Roundtable on Sustainable Palm Oil Public Summary Report Report No

Roundtable on Sustainable Palm Oil Public Summary Report Report no. : 824 502 14026 Certification assessment against the RSPO Principles & Criteria Indonesia National Interpretation (INA-NI) year 2008 and RSPO SCCS year 2011 Name of client PT Gawi Makmur Kalimantan Satui Palm Oil Mill

Head Office : Gawi Building 4th floor, Kuningan Office Park, Jl. Setiabudi Selatan Kav.16-17, South Jakarta District, DKI Ja- karta Province, Indonesia 12920

Branch Office : Jl. Pramuka No. 16 RT 020, Sungai Lulut, Banjarmasin Timur – Banjarmasin, South Kalimantan Province, Indonesia

Location : Mill Estate : Satui Barat village, Satui Sub District, Tanah Bumbu District, South Kalimantan Province Satui Estate : Satui Barat village, Jombang village, Al-Kautsar village, Setarap village, Sekapuk village, Wonorejo village and Pendamaran Jaya village, Satui Sub District, Tanah Bumbu District, South Kalimantan Province Timur Estate : Pasir putih village and Sungai Cuka village, Kintap Sub District, Tanah Laut District, South Kalimantan Province

Date of assessment : June 06 to 10, 2014

Report prepared by : Hendra Fachrurozy (RSPO Lead Auditor)

Certification decision by : Muhammad Bascharul Asana (COO TUV Rheinland Indonesia)

Certification Body : PT TUV Rheinland Indonesia Menara Karya, 10 th floor Jl. H.R Rasuna Said Block X-5 Kav.1-2 Setia Budi – Jakarta, Indonesia Tel: +62 21 579 44 579 Fax: +62 21 579 44 575 www.tuv.com

TABLE OF CONTENTS

1.0 SCOPE OF CERTIFICATION ASSESSMENT ...... 3 1.1 National Interpretation Used ...... 3 1.2 Type of Assessment ...... 3 1.3 Certificatuion Details ...... 3 1.4 Location and Maps ...... 4 1.5 Organisational Information / Contact Person ...... 7 1.6 Description of Supply Base...... 8 1.7 Actual production volumes, tonnages and projected outputs...... 9 1.8 Dates of Plantings and Replanting Cycles ...... 9 1.9 Area of Plantation (Total, Planted and Mature) ...... 10 1.10 Progress Against Time Bound Plan ...... 10 1.11 Compliance to Rules for Partial Certification...... 11 1.12 Progress of associated smallholders or outgrowers towards RSPO compliance ...... 12 1.13 Approximate Tonnages Certified ...... 12 1.14 Recommendation for certification ...... 12 1.15 Date of certification issued and scope of certificate ...... 12

2.0 ASSESSMENT PROCESS ...... 13 2.1 Certification Body ...... 13 2.2 Qualifications of Lead Assessor and Assessment Team ...... 13 2.3 Assessment Methodology & Agenda ...... 14 2.4 Stakeholder Consultation and Stakeholders Contacted ...... 16

3.0 ASSESSMENT FINDINGS ...... 17 3.1 Summary of Findings ...... 17 3.2 Identified Non-conformances against RSPO SCCS Requirements, Corrective Actions Taken and Auditors Conclusions ...... Error! Bookmark not defined. 3.3 Noteworthy Positive Component ...... 52 3.4 Conclusion and Recommendation for RSPO P & C and Supply Chain Certification ...... 52 3.5 Issues raised by stakeholders and findings pertaining to Issues ...... 52

4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ...... 54 4.1 Date of Next Surveillance Visit ...... 54 4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client ...... 54

APPENDICES ...... 55 Appendix 1 : Details of certificate ...... 56 Appendix 2 : Certification Audit Plan ...... 58 Appendix 3 : List of Abbreviations ...... 62 Appendix 4 : Observations and Opportunities for Improvement ...... 62 Appendix 5 : Attendant list of the stakeholder consultation meeting ...... 63

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 3 of 69 1.0 SCOPE OF CERTIFICATION ASSESSMENT

1.1 National Interpretation Used The operations of the palm oil mill(s) and its supply base of FFB were assessed against the National Intepretation Indonesia (INA-NI) year 2008 of the RSPO Principles & Criteria and RSPO SCCS November 2011.

1.2 Type of Assessment The certification assessment was carried out on 1 (one) mill i.e Satui Palm Oil Mill (POM) and 2 (two) estates i.e East Estate and Satui Estate under PT Gawi Makmur Kalimantan – Unit of Satui, South Kalimantan Province, In- donesia.

1.3 Certification Details The details of RSPO certification of PT Gawi Makmur Kalimantan – Unit of Satui area as per the table below Table 1 : RSPO Certification details of PT Gawi Makmur Kalimantan – Unit of Satui

RSPO Membership no. : 1-0126-12-000-00.

RSPO Certificate no. : 824 502 14026

Date of first RSPO certificate & validity : January 12, 2015 & Jan 12, 2015 to Jan 11, 2020

Date of certification audit : June 06 to 10, 2014

Date of previous surveillance audit : Not applicable Date of revised RSPO certificate & validity (if applica- Not applicable ble) : CPO tonnages claimed (tonnes) : 39,576.54 PK tonnages claimed (tonnes) : 8,393.37

PKO tonnages claimed (tonnes) : 9,543.19

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RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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1.4 Location and Maps Figure 1a : Location map of PT Gawi Makmur Kalimantan – East Estate in Tanah Laut District, South Ka- limantan, Indonesia

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Figure 1b : Location map of PT Gawi Makmur Kalimantan – Satui Estate in Tanah Bumbu District, South Kalimantan, Indonesia

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Figure 2.a : Map of Estate PT Gawi Makmur Kalimantan – East Estate

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Figure 2b : Map of Estate PT Gawi Makmur Kalimantan – Satui Estate

Table 2: GPS locations for all estates and mills included in main assessment

Name of mill / GPS locations Location estate Latitude Longitude Satui POM Satui Barat Village, Satui Sub District, Tanah 03 0 44’ 16.7” S 1150 27’ 18.7” E Bumbu District, South Kalimantan Province East Estate Pasir Putih Village and Sungai Cuka Village, Kintap Sub District, Tanah Laut District, South 03 0 44’ 18.1” S 1150 27’ 54.3” E Kalimantan Province Satui Estate Satui Barat Village, Jombang Village, Al-Kautsar Village, Setarap Village, Sekapuk Village, 03 0 44’ 16.7” S 1150 27’ 18.7” E Wonorejo Village, Pendamaran Jaya Village, Satui Sub District, Tanah Bumbu District

1.5 Organisational Information / Contact Person Contacts details of the company are as follows :

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Company Name : PT Gawi Makmur Kalimantan th Address : Head office : Gawi Building 4 floor, Kuningan Office Park, Jl. Setiabudi Selatan Kav.16-17, South Jakarta District, DKI Jakarta Province, Indonesia 12920

Mill : Satui Barat Village, Satui Sub District, Tanah Bumbu District, South Kalimantan Province, Indonesia Contact Person : Mr. Farid Makruf

Telephone / Fax: +62-21-579 01 085 / +62-21 579 0 1077

[email protected] Email : 1.6 Description of Supply Base Table 3 : FFB Supply Information for PT Gawi Makmur Kalimantan - Satui Mill, year 2013 and year 2014 FFB supplied FFB supplied FFB Contributors Year 2013 * Year 2014 ** Tonnes % Tonnes % I. Company owned estates : East Estate 84,965.70 28.97 43,494.81 31.07 Satui Estate 97,498.77 33.25 35,626.54 25.45 Sub Total I 182,464.47 62.22 79,121.35 56.52 II. Smallholder : KUD Gerbang Mitra Sejahtera 438.34 0.15 480.73 0.34 Kopermas Subur Mandiri (Plasma 5.23 0.00 0.00 0.00 Damit) Sub Total II 443.57 0.15 480.73 0.34 III. Other estate in Gawi

Group : Paser Estate 2,703.83 0.92 0.00 0.00 West Estate 109.93 0.04 0.00 0.00 Central Estate 267.48 0.09 0.00 0.00 PT Sentosa Sukses Utama 57.15 0.02 0.00 0.00 Sub Total III 3,138.39 1.07 0.00 0.00 IV. Outgrower : 107,189.36 36.56 60,388.82 43.14 Total 293,235.79 100.00 139,990.90 100.00 Note : *). January to December 2013 **). January to May 2014

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1.7 Actual production volumes, tonnages and projected outputs. Table 4 : Certified tonnages claimed, certified tonnages purchased or sold, total and projected CPO and PK production from PT Gawi Makmur Kalimantan – Satui Mill

Amount (MT)

CPO PK PKO

Certified tonnages claimed* 39,576.54 8,393.37 9,543.19

Certified tonnages sold - - -

Certified tonnages purchased - - -

Actual Production** 63,611.02 13,630.68 23,529.18

Conversion Factor year 2013 (average) OER : 21.69% KER : 4.64% PKOER : 41.50% Projected output for next 12 months (budget 61,954.00 13,517.00 30,754.00 2014)

Note : *) Based on realization of production year 2013 from the company owned estates only **) Period of January to December 2013 from all supplier (in table 3 above)

1.8 Dates of Plantings and Replanting Cycles The company follows a replanting cycle of 25-30 years. Information on the dates of plantings is as per the table below.

Table 5 : Age and year of plantings of company estate supplying to PT Gawi Makmur Kalimantan – Unit of Satui

Age & Year of Plant- Oil palm planted area at each estate (ha) ings East Estate Satui Estate Total Period of January-December 2013 0 – 5 (2009 – 2014) 0.00 0.00 0.00 6 – 10 (2003 – 2008) 0.00 0.00 0.00 11 – 15 (1997 – 2002) 4,041.55 3,918.29 7,959.84 16 – 20 (1991 – 1996) 0.00 424.52 424.52 TOTAL 4,041.55 4,342.81 8,384.36 Period of January-May 2014 0 – 5 (2009 – 2014) 0.00 0.00 0.00 6 – 10 (2003 – 2008) 0.00 0.00 0.00 11 – 15 (1997 – 2002) 4,041.55 3,055.53 7,097.08 16 – 20 (1991 – 1996) 0.00 371.31 371.31 TOTAL 4,041.55 3,426.84 7,468.39

Company has no replanting plan because all plantation in PT GMK – Unit of Satui still young, as seen on the above information.

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1.9 Area of Plantation (Total, Planted and Mature) Table 6 : Oil Palm Planted Area Summary, FFB Production and Average yield/ha for PT Gawi Makmur Kalimantan – Satui Unit Immature Oil Palm Mature Average Estate Total area (Non- FFB Production Planted area (Production) yield/ ha Name (ha) production) (tonnes) (ha) area (ha) (tonnes/ha) area (ha) Period of January – December 2013 East 4,320.55 4,041.55 4,041.55 0.00 104,359.47 25.82 Estate Satui 7,199.52 4,342.81* 4,342.81 0.00 97,498.77 22.45 Estate TOTAL 11,520.07 8,384.36 8,384.36 0.00 201,858.24 24.14 Period of January – May 2014 East 4,320.55 4,041.55 4,041.55 0.00 43,494.81 10.76 Estate Satui 7,199.52 3,426.84* 3,426.84 0.00 35,626.54 10.27 Estate TOTAL 11,520.07 7,468.39 7,468.39 0.00 79,121.35 10.52 Note : *) There are coal mining activities so that Satui estate’splanted areas different in year 2013 with 2014

Table 7: Land use data for PT Gawi Makmur Kalimantan – Unit of Satui Land used for other purposes (ha) Oil Palm *) Estate Total ar- HCV Housing, Planted Road, Not plant- Name ea (ha) (ha) Mill Other *) Area (ha) Drainage, able area Nursery Period of January-December 2013 East 4,320.55 4,041.55 214.15 279.00 0.00 0.00 0.00 Estate Satui 7,199.52 4,342.81 1,632.31 191.00 0.00 31.00 2,634.71 Estate TOTAL 11,520.07 8,384.36 1,846.46 470.00 0.00 31.00 2,634.71 Period of January-May 2014 East 4,320.55 4,041.55 214.15 279.00 0.00 0.00 0.00 Estate Satui 7,199.52 3,424.97 1,632.31 191.00 0.00 31.00 3,552.55 Estate TOTAL 11,520.07 7,466.52 1,846.46 470.00 0.00 31.00 3,552.55 Note : *) Not separate with hectare statement **) Other such as coal mining (legal & illegal), HCV and fishpond communities or mangrove areas

1.10 Progress Against Time Bound Plan Table 8 : Time Bound Plan of the Other Management Units Time bound plan Name of Holding Location Remarks for certification PT Gawi Makmur Kalimantan – Tanah Laut Regency – 2014 Main As-

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Time bound plan Name of Holding Location Remarks for certification West Estate & Central Estate South Kalimantan sessment PT Gawi Makmur Kalimantan – Penajam Paser Utara Penajam Estate Regency – East Kali- 2015 Planned mantan PT Gawi Makmur Kalimantan – Paser Regency – East 2015 Planned Paser Estate Kal imantan

1.11 Compliance to Rules for Partial Certification Compliance of the uncertified management units of PT Gawi Makmur Kalimantan against the rules for partial certification according to RSPO Certification System clause 4.2.4 was assessed by submission self assessment report. A summary of findings is as stated below :

Partial Certification Requirements Audit Findings (a) The parent organization or one of its ma- PT Gawi Makmur Kalimantan is RSPO member since Sep- jority owned and / or managed subsidiaries tember 14, 2012 with RSPO membership number 1-0126- is a member of RSPO. 12-000-00 . (b-d) A challenging time-bound plan for certi- Company made timebound plan and reported to RSPO as fying all its relevant entities is submitted to determined on the table the Certification Body (CB) during the first

certification audit. The time-bound plan should contain a list of subsidiaries, estates and mills. Any revision to the time-bound plan or to the circumstances of the company shall cause the plan to be reviewed. for whether it is still appropriate, such that changes to the time- bound plan are permitted only where the organisation can demonstrate that they are justified (e) No replacement of primary forest or any There is no evidence that company replace primary forest area identified as containing High Conserva- for they all plantation area. According to Indonesia Gov- tion Values (HCVs) or required to maintain or ernemnt regulation plantation area have to established not enhance HCVs in accordance with RSPO in primary forest but could be in logged over area forest criterion 7.3. Any new plantings since Janu- (LOA) or production forest for conversion to other forestry ary 1st 2010 must comply with the RSPO uses (hutan produksi yang dapat dikonversi) or non forest New Plantings Procedure area/land for other uses as well as non productive area, land bank and other category area decided by government . In Penajam estate, there are HCV areas amount of 756.60 ha (HCV 1, 3 & 4). There is no evidence that company replace HCV areas. (f) Land conflicts, if any, are being resolved There are land conflicts due to overlapping land between through a mutually agreed process, e.g. the company with the villagers where the conflict is usually RSPO Grievance procedure or Dispute Set- resolved by deliberation. The company has proce- tlement Facility, in accordance with RSPO dures/mechanism for handling of conflict and identification, criteria 6.4, 7.5 and 7.6. calculation and compensation the loss of legal of land with the involvement of local community representative and relevant agencies. The company has provided evidence of conflict resolution such as minute of meeting (include of agreement), result of

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Partial Certification Requirements Audit Findings inventories regarding land owner, record of compensation that was signed by both the parties, head of village and head of sub district, etc (g) Labour disputes, if any, are being re- No labor dispute in PT Gawi Makmur Kalimantan solved through a mutually agreed process, in accordance with RSPO criterion 6.3. (h) Legal non-compliance, if any, are being Some legal non compliance has been identified as stated resolved in accordance with the legal re- on the NCR of this report. While Paser and Penajam Pa- quirements, with reference to RSPO criteria ser Utara estates has identified laws/regulations compli- 2.1 and 2.2. ance and the company are processing it with non- compliance status.

1.12 Progress of associated smallholders or outgrowers towards RSPO compliance

As seen from data in Table 3, in year 2013 0.15% FFB recieved from smallholders and for year 2014 until the the end of May, the mill recieved 0.34% The company manage community’s land for oil palm plantation and all FFB from smallholder will send to the mill. The company has developed a plan for certification of smallholders as seen on document of RSPO certification for smallholder where it will begin at the least on third year from issued certificate.

1.13 Approximate Tonnages Certified

The approximate tonnage certified, based on realization of production year 2013 from company owned estates only are as follows : Crude Palm Oil (CPO) : 39,576.54 tonnes Palm Kernel (PK) : 8,393.37 tonnes Palm Kernel Oil (PKO) : 9,543.19 tonnes

1.14 Recommendation for certification PT Gawi Makmur Kalimantan – Satui mill has established and maintains an effective system to ensure compliance with the RSPO principles and criteria. The audit team has confirmed through the audit process that the company’s practices complies with, adequately maintains and implements the requirements of RSPO Principles and Criteria National Intepretation Indonesia and RSPO Supply Chain Certification System. TUV Rheinland Indonesia recommends that PT Gawi Makmur Kalimantan – Satui mill be approved as a pro- ducer of RSPO Certified Sustainable Palm Oil.

1.15 Date of certification issued and scope of certificate The scope of the certificate covers production of palm oil from PT Gawi Makmur Kalimantan – Satui mill and its supply base which include East Estate and Satui Estate. The date of certificate issued is January 12, 2015 and valid period is January 12, 2015 to January 11, 2020. Further details of the certificate are as per Appendix 1 .

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2.0 ASSESSMENT PROCESS 2.1 Certification Body

PT TUV Rheinland Indonesia is member of Group TÜV Rheinland Group, a global leader in independent testing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 490 locations in 62 countries on all five continents. PT TUV Rheinland Indonesia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, SA 8000, RSPO, ISPO, SNI, Sustainable Forest Management, Timber Legality Verification, etc. PT TUV Rheinland Indonesia’s office is located in Jakarta, Indonesia.

2.2 Qualifications of Lead Assessor and Assessment Team

The main certification assessment team members of certification audit are as per the table below :

Name Position Qualifications / Experience

Education: Bachelors Degree in Forestry - Bogor Agriculture Insti- tute. Indonesia, (1995 to 2000). Trainings attended : ISO 9001 : 2008 lead auditor course - Neville Clark (2011), ISO 14001 : 2004 lead auditor course - TUV Rhein- land Indonesia (2011), SMK3 auditor course – Department of manpower and transmigration of the Republic of Indonesia (2009), Sus- tainable Forest Management (SFM) – Forestry Education and Training Centre (2010), Timber Legality of Verification - Forestry Lead Audi- Education and Training Centre (2010), RSPO Lead Auditor Course Hendra Fachrurozy tor – Pro Forest & Wild Asia (2011), RSPO SCCS Lead Auidtor Course – David Ogg and Partners (2012), ISPO Lead Auditor Course – In- donesian Sustainable Palm Oil Commision (2012), RSPO RED Lead Auditor Course – RSPO & Brinkman Consultant (2013). Working experience: Experienced as Junior Consultant at PT Surveyor Indonesia (2002 s/d 2010), assesor for SFM –mandatory (PHPL & PHTL), assessor for industry performance assessment (IPHHK)-mandatory, auditor for Timber Legality of Verfication, auditor for SMK3, auditor for QMS and EMS and auditor for RSPO & ISPO at TUV Rheinland Indonesia. Education: Bachelor of Anthropology, Department of Anthropology - University of Indonesia, Jakarta. Trainings attended : Sustainable Natural Production Forest Man- agement (Pengelolaan Hutan Alam Produksi Lestari - PHAPL) assessor training (May 2003); Forest Plantation Management (August 2003) training - Indonesian Ecolabel Institute (LEI), Forest Man- agement and Agriculture Auditor Training; ISO 9001:2008, ISO Fadli Auditor 14000:2004, OHSAS 18001:2007 trainings - Smartwood/Rainforest Alliance; SA8000 training - SA International; RSPO Lead Auditor Training -Indonesian Palm Oil Commission. Working experience: Experienced as lecturer for D3 Tourism program, University of Indonesia. Social aspect auditor of PT. TUV In- ternational Indonesia for Sustainable Forest Management and RSPO Principles & Criteria. Researcher of stakeholder mapping for CSR Indonesia. Education : Bachelor of Indudstrial Engineering, University of North Aswan Hasibuan Auditor Sumatera. Trainings attended: ISO 9000:2000 Series Auditor / Lead Auditor

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Name Position Qualifications / Experience Training - PE International (Jakarta), IEMA Advanced EMS Auditor (IEMA / EARA ISO 14001) Auditor / Lead Auditor Training Course - PE International (Jakarta), OHSAS 18001 Lead Auditor Training Course - PE International (Jakarta). Working experience: Experienced in Quality Control from 1994- 2004. Auditor for Quality Management System since 2004 – present. Auditor for Environmental Management System since 2005 – present. Auditor for OHSAS 18001 since 2007 - present. Conducted over 100 Quality Management System audits since 2004, over 50 Environmental Management System audits since 2006 , and over 25 OHSAS audits since 2007 Education: Master Degree in Natural Reseource and Environ- mental Management, Bogor Agriculture University Trainings attended: Environmental Impact Assessment (EIA), Eco- logical Risk Assessment (ERA), Internal Quality Audit Training for Quality Management System, IRQA-QMS ISO 9001:2000, High Con- servation Value (HCV), RSPO Lead Auditor Course, ISPO Auditor M.Fundy Cholis Technical Course, Kurniawan Expert Working experience: Experienced in Environmental Impact As- sessment, Environmental Health Safety Senior Officer (EHS-Officer) in Wilmar International Plantation, Internal Auditor for Wilmar Interna- tional Plantation, Auditor for Rountable on Sustainable Palm Oil (RSPO), Indonesian Sustainable Palm Oil (ISPO), Certification for Timber Legality Verification (SVLK) in PT TUV Rheinland Indonesia since June 2012 – present.

2.3 Assessment Methodology & Agenda The certification assessment was conducted from June 06 th to 10 th , 2014 as per the assessment program below. The assessment was carried out in accordance with PT TUV Rheinland Indonesia’s RSPO audit procedure as well as the RSPO Certification Systems document. During the assessment, the qualified TUV Rheinland asses- sors used the RSPO standard as endorsed for the country in which the assessment took place and recorded their findings. Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without com- promising the integrity of the assessment in anyway. All 2 estates and 1 mill were visited and the assessment team carried out field and document assessments of compliance to all the RSPO principles and criteria (INA-NI) year 2008 and RSPO SCCS year 2011. Common systems were identified and specific evidence was recorded for individual estates. Interviews were conducted at all estates and the mill. The company proposed the correction and corrective action for all identified non conformities raised to the certification body 30 days after the closing meeting. Verification of closure of major non-conformances was conducted 2 months after the closing meeting of the main assessment and implementation of corrective actions for mi- nor non-conformities will be verified during the next surveillance audit. The certification assessment agenda is as explained below:

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Certification Assessment Agenda. Location/ Date Main activities Main sites 02 June government Stakeholder consultation with local government (province & regency level) 2014 offices such as Land National Agency, Environmental Agency, Plantation Institute, Mining Institute, Forestry Institute, etc 06 June Satui mill Opening meeting 2014 Verification of document and field : • Compliance of laws and regualtions • Management plan • Consumption of water and monitoring of waste water • Effeciency energy, reduction of pollution and emission, hazardous waste storage • Environmental document and implementation of management and monitoring environmental • Implementationof OSH • Wage, discrimination, worker union, etc

• GMP • SCCS

Training Stakeholder consultation with communities, NGO, lembaga adat etc centre 07 June Satui estate Verification of document : 2014 • Compliance of laws and regulations • Legal land • Boundary stone maintenance program • Long term management plan / projection of long term activities • HCV management and monitoring implementation • Best practices • Transparancy, Land conflict, land compentation, social & employee • Best practice, EFB application, waste management (hazardous and housing/domestic), integrated pest management program, warehouse, implementation of OSH, implementation of zero burning 08 June East estate Stakeholder consultation with communities, NGO, lembaga adat etc 2014 09 June Satui estate Verification of document & field: 2014 • Compliance of laws and regulations • Legal land • Boundary stone maintenance program • Long term management plan / projection of long term activities • HCV management and monitoring implementation • Best practices • Transparancy, Land conflict, land compentation, social & employee • Best practice, EFB application, waste management (hazardous and housing/domestic), integrated pest management program, warehouse, implementation of OSH, implementation of zero burning Closing meeting for scope of Satui estate and mill 10 June East estate Verification of document & field: 2014 • Compliance of laws and regulations • Legal land • Boundary stone maintenance program • Long term management plan / projection of long term activities • HCV management and monitoring implementation • Best practices • Transparancy, Land conflict, land compentation, social & employee • Best practice, EFB application, waste management (hazardous and

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Location/ Date Main activities Main sites housing/domestic), integrated pest management program, warehouse, implementation of OSH, implementation of zero burning Closing meeting for scope of East estate

2.4 Stakeholder Consultation and Stakeholders Contacted PT Gawi Makmur Kalimantan bought the mill and its supply based plantation from the former owner i.e. PT Damit Mitra Sekawan in year 2007, it was noted on notariat deed no.184 dated on November 20, 2007 by notary of Dr Irawan Soerodjo, SH, M.Si). In year 2012 the company become RSPO member and has commitment to comply with all RSPO principles and criteria in all the company operations activities. The initial audit was conducted on February 10 to 13, 2014 and the company has worked hard to address all identified non conformities raised during initial audit. The stakeholder consultation involved both external and internal stakeholders. External stakeholders were noti- fied to make comments on the certification assessment by placing an invitation to comment on the RSPO web- site. Stakeholders included those immediately linked with the operation of the company such employees, outgrowers, the local government, NGO’s, trade and labour unions and local communities. Stakeholder consultation took place in the form of meetings and interviews. Meetings with stakeholders were held at class room of GMK’s training centre in Satui estate (scope of Satui estate & mill), meeting room in east estate (scope of East estate) and working room in each local government (scope of east estate, satui estate & satui mill) to seek their views on the performance of the company with respect to the sustainability practices out- lined in the RSPO Principles & Criteria, and to comment on aspects where improvements could be made. Meet- ings with local communities were held at their respective premises within and near the company’s area. A stakeholder consultation meeting was also held on June 02, 2014 (local government), June 06, 2014 (communities near satui estate and mill) and June 08, 2014 (communities near east estate). Emails and sms invitations in- viting individual stakeholders to the stakeholder consultation meeting were prepared and sent to the individual stakeholders. In all the interviews and meeting, the objectives of the RSPO and the purpose of the assessment was clarified at the outset followed by an evaluation of the relationship between the stakeholders and the company before discussion proceeded to obtain the stakeholders feedback on the company’s compliance to different aspects of the RSPO Principles & Criteria. Although several stakeholders were not familiar with RSPO but they agreed with its objective and expressed their willingness to collaborate in the promotion of sustainable palm oil in South Kali- mantan province. In all interviews and meeting, the assessment team did not restrict discussion of both the positive and negative aspects of operations conducted by the estates and mill. The stakeholder consultation meeting held with stakeholders during the audit was extensive and productive, with an attendance of 18 attendees as listed on the appendix 5 below. This was followed by site inspections, including visits to the local communities, interviews with land claimants and contractors, and inspections of worker amenities and infrastructure. All stakeholder issues raised were recorded and forwarded to the management for their written reponse, and this is summarized in Section 3.7. The list of stakeholders that attended the stakeholder consultation meeting and stakeholders interviewed during the assessment is included as Appendix 5.

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3.0 ASSESSMENT FINDINGS 3.1 Summary of Findings During the certification assessment there were found 16 non-conformities against RSPO P&C requirement (11 major non-conformities and 5 minor non-conformities) and 2 non-conformities against RSPO SCCS, 5 observations or opportunities for improvement were identified. Further explanation of the non-conformities raised and corrective actions taken by the company are provided in Section 3.2. The observations & opportunities for improvement are listed in Appendix 4. The following is a summary of findings made for the criteria listed in the RSPO Principles & Criteria Indonesia National Interpretation (INA-NI) year 2008 and RSPO SCCS, November 2011. • RSPO P&C

Principle 1: Commitment to transparency

Criterion 1.1: Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation in decision making.

Findings : The company has records of information requests and the responses within log book and keep properly based on retention period as specified in SOP regarding to record retention period. During this certification audit there was only 7 letters, subjected to donation request found come from surround community such as follow : 1. Donation request for development of mosque of Jombang village on 23 September 2013. There was evidence of company’s response in form of official report no. 017/GMK-STI/II/2014 on 12 February 2014 including photo documentation for acceptance of 250 sacs of cement. 2. Donation request for mosque development of Sekapuk village at 10 January 2014. There was official report of acceptance Rp. 10 Million cash donation as evidence for company’s. 3. Poposal of youth beach party from Setarap village at 17 January 2014. There was evidence of company’s response in form of official acceptance letter of Rp. 5 Million cash donation on 7 March 2014. 4. Proposal of material request from Sekapuk village for village infrastructure development. There was official acceptance report for this material on 3 March 2014. 5. Donation request from The State Educational Division of Satui District for student sport exhibition on 25 March 2014. There was official acceptance report for cash donation Rp. 1,500,000 on 27 March 2014. 6. Donation request for road maintenance from Akautsar village on 13 April 2014. There was no evidence of company’s response regarding to this request. This condition was raised as NC. 7. Proposal of mosque development from Alkautsar village on 1 April 2014. There was evidence of company’s response in form of official acceptance report for 100 sacs of cement on 17 May 2014. Since there was no evidence of company’s response of request from Alkautsar village on 14 April 2014, this condition was raised as non-conformity (NCR No.2014-01 of 16). The company has specified retention time for document and record in procedure no FR/GMK-AGRO/PD/01/06 of Security Department. This procedure has consisted of 3 years retention for information request and response from internal and external parties.

Compliance status: Non Compliance NCR No.2014 – 01 of 16 There was no evidence of company’s response of donation request for road maintenance from Alkautsar village on 14 April 2014

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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

Findings : Regarding to communication and consultation activity with stakeholder the company established procedure no. SOP/GMK-AGRO/01/20 valid since 24 February 2014 which states which documents can be made publicly available, such as follows : 1. Vision and mision of the company 2. Company policy 3. EIA (AMDAL/UKL-UPL, RKL-RPL) Documents 4. Location permit 5. Land use right 6. Legal permits 7. Continuos improvement 8. CSR activity report 9. Social conflict resolution 10. Work health and safety program. Related to request information and response the company has specified retention time for document and record in procedure no FR/GMK-AGRO/PD/01/06 of Security Department. This did not consist of retention time for information request and response from internal and external parties. This condition was raised as major nonconformity (NCR No.2014-02 of 16) as below. There was evidence that the company keep all request letter and responses but not based on retention time procedure because it was not established yet.

Compliance status : Non Compliance

NCR No. 2014-02 of 16 The was no retention time difined by the company for information request and the response

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.

Findings : The company has procedure of identification and evaluation of laws and regulations (SOP/GMK-SMK3/01/03 Rev.0 dated on 02/01/2014). The result of identification and evaluation of laws and regulations inform of the list of applicable laws and regulations (national and local regulations) (per January 2, 2014) but not include local regulation (governor regulation) number 052/2007 about quality standard for ambience and noise and local regulation (governor regulation) number 70/2008 about quality standard for emission. That is condition was raised as non-conformities (NCR No. 2014-04 of 16) because in the procedure poin 6.4 mentioned regarding every change of laws and regualtions so list of laws and regulations should be update with related laws and regulations. The company has carried out environmental management and monitoring where one of them that it has carried out measurement of emission and pollution source in estate which based on governor regulation it (no.053/2007 and 70/2008) but the company not sight evidence that it governor regulation has appropriated with environmental agency regulation. This was raised as non-conformities too ( NCR No. 2014-04 of 16). Some evidence of company’s legal compliance as seen on latest document of list of applicable law and regulation (per January 2, 2014), covering for mill and estates (east and satui estate), such as: The company already paid worker social insurance for working accident, pension and life insurance programs. There was payment slip for worker social insurance for April 2014 period by Bank Mandiri on 3 rd may 2014 via Bank Mandiri including Satui Estate and Satui Palm Oil Mill’s workers.

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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The company has complied with Regulation no 13, 2003 regarding to workers minimum age. It was found that all workers are above 18 years old. The company (east estate) has revision plantation business license (IUP) no. 525/1442/DISBUN dated of December 14, 2007 with oil palm as commodity, estate amount of 13,290 Ha consist of PT GMK unit Jorong are 9,264 Ha and east estate are 4,026 Ha) (required by ministry of agriculture No.357/Kpts/HK.350/3/2002 article 4 jo No.26/Permentan/OT.140/2/2007 article 9 jo no.98/Permentan/OT/140/9/2013 article 10). The company (Satui estate) has plantation business registration letter (SPUP) No. 750/Menhutbun- VII/2000 dated on June 29,2000 with oil palm commodity, estate amount of 7,199.52 Ha and mill with capacity of 30 tonnes FFB/hour (required by ministry of agriculture No.107/Kpts-II/1999 jo 645/Kpts- II/1999). The company (Satui estate) has revision plantation business license (IUP) No.188.45/368/DISHUTBUN/2013 dated on June 24, 2013 with oil palm as commodity, estate amount of 7,199.52 Ha and mill with increase capacity from 30 tonnes FFB/hour to 60 tonnes FFB/hour (required by ministry of agriculture No.26/Permentan/OT.140/2/2007 jo no.98/Permentan/OT/140/9/2013). The company has land application permit as seen Tanah Bumbu Regency decree no. 273 year 2010. However, some of applicable legal regulation were not fulfil yet, This is raised as non-conformities (NCR No.2014–03 of 16), i.e. FFB truck driver no. TBS DA 9347 LC and Operator of Komatsu 015 wheel loader did not have valid driving license. Komatsu 015’s operator in Satui mill has not operator license letter (Surat Izin Operator). Non permanent daily workers amount of 635 persons at Satui estate did not registered in Jamsostek program. The test of control wells analyst parameter not appropriate with parameter inside Head of Tanah Bumbu decree No.273 year 2010. While, in term of evidence of efforts has been made to comply with changes in the regulations, it was found that the company paid worker’s salary base on the newest Decission Letter of Governor of South Kalimantan Prov- ince no. 188.40595/KUM/2013 on December 24 th , 2013 whch state that the minimum wage for 2014 is Rp. 1,675,000 monthly or Rp. 67,000 daily. Moreover, the company (Satui estate) has been revision of plantation business license (IUP) process cause FFB receive cross district and PKO not include as scope of product. It is evidence of effort from company that company want compliance with regulation (decree of ministry of agriculture no. 26 year 2007 article 13).. Satui Estate and Satui Palm Oil Mill has record of program plan for compliance with relevant legal requirements in 2014, in program consist of 17 items program to fulfill the legal requirements, such as: medical chekcup for all workers every once year, oocupational health and safety implementation and evaluation, trianing for chemical workers, environmental management, and others. In the programm the company also mentioned the time (in month) for estimation/plan realization of every activity related to the program.

Compliance status : Non Compliance

NCR No.2014-03 of 16 Local regulation (governor regulation) number 052/2007 about quality standard for ambience and noise and local regulation (governor regulation) number 70/2008 about quality standard for emission not include inside the list of applicable laws and regulations (national and local regulations) (per January 2, 2014). The company has carried out test laboratory for emission and pollution sources with based on local government (governor and head of district) requirement/regulation for quality standard but company not shows evidence that governor regulation no.053/2007 and no.70/2008 and head of district regulation has appropriated with environmental agency regulation

NCR No.2014-04 of 16 There are indicated several evidence that the company not compliance to the law and regulation for national regulation and local regulation, such as :

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 20 of 69

FFB truck driver no. TBS DA 9347 LC and Operator of Komatsu 015 wheel loader did not have valid driving license. Komatsu 015’s operator in Satui mill has not operator license letter (Surat Izin Operator). Non permanent daily workers amount of 635 persons at Satui estate did not registered in Jamsostek program. The test of control wells analyst parameter not appropriate with parameter inside Head of Tanah Bumbu decree No.273 year 2010.

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

Findings: PT Gawi Makmur Kalimantan (East and Satui estate) has demonstrated legal land as explanation below : East Estate : • Primary : the company has land used right permit (HGU) base on head of National Land Agency Decree Let- ter No. 74/HGU/BPN/99 dated August 19, 1999 with total area 4,026 ha according to Land Used Map No. 04/1996 dated February 15, 1996 (it has informed that there was exclude areas from east estate areas amount of 954 Ha) with valid for 35 years and land used permit (HGU) certificate No. 15 dated October 5, 1999 (NIB : 00002/SC,00001/PP ) with total area 4,026 ha according to measurement letter no. 01 & 02/1999 dated on Oc- tober 2, 1999 (refere from Land Used Map No. 04/1996) located in Sungai Cuka village and Pasir Putih village, Kintap Sub District, Tanah Laut District. In head of National Land Agency Decree Letter No. 74/HGU/BPN/99 and HGU certificate No. 15 on behalf PT Damit Mitra Sekawan but on the page of registration of transfer right and other recording informed the change of ownership certificate name to PT Gawi Makmur Kalimantan accordance with deed of incorporation no.34 dated of November 20, 2007 by notary of Dr Irawan Soerodjo, SH, M.Si (DP No.2811/1009 and 208/653/2009). The company (East Estate) has location permit (decision letter from head of National Land Agency South Kalimantan Province no. 460.3/01/KPT-08/1997 dated January 4, 1997) on behalf PT Damit Mitra Sekawan amount of 15,000 Ha in S.Bakar village, Pamalongan village, Damit village, Pantai Linuh village, Sabuhur village, Pelaihari Sub District, Batu Ampar Sub District, Jorong Sub Dis- trict, Tanah Laut Regency, South Kalimantan Province. It location permit same as west estate and central estate cause east estate include scope. In Minutes of land examination committee (committee B) no.09/RIS- HGU/02/1999 dated February 27, 1999 that east estate is zoned for non-forest uses (Kawasan Budidaya Tanaman Tahunan/Perkebunan) based on province & regency spatial map (appendix local government regulation no.3 year 1993 and no.13 year 1993) but based on decision letter of Head of Ministry of Forestry no. 435/Menhut/2009 dated July 23, 2009 that part of estate is convertion production forest (Hutan Produsi yang dapat dikonversi) amount of 73.80 Ha so the release of forest areas in still ongoing processing status. Current condition for process it are the auditee has submitted request of the release forest areas (letter no. 010/Dir/JKT/XII/2012 dated on December 24, 2012) to Ministry of Forestry and The Ministry of Forestry has replied to the letter it (no. S.378/BRPUK-1/2013 dated on June 17, 2013) where there is shortage of requirement i.e recommendation of approval for the release of the region into non-forest from Governor of South Ka- limantan. Land use map no. 04/1996 has remeasurement be No.094-17.08-2013 dated of November 28, 2013 with total areas are 3,822.69 Ha (4,025.48 Ha (result of remeasurement for East estate) – 91.86 Ha (operational of east estate outside legal land) – 110.93 Ha (operational of east estate on other company areas)). Moreover, based on map it that there is operational other company areas on east estate. There are operational areas outside legal land where it was raised as non-confomities (NCR No.2014-05 of 16). • Additional I : for this area that the company is processing land used right (HGU) permit where current condition, National Land Agency of South Kalimantan Province has submitted letter (no.540.2/135/652/BPN-43) to National Land Agency of Republic of Indonesia regarding request of land used permit on behalf PT Gawi Makmur Kalimantan amount of 350 Ha (land used map no. 18/PT-TL/2005). During audit, there are not response from National Land Agency of Republic of Indonesia regarding request letter from company and there is no evidence that the company has carry out the process/step of convertion production forest (Hutan Pro- dusi yang dapat dikonversi) because the result of overlay between plantation map with map of forest areas in South Kalimantan Province (attachment decision letter of Head of Ministry of Forestry no. 435/Menhut/2009 dated July 23, 2009) that it areas are convertion production forest (Hutan Produsi yang dapat dikonversi). This was raised as non -conformities (NCR No.2014 -05 of 1 6).

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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Satui Estate : • Primary : the company has land used right permit (HGU) base on head of National Land Agency Decree Let- ter No. 3/HGU/BPN/97 dated January 21, 1997 with total area 7,199.5 ha according to Land Used Map No. 6/PT-KB/1996 (amount of 1,010 Ha) and No.7/PT-KB/1996 (amount of 6,189.5 Ha) dated March 27, 1996 with valid for 35 years (until February 21, 2032) and land used permit (HGU) certificate No. 01 dated February 22, 1997 with total area 7,199.52 ha located in Sekapuk village, Setarap village, Satui Barat village, Jombang village and Sungai Danau village. Satui estate is zoned for non-forest uses (Kawasan Budidaya Tanaman Ta- hunan/Perkebunan) based on province & regency spatial map (appendix local government regulation no.3 year 1993 and no.13 year 1993) but based on decision letter of Head of Ministry of Forestry no. 435/Menhut/2009 dated July 23, 2009 that part of estate is production forest (Hutan Produsi) amount of 1,757.55 Ha so the exchange of forest areas in still ongoing processing status. Current condition for process it are the auditee has submitted request of the release forest areas (letter no. 011/Dir/JKT/XII/2012 dated on December 24, 2012) to Ministry of Forestry and The Ministry of Forestry has replied to the letter it (no. S.378/BRPUK-1/2013 dated on June 17, 2013) where there is shortage of requirement i.e recommendation of approval for the release of the region into non-forest from Governor of South Kalimantan Some legal boundaries are clearly demarcated and visibly maintained on the ground as seen on the filed for stone with GMK 47 in block AB20 - Satui estate (03 0 41’ 45.1” S; 115 0 28’ 03.1” E), GMK 47A in block AB18 - Satui estate, GMK 48 in block AC14 (03 0 41’ 04.6” S; 1150 27’ 03.9” E), GMK 9 in block H20 – Satui estate (03 0 46’ 43.1” S; 115 0 27’ 47.9” E), BPN 42A in block B36 – east estate (03 0 45’ 06.8” S; 115 0 18’ 41.0” E), BPN 61D in block D36 – east estate (03 0 46’ 32.8” S; 115 0 18’ 32.3” E) etc. Several boundary stone not available in field cause on coal mining areas (legal and illegal mining) or mangrove areas / fishpond communities. Based on conflict resolution report progress 2013 there was land conflict between company and some communities a follow : 1. By letter on 19 March 2012 Iskandar and Toni villagers of Sekapuk village claimed 110 Ha and 282 Ha area of PT GMK Satui estate as their farmers organisation cultivation area used by PT GMK without any compensation since 1995. By this letter the both farmer organisation ask to the company to pay Rp. 250 Million per hectar as compensation fee, otherwise they will took over the land in any way. The resolution progress was as follow : • On 19 April 2012 PT GMK attended meeting with Board of Head of initiate by Head of Satui District. In this meeting they stated that they have promised verballly in 1994 by one of company’s staff that the company will pay fee compensation for this land. • On 10 September 2012 PT GMK via it’s lawyer firm sent rebuttal letter to the claimer and ask them to bring this case to the Court. • On 18 March 2013 PT GMK come to Regional Police Office for clarification process stated that there was no claim or objection from any party for this land. • As testifier, Ex Head of Alkautsar village at that year (1994-1995) said that he did not know location of the land exactly, but put his signature because he saw there was signature of the ex Head of Sekapuk village in the claim letter. • On 7 November 2013 the Regional Police sent invitation letter to the member of the farmer organisation. In this occasion the ex head of local neighbourhood sent a letter which stated that the member of the both organisation were not registered as member of official neighbourhood. Recently, there was no disturbance from the claimers for company’s activity in this area. The company is waiting for the claimers reponse. 2. Conflict with Ex Head of Alkautsar village for the land at Block E26 area. By letter on 25 May 2012 ex head of Alkautsar village claimed that block E26 area was belong to community. The progress was as follow : • On 9 June 2012 Alkautsar village head sent letter to PT GMK that the company has to stop every activities inside blok E26 start from 18 June 2012 until both parties got resolution for the conflict. • On 6 July 2012 Parliament of Tanah Bumbu Regency by letter invited PT GMK to attend meeting in order to find conflict resolution on 16 July 2012. • On 17 September 2012 PT GMK sent a letter to National Land Agency of Kalimantan Selatan Province, request for clarification for area claimed by Head of Alkautsar village. • On 1 October 2012 the National Land Agency of Kalimantan Selatan Province conducted field verifica-

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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tion for the land claimed by the community. • On 9 October 2012 the National Land Agency issued decision letter regarding to field verification for Block E26 PT GMK that transmigration location I of Sekapuk village already being taken out from Land use right I, 1997 of PT GMK, land use right I of PT GMK area wa outside of transmigration area I and II of Sekapuk village. • On 22 October 2012 Parliament of Tanah Bumbu Regency invited PT GMK to join on site visit to the conflict area on 23 October 2012. Based on attendant list, this activity was attended by 36 persons consist of PT GMK, comunity members and leader, related police officer, local parliament member, and related local government. • On 14 December 2012 Parliament of Tanah Bumbu Regency issued Decision Letter no. 170.11/29/DPRD- TB/2012 which is final recommendation of board of conflict resolution as follow : o PT GMK has to take attention to surroundings community by increasing their welfare by CSR program and smallholder scheme. o PT GMK need to use discussion methode to solve problems with community. o Head of Regency need to follow up with 3 families who did not agree with relocation of area I and area II of Transmigration program member. o PT GMK has to stop and not allow illegal mining activity inside company’ area. o PT GMK has to solve land compensation problem if any • On 27 November 2012 PT GMK sent letter to Parliament of Tanah Bumbu Regency regarding to disruption from Alkautsar villagers in every company’s activities at land use right I’s location. • On 24 April 2013 head of Alkautsar village came to company’s site office fot demonstration and sent letter stated that community ask the company to develop scheme smallholder plantation and also stated the company’s area still in conflict with the community. • On 1 May 2013 the head of Alkautsar village sent a letter no. 002/Umum/Pem.AK/IV/13 asked the company to stop any activities inside conflict area until solution was achieved. • On 1 May 2013 the company issued official report regarding to activities stop based on the Head of Alkautsar village head. • Based on interview report by District level of Police Office on 5 Agustus 2013 it was known that some community member from Alkautsar village has stollen FFB from block E26. This action was initiated by one of them. For this action, each person was punished by 3 years and 1 year in jail. 3. Land claimed by Sungai Danau villagers The progress was as follow : • On 25 July 2013, the villagers of Sungai Danau (two persons) sent a request letter to the Head of Satui District for mediation of land conflict for 150 Ha (75 Ha each other). • On 27 August 2013 Head of Satui District invited PT GMK to discuss about this case. • On 4 September 2013 PT GMK by it’’s lawyer sent a letetr to the head of District of Satui to not conduct mediation process and ask the claimer for bring this case to the Court. • Until to day, there is no disruption to company’s activities at this claimed area. As an evidence of FPIC implementation, there was agreement official letter regarding to diversion of land cultivation right of Setarap villagers no. 148/GMK-BJM/DL/XII/2000, dated on 12 December 2000.

Compliance status : Non Compliance

NCR No.2014-05 of 16 • Based on map it that there is operational other company areas on east estate. There are operational areas outside legal land. • There are not progress from National Land Agency of Republic of Indonesia and there is no evidence that the company has been ensured to determine the cause or the root of the problem because based on decision letter of Head of Ministry of Forestry no. 435/Menhut/2009 dated July 23, 2009 that it areas are convertion production forest (Hutan Produsi yang dapat dikonversi).

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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

Findings : During audit it was found that in side of the company’s land (based on land use right) there were land cultivated by 10 local community members. They already there before the company came to this area. Not all of the community member hold land certificate as the land use right. Most of them only cultivate the land base on customary right. Based on interview to the cultivators and field observation it was found that the company has tried to nego- tiate with them but there were no agreement achieved. The cultivators did not want to release their land to the company. The reason was they want to keep cultivate the land for ever. The company has mapped all the land entitled by the community within it’s land use right area in proper scale. However, the company did not have any record regarding to the negotiation with the land owners or cultivators. This finding was rised as non-conformity (NCR No.2014-06 of 16) below.

Since there were community’s land inside of the company land use right area. The community must passed through the company’s road to get into their cultivating land. However, there was no agreement between company and the community regarding to entitle and obligation of the two parties. This finding was raised as nonconformity (NCR No.2014-06 of 16) below.

Compliance status : Non Compliance

NCR No.2014-06 of 16 • There was no record of negotiation between company and 10 community members owner of land inside of the company’s land use right area regarding to company’s effort to acquisition process of the land • There was no agreement between company and community members regarding to obligation and right of both parties regarding to customary right inside of the land use right area of the company.

Principle 3: Commitment to long-term economic and financial viability

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

Findings: There is company’s management plan (cost plan, investment and budget of production) for period of 2014 – 2016 for South Kalimantan region. PT GMK’s 3 years plan consist of information about company activities plan such as hectare statement, FFB production, volume of fertilizer, volume of chemical (herbisida, insectisida and pestis- ida), development of emplasment & building, man power, allocation of PPE, general cost (include training and education), budget of FFB receipt, budget of CPO & PK production (include extraction rate), budget of PKO production (only Satui POM), budget of selling product (CPO, PKO & PKE), standard of losses, budget of cost production & workshop for each estates & mill and budget of profit and loss information from total revenue and total operating cost. In year 2015, net profit margin was projected decrease but year 2016 to 2017 was projected increase again. The company implements a replanting cycle every 25-30 years, and the company’s plan for a replanting activities will begin in year 2022-2027, because the first plantings in PT GMK – east and satui estate were in 1996-1997.

Compliance status : Full Compliance

Principle 4: Use of appropriate best practices by growers and millers

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

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 24 of 69

Findings: The company has list of master document (FR/GMK-AGRO/PD/01/01) consist of manual and procedure for estate and mill activities. The procedures covering all estate activities such as nursery practices, land clearing (include without burning activity), conservation of soil and water, planting cover crops / LCC, planting of oil palm, mulching of EFB and fertilizer, land application, desease and pest control, harvest and transportation, etc. While procedure covering all mill activities such as receiping product, despatch product, laboratorium, and maintenance of mill, kernel crushing plant and processing in mill. Procedur for other group/section (supporting & sustainability) available such as human resources department, legal & relationship of community, purchasing, logistic, finance, security, technic and workshop, record and document control, audit internal, control of nonconformity product, corrective action, OSH, preparedness and emergency response, inventory of GHG, handling of hazardous waste, handling of hazardous material, communication of internal & external, loading oil from truck, mass balance report, riparian area, handling of conflict, etc. The company has conduct internal audit (RSPO & ISPO standard/scheme) on December 4-11, 2013, the activity included monitoring for all applicable procedure. Internal audit result were recorded on internal audit report (con- tains details are findings, analyzes the causes, corrective actions, target completion, verification corrective action, and evidence of correction from each nonconformity), the internal audit program is annually based. Based on verification in field, there are several condition relating inconsistency between procedures with implementation such as 1). There are stack of EFB in collection road between block C18 to C19 (east estate) has been not applied to block during 5 months ago and block B08 (Satui estate) has been not applied to block during 7 days ago too so this is condition not compliance with their procedure (SOP/GMK-AGRO/02/10 Rev.01 dated June 6, 2013), 2). EFB application more than 1 layer in block G31 (Division IV – Satui estate) so this is condition not compliance with their procedure (SOP/GMK-AGRO/02/10 Rev.01 dated June 6, 2013) that EFB application should be 1 layer on soil surface (point 2.4). It was not compliance with the company procedure and there will deficiency of nutrient cause inconsistency with recommendation of fertilizer. This is raised as non conformity (NCR no.2014-07 of 17 ). The document of operational results are well maintained in each estate and mill on monthly report e.g. monthly reports for January to May 2014 of east estate, satui estate and satui mill and annual report of year 2013 which include all activities. Records of operational results has available such as record of harvesting, fertilization, mulching of EFB, maintenance of plant, control of pest and desease, maintenance of road activities in estates, etc. Whereas in mill has available too such as production process, FFB receipt, grading, despatch, test of quality product, sounding activities, etc. Compliance status : Non Compliance

NCR No.2014 - 07 of 16 There are several condition relating inconsistency between procedures with implementation such as : 1. There are stack of EFB in collection road between block C18 to C19 (east estate) has been not applied to block during 5 months ago and block B08 (Satui estate) has been not applied to block during 7 days ago too so this is condition not compliance with their procedure (SOP/GMK-AGRO/02/10 Rev.01 dated June 6, 2013), 2. EFB application more than 1 layer in block G31 (Division IV – Satui estate) so this is condition not compliance with their procedure (SOP/GMK-AGRO/02/10 Rev.01 dated June 6, 2013) that EFB application should be 1 layer on soil surface (point 2.4).

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

Findings: The company (Satui Estate and East Estate) already conducted of leaf analysis in every year for fertilizer recommendation, with evidenced is : - Leaf analysis conducted by Sumbio-BLRS Analytical Laboratory Plant Tissue, Analysis report on April 14, 2013 with paramater analyzed is N, P, K, Mg, Ca, Cl, B, Cu, Zn, Fe, Mn. - Leaf analysis conducted by Sumbio-BLRS Analytical Laboratory Plant Tissue, Analysis report on September 6, 2012 with paramater analyzed is N, P, K, Mg, Ca, Cl, B, Cu, Zn, Fe, Mn. - Leaf analysis conducted by Sumbio-BLRS Analytical Laboratory Plant Tissue, Analysis report on July 14, 2013 with paramater analyzed is N, P, K, Mg, Ca, Cl, B, Cu, Zn, Fe, Mn.

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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For soil analysis, the company has conduct in every 5 year, based on company procedure SOP/GMK- AGRO/02/11. On the prosedure stated leaf analysis conduct every once year for fertilizer recommendation and soil analysis conducted in every 5 years. The latest soil analysis conducted in 2012 with date sample analysis on August 6 until September 7, 2012 with amount of sample is 177. The analysis conducted by Agriculture Research and Development Office, Agriculture Land Resources Office with certificate result number 1740/2012, and pa- rameters analyzed is C, N, C/N ratio, Mg, K, Na, KTK, KB+, P, K, Fe, AI, B for all estate and division. The company has record of efforts to maintain and increase soil fertility, example : - MOP fertilizer application in Division 5, field number C09 through the record of fertilizer expenditure (BPKB) number 12, date on 19/05/2014 has been issued MOP fertilizer about 4,300 kg for to be applied in that field with 3,567 palm oil tree. And based on record of foreman daily activity with number 0506 date on 15/05/2014, have been completed the fertilization of MOP as 4,300 kg with dosage 1,2 kg/tree in the same field number. tree. This dosage already compliance with fertilizer recommendation for 2014. - Based on field observation in field number AB13 for Hikay fertilizer application, evidanced of fertilizer expend- itures (BPKB) number 09 date on 09/06/2014 has been issued Hikay fertilizer about 8,700 kg fot to be applied in that field with 3,474 palm oil tree. And based redord of foreman daily activity number 0604 division VI date on 09/06/2014 have been completed the fertilization of Hikay on same field number with dosage 2,5 kg/tree. This dosage already compliance with fertilizer recommendation for 2014. Besides fertilizer application, the estate also increased the soil fertility with leguminose cultivation. The company also applied the EFB as organic fertilzer accordance to company procedure SOP/GMK-AGRO/02/10 Rev.01 date on 7/06/2013.

Compliance status : Full Compliance

Criterion 4.3: Practices minimise and control erosion and degradation of soils.

Findings: The company has map of fragile soil on the Kebun Satui Estate and East Estate. The fragile soil can be identified through the slope map. Based map, the slope condition on both estate is : - Satui Estate : 0 – 3% is 4,685.529 Ha 3 – 8% is 1,236.166 Ha 8 – 15% is 646.206 Ha 15 – 25% is 244.804 Ha 25 – 40% is 66.755 Ha >40% is 39.641 Ha - East Estate : 0 – 3% is 3,987.313 Ha 3 – 8% is 184.935 Ha 8 – 15% is 32.066 Ha 15 – 25% is 10.986 Ha 25 – 40% is 6.087 Ha >40% is 14.843 Ha The company also has map for erossion identification. Based on map, erossion potential in Satui Estate is located in field number F32, F33, F34, G33, G34, H32, H33, H34. For East Estate based on slope map, there is no fragile soil. When field observation to fragile soil location, the company has implemented terrace for location with slope 25 – 40% and also has cultivated by leguminose ( Mucona bracteata ). For riparian bufferzone the company also not allowed for chemical activity to maintain the cover crop along of riparian bufferzone to prevent the erossion in along of riparian. The company also has record of road maintenance program for every division, example : - Division 1, for filed number C19 already conduct road maintenance along of 50 meters until April - Division 2, for field number D27, D28, D26, D25 and E22 already conduct road maintenance along of 6,200 meters - Division 3, for field number G20, G21, F19 and F20 already conduct the road maintenance along of 3,000 meters

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 26 of 69

- Division 4, for field number I31 and I26 already conduct the road maintenance along of 1,800 meters - And others. Based on soil map, there is no identified the low organic matter and peat soil on both of the estate.

Compliance status : Full Compliance

Criterion 4.4: Practices maintain the quality and availability of surface and ground water.

Findings : The company has identified all streams that flow inside on the estate through the HCV identification. The company also has commitment to maintain all of natural streams inside the estate from pollution and contamination. The company has a plan for protection of river riparian buffer zones and natural streams through felling of oil palm trees adjacent to all natural streams and replanting the buffer zone areas with hardwood trees and vertiver grass, also make signboard about restriction chemical activities in along of riparian bufferzone. Based on field observation in field number D12 in riparian of Beranum River, estate already marking all of tree (red colour), installed of signboard for not allowed chemical activity in riaprian bufferzone. The company has monitoring the record of water usage for 2013 and 2014 until May. Record water used presented below : Water consumption Average m 3/ton FFB Years FFB process (tonne) (m 3) (process) 2013 293,233 378,737 1.16 2014 until May 139,989 182,947 1.18

The already conducted waste water analysis with the evidenced, example: 1. Certificate test result number 7100/LHU/LABKES/KP-A/VII/2013 from contact pond for POME, with analysis dated on July 23 until August 29, 2013 with BOD result test is 65.30 mg/l, when the standard is 100 mg/l, so this in still below the standard. Accrodance to the Local regulation number 036/2008 for POME standard. 2. Certificate test result number 7859/LHU/LABKES/KP-A/VIII/2013 from contact pond for POME, with analysis dated on August 24 until Okctober 27, 2013 with BOD result test is 810.78 mg/l, when the standard is 100 mg/l, so this in still below the standard. Accrodance to the Local regulation number 036/2008 for POME standard. But based on National regulation Decree Evironmental Ministry number 28 and 29/2003 this result still below standard for land application, and the company use the POME for land application. Certificate test result number 7859/LHU/LABKES/KP-A/VIII/2013 from contact pond for POME, with analysis dated on September 28 until October 28, 2013 with BOD result test is 493.38 mg/l, when the standard is 100 mg/l, so this in still below the standard. Accrodance to the Local regulation number 036/2008 for POME standard. But based on National regulation Decree Evironmental Ministry number 28 and 29/2003 this result still below standard for land application, and the company use the POME for land application.

Compliance status : Full Compliance

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

Findings: The company has SOP/GMK-AGRO/02/13 Rev01 dated June 7, 2013 for Pest and Disease Management. The company maintains records of conducting pest and disease detections once a month at each estate, which is done for nettle caterpillars, bagworms, rats and spike moths ( Tiratabha sp. ). The company also implements biological pest management methods such as planting beneficial plants such as Turnera sp and Tyto alba as biological predator, that attract natural predators of leaf eating insects. Plantings of Turnera species is planted along most of the estate main roads.

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 27 of 69

Recorded of pest management system are avilable in all estate. The company conducted the EWS (early warning system) and cencus as early warning pest level attack, example: 1. EWS record of field number C26 Division 1, date on 24/03/2014, for rat attack, when the tree sample is 204, and based on census has identified 39 tree attacked by the rat, percentage attack is 19%. 2. EWS record of field number D21 Division 2, date on 24/03/2014, for rat attack, when the tree sample is 206, and based on census has identified 49 tree attacked by the rat, percentage attack is 24%. Based on EWS record above, the attack condition is high level, so the estate accordance to the company procedure number SOP/GMK-AGRO/02/13. To control this attack the estate used the natural predator such as Tyto alba. Because the estate has program to used biology pests control diseases. Estate also condutc EWS for caterpillar and bagworm attack. Based on EWS record in filed number B13 Division 5 and field number A12 Division 6, there is no attack. And based on others record, it was found caterpillar attack but in low level, and the estate use the biological control to maintain, i.e. beneficial plant, such as Turnera subulata , and Antigonon leptopus . All estate has applied beneficial plant ( Turnera subulata, Turnera ulmifolia, Antigonon leptopus ) and naturan predators such as Tyto alba for integrated pest management. There is available map of beneficial location and owl box on the estate. Based on field observation, the company has cultivated the beneficial plant and owl box in field. All estates has record of monitoring of pesticide toxicity units per tonne FFB, i.e.: 1. Satui Estate • In 2014 until May - Glifosate, with average used is 0.015 litter/ton FFB - Paraquat, with average used is 0.004 litter/ton FFB - Methyl metsulfuron, with average used is 0.299 liiter/ton FFB • In 2013 - Glifosate, with average used is 0.021 litter/ton FFB - Paraquat, with average used is 0.007 litter/ton FFB - Methyl metsulfuron, with average used is 0.597 litter/ton FFB 2. East Estate • In 2014 until May - Glifosate, with average used is 0.12 litter/ton FFB - Paraquat, with average used is 0.001 litter/ton FFB - Methyl metsulfuron, with average used is 0.000 litter/ton FFB • In 2013 - Glifosate, with average used is 0.18 litter/ton FFB - Paraquat, with average used is 0.13 litter/ton FFB - Methy metsulfuron, with average used is 0.356 litter/ton FFB Based on document verification and interview with Head of Estate, paraquat used it just for “thinning out” for palm oil tree, and based on spraying activities there is no paraquat has been used for spraying activites.

Compliance status : Full Compliance

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

Findings: The company has propose to use chemical pesticides to Head of Labor dept of Tanah Bumbu District by letter no surat 015/GMK-STI/HRD-ADM/II/2014, those chemical including are Glifosat, Paraquate and Methly, but till this audit conducted, they don’t have that permit anyway. This was raised as non -conformities (NCR No. 2014 -08 of

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 28 of 69

16). Pesticide was recorded in accordance with number and it’s usage include including active ingredient , area treat- ed and number of application. During year 2013, Satui estate used ISOPOPHIL GLIFOSAT about 2,064 Litres and Toxicity about 0.021 kg/tonne FFB, METIL METSULFURON about 58.200 and Toxicty 0.597 gram/tonne FFB and PARAQUAT DIKLORIDA about 690 Litres and Toxicity 0.007 kg/tonne FFB. Based on it is information and record of monitoring toxicity units per tonne product or per tonne FFB (see criterion 4.5 above), from year 2012 until year 2013 for paraquat has been reduced, and based on record of activty the paraquat used its just for thinningout of palm oil tree. In fact, the company has policy about pesticide/chemical use, but there is no committement (target or time) to reduce or eliminated paraquat use in the company (Satui and East estate). This is condition was raised as non-conformities (NCR No.2014-09 of 16 ). Other sample in SATUI Estate regarding chemical usage as recorded in “LKM (Laporan Kerja Mandor)” or Fore- men Working Report, for Circle Spraying on May 23rd, 2014 at Block G-28 division IV about 9,03 Hectare using Glyphosate amount 1,680 gram, in accordance with manufacture recommendation. The estates have a program for chemical application for each estate block and the program shows that circle and path spraying is to be done 4 times a year in each block, which is in accordance with the company’s SOP for circle and path spraying and Weed Spraying. Empty chemical containers are sent to the estate hazardous waste store and records of amount incoming and outgoing are stored. Based on records of chemical usage, there was no usage of chemicals containing paraquat in the year 2013, it was confirmed through interviews with sprayers and well as checks at the chemicals stores that no chemicals containing paraquat is being used. There is no usage of WHO Types 1A and 1B chemicals

Compliance status : Non Compliance

NCR No.2014 - 08 of 16 The company (Satui estate) has propose to use chemical pesticides to Head of Labor dept of Tanah Bumbu Dis- trict by letter no. 015/GMK-STI/HRD-ADM/II/2014, those chemical including are Glifosat, Paraquate and Methly, but they don’t have that permit/recomendation from local goverment.

NCR No.2014 - 09 of 16 The company has policy about pesticide/chemical use but there is no committement (target or time) to reduce or eliminated paraquat use in the company (Satui and East estate) .

Criterion 4.7: An occupational health and safety plan is documented, effectively communicated and implemented.

Findings: PT Gawi Makmur Kalimantan, Satui Estate and Mill has OHS policy which is sign by Vice President dated on June 1 st , 2013. To implement this policy, company also generate documented procedure SOP/GMK-SMK3/01/01 Rev 00. OHS programmes including safety campaign, hazard identification and risk assessment in whole business processes, emergency preparedness, usage of PPE and safety patrol, company assign Mr. Budi Hantoro as responsible person for health and Safety programmes and also assign Mr. Muhammad Taufik as responsible person for OHS in Satui Estate and Mill. They have OHS committee named P2K3 which perform regularly meeting to discuss health, safety and welfare in PT gawi Makmur Kalimantan, this committee covering both side plantation and POM. All workers in PT Gawi Makmur Kalimantan, Satui Estate and Mill, covered by insurance including accident for pre, during and after working. The company has perform regular health examination by a doctor for workers in station or exposed to high risk work. The last medical examination was performed in March 23 rd , 2014 for all workers including sprayers, this examination and boiler operators, power plant operators, fertilizer operators and warehouse keepers.

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 29 of 69

The company has documented risk assessment for Occupational Health and Safety (OHS) cover all activities in plantation like maintenance, maturing, chemist application, harvesting, fertilizing, transporting and all activities in Palm Oil Mill, however this identification was not covering activity around Water Treatment installation and Waste Water Treatment Installation, this was raised as non-conformities (NCR No.2014-10 of 16 ). To implement this OHS programmes, company also perform training related to OHS, some of them, for exam- ples : First Aid Traiing for Foremen, Power Plant operators, Transportation section, and mechanics, held in Juni 15 th , 2013. First Aid Traiing for Foremen, Juni 20 th , 2013. Company provide first aid equipment in worksites and OHS equipment in worksites like fire extinuisher, hydrant in POM and Office, simply fire fighting equipment in plantation, and housing. PPE was available for all workers in accordance with their level of risk of their workstation, like boot shoes, helmet, glasses, hand-gloves for harvester, boot shoes body apron, hand-gloves, masker and glasses for sprayers, etc. To ensure Workers trained in first aid should be present in both field and mill operations, company has train all foremen with first aid training, in plantation and mill. Records of the occurrence of any work accidents are maintained and regularly reviewed, during year of 2014 there is no significant accident involved workers.

Compliance status : Non Compliance

NCR No.2014 - 10 of 16 Documented risk assessment for Occupational Health and Safety (OHS) was not covering Water Treatment Plant and Waste Water Treatment Plant

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

Findings: There Training mechanism as determined on SOP/GMK-AGRO/04/01 Rev.1 dated on June 7, 2013. Training program has been established annually, however for year 2014, the program has not been prepared based on Training Need Analysis (TNA) and there is not information on the type of training that will be followed by each employee/worker in form of training program in east estate, satui estate and satui mill. This is raised as nonconformity ( NCR no.2014-11 of 16 ). The company uses contractors for construction of houses, transport of FFB, transport of worker and transport of material for road maintenance. Note of evaluation for one houses performance construction in October and No- vember 2013 available but there is no evidence that the company use experienced or trained contractors. This is raised as nonconformity ( NCR no.2014-12 of 16 ).

Compliance status: Non Compliance

NCR No.2014 - 11 of 16 The training program was not prepared based on Training Need Analysis (TNA) and there is not information on training type that will be followed by each employee/worker in form of training program in east estate, satui estate and satui mill

NCR No.2014 - 12 of 16 Evidence that the company uses experienced or trained contractors is not available

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 30 of 69

Principle 5: Environmental responsibility and conservation of natural resources and biodiversity

Criterion 5.1: Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

Findings: The company has identify Aspect and Impact of Environment regarding their activities both in plantation and Mill this Social and environmental impact assessments (Environmental Evaluation Documents, DELH) was released year of 2011,and approved by Head of Environment Agency Tanah Bumbu District as letter number 660/82/Bappedalda/2011. The company obligation regarding environment as defined in AMDAL document was implemented and reported regularly to Environment Agency Tanah Bumbu District on six monthly based. For year of 2013 /RKL-RPL period 4 year of 2013 submitted on 08/04/2014, this report contain of test result of emission, ambient air, raw water, river water, waste water, effluent from inlet and outlet of WWTP. The company also report and air quality, generator power emission, boiler emission from Satui Palm Oil Mill. The environmental monitoring & management report period 1 year 2014 (January to March) has not sighted so that the company has not submitted to local goverment. This was raised as non-conformities (NCR No.2014-13 of 16 ).

Compliance status : Non Compliance NCR No. 2014-13 of 16 The environmental monitoring & management report period 1 year 2014 (January to March) has not sighted so that the company has not submitted to local goverment

Criterion 5.2: The status of rare, threatened or endangered species (ERTs) and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations.

Findings: PT Gawi Makmur Kalimantan (East and Satui estate) has conducted an assessment and identification of protected, rare and endangered species and HCV habitats within their area. An identification of flora and fauna has been carried out by a consultant, Re-mark asia in year 2012 (July to August 2012). The results of these assessments are documented in HCV assessment report. In the HCV assessment report it was stated that 5 types of HCVs were identified in the satui estate i.e. HCV 1, HCV 2, HCV 3, HCV 4 and HCV 5 whereas in east estate was stated 3 types i.e HCV 1, HCV 2, and HCV 4. Identified HCV’s area in each estate consist of : • HCV 1 areas are riparian (satui estate : Setarap river and Batulaki river. East estate : Kasayan river and Cu- ka river), riparian of water source (east estate : Kasayan river, Cuka river and nucleas spring), and resorvoir areas (satui estate : mangrove areas) where HCV 1 in satui estate include HCV 1.2 and 1.3 areas due to identification of many wildlife species of protected and endangered status as explained above spread througout satui estate; • HCV 2 & 3 areas is mangrove ecosystem or areas (satui estate); • HCV 4 area are riparian (satui estate : Setarap river, Batulaki river and mangrove areas, whereas east estate : Kasayan river, Cuka river, Kasayan spring and nucleas spring) and buffer zone in forest and land fire (satui estate : Setarap river, Batulaki river and mangrove areas, whereas east estate : Kasayan river and Cu- ka river); • HCV5 area is basic need of local communities in mangrove/swamp areas (satui estate) Total overlayed HCV area in PT GMK unit satui is 1,846.46 ha (satui estate : 1,632.31 Ha and east estate : 214.15 Ha. Several protected species have been found in PT GMK area (east and satui estate) such as alcedo meninting , nasalis larvatus , macaca nemestrina , hystrix brachyurum , tomistoma schlegelii , trachypithecus au-

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 31 of 69 ratus , pterospermum javanicum , etc. A HCV management and monitoring plan and recommendation on year 2014 for all identified HCV areas in PT GMK (east and satui estate) have been established by PT GMK unit of satui. The document describes the activities planned for each identified HCV (such as installation of signboard in HCV area, socialization about HCV to worker and around community, marking with paint as limited access chemical activities in riparian, patrol, monitoring of quality water, restoration of riparian with enrichment planting, etc), and timeline for each identified HCV. Several signboard has been installled infrony of all HCV area amount of 33 unit and socialization of HCV to communities and to worker. The company have to appoint and trained officer to monitor any plans and activities it.

Compliance status: Full Compliance

Criterion 5.3: Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner Findings: The company has identified all waste and documented. Waste classified into by domestic waste and Hazardous waste. Sources of waste and pollution are fertilizing processes, spraying, transportation, boiler operation, effluent ponds, Power plant, Land application and bunch processing. Estates and mills waste management and disposal are implemented to avoid or reduce pollution by implementing documented procedure Handling of Hazardous Waste (SOP/GMK-SMK3/01/14). Hazardous waste was kept less of 90 days, as permit and will be collected by licenced collector to proceed to processor and end user. This procedure also contain disposal of agrochemical and their container waste in accordance. Waste management plan has included domestic waste but it plan has not implemented cause was found domestic waste has been burned in emplasment/worker housing block F (East estate). This is condition was raised as non-conformities (NCR No.2014-14 of 16 ). The company has record or analysis of waste as report and submitted every three months to local government. This report contain balance of Hazardous Waste which is produce by company, data of daily, monthly and six monthly evaluation regarding pH, Temperature, BOD, COD, etc, shell from FFB processing was used as bio fuel, and empty bunch utilized as fertilizer also palm oil effluent utilized as nutrient source of lam tree. The company has procedure as guidance in handling of wastes (SOP/GMK-SMK3/01/14), and Hazardous waste was kept less than 90 days before sent to licenced collector PT NAZAR at 02nd May 2014 ie used oil amount 500 Litres, as manifest number 0003749.

Compliance status: Non Compliance NCR No. 2014-14 of 16 There are not evidence that waste management plan has been implemented cause was found domestic waste has been burned in emplasment/worker housing block F (East estate).

Criterion 5.4: Efficiency of energy use and use of renewable energy is maximized.

Findings: Satui Palm Oil Mill has record of efficiency of energy use in energy/ton CPO (in kilocalori) product in 2013 and 2014 until May, presented below :

Averge Average FFB Shell Fiber Shell Fiber Years Shell used Fiber used process produced produced used/ton used/ton CPO CPO 2013 293,235,790 16,127,968 36,654,474 16,127,968 36,654,474 0.25 0.56 2014* 139,990,900 7,699,500 17,498,863 7,699,500 17,498,863 0.25 0.57 *) 2014 until May

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 32 of 69

Record of monitoring fossil fuel are available in palm oil mill, when the fossil fuel used in start up of the enginee, and after that, the company used the fiber and shell as a energy sourced. In 2013 the company has eficiency of renewable energy about 99.66%. Energy monitoring record showed that the fossil fuel used in 2013 is 0.0033 litter/ton FFB process, and for 2014 until May is 0.0038 litter/ton FFB process. Satui Palm Oil Mill used all of shell and fiber they produced for renewable energy.

Compliance status: Full Compliance

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

Findings: There is no land clearing due to no replanting plan until year 2025. The company has zero burning policy as seen letter number 02.2001 by General Manager PT Gawi Mamur Kalimantan and has procedure of emergency response (SOP/GMK-AGRO/01/08) where include emergency response to land burning. Based on result of monitoring for risk of fire level year 2013, the average risk for year 2013 is low to moderate. Fire extinguishers and facilities available such as water truck non nozzle, sand, shovel, bucket, water truck with nozzle (in-progress), etc. There is regular patrol program, to monitor activites that might cause of fire in company’s area. Company conduct fire drill simulation and socialization to all workers and community surrounding plantation area. Compliance status: Full Compliance

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

Findings: The company has identified all of pollution and emission source in the mill and estate, through the record of identification of emission and pollution 2014, i.e.: 1. Estate ; from the FFB transport activity, heavy equipment activity, office, and housing 2. Mill ; loading ramp, sterilizer, thressing, press, clarification, enginee room, water treatment plan, waste water installation for POME, boiler, and others. Monitoring of pollution and emission quality has been identified, through record of : - Result of analysis number 024/EM/XII/2013 and 025/EM/XII/2013for emission from boiler number 1 and 2, dated analyzed on Dec 29, 2013 until January 6, 2014 with paramater analyzed is particulate, SO2, NO2, CO, Opacity and Flow rate accordance to the Local Regulation Gavernor of South Kalimantan number 70/2008 about standard for air emission. Refer to the local regulation above there is no paramater higher than standard. Analysis by Laboratorium of Environmental Agency of Tanah Bumbu Regency. - Result of analysis number 026/EM/XII/2013, 027/EM/XII/2013, 028/EM/XII/2013 for emission from genset number 1, 2 and 3, dated analyzed on Dec 29, 2013 until January 6, 2014 with paramater analyzed is particulate, SO2, NO2, CO, Opacity and Flow rate accordance to the Decree Environmentak Ministry number 21/2008. Refer to the local regulation above there is no paramater higher than standard. Analysis by La- boratorium of Environmental Agency of Tanah Bumbu Regency. - Result of analysis number 074/UA/XII/2013 for ambient air from housing, dated analyzed on Dec 29, 2013 until January 6, 2014 with paramater analyzed is dust, H2S, NH3, CO, NO2, SO2, O2, Noise level, temperature, moisture, wind speed. Accordance to the Local Regulation Gavernor of South Kalimantan number 053/2007 about standard for ambient level and noise level. Refer to the local regulation above there is no paramater higher than standart. Analysis by Laboratorium of Environmental Agency of Tanah Bumbu Re- gency. The company has record of efforts and strategies to reduce pollution emission, through reforestation in along of riparian bufferzone, housing, office and POME installation. Also, for noisy level the company has been provide the PPE’s such as ear muff and ear plug for enginee room operator, kernel crushing plan, sterilizer, and genset housing. For POME management through the land application from the contact pond (final pond) when this pond

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 33 of 69 has been anaerobic process, so the COD and BOD paramaters hans been lower than 5,000 mg/litter. Accord- ance to the Decree of Ministry Environmental number 82 and 29/ 2003.

Compliance status : Full Compliance

Principle 6: Responsible consideration of employees and of individuals and communities affected by growers and mills Criterion 6.1: Aspects of plantation and mill management including replanting that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. Findings : There was social impact assessment (SIA) report owned by PT GMK for estates placed on Tanah Laut Regency, Tanah Bumbu Regency, Jorong Palm Oil mill in Kalimantan Selatan Province and estates placed on Paser Penajam Regency in Kalimantan Timur Province. In line with this SIA report there was evidence of attendance list of surroundings community such as from Benua Lama village, Damit hulu, Batalang, Pamalongan, Batu Mul- ya, Sabuhur, Sukaramah, Setarap, Alkautsar, Pasir Puith, Sungai Cuka, Bebulu Darat, Lebanga and Satui Barat villages. There was also pictures during assessment activities. This SIA report consist of history of the company, positive and negative impacts, action plan for impact management and monitoring. The positive impact among other was increasing and diversity of income revenue of community members, while the negative was destruction or damage of community’s road because of FFB transportation activies. However, there was no evidence of community participation during action plan for impacts management and monitoring preparation. This condition was raised as non-conformity (NCR No.2014-15 of 16). Beside of the SIA report, the company has submitted their UKL-UPL report for 2nd semester 2013 to BLHD in January 2014.

Compliance status: Non Compliance

NCR No.2014-15 of 16: There was social impact management and monitoring action plan, but there was no evidence of community participation

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.

Findings: There was an internal and external communication Standard Operating Procedure no: SOP/GMK-AGRO/01/20, rev.02, valid since 24/02/2014. This SOP was signed by document ontrol secretary, Management Representative and Director. It was sated in this SOP that internal communication could occured vertically and horizontally in form of meetings, sign board, letter, email, sms and socialization. While for external communication, CSR manager or community relation was responsible to accept, make archive, disposition and prepare sufficient responses to stakeholder. External communication could be in form of letter, email, facsimile, telephone, direct communication, newspaper and other. There was record of communication with surrounding community such as below : 1. Letter from community of Jombang village subjected to donation request for development of mosque of Jom- bang village on 23 September 2013. 2. Letter from community of Sekapuk village subjected to donation request for mosque development of Sekapuk village at 10 January 2014. 3. Letter from community of Setarap village regarding to proposal of youth beach party on 17 January 2014. 4. Letter from community of Sekapuk village subjected to proposal of material request for village infrastructure development. 5. Letter from community of Alkautsar village sibjected to donation request for road on 13 April 2014 and for mosque development on 17 May 2013 .

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 34 of 69

Regarding to personal in charge in doing communication and consultancy with the community, there was SOP no. SOP/GMK-AGRO/01/20 valid since February 24 th , 2014 consist of information that MSR manager/ community relation has responsibility for accept, documentation and response to request and to any information from stakeholder

Compliance status: Full Compliance

Criterion 6.3: There is a mutually agreed and documented system for dealing with complaints and griev- ances, which is implemented and accepted by all parties.

Findings: There was system for complaint handling or conflict resolution i.e. SOP no. SOP/GMK-AGRO/01/15 valid since February 24th, 2014, states that : 1. Branch controller/Plantation controller/Estate Head/Mill Head/Community relation and CSR head is responsible for conflict handling. 2. Plantation controller/ Estate head/Mill head submit reports to the Department Head of CSR/community realtion/Legal related to existing issues, grievance, claim, conflict delivered in verbal or written. 3. Department Head of CSR/community realtion/Legal collects related data and information. 4. When the report was assumed as priority the next step was to identify option available for decision making. 5. If there was no decision taken or no agreement between the both parties, third party (local government) will get involved as a mediator. 6. Based on branch controller, the direction board will consider and prepare policy to resolve the conflict. There was no record of complaint from community or stakeholder. However there was some records of request. For example was request for road maintenance and service from Alkautsar village on April 13th, 2014 and from Sekapuk village’s donation request for mosque development on 10 January 2014. Based on the above SOP for conflict resolution, identification and compensation for resolution will be depend on agreement of the both parties or by involving the mediator if needed

Compliance status: Full Compliance

Criterion 6.4: Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions. Findings: There was system for complaint handling or conflict resolution i.e. SOP no. SOP/GMK-AGRO/01/15 valid since February 24th, 2014. This SOP covers identification, calculation and compensation procedures to communities and other stakeholders, which is states that third party (local government) will get involved if there was no agreement made between the company and complainers. The company has record of negotiation process or detail of compensation settlements. For example was as follow : 1. Official letter no. 148/GMK-BJM/DL/XII/2000 on December 12th, 2000 for compensation payment for 10 persons who cultivated/own land placed on Block G 33, 34, 35, Block H 33 at Kebun Satui. This official letter completed with location map. 2. Payment slip for compensation payment for the land mentioned above as Rp. 6,632,000 on 12 December 2000.

Compliance status: Full Compliance

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Criterion 6.5: Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

Findings: There is an updated salary list of PT GMK of Satui Palm Oil Mill for permanent and non permanent employees for 2014 period shows the lowest salary received was as Rp. 1,365,000. This rank is in line with the minimum regional salary set by the government which is Rp. 1,365,000 per month. There is company regulation for PT Gawi Makmur Kalimantan for 2014-2016 period regarding daily operations, worker responsibilities and rights, and valid for 1 July-30 June 2014. This regulation approved by Head of Man- power no: KEP.3/009/PP/VI/DISNAKERTRANS on 30th of June 2014. The company has established infrastructure for workers, such variety types of housing including permanent and wooden barracks, individual housing, mosque, and elementary school, sport facilities such badminton and football ground. Clean water already available through water resources surroundings and distributed to the housing with water cleaning treatment and sufficient for bathing and washing. However, there was facility found in damaged condition. For example was : 1. Toilet’s Satui Mill was not equipped light so that worker can not saw in toilet on the night shift 2. Toilet at house no. H.08 at Jombang Hosuing was out of order. 3. Drain at Backyard of mill housing was fully of bush and being used for waste dump. 4. Backyard of Sei Cuka housing (block F) in east estate was not maintened, conduit of domestic liquid waste non current, and disposal domestic waste not right place. 5. There is leaking roof in emplasment/worker housing (block C.03) which has been reported but no response/repaire from company. It condition above was raised as non-conformity (NCR No.2014-16 of 16). There was work agreement no. 006/SPK/GMK-BJM/I/2014 for housing renovation and water tower building development with contractor Aji Basa Pamungkas, no. 069/SPK/GMK-TGH/kalsel/IV/2014 between company and CV Duta Putra KH for bridge construction, no. 043/SPK/PKS-JRG/Kalsel/IV/2014 between company dengan CV. Konhesa for staff housing development. Article 8 of this agreement states that it was mandatory for the contractor to follow working safety and health briefing from company before start working, provide and use appropriate PPE while entering working place such as helmet, shoes and gloves and safety belt when in upper level site, goggle for welding activity, ear plug or ear muff

Compliance status: Non Compliance

NCR No.2014 – 16 of 16 There was facility found in damaged condition. For example was : 1. Toilet at Satui mill did not comply with sufficient lamp light, complicated night shift workers then. 2. Toilet at house no. H.08 at Jombang Hosuing was out of order. 3. Drain at Backyard of mill housing was fully of bush and being used for waste dump. 4. Backyard of Sei Cuka housing (block F) in east estate was not maintened, conduit of domestic liquid waste non current, and disposal domestic waste not right place. 5. There is leaking roof in emplasment/worker housing (block C.03) which has been reported but no response/repaire from company

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

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Findings: The company allows the worker to perform worker union. In article 20 part (c) of company regulation stated that worker entitled to establish worker union, and to be a member and leader of the organization, based on applicable government regulation. Recently, there was no worker union has established in the company. Based on interview to workers, they still feel satisfied by Bipartit organization consist of workers representative and employer representative. There was minute of meeting of the last Bipartit organization meeting on May 19, 2014, result as follow : 1. Review the last month meeting 2. Medical check up will soon be held for noisy area workers 3. PPE purchasing for workers, especially shoes for stock for workers 4. Health mask distribution for children and road sprinkling

Compliance status: Full Compliance

Criterion 6.7: Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions. Findings: There was list of employee consist of permanent and non permanent workers. Sighted in the list that there was no employee below 18 years old. There was stated in company regulation 2014-2016 period article 5 that age requirement for employee is more than 18 years. During onsite audit in PT GMK of Satui Palm Oil Mill and estates there was no evidence found of employment of worker less than 18 years

Compliance status: Full Compliance

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.

Findings: There was company policy regarding to equal opportunities for all manpower of PT GMK signed on March 3rd, 2014 that states: • The company gives an equal opportunity for manpower to gain the worth occupation and income. • The company will places any manpower based on skill, competency and other position requirement and operational activity needs. As sighted on company’s list of workers and employee there are approximately 600 workers of Satui Estate came from Kalimantan Selatan Province and other province in Java island such as Jawa Timur, Jawa Barat Provinces. There is no evidence of discrimination, and the following is evidence of equal opportunities provided to all workers: • Female workers comprise around 30% of all of company’s workers • Female workers also have opportunities to have positions as office assistants such in the HR department for training assistance. Workers of all ethnicities and religions, including Muslims, Catholics and other Christian denominations are provided with their respective places of worship such as mosques and churches in each estate. No workers interviewed on-site complained about any form of discrimination from the management of the estates

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Compliance status: Full Compliance

Criterion 6.9: A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied.

Findings: The management of PT Gawi Makmur Kalimantan of Jorong Palm Oil Mill and Kebun Barat and Kebun Tengah estates had a written policy regarding to prevention of sexual harassment and all other forms of violence against women, as well protection of their reproductive rights. The company’s regulation for 2014-2016 and its extension clause 12 page 11 contain prevent sexual harassment. This policy was signed by Vice President Director on March 3, 2014, declares that the company fight againts sexual harrasment and states the punishment for subject or actor of sexual harrasment and violance against women, based on applicable regulation. There was code of conduct for housing inhabitants signed on 1 April 2013 which states in article 3: it was prohibited to make house- hold violence. The company already established special grievence mechanism related to the issue and handling by the gender committee. There was atendant list on 1 January 2014 and documentation photo as evidence that the griev ance mechanism already socialized to all workers. The company regulation was sent to all employee and workers and displayed at each plantation division office as seen in Satui Estate and East estates. Protection of woman’s reproductive rights is defined clearly on company regulation 2014-2016 clause 32 page 26 regarding maternity leave and menstruation leave There is no record of handling of sexual harassment since there is no incident so far. The company established a Gender Committee, with representatives from each estate division. There is evidence of implementation of the reproductive rights policy, for example, the company has copies and records of maternity leave forms applied by workers and these records are kept by the HRD department, estate clinic and estate office. As recorded on FM-HRA-02-R00 dated March 13, 2013 to June 12, 2013

Compliance status: Full Compliance

Criterion 6.10: Growers and mills deal foooairly and transparently with smallholders and other local busi- nesses.

Findings: FFB price was defined based on meeting between related parties such as growers, smallholders and National Es- tate Agency. All interested parties can obtain this price decision from the agency by print out or sms service. There was FFB purchasing agreement with third parties as follow : 1. No. 115/PJB-TBS/GMK/X/12 on October 29th, 2012 with Usaha Sejati Mandiri Coopeartive, placed at Hara- pan Maji village, Batu Licin, Tanah Bumbu Regency. The last payment evidence was payment slip by Ekonomi Bank on 14 April 2014 as Rp. 1,655,353,750 2. No. 111/PJB-TBS/GMK/X/12 with Pemuda Makmur Kelapa Sawit Cooperative,.The last payment was on 2 April 2014 as Rp. 100,260,000 by Bank Mandiri. 3. No. 175/PJB-TBS/GMK/III/14 with Farmer association Karyan Tani. The last payment was on 22 April 2014 as Rp. 262,410,850 by Bank Mandiri. 4. No. 136/PJB-TBS/GMK/V/2013 with Rukun Tani Farmer Group. The last payment on 7 April 2014 as Rp. 216,768,335 by Bank Ekonomi. 5. No. 105/PJB-TBS/GMK/V/12 with Cipta Prima Sejahtera Cooperative. The last payment was on 14 April 2014 sebesar Rp. 517,702,116 by Bank Ekonomi. This agreement consist of term and conditions as follow :

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• FFB weight start from 6 Kgs • FFB not come from Dura sheed • FFB not being claim by another party • FFB delivering procedure • Location and time for delivery • Pricing: based on related parties decision • Payment condition.

Compliance status: Full Compliance

Criterion 6.11: Growers and millers contribute to local sustainable development wherever appropriate.

Findings: For local sustainable development the company has made some donations and arranged programs for the local community. For example as below: 1. Official report no. 017/GMK-STI/II/2014 on 12 February 2014 including photo documentation for acceptance of 250 sacs of cement by Jombang village community for Donation for development of mosque of Jombang village on 23 September 2013. 2. Official report at 10 January 2014 of acceptance Rp. 10 Million cash for mosque development donation Sekapuk village. 3. Official acceptance letter of Rp. 5 Million cash donation on 7 March 2014 based on poposal of youth beach party from Setarap village at 17 January 2014. 4. Official acceptance report for material donation on 3 March 2014 baesd on proposal of material request from Sekapuk village for village infrastructure development. 5. Official acceptance report for cash donation Rp. 1,500,000 on 27 March 2014 for donation request from The State Educational Division of Satui District for student sport exhibition on 25 March 2014. 6. Official acceptance report for 100 sacs of cement on 17 May 2014 based on proposal of mosque development from Alkautsar village on 1 April 2014.

Compliance status: Full Compliance

Principle 7: Responsible development of new plantings Criterion 7.1: A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and results incorporated into planning, management and operations. Findings: The company has identified Aspect and Impact of Environment and social impact assessment regarding their activities both in plantation and mill. Year planting in satui and east estate are year 1996 to 2002 and verification in field so that no new plantings inside estate. Based on information above that this is indicator not applicable. Compliance status: Not Applicable

Criterion 7.2: Soil surveys and topographic information are used for site planning in the establishment of new plantings, and the results are incorporated into plans and operations.

Findings:

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The company has soil map and topograpic map for satui and east estates. Year planting in satui and east estate are year 1996 to 2002 and verification in field so that no new plantings inside estate. Based on information above that this is indicator not applicable. Compliance status: Not Applicable

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

Findings: The company has carried out identification of HCV in satui and east estate. Year planting in satui and east estate are year 1996 to 2002 and verification in field so that no new plantings inside estate. Based on information above that this is indicator not applicable. Compliance status: Not Applicable

Criterion 7.4: Extensive planting on steep terrain, and/or on marginal and fragile soils, is avoided.

Findings: The company has map of fragile soil, soil map and erosion identification map on the satui and east estate. There is no identified the low organic matter and peat soil on the satui and east estate. Because of year planting in satui and east estate are year 1996 to 2002 and verification in field so that no new plantings inside estate. Based on information above that this is indicator not applicable. Compliance status: Not Applicable

Criterion 7.5: No new plantings are established on local peoples’ land without their free, prior and informed consent, dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions. Findings: The plantation has a the social and environmental impact assessment document which include analysis of both positive and negative environmental and social impacts, and made with the participation of affected parties, as explained under CR 7.1. No new plantings on satui and east estate because year planting are year 1996 to 2002 so that there are not released on local people’s land with FPIC. Based on information above that this is indicator not applicable. Compliance status: Not Applicable

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

Findings: No new plantings on satui and east estate because year planting are year 1996 to 2002 so that there are not land compensation. Based on information above that this is indicator not applicable. Compliance status: Not Applicable

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

Findings:

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There is no evidence that the company use fire for plantation preparation because no new plantings on satui and east estate. Year planting are year 1996 to 2002 on satui and east estate so that this is indicator not applicable Compliance status: Not Applicable

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

Criteria assessed: CR8.1 Criteria not assessed: -

Findings: Based on field observation, the company has conducted initialy the continuous improvement, such as in best practice, the company used beneficial plant ( Turnera subulata , Antigonon leptopus ) and natural predator ( Tyto alba ) to control the pest dissease. Company also, ensure that all of the workers has understood about the conservation, through the morning meeting. For undulating areas, estate applicated terrace and cover crops (Mucuna bracteata) to maintain the soil erosion. In efficiency energy used, Satui Palm Oil Mill has commitment to minimize of fossil used, and maximize the renewable energy from shell and fiber as a energy sourced. There was continuos improvement program inline with management and monitoring of social impat assessment as follow : 1. Contribution on mosque development at Jombang village as 250 sacs cement on 12 February 2014 2. Contribution on mosque development of Sekapuk village at 10 January 2014 by Rp 10 Million cash 3. Contribution on youth beach party of Setarap village by Rp. 5 Million cash on 7 March 2014. 4. Contribution of material request from Sekapuk village for village infrastructure development on 3 March 2014. 5. Contribution to Satui District for student sport exhibition on 25 March 2014 as Rp. 1,500,000 cash on 27 March 2014. 6. Contribution on mosque development of Alkautsar village as 100 sacs of cement on 17 May 2014

Compliance status: Full compliance

• RSPO SCCS Satui Palm Oil Mill (Satui POM) is located in South Kalimantan - Indonesia. Satui Mill has production capacity of 60 tonnes/hours. In year 2013, based on Table 3 that the mill processes Fresh Fruit Bunches (FFB) from company owned estate (East estate and Satui estate), smallholder areas (Damit smallholder (Kopermas Subur Mandiri) and KUD Gerbang Mitra Sejahtera), West estate, Central estate, Paser estate, PT Sentosa Sukses Utama and outgrower, whereas in year 2014 that FFB supplier different as year 2013 i.e east estate, satui estate, KUD Gerbang Mitra Se- jahtera and outgrower or smallholder. The location of Satui Palm Oil Mill is within Satui Estate. Based on Tabel 3 above that FFB from company owned estate (east and satui estate) and estate has get RSPO certificate as FFB certified and FFB from estate has not been get RSPO certified (smallholder areas, other estates in Gawi Group, outgrower). The company implements SCC-RSPO with “Mass Balance (MB)” model according to the nature of mill FBB supply condition. The following is a description of the company’s supply chain management system according to the RSPO SCCS requirements (it was assessed/audited against Module E), including status of compliance of the company and their outsourced third parties to RSPO SCCS requirements. Results of audit/assessment as describe on the explain- ation below :

1. Documented procedures

Findings: The company has a procedure for implementation of SCCS requirements. There are a set of existing procedure consisting of : 1. Procedure to receive material/product (SOP/GMK-AGRO/03/05 Rev.02, issued on June 7, 2013), This is procedure include definition of certified and non-certified FFB and mechanism validity process of FFB certified

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supplier list in jorong mill too. 2. Procedure of despatch material/product (SOP/GMK-AGRO/03/06 Rev.3, issued on June 11, 2014). 3. Procedure of control of document and record (SOP/GMK-AGRO/01/01 Rev.2, issued on June 7, 2013) 4. Procedure of control of non-conformity product (SOP/GMK-AGRO/01/03 Rev.2, issued on June 7, 2013) 5. Procedure of unloading oil from truck (SOP/GMK-AGRO/01/15 Rev.2, issued on June 7, 2013) 6. Procedure of mass balance report (SOP/GMK-AGRO/01/10 Rev.3, issued on June 11, 2014). 7. Procedure of transport of FFB (SOP/GMK-AGRO/02/22 Rev.3, issued on June 11, 2014) 8. Procedure of production process (SOP/GMK-AGRO/03/01. Issued on June 7, 2013) There are new revision procedures above but the company (Satui mill, Satui estate & east estate) has not socialization/update of information to worker. Condition above was raised as a non conformity (NCR SCCS no. 2014 – 01 of 02 ). The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements has been assigned at the audit time. Satui mill has a procedure for reception and processing of product/material (include from internal and external suppliers and/or certified or non-certified FFBs )

Compliance status : Non Compliance

NCR SCCS No 2014 - 01 of 02 There are new revision procedures above but Satui mill has not socialization/update of information to worker

2. Purchasing and goods in

Findings: Satui mill has a mechanism to receive FFB both from certified sources and non-certified sources. The document to be verified from certified sources are : material delivery letter (‘Surat Pengantar Buah’) including name of estate origin for material delivered letter. Based on name of estate origin and stamp of FFB certified in material delivery letter then weighbridge operator ensure that name of estate origin include in the list certified suppliers. If include in the list certified suppliers then it is status is FFB certified. Certification status will be stated on ‘Incoming Certified FFB Received’ report (daily, monthly and three monthly report) in weighbridge location. Non Certified status will be stated on “Incoming Non Certified FFB Received” report (daily, monthly and three monthly report) in weighbridge location. Beside FFB that the mill receive CPO and PK too from other parties. Status of CPO & PK receipt from Jorong mill is ownership Satui mill or PT GMK because transfer material only. Procedure has defined that it is as incoming material status. Whereas, receive CPO from other Jorong mill that it is not incoming material because handling material only but receive PK from other Jorong mill that it is incoming material. A person has been appointed to be responsible to check and ensure the FFB quality and quantity as per pur- chase documents. Name of supplier and volume of FFB receipt period of year 2013 and year 2014 (until May 2014) has explained above. The company has not a procedure or mechanism to inform the CB immediately if there is a projected overproduc- tion so has been stated as non-conformance status on indicator 1.1.

Compliance status: Full Compliance

3. Records Keeping

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Findings: The company has established a mechanism for control of the document and record No. SOP/GMK- AGRO/01/01Rev.2 issued on June 7, 2013 and the retention time for all records and reports has defined i.e daily production report and FFB receipt report: 1 years as active archives and 2 years in archives room; FFB receipt note and mass balance report: 10 years as active archives and 11 years in archives room; but there are not information regarding retention time for CPO & PKO despatch note, CPO & PKO despatch report and despacth instruction. This condition was raised as non-conformities ( NCR SCCS no. 2014 – 02 of 02). The company’s procedure for control of document and record is applied, with evidence as follows : the company maintains records of weighbridge slips, FFB delivery notes, FFB grading reports, CPO/PK delivery notes from other mills. Records on the quantity of FFB received, CPO/PK received, and CPO/PKO dispatched daily is maintained in the weighbridge software. The mechanism to update information about production (production CPO/PK/PKO, dispatch CPO/PK/PKO, stock CPO/PK/PKO, OER and KER) to related section is by email notifica- tion every morning. The mill maintains accurate, complete and updated records and reports. The mill has records and balances of all receipts of RSPO certified FFB and deliveries of RSPO certified CPO and PKO on daily, monthly and three monthly basis. The material balance includes information about incoming material i.e FFB, CPO and PK (certified sources and non-certified sources), FFB/PK of processed, CPO production result, PK production results, PKO production results, OER, KER, Kernel extraction rate, PK transfer, delivered CPO, delivered PK and balance stock. All volumes of palm oil that are delivered are deducted from the material accounting system according to actual daily conversion ratios. There are no outsourced supply chain processes in Satui Palm Oil mill. Compliance status: Non Compliance NCR SCCS No 2014 - 02 of 02 There is no information about retention time for CPO & PKO despatch note, CPO & PKO despatch report and despacth instruction.

4. Sales and goods out

Findings: The sales and goods out mechanism of the company are described in their procedure of sales of palm oil (SOP/GMK-AGRO/03/06). The procedure of explain about draft of despatch document for certified product where have information about reference number, date of issued, contract/delivery order number, buyer name including the address of buyer, seller name including the address seller, description of the product (information about the supply chain model and SCC certificate number using the stamp on the document), the quantity of the products delivered and reference to related transport documentation. Furthermore the CSPO, CSPK and CSPKO product was sold will be recorded in material balance sheet. Compliance status: Full Compliance

5. Training

Findings: PT GMK (Estate and Mill) has HRD procedure where include training mechanism (SOP/GMK-AGRO/04/01 Rev.2 issued on June 7, 2013)) and matrix of annual training program for their employees, such as matrix of training program for year 2014. In the matrix of training program was training related to supply chain. SCC training was done on 22 April 2014 attended by operators in Jorong mill & Satui mill as seen from training records such as attendance lists, documentation and training modules. The topic of training covers awareness or introduction and update of RSPO SCCS (standard, supply chain models, implement ation of SOPs).

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Compliance status : Full Complaince

6. Claims

Findings: The company has not yet prepared a procedure for certified product communication and claim according to RSPO requirements as they have not made any claims yet. According to product traceability instruction, the mill will only make claims regarding the use of or support of RSPO certified palm oil that are in compliance with the RSPO Rules for Communication and Claims after sold CPO and PK under RSPO claim. This will confirmed during the next audit. Compliance status: Compliance with observations

3.2 Identified non-conformances, corrective actions taken and auditors conclusions • RSPO P&C A total of 16 nonconformances were identified during the main certification assessment. These consisted of 11 nonconformity categorized as major non-conformities and 5 nonconformity categorized as minor non- conformities too. For the major non-conformances, the company has taken the necessary corrective action to close these non-conformances, and this was verified by the audit team through documented evidence submitted by the company. For the minor non-conformances, the company has taken corrective action against these as well, and for those which could not be verified as closed through document checks, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non- conformances, corrective actions taken and auditor conclusions is as belows :

Criterion 1.1. (Major indicator 2) Records of information requests.

NCR No.2014 – 01 of 16 There was no evidence of company’s response of donation request for road maintenance from Alkautsar village on 14 April 2014

Correction : Send response letter to the community and send the request letter to branch manager in Banjarmasin.

Corrective Action : Ensuring that any request letter or proposal from community or stakeholder is being recorded on logbook of external communication and then deliver the letter to estate/mill manager to be responded within 3 weeks.

Auditor Conclusions : Closed Date of closure : July 05, 2014 Verification results : The company has provided response letters about request for road maintenance from Alkautsar village. There was response letters complete with reception letter as follow : Letter no. 092/SM-STI/Umm/VI/2014 on June 3 rd , 2014 to Head of Alkautsar village states that the request will send to the Banjarmasin Branch Management first and the response will be sent to the community within 3 weeks.

Criterion 1.2. (Major indicator 2) The records must be maintained for a period of time determined by the company, taking into account their relative importance.

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NCR No. 2014-02 of 16 The was no retention time difined by the company for information request and the response

Correction : Revise company’s SOP retention time for document, record and response .

Corrective Action : Community relation officer conduct monitoring activity to ensure that every request letter came from internal and external parties will be responsed based on procedure.

Auditor Conclusions : Closed Date of closure : July 05, 2014 Verification results : The company provides control of records document no. FR/GMK-Agro/PD/01/06. It has been require the retention time for request letter and response to related party which is 3 years.

Criterion 2.1. (Major indicator 1) Evidence of compliance with relevant legal requirements

NCR No.2014-03 of 16 There are indicated several evidence that the company not compliance to the law and regulation for national regulation and local regulation, such as : • FFB truck driver no. TBS DA 9347 LC did not have valid driving license. • Komatsu 015 wheel loader’s operator in Satui mill has not operator license letter (Surat Izin Operator). • 635 non permanent daily workers at Satui estate did not registered in Jamsostek program. • Control wells parameter analyst result was not appropriate with requirement stated on Head of Tanah Bum- bu district decree No.273 year 2010.

Correction : 1. The driver and the operator proceed to license application process based on his type of vehicle. Add article related to driving license requirement in his working contract . 2. The company identify all employees and proceed to enrole for Jamsostek program 3. Carried out test of control wells according with Head of Tanah Bumbu District decree no. 273 year 2010

Corrective Action : 1. The company established 3 monthly schedules for every department to evaluate and verification implementation of the law and regulation to ensure company’s compliance to related applicable law and regulation . 2. HSE Dept responsible to ensure conducting test of control wells has according with Head of Tanah Bumbu District decree no. 273 year 2010.

Auditor Conclusions : Closed Date of closure : July 5, 2014 Verification Result : The company has provided evidence related non-conformities above : • The statement letter from driver that he will compliance with Gawi’s regulation and he will applied to police’s office for create of driving license on period of June 10-17, 2014. • The company has submitted request letter and support document (attachment) to government regarding operator license letter (Surat Izin Operator). • The company has submitted request letter and support document (attachment) to the national health care

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security (BPJS Kesehatan) office, receipt note and list of new employees which was registered in Jamsostek program. • The company has provided a letter no. 660/01/Lab-BLHD/IV/2014 dated on June 23, 2014 from environmental agency in Tanah Bumbu District regarding statement letter that parameter used test of control wells in semester I year 2014 has appropriate with Head of Tanah Bumbu District decree no. 273 year 2010.

Criterion 2.1. (Major indicator 2) Evidence of efforts made to comply with changes in the regulation

NCR No.2014-04 of 16 • Local regulation (governor regulation) number 052/2007 about quality standard for ambience and noise and local regulation (governor regulation) number 70/2008 about quality standard for emission not include inside the list of applicable laws and regulations (national and local regulations) (per January 2, 2014). • The company has carried out test laboratory for emission and pollution sources with based on local government (governor and head of district) requirement/regulation for quality standard but company not shows evidence that governor regulation no.053/2007 and no.70/2008 and head of district regulation has appropriated with environmental agency regulation

Correction : The company has submit the corrections, do it the identification local regulation of South Kalimantan Province and after that compare to the related national regulation to know which one of the regulation more strict, and that this will be guidelines for regulation compliance

Corrective Action : Ensure the all of related national and local regulation with the company has registered on book of list regulation and ensure the evaluation every 6 month.

Auditor Conclusions : Closed Date of closure : July 5, 2014 Verification Result : The company has provided evidence i.e. revised list of applicable legal regulation that has been included local government regulation number 053/2007 and 70/2008, there is statement that all regulation must be implemented. Whereas, the company has provided a matrix of comparison between local regulation no. 053/2007 and 70/2008 with environmental agency regulation and the conclusions is to use quality standard appropriate with EIA document i.e local government regulation no. 053/2007 and no. 70/2008.

Criterion 2.2. (Major indicator 1) Documents showing ownership or lease of the land in

NCR No.2014-05 of 16 • It was stated on the Map that there is another plantation activities from other company inside company’s area, while there are some company’s operational outside legal land area. • There is no evidence that the company has carry out release of the process/step of convertion production forest (Hutan Produsi yang dapat dikonversi) because the result of overlay between plantation map with map of forest areas in South Kalimantan Province (attachment decision letter of Head of Ministry of Forestry no. 435/Menhut/2009 dated July 23, 2009) that it areas are convertion production forest (Hutan Produsi yang dapat dikonversi).

Correction : • The management will issuing statement letter that company will not carry out activities in that areas it. • The hectare statement, budget of activities and all operational cost relate that areas will be revised.

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• To create the schedule of plan regarding issue of land used right and process of release of the process/step of convertion production forest (Hutan Produsi yang dapat dikonversi) • The company will submit to planologi agency regarding request of forest areas analyst. Result of analyst will submitted to National Land Agency.

Corrective Action : • Statement letter issued by top management that there are prohibited to conduct operation outside legal land area. • To ensure request to forestry planologi agency was carry out and result of analyst will submitted to National Land Agency.

Auditor Conclusions: Closed Date of closure: July 5, 2014 Verification Result : The company provided documents, such as : • Schedule of plan regarding issue of land used right where follow up to national land agency in South Kali- mantan province in March 014, forest areas analyst in planologi agency at June 2014, renew of land used right to national land agency at August 2014, till certificate issued at March 2015. • Letter from company (no.009/Dir/GMK/JKTM/14 dated on June 17, 2014) to forestry planologi agency and evidence of receive note for letter it. • Result of identification for outside legal land amount of 146 Ha and re-application land used right amount of 349 ha.

Criterion 2.3 (Major indicator 1) Records of any negotiated agreements between traditional owners of land and plantation companies (if any), supplemented with maps in appropriate scale Criterion 2.3 (Major indicator 3) Copies of negotiated agreements detailing process of consent

NCR No.2014-06 of 16 • There was no record of negotiation between company and 10 community members land owner inside of the company’s land use right area for land acquisition process of the land • There was no agreement between company and community members regarding to obligation and right of both parties regarding to customary right inside of company’s land use right area.

Correction : Conduct meeting with all community member as land owner and establish mutual agreement for all relevant activities.

Corrective Action : Ensuring all cultivated or community area inside company’s legal area are being identified, make negotiation and make agreement between the company and the land owners.

Auditor Conclusions : Closed Date of closure: July 05, 2014 Verification result : The company provide evidence that there are mutual agreement between the company and 10 community members as follow : • Negotiation record and agreement with fish pool owner (3 person) of 21.273 Ha at Setarap village • Negotiation record and agreement with fish pool owner (4 person) of 46.287 Ha at Setarap village • Negotiation record and agreement with fish pool owner (3 person) of 32.311 Ha at Setarap village All agreement records above has supplemented with maps

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Criterion 4.1 (Minor indicator 1) Records of operation result

NCR No.2014 - 07 of 16 There are several condition relating inconsistency between procedures with implementation such as : 1. There are stack of EFB in collection road between block C18 to C19 (east estate) has been not applied to block during 5 months ago and block B08 (Satui estate) has been not applied to block during 7 days ago too so this is condition not compliance with their procedure (SOP/GMK-AGRO/02/10 Rev.01 dated June 6, 2013), 2. EFB application more than 1 layer in block G31 (Division IV – Satui estate) so this is condition not compliance with their procedure (SOP/GMK-AGRO/02/10 Rev.01 dated June 6, 2013) that EFB application should be 1 layer on soil surface (point 2.4).

Correction : 1. EFB applied in the relevant plantation block following the required time. 2. Conduct the evaluation of implementation of EFB application and brief all of wokers who applied EFB in the field 3. Provide socialization again SOP/GMK-AGRO/02/10 Rev.01 by estate manager to operator and strictly moni- tore the implementation of EFB application according to procedure.

Corrective Action : • Supervisor shall ensure all employment shall compliance with procedure of EFB application. • Ensure the procedure has been implemented and conduct evaluation for implementation effectiveness of procedure

Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit

Criterion 4.6. (Major indicator 1) Evidence of use of only approved and registered agrochemicals permitted by the relevant authorities

NCR No.2014 - 08 of 16 The company (Satui estate) has propose to approval to use chemical pesticides to Manpower and Transmigra- tion dept of Tanah Bumbu District by letter no. 015/GMK-STI/HRD-ADM/II/2014, those chemical including are Glifosat, Paraquate and Methly, but until the audit time, the license has not issued yet.

Correction : The company submit letter again to Manpower and Transmigration as remainder letter and will monitoring until the licence issued.

Corrective Action : Proactive of coordination to local government that to ensure progress

Auditor Conclusions : Closed Date of closure: July 05, 2014 Verification result : The company provide copy of letter related to chemical permit/recomendation in work location from Social, Man- power and Transmigration Agency in Tanah Bumbu District through the letter number 565/53/Pstd/Was.Naker/2014 on June 20, 2014

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Criterion 4.6 (Minor indicator 1) Documentary evidence that use of chemicals categorised as World Health Organisation Type 1A or 1B, or listed by the Stockholm or Rotterdam Conventions, and paraquat, is reduced and/or eliminated.

NCR No.2014 - 09 of 16 The company has policy about pesticide/chemical use but there is no committement (target or time) to reduce or eliminated paraquat use in the company (Satui and East estate)

Correction : Create time table/or target to reduce or eliminated paraquat use

Corrective Action : Ensure to reduce or eliminated program are implemented every year

Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit

Criterion 4.7 (Minor indicator 2) Regular health examination by a doctor for workers in station or exposed to high risk work

NCR No.2014 - 10 of 16 Documented risk assessment for Occupational Health and Safety (OHS) was not covering Water Treatment Plant and Waste Water Treatment Plant

Correction : Carry out HIRAC identification on WTP and WWTP station and evaluation annually

Corrective Action : To ensure all areas and activities station has include in HIRAC identification report

Conclusions : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit

Criterion 4.8 (Major indicator 1) A documented training programme for staff, employee and scheme smallholders in accordance with workers’ positions and competences

Correction : Develop of training program based on TNA, identified from organization structure, job description, competency standard and GAP competency.

Corrective Action : To ensure that training program has developed with based on result of TNA and conducting evaluation each years.

Auditor Conclusions : Closed Date of closure: July 05, 2014

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Verification result : The company has provided training plan/program for worker in warehouse, HRD dept, head of division and all supervisors in Satui and East estate. Time, type of training and participant for training it such as : • Estate: training type i.e awaereness of RSPO, ISPO and ISCC, procedure of harvesting, procedure of fertilizer, etc with participant is supervisor (mandor) on August 2014. • Warehouse: training type i.e socialization of sustainability system, warehouse procedure, warehouse management and leadership with participant is head of warehouse and supervisor warehouse on August, Octo- ber, November and December 2014. • HRD : type of training i.e HRD procedure, socialization of sustainability system, recruitment training and leadership with participant is head of HRD, supervisor, payroll operator and radio operator on August, Sep- tember, December 2014. • Head of Division : training type i.e socialization of RSPO, ISPO & ISCC training, leadership development, Training management and IPM training with participant is head of division on August, October, November 2014.

Criterion 4.8 (Major indicator 3) Evidence that the company uses experienced or trained contra

NCR No.2014 - 12 of 16 Evidence that the company uses experienced or trained contractors is not available

Correction : Develop of vendor/contractor selection & evaluation procedure and their format.

Corrective Action : To ensure that vendor/contractor selection & evaluation procedure has been finished and implementation must consistant with procedure and evaluation of procedure.

Auditor Conclusions : Closed Date of closure: July 05, 2014 Verification result : The company has provided contractor procedure (SOP/GMK-AGRO/12/01 dated on June 11, 2014) regarding selection and appointment of contractor, bidding and application procedure, contract issued, appointment of local contractor and information must be available in contract.

Criterion 5.1 (Major indicator 2) Records of regular report on environmental management in accordance with relevant regulations

NCR No. 2014-13 of 16 The company was not provided evidence that environmental monitoring & management report for period 1 year 2014 (January to March) has been submmited to relevant institution.

Correction : • Quick request to Environment Agency in Tanah Bumbu District regarding the results of laboratory test on March 2014 on behalf PT GMK- Satui • Audiee will submit environmental management and monitoring report to institution

Corrective Action : To ensure schedule of environment monitoring was developed and carried out accordance time period in regulation

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Auditor Conclusions: Closed Date of closure: July 05, 2014 Verification result : The company has provided the environmental monitoring & management report period I year 2014 and it report has submitted to local government and all parameter not more than standard values.

Criterion 5.3 (Major indicator 2) Estates and mills waste management and disposal are implemented to avoid or reduce pollution

NCR No. 2014-14 of 16 There are not evidence that waste management plan has been implemented due to burned domestic waste was found in emplasment/worker housing block F (East estate)

Correction : The company will conduct socialization again to worker, develop of sign board “avoid of burning domestic waste” and handling of domestic waste with disposal to landfill (tempat pembuangan akhir).

Corrective Action : The company will carry out socialization and installment of sign board and create of inspection schedule in emplasment

Auditor Conclusions: Closed Date of closure: July 05, 2014 Verification result : The company provided evidence of socialization activity and installment of sign board ”avoid of burning domestic waste, wood, etc” such as photograph and attendant list. Socialization was participated by all head of division in Satui and East estate.

Criterion 6.1 (Minor indicator 1) Regular monitoring and management of social impact with the participant of local communities

NCR No.2014-15 of 16 There was social impact management and monitoring action plan, but there was no evidence of community participation to make the planning.

Correction : Conduct socialization of action plan taken regarding to social impact idenitified based on social impact assessment to the community and make some modification based on their comment or suggestion. Example was at Al Kautsar and Setarap villages.

Corrective Action : Ensuring any social program established every year will communicate to the community and get approved prior to get approved by management

Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit

Criterion 6.5 (Minor indicator 1) Growers and millers provide adequate housing, water supplies, medical, education and other facilities for employees where such facilities are not available or accessible

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NCR No.2014 – 16 of 16 There was facility found in damaged condition. For example was : 1. Toilet at Satui mill did not comply with sufficient lamp light, complicated night shift workers then. 2. Toilet at house no. H.08 at Jombang Housing was out of order. 3. Drain at Backyard of mill housing was fully of bush and being used for waste dump. 4. Backyard of Sei Cuka housing (block F) in east estate was not maintened, disposal of domestic liquid waste clogged, and disposal domestic waste not right place. 5. There is leaking roof in emplasment/worker housing (block C.03) which has been reported but no response/repaire from company.

Correction : Make reparation to the damage facilities and established monthly monitoring plan to the employee’s facility.

Corrective Action : Ensuring the facility monitoring program will be well implemented

Conclusions: Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit

• RSPO SCCS

E.1.1 The facility shall have written procedures and/or work instructions to ensure the implementation of all the elements specified in these requirements NCR SCCS No 2014 - 01 of 02 There are new revision procedures (dispatch procedure in mill (SOP/GMK-AGRO/03/06), traceable sustainable mass balance report procedure (SOP/GMK-AGRO/01/10) and transportation procedure (SOP/GMK- AGRO/02/22)) in Satui mill has not socialization/update of information to worker Correction : Create of training/socialization schedule for dispatch procedure in mill (SOP/GMK-AGRO/03/06), traceable sustainable mass balance report procedure (SOP/GMK-AGRO/01/10) and transportation procedure (SOP/GMK- AGRO/02/22) and carry out training/socialization according with schedule.

Corrective Action : To ensure if there are revisions procedure or new procedure so that the company will carry out socialization and create of schedule.

Auditor Conclusions: Closed Date of closure: July 05, 2014 Verification result : The company provided evidence of socialization in Satui and East estate and mill inform attendant list, material of socialization and photograph. Socialization has carried out on June 12, 2014 (mill) and Juli 8, 2014 (estate).

E.3.2 Retention times for all records and reports shall be at least five (5) years

There is no information about retention time for all record of CPO & PKO despatch note, CPO & PKO despatch report and despacth.

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Correction : Revision of the provisions of the document retention time for document/record of related with supply chain certification such as dispatch note for CPO & PKO, dispatch report for CPO & PKO, dispatch instruction Corrective Action : Ensuring retention time of all document/record related supply chain certification has been stated

Auditor Conclusions: Closed Date of closure: July 05, 2014 Verification result :

The company provided the provisions of the document retention time in estate and mill (FR/GMK- AGRO/PD/01/06). Retention time for CPO & PKO delivery note, CPO & PKO delivery report and product delivery instruction is 11 year such as 1 year in working areas (as achtive archive) and 10 year in archive room (as pas- sive archive).

3.33.33.3 Noteworthy Positive Component

Related clause Note

- All staff and workers has team work very good in audit process

Spraying worker in block B11 and fertilizing worker in block AB13 has been understood very 4.7 good regarding conservation, best practices and OHS

3.43.43.4 Conclusion and Recommendation for RSPO P & C and Supply Chain Certification

The audit team has confirmed through the audit process that PT Gawi Makmur Kalimantan – Unit of Satui Mill has established and maintains an effective system to ensure compliance with the RSPO P & C (INA-NI, 2008) and Supply Chain Certification System requirements (dated November 2011). TUV Rheinland recommends that Satui mill and its supply based, East and Satui Estate approved for certification of compliance to the RSPO P & C and Supply Chain Certification System requirements.

3.5 Issues raised by stakeholders and findings pertaining to Issues

A. Issued raised during stakeholder consultation meeting Audit Verifica- No. Stakeholders Issues Raised Management Response tion 1 Head of Jombang vil- There are coal mining inside planta- The company will be effort for sus- • There are agree- lage tion areas so that how can be sustain- tainable plantation but coal mining ment between able ? permit was issued by goverment company with coal mining company related plantation can be op- erated in land which coal mining yet activities. 2 Head of Satui Sub Setarap village and Jombang village, The company has road mainte- There are not road District access transportation must be cross nance for third village access for for third village inside estate and coal mining areas continue of communities transpor- moreover road in- tation. side estate & coal mining areas only

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B. Issued raised during stakeholder interviews on-site Institution - No. Issue raised Address 1. EHS supervisor OHS committee, investigation of accident, hazardous and toxic waste, Im- plementation of environmental impact assessment and UKL/UPL report 2. OHS officer OHS committee, investigation of accident, hazardous and toxic waste, Im- plementation of environmental impact assessment 3. Mill maintenance PPE, risk assement, pollution & emission 4. Operator Empty bunch Implemented of EFB with 1 layer Application 5. Sprayer Implementation of spraying, women’s worker no work with pesticides for preg- nant and breastfeeding, agrochemical 6. Workshop PPE, hazardous & toxic waste, used oil 7. Foreman Division • Impelementation of harvesting, maintenance and IPM 8. Warehouse Keeper • Stock of fertilizer & agrochemical available, • There are manifest of hazardous & toxic waste 9. Powerplant Operators • All operator has gived PPE • It is mill has implementation of efficiency energy such was used fiber and shell 10. Head of Division • The company has maintenance boundary • There are coal mining activity by other company and traditional of gold mining by communities

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4.0 CERTIFIED RGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

4.1 Date of Next Surveillance Visit

The next surveillance visit is planned for 2015

4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client

It is acknowledged that the assessment visit was carried out as described in this report and we accept the assessment findings and report content.

Signed on behalf of PT Gawi Makmur Kaliman- Signed on behalf of TUV Rheinland Indonesia tan

…………………………………… …………………………. Farid Makruf Hendra Fachrurozy Management Representative Lead Auditor November 17, 2014 November 17, 2014

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APPENDICES

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Appendix 1 : Details of certificate

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Appendix 2 : Certification Audit Plan Date / Time (1) Activities Auditor Auditee Note

Thursday, 05 June 2014 18.00 Traveling to Satui estate

Friday, 06 June 2014 Auditor Estate & POM 08.00 – 09.00 Opening Meeting di Satui POM team Management 09.00 - 11.30 Verification of document and field, relate HF POM Management Satui POM of : RSPO RSPO Principle 2 - Compliance with laws and regulations Criterion : 2.1; - Management plan Principle 3 - Procedures Criterion : 3.1 - Training Principle 4 - HCV Criterion 4.1; 4.8 Principle 5 SCCS Criterion : 5.2

SCCS Modul E 09.00 - 11.30 Verification of document and field, relate MK POM Management Satui POM of : RSPO Principle 4 RSPO Criterion : 4.4; - Best practices Principle 5 - Reneweable energy Criterion : 5.4; 5.6 - Reduce of emission & pollution Principle 8 - Continual improvement Criterion : 8.1 09.00 - 11.30 Verification of document and field, relate AH POM Management Satui POM of : RSPO Principle 4 RSPO Criterion 4.6; 4.7 - Agrochemicals Principle 5 - OHS Criterion 5.1; 5.3 - Environmental document Principle 8 - Hazardous & toxic waste Criterion : 8.1 - Continual improvement

09.00 - 11.30 Verification of document and field, relate FA POM Management Satui POM of : RSPO Principle 1 RSPO Criterion : 1.1; 1.2 - Transparancy Principle 6 - Responsible to workers & communi- Criterion : 6,1; 6.2; 6.3; 6.5; 6.6; 6.7; ties 6.8; 6.9; 6.10, 6.11 - Continual improvement Principle 8 Criterion : 8.1

11.30 – 13.30 Break & praying Auditor team 13.30 – 17.00 Continue of previous schedule Auditor team 17.00 End of 1 st day audit Stakeholder consultation with commu- Auditor 19.00-21.00 Training room nities team

Saturday, 07 June 2014 08.00 - 12.00 Verification of document and field, relate HF Estate management Satui estate of : RSPO RSPO Principle 2 - Compliance with laws and regulations Criterion : 2.1; 2.2.1 & 2.2.2 (Major) - Land legality Principle 3

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Date / Time (1) Activities Auditor Auditee Note

- Management plan Criterion : 3.1 - Operation procedure Principle 4 - Training Criterion 4.1; 4.8 - HCV Principle 5 - New planting Criterion : 5.2 Principle 7 Criterion : 7.3

08.00 – 12.00 Verification of document relate of : MK Estate management Satui estate RSPO RSPO Principle 4 - Best practices Criterion : 4.2; 4,3; 4.4; 4.5; - Reneweable anergy Principle 5 - Reduce of emission & pollution Criterion : 5.4; 5.6 - New planting Principle 7 - Continoues improvement Criterion : 7.2; 7.4 Principle 8 Criterion : 8.1 08.00 – 12.00 Verification of document relate of : AH Estate management Satui estate RSPO RSPO Principle 4 - Agrochemical Criterion 4.6; 4.7 - OHS Principle 5 - Environmental document Criterion 5.1; 5.3; 5.5 - Hazardous waste & toxic Principle 7 - Zero burning Criterion : 7.1; 7.7 - New planting Principle 8 - Continous improvement Criterion : 8.1

08.00 – 12.00 Verification of document relate of : FA Estate management Satui estate RSPO RSPO Principle 1 - Transparancy Criterion : 1.1; 1.2 - Land conflict Principle 2 - Use land not reduce of right from oth- Criterion : 2.2.3 (Major); 2.2.1 er parties (Minor); 2.2.2 (Major); 2.3 - Responsible to workers & communi- Principle 6 ties Criterion : 6,1; 6.2; 6.3; 6.4; 6.5; 6.6; - New planting 6.7; 6.8; 6.9; 6.10, 6.11 - Continous improvement Principle 7 Criterion : 7.5 dan 7.6 Principle 8 Criterion : 8.1

12.00 – 13.00 Break & praying Auditor team 13.00 – 17.00 Continue of previous schedule Auditor team 17.00 End of 2 nd day audit

Sunday, 8 June 2014 Off All Audi- Stay in Satui estate tor

Monday, 9 June 2014 08.00 - 12.00 Verification to field, relate of : HF Estate management Satui Estate RSPO RSPO - Compliance with laws and regulations Principle 2 - Land legality Criterion : 2.1; 2.2.1 & 2.2.2 (Major) - Management plan Principle 3 - Operation procedure Criterion : 3.1 - Training Principle 4 - HCV Criterion 4.1; 4.8 - New planting Principle 5

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Date / Time (1) Activities Auditor Auditee Note

Criterion : 5.2 Principle 7 Criterion : 7.3

08.00 – 12.00 Verification to field relate of : MK Estate management Satui estate RSPO RSPO Principle 4 - Best practices Criterion : 4.2; 4,3; 4.4; 4.5; - Reneweable anergy Principle 5 - Reduce of emission & pollution Criterion : 5.4; 5.6 - New planting Principle 7 - Continoues improvement Criterion : 7.2; 7.4 Principle 8 Criterion : 8.1 08.00 – 12.00 Verification to field relate of : AH Estate management Satui estate RSPO RSPO Principle 4 - Agrochemical Criterion 4.6; 4.7 - OHS Principle 5 - Environmental document Criterion 5.1; 5.3; 5.5 - Hazardous waste & toxic Principle 7 - Zero burning Criterion : 7.1; 7.7 - New planting Principle 8 - Continous improvement Criterion : 8.1

08.00 – 12.00 Verification to field relate of : FA Estate management Satui estate RSPO RSPO Principle 1 - Transparancy Criterion : 1.1; 1.2 - Land conflict Principle 2 - Use land not reduce of right from oth- Criterion : 2.2.3 (Major); 2.2.1 er parties (Minor); 2.2.2 (Major); 2.3 - Responsible to workers & communi- Principle 6 ties Criterion : 6,1; 6.2; 6.3; 6.4; 6.5; 6.6; - New planting 6.7; 6.8; 6.9; 6.10, 6.11 - Continous improvement Principle 7 Criterion : 7.5 dan 7.6 Principle 8 Criterion : 8.1

Auditor 12.00 – 13.00 Break and praying team 13.00 – 15.00 Continue previous agenda Auditor 15.30 – 16.00 Internal meeting for auditor team team Auditor Satui Estate and 16.00 – 17.00 Closing meeting team Mill Management 17.00 End of 3 rd day audit 17.30 Travelling to East estate Auditor team

Tuesday, 10 June 2014 08.00-08.30 Opening Meeting All Audi- East estate man- tor agement 08.30 - 12.00 Verification document and field, relate of : HF Estate management East Estate RSPO RSPO - Compliance with laws and regulations Principle 2 - Land legality Criterion : 2.1; 2.2.1 & 2.2.2 (Major) - Management plan Principle 3 - Operation procedure Criterion : 3.1 - Training Principle 4 - HCV Criterion 4.1; 4.8 - New planting Principle 5 Criterion : 5.2

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Date / Time (1) Activities Auditor Auditee Note

Principle 7 Criterion : 7.3

08.30 – 12.00 Verification document and field relate of : MK Estate management East Estate RSPO RSPO Principle 4 - Best practices Criterion : 4.2; 4,3; 4.4; 4.5; - Reneweable anergy Principle 5 - Reduce of emission & pollution Criterion : 5.4; 5.6 - New planting Principle 7 - Continoues improvement Criterion : 7.2; 7.4 Principle 8 Criterion : 8.1 08.30 – 12.00 Verification document and field relate of : AH Estate management East Estate RSPO RSPO Principle 4 - Agrochemical Criterion 4.6; 4.7 - OHS Principle 5 - Environmental document Criterion 5.1; 5.3; 5.5 - Hazardous waste & toxic Principle 7 - Zero burning Criterion : 7.1; 7.7 - New planting Principle 8 - Continous improvement Criterion : 8.1

08.30 – 12.00 Verification document and field relate of : FA Estate management East Estate RSPO RSPO Principle 1 - Transparancy Criterion : 1.1; 1.2 - Land conflict Principle 2 - Use land not reduce of right from oth- Criterion : 2.2.3 (Major); 2.2.1 er parties (Minor); 2.2.2 (Major); 2.3 - Responsible to workers & communi- Principle 6 ties Criterion : 6,1; 6.2; 6.3; 6.4; 6.5; 6.6; - New planting 6.7; 6.8; 6.9; 6.10, 6.11 - Continous improvement Principle 7 Criterion : 7.5 dan 7.6 Principle 8 Criterion : 8.1

Auditor 12.00 – 13.00 Break and praying team Auditor East Estate Man- 13.00 – 14.00 Closing meeting team agement 14.00 End of 4 rd day audit Auditor 14.00 – 18.00 Travelling from East Estate to airport team Auditor 20.00 – 20.45 Travelling Banjarmasin - Jakarta GA 539 team

Wednesday, 11 June 2014 06.30 – 08.55 Travelling Jakarta - Medan AH GA 142

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Appendix 3 : List of Abbreviations AMDAL Analisis Dampak Lingkungan & Sosial (Social & Environmental Impacts Assessment) CPO Crude Palm Oil EIA Environmental Impact Assessment ERTs Endangered, Rare & Threatened species FFB Fresh Fruit Bunches EFB Empty Fruit Bunches HCV High Conservation Value HGU Hak Guna Usaha (Land Use Right) IPM Integrated Pest Management OSH Occupational Safety & Health PPE Personal Protective Equipment P2K3L Panitia Pembina Kesehatan dan Keselamatan Kerja dan Lingkungan (OHS and Envi- ronmental Committee) RKL Rencana Pengelolaan Lingkungan (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan (Environmental Monitoring Plan) SIA Social Impact Assessment SOP Standard Operating Procedure UKL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UPL Upaya Pengelolaan Lingkungan (Environmental Management Efforts)

Appendix 4 : Observations and Opportunities for Improvement

No. Observations / Opportunities for Improvement Criteria

1. The company should prepadeness simulation in estate and mill 4.7.5 2. The company should create of time limit regarding compliance to a law and 5.1.2 regulation 3. The company should ensure domestic waste in emplasment or worker housing 6.5 not burning and handling with well 4. The company installment of boundary stone in a long Batulaki river where it ar- 2.2.2 eas is outside legal land

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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Appendix 5 : Attendant list of the stakeholder consultation meeting

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

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QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 68 of 69

QMF: RSPO-007b-11

RSPO Certification Assessment Report

PT Gawi Makmur Kalimantan – Satui Palm Oil Mill South Kalimantan Province, Indonesia

Page 69 of 69

QMF: RSPO-007b-11