance: Location: Pinji Estate The management and disposal of household waste at the line site was not effectively implemented. It was observed that household waste material and plastic bottles were strewn at the line site compound. Root Cause and Corrective Action: Root Cause: Estate management had a line sweeper and scheduled household waste collection for line site (twice a week). Besides, training had been conducted for all workers on Waste Management. However, new foreign workers still have poor awareness on household waste disposal.

Corrective Action: Management has conducted briefing and added new rubbish bin. Besides, management will continue to monitor the line site condition

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Verification (Corrective Action): Off-site verification carried out: Corrective Action Plan (CAP) shall be verified for closure and effectiveness at the next surveillance assessment. NC status verified by auditor: CAP accepted by Date closed: Next assessment. OCL Verification (for effectiveness): Next assessment.

NCR MYNI Details of NCR Indicator Minor 4.1.2 Date issued: 25/05/2018 WN-01 Indicator requirement: A mechanism to check consistent implementation of procedures shall be in place. Nonconformance: Location: Pinji Estate Absconded worker incident reported on 31 Mar 2018 at this estate. A police report had been made. However, as to date, the Operating Centre did not report to the Human Resource Department (HRD) at HQ in accordance with the SOP so that HRD can submit the necessary documents to Labor Office & Immigration Department. Root Cause and Corrective Action: Root Cause: Estate management had lodged police reports on the absconded workers. However, estate management did not report to the Human Resource Department (HRD) at HQ.

Corrective Action: Estate management has submitted relevant documents to HRD and reported to Immigration Department. Verification (Corrective Action): Off-site verification carried out: Corrective Action Plan (CAP) shall be verified for closure and effectiveness at the next surveillance assessment. NC status verified by auditor: CAP accepted by Date closed: Next assessment. OCL Verification (for effectiveness): Next assessment.

3.2.5 Year 2018, Re-certification / Transfer CB: 6 Observations Status RSPO Opened Closed Remark, Ref No: P&C Location Details of Observation date date if any Indicator

OBS# 4.5.1 Kampar Kampar Estate has an IPM 25 May Follow up at OCL-01 Estate programme that indicated the 2018 next planted areas for Antigonon assessment leptopus and Turnera subulata. This programme should be expanded to include the planting of Cassia cobanensis, OBS# 4.6.5 Kampar, Kampar Estate and Pinji Estate have 25 May Follow up at OCL-02 Pinji facilities for the mixing of pesticides, 2018 next Estates shower and storage area for PPE. assessment However, the one shower room for male and one shower room for

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female may not ensure the prompt cleaning up of the workers after spraying work when in future there are more that the current number of 7 sprayers. OBS# 5.1.2 Raja Hitam The riparian marker and signages 25 May Follow up at SH-01 Estate are already faded and difficult to 2018 next visualize. assessment OBS# 5.1.2 Lekir Estate It was observed that the 25 Jul Follow up at SH-02 demarcation on the extent of the 2018 next riparian zones was not indicated on assessment the ground. The drains leading to the natural water courses, Sungai Kayan and Sungai Tiram (located outside the estate) was without the extent of the riparian marker. The location of the water sampling points was also not indicated on the map, and possibly on the ground. (This was originally a Minor NC that was re-graded as an observation after a decision by an Independent Panel on the disputed NC to re- grade the finding for follow-up at next assessment). OBS# 5.3.3 Lekir Estate The management of the landfill can 25 May Follow up at SH-03 be further improved. 2018 next assessment OBS# 6.11.1 Pinji, Minor broken roofing condition 25 May Follow up at WN-01 Estate observed from Creche at Pinji 2018 next Estate. Timely maintenance should assessment be planned. First aid box should be readily available.

3.2.6 Identified Positive Elements

1) The PMU ensured implementation of its policies concerning sustainability and environmental requirements in its operation.

2) The PMU has contributed for social pollution prevention programs and activities.

3) The PMU demonstrated good safety awareness and compliance by its workforce.

3.3 Summary of Feedback Raised by Stakeholders and Findings

Prior to and during the Assessment, written and verbal feedback communicated from the stakeholders on the environmental and social performance of the PMU operations were sourced. All pertinent feedback issues were reviewed and followed up for verification and these had been accordingly incorporated into the report findings. See table below:

3.3.1 Feedback Raised by Stakeholders (Surveillance Assessment ASA-04 – Year 2017) No issues from internal and external stakeholders arising from previous assessment as reported by previous CB.

3.3.2 Feedback Raised by Stakeholders (Re-certification / Transfer CB – Year 2018) Communication done via email on 19 Apr 2018 to various categories of stakeholders (see list under para 2.5):

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Stakeholders’ Feedback PMU Response CB verification / Follow up comments comments (if any) Government Agencies: Ongoing consultations will be Verified during on-site Nil No feedback received. maintained. assessment that no No response needed. response needed. Non-Governmental Ongoing consultations will be Verified during on-site Nil Organizations: maintained. assessment that no No feedback received. No response needed. response needed.

Local Communities - Stakeholders’ Consultation: Selected stakeholders representing the complete range of various stakeholder categories were invited for the Stakeholders’ Consultation on 25 May 2018. Official invitation sent out to those identified 15 stakeholders, but none of them turned out. Personal calls conducted and 6 of the identified stakeholders interviewed via the phone. They were representatives from transport agency, DOE (), JPJ (), scheduled waste collector, local village head, as well as Jabatan - Parit & Saliran (JPS). They were interviewed by the auditors without the presence of any of the PMU staff. Concerns and suggestions received during interviews and stakeholder consultations:

1. No negative feedback from those call received, except PMU responded that the To be followed up one feedback from village maintenance of the road was during the next head - public road (between done by PMU itself. So far, no Assessment. village & palm oil mill) was mishap or accident reported on found dirty, dusty & with the use of the public road. potholes. It was possibly due to damage caused by heavy vehicles. Local Communities - Interviews: Interviews of sampled staff and workers were also conducted by the auditors during field visits from 21-25 May 2018 at the PMU:

Staff/Workers sampling: POM = 24 males, 7 females Estate = 54 males, 21 females

No negative issues raised by the No response needed. No response needed. Nil sampled staff and workers. Other Interested parties: No response needed. No response needed. Nil

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No feedback received.

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4.0 ASSESSMENT CONCLUSION AND RECOMMENDATION

Based on the findings above, Kuala Lumpur Kepong Berhad Changkat Chermin Grouping had been able to demonstrate its compliance with the RSPO Principles and Criteria (April 2013), Malaysian National Interpretation (MYNI 2014) and the RSPO Supply Chain Certification Standard (Jun 2017) for Palm Oil Mill.

Therefore, it is recommended that the certification of Kuala Lumpur Kepong Berhad Changkat Chermin Grouping be approved and continued.

Signed for and on behalf of Intertek Certification International Sdn Bhd

Dr. Ooi Cheng Lee Lead Assessor

Date: 20 Aug 2018

4.1 Acknowledgement of Internal Responsibility and Confirmation of Assessment Findings

This is to acknowledge and confirm the assessment visits described in this report and the acceptance of the contents and findings in this assessment report.

Signed for and on behalf of Kuala Lumpur Kepong Berhad

Ms. Lee Kuan Yee Senior Sustainability Manager (Plantations) Kuala Lumpur Kepong Berhad

Date: 20 Aug 2018

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4.2 INTERTEK- RSPO P&C Certificate details for KLK Changkat Chermin Grouping

Certificate No: RSPO 931588 New issue date 10 Sep 2018 Expiry date 09 Sep 2023 Organization Kuala Lumpur Kepong Berhad Address of Head Office: Wisma Taiko, 1, Jalan S.P. Seenivasagam, 30000 Ipoh, Perak Darul Ridzuan, Malaysia RSPO Membership No: 1-0014-04-000-00 Plantation Management Unit: Changkat Chermin Grouping Address of POM: Batu 13½, 32400, Ayer Tawar, Perak, Malaysia Standards: RSPO Principles and Criteria (Apr 2013); Malaysian National Interpretation (2014); RSPO Supply Chain Certification Standard (Jun 2017) for the Palm Oil Mill. Certification scope: Production of Crude Palm Oil and Palm Kernel Supply Chain module for POM Identity Preserved (IP)

Details of the Mill and Supply bases covered by this certificate and the tonnage approved are: GPS Reference Certified Name Address Latitude Longitude Area (ha) Changkat Chermin Palm Oil Mill Batu 13½, 32400, Ayer Tawar, N 4°16’29.7’’ E 100°47’5.9’’ Perak, Malaysia Capacity (60 MT/hr) Changkat Chermin Batu 13½, 32400 Ayer Tawar, N 4°18’16’’ E 100°47’48’’ Estate Perak, Malaysia Batu 12 Lekir, 32020 Sitiawan, Lekir Estate N 4°7’12’’ E 100°46’47’’ Perak, Malaysia Bt 18, Kg Jering, 32400 Ayer Raja Hitam Estate N 4°21’2’’ E 100°46’25’’ Tawar, Perak, Malaysia Jalan Seputeh – Batu Hampar, Glenealy Estate N 4°27’31’’ E 100°55’50’’ 32800 Parit, Perak, Malaysia 13,414 Ladang Allagar, 34800 Trong, Allagar Estate N 4°35’57’’ E 100°44’8’’ Perak, Malaysia Ladang Serapoh, 32800 Parit, Serapoh Estate N 4°31’15’’ E 100°53’30’’ Perak, Malaysia Ladang Kuala Kangsar, 33700 Kuala Kangsar Estate Padang Rengas, Perak, N 4°46’0.32’’ E 100°51’0.16’’ Malaysia Ladang Pinji, 31500 Lahat, Pinji Estate N 4°30’12’’ E 101°5’19’’ Perak, Malaysia Ladang Batu Dua, P.O. Box Batu Dua Estate 1027, 30820 Ipoh, Perak, N 4°28’43.5’’ E 101°4’29.3’’ Malaysia

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Ladang Menglembu, P.O. Box Menglembu Estate 1027, 30820 Ipoh, Perak, N 4°33’43.956’’ E 101°2’23.82’’ Malaysia Ladang Kampar, Peti Surat 20, Kampar Estate N 4°16’8.492’’ E 101°6’34.233’’ 31907 Kampar, Perak, Malaysia

The annual certified tonnages produced at the PMU are detailed as follows:

Changkat Chermin POM Annual Tonnages (MT) Certified FFB 270,711 Certified CPO 59,556 Certified PK 12,723 Supply chain module Identity Preserved (IP)

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Appendix A:

Qualifications of Lead Assessor and Assessment Team

Dr. Ooi Cheng Lee (OCL) Lead Assessor / Team Leader / Technical Expert (Palm Oil Mill, Environment, OHSAS, Social, HCV, Land Use and Supply Chain) - PhD in Welding, Cranfield University, UK - M.Sc. (Engineering) in Metallurgy, University of Birmingham, UK - B.App.Sc (Hons), Science University of Malaysia - Diploma in Translation for Science and Technology, Malaysia Translation Society Dr. Ooi Cheng Lee is an IRCA Lead Auditor and Lead Tutor for ISO 9001. He is also involved in auditing in other integrated management systems. He has successfully completed the RSPO Lead Assessor Course for Principles and Criteria (RSPO P&C) and the RSPO Supply Chain Certifications (RSPO SCC). He is currently involved in the management of all types of system and process/product certification in Intertek. He has more than 32 years work experience in product and process specifications, research & development, inspection and testing, quality assurance, engineering development, training, product certification, auditing and quality management system certification. He has conducted assessments of organizations in Malaysia, Singapore, Indonesia, Vietnam, Philippines, China, Myanmar, Cambodia and other regional countries. Assessments include those of rubber and oil palm plantations in Malaysia and Indonesia. His previous position as the General Manager of Lloyd’s Register Quality Assurance (LRQA) Malaysia include the management of all types of systems certification, including that of environmental (ISO 14001), safety & health (OHSAS 18001) and Clean Development Mechanisms (CDM). He is currently the General Manager in Intertek Certification International Sdn. Bhd. He is a member of the Internal Review Panel for RSPO Assessment reports since May 2011. He is part of the RSPO CB Assessment team which audited RSPO certified Plantation Management Units since 2012.

Mr. Sazali Hasni – Assessor / Technical Expert (Environment, Conservation and HCV area) - Bachelor of Science (Forestry) Mr. Sazali Hasni (SH) has over 25 years work experience in the forestry sector. He is an IRCA Auditor for ISO 9001 and auditor for the PEFC Chain-of-Custody Certification. He has successfully completed training in the Intertek In House RSPO P&C, MYNI. He was a member in the stakeholder consultation and development of the Malaysian Criteria & Indicators (MC&I) for Forest management Certification. He has been involved in the auditing of Forest Management Certification for the Perak State Forestry Department and State Forestry Department. He has also been involved with a German based company in testing their criteria for carbon tracing in an oil palm plantation in 2011. He had also acted as the regional consultant to International Tropical Timber Organization (ITTO) for the Asia Pacific region in the Evaluation and Monitoring of Projects funded by the organization from 1994 to 1998. Projects funded are mainly forestry related such as reforestation, conservation, community forestry apart from other research based projects.

Mr. William Ng Tuck Seong – Lead Assessor / Technical Expert (Palm Oil Mill and Supply Chain) - Bachelor of Science (Biotechnology), Master in Business Administration Mr. William is an IRCA Third Party Assessment (TPA) Lead Auditor and IRCA Lead Tutor for IRCA ISO 9001 and ISO 22000 Food Safety Management Systems (FSMS) Lead Auditor Courses in Intertek, Malaysia. He has over 15 years of fieldwork and experience in Agricultural and Food related auditing. He has successfully completed the IRCA accredited Lead Auditor course in ISO 9001:2015, ISO 22000, RSPO Principles and Criteria Lead Assessor Course and International Sustainable Carbon Certification (ISCC) Lead Auditor course. He has also completed the RSPO training on RSPO P&C (2013) and RSPO RED requirements. He is currently the Food Safety Manager of Intertek, Malaysia and has performed over 600 auditing days on quality, food safety and hygiene assessments in various sectors including oil palm plantations. He was the RSPO CB Assessment Team Member which audited several RSPO certified Plantation Management Units since in 2012.

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Appendix B: Assessment Plan (Actual)

Date Time Assessors and Assessment Activity

Asssessment Team 21 May 7.30 am – Travel to Kampar Estate 2018 10.00 am Monday 10.00 am – Opening Meeting and Briefing 10.30 am (Day 1) 10.30 pm – OCL SH WN 1.00 pm Site assessment at Kampar Site assessment at Site assessment at Estate Kampar Estate Kampar Estate  P1 Transparency  P2 Laws & regulations  P2 Laws & regulations  P2 Laws & regulations  P5 Environmental,  P6 Employees, Individuals  P3 Economic & Financial Conservation & HCV & Communities incl. Viability  P8 Continual Improvement Gender Issues  P4 Best Practices at Estates  P8 Continual Improvement  P7 New Plantings  Stakeholders’ Consultation  P8 Continual Improvement 1.00 pm – Lunch Break 2.00 pm 2.00 pm - Continue site assessment at Kampar Estate 5.30 pm 5.30 pm – Travel to Hotel in Ipoh & Break 6.00 pm 6.00 pm – Team Meeting and Discussion 7.00 pm

Date Time Assessors and Assessment Activity

Asssessment Team 22 May 9.00 am – OCL SH WN 2018 1.00 pm Site assessment at Pinji Site assessment at Pinji Site assessment at Pinji Tuesday Estate Estate Estate

 P1 Transparency  P2 Laws & regulations  P2 Laws & regulations (Day 2)  P2 Laws & regulations  P5 Environmental,  P6 Employees, Individuals  P3 Economic & Financial Conservation & HCV & Communities incl. Viability  P8 Continual Improvement Gender Issues  P4 Best Practices at Estates  P8 Continual Improvement  P7 New Plantings  Stakeholders’ Consultation  P8 Continual Improvement 1.00 pm – Lunch Break 2.00 pm 2.00 pm - Continue site assessment at Pinji Estate 5.30 pm 5.30 pm – Travel to Hotel in Setiawan & Break 6.00 pm 6.00 pm – Team Meeting and Discussion 7.00 pm

Date Time Assessors and Assessment Activity

Asssessment Team OCL SH WN

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23 May 9.00 am – Site assessment at Lekir Site assessment at Lekir Site assessment at Lekir 2018 1.00 pm Estate Estate Estate Wednesd  P1 Transparency  P2 Laws & regulations  P2 Laws & regulations ay  P2 Laws & regulations  P5 Environmental,  P6 Employees, Individuals  P3 Economic & Financial Conservation & HCV & Communities incl. (Day 3) Viability  P8 Continual Improvement Gender Issues  P4 Best Practices at  P8 Continual Improvement Estates  Stakeholders’ Consultation  P7 New Plantings  P8 Continual Improvement 1.00 pm – Lunch Break 2.00 pm 2.00 pm - Continue site assessment at Lekir Estate 5.30 pm 5.30 pm – Travel to Hotel & Break 6.00 pm 6.00 pm – Team Meeting and Discussion 7.00 pm

Date Time Assessors and Assessment Activity 24 May 8.30 am – OCL SH WN 2018 12.30pm Site assessment at Raja Site assessment at Raja Site assessment at Raja Thursday Hitam Estate Hitam Estate Hitam Estate  P1 Transparency  P2 Laws & regulations  P2 Laws & regulations (Day 4)  P2 Laws & regulations  P5 Environmental,  P6 Employees, Individuals  P3 Economic & Financial Conservation & HCV & Communities incl. Viability  P8 Continual Improvement Gender Issues  P4 Best Practices at  P8 Continual Improvement Estates  P7 New Plantings  P8 Continual Improvement 12.30 pm – Lunch Break 1.30 pm 1.30 pm - Site assessment at Palm Site assessment at Palm Site assessment at Palm 5.00 pm Oil Mill Oil Mill Oil Mill  P1 Transparency  P2 Laws & regulations  P2 Laws & regulations  P2 Laws & regulations  P5 Environmental,  P6 Employees,  P3 Economic & Financial Conservation & HCV Individuals & Viability  P8 Continual Improvement Communities incl. Gender  P4 Best Practices at Mill Issues  P8 Continual Improvement  P8 Continual  SCC for POM Improvement 5.00 pm – Travel to Hotel & Break 6.00 pm 6.00 pm – Team Meeting and Discussion 7.00 pm

Date Time Assessors and Assessment Activity 25 May 8.30 am – OCL SH WN 2018 11.30 am Site assessment at Palm Stakeholders’ Consultation on the following categories Friday Oil Mill (see Notes 1 and 2 below):  P1 Transparency  Contractors (Day 5)  P2 Laws & regulations  Suppliers  P3 Economic & Financial  Transporters Viability  NGOs  SCC for POM  Government Department / Agencies  Local Community Notes

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1. It is mandatory for the PMU to inform Intertek and provide the information (as a minimum the no. of stakeholders in each applicable category and contact number) on the stakeholders prior to the assessment. 2. This will facilitate the random and impartial selection of stakeholders (including independent and organized smallholders, where applicable) and to meet the sample size requirement 11.30 pm – Lunch Break 12.30 pm 12.30 pm – Preparation for Closing Meeting 1.30 pm 1.30 pm – 2.30 pm Team Meeting and Discussions with POM Management Representative 2.30 pm – Closing Meeting & Briefing at Palm Oil Mill Office 3.30 pm 3.30 pm Travel to Kuala Lumpur onwards

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Appendix C-1:

Location Map of KLK Changkat Chermin Grouping, Perak, Malaysia

KLK Changkat Chermin Grouping

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Appendix C-2-1: Map of Changkat Chermin Estate and POM

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Appendix C-2-2: Map of Allagar Estate

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Appendix C-2-3: Map of Glenealy Estate – Home Division

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Appendix C-2-4: Map of Glenealy Estate – Parit Division

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Appendix C-2-5: Map of Glenealy Estate – Reyland Division

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Appendix C-2-6: Map of Glenealy Estate – Senggang Division

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Appendix C-2-7: Map of Kampar Estate

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Appendix C-2-8: Map of Kuala Kangsar Estate – Gapis Division

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Appendix C-2-9: Map of Kuala Kangsar Estate – Selinsing Division (North)

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Appendix C-2-10: Map of Kuala Kangsar Estate – Selinsing Division (South)

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Appendix C-2-11: Map of Lekir Estate

Appendix C-2-12: Map of Pinji Estate (Hillrise Division)

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Appendix C-2-13: Map of Pinji Estate (Meranti Lapan Division)

Appendix C-2-14: Map of Raja Hitam Estate

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Appendix C-2-15: Map of Serapoh Estate

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Appendix C-2-16: Map of Menglembu Estate

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Appendix C-2-17: Map of Batu Dua Estate (Batu Dua Division under Pinji Estate)

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Appendix D:

Photographs at KLK Changkat Chermin Grouping

Pesticides sprayers at Kampar Estate Chemicals store at Pinji Estate

Lekir Estate: Interviewing foreign workers from Lekir Estate: Pesticides sprayers with PPE being Indonesia working as harvesters. interviewed by auditor.

Chemicals store at Lekir Estate Fertilizer store at Lekir Estate

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Appendix E:

Time Bound Plan - as submitted by Kuala Lumpur Kepong Berhad (May 2018)

POM Planting No ESTATE Location Licenses Year Area (Ha) RSPO Target

1 Palm Oil Mill is expected to Only planted commission by Butaw Estate Liberia Leasehold 1,418Ha 8,011 BY 2022

Sinoe

County Y2020 since 2012

IA 2 Only planted LIBER Palm Bay Estate Liberia Leasehold 6,404 Ha 13,007 BY 2022

County since 2011

Grand Bassa

TOTAL 21,018 1 Berau Kebun Malindomas Berau, KALTIM HGU & IUP 2006 7,971 Perkebunan

2 Kebun Hutan Hijau Mas Berau, KALTIM HGU & IUP 2006 7,317 BY 2018 3 Kebun Anugrah Surya Berau, KALTIM IL & IUP - 2,682

Mandiri

KALTIM 1 Jabontara Kebun Jabontara Eka Berau, KALTIM HGU & IUP 2007 14,086 CERTIFIED IN Karsa NOV Y2017

1 Mandau Kebun Mandau* Riau, Sumatera HGU & IUP 14,799 CERTIFIED IN

OCT Y2012

INDONESIA 2 Nilo 1 Kebun Nilo Timur Riau, Sumatera HGU & IUP 12,860

RIAU, CERTIFIED IN

MATERA 3 Nilo 2 Kebun Nilo Barat Riau, Sumatera HGU & IUP MEI Y2014

SU

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Kebun Mutiara Riau, Sumatera IL & IUP 2005 1,400 AUDITED IN March Y2018; AWAITING CERTIFICATE 4 Tapung Kanan Kebun Sekarbumi Riau, Sumatera HGU & IUP 6,200 CERTIFIED IN Alamlestari APRIL Y2013

1 Steelindo Wahana Kebun Steelindo Wahana Belitung HGU & IUP 14,065 CERTIFIED IN Perkasa Perkasa JANAURY Y2015

2 Parit Sembada Kebun Parit Sembada Belitung HGU & IUP 3,990 CERTIFIED IN OCTOBER Y2016 Kebun Alam Karya Belitung IL & IUP 2009 2,336 BY 2018

BELITUNG Sejahtera

1 Stabat Kebun Basilam* Langkat, SUMUT IUP & HGU 2001 2,697

Kebun Tanjung Beringin Langkat, SUMUT IUP & HGU 2000 3,936

Kebun Gohor Lama * Langkat, SUMUT IUP & HGU 1992 3,323

Kebun Padang Brahrang Langkat, SUMUT IUP & HGU 1979 1,949 CERTIFIED IN

NESIA AUGUST Y2017 Kebun Bukit Lawang Langkat, SUMUT IUP & HGU 1995 1,377

INDO

SUMATERA UTARA Kebun Tanjung Langkat, SUMUT IUP & HGU 1991 2,407 Keliling*

Kebun Bekiun Langkat, SUMUT IUP & HGU 1984 2,979

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Maryke Langkat, SUMUT IUP & HGU 2007 2,704

1 KMA POM Kebun Karya Makmur Mentaya Hulu, IUP & HGU 2008 9397 Abadi KALTENG BY 2018

Kebun Karya Makmur Bukit Santuai IUP & IL 2008 3406 Abadi KALTENG MAP POM Kebun Mulia Agro Baamang, IUP & HGU 2006 9,055 Permai KALTENG

KALTENG Kebun Menteng Jaya Mentaya Hilir Utara, IL & IUP 2009 5,893 Sawit Perdana KALTENG

TOTAL 136,830

POM No ESTATE Location Licenses Area (Ha) RSPO Target 1 Batu Lintang POM Pelam Estate* Kulim, Kedah Land Title 2,960

2 Batu Lintang Estate* Serdang, Kedah Land Title 1,808

CERTIFIED IN SEPT 3 Subur Estate Batu Kurau, Perak Land Title 1,290 Y2013

4 Buntar Estate Serdang, Kedah Land Title 899

MALAYSIA 5 Changkat Chermin POM Lekir Estate Manjung, Perak Land Title 3,307 CERTIFIED IN SEPT

PENINSULAR M’SIA PENINSULAR 6 Changkat Chermin Estate Manjung, Perak Land Title 2,530 Y2013

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7 Raja Hitam Estate Manjung, Perak Land Title 1,497

8 Glenealy Estate* Parit, Perak Land Title 1,059

9 Serapoh Estate* Parit, Perak Land Title 936

10 Kuala Kangsar Estate* Padang Rengas, Perak Land Title 1,340

11 Allagar Estate Trong, Perak Land Title 773

12 Tuan Mee POM Tuan Mee Estate Sg Buloh, Selangor Land Title 2,678 CERTIFIED IN SEPT Y2013

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POM No ESTATE Location Licenses Area (Ha) RSPO Target 13 Tanjong Malim Changkat Asa Estate* Tg Malim, Perak Land Title 1,714 POM 14 Kerling Estate* Kerling, Selangor Land Title 619 CERTIFIED IN NOV Y2013

15 Sg Gapi Estate Serendah, Selangor Land Title 603

16 Jeram Padang POM Ayer Hitam Estate Bahau, Negeri Sembilan Land Title 2,640

17 Batang Jelai Estate* Rompin, Negeri Sembilan Land Title 2,148

18 Jeram Padang* Bahau, Negeri Sembilan Land Title 2,114

19 Kombok Estate* Rantau, Negeri Sembilan Land Title 2,331 M’SIA 20 Ulu Pedas Estate* Pedas, Negeri Sembilan Land Title 922 CERTIFIED IN SEPT Y2012 21 Gg Pertanian Estate Simpang Durian, Negeri Sembilan Land Title 686

MALAYSIA 22 Sg Kawang Estate* Lanchang, Pahang Land Title 1,889

PENINSULAR PENINSULAR 23 Renjok Estate* Telemong, Pahang Land Title 1,578

24 Tuan Estate* Telemong, Pahang Land Title 1,353

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No POM ESTATE Location Licenses Area (Ha) RSPO Target 25 Kuala Pertang Kerilla Estate* Tanah Merah, Kelantan Land Title 2,176 POM 26 Pasir Gajah Estate Kuala Krai, Kelantan Land Title 2,107 CERTIFIED IN NOV Y2014 27 Sg Sokor Estate* Tanah Merah, Kelantan Land Title 1,603

28 Kekayaan POM Landak Estate Paloh, Johor Land Title 4,451

29 Kekayaan Estate Paloh, Johor Land Title 4,436

30 Voules Estate* Tenang, Johor Land Title 2,969

31 Sg Penggeli Estate Bandar Tenggara, Johor Land Title 942

32 New Pogoh Estate* Tenang, Johor Land Title 1,545

MALAYSIA 33 Fraser Estate Kulai, Johor Land Title 1,916 CERTIFIED IN OCT Y2011

PENINSULAR M’SIA PENINSULAR 34 Paloh Estate Paloh, Johor Land Title 2,029

35 Sg Bekok Estate Bekok, Johor Land Title 625

36 Ban Heng Estate Pagoh, Muar, Johor Land Title 631

37 See Sun Estate Renggam, Johor Land Title 589

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No POM ESTATE Location Licenses Area (Ha) RSPO Target 1 Pinang POM Jatika Estate Tawau, Sabah Land Title 3,508

2 Sigalong Estate Tawau, Sabah Land Title 2,864

CERTIFIED IN MAR Y2009 3 Pangeran Estate Tawau, Sabah Land Title 2,855

4 Pinang Estate Tawau, Sabah Land Title 2,420 5 Mill II Pang Burong Estate Tawau, Sabah Land Title 2,548

6 Sri Kunak Estate Tawau, Sabah Land Title 2,770

CERTIFIED IN MAR Y2009 7 Tundong Estate Tawau, Sabah Land Title 2,155

Ringlet Estate Tawau, Sabah Land Title 1,834

SABAH 8

MALAYSIA 9 Bornion POM Bornion Estate Kinabatangan, Sabah Land Title 3,233

10 Segar Usaha Estate Kinabatangan, Sabah Land Title 2,792

11 Lungmanis POM Tungku Estate Lahad Datu, Sabah Land Title 3,418

CERTIFIED IN JULY Y2010 12 Bukit Tabin Estate Lahad Datu, Sabah Land Title 2,916

13 Lungmanis Estate Lahad Datu, Sabah Land Title 1,656

14 Sg Silabukan Estate Lahad Datu, Sabah Land Title 2,654

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15 Rimmer Estate Lahad Datu, Sabah Land Title 2,730

Above marked * is combination of total rubber and palm oil area within stated plantation where the exact certified or under certification of each plantation will be according to the respective public summary report.

Country Region Area (Ha) P.M’sia 65,693 Malaysia Sabah 40,353 KALTIM 32,056 Riau 35,259 Indonesia Belitung 20,391 Sumatera Utara 21,372 KALTENG 27,751 Palm Bay 13,007 Liberia Butaw 8,011 GRAND TOTAL 263,893

Remarks: 1. KLK has acquired Selinsing division from Agro Harapan Lestari Sdn. Bhd (Formely known as Good Hope) in November 2016. Titled hectarage of Selinsing Division is 497Ha + 843Ha (Kuala Kangsar Home Division) = 1340Ha

2. KLK has sold 1012Ha to Aura Muhibbah Sdn. Bhd.

3. KLK has sold 32Ha from Allagar Estate and 4Ha from Lekir Estate to .

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4. Rimmer POM has been closed due to extensive replanting plan at Lahad Datu Complex.

5. Paloh POM has been closed due to low FFB volume.

6. RSPO Compensation Concept Note has been endorsed by RSPO Compensation Panel on 14/2/2018.