RSPO Audit Report

Audit Report

1st Annual Surveillance Audit for

PT. SUPRA MATRA ABADI - Teluk Panjie Mill and Its Supply Base

FMS40023

RSPO Membership number: 1-0022-06-000-00 RSPO Member Name: PT. INTI INDOSAWIT SUBUR

Audited Address: Teluk Panjie Mill: Teluk Panjie Village, Kampung Rakyat District, Labuhan Batu Regency, North Sumatera IDN Its supply bases: Teluk Panjie Estate: Teluk Panjie Village, Kampung Rakyat District, Labuhan Batu, Regency, North Sumatera IDN

Date of audit: 01/03/2016

COMMERCIAL- IN – CONFIDENCE I The contents of this report must not be disclosed to a third party without the agreement of the SAI Global Client

Audit Report

Table of contents Page Executive Overview 4 Abbreviations Used 5

1.0 SCOPE OF THE ASSESSMENT 7 1.1 Introduction 7 1.2 Audit Objective 7 1.3 Scope of Certification 7 1.3.1 Palm Oil Mill 8 1.3.2 Oil Palm Estate 8 1.4 Location of Mill and Estates 8 1.5 Description of Supply Base 10 1.6 Date of Plantings 10 1.7 Area of Plantation 10 1.8 Approximate Tonnages Offered for Certification (CPO and PK) 11 1.9 Other Certificates Held 13 1.10 Organisational Information/Contact Person 14 1.11 Time Bound Plan for Other Management Units 14 1.12 Partial Certification Requirements 17 1.13 Date of Issue of Certificate 17

2.0 AUDIT PROCESS 18 2.1 Certification Body 18 2.2 Audit Methodology 18 2.2.1 Pre-audit 18 2.2.2 Certification Audit 18 2.3 Qualification of the Lead Auditor and Audit Team Members 19 2.4 Stakeholder Consultation 20 2.5 Date of Next Surveillance Visit 20

3.0 AUDIT FINDINGS 20 3.1 Action taken on previous audit issues 20 3.2 Claim and use of certification mark and or logo 20 3.3 Description of audit findings 22 3.3.1 RSPO Principle and Criteria, Indonesian National Interpretation 22 3.3.2 Mill Supply Chain Requirements 132 3.3.2.1 Supply Chain Certification Standard 132 3.3.2.2 Supply Chain Certification System 146 3.4 Recommendation 148 3.5 Environmental and social risk for this scope of certification for planning 148 of the surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of 148 Assessment Findings

List of Tables Page 1 Mill and Estates GPS Locations 8 2 FFB Production of the Supply Base 8 3 Age Profile of Planted Palms 10 4 Land use Description of Teluk Panjie Estate in 2016 10 5 Estate and Area Planted 11 6 Teluk Panjie Estate FFB Production Trend 2011-2015 11 7 Teluk Panjie Mill Total CPO and PK Production 2015 and Estimate 11 Production of 2016 8 Actual Teluk Panjie Mill Production of CPO and PK 2015 12

9 Estimated Teluk Panjie Mill Production of CPO and PK 2016 12 10 Certificates Held by Mill and Estates 13 11 RSPO Certification Time Bound Plan 13 12 List of internal and external stakeholder 20 13 Actual Teluk Panjie Mill CPO and PK Delivered in 2015 21

List of Figures Page 1 Map of Mill and Estates Location 9

List of Appendixes Page A Audit Plan 149 B Previous Nonconformities, Corrective Actions and Opportunity for 151 Improvement Summary C Nonconformities, Corrective Actions and Opportunity for Improvements 154 Summary D Stakeholder’s issues and comment 165 E Definition of, and action required with respect to audit findings 166 F Definition of, and action required with respect to audit findings for 167 Supply Chain Certification System

Executive Overview

This is 1st annual surveillance audit. SAI Global has audited Teluk Panjie Mill PT. Supra Matra Abadi and its supply bases operations that comprising one mill, one oil palm estate, support services and infrastructure. During this first annual surveillance audit six Major Nonconformities were identified and CARs were issued. Follow up audit has been conducted to review the corrective action taken to the Major Non Conformities and objective evidences reviewed that Major Non Conformities could be closed out.

At the conclusion of this audit, Teluk Panjie Mill, PT. Supra Matra Abadi and its supply bases operation was found complies with the requirements of the Generic RSPO Principles and Criteria for Sustainable Palm Oil Production, version May 2013 and the RSPO Supply Chain Certification System, version November 2014 and RSPO Supply Chain Certification Standard, Module E – CPO Mill: Mass Balance, version November 2014.

The recommendation from this audit is that the certificate can continue for PT. Supra Matra Abadi Teluk Panjie Mill as a producer of RSPO Certified Sustainable Palm Oil and Palm Kernel and Supply Chain Model Mass Balance.

Estimated tonnage of certified CPO produced 17,310 MT Estimated tonnage of certified PK produced 4,201 MT

Abbreviations Used

AK3U Occupational Health and Safety Expert (Ahli K3 Umum) AMDAL Environmental Impact Analysis (Analisis Dampak Lingkungan) BKM Log book of group leader activity (Buku Kegiatan Mandor) BLH Environmental Agency (Badan Lingkungan Hidup) BOD Biological Oxygen Demand BPN National Land Agency (Badan Pertanahan Nasional) COD Chemical Oxygen Demand CPO Crude Palm Oil CSR Corporate Social Responsibility EFB Empty fruit bunch ERT Emergency Response Team FFB Fresh Fruit Bunch FRF Fractionation and Refinery Factory GAPKI Gabungan Pengusaha Kelapa Sawit Indonesia GPS Global Positioning System Ha Hectare HACCP Hazard Analysis Critical Control Point HCV High Conservation Value HGU Land Use Title (Hak Guna Usaha) HIPERKES Industrial Hygienist IDN Indonesia IPM Integrated Pest Management ISCC International Sustainability Carbon Certification ISO International Standards Organisation ISPO Indonesia on Sustainable Palm Oil Jamsostek Man Power Social Assurance (Jaminan Sosial Tenaga Kerja) Kepmen Degree of Man Power Ministry (Keputusan Menteri Tenaga Kerja) KTU Head of Administration (Kepala Tata Usaha) KTP Teluk Panjie Estate (Kebun Teluk Panjie) KUD Cooperation of Village Unit (Koperasi Unit Desa) LA Land Appliacation LHP Daily Mill Report (Laporan Harian Pabrik) LTI Loss Time Incident LUK Estate Unit Report (Laporan Unit Kebun) LUP Mill Unit Report (Laporan Unit Pabrik) MCU Medical Check-Up MOS Mill Operation Summary MSDS Material Safety Data Sheet NCR Non Conformance Report NGO Non-Government Organisation OER Oil Extraction Rate OHS Occupational Health and Safety P2K3 Safety Committee P&C Principle and Criteria Permen/Permenaker Regulation of Man Power Ministry (Peraturan Menteri Tenaga Kerja) Permentan Regulation of Agricultural Ministry (Peraturan Menteri Pertanian) PHL Daily worker (Pekerja Harian Lepas) PK Palm Kernel PKWT Contracted worker (Pekerja Waktu Tertentu) POME Palm Oil Mill Effluent PP Government Regulation (Peraturan Pemerintah) PPE Personal Protective Equipment

PK Palm Kernel PKB Joint Working Agreement (Perjanjian Kerja Bersama) PTP Teluk Panjie Mill (Pabrik Teluk Panjie) QC Quality Control R&D Research and Development RABQSA Quality Society of Australia RKH Daily Work Plan (Rencana Kerja Harian) RKL Environmental Management Plan (Rencana Pengelolaan Lingkungan) RPL Environmental Monitoring Plan (Rencana Pemantauan Lingkungan) RSPO Roundtable on Sustainable Palm Oil SA Social Accountability SCCS Supply Chain Certification System SEL Environmental Evaluation Study (Studi Evaluasi Lingkungan) SIA Social Impact Assessment SKU Permanent worker (Syarat Kerja Utama) SPSI Indonesian Worker Union (Serikat Pekerja Seluruh Indonesia) SOP Standard Operational Procedure UKL Environmental Management Effort (Upaya Pengelolaan Lingkungan) UPL Environmental Monitoring Effort (Upaya Pemantauan Lingkungan) Walhi (Wahana Lingkungan Hidup Indonesia) WWF World Wild Fund WWTP Waste Water Treatment Plant YOP Year of Planting

1.0 SCOPE OF THE CERTIFICATION ASSESSMENT

1.1 Introduction

SAI Global conducted an audit of PT. Supra Matra Abadi - Teluk Panjie Mill and Its Supply Base on 29 February 2016 to 1 March 2016 with six Major Nonconformities identified. Follow up audit has been conducted on 7 June 2016 for verification of corrective action taken by the organisation. All correction and corrective action including objective evidence have been reviewed and all NCR consider as closed.

The purpose of this audit report is to summarise the degree of compliance with the relevant criteria, as defined on the cover page of this report, based on the evidence obtained during the audit of your organisation.

SAI Global audits are carried out within the requirements of SAI Global procedures which also reflected the requirements and guidance provided in the international standards relating to audit practice such as ISO/IEC 17021, ISO 19011, RSPO Certification System, relevant RSPO Supply Chain Certification System and other normative criteria. SAI Global Auditors are assigned to audits according to industry, standard or technical competencies appropriate to the organisation being audited. Details of such experience and competency are maintained in our records. The audit team is detailed in the attached audit record.

In addition to the information contained in this audit report, SAI Global maintains files for each client. These files contain details of organisation size and personnel as well as evidence collected during preliminary and subsequent audit activities (Documentation Review and Scope) relevant to the application for initial and continuing certification of your organisation.

Details of your primary contact persons and their contact details and site addresses are also maintained. Please take care to advise us of any change that may affect the application/certification or may assist us to keep your contact information up to date, as required by SAI Global Terms and Conditions.

Please note that this report is subject to independent review and approval. Should changes to the outcomes of this report be necessary as a result of the review, a revised report will be issued and will supersede this report.

1.2 Audit Objective

This is the 1st Annual Surveillance Audit. The purpose of this audit was to determine continuing compliance of your organization’s management system with the audit criteria Generic RSPO Principles and Criteria for Sustainable Palm Oil Production, version May 2013 and RSPO Supply Chain Certification Standard, CPO Mill, Module E Mass Balance, version November 2014 and its effectiveness in achieving continual improvement and system objectives.

Also to verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers.

1.3 Scope of certification

The scope of certification is the CPO production from one (1) Palm Oil Mill and one (1) FFB supply base owned by PT. Supra Matra Abadi.

1.3.1 Palm Oil Mill

Teluk Panjie Mill PT. Supra Matra Abadi Location: Teluk Panjie Village, Kampung Rakyat District, Labuhan Batu Regency, North Sumatera IDN GPS Location: East 100⁰ 14' 37'' North 2⁰ 00' 10'' Mill capacity: 45 MT FFB/hour

1.3.2 Oil Palm Estate

Teluk Panjie Estate PT. Supra Matra Abadi Location: Teluk Panjie Village, Kampung Rakyat District, Labuhan Batu Regency, North Sumatera IDN GPS Location: East 100o 13’ 33” – 100o 20’ 55” North 1o 54’ 52” – 2o 02’ 07”

1.4 Location of mill and estates

Teluk Panjie Mill and Estate are located in North Sumatera Province, Indonesia. The geographical coordinate of the mill and estates are shown on Table 1.

Table 1: Mill and Estates GPS Locations

MILL AND ESTATE EASTING NORTHING Teluk Panjie Mill 100⁰ 14' 37'' E 2⁰ 00' 10'' N Teluk Panjie Estate 100o 13’ 33” – 100o 20’ 55” E 1o 54’ 52” – 2o 02’ 07” N

1.5 Description of supply base

The FFB source is one (1) organisation owned by PT. Supra Matra Abadi and the third party estate. There is no scheme smallholder associated with Teluk Panjie Mill. The third party (independent small holders) sold FFB to the Mill based on the agreed price and did not have special agreement with the organisation. The hectarage and estimated FFB production of the plantation area are shown on Table 2.

Table 2: Estimated FFB Production of the supply base

ESTIMATED FFB PRODUCTION 2016 ESTATE PLANTED AREA (HA) (TON/YEAR)

Teluk Panjie Estate, 3,134 77,799 PT. Supra Matra Abadi The third party NA 85,000 Total 3,134 162,799 Source: PT. Supra Matra Abadi, March 2016

Figure 1 Map of Mill and Estates Location

Source: PT. Supra Matra Abadi, March 2016

Audit Report

1.6 Date of plantings

Table 3: Age Profiles of Planted Palms 2016

Estate Planted Area % of Planted Area Year (Ha) Mature Immature Mature Immature 1987 245 - 7.82 - 1988 1,417 - 45.21 -

1989 1,147 - 36.60 - 1994 9 - 0.29 - 2014*) - 316 - 10.08 Total 2,818 316 89.92 10.08 Grand Total 3,134 100 Source: PT. Supra Matra Abadi, March 2016 Note: *) replanting

1.7 Area of plantation

The areas details for organisation owned estates are shown on Table 5. Review of estate boundary maps has been done. There is no new open area since November 2005. All lands inside the concession area were developed before 1987 – 1994. Plantation in 2015 was replanting.

Table 4: Land use description of Estates in 2016

AREA HECTARES

Mature area 2,818

Immature area 316

HCV area (HCV area is located inside area planted) 7

Total area planted 3,134

Nursery 8

Emplacement and Mill 73

Land bank 640

Total certified area 3,855 Source: PT. Supra Matra Abadi, March 2016

Audit Report

Table 5: Estates and Area Planted 2016

ESTATE MATURE (HA) IMMATURE (HA)

Teluk Panjie Estate 2,818 316

Source: PT. Supra Matra Abadi, March 2016

1.8 Approximate tonnages offered for certification (CPO and PK)

Approximate tonnages offered for certification are estimated based on the organisation last three years actual FFB production from Teluk Panjie Estate; also last year CPO and PK, OER and KER of Teluk Panjie Mill.

Table 6: Teluk Panjie Estate FFB Production Trend 2011 – 2015

YEAR Actual Production (MT) 2011 106,588 2012 115,617 2013 95,419 2014 100,689 2015 99,906 Source: PT. Supra Matra Abadi, March 2016

Table 7: Teluk Panjie Mill Total CPO and PK Production of 2015 and Estimate Production of 2016

CPO PK FFB Processed Supply Base Production Production (MT) (MT) (MT)

Teluk Panjie Estate* 79,570 17,307 4,024 Other Suppy Base 100,622 18,044 5,066 - The 3rd Party Total actual production 180,192 35,351 9,090 Teluk Panjie Estate 77,799 17,310 4,201 Other Suppy Base 85,000 15,513 4,675 - The 3rd Party Total estimate production 162,799 17,244 8,876 Source: PT. Supra Matra Abadi, March 2016 *Detail see Table 8

The FFB from Teluk Panjie Estate are processed together with FFB from other supply based, therefore Teluk Panjie Mill used RSPO Supply Chain Mass Balance Model – Module E.

Audit Report

Table 8: Actual Total Teluk Panjie Mill Production of CPO and PK derived from Teluk Panjie Estate FFB in 2015

FFB (MT CPO (MT) PK (MT) Teluk Teluk Teluk Panjie Month Panjie Panjie Estate Estate Estate (Certified) (Certified) (Certified) January 4,965 1,115 267 February 4,920 1,117 259 March 5,831 1,301 293 April 5,878 1,268 291 May 5,851 1,219 295 June 6,400 1,367 297 July 7,964 1,716 382 August 8,032 1,773 399 September 8,105 1,753 405 October 6,930 1,530 349 November 6,469 1,436 338 December 8,225 1,712 449 Total 79,570 17,307 4,024 Source: PT. Supra Matra Abadi, March 2016

Table 9: Estimated Total Teluk Panjie Mill Production of CPO and PK from Teluk Panjie Estate FFB in 2016

FFB (MT CPO (MT) PK (MT) Teluk Teluk Teluk Panjie Month Panjie Panjie Estate Estate Estate (Certified) (Certified) (Certified) January 5,746 1,278 311 February 4,851 1,079 262 March 5,526 1,230 299 April 5,759 1,281 311 May 6,089 1,355 329 June 6,992 1,556 376 July 6,942 1,545 374 August 7,983 1,776 431 September 7,561 1,682 409 October 7,282 1,620 393 November 6,700 1,491 362 December 6,368 1,417 344 Total 77,799 17,310 4,201 Source: PT. Supra Matra Abadi, March 2016

Based on the above figures, the estimated of certified CPO and PK from certified area offered in 2016 for certification are:

Estimated tonnage of certified CPO produced 17,310 MT Estimated tonnage of certified PK produced 4,201 MT

Audit Report

1.9 Other certificates held

The organisation is implementing quality, environmental, and occupational health and safety management system based on ISO 14001:2004 and ISCC. The details of other certifications held are shown in the following table.

Table 10: Certificates Held by Mill and Estates

MILL/ESTATE OTHER CERTIFICATION HELD

Teluk Panjie Mill and ISO 14001:2004 by SGS Indonesia, Certificate number: ID05/65250, Expired Estate date: 10 June 2017

Teluk Panjie Mill and ISCC by SGS Germany GmbH, certificate number: EU-ISCC-Cert-DE100- Estate 20152530, Expired 31 August 2016.

Teluk Panjie Mill and ISPO by PT SAI Global Indonesia, certificate number: FMS40009 issue 8 May Estate 2015 expired 7 May 2020 Source: PT. Supra Matra Abadi, March 2016

1.10 Organizational information/contact person

PT. Supra Matra Abadi Jl MH Thamrin No 31 Jakarta 10230 Phone : (+62-21) 2301119 Fax : (+62-61) 2301120 Contact person : Ms Asrini Subrata Stakeholder Relations Manager Email : [email protected]

1.11 Time bound plan for other management units

PT. Supra Matra Abadi as a subsidiary of PT. Inti Indosawit Subur is committed to RSPO certification of all its Management Units located in North Sumatera, Riau and Jambi Province. Time bound plan has been developed to achieve the RSPO certification for all its Management Units and Plasma. The time bound plan is realistic and challenging. The plan was detailed on Table 11. The time bound plan was revised in February 2016. It was noted that all Management Units have been audited for RSPO certification and 2016 for Plasma, except several areas which land use title are not ready.

Table 11: RSPO Certification Time Bound Plan

Name of Supply Estate Time bound for Name of Mill Mill Address Progress Base Plantation Address certification

Buatan I Mill Delik & Pangkalan Buatan Estate Delik & Pangkalan 2010 Certified on 16 Kerinci Village, Kerinci Village, Bunut September 2010 Bunut Langgam Langgam District, District, Pelalawan Pelalawan Regency, Regency, Riau Riau

Audit Report

Name of Supply Estate Time bound for Name of Mill Mill Address Progress Base Plantation Address certification

Buatan (Plasma) Delik & Pangkalan Kerinci Village, Bunut Langgam District, Pelalawan Regency, Riau Buatan II Mill Delik & Pangkalan Buatan Estate Delik & Pangkalan 2010 Certified on 16 Kerinci Village, Kerinci Village, Bunut September 2010 Bunut Langgam Langgam District, District, Pelalawan Pelalawan Regency, Riau Regency, Riau Buatan (Plasma) Delik & Pangkalan Kerinci Village, Bunut Langgam District, Pelalawan Regency, Riau Ukui I Mill Ukui Village, Ukui Ukui Estate Ukui Village, Ukui 2010 Certified on 1 District, Pelalawan District, Pelalawan March 2011 Regency, Riau Regency, Riau Ukui (Plasma) Ukui & Lubuk Batu Jaya Brought forward Certified on 11 District, Pelalawan & from 2012 to 2011 June 2012 Inhu Regency, Riau Ukui II Mill Ukui Village, Ukui Soga Estate Ukui Village, Ukui 2010 Certified on 1 District, Pelalawan District, Pelalawan March 2011 Regency, Riau Regency, Riau Ukui (Plasma) Ukui & Lubuk Batu Jaya Brought forward Certified on 11 District, Pelalawan & from 2012 to 2011 June 2012 Inhu Regency, Riau Tungkal Ulu Pulau Pauh / Tungkal Ulu Estate Pulau Pauh / 2011 Certified on 15 Mill Penyabungan / Penyabungan / Merlung August 2012 Merlung Village, Village, Tungkal Ulu Tungkal Ulu District, Tanjung Jabung Regency, Jambi District, Tanjung Tungkal Ulu Renah Mendalo, 2012 Certified on 11 Jabung Regency, (Plasma) Merlung, Muara Papalik July 2013 Jambi District, Tanjung Jabung Barat Regency, Jambi Muara Bulian Singoan / Bukit Sari Muara Bulian Estate Singoan / Bukit Sari / 2011 Certified on 28 Mill / Bulian Jaya Bulian Jaya Village, August 2012 Village, Muara Muara Bulian / Bulian / Pemayung Pemayung District, Batang Hari Regency, District, Batang Jambi Hari Regency, Muara Bulian Maro Sebo Ilir District, 2012 Certified on 12 Jambi (Plasma) Batanghari Regency, July 2013 Jambi Muara Bulian Maro Sebo Ilir District, 2012 Certified on 12 (KKPA) Batanghari Regency, July 2013 Jambi Topaz Mill Petapahan Village, Topaz & Seed Petapahan Village, 2013 Certified on 30 Tapung District, Garden Estate Tapung District, Kampar March 2015 Kampar Regency, Regency, Riau Riau Taman Raja Lubuk Bernai / Taman Raja & Lubuk Bernai / Kampung 2013 Certified on 20 Mill Kampung Baru / Badang Estate Baru / Pelabuhan February 2015 Pelabuhan Dagang Dagang / Pematang / Pematang Pauh Pauh Vilage, Tungkal Ulu District, Tanjung Vilage, Tungkal Ulu Jabung Regency, Jambi District, Tanjung Jabung Regency, Jambi Segati Mill Langkan / Segati Estate Langkan / Penarikan / 2014 On progress Penarikan / Tambak / Sotol Village, Tambak / Sotol Langgam District, Village, Langgam Pelalawan Regency, Riau

Audit Report

Name of Supply Estate Time bound for Name of Mill Mill Address Progress Base Plantation Address certification

District, Pelalawan Penarikan & Gondai Pangkalan Sarik / Baru 2014 On progress Regency, Riau Estate Village, Langgam / Siak Hulu District, Pelalawan / Kampar Regency, Riau Penarikan (KKPA) Pangkalan Sarik / Baru 2016 On progress Village, Langgam / Siak Hulu District, Pelalawan / Kampar Regency, Riau Gunung Sahilan Gunung Sahilan Village, 2016 On progress (KKPA) Lipat Kain District, Pelalawan Regency, Riau Tanah Datar Tanah Datar Tanah Datar Estate Tanah Datar Petatal Brought Forward Certified on 18 Mill Petatal Village, Village, Talawi District, from 2015 to 2013 May 2015 Talawi District, Asahan Regency, North Asahan Regency, Sumatera Bahilang Estate Bahilang Village, Tebing North Sumatera Tinggi District, Serdang Bedagai Regency, North Sumatra Aek Nabara S1-S3 / Sukadame Aek Nabara Estate S1-S3 / Sukadame Brought Forward Certified on 6 Mill Village, Bilah Hulu / Village, Bilah Hulu / Kota from 2015 to 2013 March 2015 Kota Pinang Pinang District, Labuhan District, Labuhan Batu Regency, North Sumatra Batu Regency, North Sumatra Teluk Panjie Teluk Panjie Teluk Panjie Estate Teluk Panjie Village, Brought Forward Certified on 21 Mill Village, Kampung Kampung Rakyat from 2015 to 2013 April 2015 Rakyat District, District, Labuhan Batu Labuhan Batu Regency, North Sumatra Regency, North Sumatra Peranap Mill Simelinyang / Pauh Peranap Estate Simelinyang / Pauh Brought Forward Certified on 7 Ranap / Sengkilo Ranap / Sengkilo from 2016 to 2013 January 2015 Village, Peranap Village, Peranap District, District, Indragiri Indragiri Hulu Regency, Riau Hulu Regency, Peranap (Plasma) Simelinyang / Pauh 2016 On progress Riau Ranap / Sengkilo Village, Peranap District, Indragiri Hulu Regency, Riau Bungo Tebo Tuo Sumai / Sungai Bungo Tebo Estate Tuo Sumai / Sungai 2016 Certified on 3 Mill Rambai Village, Rambai Village, PWK December 2015 PWK Sumai / Tebo Sumai / Tebo Ulu Ulu District, Bungo District, Bungo Tebo Regency, Jambi Tebo Regency, Bungo Tebo Tuo Sumai / Sungai 2016 On progress Jambi (Plasma) Rambai Village, PWK Sumai / Tebo Ulu District, Bungo Tebo Regency, Jambi Tanjung Kampung Padang Tanjung Selamat Kampung Padang 2017 Certified on 26 Selamat Mill Village, Bilah Hilir Village, Bilah Hilir May 2015 District, Labuhan District, Labuhan Batu Batu Regency, Regency, North Sumatra Pangkatan Sennah Village, Bilah 2017 Certified on 26 North Sumatra Hilir District, Labuhan May 2015 Batu Regency, North Sumatra Gunung Rahuning Village, Pulau Maria Estate Rahuning Village, 2017 Certified on 7 Melayu I Bandar Pulau Bandar Pulau District, September 2015 District, Asahan Asahan Regency, North Regency, North Sumatra Sumatra

Audit Report

Name of Supply Estate Time bound for Name of Mill Mill Address Progress Base Plantation Address certification

Gunung Gonting Mahala Sentral & Batu Gonting Mahala 2017 Certified on 8 Melayu II Village, Bandar Anam Estate Village, Bandar Pulau July 2015 Pulau District, District, Asahan Asahan Regency, Regency, North North Sumatra Sumatra Negri Lama II Negri Lama Negri Lama Negri Lama Seberang 2018 - Certified on Seberang Village, Village, Bilah Hilir 23 December Bilah Hilir District, District, Labuhan 2015 as Labuhan Batu Batu Regency, North Independent Regency, North Sumatra Mill Sumatra Aek Kuo Aek Korsik Village, - Audited in Aek Natas District, March 2016 Labuhan Batu as Mill and Regency, North supply bases Sumatra - HGU No.02- 12-00-00-2- 00074 issued on 29 February 2016 for area 188.75 Ha. Negri Lama I Negri Lama *3rd party which is Negri Lama Seberang Brought Forward - Certified on 8 Seberang Village, excluded from Village, Bilah Hilir from 2018 to April 2015 Bilah Hilir District, scope of District, Labuhan 2013 - Audited in Labuhan Batu certification Batu Regency, North March 2016 Regency, North Sumatra as Sumatra independent Mill

Source: PT. Supra Matra Abadi, March 2016

1.12 Partial Certification Requirements

All Management Units have been audited for RSPO Certification based on Table 11: RSPO Certification Time Bound Plan, except several areas which land use title are not ready. Statuses of land use title for the related management unit were:  Topaz Estate, PT. Tunggal Yunus Estate: on progress for recommendation regarding Location Permit applied to Regent (Bupati) of Kampar.  Negeri Lama Estate, PT. Hari Sawit Jaya: Land titles HGU Extension No.02-12-00-00-2- 00074 issued on 29 February 2016 includes SK BPN Sumatera Utara No.3/HGU/BPN.12/XI/2015 dated 8 December 2015 regarding extension land titles issues for PT Hari Sawit Jaya for area coverage 188,75 Ha.  Teluk Panjie Estate, PT. Supra Matra Abadi: on progress for technical consideration in gaining Location Permit from Land Agency (BPN) of Rokan Hilir Regency, Riau Province.

1.13 Date of issue of certificate

Date of issue of certificate: 21 April 2015 Date of previous audit: 10 – 11 February 2014 (certification audit), 22 April 2014, 14 May 2014, 1 October 2014 (follow up audit).

Audit Report

2.0 AUDIT PROCESS

2.1 Certification body

PT. SAI Global Indonesia Graha Iskandarsyah, 4th floor Jl. Iskandarsyah Raya No. 66 C Kebayoran Baru, Jakarta 12160, Indonesia Phone : +62 21 720 6186, 720 6460 Fax : +62 21 720 6207 Contact person : Ms Inge Triwulandari Technical Manager Email : [email protected]

SAI Global is one of the world’s leading business providers of independent assurance. SAI Global provides organisations around the world with information services and solutions for managing risk, achieving compliance and driving business improvement.

We provide aggregated access services to Standards, Handbooks, Legislative and Property publications; we audit, certify and register your product, system or supply chain; we facilitate good governance and awareness of compliance, ethics and policy issues and provide training and improvement solutions to help individuals and organisations succeed. The SAI Global business is driven by two equally important client needs - the mandated need for organisations to conform to regulations, standards and legislation in all their locations, and the operational need for organisations to improve business processes and procedures as well as corporate culture. As we are a global company, we can meet these needs for any client - those operating within one country's borders and in one language or those operating across borders and in several languages.

There are three business units/divisions within SAI Global namely the Information Services Division, the Compliance Division, and the Assurance Division. The Assurance Division helps organisations manage risk, achieve process or product certification and drive improvement by providing training, registration audits and supplier management programs which can improve business performance. We provide independent audits, assessments and certification of your products or business processes to ensure they comply with industry standards or customer specific requirements. We understand how compliance with those standards can improve the efficiency, economy and profitability of your operation. With auditing and assessment staff located around the world, our clients include large global corporations as well as single site organisations.

2.2 Audit methodology

The 1st Annual Surveillance Audit was performed on 29 February 2016 to 1 March 2016. The audit programme was included in the body of report. The audit methodology for collection of objective evidences is site inspection, documentation and record review and interview with staffs, workers, and other stakeholders. Objective evidences from documentation/record review in one area may also be cross checked with other objective evidences in other areas and with the evidence of implementation on site during the audit.

During the audit, particular attention has been paid to previous non-conformities. The previous minor non-conformities were checked for being closed. Assessments plan has included but not be limited to areas of potential environmental and social risk. Considering previous audit findings, the

Audit Report mill and all supply bases were audited during this surveillance audit. Audit has paid special attention on some potential risks in the following areas: - All environment aspects of P&C including reporting of environmental management, waste handling (Teluk Panjie Mill and Estate) - All social aspects of P&C including land conflict issue (if any), customary right, labour issue, organization contribution (CSR program, empowerment of local community) (Teluk Panjie Mill and Estate) - All HCV aspects of P&C including identification, management and monitoring HCV (Teluk Panjie Mill and Estate).

Audit plan is available in Appendix A of this report on page 149.

2.3 Qualification of the lead auditor and audit team member

Eko Purwanto – Lead Auditor and auditor for land tittle issues, best agriculture practice, RSPO Supply Chain and RSPO certification system clause 4.2.4 Eko Purwanto graduated as Bachelor of Forestry from Forest Conservation Department, Faculty of Forestry, Bogor Institute of Agriculture (IPB) in 2001. He owned working experience at Oil Palm Plantation in East Kalimantan since 2003 to 2012, the last position was Estate Manager. He has implemented good agricultural practice including integrated pest management and limited pesticides uses. He has completed lead auditor training courses for RSPO P & C (2013), ISO 9001:2008 (2012), ISO 14001:2004 (2013), ISPO (2012) and RSPO SCC (2012). He has also completed training course of ISO 14001 (2012), Minaut (Oil and Automotive) Indonesia (2011) and Introduction to HCV Toolkit HCV (2011). Since October 2012 he has been involved in quality (ISO 9001) management system audits for very broad industrial and involved in Indonesia Sustainable Palm Oil (ISPO) and RSPO P&C audit for several plantations and mills, also RSPO Supply Chain audit for several KCP, Bulking and Refinery.

Daniel Sitompul - Audit Team Member and auditor for Occupational Health and Safety issues in mill and estates, and best manufacturing practice in mill. Daniel graduated with Bachelor of Chemical Engineering degree from Indonesia Institute of Technology in 1995. He has working experience as Quality, Environment and Safety Consultant for many years. She has completed ISO 14001 (2007), OHSAS 18001 (2010), Ahli K3 Umum (2007), ISO 9001 (2009), RSPO PC Training (2013), Auditor SMK3 (2013) dan ISPO Auditor Training (2013). He has also completed the training form government regarding to Safety Management System (SMK3), PROPER and AMDAL (environment). For the last 5 years she has been involved in quality (ISO 9001), Safety (OHSAS 18001) and environmental (ISO 14001) management system consultancy and audits for very broad industrial and in the palm oil sector since 2013 for several plantations and mills.

Mujinius Jalaraya – Audit Team Member and auditor for High Conservation Value (HCV) and Environment issues. Mujinius Jalaraya, Bachelor from Faculty of Forestry, Bogor Agricultural University (IPB) in 2008, Majoring in Forest Resources Conservation. He has a working experience in palm oil plantations as SHE Assistant at PT. Astra Agro Lestari Tbk in 2008 - 2012 and as Supervisor Sustainability at Teladan Prima Group in 2012 – 2014. He joined the SAI Global since April 2014 as Auditor ISO 9001: 2008, ISPO and RSPO. Various training has followed, such as: Lead Auditor ISO 9001: 2008 Training (2014), Auditor ISPO Training (2014), Lead Auditor RSPO Training (2014), HCV Assessor Training (2013), Internal Auditor ISO 14001: 2004 Training (2013), Training for Trainers (2013), Training OHS Expert (Ahli K3 Umum - 2010), etc. He has much experience in application

Audit Report of quality management system, environmental and OHS management system in the company and much involved in audit of the management system. During work at SAI Global he has had experience for audit ISO 9001: 2008 in various industries and services, RSPO and ISPO audit for several oil palm plantation companies.

Fadjar Deniswara - Audit Team Member and auditor for Social aspects He graduated with Bachelor of Industrial Engineering degree from National Institute of Technology in Malang. He is a Lead Quality Auditor for ISO 9001:2008 with SAI Global and registered in RABQSA. He has an experience for more than 10 years in auditing. He has an experience in audit with company with labour intensive type (e.g. textile, garments, shoes, etc). He has also registered as SA 8000 certified auditor. He has received training for good agricultural practices including integrated pest management and high conservation value.

2.4 Stakeholder consultation

Stakeholder consultation was performed to internal and external stakeholders. Internal stakeholders included staffs and workers. External stakeholders were selected by considering that they have an interest in the organisation activities, directly border with organisation, area which the workers live. External stakeholders included NGO, governments and civil societies.

Letters were also sent to external stakeholders to invite for comment or individual/ group discussion. Group & Individual discussion with stakeholders (Table 12) was conducted during audit, to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. Surrounding Village of estate and mill has been chosen to represent societies. Group & individual discussions were conducted for two sessions. First session was conducted especially for around stakeholder directly affected on estate and mill, i.e. Head of village, farmers. Second session was conducted especially for labour union, gender committee and selected workers.

Group interview was conducted for workers with similar job while others were interviewed individually in the scope to verify compliance against relevant criteria and indicator related to infrastructure facility, labour, social aspect (discrimination and sexual harassment), environment and HCV. The result of stakeholder consultation was used to justify fulfilment of some indicators, e.g. criterion 2.2 indicator major 3, minor 1 and minor 2, criterion 2.3 indicator major 1, criterion 6.5 indicator minor 1, criterion 6.6 indicator minor 1, criterion 6.7 indicator minor 1, criterion 6.8 indicator minor 1, criterion 6.9 indicator minor 1, 2 and 3, criterion 6.10 indicator minor 1 and 2, criterion 6.11 indicator minor 1, etc.

The result of these consultations was provided in Appendix D on page 165.

Table 12: List of internal and external stakeholder

STAKEHOLDERS METHODS OF CONSULTATION Internal stakeholder ( mill & estates )

Head of SPSI Group discussion

Head of Gender Committee Group discussion

Workers Group discussion for workers with similar role,

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STAKEHOLDERS METHODS OF CONSULTATION otherwise individually interviewed

External Stakeholders ( mill & estates )

Head of Villages : individual discussion - Perkampungan Teluk Panjie FFB Supplier individual discussion

Social and Labour Agency of Labuhan Batu Selatan An invitation letter to comment was sent Regency Agriculture and Plantation Agency of Labuhan Batu An invitation letter to comment was sent Selatan Regency Environment Agency of Labuhan Batu Selatan An invitation letter to comment was sent Regency National land Agency – Badan Pertanahan An invitation letter to comment was sent Nasional (BPN) of Labuhan Batu Selatan Regency District Police of Kampung Rakyat District An invitation letter to comment was sent

District Head (Camat) of Kampung Rakyat District An invitation letter to comment was sent

NGOs: AMAN (Aliansi Masyarakat Adat Nasional), An invitation letter to comment was sent GAPKI, Sawit Watch, WWF and Walhi Sumatera Utara Regent (Bupati) Labuhan Batu Selatan An invitation letter to comment was sent

2.5 Date of next surveillance visit

The next surveillance visit will be conducted around January 2017 or three months before datum month of the certification period.

3.0 AUDIT FINDINGS

3.1 Action taken on previous audits findings

All non-conformances (Major and Minor) from the previous audits have been followed up by taking corrective actions. Corrective actions have been implemented and verified. All corrective actions were considered as closed satisfactorily.

3.2 Claim and use of certification mark and or logo

There was no use of certification mark and or logo. Oil palm product that has been sold as RSPO certified was 1,000 MT CPO and 1,500 MT PK. Detail are in Table 13.

Table 13: Actual Teluk Panjie Mill CPO and PK Delivered in 2015

RSPO RSPO Month Certified CPO Certified PK Jan - - Feb - -

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Mar - - Apr - - May 322 - Jun 386 - Jul 234 150 Aug - 653 Sept 58 - Oct - 347 Nov - 350 Dec - - Total 1.000 1.500 Source: PT. Supra Matra Abadi, March 2016

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3.3 Description of audit findings 3.3.1 RSPO Principle and Criteria

PRINCIPLES 1: COMMITMENT TO TRANSPARENCY CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 1.1 Growers and millers provide adequate information to relevant stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making. 1.1.1 There shall be evidence that growers and millers provide adequate information on (environmental, social and/or legal) issues relevant to RSPO Criteria to relevant stakeholders for effective participation in decision making.

Specific Guidance: For 1.1.1: Evidence should be provided that information is received in appropriate form(s) and language(s) by relevant stakeholders. Information will include information on the RSPO mechanisms for stakeholder involvement, including information on their rights and responsibilities. a. Does the company maintain a list of - SOP : AA-GL-5009.1-R0 – Documents available to the public and stakeholder can be provided to stakeholders YES stakeholders? (E.g. listed by category Communication and according to their relevance through a written request to the organization. The (Minor NCR and stakeholders listed should be site consultation procedure information most frequently requested by stakeholders are information related to the 2016-01 is specific) - Public consultation and management of occupational health and safety (P2K3 report) – ‘Disnakertrans’, closed) environmental management report (wastewater, LB3) - BLH, employment report – b. What is the frequency of updating the interview with stakeholder on 1 ‘Disnakertrans’, production data and area statements - BPS, etc. stakeholder list? March 2016 - Field observation and interview c. Is there evidence of stakeholder with employee Information provided to the public and stakeholder has disseminated to the verification? stakeholder together with public consultation of social assessment and socialization th d. What type of information is provided? of procedures for complaints handling on November 18 , 2010. Dissemination of th (E.g. Environmental, social and legal) social communication procedure has been performed in April 16 , 2015 to stakeholder. Minutes of socialization and attendance list was sighted. Procedure e. What is the frequency and level of access and communication was delivered in appropriate language and understood by to this information? stakeholder. f. How and where is the information disseminated? Organization has assigned a responsible person for providing and updating information and stakeholder that was Humas (Public Relation). Responsibility and g. Who is responsible for providing & function was described in Humas job description. updating information? h. Is there an SOP available to describe the SOP to describe the process of information sharing/dissemination defined in social process (of information communication SOP: AA-GL-5009.1-R0 - Communication and consultation procedure. Consultation and communication with stakeholders conducted by

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) sharing/dissemination)? collecting community leaders, village heads and local community or visiting the office/the village hall to meet with the village head, village officials and community. i. Are stakeholders aware of the type of information available and the procedures Minor Non Conformities: for accessing the information? Teluk Panjie Estate/Mill: - Stakeholder list was available however it was not identified when the list is updated and who verified it. - Documents that can be accessed was only legal/permit documents, there is no other document defined can be accessed by stakeholder, e.g. HCV Assessment result.

Correction: Humas (Public Relation) updated stakeholder list and list of documents that can be accessed by stakeholder based of the procedure of Information Request.

Root Cause: Management of Teluk Panjie has not appointed yet PIC for updating stakeholder list and list of documents that can be accessed by stakeholders.

Corrective Action: Management of Teluk Panjie has appointed Humas (Public Relation) as personnel in charge for updating stakeholder list and list of documents that can be accessed by stakeholders based on Memorandum #027/ES-KTP/INT/IV/2016 dated 1 April 2016. 1.1.2 (M) Records of requests for information and responses shall be maintained.

Guidance: Growers and millers should have a Standard Operating Procedure (SOP) to respond constructively to stakeholders, including a specific timeframe to respond to requests for information. Growers and millers should respond constructively and promptly to requests for information from stakeholders. Growers and millers should ensure that sufficient objective evidence exists to demonstrate that the response is timely and appropriate. See Criterion 1.2 for requirements relating to publicly available documentation. See Criterion 6.2 on consultation. See Criterion 4.1 on SOPs. a. Does the company have an SOP to • Social communication Organization has defined the procedure to ensure constructive response to YES ensure constructive response to procedures AA-GL-5008.1- stakeholders in AA-GL-5008.1-R0 – ‘‘Stakeholder Information Request Handling’. (Major NCR

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) stakeholders? R0 – ‘Stakeholder Procedure described the requests for information and the aspirations of 2016-02 is Information Request stakeholders including their response. closed) b. Who is the personnel in charge (PIC)? Handling’. c. Does the SOP cover the elements under • Log Book ‘Information Requests for information submitted in proposal and send to company, all the 1.1.1? Request and Response year information and aspirations will be addressed to organization with consideration d. Is there a clear time frame for response to 2015’. company policy. Some of proposal were rejected and approved by the company. request for information? • Interview with stake holder dated 1 March 2016 Responses can be handled directly by the ‘Public Relations’ or Estate Manager, e. Are records of requests for information however some response are escalated to Group Manager and Regional Officer for and responses maintained? decision. f. Are responses to requests for information timely and appropriate? PIC who’s tasked associated with social communication is Estate Manager with the daily implementing are ‘Public Relations’. And elements 1.1.1. already described in this procedure.

The initial response was given no later than 14 days after receipt of the request from stakeholders. This time frame already decided in the procedure AA-GL- 5008.1-R0 – ‘Stakeholder Information Request Handling’.

Major Non Conformities: Teluk Panjie Estate: - Log book of information request was not updated, information request recorded was done in July 2015. - There is not enough evidence that request from BLH of Kota Pinang dated 27 February 2015 has been followed up and from BPJS Kesehatan regarding JKN bills IDR 7,655,385 in May 2015.

Correction: - Updated the information request log book - Show evidence that request from BLH Kota Pinang and on 27 February 2015 and from BPJS Kesehatan in May 2015 has been followed up.

Root Cause: - Responds of information request frequently delivered via telephone. - Management of Teluk Panjie has not appointed yet PIC for updating log book of information request and responds.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

Corrective Action: - All Responds to the information request always recorded in the logbook even the responds is delivered via telephone. - Appointed PIC for updating log book of information request and responds. 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes. 1.2.1 (M) Publicly available documents shall include, but are not necessarily limited to: • Land titles/user rights (Criterion 2.2); • Occupational health and safety plans (Criterion 4.7); • Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8); • HCV documentation (Criteria 5.2 and 7.3); • Pollution prevention and reduction plans (Criterion 5.6); • Details of complaints and grievances (Criterion 6.3); • Negotiation procedures (Criterion 6.4); • Continual improvement plans (Criterion 8.1); • Public summary of certification assessment report; • Human Rights Policy (Criterion 6.13).

Guidance: This concerns management documents relating to environmental, social and legal issues that are relevant to compliance with RSPO Criteria. Management documents will include monitoring reports. The auditors will comment on the adequacy of each of the documents listed in the public summary of the assessment report. Examples of commercially confidential information include financial data such as costs and income, and details relating to customers and/or suppliers. Data that affects personal privacy should also be confidential. Ongoing disputes (within or outside of a legal mechanism) can be considered as confidential information where disclosure could result in potential negative outcomes for all parties involved. However, affected stakeholders and those seeking resolution to conflict should have access to relevant information. Examples of information where disclosure could result in potential negative environmental or social outcomes include information on sites of rare species where disclosure could increase the risk of hunting or capture for trade, or sacred sites which a community wishes to maintain as private. Growers and millers should ensure that sufficient objective evidence exists to demonstrate that the level of measuring and monitoring of the management plan, and information, is appropriate and made available. For National Interpretation: Specific approaches to personal privacy safeguards, including any legal requirements, will be considered. a. How are the management documents Documents available to the public specified in the ‘List of Documents and YES • List of Documents and listed in (c) below made publicly available? Information Accessed by Public for PT. Supra Matra Abadi – Teluk Panjie Mill. Information Accessed by

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) b. Where are the documents placed? Public for PT.Supra Matra Documents available to the public and stakeholder can be provided to stakeholders Abadi – Teluk Panjie Mill according to their relevance through a written request to the organization. List of c. Is the information provided adequate? Note: At minimum, an information • Log book – receipt note information available in Bahasa Indonesia and easily understood by stakeholder. • CSR Project Tracking 2015 Public document for stakeholder has been disseminated by organization in 4 summary of the document listed below should be made available. • CSR Monitoring Tracking 2015 February 2016. • Field observation and interview  Land titles/user rights (Criterion 2.2) with employee. Documents available to the public placed in the respective sections within the - Legal boundaries ,land use, organization. Such as land title right/ HGU certificate placed in KTU and other. classification, total area, grant Information provided adequate at minimum, an information summary of the title, permit validity , NCR rights, document listed such as :  Occupational health and safety plans • Land titles/user rights (Criterion 2.2) (Criterion 4.7); - Legal boundaries ,land use, classification, total area, grant title, - risk assessment and mitigation, permit validity, NCR rights emergency response plan, • Occupational health and safety plans (Criterion 4.7); training, accident records - risk assessment and mitigation, emergency response plan, training,  Plans and impact assessments accident records relating to environmental and social • Plans and impact assessments relating to environmental and social impacts impacts (Criteria 5.1, 6.1, 7.1 and (Criteria 5.1, 6.1, 7.1 and 7.8); 7.8); - main social and environmental impacts and mitigation measures, - main social and environmental • HCV documentation (Criteria 5.2 and 7.3); impacts and mitigation - identification on HCV areas, maps, management and monitoring measures, HCV  HCV documentation (Criteria 5.2 and • Pollution prevention and reduction plans (Criterion 5.6); 7.3); - identification of pollutants, management and reduction measures - identification on HCV areas, • Details of complaints and grievances (Criterion 6.3); maps, management and - nature of complaints, parties involved, status of case monitoring HCV • Negotiation procedures (Criterion 6.4);  Pollution prevention and reduction - SOP, consultative, neutral, inclusiveness, timeframe, responsibility plans (Criterion 5.6); • Continual improvement plans (Criterion 8.1); - identification of pollutants, - for all elements under 8.1, management and reduction • Public summary of certification assessment report; measures - follow RSPO format  Details of complaints and grievances • Human Rights Policy (Criterion 6.13). (Criterion 6.3); - policy statement comply to the requirements of 6.13 - nature of complaints, parties

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) involved, status of case Monitoring plan associated with public documents already established and  Negotiation procedures (Criterion available. For example for environmental documents: CSR monitoring 2015, the 6.4); management of HCV, RKL-RPL was reported every six months to BLH, reports - SOP, consultative, neutral, related to the management of K3 (occupational health and safety) are reported inclusiveness, timeframe, every three months to Man power Office , reports LB3 and liquid waste are reported responsibility every three months to BLH, etc.  Continual improvement plans (Criterion 8.1); Update monitoring report publicly available. Evidence of delivery of the report in the - for all elements under 8.1, form of receipts properly documented and archived in a file Receipt.  Public summary of certification assessment report; Monitoring plan associated with public documents already established and - follow RSPO format available. For example 'Worker contributions to BPJS' its reported monthly, the  Human Rights Policy (Criterion 6.13). number of security personnel gardens and mills' to Police - policy statement should comply to the requirements of 6.13 Update monitoring report publicly available. Evidence of delivery of the report in the d. Do the management documents contain form of receipts properly documented and archived in a file Receipt. monitoring plans and reports? e. Are all monitoring reports publicly available?

1.31 Growers and millers commit to ethical conduct in all business operations and transactions. *1 New Criteria - Growers and millers commit to ethical conduct in all business operations and transactions. 1.3.1 There shall be a written policy committing to a code of ethical conduct and integrity in all operations and transactions, which shall be documented and communicated to all levels of the workforce and operations.

Guidance: All levels of the operations will include contracted third parties (e.g those involved in security). The policy should include as a minimum: • A respect for fair conduct of business; • A prohibition of all forms of corruption, bribery and fraudulent use of funds and resources; • A proper disclosure of information in accordance with applicable regulations and accepted industry practices.

The policy should be set within the framework of the UN Convention Against Corruption, in particular Article 12.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a written policy committing to a • Company Policy dated 01 YES Written policy committing to a code of ethical conduct and integrity in all operations code of ethical conduct and integrity in all December 2014 and transactions was available in “Company Policy” dated 01 December 2014 and operations and transactions? • Attendance list: Dissemination signed by the Managing Director. of company policy for mill, b. Does the policy include as a minimum: estates and subcontractor on Ethic policy includes several aspects, such as:  A respect for fair conduct of 16 October 2015. business? • Interview with stake holder - Social Responsibility  A prohibition of all forms of corruption, - Wages dated 1 March 2016 bribery and fraudulent use of funds - Fair conduct of business and resources? - Infrastructure and accommodation  A proper disclosure of information in - Labour union accordance with applicable - Child labour regulations and accepted industry - Indiscriminative treatment practices? - Protection against sexual harassment and violence - Protection of reproductive rights c. Is the policy documented and - Receipts and provision of gifts, entertainment or assistance in job, communicated to all levels of the corruption and fraud workforce and operations, including - Relation with supplier contracted third parties? How is it - Occupational health and safety, and environment communicated? - Employee cooperatives d. Are the documentation and communication - Human rights done in the appropriate languages? The policy has been documented; communicated to all levels of the workforce and operations, including contracted third parties through socialization. Note to auditor: The workforce should be The policy was well documented on 01 December 2014 and signed by the interviewed to determine level of understanding Management Director. The policy has been communicated to all levels of the of policy workforce and operations, including contracted third parties.

Policy socialization to contractor/third parties performed at the time of going to do the job.

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PRINCIPLES 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. 2.1.1 (M) Evidence of compliance with relevant legal requirements shall be available.

Guidance: Implementing all legal requirements is an essential baseline requirement for all growers whatever their location or size. Relevant legislation includes, but is not limited to: regulations governing land tenure and land-use rights, labour, agricultural practices (e.g. chemical use), environment (e.g. wildlife laws, pollution, environmental management and forestry laws), storage, transportation and processing practices. It also includes laws made pursuant to a country’s obligations under international laws or conventions (e.g. the Convention on Biological Diversity (CBD), ILO core Conventions, UN Guiding Principles on Business and Human Rights). Furthermore, where countries have provisions to respect customary law, these will be taken into account. Key international laws and conventions are set out in Annex 1 Contradictions and inconsistencies should be identified and solutions suggested. For National Interpretation: All relevant legislation will be identified, and any particularly important requirements identified. a. Is the complete list of legal requirements YES - “Regulations compliance Relevant legal requirement legal were documented in “Regulations compliance available? (Refer to relevant NIs or LIs for evaluation form update in evaluation form (Reviewed 2016). Updating of law and regulations change list of legal requirements) March 2016. activities were well documented and update once a year as defined in Procedure b. Does the company have copies of the AA-GL-5001.1-R0 (Compliance to regulations and its change). Last update was - Procedure AA-GL-5001.1-R0 legal requirements? performed in March 2016. Information on applicable legal and other requirements (Compliance to regulations and have been reviewed and summarised. Copies of the legal requirements were its change) Note to auditor: A due diligence on the shown and maintained properly. company/area or management unit on legal Evidence of compliance with applicable local, national and ratified international compliance should be conducted prior to field laws and regulations of Napal Mill and Estate have been provided, including: audit. Any non-compliance should be verified during the field audit. Land tenure and land use right : Relevant legislation includes, but is not limited - Location permit, to: regulations governing land tenure and land- - Izin Usaha Perkebunan (Plantation Business Permit) use rights, labour, agricultural practices (e.g. - Concession (HGU), please see criterion 2.2.1 major for details chemical use), environment (e.g. wildlife laws, pollution, environmental management and Labour : forestry laws), storage, transportation and - SMK3 (OHS) implementation records, processing practices. It also includes laws - OHS committee (P2K3), made pursuant to a country’s obligations under - freedom of worker union, international laws or conventions (e.g. the - labour cooperation,

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Convention on Biological Diversity (CBD), ILO - minimum wage (UMSK), core Conventions and UN Guiding Principles on - labour law, Business and Human Rights. - employee social benefit, - Jamsostek (worker insurance) for employee, - medical check-up, - clinic operation permit, - Hyperkes certified doctor and paramedic, etc

Agricultural practise : - system of plant cultivation of oil palm plantation, - use of limited pesticides (paraquat),

Occupational Health and Safety: - Permit of machinery, safety committee, safety officer, medical insurance, monitoring of working environment, paramedic and first aid officer, clinic for workers, handling of hazardous materials including pesticides, firefighting team and equipment. - mill production equipment permit (crane, sterilizer, pressurised vessel permits, boiler, lifting equipment), SIO for operator who conduct lifting equipment, electrical, welder - safety committee, safety officer, medical insurance, monitoring of working environment, paramedic and first aid officer, clinic for workers, handling of hazardous materials including pesticides, firefighting team and equipment - Availability of MSDS, periodic safety parameter monitoring (illumination, vibration and noise), medical check-up, safety committee and occupational health and safety report to authority.

Environment : - Government regulation of the Environment No. 5/2014 - water quality standard, environmental impact analysis, etc. - Government Regulation 101/2014 hazardous waste management, company has manage the waste properly (liquid, air and solid waste management) - Government Regulation No.41/1999 re: Emission Control, Company

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) has conducted air pollution control and emission control periodically in every six month at mill - Periodic environmental parameter monitoring (stationary emission, ambient emission and ambient noise, moving source emission, waste water discharge quality, and ground water quality) - list of protected flora and fauna, - management of protected area and protected flora and fauna

Conservation: - President Decree No. 32/1990 regarding Management of protected areas complies by identifying areas comply with HCV in the estate and surrounding area, perform management and monitoring of HCV. - Act No. 5/1990 regarding the conservation of natural resources and ecosystems, comply with managing HCV areas, create HCV management and monitoring plan and performed it well, create procedures regarding HCV protection.

Status of compliance with laws and regulations were evaluated, and evaluation of compliance result indicated that compliance status was justified with reference to the objective evidence of compliance.

2.1.2 A documented system, which includes written information on legal requirements, shall be maintained.

a. Is there a document system which includes SOP AA-GL-5001.1-R0 – A documented system which includes written information on legal requirements YES the following? Compliance Laws Procedure. was maintained. It was documented in SOP AA-GL-5001.1-R0 - Compliance - Personnel in charge to manage Laws Procedure. The procedure described that identification and evaluation - Set of legal documents performed against regulation and requirement regarding environment, OHS, - Comprehensive list of international, plantation, labour, social, etc. the updating of legal regulation performed once a national, sub-national and provincial year in January, while evaluation of compliance with legal regulation performed is laws which details the requirements once per year; personnel in charge to manage the updating and evaluation which of specific to the mill and estate is sustainability division together with estate personnel in each section. operations. - Relevant sections within the law that This document was available to all staff and all level management, the document is identified and linked to activities was storage at central office.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) b. Are the documents available to all levels of management?

2.1.3 A mechanism for ensuring compliance shall be implemented.

a. Is an internal audit for legal compliance  List Of Attendances – Mechanism for ensuring compliance has been implemented and documented in YES conducted annually and documented? Corrective Action ISPO RSPO SOP AA-GL-5001.1-R0 – Compliance Laws Procedure. The audit checklist  RSPO Internal Audit 1 - 6 covered the implementation of the all applied regulations. Status of compliance February 2016 with the applicable environment, OHS, plantation, labour, social laws and  Check list and corrective action regulations were evaluated, and evaluation of compliance result indicated that audit internal year 2016. compliance status was justified with reference to the objective evidence of compliance. Internal audit related to legal compliance has been performed by organisation annually. Last internal audit was conducted in 1 – 6 February 2016. Report of audit result was sighted and well documented. 2.1.4 A system for tracking any changes in the law shall be implemented.

Specific Guidance: For 2.1.4: The systems used for tracking any changes in laws and regulations should be appropriate to the scale of the organisation. a. Is there a documented methodology (e.g.:  SOP AA-GL-5001.1-R0 – A system for tracking any changes in the law has been implemented and YES personnel in charge (PIC), source of info, Compliance Laws Procedure. documented in SOP AA-GL-5001.1-R0 – Compliance Laws Procedure. frequency of update) for tracking changes List of Legal Compliance and communication of changes to Evaluation PT. SMA year 2016 Sustainability division was responsible for updating new regulation every year. relevant sections of the legislation? Company has defined the procedure to identify and evaluated legal compliance which documented in ‘List of Legal Compliance Evaluation PT. SMA year 2016’

In the procedure explained that PIC's to track prevailing is Regulation Owner - Head SSL. Legal requirement compliance evaluation performed by call/visiting the statutory body and browsing to internet.

2.2 The right to use the land is demonstrated, and is not legitimately contested by local people who can demonstrate that they have legal, customary or user rights. 2.2.1 (M) Documents showing legal ownership or lease, history of land tenure and the actual legal use of the land shall be available.

Guidance

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Where there is a conflict on the condition of land use as per land title, growers should show evidence that necessary action has been taken to resolve the conflict with relevant parties. A mechanism should be in place to resolve any conflict (Criteria 6.3 and 6.4). Where operations overlap with other rights holders, companies should resolve the issue with the appropriate authorities, consistent with Criteria 6.3 and 6.4. For National Interpretation: Any legal, customary or user rights to land, or disputes, which are likely to be relevant, will be identified. a. Are there documents showing legal  Decree of the Minister of State Copy of land use title (HGU) of Teluk Panjie Estate was sighted and legally owned YES ownership or lease of the land available? Agrarian/Head of National by PT. Supra Matra Abadi. Land use title of Teluk Panjie Estate was located at (e.g. land titles, lease documents) Land Agency No. Teluk Panjie Village, Kampung Rakyat District, Labuhan Batu Regency, North b. Are there documents showing history of 119/HGU/BPN/ 2004. Land Sumatera Province. use title permit: HGU No. 01, land tenure available? (e.g. legal Site Permit (Izin Lokasi) issued as indicated in Decree of the Governor of North documents showing land status change, issued 28 October 2004. Total area: 3,855.69 Ha. Sumatera #593/37/K/BKPMD/Year 1988, covering area of 9,746.86 hectares for SIA and EIA reports, HCV assessment Teluk Panjie and Aek Nabara Estate at Kampung Rakyat Village, Bilah Hulu District, reports) Labuhan Batu Regency and Tanah Datar Estate in Tanah Datar Village, Talawi c. Are there documents showing the actual District, Batubara Regency, North Sumatera Province. Licensed Area for Teluk legal use of the land available? Panjie Estate is 3,855.69 Ha. d. Are the documents complete? PT. Supra Matra Abadi has Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #HK.350/408/Dj.Bun.5/V/2001, dated 28th of May 2001, with

details: Area of permitted : 3,855.69 Ha, Plant Type : Palm Oil Site : Bilah Hulu District, Labuhan Batu Regency, North Sumatera Province Processing Unit : 1 unit of palm oil mill Licensed Capacity : 45 tons FFB / hour Installed capacity : 45 tons FFB / hour Plantation Business Assessment (Penilaian Usaha Perkebunan (PUP)); Class II, based on the Decree of Agency of Forestry and Plantation #525/105/Hutbun/2013.

The plantation has a land rights area:  Decree of the Minister of State Agrarian/Head of National Land Agency No. 119/HGU/BPN/ 2004. Land use title permit: HGU No. 01, issued 28th of October 2004. Total area: 3,855.69 Ha. Building Permit (IMB):

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Decree of Kepala badan Pelayanan Perizinan Terpadu & Penanaman Modal, Kabupaten Labuhan Batu Selatan, #503/403/BPPTPM/2013, dated 11th of December 2013 covered 78 units of employee housing (133,12 m2 each), 7 staff housing (139,5 m2 each) and 1 mess (139,5 m2).  Decree of District Head of South Labuhan Batu (Keputusan Bupati Labuhan Batu Selatan), #503/471/BPPTPM/2012, dated 28 November 2012 covered 56 unit of employee housing (12 m x 8 m each).  Decree of District Head of Labuhan Batu (Keputusan Bupati Kepala Daerah Tinggkat II Kab. Labuhan Batu), #505.548/20j/TP/1998, dated 2nd of April 1998 covered office (120 m2), workshop (150 m2), Manager housing (128 m2), 2 staff housing (296 m2), 15 units of employee housing (1,285 m2) and other (42.50 m2),

2.2.2 Legal boundaries shall be clearly demarcated and visibly maintained.

Specific Guidance: For 2.2.2: Plantation operations should cease on land planted beyond the legally determined area and there should be specific plans in place to address such issues for associated smallholders. a. Is there a legal map showing location of  Teluk Panjie Estate: Area has been measured by BPN, and recorded on: YES boundary markers? Drawing/map Situation No.  Situation Map / HGU map dated 26th of May 1986, no. 634/1986. b. Is there physical presence of boundary 624/1986 dated 28 October markers? 2004 Legal boundaries marker were sighted during audit and maintained along the  BPN peg maintenance perimeters of estate lands which were mapped with Global Positioning System c. Is there an SOP for boundary demarcation program and report (check list) (GPS). and maintenance?  Procedure of boundary pegs Field observation was conducted to pegs number: maintenance Note to auditor: Ground verification of boundary  Field Observation to HGU pegs  Peg of HGU no. XV, location: Division I, bordering with Sidodadi Villages; N: markers using GPS should be conducted. 01°56’29.8” & E: 100°13’41.9” Priority should be on boundaries with other  Peg of HGU no. XXXVI, location: Division I, bordering with Sei Kalam estates, community areas, protected area and Villages; N: 01°57’09.0” & E: 100°14’08.5” rivers  Peg of HGU no. XV, location: Division II, N: 02°02’03.7” & E: 100°15’02.1”.

In the case of Associated Smallholders: Procedure of boundary pegs maintenance has been established. Estates has d. Are there documents showing that the program to maintenance boundary pegs twice a year such as cleaning of pegs boundaries of associated smallholders circle and pegs repainting. A review to legal boundaries maintenance records at

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) have been recorded and verified by the Teluk Panjie Estate and field observation to a number of legal boundaries mill? demonstrated that the legal boundaries were well maintained by Estates. Last e. In case of boundary breach, is there proof activities of maintenance were conducted in November 2015.

of a mitigation plan being implemented? There is no scheme smallholders associated with PT. Supra Matra Abadi – Teluk Panjie Mill

2.2.3 Where there are or have been disputes, additional proof of legal acquisition of title and evidence that fair compensation has been made to previous owners and occupants shall be available, and that these have been accepted with free, prior and informed consent (FPIC).

a. Are there, or have there been any land  Interview with stakeholders PT. Supra Matra Abadi has established a mechanism for resolution of conflicts YES disputes? and the local community on 1 and disputes through SOP for Social Conflict and Land Dispute Resolution that March 2016 has been described in AA-GL-0052.1-R1. Note to auditor: Due diligence should be  SOP AA-GL-0052.1-R1: Social conducted on the management to provide Conflict and Land Dispute This procedure mentioned how the company solves the problem if any conflict evidence that there has been no historical or Resolution occurred, both internal and external conflicts. This procedure also mentioned if the current land dispute problem cannot be resolved by negotiation, the company will take legal action involving the related institution. b. If there are or have been disputes, are there: So far there were no unprecedented conflicts/disputes with stakeholders; it was - Documents to proof legal acquisition? verified during the stakeholder meeting in 1 March 2016. It was confirmed that - Records of FPIC process? there was no land conflict found at the estate.

c. If there has been acquisition involving No complaints associated with land disputes between the company and the compensation, are there: surrounding community. This was also confirmed during the interview with - Records that Fair compensation has stakeholders and the local community on 1 March 2016. been provided and accepted by parties involved? - Records that all affected parties are consulted and represented? - Documents of negotiations/discussion available?

Note to auditor: There should be direct

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) verification of above with the affected parties

2.2.4 (M) There shall be an absence of significant land conflict, unless requirements for acceptable conflict resolution processes (see Criteria 6.3 and 6.4) are implemented and accepted by the parties involved.

a. Does the company have cases of  Interview with stakeholders PT. Supra Matra Abadi has etablished a mechanism for resolution of conflicts and YES significant land conflict? (i.e. preventing and the local community on 1 disputes through SOP for Social Conflict and Land Dispute Resolution has been the company from operating normally) March 2016 described in AA-GL-0052.1-R1.

b. If the company has cases of conflict, are  SOP AA-GL-0052.1-R1: Social This procedure mentioned how the company solves the problem if any conflict records of the following available? Conflict and Land Dispute occurred, both internal and external conflicts. This procedure also mentioned if the - Status of conflict Resolution problem cannot be resolved by negotiation, the company will take legal action - SOP/ mechanism for conflict involving the related institution. resolution

- Implementation of SOP/mechanism - Acceptance of the procedures by all parties - Records of conflict resolution

2.2.5 For any conflict or dispute over the land, the extent of the disputed area shall be mapped out in a participatory way with involvement of affected parties (including neighbouring communities where applicable).

a. Is there an SOP for participatory mapping  Interview with stakeholders NA No complaints associated with land disputes between the company and the of disputed area? and the local community on 1 surrounding community. This was also confirmed during the interview with March 2016 b. Is a dispute map available? stakeholders and the local community on 1 March 2016.  SOP AA-GL-0052.1-R1: Social c. Is there documented evidence of Conflict and Land Dispute However, the company also has implemented procedures for land conflict involvement and acceptance by the

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) affected parties? Resolution handling mechanism specified in SOP: AA-GL-5003.1-R0. Procedure explaining the land compensation process from identification of landowners, Input data (soil

Note to auditor: Actual ground verification mapping), Negotiating compensation (according to the agreement and witnessed by a competent witness), payment of compensation, Documentation. showing the accuracy of the dispute map should be conducted 2.2.6 (M) To avoid escalation of conflict, there shall be no evidence that palm oil operations have instigated violence in maintaining peace and order in their current and planned operations.

Specific Guidance: For 2.2.6: Company policy should prohibit the use of mercenaries and para-militaries in their operations. Company policy should prohibit extra-judicial intimidation and harassment by contracted security forces (see Criterion 6.13). a. Does the company have a policy to  Company policy dated 1 Company have a policy to circumvent instigated violence to maintain peace and YES circumvent instigated violence to maintain December 2014 order in current and planned operations. It is documented in the Company Policy peace and order in current and planned  Interview with stakeholders dated 1 December 2014. Described in point 8 and 13 company policy as follows: operations? and the local community on 1 Point 8. b. Is there any evidence of: March 2016 Ensuring that any negotiations concerning compensation for loss of legal or - The use of confrontation and customary rights through a documented system that enables indigenous intimidation by the company to peoples, local communities and other interested parties may submit their maintain peace and order? views through representative organizations of their own choosing. - Use of para-militaries and mercenaries in the plantation? Point 13. Respect the human right Based on interview with stakeholders dated 1 March 2016 also confirmed that no act of violence and militaristic ways adopted by the company in solving problems with public / stakeholders.

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

2.3.1 (M) Maps of an appropriate scale showing the extent of recognised legal, customary or user rights (Criteria 2.2, 7.5 and 7.6) shall be developed through participatory mapping involving affected parties (including neighbouring communities where applicable, and relevant authorities).

Guidance: All indicators will apply to current operations, but there are exceptions for long-established plantations which may not have records dating back to the time of the decision making, in particular

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) for compliance with Indicators 2.3.1 and 2.3.2. Where there are legal or customary rights over land, the grower should demonstrate that these rights are understood and are not being threatened or reduced. This Criterion should be considered in conjunction with Criteria 6.4, 7.5 and 7.6. Where customary rights areas are unclear these should be established through participatory mapping exercises involving affected parties (including neighbouring communities and local authorities). This Criterion allows for sales and negotiated agreements to compensate other users for lost benefits and/or relinquished rights. Negotiated agreements should be non-coercive and entered into voluntarily, carried out prior to new investments or operations, and based on an open sharing of all relevant information. The representation of communities should be transparent and in open communication with other community members. Adequate time should be given for customary decision making and iterative negotiations allowed for, where requested. Negotiated agreements should be binding on all parties and enforceable in the courts. Establishing certainty in land negotiations is of long-term benefit for all parties. Companies should be especially careful where they are offered lands acquired from the State by its invoking the national interest (also known as ‘eminent domain’). Growers and millers should refer to the RSPO approved FPIC guidance (‘FPIC and the RSPO: A Guide for Companies’, October 2008)

For National Interpretation: Any commonly encountered situations should be identified. a. Does the company have an SOP on FPIC?  Analisis Dampak Lingkungan NA Company has defined the procedures on FPIC which was described in SOP:AA- PT.Supra Matra Abadi year b. Is there evidence that the identification of GL-5003.1-R0 dated 5th December 2009. Procedures explaining the land 1994 legal, customary or user rights has been compensation process through FPIC begin from identification of landowners, Input done through FPIC process?  Interview with local community data (soil mapping), Negotiating compensation (according to the agreement and on 1 March 2016. witnessed by a competent witness), payment of compensation, documentation. c. Is there evidence that the FPIC process has been implemented in accordance to There is no new open area since 2005. All land in inside the concession area has the company SOP? Where is this evidence been developed in period 1987 – 1990. YOP 2015 was replanting. FPIC was not recorded? (E.g.: Documents, Minutes of applicable for PT. Supra Matra Abadi. However Land acquisition from local meeting, Records, Agreements, Maps etc.) communities has been performed through "Surat Persetujuan Bersama” (pact of d. Is there a map of the extent of legal, agreement). No force has been applied, prior informed consents were given to the customary or user rights? Is this map of previous owner. appropriate scale (1: 10,000)? Company already has a valid land ownership that were HGU with clear e. Was the map produced through boundaries and markers HGU, also have a map of HGU and HGU boundary participatory mapping with reference to markers with the scale of 1: 25,000 issued by BPN complete with title, legend, SIA and HCV assessment? source, and Georeferenced. f. Does the map have a title, legend, source, Installation of the concession boundary markers have also been communicated scale and projections/georeference? and coordinated with relevant communities bordering and with the agreement of both parties, it was confirmed during the public consultation and interview with g. Are the maps accepted by the relevant stakeholder. A map of land title has accepted by the relevant communities. communities? Based on Social Impact Assessment and public consultation there were no land

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) conflict happen between surrounding community and company.

2.3.2 Copies of negotiated agreements detailing the process of free, prior and informed consent (FPIC) (Criteria 2.2, 7.5 and 7.6) shall be available and shall include: a) Evidence that a plan has been developed through consultation and discussion with all affected groups in the communities, and that information has been provided to all affected groups, including information on the steps that shall be taken to involve them in decision making; b) Evidence that the company has respected communities’ decisions to give or withhold their consent to the operation at the time that this decision was taken; c) Evidence that the legal, economic, environmental and social implications for permitting operations on their land have been understood and accepted by affected communities, including the implications for the legal status of their land at the expiry of the company’s title, concession or lease on the land. a. Are copies of negotiated agreements with  Interview with Stakeholder / Land clearing of PT. Supra Matra Abadi was conducted in 1987 - 1990, FPIC was NA affected parties available? local community on 1 March not applicable. 2016. b. Is there evidence that the agreement is However, the company also has implemented procedures for conflict resolution prepared through proper FPIC process?  SOP:AA-GL-5003.1-R0 dated mechanism specified in Land conflict handling procedure SOP: AA-GL-5003.1-R0 th 5 December 2009 – dated 5th December 2009. Procedure explaining the land compensation process c. Does the agreement contain the following: Procedure of Land conflict - An action plan developed through from identification of landowners, Input data (soil mapping), Negotiating handling compensation (according to the agreement and witnessed by a competent consultation with affected parties, is inclusive and evidence that members witness), payment of compensation, documentation. of affected parties are well informed and involved in the decision making process - Evidence of options to give or withhold consent for development - Evidence that members of the affected communities understand and accept the implication involved in permitting/rejecting oil palm development on their land (E.g.: legal status, social, environmental, economic) - Evidence that the negotiated agreement was entered voluntarily without coercion by all parties - Evidence that adequate time was given for customary decision making

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and iterative negotiations - Clause which states that the negotiated agreement is legally binding

2.3.3 All relevant information shall be available in appropriate forms and languages, including assessments of impacts, proposed benefit sharing, and legal arrangements.

a. Is there evidence that all the information  Interview with Stakeholder / Land clearing of PT. Supra Matra Abadi was conducted in 1987 - 1990, FPIC was NA (maps, agreement, records, impact local community on 1 March not applicable. assessment, benefit sharing and legal 2016. However, the company also has implemented procedures for conflict resolution arrangements) is available in appropriate  SOP:AA-GL-5003.1-R0 dated mechanism specified in Land conflict handling procedure SOP: AA-GL-5003.1-R0 forms and languages, understood and th 5 December 2009 – dated 5th December 2009. Procedure explaining the land compensation process accessible to affected parties? Procedure of Land conflict from identification of landowners, Input data (soil mapping), Negotiating

handling compensation (according to the agreement and witnessed by a competent Note to auditor: this should be cross checked to witness), payment of compensation, documentation. a sample of the affected parties

2.3.4 (M) Evidence shall be available to show that communities are represented through institutions or representatives of their own choosing, including legal counsel.

Specific Guidance: For 2.3.4: Evidence should be available from the companies, communities or other relevant stakeholders.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Who is the representative of the  Interview with Stakeholder / YES Communities are represented through institutions or representatives of their own community in the negotiation process? local community on 1 March choosing. It was confirmed that Village communities have delegated their 2016. b. Is the representative accepted by the representatives to the Village Head. Village Head are selected through local

community? election and accepted by the community. c. Is the record of appointment to represent the community available and shared with other parties?

Audit Report

PRINCIPLES 3: COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability. 3.1.1 (M) A business or management plan (minimum three years) shall be documented that includes, where appropriate, a business case for scheme smallholders. Specific Guidance: For 3.1.1: The business or management plan should contain: • Attention to quality of planting materials; • Crop projection = Fresh Fruit Bunches (FFB) yield trends; • Mill extraction rates = Oil Extraction Rate (OER) trends; • Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends; • Forecast prices; • Financial indicators.

Suggested calculation: trends in 3-year running mean over the last decade (FFB trends may need to allow for low yield during major replanting programmes).

Guidance: Whilst it is recognised that long-term profitability is also affected by factors outside their direct control, top management should be able to demonstrate attention to economic and financial viability through long-term management planning. There should be longer term planning for plantations on peat, particularly in regards to subsidence and flooding issues (see Indicator 4.3.5). Consideration of smallholders should be inherent in all management planning where applicable (see also Criteria 6.10 and 6.11). For scheme smallholders the content will vary from that suggested (refer to RSPO Guidance On Scheme Smallholders, July 2009). Growers should have a system to improve practices in line with new information and techniques. For smallholder schemes, the scheme management should be expected to provide their members with information on significant improvements. This Criterion is not applicable to independent smallholders (refer to RSPO Guidance for Independent Smallholders under Group Certification, June 2010) a. Does the company have a documented YES  PT. Supra Matra Abadi – Management plan established for period 2015 - 2022 has been used to achieve business or management plan with a Teluk Panjie Mill Projection economic viability and long-term financial. The plan was approved by the top minimum planning period of 3 years? year 2015 – 2022 management. The parameters listed in the management plan that includes b. Does it include the following:  PT. Supra Matra Abadi – revenue and earnings, projected crop production (FFB yield trend), the extraction - Land area statement (planting Teluk Panjie Estate Operation rate of CPO and PK (Production forecast up to 2020), harvesting, processing FFB years, non-planted areas, i.e. HCV, Projection year 2015 - 2022 and CPO. The achievement of the management plan is reviewed every month in conservation areas, fragile soils, the Estate Unit Report (LUK) and Mill Unit Report (LUP) according to the current enclaves) with updated location month. Reviewing of LUK and LUP was conducted monthly. Planting material are maps. Maps should have title, 70% Topaz, 10% Socfin, 10% Dami Mas and 10% Lonsum. legend, source, scale and projections/georeferenced The organisation has a system to improve practices in line with new information and techniques through continual improvement. All staffs can propose continual - Plan for management of scheme

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) smallholders (where appropriate) improvement. Continual improvement was communicated to all unit - Quality of planting materials managements. - Crop projection = Fresh Fruit

Bunches (FFB) yield trends - Mill extraction rates = Oil Extraction Rate (OER) trends - Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends - Forecast prices - Financial indicators – profitability forecast (income vs cost) - Projected expansion (area, mill capacity, infrastructure, social amenities) - General strategy and allocation for environmental and social management (refer to P5, P6 and P8) c. Is this management document subjected to an annual review? d. For plantations on peat, is there a long term viability plan – e.g. flooding, drainability assessments and subsidence issues? (see 4.3.5) e. Does the grower have a system to improve practices in line with new information and techniques? - Has the personnel in charge (PIC) been identified? - How is the information updated? - Is there a documented SOP which requires monitoring and updating information to improve practices? - Is new information communicated to

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) workers and scheme smallholders (where appropriate)? How is it communicated?

3.1.2 An annual replanting programme projected for a minimum of five years (but longer where necessary to reflect the management of fragile soils, see Criterion 4.3), with yearly review, shall be available. a. Is there an annual replanting programme Replanting program of PT. Supra Projected annual replanting programme was described in the “Replanting YES projected for a minimum of five years? Matra Abadi – Teluk Panjie Estate Program of PT. Supra Matra Abadi – Teluk Panjie Estate”. Detail Annual Replanting Programme for 2015 – 2023 are as follow: b. Has it been documented?

c. Is the progress of implementation Year Area (Ha) documented? 2015 316 d. How does the programme take into consideration fragile soils such as peat? 2016 - Is there a longer projection period (see 2017 292 C4.3)? 2018 510 2019 567 e. Is there evidence of a yearly review of 2020 620 the replanting programme? 2021 510 2022 569 2023 551

The progress of implementation was documented. Based on map of soil, there is no fragile soil such as peat in Teluk Panjie Estate. The replanting program is reviewed annually.

Audit Report

PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 4.1 Operating procedures are appropriately documented, consistently implemented and monitored. (M) Standard Operating Procedures (SOPs) for estates and mills shall be documented.

Specific Guidance: For 4.1.1 and 4.1.4: 4.1.1 SOP and documentation for mills should include relevant supply chain requirements (see RSPO Supply Chain Certification Standard, Nov 2011).

For National Interpretation: National codes of practice or Best Management Practices (BMPs) will be referenced.  Agriculture Policy Manual The documented Standard Operating Procedures (SOP) for Estate was evident: YES  Mill Policy Manual a. Have the SOPs for mills and plantation  AA-APM-OP-1100.01-R1 Nursery

been documented?  AA-APM-OP-1100.02-R1 Land Preparation b. Does the SOP cover key processes,  AA-APM-OP-1100.03-R1 Creation and Maintenance of Road harvesting, transportation, manuring,  AA-APM-OP-1100.04-R1 Creation and Maintenance Trenches IPM, GAP, Supply Chain requirements for  AA-APM-OP-1100.05-R1 Soil and Water Conservation the mill, etc.?  AA-APM-OP-1100.06-R1 Planting Leguminous Cover Crop c. Is a copy of the SOP available on site and  AA-APM-OP-1100.07-R1 Oil Palm Planting is it documented in an appropriate  AA-APM-OP-1100.09-R1 Manuring language?  SOPs for IPM: o AA-APM-OP-1100.10-R1 Pest & Diseases Control d. Is there evidence that SOPs are o AA-APM-OP-1100.08-R1 Weeding Control implemented and understood by o AA-APM-OP-1100.14-R1 Census and Identification Plant workers?  AA-APM-OP-1100.11-R1 Management Pesticides e. Are the SOPs appropriate and adequately  AA-APM-OP-1100.12-R1 Castration cover all estate and mill processes and  AA-APM-OP-1100.13-R1 Pruning activities?  AA-APM-OP-1100.15-R1 Census of Production f. How are the SOPs made available at the  AA-APM-OP-1100.16-R1 Consolidation point of use?  AA-APM-OP-1100.17-R0 Water Management  AA-APM-OP-1100.18-R1 FFB Harvesting

 AA-APM-OP-1100.19-R1 Transportation Management  AA-APM-OP-1100.20-R1 Replanting

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

The documented procedures regarding processing activities of palm oil have already described within the “Mill Policy Manual” (MPM) document which approved by Operations Director. The manual are consist of each processing station start from FFB (Fresh Fruit Bunch) receiver until the CPO delivery and also include the procedures of machineries preventive maintenance, utilities and quality control. Herewith the procedures consists within the MPM such as:  AA-MPM-OP-1400.02-R2 FFB Receiver Procedure  AA-MPM-OP-1400.03-R1 Sterilizer station Procedure  AA-MPM-OP-1400.04-R1 Threshing station Procedure  AA-MPM-OP-1400.05-R1 Digesting and Screw Press station Procedure  AA-MPM-OP-1400.06-R1 Clarifier station Procedure  AA-MPM-OP-1400.07-R1 Nut Polishing Procedure  AA-MPM-OP-1400.08-R1 Kernel station Procedure  AA-MPM-OP-1400.11-R1 Water Treatment Procedure  AA-MPM-OP-1400.12-R1 Laboratory Procedure  AA-MPM-OP-1400.14-R2 Storage and delivery Procedure  AA-MPM-OP-1400.15-R1 Preventive machineries maintenance Procedure  AA-MPM-OP-14000.13-R1 – WWTP Process  AA-MPM-OP-1400.17-R3 Traceability  AA-MPM-OP-1400.18-R3 Mass Balance

Copy of the procedures was available on site and is it documented in Indonesian language. Procedures were distributed to Estate and Mill. Procedure has been disseminated periodically to all Estate and Mill employees through regular training and morning briefing. Interviews with the employees indicated satisfactory level of understanding and implementation in relation to their respective job function. Sample of estate operational implementation were taken in harvesting process in Block B89n Afdeling II and pesticide spraying (circle and path) in Block A88e Afdeling I. Mill operational implementation was conducted started from loading ramp to CPO dispatch including supporting process, e.g. maintenance, workshop

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and warehouse activities. It was observed that all of the activities were implemented according to procedures. Sample of Mill operational implementation were taken from each station (sterilization, pressing, clarification etc.) process from last week of January 2016. The production log sheets for each station were evident and the process parameters such as time, pressure, temperature were controlled properly and matched to the standard determined. In process Inspection reports were evident and the records were maintained properly. Sample of dispatch CPO was taken from delivery on 29 February 2016 for all mills audited. The target percentage of FFA, moisture and dirt were <3.58, <0.158, and <0.029. The records shown that all dispatched CPO were matched to the target determined.

A mechanism to check consistent implementation of procedures shall be in place.

4.1.2 Guidance: Mechanisms to check implementations could include documentation management systems and internal control procedures. a. Is there a master list of all SOPs?  Procedure Internal Audit Master list SOP and Work Instruction was available and there was a control YES document procedure that arranged mechanism for SOP and WI revision. Control b. How does the company keep track of  Procedure for Corrective and of record procedure was evident, revision history was available. The company revisions? Preventive Action  Master list of Procedure and keep track of revisions. c. Is there mechanism for: Work Instruction - Translation of SOP into work  Procedure of Document The procedures has described mechanism for: instructions in appropriate Control - Translation of SOP into work instructions in appropriate languages, SOP and languages?  R&D Agronomy Visit Work Instruction are presented in English and Bahasa Indonesia - Records of training for all levels? (KTP/R&D-AGRO/01/15) - Records of training for all levels - Internal control (e.g. audit and - Internal control (e.g. audit and review, field inspection) procedure in place to review, field inspection) procedure monitor consistent implementation of SOPs, in place to monitor consistent - Trained and competent personnel assigned to carry out internal control implementation of SOPs? activities - Trained and competent personnel - Implementation audits to be carried out regularly covering implementation of assigned to carry out internal control all the SOPs activities? - Procedure to address non-compliance and corrective action for continuous - Implementation audits to be carried improvement

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) out regularly covering implementation of all the SOPs? - Procedure to address non- compliance and corrective action for continuous improvement? 4.1.3 Records of monitoring and any actions taken shall be maintained and available, as appropriate. a. Have the records been maintained on the  LUK (Laporan Unit Kebun) The records of internal audit were maintained properly such as internal audit YES following? Monthly Estate Report. RSPO, ISPO and OHS and environment. The actions arise were documented, - Measurements or results of internal  MOS (Mill Operation implemented and monitored. Internal control operational has been conducted control and monitoring activities Summary) periodically from Head Office. The last internal control was conducted on 9 March- (refer 4.1.2)  Internal audit report: 1-6 13 March 2015. The content of the report covered evaluation of operational - Records of corrective actions and activities also quality of products including FFB received, sterilization, unstripped February 2016 improvement undertaken  Internal control Audit Report on bunch, processing temperature, raw water treatment, effluent pond, laboratory, 9-13 March 2015 and mass balance and cross check. The report included summary of current visit, recommendation for following up and outstanding issue from the previous visit. Audit result was evident and corrective action has been determined in the action plan visit. From the records reviewed, seen that all the findings have been followed up properly. 4.1.4 (M) The mill shall record the origins of all third-party sourced Fresh Fruit Bunches (FFB). a. Is there an SOP for third-party FFB  Procedure AA-MPM-OP-1400.02- SOP of third party sourcing has been defined in procedure AA-MPM-OP-1400.02- YES sourcing? R2: FFB Receiver. R2 FFB Receiver. b. Is there a list of approved third-party FFB  List of FFB Approved Supplier The list of approved third party has been sighted as follows: suppliers? 2016. 1) Jamiatul Hasibuan c. Is there proof of observed implementation 2) Naga of SOP? 3) Alex 4) Lina d. Is there daily and summary records of 5) Anugrah Alam volume and origins of third-party FFB 6) Katijan received? 7) PT. Golden Permata e. Have these records been verified against 8) Marsai the available document? 9) Yang Yam 10) Sinar Makmur 11) Naga Mas Abadi 12) H. Zulkifli Mahyuddin

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 13) Sumber Mulia 14) Sehati 15) Abdul Gani 16) JH. M. Sawit 17) JH. S. Makmur 18) JH. M. Jaya The sorting process was sighted in relevant records and conducted accordingly to the procedure. Daily and summary record of 3rd party FFB received was shown and several samples were reviewed such as for FFB received on 26 February 2016 from Jamiatul Hasibuan. Verification has been conducted against the SOP of third party sourcing has been defined in procedure AA-MPM-OP-1400.02-R2 FFB Receiver. There was also statement on receipt note from third party supplier that justify that the source of FFB received was not from illegal source and also not an illegal FFB. Interview has been conducted to the third party supplier during audit such as with supplier named Jamiatul Hasibuan. The result of the interview indicated that all suppliers were satisfied with the performance of the organisation. There was no complaint related to payment issue. 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. There shall be evidence that good agriculture practices, as contained in Standard Operating Procedures (SOPs), are followed to manage soil fertility to a level that ensures optimal and sustained yield, where possible.

Guidance: 4.2.1 Long-term fertility depends on maintaining the structure, organic matter content, nutrient status and microbiological health of the soil. Nutrient efficiency should take account of the age of plantations and soil conditions.

For National Interpretation: The range of appropriate techniques will be identified. a. Are there SOPs for Good Agricultural  AA-APM-OP-1100.09-R1 SOP for managing soil fertility was available in AA-APM-OP-1100.09-R1 YES Practices in managing soil fertility? Manuring Manuring. The SOP explained good agricultural practice in managing soil fertility. Manuring are performed based schedule, dosage and location from Manuring b. Is there evidence that the SOPs have  Memorandum from Plantation been implemented and monitored? Head #018/HP/Memo/XII/15 Recommendation. Manuring recommendation in 2016 was defined based leaf dated 15 December 2015 sampling unit (LSU) and soil sampling unit (SSU). Manuring activity was reported  Manuring Recommendation in LUK monthly.  LUK (Estate Report)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Field observation of manuring Field observation shows that plants are in good condition. The application was activity according to Memorandum from Plantation Head #018/HP/Memo/XII/15 dated 15 December 2015 and fertiliser dosage was in accordance with manuring recommendation and manuring technique was in line with the procedure.

4.2.2 Records of fertiliser inputs shall be maintained. a. Is records of fertiliser inputs maintained?  Manuring recommendation and Record of fertiliser input was maintained in Manuring Recommendation and YES b. Is there records to proof that the fertiliser application report 2015 and application report. The fertiliser program was linked to the agronomic report in LUK (Estate Monthly Report). program is linked to the agronomic 2016

report?  LUK (Estate Report)

c. Is there records of fertilizer usage per Record of manuring realisation in 2015 shows that the realisations are in tonne of FFB production (>in Summary accordance with the plan/recommendation. The realisation are: Table, specific types of fertilizers)? Recommendation Realisation Fertilizer % (ton) (ton) ZA 1,945.34 1,945.39 100% RP 395.19 395.88 100%

MOP 535.70 538.54 101% Kieserite - 6 - HGFB 18.91 18.90 100% Dolomite 384.72 384.52 100% EFB 32,071.60 41,792.01 130% T o t a l 35,351.46 45,075.26 128%

4.2.3 There shall be evidence of periodic tissue and soil sampling to monitor changes in nutrient status. a. Is there SOPs for tissue and soil  SOP Leaf and Soil Sample SOP for tissue and soil sampling was available describing leaf and soil sample YES sampling? Taking taking by trained personnel. Leaf and soil sample are taken to the company

owned laboratory R & D in Tebing Tinggi, North Sumatera. Leaf sample are taken b. Is there evidence of implementation of the  Soil Analysis Report, April 2015 annually whilst soil sample taken in five years interval based on age of trees.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) SOPs, including availability of records?  Foliar Analysis Report, May Evidence of periodic leaf sampling analysis were available on Foliar Analysis c. Is there records of tissue and soil 2015 analysis? Result, e.g.: - Foliar Analysis Report on May 2015 # 036/INT/R&D/MEI/L/15 d. Is the results of the study incorporated - Foliar Analysis Report on May 2015 # 037/INT/R&D/MEI/L/15 into the fertilizer program? Evidence of periodic soil sampling analysis were available on Soil Analysis Report, e.g.: - Soil Analysis Report on April 2015 # 015-1/T/BINA/IV/2015 - Soil Analysis Report on April 2015 # 015-4/T/BINA/IV/2015

Result of leaf sampling analysis and soil sampling analysis was incorporated into the manuring program. Manuring recommendation were made base on the result of leaf sampling analysis and soil sampling analysis.

A nutrient recycling strategy shall be in place, and may include use of Empty Fruit Bunches (EFB), Palm Oil Mill Effluent (POME), and palm residues after replanting.

4.2.4 Guidance: The nutrient recycling strategy should include any use of biomass for by-products or energy production. a. Is there a nutrient recycling strategy in  LUK (Estate Report) YES There was the nutrient recycling strategy performed by organisation such as land place? application from POME (Palm Oil Mill Effluent), Empty Fruit Bunch (EFB), fibre, b. Does the strategy include the following? boiler ash and kernel shell. The nutrient recycling strategi does include clear  Clear objectives and time-bound objective and time-bound targets, inventory of residues (byproduct), biomass targets recycling program, implementation and monitoring records.  Inventory of POME is applied using piping system and flat bed. Land application was applied - EFB in Teluk Panjie Estate, with permit from Regent of Labuhan Batu Selatan Regency - POME #660/997.4/BPPTPM/2013 valid for 5 years. - Fibre - Boiler ash EFB were also applied in Teluk Panjie Estate. EFB were applied based on the - Kernel shell recommendation in terms of dosage per ha and location. EFB application was - Palm residues from replanting performed as mulch ground cover and added of organic material.  Biomass recycling program Total applications of EFB in 2015:  Implementation and monitoring records Estate Recommendation Realisation (Kg) % (kg)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Note to auditor: Ground verification required Teluk Panjie 32,071.60 41,792.01 130%

During site visit, it was observed that Land Application has been applied in the permitted area and EFB has been applied in the recommendation area. 4.3 Practices minimise and control erosion and degradation of soils. (M) Maps of any fragile soils shall be available.

Guidance: Plantations on peat should be managed at least to the standard set out in the ‘RSPO Manual on Best Management Practices (BMPs) for existing oil palm cultivation on peat’, June 2012 (especially water management, fire avoidance, fertiliser use, subsidence and vegetation cover). 4.3.1 Techniques that minimise soil erosion are well known and should be adopted, where appropriate. These should include practices such as ground cover management, biomass recycling, terracing, and natural regeneration or restoration instead of replanting.

For National Interpretation: National Interpretation (or an RSPO recognised parallel means) will refer to national guidance, and identify the best management practices and appropriate techniques for maintaining soil quality in local conditions, including guidance on soil types, and any appropriate performance thresholds such as maximum acceptable slope gradient for planting. a. Is there soil maps showing presence of  Maps of soil type in Teluk Panjie YES Maps of soils survey by R&D Centre Tebing Tinggi Oktober 2011 were available fragile soils and problem soils (refer to Estate were available in scale 1 for Teluk Panjie Estate. The maps included maps of fragile soils. Based on maps 4.3.6)? : 40,000 of soils type, there are no fragile soils present in Teluk Panjie Estate. Soil b. Are maps georeferenced and of  Field observation in Teluk characteristic is presented in table below: appropriate scale (1:50,000)? Panjie Estate KELAS LERENG JENIS TANAH LUAS (Ha) % Flat-undulating (0-8%) Endoaquepts 1,556 40

Flat-undulating (0-8%) Hapludults 611 16 Flat-undulating (0-8%) Dystrudepts 174 4 Steep (>30%) Dystrudepts 446 12 Flat-Wavy (0-8%) Humaquepts 1,068 28 TOTAL 3,855 100

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

4.3.2 A management strategy shall be in place for plantings on slopes above a certain limit (this needs to be soil and climate specific).

a. Is there a management strategy in place  Maps of soil type in Teluk Panjie Based on maps of soil in Teluk Panjie Estate, there was area with slopes > 30% YES for plantings on slopes? Estate were available in scale 1 with total area 446 Ha (12 % of the total area). : 40,000 b. Does the management strategy include The organisation has defined the strategy for planting of slopes area in the the following?  Field observation in Teluk procedure AA-APM-OP-1100.02-R1 - SOP Land Preparation. The management - Identification of steep areas not Panjie Estate strategy include the following: suitable for planting  AA-APM-OP-1100.02-R1 - SOP Identification of steep areas not suitable for planting - Policy of planting on slopes Land Preparation - Policy of planting on slopes - SOPs to minimise soil erosion  LUK (Estate Report) - based on local soil and climate  Productivity of upkeep 2015 - Method to minimise soil erosion based on local soil and climate conditions, e.g. ground cover conditions, e.g. ground cover management, biomass recycling, management, biomass recycling, terracing, and natural regeneration or restoration instead of replanting terracing, and natural regeneration or restoration instead of replanting System for planting on slopes area was implemented through terracing, Making the catchment where runoff water, called: “Tapak Kuda” (platform), growing of c. Is there proof of records of field legume cover crops (LCC) and determining of planting space. To minimise and inspection on SOP implementation? control erosion in slope area, several activities have been implemented by the organisation including terracing, Making the catchment where runoff water, called: “Tapak Kuda”, growing of legume cover crops (LCC) and determining of planting space. The organisation also measured erosion flow monthly by considering rain fall factor, type of soil and slope. The result of erosion flow was reported to related local government. So far level of erosion flow was good.

4.3.3 A road maintenance programme shall be in place.

a. Is there a road maintenance programme  Field observation in Teluk Road maintenance program has been established. Road maintenance was YES in place with supporting budget and Panjie Estate conducted manually and mechanically. Road Maintenance Program described, resources?  LUK (Estate Report) length, location with supporting budget and resourced. Road Maintenance b. Is there road maintenance records?  Recapitulation of upkeep 2015 Program is recorded in LUK (Monthly Estate Report). During field observation all main roads and collection roads were well maintained

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and passable for vehicle. Good road condition is important for FFB transportation.

(M) Subsidence of peat soils shall be minimised and monitored. A documented water and ground cover management programme shall be in place.

Specific Guidance: 4.3.4 For 4.3.4: For existing plantings on peat, the water table should be maintained at an average of 50cm (between 40 - 60cm) below ground surface measured with groundwater piezometer readings, or an average of 60cm (between 50 - 70cm) below ground surface as measured in water collection drains, through a network of appropriate water control structures e.g. weirs, sandbags, etc. in fields, and watergates at the discharge points of main drains (Criteria 4.4 and 7.4). a. Is there an SOP to provide guidance on  Maps of soil type in Teluk Panjie Based on Semi detail Soil Map and field observation at Teluk Panjie Estate there NA subsidence management? Estate in scale 1 : 40,000 are no peat soils in the plantation. b. Does the SOP make reference to the RSPO BMPs on peat? c. How is subsidence being monitored? d. Are there records of subsidence monitoring? e. How is subsidence being minimised? f. Is there a water management programme and evidence of implementation? For existing plantings on peat, the water table should be maintained at an average of 50cm (between 40 - 60cm) below ground surface measured with groundwater piezometer readings, or an average of 60cm (between 50 - 70cm) below ground surface as measured in water collection drains, through a network of appropriate water control structures e.g. weirs, sandbags, etc. in fields, and watergates at the discharge points of main drains (Criteria 4.4 and 7.4). g. Is there a ground cover management programme and is there evidence of

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) implementation?

Drainability assessments shall be required prior to replanting on peat to determine the long-term viability of the necessary drainage for oil palm growing.

Specific Guidance: 4.3.5 For 4.3.5: Where drainability assessments have identified areas unsuitable for oil palm replanting, plans should be in place for appropriate rehabilitation or alternative use of such areas. If the assessment indicates high risk of serious flooding and/or salt water intrusion within two crop cycles, growers and planters should consider ceasing replanting and implementing rehabilitation. a. Was a drainability assessment conducted  Maps of soil type in Teluk Panjie Based on Semi detail Soil Map and field observation at Teluk Panjie Estate there NA before replanting on peat? Estate in scale 1 : 40,000 are no peat soils in the plantation. b. Was a flood risk map provided as a result of the drainability assessment? c. If the drainability assessment shows that an area is unsuitable for replanting, are there alternative plans in place for rehabilitation and alternative use in accordance to the RSPO BMPs?

4.3.6 A management strategy shall be in place for other fragile and problem soils (e.g. sandy, low organic matter, acid sulphate soils).

a. Is there a management strategy in place  Maps of soil type in Teluk Panjie Based on Semi detail Soil Map and field observation at Teluk Panjie Estate there NA for other fragile and problem soils? Estate in scale 1 : 40,000 are no peat soils in the plantation. b. Does the management strategy include SOPs for the management of other fragile and problem soils?

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) c. Is inspection and implementation records available?

4.4 Practices maintain the quality and availability of surface and ground water. An implemented water management plan shall be in place.

Specific Guidance: For 4.4.1: The water management plan will: • Take account of the efficiency of use and renewability of sources; • Ensure that the use and management of water by the operation does not result in adverse impacts on other users within the catchment area, including local communities and customary 4.4.1 water users; • Aim to ensure local communities, workers and their families have access to adequate, clean water for drinking, cooking, bathing and cleaning purposes; • Avoid contamination of surface and ground water through run-off of soil, nutrients or chemicals, or as a result of inadequate disposal of waste including Palm Oil Mill Effluent (POME).

Guidance: Growers and millers should address the effects of their use of water and the effects of their activities on local water resources. a. Is there a water management plan in YES Organization has defined water management plan in Procedure AA-MPM-OP- place for mill and plantation with identified  Documented procedure (AA- (Minor NCR 1400.11-R1 include water source and distribution identification, volume of water actions? MPM-OP-1400.11-R1 dated 2016-04 is utilization, parameter/standards of water utilization, identify the impacts include February 2009) regarding water closed) b. Does the plan include the following? treatment water effluents/wastes and also the method to reduce and control. Also defined in  Identification of water sources Procedure AA-APM-OP-1100.05-R1-Soil and Environmental Field Procedure on  Efficient use of water  License of river/surface water the Restoration of Riparian and Areas surrounding Lakes/Reservoirs and Springs (APU) from Labuhan Batu  Renewability of water source (AA-KL-12-EFP), issued on August 1st 2010. For protection and management of Regency based on decree No.  Impacts on catchment area and riparian buffer zones at or before replanting. Procedure mentioned that in 50 m on 503.547/188/DBM-IV/2012, No. local stakeholders the left and right side of riparian buffer zones, Estates are prohibited to apply 503.547/187/DBM-IV/2012 and agrochemical, used manual manuring and river bank was planted by erosion  Access of clean drinking water all No. 503.547/202/DBM-IV/2012. year round for stakeholders barrier crop (planting of “Bamboo, Angsana, Sungkai, etc).  Avoidance of surface and ground  Water analysis measurement The organisation has described water management by : water contamination for period 2015 by Balai Teknik Kesehatan Lingkungan dan • Identification of water sources; The water sources at Teluk Panjie Mill and c. Have the identified actions in the plan Pengendalian Penyalit estate were from Ground water for mill processing and domestic use in 3 point been implemented? (BTKLPP) Kelas I Medan of place. Organisation has the license of Ground water utilization for mill from Head of Badan Pelayanan Perizinan Terpadu North Sumatera SK  Records of water consumption No.610/23/BPPTSU/2/12.I/B/2013 dated 1st April 2013 valid until 3 years. Also period 2014 and 2015 at mill

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and estate. has the license of Ground water utilization for domestic use based on Decree Regent of Labuhan Batu Selatan No. 503/455/BPPTPM-LS/2012 dated 28th  Mill operations summar 2015 November 2012.  Water management programme • Efficiency use of water, organisation has performed monitoring the water consumption; if there is above the average, then efficiency of water use will conducted by reduce the water consumption, water savings from sochlet water recycle in the Mill laboratory and reuse of turbine water coolant. • Renewability of water source, organisation has been protect the source of water to ensure the renewability of water source by Restoration of Riparian and Areas surrounding Lakes/Reservoirs and Springs and protect the riparian zone. • Reduce and minimized Impacts on catchment area and local stakeholders; organisation are prohibited to apply agrochemical and chemical fertilizer in riparian zone and planted erosion barrier crop (planting of “Bamboo, Angsana, Sungkai, etc). • Maintain water quality to provide of clean drinking water all year round for stakeholders; Organisation has been performed regular monitoring of water quality each semester based on Permenkes 492/MENKES/PER/IV/2010 and analyzed by Balai Teknik Kesehatan Lingkungan dan Pengendalian Penyakit (BTKLPP) Kelas I Medan. Water analysis certificate were evident in certificate No. 5363-65/K/AL/12/2015 dated 10 December 2015. The analysis result was met with the requirement. • Avoidance of surface and ground water contamination; Organisation also performed monitoring of outlet from oil trap in workshop, warehouse based on KepMenLH No.5 tahun 2014 and domestic waste in emplacement based on PerMenLH No. 05 year 2014 appendix XLVI. Analysis conducted by Balai Teknik Kesehatan Lingkungan dan Pengendalian Penyakit (BTKLPP) Kelas I Medan. Certificate analysis was evident in certificate No.4885 - 4886/K/AM/11/2015. The analysis result was met with the requirement.

Minor Non Conformities: Not enough evidence that organization has implemented water management and

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) water efficiency. Objective evidence :: - Ground water usage actual in Teluk Panji Estate on June 2015 average 218 – 228 L and on December 2015 average 220 – 470 L usage per day, while in permit water debit allowed was 193,33 L/day. - The analysis results of waste water in Workshop oil trap outlet and waste water outlet of TUS (spraying team washing house) for parameters of lead (Pb) was exceeded the standard quality - quality standard of 0.1 mg/l but the analysis results was 0.2544 mg/l. - Maintenance oil trap was insufficient, it can be seen from the oil trap compartment which still contains a lot of oil and oil were not quoted and the outlet in the workshop oil trap still visible a thin layer of oil.

Correction: - Conduct a new license processing - Conduct cleaning of oil trap once in three months and the residual from cleaning put into hazardous waste warehouse, then do retesting. - Conduct sample taking using plastic container, then retesting. - Conduct maintenance and oil trap cleaning.

Root Cause: - Based on visit of Industrial and Mining Agency North Sumatera Province dated 11 March 2016, the Agency admitted has made a typing mistake in permit of ground water usage, where 193.33/day should be 193.33/second. - The residual of diesel sediment in oil trap has made sample of testing contain Pb. - Sample taking of waste from spraying team was using steel container made the test results contains Pb. - There is a leakage in the trap wall, so the last trap was still containing oil.

Corrective Action:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) - Management of Teluk Panjie assigned KTU to ensure that license gained is correct in numbers and measuring units. - Made program for maintenance and cleaning of oil trap and warehouse staff as PIC. - Made program for maintenance and cleaning of spraying team washing house and spraying Mandor as PIC.

(M) Protection of water courses and wetlands, including maintaining and restoring appropriate riparian and other buffer zones (refer to national best practice and national guidelines) shall be demonstrated.

Specific Guidance: 4.4.2 For 4.4.2: Refer to the ‘RSPO Manual On Best Management Practices (BMP) for management and rehabilitation of natural vegetation associated with oil palm cultivation on peat’, July 2012.

For National Interpretation: National Interpretation will refer to national guidelines or best practice and where appropriate include performance thresholds for requirements such as the size and location and methods of restoration of riparian strips or acceptable maximum run-off levels. a. Is there a map identifying water courses YES • Identified water courses and Organization has been identifying water courses and wetland in the plantation and wetlands? (Major NCR wetland in Teluk Panji Estate, area and documented in riparian map with scale 1:80,000. There were identified 2016-05 is b. Are the water courses and wetlands documented in HCV water courses and wetland in Teluk Panji Estate, i.e: closed) protected? Identification report  Riparian buffer zone of Kalam River, with area 6,05 ha. c. Are the riparian and buffer zones • AA-APM-OP-1100.05-R1-Soil maintained and restored in existing and Water Conservation Protection of waterways and wetlands have been made by the company with the plantation and replanting areas? following way : • Riparian restoration program - Protection of riparian areas (20 m left and right side) with no chemical crops d. Is there SOP for riparian and buffer zone protection? • Field observation care activities both fertilizer and herbicide spraying e. Has the SOP been implemented? - Conduct rehabilitation of riparian Policy of riparian buffer zone management at or before replanting was provided in

related procedure. Procedure mentioned that riparian buffer zone is prohibits the application of agrochemicals on the riparian area. The other programs for maintaining and restoring of riparian buffer zones are:  Manual upkeep of weeds controlling in 0-10 m of riparian buffer zones.  Planting bamboo and ”ketapang” at River and trench and planting vertiver,

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) sungkai, angsana and pohon roda at Riparian zone.  Put permanent pegs per 200 meters and paint the tree as boundary sigh.  Not dispose stem to River and trench.

Organization also has been establish the procedure for riparian and buffer zone protection which documented in AA-APM-OP-1100.05-R1-Soil and Water Conservation. The organisation has a procedure that prohibits the application of agrochemicals on the riparian area: Environmental Field Procedure on the Restoration of Riparian and Areas surrounding Lakes/Reservoirs and Springs (AA-KL-12-EFP), issued on August 1st 2010. The organisation has declared its HCV area of riparian to be 50 meters wide. Prohibition of agrochemicals application along the riparian area, weeding and tree root levering, disposing/ discarding/throwing midrib to rivers and creeks were implemented to protect and maintain the quality of water in the rivers. For further elaboration, please see section for Criterion 5.2. Riparian zone were well maintain, the following was activity to maintain riparian zone such as : - Boundary markers placement in 2 rows of palm trees (20 m) related restrictions spraying of chemicals and chemical fertilizers in the area of 20 m side of the river. There was the evidence during the audit, riparian zone was well maintain and no contamination of chemical usage and fertilizer - Warning boards placement which contain information restrictions the pesticide usage and chemical fertilizers in the riparian area. - Riparian rehabilitation by planting vetiver grass, a shade trees and barriers to erosion trees (Bamboo, Angsana, Sungkai, etc.). There was the evidence of plan and realization for riparian rehabilitation, its observed Bamboo, Angsana trees and Sungkai was planted and grow well in both side of the river.

Non Conformities: The company was not determined riparian area based on provision of the applicable regulations (PP No. 38/2011 regarding River, Kepres No. 32/1990).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

Correction: Performed addition of riparian pegs distance to be 50 meter.

Root cause: Riparian pegs were not made based on geomorphology aspect and assessment.

Corrective: Assigned personnel to perform monitoring of riparian area according to the SOP which stated that pegs (borders) must be placed based on geomorphology aspects (meander) and assessment.

Appropriate treatment of mill effluent to required levels and regular monitoring of discharge quality, especially Biochemical Oxygen Demand (BOD), shall be in compliance with national 4.4.3 regulations (Criteria 2.1 and 5.6). YES a. Is the mill effluent treatment process in  Report of analysis mill effluent Teluk Panji Mill waste water (POME) was processed through a series of waste place? period January – December water treatment ponds: one cooling pond, one acid pond, two anaerobic ponds, b. Is there a process in place for checking 2015 from Balai Teknik one aeration pond, one sediment pond, and three buffer ponds. Process and monitoring water discharge quality, Kesehatan Lingkungan dan parameter monitoring and maintenance of the ponds were sighted. particularly BOD? Pengendalian Penyalit POME is monitored monthly as required by permit. The results of POME (BTKLPP) Kelas I Medan c. Is the water discharge quality in monitoring were reviewed including measurement of BOD for January to

compliance with national regulations?  Permit of land application from December 2015. The Environment Ministry Decree No. 28/2003 required that BOD of POME discharged is less than 5,000 mg/litre. The result of POME quality d. Does the mill have a license for Regent of Labuhan Batu treatment, discharge or land application Selatan 503/354/BPPTM/2014 during this period was under 5,000 mg/litre (average 500 – 1,000 mg/litre). th of mill effluent, and is the mill in compliant dated 18 August 2014 There is sighted the license of waste water discharge 503/354/BPPTM/2014 with the requirements of the license? dated 18th August 2014 that valid for 3 (three) years from Regent of Labuhan Batu Selatan.

4.4.4 Mill water use per tonne of Fresh Fruit Bunches (FFB) (see Criterion 5.6) shall be monitored.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) YES Mill operation summary 2014 and Mill water use per tonne of FFB is monitored monthly. Result of monitoring of mill a. Are there procedures to measure mill 2015 water use per tonne of FFB was sighted for period January to December 2015. It water usage, and are the procedures was noted that mill water use per tonne of FFB period January to December 2015 implemented? (0.89 m3/ton FFB) was still below compared with budget 1.10 m3/ton FFB. b. Are there records of mill water use per The organisation has program to reduce water consumption, such as: recycle the tonne of Fresh Fruit Bunches (FFB)? water cooler turbine discharge water basin; recycle condensate water discharge water dilution; minimize duration of cleaning to be every two weeks.

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

(M) Implementation of Integrated Pest Management (IPM) plans shall be monitored.

4.5.1 Guidance: Growers should apply recognised IPM techniques, incorporating cultural, biological, mechanical and physical methods to minimise the use of chemicals. Native species should be used in biological control where possible. a. Is there a documented IPM plan?  IPM Program – Budget 2016 Pest and Diseases management program of oil palm plantations have been YES  SOP AA-APM-OP-1100.10-R1 prepared in the budget 2016. b. Does the IPM plan include the following? Pest and Diseases Control  Identification of potential pests and The SOP describes integrated pest control (integrated pest management/IPM)  Report of pest and diseases, thresholds plan which combines various control techniques e.g. mechanical, biological, December 2015 and January physical and chemical, applied early warning system (EWS) through periodically  What are the techniques used 2016 (cultural, biological, mechanical and census for pests.  Recapitulation of pest census physical methods)? IPM program included:  What are the native species used as  Visual observation (e.g. broken leafs or stems and fruit rotten) part of the biological control method?  Conducting a census (to determine the distribution and level of attack)  Does it help in reducing the use of  Control (manual, biological or chemical), e.g hand picking, light trap, planting chemicals over a period of time? of beneficial plant (nest of natural predator for caterpillars)  Prophylactic use of pesticides  Minimisation of pesticide use  Minimization of pesticide use  Census of evaluation (to see the effect of control)

 Review on the plans to suit the present condition such as IPM plan was well implemented and documented, e.g.: replanting?  Census of caterpillar is conducted monthly. Based on result of caterpillar

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) c. Is there an SOP to implement the plan census in 2015, there was no caterpillar attack therefore there was no and monitor its effectiveness? pesticide use. d. Is there records of pest occurrence and  To control rat, the organisation applied Tyto alba (owls) as predator of rat. control? House of owl was built one in 25 Ha. Condition of Tyto alba is monitored three times a year.  There was no Oryctes attack. Planted the beneficial plant as the host/nest for natural predator for caterpillars (Eucanticona purcelata, cycanus sp). The beneficial plant such as: Turnera subulata planted in the collection and the main road. Planting and upkeep of beneficial plants in Teluk Panjie Estate was sighted and during field observations, it was observed that beneficial plants were well maintained.

4.5.2 Training of those involved in IPM implementation shall be demonstrated. List of participant attendance Training of implementation of IPM has been conducted several times, e.g. on 14 YES a. Is there records of training provided to March 2012, 18 April 2013, 7 October 2014 and 18 July 2015. Participant of training was staff and non-staff employees from Teluk Panjie Estate. List of those involved in the implementation of IPM? participant attendance was sighted. Training material covered IPM technique and implementation.

4.6 Pesticides are used in ways that do not endanger health or the environment.

(M) Justification of all pesticides used shall be demonstrated. The use of selective products that are specific to the target pest, weed or disease and which have minimal effect on non-target species shall be used where available.

Specific Guidance: For 4.6.1: Measures to avoid the development of resistance (such as pesticide rotations) should be applied. The justification should consider less harmful alternatives and IPM. 4.6.1 Guidance: The RSPO has identified some examples of alternatives to pesticide use, which include those listed in the ‘Research project on Integrated Weed Management Strategies for Oil Palm; CABI, April 2011’. Due to problems in the accuracy of measurement, monitoring of pesticide toxicity is not applicable to independent smallholders (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Does the organization have a policy on  AA-APM-OP-1100.11-R1 – The organisation has established procedure on safe use of chemical, which YES safe use of chemicals? Pesticide management described on safe use of chemical, selection, use and storage of pesticide. The b. Does the organization have SOPs for use  Annual budget procedure also described use of selective pesticides that are specific to target pests, weeds, or diseases. Each type of pesticide used have been defined of selective products that are specific to  LUK (Estate Report) target pests, weeds, or diseases and  Distribution of pesticide use specific target of pest, types of weeds, application doses per hectare which have minimal effect on non-target species and a broad plan of applications specified in which have minimal effect on non-target the annual budget. To avoid development of resistance have been implemented species? i. Measures to avoid the by pesticides rotation.

development of resistance (such Less harmful alternatives and IPM was applied by planting of beneficial plants, as pesticide rotation) should be applied. building house of owl, detection and census of caterpillar. Pesticides used by Teluk Panjie Estate has license and registered in the ii. Is there a list of all pesticide with target species and justification of Agriculture Department as mentioned in Pesticide Commission Book “Buku Komisi Pestisida”: use? 1. Eagle (Isopropilamina glyphosate 480 g/L), license RI.01030119941170, iii. The justification should consider th less harmful alternatives and IPM. valid through January 9 2017. 2. Gramoxone (paraquat 200 g/l), License RI.010301197436, valid through c. Is there evidence of implementation of March 18th 2019. SOP on the ground? 3. Kenrane (Trifloroksipir - 1 - methyl heptyl ester 288 g / l), License RI.01010120103759, valid through September 6th 2016. 4. BIONASA (isopropylamine glyphosate 480 g/l), License RI.01030120031806, valid through April 29th 2018. 5. Kenlon ( trichlopyr butoxy ethyl ester : 480 g/ l), License RI.01030120062433, valid through June 23rd 2016 6. Lindomin (2,4 - Dimethyl Amine 865 g/l), License RI.0103011989867, valid through June 23rd, 2016. 7. Metsulindo 20 WP(metil metsulfuron: 20%), License RI.01030119991484, valid through 23 June 2016 8. Polydor 25EC (lamda sihalotrin: 25 g/l), License RI.01010120041994, valid through 9 December 2018 9. Thuricide HP, License RI.0101011977298, valid through 9 January 2017

It was noted that there were no agrochemicals being used which were not registered during this audit. During audit it was evidence that procedure was implemented.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

4.6.2 (M) Records of pesticides use (including active ingredients used and their LD50, area treated, amount of active ingredients applied per ha and number of applications) shall be provided.

a. Does the company have a pesticide  Annual budget The organization has defined pesticide application program in the annual budget. YES application program?  LUK (Estate Report) Record of pesticide use realisation was well recorded and reported in monthly Estate report (LUK). Records also covered active ingredients used and their b. Is records of pesticides use available?  Monitoring record of Pesticide toxicity LD50, area treated, amount of active ingredients applied per ha. c. Do the records detail the active  List of chemical name and ingredients used and their LD50, area nature treated, amount of active ingredients applied per ha and number of applications?

(M) Any use of pesticides shall be minimised as part of a plan, and in accordance with Integrated Pest Management (IPM) plans. There shall be no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines.

Specific guidance for 4.6.3: Justification of the use of such pesticides will be included in the public summary report.

4.6.3 For National Interpretation: National Interpretation will consider: statutory requirements concerning pesticide use, lists of legally prohibited pesticides, pesticide residues that should be tested for and the appropriate levels of residues, and best management practices for pesticide use or sources of information on these. National Interpretation will develop best practice guidelines on the exceptional circumstances that would allow the use of pesticides categorised as World Health Organisation Class 1A or 1B, or those listed by the Stockholm or Rotterdam Conventions, and paraquat as well as how they will be used in ways that do not endanger health or the environment.  IPM Program – Budget 2016 YES a. Does the company have an IPM plan? Integrated Pest Management (IPM) program included:  SOP AA-APM-OP-1100.10-R1

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) b. Has that plan been implemented? Pest and Diseases Control  Visual observation (e.g. broken leafs or stems and fruit rotten) c. Is the effectiveness of the IPM plan  Report of pest and diseases,  Conducting census to determine the distribution and level of attack. monitored? December 2015 and January  Control (manual, biological or chemical), e.g hand picking, light trap, planting 2016 of beneficial plant (nest of natural predator for caterpillars) d. Are there records showing that the use of  Recapitulation of pest census  Pesticide usage as a last alternative in the control of pests and diseases pesticides have been minimised in  LUK (Estate Report) accordance with Integrated Pest  Census of evaluation (to see the effect of control)  Field observation Management (IPM) plan? e. Has there been prophylactic use of IPM plan was well implemented and documented, e.g.: pesticides? If so, justification must be  Census of caterpillar is conducted monthly. Based on result of caterpillar provided in accordance to National Best census in 2015, there was no caterpillar attack therefore there was no Practices. pesticide use.  To control rat, the organisation applied Tyto alba (owls) as predator of rat. House of owl was built one in 25 Ha. Condition of Tyto alba is monitored three times a year.  There was no Oryctes attack.  Planted the beneficial plant as the host/nest for natural predator for caterpillars (Eucanticona purcelata, cycanus sp). The beneficial plant such as: Turnera subulata, Antigonon leptopus and Casia cobanensis planted in the collection and the main road. Planting and upkeep of beneficial plants in Teluk Panjie Estate was sighted and during field observations, it was observed that beneficial plants were well maintained. The use of pesticides has been minimised as part of a plan, and in accordance with Integrated Pest Management (IPM) plans. Use of pesticides in the field was always lower than the planned budget. It also shows the company's commitment to always reduce pesticide usage and give priority to the prevention of mechanical, biological and integrated pest management. It was evidence that there was no prophylactic use of pesticides in Teluk Panjie Estate. Pesticide only used and apply for weeds and pest. Pesticides that are categorised as World Health Organisation Class 1A or 1B, or that are listed by the Stockholm or Rotterdam Conventions, and paraquat, are not used, except in specific 4.6.4 situations identified in national Best Practice guidelines. The use of such pesticides shall be minimised and eliminated as part of a plan, and shall only be used in exceptional circumstances. a. Does the company have a complete  AA-APM-OP-1100.11-R1 – Organization already has a list of pesticides that are included in WHO Class 1A YES

listing of WHO class 1A, class 1B, and Pesticide management (extremely hazardous) 28 types, class 1B (highly hazardous) 56 types and

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Stockholm or Rotterdam Conventions  LUK (Estate Report) Stockholm Rotterdam convention pesticide. pesticide?  Program and realisation b. Is there a policy, procedure or paraquat use The organisation has established procedure on safe use of pesticides. Procedure described on safe use of pesticides and selection including minimise and management plan committing to minimise and eliminate use of these pesticides and eliminate use of these pesticides and paraquat.

paraquat? Records of minimisation of pesticides and paraquat use were available in c. Are there records of minimisation of Program and realisation paraquat use. Field observation and records pesticides and paraquat use? demonstrated that pesticides uses are in line with national best practice d. Where there is the use of the above guidelines. pesticides or paraquat, has justification in line with national best practice guidelines According to the observation to pesticide warehouse verified that inventory in the been documented? chemical store are agree back to the inventory records.

e. Does physical verification of inventory in the chemical store agree back to the inventory records? (M) Pesticides shall only be handled, used or applied by persons who have completed the necessary training and shall always be applied in accordance with the product label. Appropriate 4.6.5 safety and application equipment shall be provided and used. All precautions attached to the products shall be properly observed, applied, and understood by workers (see Criterion 4.7). a. Is there SOP for chemicals/pesticides  AA-APM-OP-1100.11-R1 – The organisation has established procedure on safe use of chemical. Procedure YES handling? Pesticide management described on safe use of chemical, selection, use and storage of chemicals.  Certificate of training b. Is there a training plan and training Pesticides have been applied and handled by trained spraying workers who have records for workers who apply or handle  Field observation to spraying received usage of limited pesticide training. Training was delivered by Pesticide pesticides? activity and Fertilizer Controlling Commission of Agriculture Department North Sumatera Province on 14 March 2012, 18 April 2013, 7 October 2014 and 18 July 2015. c. Is there evidence that training has been Training covered handling of concentrate agrochemical and spraying method conducted in an appropriate language including pesticide hazard. understood by the workers? d. Are pesticides handled, used or applied Personnel interviewed (sprayer workers) can clearly explain the type of work including work methods and goals, materials used (pesticides) including the only by persons who have completed the necessary training? dosage and hazards and risks, personal protective equipment and first aid. e. Are the workers involved in chemical Pesticides are always applied in accordance with the product label and handling or application able to procedure. demonstrate understanding of the Pesticides storage was locked areas with limited access. The storage was

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) hazards and risks related to chemicals ventilated. MSDS and hazard symbol label were provided nearby of pesticides. used when interviewed? Emergency shower and eye washer were also provided to anticipate in case of an f. Are pesticides always applied in emergency of pesticides handling. The possible spill was managed. Secondary containment was provided around the pesticides storage area. Spill kit was also accordance with the product label? provided in the area. PPE for handling of pesticides were provided including g. Are MSDS for pesticides used readily boots, apron, safety glass, respiratory mask and hand gloves. PPE used was available for easy reference? appropriate according to recommendations in any risk assessments. PPE h. Is appropriate safety and application provided and used can be easily replaced if damaged. equipment provided and used? Site visit in Block A88e Afdeling I Teluk Panjie Estate has been done to observe i. Is PPE used appropriate according to the spraying and pesticide application in field. Interview with spraying workers recommendations in any risk were evident that all of them has a good knowledge regarding the pesticide usage assessments done? and its material usage and toxicity. All the workers have used the personal protective equipment meet with the safety rules and work instruction such as: j. Is appropriate PPE provided and used, Aprons, safety goggles, mask, hand gloves and safety shoes. All precautions and can it be easily replaced if damaged? attached to the products properly observed, applied, and understood by workers. k. Does the management checked the Mandor (Supervisor) as person in charge to check the workers usage of workers usage of appropriate PPEs? appropriate PPEs. (M) Storage of all pesticides shall be according to recognised best practices. All pesticide containers shall be properly disposed of and not used for other purposes (see Criterion 5.3).

4.6.6 Specific guidance for 4.6.6: Recognised best practice includes: Storage of all pesticides as prescribed in the FAO International Code of Conduct on the distribution and use of pesticides and its guidelines, and supplemented by relevant industry guidelines in support of the International Code (see Annex 1). a. Has the SOP for pesticide storage been YES  Procedure AA-KL-06-EFP – SOP for pesticide storage has been documented in Procedure AA-APM-OP- documented and implemented? Handling of Hazardous Waste. 1100.11-R1 dated 1 February 2009 – Management Pesticides. b. Are all pesticides stored according to Pesticides were stored in the determined area separated from fertiliser and other recognised best practices?  Procedure AA-APM-OP- 1100.11-R1 dated 1 February chemicals. Pesticides storage was provided in central workshop. Pesticides c. Is there evidence that empty pesticide 2009 – Management Pesticides storage was locked areas with limited access. The storage was ventilated through containers are properly stored and cross flow ventilation. MSDS and hazard symbol label were provided nearby of disposed off and not used for other  Field observation at central pesticides. Emergency shower and eyewash were also provided to anticipate in purposes? warehouse and spraying case of an emergency of chemical handling. PPE for handling of chemicals were activities at estate operation d. Is there evidence observed in the field provided including boots, apron, safety glass, respiratory mask and hand gloves. that pesticide containers are  The training list of attendance The possible spill was managed. Secondary containment was provided around indiscriminately disposed (in dump site) and training material the pesticides storage area. Spill kit was also provided in the area. EHS patrol or used for other purposes, .e.g. as waste was regularly performed monitor possible spill.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) containers, flower pots? All empty agrochemical containers were triple rinsed, the jerry can were reused to spraying activities, while bottles containers were categorized as B3 (hazardous waste) that send to central hazardous waste warehouse which has valid license from regent of Labuhan Batu Selatan based on decree No. 503/447/BPPTPM- LS/P.1/2015 dated 29th August 2015 valid until five years. Pesticides containers were transported by authorised transporter, PT Shali Riau Lestari. Records of pesticides containers quantity were evident. Liquid waste from pesticides was reused for the next spraying applications also there are several ex-containers “jerry can” that may re-use for field application. Liquid waste from agrochemical was reused for the next spraying application. The documented work instruction (IK-47) was available to define the mechanism how to dispose the ex-pesticides containers. Records of TPS B3 log book, periodical report, received notes from each division to central TPS B3 and manifest was available, sighted and complied. 4.6.7 Application of pesticides shall be by proven methods that minimise risk and impacts. a. Is there work instruction for pesticide  AA-APM-OP-1100.08-R1 Pesticide application was described in AA-APM-OP-1100.08-R1 Weeding Control, YES application? Weeding Control AA-APM-OP-1100.10-R1 Pest & Diseases Control and AA-APM-OP-1100.11-R1 Management Pesticides. b. Is there training provided on work  AA-APM-OP-1100.10-R1 Pest Training and dissemination on work instruction including risk and impacts of instruction including risk and impacts of & Diseases Control pesticide applications has been performed by the organization regularly. Training pesticide applications?  AA-APM-OP-1100.11-R1 Management Pesticides and dissemination records were sighted.  Training and dissemination Site visit in Block A88e Afdeling I Teluk Panjie Estate has been done to observe record  Field observation to spraying the spraying and pesticide application in field. Interview with spraying workers activity were evident that all of them has a good knowledge regarding the pesticide usage and its material usage and toxicity. All the workers have used the personal protective equipment meet with the safety rules and work instruction such as: Apron, safety goggles, mask, hand gloves and safety shoes. All precautions attached to the products properly observed, applied, and understood by workers. Mandor (Supervisor) as person in charge to check the workers usage of appropriate PPEs. (M) Pesticides shall be applied aerially only where there is documented justification. Communities shall be informed of impending aerial pesticide applications with all relevant information 4.6.8 within reasonable time prior to application. a. Has aerial spray been applied? If yes, is  Record of pesticides Based on record of pesticides application and field observation it was verified that NA

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) there documented justification? application no pesticides applied aerially. b. Is the impact and risk associated with  Field Observation aerial application documented and made available? c. Are the identified affected communities informed of impending aerial pesticide applications with all relevant information within reasonable time prior to application?

Maintenance of employee and associated smallholder knowledge and skills on pesticide handling shall be demonstrated; including provision of appropriate information materials (see Criterion 4.6.9 4.8).

 Training and dissemination YES There was no smallholder associated with PT. Supra Matra Abadi – Teluk Panjie record Mill. a. Has the company provided information  Training certificate materials on pesticide handling to all  Field observation to spraying The organisation has provided information materials on pesticide handling to employees and associated smallholders activity all employees. Training and dissemination on work instruction including risk and (if any) (see Criterion 4.8)? impacts of pesticide applications has been performed by the organization regularly. Training and dissemination records were sighted. b. Is there evidence of periodic training (in appropriate language) of employees and Pesticides have been applied and handled by trained spraying workers who have

associated smallholders on pesticide received usage of limited pesticide training. Training was delivered by Pesticide handling? and Fertilizer Controlling Commission of Agriculture Department of North Sumatera Province on 14 March 2012, 18 April 2013, 7 October 2014 and 18 July

2015. Note: Interview with workers and smallholders

on their knowledge and skills in pesticides Site visit in Block A88e Afdeling I Teluk Panjie Estate has been done to observe handling. the spraying and pesticide application in field. Interview with spraying workers were evident that all of them has a good knowledge regarding the pesticide usage and its material usage and toxicity.

4.6.10 Proper disposal of waste material, according to procedures that are fully understood by workers and managers shall be demonstrated (see Criterion 5.3).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Procedure AA-KL-06-EFP – YES All empty pesticides containers were triple rinsed and collected in the temporary Handling of Hazardous Waste. storage of hazardous waste. Pesticides containers were transported by authorised

transporter, PT. Shali Riau Lestari. Records of pesticides containers quantity were a. Is there an SOP for proper disposal of  Procedure AA-APM-OP- evident. Liquid waste from pesticides was reused for the next spraying waste material? 1100.11-R1 dated 1 February applications also there are several ex-containers “jerry can” that may re-use for b. Is there training provided to workers and 2009 – Management of field application. Pesticides managers on proper waste disposal? Training/briefing regarding disposal of waste material has been conducted to all c. Is there evidence of implementation of  Field observation at central workers and staffs. Based on interview with sprayer workers at Division I Block proper ways for waste disposal by the warehouse, spraying activities A95C, they understood the disposal of waste material. company? at estate operation

 The training list of attendance and training material

4.6.11 (M) Specific annual medical surveillance for pesticide operators, and documented action to treat related health conditions, shall be demonstrated.

 List Of Pesticides Operator 2015 List of pesticides operator was shown and updated periodically for all estates. YES  Diagnoses Card and Report from Specific health surveillance has been performed on for pesticide operators recommended hospital and local included cholinesterase, spirometry and audiometry. The surveillance was a. Is there an updated list of pesticide polyclinic planned to be conducted once in a year. Reports of the health surveillance for all operators?  MCU Recapitulation Report on workers were available. The recommended actions were recorded and reported to 22/08/2015 estate manager. Base on recommendation from manager the actions were b. Is there records of annual medical executed and the results were reports were available. All results raised from

surveillance of pesticide operators? actions taken were maintained properly. Diagnoses Cards for all pesticides c. Is there medical and treatment records of operator were available. The diagnoses and treatment applied to the workers. all pesticide operators? Several records were sighted and reviewed such as for pesticides operators as follows: Dedi, Hadijah, Suwarni, Juliani and Yuni Astuti as pesticide operators from Block A88E Division 01. Socialization of health surveillance results have been conducted to the workers.

4.6.12 (M) No work with pesticides shall be undertaken by pregnant or breast-feeding women.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a policy statement preventing PKB period 2015-2017 The statement for preventing pregnant and breast-feeding workers was described YES pregnant and breast-feeding women from in PKB (working Agreement) 2015-2017 Clause 111 point 6. The updated list was handling pesticides? available and there was approximately 25 female workers handling the pesticides at each estate. Pregnancy test was performed monthly to all workers related to b. Is there a lists of female workers handling pesticides available? agrochemical works for prevention. Breastfeeding women were not allowed to work with agrochemical and reassigned for non-risky jobs. c. Does the company have a system to identify pregnant and breast-feeding women? d. Is there evidence showing that pregnant and breast-feeding women are not allowed to handle pesticides?

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

(M) A health and safety policy shall be in place. A health and safety plan covering all activities shall be documented and implemented, and its effectiveness monitored.

Guidance: 4.7.1 Growers and millers should ensure that the workplace, machinery, equipment, transport and processes under their control are safe and without undue risk to health. Growers and millers should ensure that the chemical, physical and biological substances and agents under their control are without undue risk to health when appropriate measures are taken. All indicators apply to all workers regardless of status. The health and safety plan should also reflect guidance in ILO Convention 184 (see Annex 1). a. Is there a health and safety policy in  Health and Safety Policy Occupational health and safety policy is remained unchanged. The policy was YES place?  OHS Target and Plan 2015 and displayed at strategic locations of estate and mill and communicated to (Major NCR  Is it written in an appropriate 2016 employees including contractor workers. The Health and safety policy was signed 2016-06 is language?  Notes of Meeting Safety by organization director on 1 December 2014. The mitigation of risks to workers closed)  Has the policy been approved by an Committee 2015 and 2016 health and safety was included in point 4 and 5 in the policy. Health and safety authorized personnel and dated?  Risk Assessment register 2016 plan and target for all estates and mill were evident and included guidance

 Does the policy cover mitigation of  OHS Training Records 2015 provided in ILO Convention 184. The evidences of the implementation were risks to workers health and safety at and 2016 shown such as Health Surveillance Reports, OHS Performance Reports, OHS all workplace activities?  OHS Performance Report 2015 Training attendance, etc. Monitoring of the safety plan was conducted by regular  Are the workers aware of and  Measurement Report of OHS safety meeting once in a month. Several actions were issued for the unachieved understand the policy? Parameters March 2015 safety targets and plans. The safety target and plan was also publicly available via company website. b. Is there a health and safety plan in  Safety Working Permit Records

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) place?  Etc. OHS Programs/Plans 2015 and 2016 were evident such as: safety trainings,  Does the plan include targets for  Observations of OHS safety inspection, safety parameters monitoring, MCU, Handling of incidents, improving occupational health and implementation on spraying emergency simulation, safety report, safety committee meeting etc. safety? activities (block A88E Division 01)  Does the plan reflect guidance and harvesting activities (block The implementations of the programs were evident such as: provided in the ILO Convention 184 B89N Division 02), warehouse  Safety Committee meeting during 2015 and 2016 (see Annex 1)? and workshop.  4th semester Safety Performance Report to local authority period October-December 2015. c. Is there evidence of implementation of the plan?  Monitoring of OHS parameter (air ambient etc.) on 11 March 2015  Fire Fighting Training on 21 May 2015 d. Is the effectiveness of the health and  etc. safety plan monitored? Monitoring of physical chemistry factors has been conducted for all mill audited e. Is the health and safety plan made such as noise, vibration, air ambient, etc. Several factors were found exceeded publicly available? than regulation such as noise. Follow up regarding to this condition has been f. Is there an action plan if targets are not conducted and evaluated. achieved? OHS induction was performed by Safety Officer at mill and estates. Utility equipment were available and installed such as boilers, sterilised, steam vessel, compressors, generator, heavy equipment and lifting equipment. This equipment has been inspected by local authority and the records were evident. Periodic monitoring was also performed internally such as boiler parameter monitoring (pressure, temperature, water quality, water level, etc. Moving parts of machine/equipment generally has been covered or guarded. Safety sign was provided to make workers aware on this hazard and risk. Electrical hazard symbol was provided at electrical panel. Inspection regarding to electrical installation has been made. Access for workers to workplace in general also good e.g. stair was provided with hand rail and platform at height was provided with border to prevent fall risk. There was also detailed working instruction which described process for conducting activities including requirement concerning to OHS aspects such as requirement of PPE. Working instructions were sighted such as spraying, harvesting, pesticide preparation, etc. OHS control for working in confined space (e.g. cleaning of storage tank), working at height and welding. Work permit system was implemented for these works. It was noted that measurement of adequacy of oxygen and availability of dangerous gas were required before entering confined space and it was mentioned in the

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) work permit; the portable gas detector was sighted during this audit. Lock out tag out has also been established and implemented especially intended for risk control of maintenance activities. The PPE for each activity has been established, e.g. working at mill, working at generator set, welder, working at laboratory, harvester, sprayer, fertilizer storage, chemical storage, etc. Observation during this audit generally concluded that PPE has been well provided and implemented. Workers were interview during this audit and generally they understood the risk of their work and the purpose of using PPE. Emergency Response Team has been defined and the emergency flow charts have been established for any kind of emergency situation such as earthquake, fire, flood etc. The awareness of employee was gained with the simulation of emergency response. The evacuation routes and emergency flowcharts have been socialized during simulation. Emergency signs and boards were provided in several areas. The muster points for each area such as workshop, warehouse, office etc. were sighted.

Major Non Conformities: Teluk Panjie Estate: - Electrical Relay at fuel station in Teluk Panji estate was found in open condition. - There was no evidence related to water tank periodical maintenance inspection - Fire extinguisher no.06 at estate warehouse and fire extinguisher no.09 at mill has not been refilled.

Correction: - Covered and fixed the open electrical relay - Conduct water tank maintenance inspection - Refilled fire extinguisher no.6 at estate warehouse and no.9 at mill

Root cause: - The fuel keeper work at Fuel Station was not understood yet the hazard in the fuel station. - The water tank keeper was not understood periodical maintenance inspection. - Checklist to monitor contain of fire extinguisher was not available.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

Corrective Action: - Conduct HIRAC training to fuel keeper at Teluk Panjie Estate. - Conduct training of water tank periodical maintenance to the water tank keeper. - Safety officer make checklist to monitor contain of fire extinguisher. - Safety officer conducts periodical monitoring of fire extinguisher then record it in the checklist, if there is expired contain, then refilled performed.

(M) All operations where health and safety is an issue shall be risk assessed, and procedures and actions shall be documented and implemented to address the identified issues. All 4.7.2 precautions attached to products shall be properly observed and applied to the workers.

a. Have risk assessments been conducted  Risk Assessment 2015 and Risk Assessment for all operations for all estates and mills were available and YES for all operations where health and safety 2016. socialized to the workers and operators. The risk assessments cover all the is an issue?  List Attendance of RA organization’s processes and activities such as: spraying, fertilizing, weeding, road maintenance, harvesting, transportation, warehouse, workshop, b. Does the risk assessment cover all the Dissemination infrastructure, polyclinic, office etc. Related risk assessments were reviewed if any organization’s processes and activities? accident has occurred. Several procedures related to issues raised have been c. If any accidents had occurred, were these documented such as procedure for using hydrant and FE, safety working permit, included in the risk assessments with lock out tag out, first aid to workers, material processing and transportation, etc. action plans to prevent further All precautions attached to products been properly observed and applied to the recurrence? workers. Several controls such as providing PPE and administration control were d. Have the procedures and action plans applied to workers in some activities such as: mill maintenance process, spraying been documented and implemented to activities and handling of pesticides. address the identified issues? e. Have all precautions attached to products been properly observed and applied to the workers?

(M) All workers involved in the operation shall be adequately trained in safe working practices (see Criterion 4.8). Adequate and appropriate protective equipment shall be available to all 4.7.3 workers at the place of work to cover all potentially hazardous operations, such as pesticide application, machine operations, and land preparation, harvesting and, if it is used, burning.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Are all workers involved in the operation  List Attendance of Risk Risk assessment socialization has been performed for mill and estate. Samples YES appropriately trained in safe working Assessment socialization were taken such as: harvesting, spraying and chemical warehouse workers. The practices (see Criterion 4.8)?  PPE Checklist Maintenance socializations were conducted by Safety Officer who has been qualified as Safety Officer by the government. b. Are OSH training programs and training  PPE Distribution Records records available and conducted by The PPE for each activity has been provided, e.g. working at Mill, working at qualified persons? generator set, welder, working at laboratory, harvester, sprayer, fertilizer storage, c. Is adequate and appropriate protective chemical storage, etc. Observation during this audit generally concluded that PPE equipment available to all workers at the has been well provided and implemented. Workers were interview during this place of work to cover all potentially audit and generally they were understood the risk of their work and the purpose of hazardous operations, such as pesticide using PPE. List of PPE was evident included: ear plug, helmet, ear muff, safety application, machine operations, and land shoes, gloves, googles, mask, gas mask, apron etc. The records of PPE preparation, harvesting and, if it is used, distribution when it was damaged were evident such as for: Teluk Panji Estate on burning? 10 January 2016 for harvesting workers and pesticides operator at Division I. d. Is PPE provided to workers and replaced It was observed that workers were wearing appropriate PPE such as gloves, when damaged? goggles, shoes and chemical mask for pesticides operators.  Does the organization maintain a list of PPE distribution?  Are workers observed wearing appropriate PPE? (M) The responsible person/persons shall be identified. There shall be records of regular meetings between the responsible person/s and workers. Concerns of all parties about health, safety 4.7.4 and welfare shall be discussed at these meetings, and any issues raised shall be recorded. a. Has the company identified the - Approval Letter of Safety The responsible person was identified as Chief of P2K3 (estate manager and mill YES responsible person/persons to implement Committee (P2K3) from local manager) and P2K3 secretary (Safety Officer). OSH? authority The safety committee (P2K3) structure was evident and has been approved by - Notes of Meeting Safety local authority as below: b. Are meetings between the responsible Committee (P2K3) persons and workers conducted on a Teluk Panji Estate and Mill: regular basis, or as required by law, if Chief P2K3 Mr.Ismail and Secretary P2K3 Mr. Mikael Adiyanta (Mill) any? Chief P2K3 Mr.Eduart Hutauruk and Secretary P2K3 Mr. Rico Sianipar (estate) c. Are minutes of meeting recording Notes of Regular Meeting of Safety Committee (mill and estate) with workers were attendees and issues discussed evident Sample reports were reviewed for October-December 2015. The meeting available? was planned once in a month as required by Permenaker 04/1987. Several concerns were discussed such as: evacuation route, incident investigation, and

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Are concerns of all parties about health, request for PPE. The actions were monitored for realisation and reported to safety and welfare discussed at these management and local authority. meetings?

Note to Auditor: Interviews with workers reflect compliance to a-d above.

Accident and emergency procedures shall exist and instructions shall be clearly understood by all workers. Accident procedures shall be available in the appropriate language of the workforce. 4.7.5 Assigned operatives trained in First Aid should be present in both field and other operations, and first aid equipment shall be available at worksites. Records of all accidents shall be kept and periodically reviewed. a. Are there SOPs for accidents and - Emergency respond procedure Accident and Emergency respond procedure written in Bahasa Indonesia was YES emergencies? AA-EMS-447-PR described by AA-EMS-447-PR and was covered reporting, responsibility of all (Minor NCR  Do these cover all major potential - Accident procedure members of ERP Team, handling of ERP situation, mitigating of ERP situation, 2016-07 is emergencies, such as, but not - List attendance of First Aid etc. Some situations were identified such as accident, fire and hazardous spillage. closed) limited to fire, chemical spillage, and Training Emergency respond procedure has been socialized to workers during simulation potential natural disasters specific - List Attendance of Emergency of emergency situation on 22 May 2015 and attended by all workers. The list of for the region, e.g. earthquakes, Simulation attendance was available. From workers interview in the field it was observed that volcanoes, etc.? - Record and report of accidents the workers were clearly understood of what is required in the procedure.  Are accidents investigated and action taken to prevent recurrence? Trained First Aid operators were provided in the field area. The List attendance of  Are accident records provided to the First Aid Training was available on 17 September 2015. The First Aid equipment local authority in accordance with carried by foreman were available at worksites such as harvesting area, spraying local legal requirements, if any? area etc. and were checked in accordance with local regulation Permenaker  Available in the appropriate 15/2008. First aid equipment was also available at each area in mill operation. language of the workforce? The records of accidents were shown during audit. The last accident has been b. Are the instructions on emergency investigated and reported to the local authority. All the records were available and procedures clearly understood by all sighted. workers? c. Are assigned operators trained in First Minor Non Conformities: Aid present in both field and other operations? Teluk Panjie Estate:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Is there records of training of the first One of TPA (childcare) officer was not trained yet regarding first aid. aiders? e. Is first aid equipment available at Correction: Give first aid training to the related TPA (Child Care) officer. worksites? Is the equipment available during conduct of field manual work? Root cause: e. Are first aid kits adequately stocked and During previous first aid training, the related TPA (Child Care) officer was sick so regularly checked in accordance with she did not coming to work. local legal requirements? f. Are records of all accidents kept and Corrective Action: periodically reviewed for continuous Safety officer made training plan including for first aid training and ensure all improvement? employee have had relevant safety training.

4.7.6 All workers shall be provided with medical care, and covered by accident insurance.

a. Is there evidence that all workers are Slip payment of medical care and Workers were covered by accident and medical care insurance including daily NO provided with medical care (refer to accident insurance January 2016 workers. Slip payment for all estates and mills for accident insurance were (Minor Criterion 6.5.3), and covered by available for all estates and mills. However there were still several daily workers NCR2016-08 is accident insurance by the company? (PHL) which has not been covered for the accident insurance. There were 201 open) For contract workers, the contract daily workers were not covered by insurance between the company and the contractor shall be in compliance. Minor Non Conformity: Not all employee been covered by accident insurance. There was only 432 b. For accidents that have occurred, is there evidence that the affected workers employees from 633 employees been paid for their accident insurance.

received appropriate medical treatment, and was able to claim and receive Root cause: compensation under the insurance High rates of PHL workers turnovers made Registration of BPJS Ketenagakerjaan policy (if relevant)? (worker insurance) performed step by step. c. Is there evidence that the insurance policies are valid? Corrective: Conduct update of employee’s insurance membership so that payments can be done.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Occupational injuries shall be recorded using Lost Time Accident (LTA) metrics.

Specific Guidance for 4.7.7: The National Interpretation will define the metrics for LTA. For countries where there are no national interpretations, the growers will determine their own metrics. 4.7.7 For National Interpretation: National Interpretation will define the metrics for LTA. All legal requirements together with any local or national guidance on safe working practice in agriculture will be identified and used. It will also be important to identify what constitutes a ‘hazardous’ operation in the local context. Frequency Rate and Severity Rate Safety performance for both mill and estates was calculated using frequency rate YES Calculation Table (FR) and severity rate (SR).

The calculation for FR and SR as below: a. Are occupational injuries recorded FR= total accident x 1.000.000/total man hour using Lost Time Accident (LTA) SR=total lost time x 1.000.000/total man hour metrics?

The data of SR and FR for all mills and estates have been shown and the records were properly maintained.

4.8 All staff, workers, smallholders and contract workers are appropriately trained.

(M) A formal training programme shall be in place that covers all aspects of the RSPO Principles and Criteria, and that includes regular assessments of training needs and documentation of the programme.

Guidance: Workers should be adequately trained on: the health and environmental risks of pesticide exposure; recognition of acute and long-term exposure symptoms including the most vulnerable groups (e.g. young workers, pregnant women); ways to minimise exposure to workers and their families; and international and national instruments or regulations that protect workers’ health. The training programme should include productivity and best management practice, and be appropriate to the scale of the organisation. 4.8.1 Training should be given to all staff and workers by growers and millers to enable them to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of these Principles, Criteria, Indicators and Guidance. Contract workers should be selected for their ability to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of the RSPO Principles, Criteria, Indicators and Guidance. Growers and millers should demonstrate training activities for schemes smallholders who provide Fresh Fruit Bunches (FFB) on a contracted basis. Workers on smallholder plots also need adequate training and skills, and this can be achieved through extension activities of growers or millers that purchase fruit from them, by smallholders’ organisations, or through collaboration with other institutions and organisations (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) For individual smallholder operations, training records should not be required for their workers, but anyone working on the farm should be adequately trained for the job they are doing (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009).

For National Interpretation: Appropriate occupational training qualifications will be identified. a. Does the company maintain a list of staff, • Training Identification Matrix YES Training need identification matrix 2015 and 2016 were evident and covered staff, workers, smallholders and contract • Training Programme 2015 and workers, and contract worker and daily workers. Training programme 2015 and workers whom training must be provided 2016 2016 were sighted and established based on the training needs identification and to? • Training Records covered all aspects of the RSPO criteria such as safety, environment, social, best (List Attendance, evaluation etc.) b. Is there a formal training programme in practice, human rights, management program, HCV and ethical. place that covers all aspects of the RSPO Principles and Criteria? Does the formal training program include:  Regular assessment of training needs of all staff, workers, The list of attendance and the training handout were evident such as: smallholders and contract workers;  First Aid Training: 17 September 2015  Training for workers on smallholder  Safety Officer 4 February 2016 plots;  Pesticides Best Practice: 28 September 2015  Documentation of all the training  Basic Fire: 12-21 May 2015 assessment needs, formal training  Safety Work Training: 12 February 2015 conducted and the list of  HCV on 24 October 2015 participants attending these formal  Health Insurance Socialization 12 December 2015 training;  RSPO PC awareness: 15 October 2015  Does the training for workers cover,  MCU Result Socialization on 1 February 2016 at minimum, to the following:  Environment Training: 27 May 2015 o The health and environmental risks of  Total Productive management on 31 October 2015. pesticide exposure; o recognition of acute and long-term exposure symptoms including the most vulnerable groups (e.g. young workers, pregnant women); o ways to minimise

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) exposure to workers and their families; o International and national instruments or regulations that protect workers’ health; and o Productivity and best management practice.

Note to auditor: To interview staff, workers, smallholders and contract workers to verify that the training has been conducted effectively.

4.8.2 Records of training for each employee shall be maintained.

a. Are training records maintained for each Personal Training Records of Evidence of training for key persons were verified and sighted and the records YES employee? managers and Safety Officer were maintained for each employee such as for Safety officer. The system to record personal training was established-in this record; the training which has

been completed by each person was recorded. Training realisation records are sighted such as hazardous substance handling training, boiler training, safety officer, pesticides training, etc.

Audit Report

PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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 5.1 made, implemented and monitored, to demonstrate continual improvement. (M) An environmental impact assessment (EIA) shall be documented.

Guidance: The EIA should cover the following activities, where they are undertaken: • Building new roads, processing mills or other infrastructure; • Putting in drainage or irrigation systems; • Replanting and/or expansion of planting areas; • Management of mill effluents (Criterion 4.4); • Clearing of remaining natural vegetation; • Management of pests and diseased palms by controlled burning (Criteria 5.5 and 7.7).

5.1.1 Impact assessment can be a non-restrictive format e.g. ISO 14001 EMS and/or EIA report incorporating elements spelt out in this Criterion and raised through stakeholder consultation. Environmental impacts should be identified on soil and water resources (Criteria 4.3 and 4.4), air quality, greenhouse gases (Criterion 5.6), biodiversity and ecosystems, and people’s amenity (Criterion 6.1), both on and off-site. Stakeholder consultation has a key role in identifying environmental impacts. The inclusion of consultation should result in improved processes to identify impacts and to develop any required mitigation measures. For smallholder schemes, the scheme management has the responsibility to undertake impact assessment and to plan and operate in accordance with the results (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009).

For National Interpretation: National Interpretation will consider any national legal requirements together with any other issues that are not required by law but are nevertheless important, e.g. independent social and environmental impact assessment (SEIA) for replanting may be desirable under specific situations. a. Has an EIA been conducted according to YES Environmental Impact assessment was documented in Documents of SEL the scope of operation covering at  Document of SEL and RKL - (Environmental Evaluation Study and RKL –RPL) approved by Ministry of Ministry minimum the following: RPL for Teluk Panji Mill and of Agriculture on 26th of February 1994 No. RC.220/385/B/II/1994.  Building new roads, processing mills Estate # RC.220/385/B/II/1994 th or other infrastructure; dated 26 February 1994 Document of environmental impact assessment included:  Putting in drainage or irrigation  EMS-431-003-LT Rev.10 form  Processing mills or other infrastructure; systems; updated on February 2016  Putting in drainage or irrigation systems;  Replanting and/or expansion of Identification of Environmental  Replanting and/or expansion of planting areas;

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) planting areas; Aspect and Impact  Management of mill effluents;  Management of mill effluents  Clearing of remaining natural vegetation;  Procedure AA-EMS-431-PR (Criterion 4.4);  Management of pests and diseases palms by controlled burning; Rev.3 dated January 2007  Clearing of remaining natural Identification and Evaluation of  Road management vegetation; Environmental Aspects.  Management of pests and diseased EIA assessment has include consultation with relevant stakeholders to identify palms by controlled burning (Criteria impacts and to develop any mitigation measures, it evident in Environmental 5.5 and 7.7). Evaluation Study document. b. Has the EIA been conducted and The aspect and impact of environmental for all activity and process including documented according to local replanting was identified and documented in EMS-431-003-LT. requirements? Teluk panji Mill and Estate implemented procedure for identifying environmental c. Does the assessment include consultation aspect and evaluating its impact based on Environmental Management System with relevant stakeholders to identify ISO 14001:2004 and procedure AA-EMS-431-PR Rev.3 dated January 2007. The impacts and to develop any mitigation result of environmental aspect and impact identification and evaluation was measures? documented. As required by the procedure, the information of environmental is reviewed and updated annually. Last review and update of environmental aspect and impact register for Teluk Panjie Mill and Estate was performed in February 2016. Teluk Panji Mill and its supply bases have ensured that all activities with significant environmental impacts were managed, e.g. land clearing, use of fertiliser, waste water discharged, and emission to air from mill and POME. Organisation has defined the Environmental Management Program based on Environmental aspect and impact identification to maintain significant environmental impacts. Where the identification of impacts requires changes in current practices, in order to mitigate negative effects, a timetable for change shall be developed and implemented within a 5.1.2 comprehensive management plan. The management plan shall identify the responsible person/persons. a. Is there an environmental management Organisation has establish environmental management plan for Teluk Panji Mill YES plan in place?  Procedure AA-EMS-431-PR – Environmental aspect and and Estate, 2015 and 2016. Environmental management plan defined based on b. Is the environmental management plan impact identification environmental aspect and evaluating its impact. As required by the procedure, the documented to include the following: information of environmental is reviewed and updated regularly. Last review and  Identification of responsible person(s);  EMS-431-003-LT Rev.10 form update of environmental aspect and impact register Teluk Panji Mill and Estate  Potential impacts from current updated on February 2016 was performed on February 2016. No changes of identification of impacts since practices; Identification of Environmental last audit.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Measures to mitigate negative Aspect Environmental management plan documented to include the following: impacts;

 Timetable for change (where changes  Identification of responsible person(s); in current practices are required).  Potential impacts from current practices; c. Has the environmental management plan  Measures to mitigate negative impacts; been implemented?  Timetable for change (where changes in current practices are required). Teluk Panji Mill and Estate has ensured that all activities with significant environmental impacts were managed. Control measure were defined and implemented for ensuring that negative environmental impact were prevented or mitigated. There were several types of control measures defined: engineering control, administrative control and PPE. The implementation of those control measures are monitored during monthly environmental patrol and also round of internal audits. This plan shall incorporate a monitoring protocol, adaptive to operational changes, which shall be implemented to monitor the effectiveness of the mitigation measures. The plan shall be 5.1.3 reviewed as a minimum every two years to reflect the results of monitoring and where there are operational changes that may have positive and negative environmental impacts. a. Does the plan incorporate a monitoring YES - RKL – RPL PT SMA-Teluk Panji Management Plan and monitoring of environmental impacts documented in RKL protocol? - “Evaluation of Environmental (Rencana Kelola Lingkungan) and RPL (Rencana Pemantauan Lingkungan) as b. Is the monitoring protocol adaptive to Aspect and Impact PT SMA – monitoring protocol. operational changes? Teluk Panji 2015 and 2016” Environmental management plans adapted to estate and mill operations change c. Is the monitoring protocol implemented to and regulations, if there are changes in the regulations related to operational and monitor the effectiveness of the mitigation environmental, management plan will be reviewed and re-conducted the update to measures? be relevant. d. Is the plan reviewed at a minimum every The reporting of RKL/RPL was conducted 6 monthly issued by Head of

two years to reflect the results of administration/KTU that consist of the implementation of environment monitoring and where there are management and monitoring plan include analysis of waste water quality and flow operational changes that may have rate also the air emissions measured by third party (Environmental Laboratory). positive and negative environmental The effectiveness of the outcome from the implementation of environmental impacts? management and monitoring was reviewed on the report through the evaluation of compliance, evaluation of trends and evaluation of the effectiveness of management and environmental monitoring. Whenever there is a material change, changes in operations and regulatory changes must precede environment aspect and impact assessment. This

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) identification was updated annually.

The status of rare, threatened or endangered species and other High Conservation Value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, 5.2 shall be identified and operations managed to best ensure that they are maintained and/or enhanced. (M) Information shall be collated in a High Conservation Value (HCV) assessment that includes both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors).

Specific Guidance: This information will cover: • Presence of protected areas that could be significantly affected by the grower or miller; • Conservation status (e.g. IUCN status), legal protection, population status and habitat requirements of rare, threatened, or endangered (RTE) species that could be significantly affected by the grower or miller; • Identification of HCV habitats, such as rare and threatened ecosystems, that could be significantly affected by the grower or miller;

Guidance: 5.2.1 This information gathering should include checking available biological records and consultation with relevant government departments, research institutes and interested NGOs if appropriate. Depending on the biodiversity values that are present, and the level of available information, some additional field survey work may be required. Wherever HCV benefits can be realised outside of the management unit, collaboration and cooperation between other growers, governments and organisations should be considered.

For National Interpretation: Appropriate sources of information can include government or international lists of threatened species (‘red data lists’), national wildlife protection legislation, authorities responsible for protected areas and species, or relevant NGOs. Note: Operators need to consider a variety of land management and tenure options to secure HCV management areas in ways that also secure local peoples’ rights and livelihoods. Some areas are best allocated to community management and secured through customary or legal tenures, in other cases co-management options can be considered. Where communities are asked to relinquish rights so that HCVs can be maintained or enhanced by the companies or State agencies, then great care needs to be taken to ensure that communities retain access to adequate land and resources to secure their basic needs; all such relinquishment of rights must be subjected to their free, prior, and informed consent (see Criteria 2.2 and 2.3).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Has a High Conservation Value (HCV) YES • HCV Assessment report by High Conservation Value (HCV) assessment has been conducted in September assessment been conducted and cover the Forestry Department, Bogor 2012 by independent assessors from Faculty of Forestry IPB and cover the following: Agriculture Institute in following:  Presence of protected areas that September 2012 could be significantly affected by the  Presence of protected areas that could be significantly affected by the grower or miller; • Lisf of Registered HCV RN grower or miller;  Conservation status (e.g. IUCN Assessor status), legal protection, population  Conservation status (e.g. IUCN status), legal protection, population • Attendance list of HCV Public status and habitat requirements of rare, threatened, or endangered status and habitat requirements of rare, threatened, or endangered consultation (RTE) species that could be significantly affected by the grower or (RTE) species that could be • Field observation miller. significantly affected by the grower or  Identification of HCV habitats, such as rare and threatened ecosystems, miller. that could be significantly affected by the grower or miller;  Identification of HCV habitats, such as rare and threatened ecosystems, that HCV assessment performed by a qualified HCV assessor from Faculty of Forestry could be significantly affected by the IPB. All assessors are RSPO approved HCV assessor - Discipline Specialist, grower or miller; coordinated by an RSPO approved HCV assessor - Team Leader. Comprise of : b. Was the HCV assessment performed by a - Dr Ir. H Nyoto Santoso MS qualified HCV assessor? - Dr. Ir Iwan Hilwan, MS c. Was the HCV assessment performed in - Eko Adhiyanto S. Hut consultation with relevant stakeholders? - Sayidina Ali, Amd d. Does the HCV assessment include checking of available biological records? - Udi Kusdinar S.Hut e. Does the HCV assessment include both HCV assessment performed in consultation with relevant stakeholders around the planted area itself and relevant wider plantation. Public consultation conducted on 29 September 2012 with the landscape-level considerations (such as community leaders and figures around the estate and government agencies wildlife corridors)? (Village Head/Kepala Desa, his officials and community leaders in the village). f. Was the HCV assessment performed in HCV assessment include checking of available biological records. accordance to the latest methodology available at global and national level? HCV assessments also include checking of available biological records and include both the planted area itself and relevant wider landscape-level g. Are identified HCVs mapped? considerations (such as wildlife corridors). Methodology of assessment using a toolkit of HCV 2008, implementation of the

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) assessment consists of: Secondary data collection, field survey, mapping and landscape, Assessment of fauna aspect with a rapid assessment (direct observation, interviews with the parties), asessment of flora aspects (direct survey and interview) , assessment of socio-economic and cultural aspects (interviews and direct observation at selected sites), analysis and mapping. HCV Asessment has been peer rewiew by Dr. Kunkun Jaka Gurmaya in January 2013. The HCV assessment report was published in December 2012. Besides presenting data and map of HCV area, the report also includes a list of rare and threatened wildlife species from 4 (four) main wildlife groups: mammals, birds, herpetofaunas, and fishes. HCV maped with scale 1 : 80.000 (M) Where rare, threatened or endangered (RTE) species, or HCVs, are present or are affected by plantation or mill operations, appropriate measures that are expected to maintain and/or enhance them shall be implemented through a management plan.

Specific Guidance: 5.2.2 These measures will include: • Ensuring that any legal requirements relating to the protection of the species or habitat are met; • Avoiding damage to and deterioration of HCV habitats such as by ensuring that HCV areas are connected, corridors are conserved, and buffer zones around HCV areas are created; • Controlling any illegal or inappropriate hunting, fishing or collecting activities, and developing responsible measures to resolve human-wildlife conflicts (e.g. incursions by elephants). a. Are HCVs and/or RTEs present? YES • HCV Assessment report by HCV assessment results showed that in the plantation area of Teluk Panjie Estate b. If HCVs and/or RTEs are present, has a Forestry Department, Bogor were identified 6,85 ha areas of HCV, including : management plan containing appropriate Agriculture Institute in measures that are expected to maintain September 2012  HCV HCV 4.1 areas or ecosystems important for the provision of water and and/or enhance them been prepared? The prevention of floods for downstream communities: Riparian buffer zone of measures should include the following: • Conservation Management Plan Kalam River, with area 6,05 ha. 2015  Ensuring that any legal requirements  HCV 6 areas critical for maintaining the cultural identity of local communities: relating to the protection of the • HCV Management and Graveyard Blok B-89-I 0,2 ha, Graveyard B-88-d 0,44 ha, Graveyard Blok A- species or habitat are met; Monitoring report 2015 87-b 0,2 ha, Graveyard Blok A-87-a 6 m2.  Avoiding damage to and deterioration • RTE species monitoring result of HCV habitats such as by ensuring Estate has established the management plan to maintain and/or enhance High 2015 that HCV areas are connected, conservation value area. HCV management and monitoring plan described corridors are conserved, and buffer • Field observation measures taken for each HCV and its monitoring. Relevant laws were taken into zones around HCV areas are created; account for determining appropriate measure including UU #5/1990 about Natural resources conservation, PP#7/1999 about List of protected plan and wildlife,

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Controlling any illegal or inappropriate Kepres #32/1990, and PP 26/2008 Management plan consist of : hunting, fishing or collecting activities, Management plan was available containing appropriate measures that are and developing responsible measures expected to maintain and/or enhance them, includes: to resolve human-wildlife conflicts (e.g. incursions by elephants). - Maintenance of HCV marking, manual upkeep c. Are the measures contained in the - Placement of warning sign/sign board management plan actively implemented to maintain and/or enhance HCV values? - Monitoring of riparian area d. Are the HCV values and the presence of - Monitoring the presence of wildlife (Protected animal) RTEs periodically monitored? - Monitoring of illegal hunting and HCV Patroll e. Are the field inspections conducted Management plans and monitoring of HCV was documented in “Conservation regularly to ensure implementation of Management Plan PT SMA-Teluk Panji Estate 2015” breakdown in Division HCV mitigation plan (especially along areas Management Program, each Division assistant was responsible for the program bordering natural area)? and its implementation. The measures contained in the management plan were actively implemented to maintain and/or enhance HCV values. Field observation to HCV area and document verification “Laporan Monitoring Biodiversity” of PT SMA-Teluk Panji Estate period semester I and II 2015 was available and demonstrate that the measures contained in the management plan been actively implemented. There shall be a programme to regularly educate the workforce about the status of these RTE species, and appropriate disciplinary measures shall be instigated in accordance with company 5.2.3 rules and national law if any individual working for the company is found to capture, harm, collect or kill these species. a. Does the company have policies or rules YES • Company Policy dated 1st Organization has a policies or rules to protect RTE species based on UU No.5 / to protect RTE species? December 2014 1990. Penalties under the UU No.5 / 1990 "person who deliberately capture, b. Is there a programme to regularly injure, kill, keep, possess, maintain, transport, and trade in protected animals alive • Environmental Field Procedure educate the workforce about the status of or dead can shall be punished with imprisonment of 5 years and a maximum fine Conservation Area Monitoring the RTE species? 100.000.000, - (one hundred million). Policy also documented in Kebijakan (AA-PL-08-EFP) st c. Is there evidence or action taken to Perusahan (Company Policy) dated 1 December 2014 and Environmental Field implement the rules and programs? E.g. • Conservation Management Plan Procedure Conservation Area Monitoring (AA-PL-08-EFP). 2015 Inspections conducted to check no Penalties were communicated directly to all employees and the local community traps/snares put up within or nearby • HCV Management and during HCV socialization and through the HCV sing borads and warnings board. areas. Monitoring report 2015 Organisation also established the programme to regularly educate the workforce

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Have appropriate disciplinary measures • Field observation and interview about the status of the RTE species. The program has been implemented, the been imposed in accordance with with workers evidence of socialization invitation, list of attendance and photographs, minutes of company rules and national law, should socialization was proved. HCV protection and wildlife protection dissemination any individual working for the company is conducted twice a year internally to employee and once a year externally to found to have captured, harmed, surrounding community. collected or killed any RTE species? Inspections conducted regularly through HCV patrol to check no traps/snares put up within or nearby areas of HCV. Schedule and report of HCV patrol was sighted. Organization has been appointed PIC HCV (Officer HCV) in Teluk Panji Estate. The responsibility of HCV area management is part of the job description of the HCV Officer. The ”HCV Officers” have no particular background for HCV management, however they has been trained in regard identification, management and monitoring of HCV. Relevant laws were taken into account for determining appropriate measure including UU #5/1990 about Natural resources conservation, PP#7/1999 about List of protected plan and wildlife, President Decree (Kepres) #32/1990, and Government Regulation (PP) #26/2008. Where a management plan has been created there shall be ongoing monitoring: 5.2.4 • The status of HCV and RTE species that are affected by plantation or mill operations shall be documented and reported; • Outcomes of monitoring shall be fed back into the management plan. a. Does the management plan contain NO • Conservation Management Plan Management plan of HCV has been established based on HCV assessment in ongoing monitoring of status of HCV and (Minor NCR 2015 2012. Ongoing monitoring of the HCV management plan is performed regularly in RTE species that are affected by 2016-09 is monthly basis. HCV Officer is the personnel in charge for conducting the plantation or mill operations? • HCV Management and open) monitoring of HCV. Records of HCV monitoring were available and it was Monitoring report 2015 b. Is the status documented and reported? observed that monitoring was performed consistently. • Field observation and interview c. Are the outcomes of monitoring fed back HCV management plan is updated once a year based on the outcome of the HCV with workers into the management plan? monitoring that performed regularly in monthly basis. Monitoring of management plan was conducted periodically twice in a year (January – June and July – December). HCV and RTE species that are affected by plantation or mill operations have been monitored, documented and reported each semester. A record was available in

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Monitoring of RTE species existences and HCV area. Items checked contain RTE species existence, disturbance of people hunting and warning sign condition.

Minor Non Conformity: Teluk Panjie Estate: HCV Monitoring report 2015 has not give outcomes and feed back into the Conservation Management Plan 2016.

Correction: Input feedback from HCV monitoring report 2015 to the Conservation Management Plan 2016.

Root cause: Feedback of HCV was only discussed in the management meeting and not documented it in the next Conservation Management Plan.

Corrective Action: Conservation officer ensure that all feedback from HCV monitoring that discussed in the management meeting is always be documented in the next Conservation Management Plan. Where HCV set-asides with existing rights of local communities have been identified, there shall be evidence of a negotiated agreement that optimally safeguards both the HCVs and these rights.

5.2.5 Specific Guidance: For 5.2.5: If a negotiated agreement cannot be reached, there should be evidence of sustained efforts to achieve such an agreement. These could include third party arbitration (see Criteria 2.3, 6.3 and 6.4). a. Is there HCV set-asides with existing NO • HCV Assessment report by Minor Non Conformity: rights of local communities? (Minor NCR Forestry Department, Bogor Teluk Panjie Estate: 2016-10 is b. Who are the affected communities? Agriculture Institute in There was no evidence that negotiated agreement has been reached between open) September 2012 c. Is the identified HCV areas mapped? company with local community to optimally safeguard both the HCVs and rights of d. Is there evidence of stakeholder • Conservation Management Plan local communities regarding HCV 6 in Block B88d, Afdeling II. consultation and negotiated agreement, 2015 in accordance to FPIC principles, with Correction:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) local community to optimally safeguard • HCV Management and Make arrangements regarding the rights in accessing HCV 6 both the HCVs and rights of local Monitoring report 2015 communities? Root cause: • Field observation Previously approval only delivered orally. e. If a negotiated agreement cannot be reached, is there evidence of sustained • Interview stakeholder Corrective Action: efforts to achieve an agreement? Refer to Conservation officer ensures that approval available in written. specific guidance for 5.2.5.

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

5.3.1 (M) All waste products and sources of pollution shall be identified and documented.

a. Is there a registry/list of waste products YES - Procedure AA-KL-06-EFP – Identification of waste and pollution sources from Teluk Panji Mill and Estate produced? Handling of Hazardous Waste activities was evident. The source of pollution, type and control method of waste b. Is there a registry/list of pollution was recorded. sources? - Procedure AA-KL-07-EFP – Handling of Medical Waste. The waste products from estate generally were domestics waste and also several hazardous waste from estate operations activities as detailed below (but not - Procedure AA-KL-11-EFP – limited): Handling of Laboratory Waste.  Ex-pesticides containers (bottles and jerry cans) - Form AA-KL-601-FM – Record of Hazardous waste  Used oils  Used battery from the vehicles - Form AA-KL-602-FM – record of hazardous waste circulation  Plastics  Medical waste (first aid usage) - EMS-431-003-LT Rev.10 form updated on 3rd March 2015  Rags Identification of Environmental  Fertilizer containers Aspect  Emissions from vehicles  Usage lamps

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Tires  Usage batteries  Usage oil filters While at the Mill it was several hazardous waste generated from the mill operations, in detailed below (but not limited):  POME  Palm shell  Fibre  Empty bunch  Boiler ash  Chemicals jerry can and bottles  Gunny sacks from chemicals materials  Welding materials from workshop activities  Lubricants from workshop materials  Contaminated rags from workshop activities  Usage lamps  Tires  Usage batteries  Usage oil filters  Emissions from vehicles and other engines (generator, boilers)

5.3.2 (M) All chemicals and their containers shall be disposed of responsibly.

a. Is there an inventory of chemicals and YES - Procedure AA-KL-06-EFP – Procedure waste handling including hazardous waste handling has been their containers that are used and kept on (Major NCR Handling of Hazardous Waste. established and implemented. The procedure required waste to be segregated site? 2016-11 is from point of generation. In addition Mill and Estate also established waste - Procedure AA-KL-07-EFP – closed) b. How are chemicals and their containers register, which described wastes generated from each activity/location, its Handling of Medical Waste. stored and disposed off? Is it in classification (organic, inorganic or hazardous), and its control measure. accordance to best practices? (as - Procedure AA-KL-11-EFP – All empty agrochemical containers were triple rinsed, the jerry can were reused to

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) prescribed by manufacturers’ labels, local Handling of Laboratory Waste. spraying activities, while bottles containers were stored in the designated area requirement, national or international best and categorized as hazardous waste (B3). Records of chemical containers - Form AA-KL-601-FM – Record practice) quantity disposed were evident. Liquid waste from agrochemical was reused for of Hazardous waste the next spraying application. c. Are collection and disposal records of - Form AA-KL-602-FM – record chemicals and their containers Several ex-chemicals materials containers that use at mills operations such as of hazardous waste circulation maintained? laboratory chemicals ex-containers and the others, such as boiler additive liquids, - Hazardous waste manifest lubricants, workshop materials, use battery, etc were categorized as hazardous wastes that stored at hazardous waste temporary warehouse (TPS B3) that will - Observation to temporary be managed by licensed vendor: PT Shali Riau Lestari for transporter and as storage of hazardous waste used oil collector; PT Wastec as used of rags processor (used fibbers, used lamp, - Permit of temporary storage of contaminated goods, medical waste). Manifest of disposal were sighted. hazardous waste for Teluk Hazardous wastes generated by Mill and Estate are stored in temporary storage Panjie Mill and Estate of hazardous waste prior to be transported by licensed vendor. Temporary - Permit of PT. Shali Riau storage of hazardous waste still held valid permit from Labuhan Batu Selatan Lestari No. 237/2011 from District Environment Agency on 16th of October 2012 with permissible period 180 Menteri Lingkungan Hidup as days and valid through 5 years for Teluk Panjie Estate and on 29th of October hazardous waste collector valid 2010 with permissible period 180 days and valid through 5 years for Teluk Panjie for 5 years. Mill. - Permit of PT. Shali Riau These hazardous wastes were managed by licensed vendor: PT. Elmusensetindo Lestari No. B- Nusaindah as transporter of all wastes and as collector of used oil, PT. 14559/Dep.IV/LH/PDAL/12/201 Indocement Tunggal Prakarsa as processor of used filter, contaminated rags and 4 dated 30 December 2014 gloves, agrochemical and chemical containers waste, used lamp, PT. Muhtomas from Kementrian Lingkungan as processor of used battery and PT. Wastec International as processor of Hidup for truct BM 8431 JU medical waste. Disposal of hazardous waste was completed with manifest. valid through 5 years as Manifest of disposal were sighted. hazardous waste transporter Hazardous waste was reported to North Sumatera Province and Labuhan Batu - Permit of PT Wastec as Selatan District Environmental Agency and Central of Management Ecoregion hazardous waste processor Sumatera. Receipt note was also sighted. No.004/WI/SKT-LB3/VI/2015 dated 25 June 2015, Major Non Conformities: - MoU PT Shali Riau Lestari with Teluk Panjie Estate: PT SMA Teluk Panji It was found that ex lubricant container was not stored at hazardous waste storage, but put on the ground behind oil warehouse, so that the ground is

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) contaminated

Teluk Panjie Mill: Several label/symbol of hazardous waste characteristic were found not sticked, e.g. in ex paint container and tube lamp.

Correction: - Put all ex lubricant container at hazardous waste storage. - Sticked all label/symbol of hazardous waste characteristic in related hazardous waste

Root cause: - The limited space in existing hazardous waste storage. - The hazardous waste storage keeper was not understood yet the importance of hazardous characteristic symbols.

Corrective Action: - Conduct repositioning in the hazardous waste storage. - Safety officer give training to the hazardous waste keeper regarding the importance of hazardous characteristic symbols. A waste management and disposal plan to avoid or reduce pollution shall be documented and implemented.

Guidance: The waste management and disposal plan should include measures for: • Identifying and monitoring sources of waste and pollution. • Improving the efficiency of resource utilisation and recycling potential wastes as nutrients or converting them into value-added products (e.g. through animal feeding programmes). • Appropriate management and disposal of hazardous chemicals and their containers. Surplus chemical containers should be reused, recycled or disposed of in an environmentally and 5.3.3 socially responsible way using best available practices (e.g. returned to the vendor or cleaned using a triple rinse method), such that there is no risk of contamination of water sources or risk to human health. The disposal instructions on the manufacturers’ labels should be adhered to. Use of open fire for waste disposal should be avoided.

For National Interpretation: National Interpretation (or an RSPO recognised parallel means) should include, as appropriate: details of relevant national laws or policies, a list of waste types (hazardous, non-hazardous, domestic, etc.) which must be considered, any types of disposal which are not acceptable (e.g. untreated waste water may not be discharged directly into streams or rivers (see Criterion 4.4), existing best practice guidelines on recycling and re-use of nutrients, managing effluent ponds, increasing mill extraction efficiency and appropriate disposal of wastes.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a documented waste management YES Procedure waste handling including hazardous waste handling has been and disposal plan to avoid or reduce  Procedure AA-KL-06-EFP – established and implemented. The procedure required waste to be segregated pollution? Handling of Hazardous Waste. from point of sources. In addition Mill and Estate also established waste register, b. Does the waste management and disposal  Procedure AA-KL-07-EFP – which described wastes sources from each activity/location, its classification plan, at minimum, include measures for: Handling of Medical Waste. (organic, inorganic or hazardous), and its disposal, reusing or recycling.  Identifying and monitoring sources of  Procedure AA-KL-11-EFP – EFB was used as fertilizer in Peranap Estate. POME was applied to land waste and pollution? Handling of Laboratory Waste. application as liquid fertilizer in Peranap Estate. Fibre and Shell from Peranap Mill  Improving the efficiency of resource was used for boiler feed. It was observed that organic and inorganic waste was utilisation and recycling potential of  Form AA-KL-601-FM – Record segregated at point of source. Mill and Estate including housing has provided wastes as nutrients or converting of Hazardous waste different colour of waste bin for each type of waste. Organic and inorganic wastes them into value-added products (e.g.  Form AA-KL-602-FM – record from Mill and Estate including housing were disposed to landfill in the Estate area. through animal feeding of hazardous waste circulation Areas of organic and inorganic wastes disposal was far from housing, in the flood- programmes)? free area and not in swamp area and completed with warning sign not burning  Observation to temporary  Appropriate management and wastes. disposal of hazardous chemicals and storage of hazardous waste their containers? There are evident the measurement periodical report include air ambience quality;  EMS-431-003-LT Rev.10 form emissions of vehicles and other engines (boilers, generators, etc.) also the  Reduction, re-use and recycle of updated on 3rd March 2015 programme on how to reduce the fuel usage and environmentally friendly. waste? Identification of Environmental c. Is there evidence that the plan has been Aspect Hazardous wastes generated by Mill and Estate are used oil, used oil filter, used implemented? battery, medical waste and used lamp. Temporary storage of hazardous waste was available to collect hazardous waste prior to be transported by licensed d. Is there evidence that waste has not been vendor. disposed off using open fire? Disposal of hazardous waste was completed with manifest. Manifest of disposal were sighted. Hazardous waste was reported to BLH South Labuhan Batu regency, BLH Nort Sumatera Province, PPE Sumatera and KLH Jakarta. Receipt note was also sighted.

5.4 Efficiency of fossil fuel use and the use of renewable energy is optimised.

A plan for improving efficiency of the use of fossil fuels and to optimise renewable energy shall be in place and monitored.

5.4.1 Guidance: Renewable energy use per tonne of Crude Palm Oil (CPO) or palm product in the mill should be monitored.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Direct fossil fuel use per tonne of CPO or Fresh Fruit Bunches (FFB) should be monitored. Energy efficiency should be taken into account in the construction or upgrading of all operations. Growers and millers should assess the direct energy use of their operations, including fuel and electricity, and energy efficiency of their operations. This should include estimation of fuel use by on-site contract workers, including all transport and machinery operations. The feasibility of collecting and using biogas should be studied if possible. a. Is there a plan for improving efficiency of YES - Fossil fuels efficiency PT. Supra Matra Abadi - Teluk Panjie mill and estate has been develop the the use of fossil fuels and to optimise programme programme/plan on how to conduct efficiency for utilization of fossil fuel by renewable energy? develop the standard to manage the consumption each of vehicles and electricity - Renewable energy (Fibre and b. Has the plan been implemented and is it generator within litre per hours for organization owned; the monitoring conducted shell) optimization programme monitored? by monthly and reported to technical department. In order to support the target, c. Does the monitoring system encompass - Records of diesel fuels usage there are several programme executed on how to efficiency of fossils fuels, such as: the following : - Records of fibre and shell  Renewable energy use/tCPO or palm usage - Control hour mater of heavy vehicle with car-lock and control diesel product; consumption with evidence of heavy vehicle utilisation  Direct fossil fuel use/tCPO or tFFB; - Decrease diesel consumption of dump truck with increase ratio utilisation  Estimated fuel use by on-site contract 3.2 km/litre on 2014 to 3.7 km/litre on 2016. workers and transport and machinery operations; - Decrease diesel consumption for heavy vehicle 2%  Electricity use in operations. - Efficiency usage of water for domestic consumption with standard 2.6 d. Was energy efficiency taken into account m3/family during the construction or upgrading of all operations? - Efficiency usage of paper, with average usage 18 rim/month e. Has studies on the feasibility of collecting There are monitoring records sighted regarding the utilization of fossils fuels and and using biogas been carried out? fibre shell that presented as below: Renewable Energy (Fibre 2014 2015 and shell) Fibre (ton) 1,118,761 27,982.26 Shell (ton) 821.43 2,097.96

Fossil fuels 2014 2015

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Vehicles (litre) 4,196 5,306 Heavy equipment (litre) 2,147 5,215 Genset (litre) 28,188 36,200

So far there is a plan regarding feasibility of collecting and using biogas, however it still on management discussion.

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

(M) There shall be no land preparation by burning, other than in specific situations as identified in the ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions.

Guidance: 5.5.1 Fire should be used only where an assessment has demonstrated that it is the most effective and least environmentally damaging option for minimising the risk of severe pest and disease outbreaks, and exceptional levels of caution should be required for use of fire on peat. This should be subject to regulatory provisions under respective national environmental legislation.

Extension/training programmes for associated smallholders may be necessary. a. Does the company have a zero burning YES • Company policy dated 1 Company have a zero burning policy and stated in Company Policy dated 1st policy or any statement on zero burning? December 2014 December 2014. b. Does the company have SOPs for land preparation which mentions zero • Replanting procedure (AA-APM- Land preparation which mentions zero burning described within the replanting burning? OP-1100.20-R1) procedure (AA-APM-OP-1100.20-R1), the organisation committed to zero burning by using “chipping technique” at the ganoderma risks plantation by conducting • Field observation c. Was land prepared using the burn topple to the palm trees, chopping and stacking using excavator by bucket method? If yes, was it based on the modification. specific situations identified in the ‘Guidelines for the Implementation of the Procedure replanting mentioned that Field Assistant, Assistant Chief and Estate ASEAN Policy on Zero Burning’ 2003, or Manager must perform checks to ensure that the contractor does not perform comparable guidelines in other regions? burning for land preparation for replanting. d. Has the policy been implemented All the replanting activities requires to be documented and monitored, such as: throughout the operations? Schedule of replanting (chipping, digging and planting), progress planting LCC (Legume Cover Crop) and Minutes Works replanting (Progress in the Works e. Is there training programmes for Contractor) associated smallholders on zero burning

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) where appropriate? In the procedure of replanting mentioned that, the methods used are:  Toppling trees using heavy equipment (excavators)  Chipping: cutting palm trunk, so as not infected with ganoderma  Planting LCC / legumes (Mucuna and Puereria javanica etc. So that the decay of the old oil palm trunks can be faster  Planting of oil palm. This method has been used in replanting the whole plantation belonging to Asian Agri group including PT. SMA – Teluk Panji Mill and Estate. Where fire has been used for preparing land for replanting, there shall be evidence of prior approval of the controlled burning as specified in ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions.

5.5.2 For National Interpretation: National Interpretation will identify any specific situations where such use of fire may be acceptable, for example through reference to ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions. a. Where fire has been used for preparing NA Not applicable Organisation has policy “zero burning” in each operational activity, including land land for replanting, is there evidence of preparation and replanting. prior approval of the controlled burning as specified in ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions? b. What was the justification for using fire?

Preamble

Growers and millers commit to reporting on operational greenhouse gas emissions. However, it is recognised that these significant emissions cannot be monitored completely or measured 5.6 accurately with current knowledge and methodology. It is also recognised that it is not always feasible or practical to reduce or minimise these emissions. Growers and millers commit to an implementation period until the end of December 2016 for promoting best practices in reporting to the RSPO, and thereafter to public reporting. Growers and millers make this commitment with the support of all other stakeholder groups of the RSPO.

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

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) (M) An assessment of all polluting activities shall be conducted, including gaseous emissions, particulate/soot emissions and effluent (see Criterion 4.4).

5.6.1 Specific Guidance: Where practically feasible, operations should follow best management practices to measure and reduce emissions. Advice on this is available from the RSPO. a. Has an assessment of all polluting YES Identification of pollution and emission sources at Teluk Panji Mill and Estate activities been conducted including  EMS-431-003-LT Rev.10 form activities were evident. gaseous emissions, particulate/soot updated on February 2016 Identification of Environmental emissions and effluent (see Criterion The source of pollution, type of pollution and its control was documented. The Aspect 4.4)? information of pollution and emission sources at Teluk Panji Mill and Estate were b. Is there a documented list of all identified reviewed and updated on February 2016 including boiler emission, methane from polluting activities? Palm Oil Mill Effluent, diesel electricity generator and vehicles and heavy equipment.

(M) Significant pollutants and greenhouse gas (GHG) emissions shall be identified, and plans to reduce or minimise them implemented.

5.6.2 Specific Guidance: For 5.6.2: Plans will include objectives, targets and timelines. These should be responsive to context and any changes should be justified. For 5.6.2 and 5.6.3: The treatment methodology for POME will be recorded. a. Is there a documented list of all identified YES Greenhouse gas emissions The program was identify the source of greenhouse gas emissions as listed significant pollutants and GHG reduction Programme year 2016 below: emissions? b. Are there plans to reduce or minimise the 1. Methane from POME at mill identified pollutants and GHG emissions? 2. Fossil fuels emissions from vehicles and engines c. Do the plans include objectives, targets 3. Chemical fertilizer and timelines for reduction that are 4. Electricity usage responsive to context? There are also established the GHG reduction plan completed with objectives, d. Are the plans being implemented? Was targets and timelines as below: there any changes? Is it justified? Program Target 2015 e. Is the treatment methodology for POME recorded? (refer to C 4.4.3) Reduce diesel consumption 4,2Km/ litre Reduce paper consumption 18 Rim/month Reduce water consumption 2,6 m3/family

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) The records of each programme were sighted as evident implementation. Teluk Panji Mill waste water was processed through a series of waste water treatment ponds: one cooling pond, one acid pond, two anaerobic ponds, one aeration pond, one sediment pond, and three buffer ponds. Process parameter monitoring and maintenance of the ponds were sighted. Quality of waste water effluent is monitored quarterly in line with the requirements The results of monitoring of waste water effluent were reviewed including measurement of BOD; the result of discharge effluent conforms to the limits for parameters. A monitoring system shall be in place, with regular reporting on progress for these significant pollutants and emissions from estate and mill operations, using appropriate tools.

Specific Guidance: For 5.6.3 (GHG): For the implementation period until December 31st 2016, an RSPO-endorsed modified version of PalmGHG which only includes emissions from operations (including land use practices) can be used as a monitoring tool.

5.6.3 For 5.6.3: In addition, during the implementation period, growers will start to assess, monitor and report emissions arising from changes in carbon stocks within their operations, using the land use in November 2005 as the baseline. The implementation period for Indicator 5.6.3 is the same implementation period for Criterion 7.8. During the implementation period, reporting on GHG will be to a relevant RSPO working group (composed of all membership categories) which will use the information reported to review and fine tune the tools, emission factors and methodologies, and provide additional guidance for the process. Public reporting is desirable, but remains voluntary until the end of the implementation period. During the implementation period the RSPO working group will seek to continually improve PalmGHG, recognising the challenges associated with measuring GHG and carbon stock. PalmGHG or RSPO-endorsed equivalent will be used to assess, monitor and report GHG emissions. Parties seeking to use an alternative to PalmGHG will have to demonstrate its equivalence to the RSPO for endorsement. a. Is there a system in place to monitor YES Calculation of GHG RSPO The GHG emission calculation for Teluk Panji Mill and Estate of PT SMA uses emission of pollutants including calculation Year assessment 2015 Palm GHG V 2.1.1. As RSPO requirement. The reporting was not conducted yet greenhouse gases from estate (plantation) periodically to the RSPO interest. Reports was sighted that summarized as below: and mill operations? b. Is there regular reporting of the monitoring Emission Own crop outcomes? How often and to whom is reporting done? Total field emissions (tCO₂e) 39,831.48 c. Is the monitoring and reporting conducted using appropriate tools? What tool is being Total mill emissions (tCO₂e) 8,094.85 used to assess, monitor and report on Total mill emissions/tonnage CPO 1,75

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) GHG emissions? (tCO₂e/tonnage CPO) Total mill emission/tonnage PK 1,75 Please refer to specific guidance for GHG (tCO₂e/tonnage PK) requirements.

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PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Aspects of plantation and mill management that have social impacts, including replanting, are identified in a participatory way, and plans to mitigate the negative impacts and promote the 6.1 positive ones are made, implemented and monitored, to demonstrate continual improvement. (M) A social impact assessment (SIA) including records of meetings shall be documented.

Guidance: Identification of social impacts should be carried out by the grower with the participation of affected parties, including women and migrant workers as appropriate to the situation. The involvement of independent experts should be sought where this is considered necessary to ensure that all impacts (both positive and negative) are identified. Participation in this context means that affected parties are able to express their views through their own representative institutions, or freely chosen spokespersons, during the identification of impacts, reviewing findings and plans for mitigation, and monitoring the success of implemented plans. Potential social impacts may result from activities such as: building new roads, processing mills or other infrastructure; replanting with different crops or expansion of planting area; disposal of mill effluents; clearing of remaining natural vegetation; changes in employee numbers or employment terms; smallholder schemes. Plantation and mill management may have social impacts (positive or negative) on factors such as: 6.1.1 • Access and use rights; • Economic livelihoods (e.g. paid employment) and working conditions; • Subsistence activities; • Cultural and religious values; • Health and education facilities; • Other community values, resulting from changes such as improved transport /communication or arrival of substantial migrant labour force. The review can be done (once every two years) internally or externally.

For National Interpretation: As social impacts are particularly dependent on local social conditions, National Interpretation will identify the important issues, and methodologies for collecting data and using the results. This should include adequate consideration of the impacts on the customary or traditional rights of local communities and indigenous people, where these exist (Criteria 2.3 and 6.4). a. Has an SIA been conducted? When  “Studi Evaluasi Lingkungan” Social Impact Assessment result was documented both in “Studi Evaluasi YES was the last SIA conducted? document (by PT. Beringin Lingkungan” document (by PT. Beringin Megaconsult, February 1994) and HCV b. Is the process in conducting the SIA Megaconsult, February 1994. full assessment report (by IPB 2012). Social impacts were identified as follow: and the findings documented?  HCV full assessment report (by land ownership and control, job opportunities, living standards of the community, IPB 2012 health and disease, local economics, culture (inter-ethnics marriage). c. Does the SIA cover all of the potential  AMDAL document (released in Social impact assessment result was also documented in AMDAL document impact factors, including: 1994  Access and use rights; (released in 1994). The AMDAL studies including pre operation and operation  Economic livelihoods (e.g. paid phase of estate and mill.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) employment) and working In line with AMDAL legal requirements, the studies involved participation of conditions; affected parties and local communities.  Subsistence activities; It was reviewed that social component covered is in line with the minimum  Cultural and religious values; guidance of AMDAL coverage including working opportunities, incomes, local  Health and education facilities; perception, public health, and social conflict.  Other community values, resulting from changes such as The assessment scope are : improved transport a) Village monography /communication or arrival of substantial migrant labour force. b) Relationship between company and village c) Livelihoods d) Religion activities e) Village infrastructure f) Positive impact g) Negative impact

6.1.2 (M) There shall be evidence that the assessment has been done with the participation of affected parties. a. Does the assessment involve  “Studi Evaluasi Lingkungan” Social Impact assessments involve consultation with the affected parties covered YES consultation with the affected parties? document (by PT. Beringin villages. Who are the affected parties? Megaconsult, February 1994. b. Is there record of how the participatory  HCV full assessment report (by Evidence of participatory action from local communities was also sighted in related SIA documentation including photos. assessment has been conducted? IPB 2012

Were the affected parties able to  AMDAL document (released in SIA method is done by interview and questionnaire. Attendance list and express their views through their own 1994 photograph of social impact assessment were available. Assessment has been representative institutions, or freely  Stakeholder / local community done with the participation of affected parties such as head of villages, village chosen spokespersons, during the meeting 1 March 2016 identification of impacts, review of representatives, sub district police head, etc.

findings and planning for mitigation? Affected parties have been able to express their views through their own representative institutions, or freely chosen spokespersons, during the identification of impacts, reviewing findings and plans for mitigation, and

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) monitoring the success of implemented plans. This is demonstrated by interview result available on Analisis Dampak Lingkungan (ANDAL) Perkebunan dan Pabrik Pengolahan Kelapa Sawit, PT. Supra Matra Abadi.

Consultation management plans and monitoring the social impact to the community has been communicated and disseminated to affected communities on 1 March 2016. (M) Plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts identified, shall be developed in consultation with the affected 6.1.3 parties, documented and timetabled, including responsibilities for implementation. a. Is there any documented record to • Monitoring and CSR Program PT. Supra Matra Abadi – Teluk Panjie has a management plan and monitoring YES outline the plan on mitigation, year 2015 and 2016 of social impacts as contained in SIA report, has been developed into Monitoring implementation and monitoring • CSR Report for year 2015 and CSR Program. according to the SIA report? Social Assessment Monitoring conducted every year by CSR Region, monitoring b. Have plans for avoidance or mitigation between planning and realization were identified and evident. Negative impact of negative impacts and promotion of was used and identified for CSR program, e.g. road repair facilities, road the positive ones, and monitoring of watering, health checks impacts been developed? All the planning and realization have been documented and are also completed c. Have these plans been documented, with photos relevant to CSR activities. with clear timetables? Is the timeline reasonable? Realization of planning have been defined and implemented within a reasonable time. d. Have the persons responsible for implementation of the plans been identified? The plans shall be reviewed as a minimum once every two years and updated as necessary, in those cases where the review has concluded that changes should be made to current 6.1.4 practices. There shall be evidence that the review includes the participation of affected parties. a. Is the plan reviewed every two years? • Monitoring and CSR Program SIA document has been reviewed every year alongside with Social Assessment YES b. Has the plan been updated as year 2015 and 2016, monitoring.

necessary (i.e. in cases where the • CSR Report for year 2015 As reviewed in Social Assessment Monitoring 2015, programs to develop review has concluded that changes should be made to current practices)? positive impact has been realized such as CSR programs, access road, • Analisis Dampak Lingkungan infrastructure and new livelihoods. The negative impact has been minimized by c. Have the changes to the plan been (AMDAL) Perkebunan dan road maintenance and road watering. implemented? Pabrik Pengolahan Kelapa Sawit, PT. Supra Matra Abadi All processes have been documented in the CSR Report year 2015.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Is there evidence that the review has 2006 been done with the participation of the There are no differences in village monography and conditions since the first affected parties? social assessment in 2006. e. Has the process been recorded/documented?

6.1.5 Particular attention shall be paid to the impacts of smallholder schemes (where the plantation includes such a scheme). a. Are there schemed smallholders Not Applicable PT. Supra Matra Abadi – Teluk Panjie Estate is not having a smallholder/farmer NA involved? partnership. Therefore, indicator 6.1.5 is not applicable b. Have they been considered and involved in the whole process of the SIA? c. What are the main impacts affecting these smallholders?

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. (M) Consultation and communication procedures shall be documented.

Guidance: Decisions that the growers or mills are planning to make should be made clear, so that local communities and other interested parties understand the purpose of the communication and/or consultation. Communication and consultation mechanisms should be designed in collaboration with local communities and other affected or interested parties. These should consider the use of 6.2.1 appropriate existing local mechanisms and languages. Consideration should be given to the existence/formation of a multi-stakeholder forum. Communications should take into account differential access to information by women as compared to men, village leaders as compared to day labourers, new versus established community groups, and different ethnic groups. Consideration should be given to involving third parties, such as disinterested community groups, NGOs, or government (or a combination of these), to facilitate smallholder schemes and communities, and others as appropriate, in these communications.

For National Interpretation: National Interpretation will consider issues such as appropriate levels of consultation and the types of organisation or individuals that should be included.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Does the company maintain a list of • Stakeholder / local community The Company has a list for the local community and other interested parties and YES local communities and other affected meeting 1 March 2016 mentioned in the List of Stakeholders year 2016. or interested parties? SOP related to communication and consultation is described in the SOP AA-GL- • SOP AA-GL-50009.1-R0 - b. Is there SOP being developed by the 50009.1-R0 - Mechanism local communication / public consultation for interested Mechanism local communication company for communication and parties. / public consultation for consultation between the company interested parties. and the local communities and other FPIC was not applicable in PT. Supra Matra Abadi – Teluk Panjie, however FPIC affected or interested parties? approach was incorporated in the SOP for communication and consultation with • Stakeholder list year 2016 the local communities and other affected or interested parties c. Is the FPIC approach incorporated in the SOP for communication and The existing communication and consultation mechanisms (SOP related to consultation with the local communication and consultation is described in the SOP AA-GL-50009.1-R0 - communities and other affected or Mechanism local communication / public consultation) has been designed with interested parties? consideration to the use of appropriate existing local mechanisms and languages. Consideration has been given to the existence/formation of a multi- d. Has the SOP been developed together stakeholder forum. with the local communities and other affected or interested parties using The Procedure has disseminated to the stakeholder, minutes of dissemination appropriate existing local mechanisms and attendance list was sighted. The existing communication and consultation and in languages understood by these was taken into account differential access to information by women as compared parties? to men, village leaders as compared to day labourers, new versus established community groups, and different ethnic groups. e. Has the SOP been socialized with the local communities and other affected Procedure was available in Indonesian and easily to understand and it was or interested parties taking into effective. It was verified during public consultation and interview with stakeholder account the differential access to dated 1 March 2016. information by women as compared to men, village leaders as compared to day labourers, new versus established community groups, and different ethnic groups? f. Have interviews with affected parties been carried out to verify that the SOPs are effective?

6.2.2 A management official responsible for these issues shall be nominated.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Who in the company is appointed to YES - Humas (Public Relation) Job Company has appointed Public Relation Officer/Humas to responsible for be responsible for communication description communication and consultation with stakeholders. and consultation with the affected parties? - Interview with stakeholder on 1 Described in Job description, Public relation is one of the functions who develop b. Has the position been made official March 2016 and maintain the good social relationship with community and third parties include affected party. with clear and proper job description? - Procedure of Stakeholder c. Have the affected parties been made information request handling Affected parties have been aware and have access to the person in charge in aware and have access to the person SOP:AA-GL-5008.1-R0 dated 5th accordance with Social Communication procedure. From the interview with the in charge? December 2009 Rev. 00 local community that represented by village head, they already know that the Public Relation Officer is responsible for the communications and consultation e. - SOP Community complain handling SOP: AA-GL-510.1-R0.

A list of stakeholders, records of all communication, including confirmation of receipt and that efforts are made to ensure understanding by affected parties, and records of actions taken in 6.2.3 response to input from stakeholders, shall be maintained. a. Is the following maintained? • List of stakeholder – January A list of stakeholder was documented and updated once a year. The document YES  List of stakeholders (local 2016. was available covers internal stakeholder, government institution of, villages communities and other affected • Log book year 2015 and 2016. around PT. Supra Matra Abadi – Teluk Panjie, labour union, FFB supplier, and or interested parties etc.); • Stakeholder / local community general contractor/supplier. Last update was performed in January 2016. Record  Records of all communication, meeting on 1 March 2015 of list stakeholder can be demonstrated and well maintained.

including confirmation of receipt Records of all communication including confirmation of receipt or endorsement or endorsement; were well maintained, it documented in logbook of information request and

 Evidence that efforts have been community aspiration. made to ensure understanding by affected parties; Efforts were made to ensure understanding by affected parties was evident and  Record of actions taken in documented in folder of information request and community aspiration as well as response to input from records of actions taken in response to input from stakeholders. stakeholders. Records of actions taken in response to input from stakeholders was evident and verified during audit.

6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all affected parties. (M) The system, open to all affected parties, shall resolve disputes in an effective, timely and appropriate manner, ensuring anonymity of complainants and whistleblowers, where requested. 6.3.1

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Specific Guidance: For 6.3.1: The system should aim to reduce the risks of reprisal.

Guidance: See also to Criterion 1.2. Dispute resolution mechanisms should be established through open and consensual agreements with relevant affected parties. Complaints should be dealt with by mechanisms such as Joint Consultative Committees (JCC), with gender representation as necessary. Grievances may be internal (employees) or external. For scheme and independent smallholders, refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009. Where a resolution is not found mutually, complaints can be brought to the attention of the RSPO Complaints System. Refer to helpful texts for guidance, such as the Human Rights Commission (HRC) endorsed ‘Guiding Principles on Business and Human Rights: Implementing the UN "Protect, Respect and Remedy" Framework’, 2011. a. Is there an system in place to deal with • SOP handling of customer Organization has defined the system to deal with complaints and grievances for YES complaints and grievances for all complaints / stakeholders SOP: all affected parties which documented in SOP handling of customer complaints / affected parties? AA-HR-3085.5 – R.0. stakeholders SOP: AA-HR-3085.5 – R.0. • Stakeholder / local community b. Who in the company is responsible to Person who responsible to receive complaints and grievances has assigned by meeting 1 March 2016. receive complaints and grievances? organization that was Estate Manager. In the procedure also described stages • Attendance list worker – PT. follow up of complaint, problem identification and escalation of complaint to c. Is the existence of the system been SMA , October 2015. made known and communicated to all Estate Manager, General Manager, Region Head and Head Office (if necessary) parties? The existence of the system has been communicated and made known to all d. Is there evidence that the system is parties. It has been disseminated to all parties together with public consultation understood by all parties? of social assessment and socialization of procedures for complaints handling and communication. e. Is training provided to the workers on the procedures/systems? Dissemination of procedures has been performed to all levels of employees, office workers were conducted in October 2015. f. Is the system effective to ensure that complaints or grievances are The system was effective to ensure that complaints or grievances are addressed addressed or resolved in an effective, or resolved in an effective, timely and appropriate manner. Evidence that the timely and appropriate manner? procedures have been implemented is the logbook of complaint. Records are routinely monitored monthly. Since January to December 2015 there were no g. Does the mechanism or procedure complaints submitted by the public community and employees. provide a way for workers to report a grievance against a supervisor to Mechanism and procedure was providing a way for workers to report a grievance someone other than the supervisor? against a supervisor to someone other than the supervisor.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) h. How is a complaint or grievance The system was enable resolution of disputes in an effective and appropriate investigated, addressed and resolved? manner by way of classifying complaints into internal and external, appointed the Are complaints dealt with by person who responsible for handling complaints, including level of officials who mechanisms such as JCC? make decisions for complaint resolution. i. Is there a non-retaliation or non- Non-retaliation or non-reprisal policy that protects complainants or whistle- reprisal policy that protects blowers was described in Company Policy PT. Supra Matra Abadi. Privacy of complainants or whistle-blowers? parties who submitted the compliant and aspiration were protected if necessary. j. Is the privacy of parties protected? Where a resolution is not found mutually by means of deliberations between two k. Where a resolution is not found parties, the problem can be resolved through third-party mediation / authorities, mutually, is there a process for be resolved through the applicable law or brought the RSPO Complaints complaints to be brought to the RSPO System. Complaints System?

6.3.2 (M) Documentation of both the process by which a dispute was resolved and the outcome shall be available.

a. Is the complaints or grievance • Complaint log book – PT. SMA. Complaints or grievance resolution process documented in the logbook of YES resolution process documented? • Interview result with worker Complaint. Records are routinely monitored monthly. However since January union, stakeholder, gender 2015 to February 2016 there were no complaints submitted by the public b. Are outcomes or decisions reported committee dated 1 March 2016. community and employees. to the parties?

c. Who has access to the It was also confirmed based on public consultation with surrounding village documentation of the process and/or representative, labour union and gender committee. outcomes? Outcomes or decisions as response to followed up the complaint reported to affected parties as described in example above. Any negotiations concerning compensation for loss of legal, customary or user rights are dealt with through a documented system that enables indigenous peoples, local communities and 6.4 other stakeholders to express their views through their own representative institutions. (M) A procedure for identifying legal, customary or user rights, and a procedure for identifying people entitled to compensation, shall be in place.

6.4.1 Guidance: This criterion should be considered in conjunction with Criteria 2.2 and 2.3, and the associated Guidance.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Are procedures for identifying legal, YES - Procedure of Identification and Procedure for identifying legal, customary or user rights has been established customary or user rights in place? calculation of land compensation and available in procedure SOP AA-GL-5003.1-R1. b. Are procedures for identifying people SOP AA-GL-5003.1-R1. entitled to compensation in place? The steps of the procedures to identification and calculation of land - Minutes of dissemination of compensation , consist of: c. Are those procedures jointly Procedure to stakeholder on 23rd 1. Identification of land owner developed, agreed and accepted by October 2014 local communities? 2. Measurement - Stakeholder meeting on 1 March 2016 3. Data input (mapping) 4. Negotiating compensation 5. Payment of compensation 6. Data documentation.

Procedure for identifying people entitled to compensation has been established and available also in procedure of Identification and calculation of land compensation (SOP AA-GL-5003.1-R1). The steps are as described above. Procedures was jointly developed, agreed and accepted by local communities It has been designed with consideration to the use of appropriate existing local mechanisms and languages. Consideration has been given to the existence/formation of a multi-stakeholder forum. The Procedure has disseminated to the stakeholder together with public consultation of social assessment and socialization of procedures for complaints handling. Dissemination of social communication procedure has been performed in 23rd October 2014 to stakeholder. Minutes of socialization and attendance list was sighted. A procedure for calculating and distributing fair compensation (monetary or otherwise) shall be established and implemented, monitored and evaluated in a participatory way, and corrective actions taken as a result of this evaluation. This procedure shall take into account: gender differences in the power to claim rights, ownership and access to land; differences of 6.4.2 transmigrants and long-established communities; and differences in ethnic groups’ proof of legal versus communal ownership of land. Specific Guidance: For 6.4.2: Companies should make best efforts to ensure that equal opportunities have been provided to both female and male heads of households to hold land titles in smallholder schemes.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Has a procedure for calculating and • SOP AA-GL-5003.1-R1 - Procedure for calculating and distributing fair compensation (monetary or YES distributing fair compensation Calculation and compensation otherwise) has been established and available in procedure of Identification and (monetary or otherwise) been method for land. calculation of land compensation SOP AA-GL-5003.1-R1 - Calculation and established and implemented? compensation method for land. The steps are as described in criterion 6.4.1. • Minutes of dissemination of

b. Are the procedures jointly developed, Procedure to stakeholder on 23rd Procedures was jointly developed, agreed and accepted by local communities It agreed, accepted and clearly October 2014 has been designed with consideration to the use of appropriate existing local understood by affected parties? • Public consultation with ‘Village mechanisms and languages. Consideration has been given to the c. Is the procedure monitored and Heads’ 1 March 2016 existence/formation of a multi-stakeholder forum. evaluated in a participatory way? Have corrective actions been taken as a The procedure monitored and evaluated in a participatory way, procedures will result of this evaluation? be revised if there is a reasonable request from stakeholders. d. Does this procedure take into account the following: This procedure take into account of the gender differences in the power to claim

 Gender differences in the power rights, ownership and access to land, differences of transmigrants and long- to claim rights; established communities, differences in ethnic groups’ proof of legal versus  Ownership and access to land; communal ownership of land.

 Differences of transmigrants and There was no smallholder scheme associated with PT. Supra Matra Abadi – long-established communities; Teluk Panjie Mill.  Differences in ethnic groups’ proof of legal versus communal ownership of land. e. Where there are schemed smallholders, is there effort to ensure equal opportunity has been provided to.

(M) The process and outcome of any negotiated agreements and compensation claims shall be documented, with evidence of the participation of affected parties, and made publicly 6.4.3 available.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is the process and outcome of  SOP AA-GL-5003.1-R1 - NA The organisation did not acquire any new land after 2005. It was noted that there negotiated agreements and Calculation and compensation was no ongoing progress of new land acquisition during group discussion with compensation claims documented? method for land. village head and local Government. All land acquisition process was done before b. Does this documentation include  Minutes of dissemination of 1993. evidence of the participation of Procedure to stakeholder on 23rd

affected parties? Is there any October 2014 approval/signed by effected parties?  Public consultation with ‘Village c. Was consent obtained from all parties Heads’ 1 March 2016 to make the documents publicly available?

6.5 Pay and conditions for employees and for contract workers always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

(M) Documentation of pay and conditions shall be available.

6.5.1 For National Interpretation: National Interpretation will define a Decent Living Wage. Where there is no National Interpretation, the legal minimum wage will be used. a. What types of employment • Working agreement (PKB) Working agreement (PKB) was established and endorsed by local authorities YES arrangements are there in the period 2015 – 2017. (labour department) and last for 2 years, period of working agreement is April company? (E.g. contractual, • Company policy no. 01 dated 1 2015 – April 2017. This working agreement was made by BKS-PPS and outsourced, apprenticeships, direct December 2014 PP.FSP.PP-SPSI. hires, piecemeal basis, etc.) • Pay roll list period December 2015. PT. Supra Matra Abadi has a policy for pay and conditions for employees in b. Is there documentation of pay and conditions for each employee? • Sumatra Utara Governor Decree Company Policy No. 01 dated 01 December 2014. No. 188.44/639/KPTS/201 in c. Is there a definition for living wage in regard Minimum Wages Sub Documentation of pay and conditions for each employee was evident and the country? If not, how was the Agriculture / Oil Palm and Palm recorded in the pay roll list. decision on wage for employees and Oil and Rubber Plant in 2016. contract workers made? Definition for living wage was determined and refer to Sumatra Utara Governor Decree No. 188.44/639/KPTS/201 about Minimum Wages Sub Agriculture / Oil Palm and Palm Oil And Rubber Plant in 2016. Based on interview with worker it was noted that there was no worker wage deduction. Payments for workers were determined according to daily attendance

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) register and over time shift. Daily attendance for workers was recorded and controlled manually by the each Assistant. Pay and conditions for employees and for contract workers always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

(M) Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday 6.5.2 entitlement, maternity leave, reasons for dismissal, period of notice, etc.) shall be available in the languages understood by the workers or explained carefully to them by a management official. a. Is the pay and conditions of • Working agreement (PKB) Workers contract is available in form “Perjanjian Kerja Bersama Tahun 2015- YES employment clearly detailed in the period 2015 – 2017. 2017” dated April 21st 2015, where the entire worker’s rights and obligation are employment or service contracts? • Company policy no. 01 dated 1 indicated in detail, such as not providing underage worker, company shall (E.g. working hours, deductions, December 2014/ provide PPE during working hours, overtime, maternity leave, facilities given to overtime, sickness, holiday • Pay roll list period December employees (housing, social insurance, etc). The agreement written in Bahasa entitlement, maternity leave, reasons 2015. Indonesia and based on interview with worker, they do understand their working for dismissal, period of notice, etc.) • Sumatra Utara Governor Decree agreement. b. Is the contract prepared in languages No. 188.44/639/KPTS/201 about Minimum Wages Sub Agriculture Besides working agreement, PT Supra Matra Abadi has a policy for pay and understood by the workers, explained / Oil Palm and Palm Oil and conditions for employees Company Policy item no. 01 dated 1 December 2014. carefully to workers by management officials, and signed by both the Rubber Plant in 2016. This policy has been socialized to employees on 15 October 2015

authorised signatory of the company and employee? Employee’s pay rate was according to List of Payment Rate from Head Office. It was evident that the wages are paid according to regulations, such as : c. Does the pay and conditions provided in labour laws, union • Sumatra Utara Governor Decree No. 188.44/639/KPTS/201 about Minimum agreements or direct contracts of Wages Sub Agriculture / Oil Palm and Palm Oil and Rubber Plant in 2016. employment comply with:  The decent living wage as provided in the National If worker have a family the he will be give 15 kg additional rice, 9 kg rice for wife Interpretation for the country; or and 7,5 kg rice for each child, maximum 3 child.  The local legal requirements in meeting the minimum wage; or Based on interview with workers and labour union, there are no records of  The industry minimum standard breach by the company. Salary has been delivered routine in each month for a similar position or work without problem.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) responsibilities

d. Is the pay received by the employee consistent with the terms of the contract and the law (relates to P2)? e. Have there been any cases recorded of breach by the company, or complaint made by employees against the company on unjust pay and conditions?

Growers and millers shall provide adequate housing, water supplies, medical, educational and welfare amenities to national standards or above, where no such public facilities are available 6.5.3 or accessible.

a. Have growers and millers provided • Housing map The company has provided employees facilities such as: housing, sport fields, YES adequate housing and other basic • Field observations in worker building for prayers (mosques and churches), schools (kindergarten and necessities such as that listed below to Emplacement elementary school ), childcare house, polyclinics, free electricity and clean water national standards or above, where no supply (from reservoir and deep-wells). such public facilities are available or accessible? The water quality was periodically checked by external lab and showed  adequate housing; conformity with the quality standard.  adequate electricity;  clean water supplies (availability of - Housings were provided for staff, non-staff even PHL (daily free clear water all year round); workers). Each house has 2 bedrooms, a living room and one bath  medical services (distance to room. No charges given to the employee for electricity and water health care facility i.e. clinic, supply use. hospital);  children education (distance to school and schooling attendance (%) of children under 12)  welfare amenities.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

6.5.4 Growers and millers shall make demonstrable efforts to monitor and improve workers’ access to adequate, sufficient and affordable food.

a. Have growers and millers made - List of Payment Rate for Staff Company policy stated that workers will be given 15 kg additional rice (if worker YES demonstrable efforts to monitor and PT. SMA month December is not married) and if worker have a family the he will be give 15 kg additional improve workers’ access to adequate, 2015 and January 2016 rice, 9 kg rice for wife and 7,5 kg rice for each child, maximum 3 child. Besides sufficient and affordable food? - Interview with workers dated 1 that, extra food given for the workers such as milk and green-bean porridge. March 2016 The employer respects the rights of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining 6.6 are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel. (M) A published statement in local languages recognising freedom of association shall be available.

Guidance: The right of employees, including migrant and transmigrant workers and contract workers, to form associations and bargain collectively with their employer should be respected, in accordance with Conventions 87 and 98 of the International Labour Organisation (ILO). 6.6.1 Labour laws and union agreements, or in their absence direct contracts of employment detailing payments and other conditions, should be available in the languages understood by the workers or explained carefully to them by a management official.

For National Interpretation: National Interpretation will define migrant and transmigrant workers. ILO definitions and other international protocols, instruments and explanations should be used throughout. a. Has the company published a - Company Policy – dated 1 Freedom of association has been mentioned in Company Policy dated 1 YES statement in local languages December 2014. December 2014. Organizations understand that workers have the right to recognising the rights of employees to - PKB – PT. Supra Matra Abadi argued, associate and organize in a labour union. freedom of association? period 2015 - 2017 b. Are the employees, including migrant Organization committed to provides opportunities for workers to organize in unions and express an opinion. and transmigrant workers and contract

workers, allowed to form associations and bargain collectively with their Commitment covered in the policy are:

employer? “Respect the right of every employee to form or join trade unions in accordance c. Was the outcome, if any, from the they want and to bargain collectively” collective bargaining process between the company and the association Based on interview with labour union leader, the company has accommodated respected, implemented and adopted employee rights to argued, associate and organize in a labour union.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) in full or partially by the company? Employees, including migrant and transmigrant workers and contract workers d. Are there Labour laws and union agreements, or in their absence direct were allowed to form associations and bargain collectively with their employer.

contracts of employment detailing payments and other conditions, made There were union workers represent estate and mill employee incorporated in the SPSI /Union Labour - Perkebunan PT. Supra Matra Abadi available in the languages understood

by the workers or explained carefully to them by a management official? Labour laws, union agreements which described in working agreement/PKB and direct contracts of employment detailing payments and other conditions was made available in the languages which understood by the workers and explained carefully to them by management official.

6.6.2 Minutes of meetings with main trade unions or workers representatives shall be documented.

a. Are there documented minutes of Minutes of meeting between worker Minutes of meetings with main labour unions or workers representatives been YES meetings between the company and Union with Company dated 10 documented, e.g. bipartite meeting in regard determining to review ‘premium’ main trade unions or workers December 2015 wages for harvester dated 10 December 2015 representatives? This meeting is attended by the company representatives (head assistant, b. Are the minutes made readily available assistant, foreman and employees) and the labour union of PT. Supra Matra to employees upon request? Abadi

Minutes of meeting were available, list of attendance was sighted. The minute was made readily available to employees upon request.

6.7 Children are not employed or exploited.

(M) There shall be documentary evidence that minimum age requirements are met.

Guidance: Growers and millers should clearly define the minimum working age, together with working hours. Only workers above the minimum school leaving age in the country or who are at least 15 6.7.1 years old may be employed. The minimum age of workers will not be less than stated under national regulations. Any hazardous work should not be done by those under 18, as per International Labour Organisation (ILO) Convention 138.

Please refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009for additional guidance on family farms.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is the minimum working age for  Company Policy item no. 14 PT. Supra Matra Abadi – Teluk Panjie Estate and Mill has a policy for minimum YES workers together with working hours dated 01 December 2014. working age. It was stated that company committed to not employ underage clearly defined in the company’s  Worker List PT. Supra Matra workers required by national legislation. recruitment policy? Abadi – Teluk Panjie Estate and b. Are workers employed above the Mill Besides that, company has a procedure AA-HR-305-2-00 – Recruitment and Selection which stated that every candidate must have identity card “(KTP), minimum school leaving age of the  Procedure : AA-HR-305-2-00 – Kartu Keluarga, Surat Nikah (if married)”. country or who are at least 15 years of Recruitment and Selection age? Based on document review as listed in “Daftar Tenaga Kerja (List of Workers)

c. Is there evidence that the nature of PT. Supra Matra Abadi – Teluk Panjie Estate and Mill, there are no underage work for workers under 18 is in workers found and List of workers did not show any worker under 18 years old accordance with International Labour when they joined the company. Organisation (ILO) Convention 138? d. Does ground verification show Some copies of worker’s ID were also filled as evidence. No underage worker evidence of employment of workers was found during the audit. Workers interviewed indicated that no worker under below the minimum working age? 18 years old in Teluk Panjie Estate and Mill.

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.

(M) A publicly available equal opportunities policy including identification of relevant/affected groups in the local environment shall be documented.

Guidance: Examples of compliance can be appropriate documentation (e.g. job advertisements, job descriptions, appraisals, etc.), and/or information obtained via interviews with relevant stakeholders 6.8.1 such as affected groups which may include women, local communities, foreign workers, and migrant workers, etc.

Notwithstanding national legislation and regulation, medical conditions should not be used in a discriminatory way.

The grievance procedures detailed in Criterion 6.3 apply. Positive discrimination to provide employment and benefits to specific communities is acceptable as part of negotiated agreements.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a company policy on non- - Company policy item no. 13 An equal opportunities policy was documented in Company Policy No. 13 which YES discrimination and equal opportunities? dated 1 December 2014. mentioned : Does it at least cover the items - List of worker “Respect for human rights by putting all employees fairly, both in terms of mentioned in the criteria (6.8)? - Attendance list worker – PT. reception, assessment, conditions and working environment, as well as the b. Is the policy made publicly available for Supra Matra Abadi – Teluk representation, regardless of race, caste, national origin, religion / belief, Panjie Estate. disability, gender, sexual orientation. union membership workers, political the relevant stakeholders? - Minutes – Stakeholder / local affiliation or age”.

c. Is there evidence that the policy has community meeting 1 March been implemented? 2016. This policy has been disseminated to employees in October 2015 for workers and 16 March and October 2015 for stakeholder and local community As reviewed in document "List of Workers accordance Tribe and Religion” , seen that the worker is composed of several ethnic Batak, Java, and several different religions.

6.8.2 (M) Evidence shall be provided that employees and groups including local communities, women, and migrant workers have not been discriminated against.

a. Is there evidence that employees and - Procedure: AA-HR-305-2-00 – Recruitment process was documented in Procedure: AA-HR-305-2-00 – YES groups including local communities, Recruitment and Selection. Recruitment and Selection. Process covers : women, and migrant workers have not - Logbook Complaint 2015 - The collection of application file been discriminated against? - Public consultation on 1 March - Selection of administration - Announcement of the selection schedule b. Are the employees and groups 2016 and interview with - Test questions and physical tests including local communities, women, employee and migrant workers happy with the - Summary of the results of the selection - Announcement of selection results way the company is treating them? - Provision of a cover letter MCU to candidates who pass the selection c. Are there complaints against the - Implementation of MCU company on issues relating to discrimination? Based on public consultation on 1 March 2016 with stakeholders and interview with employee could be demonstrated that there was no discrimination against d. What is the nature of complaints employees and groups including local communities, women, and migrant employees and groups including local workers. However there was no migrant worker work to company. communities, women, and migrant workers have lodged against the The employees and groups including local communities, women, and migrant company, if any? workers were happy with the way the company treating them. There was no complaint against the company on issues relating to discrimination

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) based on public consultation with stakeholders and interview with employee and Complaint Logbook. Based on Logbook Complaint 2015 since January – December 2015 there was no complaint employee and groups including local communities, women, and migrant workers have lodged against the company.

6.8.3 It shall be demonstrated that recruitment selection, hiring and promotion are based on skills, capabilities, qualities, and medical fitness necessary for the jobs available.

a. Does the company keep and maintain - Procedure AA-HR-305-2-00 - YES Recruitment process was documented in procedure AA-HR-305-2-00 – a record of their employees’ work Recruitment and Selection. Recruitment and Selection. Based on that procedure, it was described that the credentials and medical history? - Medical Records for workers selection, recruitment and promotion of workers based on worker competency. b. Does the company explicitly state the - Interview with stakeholders and indiscriminatory policy during the worker representatives on 1 Employees credential and medical history were documented and recorded. March 2016 recruitment selection, hiring and Company explicitly state the indiscriminatory policy during the recruitment promotion process? selection, hiring and promotion process. c. Is the company’s indiscriminatory All company policy reviewed every year by Sustainability Department, PT. Supra policy reviewed regularly? Matra Abadi. Company’s indiscriminatory policy reviewed regularly, once a year.

d. Are the company’s employees Company’s employees was recruited and promoted based on skills, capabilities, recruited and promoted based on skills, qualities, and medical fitness necessary for the job. capabilities, qualities, and medical fitness necessary for the job? How is Recording of recruitment begun from letter of application, personal data of this evidenced? employees, contract and medical history are stored in the employee archives. From the record could be demonstrated that company has implemented well the procedure and the policy. Some evidence such as: employee promotion PT Supra Matra Abadi 2016. Employee’s evaluation was conducted every year to decide promotion of employees. Based on their competency some of worker from estate was promoted to Office Admin.

6.9 There is no harassment or abuse in the work place, and reproductive rights are protected. (M) A policy to prevent sexual and all other forms of harassment and violence shall be implemented and communicated to all levels of the workforce.

6.9.1 Specific Guidance: For 6.9.1 and 6.9.2: These policies should include education for women and awareness of the workforce. There should be programmes provided for particular issues faced by women, such

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) as violence and sexual harassment in the workplace. A gender committee specifically to address areas of concern to women will be used to comply with this Criterion. This committee, which should include representatives from all areas of work, will consider matters such as: training on women’s rights; counselling for women affected by violence; child care facilities to be provided by the growers and millers; women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks; and women to be given specific break times to enable effective breastfeeding. For 6.9.2: see Indicator 4.6.12.

Guidance: There should be a clear policy developed in consultation with employees, contract workers and other relevant stakeholders, and the policy should be publicly available. Progress in implementing the policy should be regularly monitored, and the results of monitoring activities should be recorded.

Notwithstanding national legislation and regulation, reproductive rights are respected. a. Does the company have the policy to - Company Policy dated 1 YES A company policy on sexual harassment was documented in Company Policy prohibit any form of sexual and all December 2014. (Major NCR PT. Supra Matra Abadi item no. 15. other forms of harassment and - Organization Structure of 2016-12 is violence? Gender Committee of PT. Supra “Preventing sexual harassment and all forms of violence against women and closed) b. Has this policy been documented, Matra Abadi protect the rights of her reproductive” - Interview with Gender implemented and communicated This policy has been socialized to employees in 15 October 2015 based on Committee and worker clearly to all levels of the workforce? evidences such as attendance list and Minutes of Meeting. representatives on 1 March 2016 c. Is there a clear protocol for the Company has formed A Gender Committee. Gender Committee activities such company to deal/handle such as handle complaint from female workers, reporting and data collecting if case issues/complaints received from the appeared concerning sexual harassment. workforce?

d. Is there a list of awareness programs Major Non Conformity: or training provided to the workforce in Teluk Panjie Estate/Mill: relation to these issues? At the latest Gender Committee performed meeting in September 2015, however e. Has the company formed a Gender this meeting was not discussed required items. Committee to address areas of concern to women? Is there a list of Correction: the members sitting in the committee? Conduct refreshment meeting to discuss required items based on the SOP. What are the Terms of Reference of the committee? Does it include the Root cause: handling of issues such as: The previous Gender Committee meeting held in 2014 was already discussed  training on women’s rights; required items.  counselling for women affected

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) by violence; Corrective Action:  child care facilities to be provided Chairman of Gender Committee ensure that required items are discussed in by the growers and millers; every meeting based on the SOP.  women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks; and  women to be given specific break times to enable effective breastfeeding. f. Is the policy regularly reviewed?

6.9.2 (M) A policy to protect the reproductive rights of all, especially of women, shall be implemented and communicated to all levels of the workforce.

a. Is there a policy to protect the - Company Policy dated 1 A company policy on reproductive rights was documented in Company Policy YES reproductive rights of all, especially of December 2014 item 15 dated 1 December 2014. women? - Minutes of Dissemination on Policy communicated to all level employees in the company. b. Has this policy been documented, January 2015 to office workers,

implemented and communicated mill workers in July and August This policy has been disseminated to all employees based on evidences such as clearly to all levels of the workforce? 2015, estate workers in September and October 2015 attendance list and Minutes of Meeting. c. How is this policy communicated to all - Interview with Gender Committee levels of the workforce? and employee on 1 March 2016 All company policy reviewed every year by Sustainability Department PT. Supra - Field observation Matra Abadi. -

6.9.3 A specific grievance mechanism which respects anonymity and protects complainants where requested shall be established, implemented, and communicated to all levels of the workforce.

a. Does the company have a mechanism - Company Policy dated 1 Company mechanism about complaint (internal and external) documented in to handle employment grievances, that December 2014 YES procedure SOP: AA-HR-3085.5 - R.0 "Complaints of employees - the delivery respects anonymity and protects - Minutes of Dissemination on and settlement of employee complaints'. complainants where requested? January 2015 to office workers, b. Does the mechanism provide a way for mill workers in July and August In the procedure also described the process of complaint. Complaint process

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) workers to report a grievance against a 2015, estate workers in cannot report only to Supervisor but other such Union, Gender Committee. supervisor to someone other than that September and October 2015 Stages of complaint were described in the procedure. supervisor? - Interview with Gender Committee In point in the procedure stated that the company will respects anonymity and and employee on 1 March 2016 c. Is the mechanism documented, protects complainants where requested. implemented and communicated clearly to all levels of the workforce? All company policy reviewed every year by Sustainability Department PT. Supra Matra Abadi. d. Has the company identified personnel who will be responsible to receive and According log book and interview with related workers in the company, there is manage complaints received from the no complaint that received by company. workforce? e. Has the company received any reports or complaints of harassment or abuse? How was it addressed or resolved? f. Is the policy reviewed regularly?

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

Current and past prices paid for Fresh Fruit Bunches (FFB) shall be publicly available.

Guidance: Transactions with smallholders should consider issues such as the role of middle men, transport and storage of FFB, quality and grading. The need to recycle the nutrients in FFB (see Criterion 4.2) should also be considered; where it is not practicable to recycle wastes to smallholders, compensation for the value of the nutrients exported can be made through the FFB 6.10.1 price.

Smallholders should have access to the grievance procedure under Criterion 6.3 if they consider that they are not receiving a fair price for FFB, whether or not middle men are involved. The need for a fair and transparent pricing mechanism is particularly important for outgrowers who are contractually obliged to sell all FFB to a particular mill. If mills require smallholders to change practices to meet the RSPO Principles and Criteria, consideration should be given to the costs of such changes, and the possibility of advance payments for FFB can be considered. a. How is the price of FFB determined?  Pricing calculation The FFB for Mill were received from own estate and third party. Price YES mechanism of FFB was determined by head office Medan and distributed to b. Is current and past prices paid for purchasing personnel in each estate. The FFB price was monitored daily by the Fresh Fruit Bunches (FFB) publicly purchasing personnel in Estate. The determination of FFB price was conducted

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) available? How? by considering the market price of crude palm oil and kernel, the cost of transportation, price of the competitor factories and fruit condition / FFB field, by c. Was there any complaints on FFB pricing? the approval from the purchasing managers in the head office. The update FFB price was informed to the FFB supplier via phone message and directly informed d. How was the complaint handled? by Mill through information board that placed in the front area of the factory. e. What was the solution? There were current and past prices available such as prices for 26 February-till now. And also from 16/2/2016 to 25 February 2016. There was no complaint regarding to the FFB price. (M) Evidence shall be available that growers/millers have explained FFB pricing, and pricing mechanisms for FFB and inputs/services shall be documented (where these are under the 6.10.2 control of the mill or plantation).

a. What is the mode of  Log Book FFB Received 2016 Transaction has been recorded by form Log Book of FFB Received. Several YES recording/documenting transactions  Pricing Calculation records were sighted such as for January 2016. The update FFB price was between millers with middlemen and/or informed to the FFB supplier via phone message and directly informed by Mill smallholders? through information board that placed in the front area of the factory. There were b. Is there evidence that growers/millers no inputs/services rendered to the third party supplier. The value of the waste of FFB (as EFB nutrient) has been included in the pricing calculation. have explained FFB pricing and pricing mechanisms for FFB? c. Are there any inputs/services rendered by the millers to smallholders/middle men? Are these inputs/services having any influence to the pricing and pricing mechanisms for FFB? d. Have inputs/services been documented (where these are under the control of the mill or plantation)? e. Where it is not practicable to smallholders to recycle waste (i.e. EFB), is there compensation for the value of the nutrients of EFB given to the smallholders? Is this translated into the pricing factors of FFB?

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

6.10.3 Evidence shall be available that all parties understand the contractual agreements they enter into, and that contracts are fair, legal and transparent.

a. Is there a contractual agreement  Contract agreement PT. SMA with The agreement/contract documents between contractor and organisation is YES between the miller and smallholders/ PT. Golden Permata. sighted such as for FFB Transporter. middle men? All contracts are acknowledged by all parties as part that contain of contract are well understood. The contract contains all relevant information such as payment b. Do all parties understand the method, work requirements, force majeure, contract period, cancellation of contractual agreements they have contract, etc. entered into? c. Are all contractual agreements fair, legal and transparent? d. Who keeps the contractual agreements?

6.10.4 Agreed payments shall be made in a timely manner.

a. How are all payments made to the Slip payment for third party FFB A review to several payment records January 2016 demonstrated that the YES smallholders/middle men? payment has been made according to the agreement. The payment was been made periodically according to the contract agreement. Several samples were b. What is the mode of recording/documenting transactions shown such as payment on 20 January 2016 for PT. Golden Permata. between millers with middlemen and/or smallholders? c. Have agreed payments been made in a timely manner?

6.11 Growers and millers contribute to local sustainable development where appropriate.

Contributions to local development that are based on the results of consultation with local communities shall be demonstrated. 6.11.1 Guidance:

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Contributions to local development should be based on the results of consultation with local communities. See also Criterion 6.2. Such consultation should be based on the principles of transparency, openness and participation, and should encourage communities to identify their own priorities and needs, including the different needs of men and women. Where candidates for employment are of equal merit, preference should always be given to members of local communities. Positive discrimination should not be recognised as conflicting with Criterion 6.8. Efforts should be made to identify independent smallholders in the supply base. Where sourcing of fruit is from identified independent smallholders, efforts should be made to contribute to the improvement of their farming practices.

For National Interpretation: National Interpretation will consider specific parameters or thresholds such as use of local and national goods and services where possible, whether a certain percentage of the plantation’s profit/turnover should be used for social development projects, and minimum quotas for local employment. a. Have the local development needs and - CSR program 2016 The Company has a CSR program, coordinated by the CSR Team Office YES priorities been identified in consultation - CSR Realisation documentation Region. Team is responsible for identifying the needs of rural communities with local communities? (refer also to C 2015 around the garden. Program identification is done by visiting and meeting with 6.2) - Worker List PT. Supra Matra local village head.

b. What are the contributions made to Abadi – Teluk Panjie local development? Are they in - Interview with stakeholders on 1 Identification of CSR results made in the proposal and approved by the head office, every year his company budgeted for CSR programs. Once proposal is accordance with the results of March 2016 approved, the CSR program was planned and implemented. consultation?

c. Are there efforts to improve or For PT. Supra Matra Abadi – Teluk Panjie. Several CSR programs were maximise employment opportunities at conducted among others: improvement of places of worship, donations of books the company for local communities? for elementary schools, etc.

Based on interviews with stakeholders, it is known that the presence of the company has a positive impact on people's lives, especially in terms of labour.

6.11.2 Where there are scheme smallholders, there shall be evidence that efforts and/or resources have been allocated to improve smallholder productivity.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a complete registry of  Interview with Estate/Mill There was no scheme smallholder associated with PT. Supra Matra Abadi – NA independent smallholders in the supply Manager, KTU and community Teluk Panjie Mill base? leader

b. Have efforts been made to improve the farming practices of independent smallholders? c. Where there are schemed smallholders, have efforts and/or resources been allocated to improve smallholder productivity?

No forms of forced or trafficked labour are used. 6.121 *1 New Criteria - No forms of forced or trafficked labour are used. (M) There shall be evidence that no forms of forced or trafficked labour are used.

Specific Guidance: For 6.12.1: Workers should enter into employment voluntarily and freely, without the threat of a penalty, and should have the freedom to terminate employment without penalty given reasonable notice or as per agreement.

Guidance Migrant workers should be legalised, and a separate employment agreement should be drawn up to meet immigration requirements for foreign workers and international standards. Any 6.12.1 deductions made should not jeopardise a decent living wage. Passports should only be voluntarily surrendered. There should be evidence of due diligence in applying this to all sub-contract workers and suppliers. National guidance should be used on contract substitution.

For National Interpretation: National Interpretation will define the following: temporary workers; migrant workers; special labour policy; contract substitution; and decent living wage. International Labour Organisation (ILO) definitions (ILO Convention 29 and 105) and other international protocols, instruments and explanations should be used throughout. See Criterion 6.5 for further guidance. a. What is the company’s policy on forced - Interview with stakeholders and NA Company’s policy on forced or trafficked labour was described in Company or trafficked labour? employee on 1 March 2016. Policy Asian Agri – PT Supra Matra Abadi. b. How does the company define forced - Worker list of Teluk Panjie Mill and Estate, PT. Supra Matra Based on Interview with stakeholders and employee on 1 March 2016 with

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) or trafficked labour? Abadi several worker and worker union it was evident that no forms of forced or trafficked labour have been used. Workers/employee entered into organization c. What is the process of recruiting foreign/ migrant workers directly and/or voluntarily and freely, without the threat of a penalty and they have the freedom to terminate employment without penalty given reasonable notice or as per through licenced outsourcing agencies/ labour suppliers? agreement. d. Who is the person responsible for There was no migrant worker in PT. Supra Matra Abadi – Teluk Panjie. Its selecting/ screening labour suppliers/ verified during audit documentation list of employee, interview with employee outsourcing agents? and stakeholders. e. Do the foreign workers have to pay a Person who responsible for selecting/screening labour suppliers was KTU fee to the employment recruitment (Kepala Tata Usaha) under supervision from Estate Managers. agency or labour suppliers in the Employees work based on contract labour agreement which contains workers’ countries of origin? If yes, agreements include: working time, dependents, payroll and consent of both does it jeopardise decent living wage? parties. Working hours, deductions, overtime, sickness, holiday entitlement, f. Are there restrictions on workers from maternity leave, reasons for dismissal, period of notice, etc described in PKB leaving the mill or estate or their years 2015 - 2017 which have been agreed between the employees housing facilities outside working (represented by SPSI) and company. hours? g. What is the process if a worker wants

to terminate their employment before

their contract expires? In this case, who pays for the return transportation? h. What are the penalties imposed if the workers were terminated or fired before their contract expires? i. Who keeps the workers passports or identity documents? j. If workers do not keep their passports or identity documents, is this legally allowed? k. What is the process for workers’ to hand over their passports or identity

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) documents to the company? l. Do workers have unrestricted access to their passports or identity documents? Describe how workers are able to access their documents?

6.12.2 Where applicable, it shall be demonstrated that no contract substitution has occurred.

a. Is there evidence of contract - Company Policy dated 1st YES Based on observation of several employee contract and public consultation with substitution occurring? December 2014 stakeholders on 1 March 2016 and interview with employee could be - Interview with stakeholders and b. Are foreign workers asked to sign a demonstrated that there was no contract substitution occurred. contract upon arriving in the receiving employee on 1 March 2016. country? If yes, is that contract - PKB years 2015 - 2017 There was no migrant worker in PT. Supra Matra Abadi, Teluk Panjie Mill and identical to the one signed in the - Field observation Estate. It’s verified during audit documentation list of employee, interview with employee and stakeholders. country of origin? c. Are workers given a copy of their Employees work based on contract labour agreement which contains employment contracts? If yes, is the agreements include: working time, dependents, payroll and consent of both contract identical to the one signed at parties. Workers was given a copy of their employment contracts and the the time of recruitment? contract was identical to the one signed at the time of recruitment.

(M) Where temporary or migrant workers are employed, a special labour policy and procedures shall be established and implemented.

Specific Guidance: For 6.12.3: The special labour policy should include: 6.12.3 • Statement of the non-discriminatory practices; • No contract substitution; • Post-arrival orientation programme to focus especially on language, safety, labour laws, cultural practices etc.; • Decent living conditions to be provided.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. What is the company’s policy and - Interview with stakeholders and There is no migrant worker in PT Supra Matra Abadi – Teluk Panjie Mill and YES procedures for temporary or employee on 1 March 2016. Estate. Its verified during audit documentation list of employee, interview with foreign/migrant workers? Does the - Worker list of Teluk Panjie Mill employee and stakeholders special labour policy include: and Estate, PT. Supra Matra  Statement of the non-discriminatory Abadi practices?  No contract substitution?  Post-arrival orientation programme with emphasis on language, safety, labour laws, cultural practices etc.?  The provision of decent living conditions? b. Have the policies and procedures been implemented?

Growers and millers respect human rights. 6.132 *2 New Criteria - Growers and millers respect human rights. (M) A policy to respect human rights shall be documented and communicated to all levels of the workforce and operations (see Criteria 1.2 and 2.1).

Guidance: See also Criterion 6.3. All levels of operations will include contracted third parties (e.g those involved in security).

6.13.1 Note: From the UN Guiding Principles on Business and Human Rights: “The responsibility of business enterprises to respect human rights refers to internationally recognised human rights – understood, at a minimum, as those expressed in the International Bill of Human Rights and the principles concerning fundamental rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work” (“The corporate responsibility to respect human rights” in Guiding Principles on Business and Human Rights). The RSPO WG on Human Rights will provide a mechanism to identify, prevent, mitigate and address human rights issues and impacts. The resulting Guidance will identify the relevant issues on human rights to all RSPO Members.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a company policy on human - Company Policy dated 1 Policy to respect human rights has been documented in Kebijakan Perusahaan rights? December 2014. YES (Company Policy) dated 1st December 2014. Top management has commitment - Attendance list of worker for b. How is this communicated to all to respect human right refers to internationally recognised human rights set out dissemination of Company employees, including outsourced in the International Labour Organization’s Declaration on Fundamental Principles Policy – PT. Supra Matra Abadi, workers, customers and suppliers? If and Rights at Work. The document has been communicated to all levels of the 15 October 2015 by training, how often is the training workforce and operations based on public consultation with labour union, worker - Interview with stakeholders and conducted? and gender committee. employee on 1 March 2916 c. Who has the task of communicating The policy has been communicated to all employees, including outsourced the policy internally and externally? workers, customers and suppliers by dissemination. Dissemination was conduct d. Does the company have any regularly once a year. outstanding cases of human rights Person in charge to communicating the policy internally are Public Relation violations? Officer and Estate Manager. During audit and based on verification on interview with stakeholders and employee on 1 March 2016 could be demonstrated that there was no cases of human rights violations in PT.Supra Matra Abadi Teluk Panjie Mill and Estate.

Audit Report

PRINCIPLES 7: RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS All land inside the concession area has been developed in the period of 1987 – 1990, planting year 2015 is replanting; therefore Principles 7 is not applicable.

PRINCIPLES 8: COMMITMENT TO CONTINUOUS IMPROVEMENT IN KEY AREAS OF ACTIVITY

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 8.1 Growers and millers regularly monitor and review their activities, and develop and implement action plans that allow demonstrable continual improvement in key operations. (M) The action plan for continual improvement shall be implemented, based on a consideration of the main social and environmental impacts and opportunities of the grower/mill, and shall include a range of Indicators covered by these Principles and Criteria. As a minimum, these shall include, but are not necessarily be limited to: • Reduction in use of pesticides(Criterion 4.6); • Environmental impacts (Criteria 4.3, 5.1 and 5.2); • Waste reduction (Criterion 5.3); • Pollution and greenhouse gas (GHG) emissions (Criteria 5.6 and 7.8); • Social impacts (Criterion 6.1); 8.1.1 • Optimising the yield of the supply base.

Guidance: Growers should have a system to improve practices in line with new information and techniques, and a mechanism for disseminating this information throughout the workforce. For smallholders, there should be systematic guidance and training for continual improvement.

For National Interpretation: National Interpretation will include specific minimum performance thresholds for key indicators (Criteria 4.2, 4.3, 4.4, and 4.5). YES a. Is there an action plan for continual • HCV Management plan 2015 Evidence of several improvements was shown, e.g. improvement? • RSPO internal audit report  Reduction in use of certain chemicals: b. Describe the main components of the plan. 2015 and it Corrective action • The organisation committed that Paraquat only used for specific species: a c. Has the action plan been implemented? • Field observation few species of ferns, such as: Stenochlaena and Lycopodiophyta. Reduction of Gramoxone consumption d. Provide examples of continual improvements that have been  Environmental impacts: implemented. • Segregation of domestic water run off with industrial waste water by

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) building trench around shell storage area to prevent contaminated water to e. Are history records available to develop the open drainage action plan? • Improvement in monitoring of fuel consumption by calibrating fuel injection f. Are records of implementation of the action pumps and check fuel nozzle pipe. plan available? • Improvement in monitoring of domestic water consumption by installing g. Does the action plan include strategies for: flow meter to monitor water consumption in housing • Reduction in use of pesticides • Recycle the water cooler turbine discharge water basin; (Criterion 4.6)? Is IPM widely implemented? • Recycle the condensate water discharge water dilution; • Environmental impacts (Criteria 4.3, • Minimize duration of mill cleaning to be every two weeks. 5.1 and 5.2)?  Waste reduction: • Waste reduction (Criterion 5.3)? • Pollution and greenhouse gas (GHG) • Reduction in discharged waste water. The project including: Injection of emissions (Criteria 5.6 and 7.8)? water from hydro cyclone and blow down boiler to boiler chimney. It can • Social impacts (Criterion 6.1)? prevent blow down boiler drain to water body, reduce waste water treated • Optimising the yield of the supply in WWTP. base?  Pollution and emissions: h. Do growers have a system to improve practices in line with new information and • Reduction of potential particulate release to the atmosphere by increase techniques, and a mechanism for boiler ash capture by the chimney disseminating this information throughout  Biodiversity conservation the workforce? • Planting riparian zone/river border with barrier to erosion plant and native species to conserve riparian zone • Monitoring of RTE species regularly to control the population dynamics of wildlife • Sign board installation for HCV protection and awareness to conserve biodiversity and HCV area Regular evaluation of plantation and mill operation was performed through internal and external audits. The coverage of the audit including production planning, production, power generation and utilization, consumable, process control, quality control – including waste water treatment, maintenance, occupational health and safety, FFB incoming and inspection, and laboratory. The above audit reports indicated that all gaps against standard operation procedure of plantation and

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) operation were noted. Corrective action plan was issued and implemented to demonstrate effort for compliance as well as continual improvement. A monitoring action plan has been established after AMDAL/social impact assessment and annual evaluation was also done to monitor result and progress of action. Most of the plans were executed and the result found was as expected (CSR, local recruitment, etc).

Audit Report

3.3.2 Mill Supply Chain Requirements

The FFB source is one (1) organisation owned by PT. Supra Matra Abadi and third party estates. The third party estates are excluded from certification. All FFB are processed together, both from the Teluk Panjie Estate and the third party estates. Therefore the Model selected is Mass Balance and RSPO Supply Chain Module E was used as audit criteria.

The detail of FFB processed in Teluk Panjie Mill is described in Table 7, Table 8 and Table 9 presented in this report.

3.3.2.1 Supply Chain Certification Standard

PART A COMPANY DETAIL

Company Name (covered by certification): PT. SUPRA MATRA ABADI

RSPO member name: PT. INTI INDOSAWIT SUBUR RSPO member number: 1-0022-06-000-00

RSPO IT Platform Registration number: RSPO_PO1000002146

Site Address: Teluk Panjie Village, Kampung Rakyat District, Labuhan Batu Regency, North Sumatera IDN

Management Representative: Ismail (Mill Manager)

Site type: Palm Oil Mill

Site capacity: 45 MT FFB per Hour

Certified palm product sold: 1,000 MT CPO and 2,732 MT PK

Certified palm product used: 57,520 MT FFB

App/Cert No: FMS40023 Audit Type: ASA1

Audit Report

SAI Global Auditor/Team: Eko Purwanto Audit Date: 1 March 2016 Activity/Audit No: WI-646883

Audit objectives To verify the volume of certified and uncertified FFB entering the mill and sold volume of RSPO certified producers.

Supply Chain Model: Module E - CPO Mills (MB) Mass Balance

Pertinent record period: January to December 2016

Estimated tonnage of certified palm product produced: 17,310 MT CPO and 4,201 MT PK

Estimated of tonnage of non certified palm product produced 15,513 MT CPO and 4,675 MT PK

String description: Palm Oil Mill

Outsource activity(ies) (if any): None

Independent third party(ies) performing outsource activity(ies): None name, address and Capability

Audit Report

PART B SUPPLY CHAIN CERTIFICATION STANDARD

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C )

CPO MILLS (MB) MASS BALANCE SUPPLY CHAIN MODELS – MODULAR REQUIREMENTS

E.1 Definition

E.1.1. Certification for CPO mills is necessary to verify the volumes of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. In that scenario, the mill can claim only the volume of oil palm products produced from processing of the certified FFB as MB.

E.2 Explanation

E.2.1. The estimated tonnage of CPO and PK products that could potentially be produced by the certified mill must be recorded by the CB in the public summary of the P&C certification report. This figure represents the total volume of certified palm oil product (CPO and PK) that the certified mill is allowed to deliver in a year. The actual tonnage produced should then be recorded in each subsequent annual surveillance report.

The estimated tonnage of CPO and PK products has been C a. Has the estimated tonnage of CPO and PK products recorded by SAI Global, i.e.: (that could potentially be produced by the certified Certification audit: mill) been recorded by the certification body (CB) in Estimated CPO : 19,813 MT the public summary of the P&C certification report ? Estimated PK : 4,909 MT

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C )

ASA1: Estimated CPO : 17,310 MT Estimated PK : 4,201 MT C b. Does the figure represent the total volume of certified Yes, the figure does represent the total volume of certified palm palm oil product (CPO and PK) that the certified mill is oil product (CPO and PK) that the certified mill allowed to allowed to deliver in a year ? deliver in a year.

The actual tonnage produced has been recorded in each C subsequent annual surveillance report, i.e: ASA1: c. Does the actual tonnage produced have to then be Actual CPO : 12,403 MT recorded in each subsequent annual surveillance report ? Actual PK : 2,887 MT

E.2.2. The mill must also meet all registration and reporting requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim).

a. The mill must also meet all registration requirements PT. DASA ANUGRAH SEJATI – Teluk Panjie Mill has met all C for the appropriate supply chain through the RSPO registration requirements for the appropriate supply chain supply chain managing organization (RSPO IT platform through the RSPO supply chain managing organization (RSPO or book and claim)? IT platform), with register number RSPO_PO1000002146.

b. The mill must also meet all reporting requirements for C the appropriate supply chain through the RSPO supply The mill also has met all reporting requirements for the appropriate supply chain through the RSPO supply chain chain managing organization (RSPO IT platform or

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) book and claim)? managing organization (RSPO IT platform).

E.3 Documented Procedure

E.3.1. The site shall have written procedures and/or work instructions to ensure the implementation of all the elements specified in these requirements. This shall include at minimum the following: a. Complete and up to date procedures covering the implementation of all the elements in these requirements; b. The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. This person shall be able to demonstrate awareness of the site procedures for the implementation of this standard.

a. Does the site have written procedures and/or The Site has system documentation available on site to ensure work instructions in place to ensure the the implementation of RSPO SCC requirements. The implementation of all elements specified in these procedures are updated and appeared to be compliance with requirements ? current standard.  AA-MPM-OP-1400.17-R4, dated February 25th, 2015, Procedure of Traceability. The procedure was established to ensure the production of sustainable and non-sustainable CPO/PK/CPKO produced by the Mill C and shipped out could be traced to the suppliers of raw material, and also to ensure the palm oil production process could be described.  AA-MPM-OP-1400.18-R4, dated February 25th, 2015, Procedure of Book Keeping. The procedure described mechanism to monitor the supply chain of certified CPO, PK and CPK production are sustainable, from

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) receipt of raw materials to the delivery of mill products (POM/KCP) and to ensure the record of number of "certified" and "non-certified" CPO, PK and CPKO production generated by POM/KCP and shipped out from the mill are "balance" in each 3-months period.  AA-MPM-OP-1400.02-R2, procedure of FFB Receiving  AA-MPM-OP-1400.03-R1, procedure of Sterilizer station  AA-MPM-OP-1400.06-R1, procedure of Clarifier station  AA-MPM-OP-1400.08-R1, procedure of Kernel station  AA-MPM-OP-1400.14-R2, procedure of Storage and Delivery. b. Are procedures / work instructions completely Procedures and Work Instruction are completely covering the C covering the implementation of all the elements in implementation of the elements in this requirement, i.e.: these requirements?  FFB Receiving  FFB Processing  Production Recording (CPO and PK)  Product Delivery  Mill Daily Report  Three Monthly Mass Balance Report  Certified Product Claim  Record Keeping  Shipping Announcement in e Trace c. Have the site had the role of the person having overall Based on the Procedure of Traceability Top Management has C responsibility for and authority over the assigned personnel who having overall responsibility for and implementation of these requirements and authority over the implementation of these requirements and compliance with all applicable requirements ? compliance with all applicable requirements, who is the Mill Manager. Weighing clerk responsible for data input and print out

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) weighing card. Receiving of FFB was based on SPB (delivery note) covers whether are sustainable or non-sustainable. If sustainable then delivery note must covers: - Estate name and block number - Year of planting - Date of harvesting - Certificate number - Batch number - Transporter identity. All related personnel regarding Mill Manager, weighing clerk, security, storage keeper etc. has been trained for refreshment of Traceability and Mass Balance on 17 September 2015. d. Is the person able to demonstrate awareness of The assigned persons were able to demonstrate awareness of C the site’s procedures for the implementation of the site’s procedures for the implementation of RSPO SCC this standard? standard. All employees contribute to implementation of RSPO SCC have been trained by competent persons. The latest training was performed on 27 October 2015.

E.3.2. The site shall have documented procedures for receiving and processing certified and non-certified FFBs.

The Procedure of Traceability (AA-MPM-OP-1400.17-R4) and C Mass Balance (AA-MPM-OP-1400.18-R4) have mentioned the a. Has the site had documented procedures for receiving mechanism for receiving certified FFBs. The system has certified FFBs ? separated the recording of certified and non- certified FFB.

b. Has the site had documented procedures for receiving The Procedure of Traceability (AA-MPM-OP-1400.17-R4) and C non-certified FFBs? Mass Balance (AA-MPM-OP-1400.18-R4) have mentioned the

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) mechanism for receiving non-certified FFBs. The system has separated the recording of certified and non- certified FFB. The Procedure of Traceability (AA-MPM-OP-1400.17-R4) and C Mass Balance (AA-MPM-OP-1400.18-R4) have mentioned the c. Has the site had documented procedures for mechanism for processing certified FFBs. The selected RSPO processing certified FFBs? SC model is Mass Balance, so the mill does not have to separate the process of certified FFBs from non-certified FFBs. The Procedure of Traceability (AA-MPM-OP-1400.17-R4) and C Mass Balance (AA-MPM-OP-1400.18-R4) have mentioned the d. Has the site had documented procedures for mechanism for processing non-certified FFBs. The selected processing non-certified FFBs? RSPO SC model is Mass Balance, so the mill does not have to separate the process of certified FFBs from non-certified FFBs.

E.4 Purchasing and Goods In

E.4.1. The site shall verify and document the volumes of certified and non-certified FFBs received.

It was verified that receiving of FFB was traceable to the supply C base unit. During weighing on weighbridge the FFB sources is identified; whether received from own estate (block number and division) or from third party. Weighing slip and receiving a. Does the site verify and document the volumes of report issued clearly stated the weight off FFB received and its certified FFBs received ? source (certified or non-certified).

The documented Mill Operation Summary has recapitulated FFB received from own estate and from third party. Based on the report, FFB received from own estate from January to December 2015 were 58,054 MT (certified), 99,906 MT (total).

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) The site has two weighbridge, which are: - Avery Weigh Tronix / E1205 / Serial No.072750139 with maximum capacity of 50 MT. The weighbridge has been calibrated by UPT Metrologi Medan based on certificate No.510.3/366/MT.RP/15-TU on June 2015.

Records of certified FFB received: - Weighbridge card No.PTPA116101655 dated 29 February 2016 described the commodity was certified FFB, sourced from Teluk Panji Estate, Division 1, Block A87G. Nett tonnage was 3,670 KG. Time in 23.21, Time out 23.24. Transporter BK9116CK, driver Ali Akbar. - Weighbridge card No.PTPA116101615 dated 29 February 2016 described the commodity was certified FFB, sourced from Teluk Panji Estate, Division 1, Block A87G. Nett tonnage was 6,720 KG. Time in 13.40, Time out 13.45. Transporter BK9116CK, driver Ali Akbar. - Weighbridge card No.PTPA516101601 dated 29 February 2016 described the commodity was 3rd party FFB, sourced from Jamiatul Hasibuan. Nett tonnage was 6,992 KG. Time in 09.34, Time out 09.59. Transporter BK9271CP, driver Sugeng. - Laporan Harian Pabrik (Mill Daily Report) dated 29 February 2016, mentioned: FFB received from own estate (certified) was 239,290 KG and 89,510 non certified, and from third party 381,902 KG.

It was verified that receiving of FFB was traceable to the supply C b. Does the site shall verify and document the base unit. During weighing on weighbridge the FFB sources is volumes of non-certified FFBs received ? identified; whether received from own estate (block number

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) and division) or from third party. Weighing slip and Mill Daily Report issued clearly stated the weight off FFB received and its source (certified or non-certified). Records of non-certified FFB received: - Weighbridge card No.PTRA516100908 dated 30 January 2016 described the commodity was third party FFB, sourced from FFB supplier CV. PANDAWA LIMA LAPAN TR. Nett tonnage was 7,250 KG minus dirt 435 KG become 6,815 KG. Time in 06.14, Time out 06.33. Transporter BH8215EJ, driver Aan. - Laporan Harian Pabrik (Mill Daily Report) dated 9 February 2016, mentioned: FFB received from third party estate was 530,720 KG.

E.4.2. The site shall inform the CB immediately if there is a projected overproduction of certified tonnage.

a. Does the site inform the CB immediately if there The responsible personnel (Mill Manager) understood that the C is a projected overproduction of certified tonnage site have to inform CB immediately if there is a projected ? overproduction of certified tonnage. There is no overproduction during previous license period.

E.5 Records Keeping

E.5.1. The site shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO and PK on a three-monthly basis. All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system according to conversion ratios stated by RSPO. The site can only deliver Mass Balance sales from a positive stock. Positive stock can include product ordered for delivery within three months. However, a site is

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) allowed to sell short.(ie product can be sold before it is in stock.) For further details refer to Module C.

a. Does the site record and balance all receipts of The site has recorded and balanced all receipts of RSPO C RSPO certified FFB on a three-monthly basis ? certified FFB on a three-monthly basis, which is on documented “Three Monthly CPO and PK Mass Balance Report”.

b. The site shall record and balance all deliveries of The site has recorded and balanced all deliveries of RSPO C RSPO certified CPO and PK on a three-monthly certified CPO and PK on a three-monthly basis, which is on basis ? documented “Three Monthly CPO and PK Mass Balance Report”. c. Are all volumes of palm oil and palm kernel oil C that are delivered being deducted from the All volumes of palm oil and palm kernel delivered are deducted material accounting system according to from the material accounting system according to conversion conversion ratios stated by RSPO ? ratios stated by RSPO.

d. Is the site only able to deliver Mass Balance sales Based “Three Monthly CPO and PK Mass Balance Report” it C from a positive stock ? was verified that the site only deliver Mass Balance sales from

Positive stock can include product ordered for delivery within a positive stock. During the period the site does not practices three months. However, a site is allowed to sell short.(ie sell short. product can be sold before it is in stock.)

E.5.2. In cases where a mill outsources activities to an independent (not owned by the same organization) palm kernel crush, the crush still falls under the responsibility of the mill and does not need to be separately certified. The mill has to ensure that the crush is covered through a signed and enforceable agreement. a. Does the mill outsource activities to an independent (not owned by the same No outsourced activity NA organization) palm kernel crush, the crush still

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) falls under the responsibility of the mill and does not need to be separately certified ?

b. Does the mill have to ensure that the crush is covered through a signed and enforceable agreement ? No outsourced activity NA

Audit Report

3.3.2.2 Supply Chain Certification System

Supply Chain Certification System Status ( Yes / No )

5.3.1 Has the client been made aware with necessary information concerning the RSPO Supply Chain Certification and the RSPO Rules on Communication and Claims Has the client been made aware with necessary information concerning the RSPO Supply Chain Certification and the RSPO Rules on Communication and Claims? Yes If potential clients have any further questions concerning the RSPO these shall be directed to the RSPO secretariat.

5.3.2 Has the client been made aware of the contractual agreement for certification services against the RSPO Supply Chain Yes Standard and maintain a record of any agreement? 5.3.6 Has the organization been informed about the following items? a. Certification process Yes b. Agree logistics for the assessment and time of exit (closing) meeting. Yes c. Confirm acess to all relevant documents, field sites and personnel Yes d. Explain confidentiality and conflict of interest Yes

5.3.7 Have the management documentation of the organization fully met to the requirements of the RSPO Supply Chain Yes Certification Standard? 5.3.7 Have any issues or areas of concern been clarified to the organization? Yes 5.3.7 Have the internal audits against RSPO supply chain standard been fully planned and underway before certification is Yes awarded ? 5.3.8 Have the organization sufficiently and adequately implemented the organizational systems, the management systems and the operational systems, including any documented policies and procedures, to meet the intent and requirements of Yes the RSPO Supply Chain Certification Standard?

Audit Report

Supply Chain Certification System Status ( Yes / No )

5.3.8 Have the client made aware that when there is outsourcing process to the third party after certification is granted therefor Yes SAI Global shall be informed and SAI Global decides whether an interim visit is required for the next audit ? 5.3.9 Has certification audit reviewed pertinent RSPO Supply Chain records relating to the receipt, processing and supply of Yes certified oil palm products? 5.3.10 Have all activities conducted by subcontractors complied with the intent and requirements of the RSPO Supply Chain Yes Certification Standard 5.3.11 Have the client made aware that until they receive written confirmation of their RSPO Supply Chain certification Yes registration and its expiry date that they are not certified and can not make any claims concerning registration? 5.3.11 Have a detail records have been compiled of the entry (opening) meeting including a list of the participants in the Yes meeting? 5.3.11 Have the client made aware of the findings of the audit team including any deficiencies which may result in a negative Yes certification decisions or which may require further actions to be completed before a certification decision can be taken? 5.3.11 Have the client made aware that the findings of the audit team are tentative pending review and decision making by the Yes duly designated representatives of the certification body?

Audit Report

3.4 Recommendation

The recommendation from this audit is that your company continue as a producer of RSPO Certified Sustainable Palm and Palm Kernel, Mass Balanced Model.

Audit recommendations are always subject to ratification by RSPO.

This report was prepared by: Eko Purwanto, Fadjar Deniswara, Mujinius Jalaraya and Daniel Sitompul.

3.5 Environmental and social risk for this scope of certification for planning of the surveillance audit

 Environmental risk: compliance with regulations, hazardous waste management, RKL RPL reporting  Social risk: compliance with regulations  OHS: prevention of hazard and risk

3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of Assessment Findings

Date: 14 July 2016

Signed for and on behalf of PT. SAI Global Indonesia

Inge Triwulandari Technical Manager Date: 23 June 2016

Appendix “A” – Audit Record

Audit meetings plus functions/ processes/ Times* Date Auditor # Shifts* areas/ *shifts audited: From - To

28.02.2016 Day 1

Eko, Denis, GA118 Travelling Jakarta – Teluk Panjie Muji, Daniel 12.40 -15.10

Auditor ASI Traveling KL – Teluk Panjie

29.02.2016 Day 2

Teluk Panjie Estate

Eko, Denis, Muji, Daniel Opening Meeting 08.00 + Auditor ASI Verification on corrective action of previous audit issues Document review and site visit: RSPO Criteria: 2.2.1 and 2.2.2 Eko Criteria: 3.1. all indicators 08.30 Criteria: (Estate) 4.1.1, 4.1.2, 4.1.3 Criteria: 4.2. 4.3, 4.5 all indicators Criteria: 4.6.1, 4.6.2, 4.6.3, 4.6.4, 4.6.5, 4.6.7, 4.6.8, 4.6.9 Criterion: 8.1 Verification on corrective action of previous audit issues Document review and site visit: RSPO Criteria: 2.1.1 for environment aspect and Muji HCV 08.30 Criterion: 4.4.1, 4.4.2, 4.4.3, 4.4.4 Criterion: 4.6.6, 4.6.10 Criterion: 5.1, 5.2, 5.3, 5.4, 5.5 and 5.6 all indicators Criterion: 7.3 (if applicable) Criterion: 8.1 Verification on corrective action of previous audit issues Document review and site visit: RSPO Criteria: 2.1 all indicators for OHS aspect Daniel Criterion: (Mill) 4.1.1 , 4.1.2, 4.1.3, 4.1.4 08.30 Criterion: 4.6.11, 4.6.12 Criteria: 4.7 all indicators Criterion: 4.8 all indicators Criterion: 6.10 all indicators Criterion: 8.1 Verification on corrective action of previous audit issues Document review and site visit: RSPO Denis 08.30 Criteria: 1.1; 1.2; 1.3 all indicators Criteria: 2.1 all indicators for social aspects Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 149 of 167 Audit Report Audit meetings plus functions/ processes/ Times* Date Auditor # Shifts* areas/ *shifts audited: From - To Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13 Criterion: 8.1 01.03.2016 Day 3

Teluk Panjie Mill Document review and site visit: RSPO Eko 08.00 Partial Certification Requirements RSPO Supply Chain Certification Document review and site visit: RSPO Muji Criterion: 4.4.1, 4.4.2, 4.4.3, 4.4.4 08.00 Criterion: 4.6.6, 4.6.10 Criterion: 8.1 Document review and site visit: RSPO Audit continue for OHS aspects Criterion: (Mill) 4.1.1 , 4.1.2, 4.1.3, 4.1.4 Daniel Criteria: 4.7 all indicators 08.00 Criterion: 4.8 all indicators Criterion: 6.10 all indicators Criterion: 8.1 Interview with FFB Supplier (if applicable) Document review and site visit: RSPO Denis Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13 Criterion: 8.1 Kaji dokumen dan kunjungan lapangan 08.00 ISPO Kriteria 4.2, 4.3, 4.4, 4.5 Pras Kriteria 5.1, 5.2 Kriteria 6.1 Kriteria 7 Observation of Facility in Mill & Estate Interview with employees, labour union and Denis committee gender (Mill and Estate), FFB 10.00 Supplier, local people, village head, religious leader and social leader. Eko, Muji, Closing Meeting 16.00 Daniel, Denis

Eko, Muji, Traveling Teluk Panjie – Aek Nabara 17.00 Daniel, Denis

Auditor ASI Travelling Teluk Panjie - KL 17.00 All applicable requirements of relevant standards are covered during the audit of the ‘Functions/Processes/Areas. * Enter shift details only where applicable.

Appendix “B” – Previous Nonconformities and Opportunity for Improvement Summary

Nonconformities No RSPO Criterion Details Corrective Action Completion Date PIC Status Initial Certification 1 2.1 indicator Major 1 There was no documented Update evaluation of compliance periodically 14 May 2014 Environment Closed evidence of compliance with laws Identify PHL which has not been registered to and and regulations. Jamsostek. KTU develop Log book of planning of Sustainability employee registration to Jamsostek based on in out of Officer employee. KTU 2 2.2. indicator Major 1 Teluk Panjie Estate Monitor based on Form of Evaluation of legal 1 October 2014 Legal Officer Closed  There is oil palm planting area compliance. Medan HO outside HGU in which is still under process

3 4.4. indicator minor 1 Although system to manage water Develop checklist reporting of surface water utilisation. 22 April 2014 Environment Closed sources has been defined however Report of water utilisation will be reported to related and inconsistency was found. institution. Sustainability Officer 4 4.6. indicator Major 1 There was no evidence that several State validation date of permit of agrochemical in LUK. 22 April 2014 Estate Manager Closed agrochemicals used were approved Column of monitoring is added in LUK (add expired and registered agrochemicals date). permitted by government. 5 4.7 indicator minor 2 Not all mill employees are covered Conduct coordination with Medan Regional Office to 22 April 2014 KTU Teluk Closed routine medical check-up, conduct MCU for engine operator once a year as a Panjie Mill especially the specific audiometry minimum. medical check-up. 6 4.7 indicator minor 3 It was noted the existing risk Add risks analysis according to improvement needed 14 May 2014 Environment Closed analysis at the mill is not fully during meeting of OHS program and monitored by and covered the routine risky activities, OHS expert. Sustainability such as the activities at confined Officer space and working at height activity are not defined within the risk analysis include not yet available the control action as there was routine activity at bulk storage tanks (BST). 7 4.7 indicator minor 8 It was found there were poor in Include accident and investigation report to report 22 April 2014 Safety Officer Closed implementation within the system of submitted to Disnaker. Develop checklist monitoring of work accident reporting and external report. investigation

Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 151 of 167 AUDIT REPORT No RSPO Criterion Details Corrective Action Completion Date PIC Status 8 5.3 indicator Major 2 Not all hazardous waste handling Ensure that all hazardous wastes were stored in 22 April 2014 Environment Closed were conducted as required by temporary storage of hazardous waste and stored less and regulation. than 180 days. Sustainability Officer 9 5.5 indicator minor 1 It was noted regarding fire Include testing of hydrant pump to checklist of hydrant 22 April 2014 Safety Officer Closed prevention/protection facilitates, pump. especially for hydrant pumps are not in proper maintenance to ensure its facilities are ready to use based on regulation Ins Menaker No. BW/11/ 1997 10 6.1 indicator minor 1 Social impact has not been Develop matrix of local communities’ perception and 29 February 2016 Public Relation Closed evaluated regularly with the include the matrix into RKL RPL reporting. Officer participation of local communities. 11 6.5 indicator Major 2 The daily allowance for job Make internal memo to inform the amount of daily 22 April 2014 Estate/Mill Closed assignment (outside the company) allowance for job assignment (outside the company Manager was not implemented accordingly area) was according to PKB. with PKB (working agreement). 12 8.1 indicator Major 1 There was no evidence that Add matrix of social aspect based on evident of social 14 May 2014 Environment Closed continuous improvement planning aspect activity, into RKL RPL report. and and monitoring was documented. Sustainability Officer

Opportunities for improvement

No Criterion Location Detail of Opportunity for Improvements

1 4.1 indicator major 2 All It could be considered to distribute the whole procedures and the latest revision in each unit 2 4.1 indicator minor 2 Mill It could be considered to calibrate the master equipment of calibration. It could be considered to provide calibration labels in all measuring instruments. It could be considered to conduct double check on the measuring devices in the machine. It could be considered to place the measuring devices in the machine / equipment. 3 4.7 indicator major 1 All It was suggested to properly install, maintain and safeguard the machinery, equipment and appliances in all activities at mills and estate in order to protect and prevent personnel from injury.

AUDIT REPORT

No Criterion Location Detail of Opportunity for Improvements

4 5.2 indicator major 2 Estate It could be considered to improve the HCV management and monitoring SOP

5 5.2 indicator minor 1 Estate It could be considered to improve HCV awareness by involving other participants outside Estate.

It could be considered to improve information/warning/prohibition boards.

AUDIT REPORT Appendix “C” – Nonconformities and Opportunity for Improvement Summary

Nonconformities PT. SUPRA MATRA ABADI, Teluk Panjie Mill and its Organisation Name: Location: North Sumatera, Indonesia Supply Bases Date: 5/03/2016 Audit team leader: Eko Purwanto Activity/Report ID: WI-646883 License/Certificate No.: FMS40023 Organisation’s acknowledgement of receipt of NCR Employee Name: Welly Pardede Date NCR Accepted: 08/03/2016

Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2016- RSPO Minor Non-conforming situation: Due Date: Humas (Public Relation) Root Cause: Response: Verification of Effectiveness: There is not enough evidence that 01 Criterion Next audit updated stakeholder list Management of Teluk Panjie Acceptable (please - Stakeholder list and list of 1.1 Teluk Panjie Mill and Estate have and list of documents that has not appointed yet PIC for see section 4 for documents that can be accessed indicator provided adequate information can be accessed by regarding RSPO Criteria to the updating stakeholder list and details) by stakeholder have been minor 1 SAI stakeholder based of the list of documents that can be stakeholders. updated. Follow up procedure of Information accessed by stakeholders. Method: Request. Reviewer: - PIC for updating stakeholder list

Onsite Eko Purwanto and list of documents that can be Requirement: Corrective Action: There shall be evidence that accessed by stakeholders has Management of Teluk Panjie been appointed by Teluk Panjie growers and millers provide Date: adequate information on has appointed Humas (Public Management. Relation) as personnel in 18/04/2016 (environmental, social and/or legal) issues relevant to RSPO Criteria to charge for updating relevant stakeholders for effective stakeholder list and list of Minor NCR 2016-01 is closed participation in decision making. documents that can be accessed by stakeholders Name Objective evidence: based on Memorandum #027/ES-KTP/INT/IV/2016 Eko Purwanto Teluk Panjie Estate/Mill: dated 1 April 2016. - Stakeholder list was available Date: however it was not identified when the list is updated and 07/06/2016 who verified it. - Documents that can be accessed was only legal/permit documents, there is no other document defined can be accessed by stakeholder, e.g. Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 154 of 167

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

HCV Assessment result.

2016- RSPO Major Non-conforming situation: Due Date: - Updated the information Root Cause: Response: Verification of Effectiveness: There is not enough evidence that 02 Criterion 10/05/2016 request log book - Responds of information Acceptable (please All submitted evidence have been 1.1 requested information has been - Show evidence that request frequently delivered see section 4 for reviewed and verified can be indicator responded on time. request from BLH Kota via telephone. details) effectively implemented. Non Major 2 SAI Conformance consider as closed. Requirement: Pinang and on 27 - Management of Teluk Follow up Records of requests for information Method: February 2015 and from Panjie has not appointed Reviewer: and responses shall be maintained. Evidence BPJS Kesehatan in May yet PIC for updating log Eko Purwanto Major NCR 2016-02 is closed submitted to 2015 has been followed Objective evidence: book of information request Team Leader up. and responds. Teluk Panjie Estate: Date: Name

- Log book of information request 18/04/2016 Eko Purwanto was not updated, information Corrective Action: request recorded was done in - All Responds to the Date: July 2015. information request always 07/06/2016 - There is not enough evidence recorded in the logbook that request from BLH of Kota even the responds is Pinang dated 27 February 2015 delivered via telephone. has been followed up and from - Appointed PIC for updating BPJS Kesehatan regarding JKN log book of information bills IDR 7,655,385 in May request and responds. 2015.

2016- RSPO Major Non-conforming situation: Due Date: Update the document list Root Cause: Response: Verification of Effectiveness: 03 Criterion Master list document was not up 10/05/2016 for period 2015 – 2016 Management of Teluk Panjie Acceptable (please - Stakeholder list and list of 1.2 date. according to the RSPO has not appointed yet PIC for see section 4 for documents that can be accessed indicator indicator 1.2.1 and added updating list of documents that details) by stakeholder have been Major 1 Requirement: SAI the list with location of the can be accessed by updated including the location of Publicly available documents shall Follow up document. stakeholders. Method: Reviewer: the documents. include, but are not necessarily limited to: Evidence Eko Purwanto - PIC for updating stakeholder list submitted to Corrective Action: • Land titles/user rights (Criterion and list of documents that can be 2.2); Team Leader Management of Teluk Panjie accessed by stakeholders has Date: • Occupational health and safety has appointed Humas (Public been appointed by Teluk Panjie Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 155 of 167

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

plans (Criterion 4.7); Relation) as personnel in 18/04/2016 Management. charge for updating • Plans and impact assessments relating to environmental and stakeholder list and list of documents that can be Major NCR 2016-03 is closed social impacts (Criteria 5.1, 6.1, accessed by stakeholders 7.1 and 7.8); based on Memorandum Name • HCV documentation (Criteria 5.2 #027/ES-KTP/INT/IV/2016 and 7.3); dated 1 April 2016. Eko Purwanto • Pollution prevention and reduction plans (Criterion 5.6); Date: • Details of complaints and 07/06/2016 grievances (Criterion 6.3); • Negotiation procedures (Criterion 6.4); • Continual improvement plans (Criterion 8.1); • Public summary of certification assessment report; • Human Rights Policy (Criterion 6.13).

Objective evidence: Teluk Panjie Estate/Mill:  Documents that can be accessed by stakeholders was only legal/permit documents, there is no other document defined as required in RSPO indicator 1.2.1.  Location for placing those documents was not defined yet, e.g. Mill, Estate of Head Office

2016- RSPO Minor Non-conforming situation: Due Date: - Conduct a new license Root Cause: Response: Verification of Effectiveness: 04 Criterion Not enough evidence that the Next audit processing - Based on visit of Industrial Acceptable (please All submitted evidence have been 4.4 Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 156 of 167

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

indicator organization has implemented water - Conduct cleaning of oil and Mining Agency North see section 4 for reviewed and verified can be Minor 1 management plan and water SAI trap once in three Sumatera Province dated details) effectively implemented. Non efficiency Follow up months and the residual 11 March 2016, the Agency Conformance consider as closed. Method: from cleaning put into admitted has made a typing Reviewer: Onsite Requirement: hazardous waste mistake in permit of ground Eko Purwanto Minor NCR 2016-04 is closed warehouse, then do water usage, where An implemented water management plan shall be in place. retesting. 193.33/day should be Date: Name - Conduct sample taking 193.33/second. 18/04/2016 Eko Purwanto Objective evidence: using plastic container, - The residual of diesel then retesting. sediment in oil trap has Teluk Panjie Estate: - Conduct maintenance made sample of testing Date: - Ground water usage in Teluk and oil trap cleaning. contain Pb. 07/06/2016 Panji Estate on June 2015 - Sample taking of waste average 218 – 228 L and on from spraying team was December 2015 average 220 – using steel container made 470 L usage per day, while in the test results contains Pb. permit water debit allowed was - There is a leakage in the 193,33 L/day. trap wall, so the last trap Teluk Panjie Workshop: was still containing oil. - The analysis results of waste water in Workshop oil trap outlet Corrective Action: and waste water outlet of TUS - Management of Teluk (spraying team washing house) Panjie assigned KTU to for parameters of lead (Pb) was ensure that license gained exceeded the standard quality - is correct in numbers and quality standard of 0.1 mg/l but measuring units. the analysis results was 0.2544 - Made program for mg/l. maintenance and cleaning - Maintenance oil trap was of oil trap and warehouse insufficient, it can be seen from staff as PIC. the oil trap compartment which - Made program for still contains a lot of oil and oil maintenance and cleaning were not quoted and the outlet of spraying team washing in the workshop oil trap still house and spraying Mandor visible a thin layer of oil. as PIC.

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2016- RSPO Major Non-conforming situation: Due Date: Performed addition of Root cause: Response: Verification of Effectiveness: 05 Criterion The company was not determined 10/05/2016 riparian pegs distance to Riparian pegs were not made Acceptable (please All submitted evidence have been 4.4 be 50 meter. riparian area based on provision of based on geomorphology see section 4 for reviewed and verified can be indicator the applicable regulations (PP No. aspect and assessment. details) effectively implemented. Non Major 2 SAI 38/2011 regarding River, Kepres No. Conformance consider as closed. 32/1990). Follow up Method: Reviewer:

Onsite Corrective Action: Eko Purwanto Major NCR 2016-05 is closed Requirement: Assigned personnel to perform Protection of water courses and monitoring of riparian area Name wetlands, including maintaining and Date: according to the SOP which Eko Purwanto restoring appropriate riparian and stated that pegs (borders) 18/04/2016 other buffer zones (refer to national must be placed based on best practice and national geomorphology aspects Date: guidelines) shall be demonstrated. (meander) and assessment. 07/06/2016

Objective evidence:

Teluk Panjie Estate: - In Procedure No. AA-KL-12-EFP (Riparian restoration) mentioned

that wide of riparian is 50 m to the

left and right of <30 m wide river and 100 m to the left and right of >30 m wide river. - PP No. 38/2011 and Kepres 32/1990 mentioned that riparian for small river is defined 50 m to the left and right and for big river

defined 100 m to the left and right. - Field observation found that pegs of Riparian Area (RA) have not following the riparian wide based on SOP.

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2016- RSPO Major Non-conforming situation: Due Date: - Covered and fixed the Root cause: Response: Verification of Effectiveness: 06 Criterion Not enough evidence that health and Next audit open electrical relay - The fuel keeper work at Acceptable (please All submitted evidence have been 4.7 safety plan has been consistently - Conduct water tank Fuel Station was not see section 4 for reviewed and verified can be indicator implemented. maintenance inspection understood yet the hazard details) effectively implemented. Non Major 1 SAI Conformance consider as closed. - Refilled fire extinguisher in the fuel station. Follow up Requirement: Method: no.6 at estate - The water tank keeper was Reviewer: A health and safety policy shall be in Onsite warehouse and no.9 at not understood periodical Eko Purwanto Major NCR 2016-06 is closed mill place. A health and safety plan maintenance inspection. covering all activities shall be - Checklist to monitor the Name documented and implemented, and Date: contain of fire extinguisher Eko Purwanto its effectiveness monitored. was not available. 18/04/2016

Objective evidence: Date: Corrective Action: Teluk Panjie Estate: 07/06/2016 - Conduct HIRAC training to - Electrical Relay at fuel station in fuel keeper at Teluk Panjie Teluk Panji estate was found in Estate. open condition. - Conduct training of water - There was no evidence related tank periodical maintenance to water tank periodical to the water tank keeper. maintenance inspection - Safety officer make - Fire extinguisher no.06 at estate checklist to monitor contain warehouse and fire extinguisher of fire extinguisher. no.09 at mill has not been - Safety officer conducts refilled. periodical monitoring of fire extinguisher then record it in the checklist, if there is expired contain, then refilled performed.

2016- RSPO Minor Non-conforming situation: Due Date: Give first aid training to the Root cause: Response: Verification of Effectiveness: 07 Criterion Not enough evidence that assigned Next audit related TPA (Child Care) During previous first aid Acceptable (please All submitted evidence have been 4.7 person has been understood in First officer. training, the related TPA (Child see section 4 for reviewed and verified can be indicator Aid uses. Care) officer was sick so she details) effectively implemented. Non Minor 5 SAI did not coming to work. Conformance consider as closed. Follow up Requirement: Method: Reviewer: Accident and emergency procedures Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 159 of 167

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

shall exist and instructions shall be Onsite Corrective Action: Eko Purwanto Minor NCR 2016-07 is closed clearly understood by all workers. Safety officer made training Accident procedures shall be plan including for first aid Date: Name available in the appropriate training and ensure all language of the workforce. Assigned employee have had relevant 18/04/2016 Eko Purwanto operatives trained in First Aid should safety training. be present in both field and other operations, and first aid equipment Date: shall be available at worksites. 07/06/2016 Records of all accidents shall be kept and periodically reviewed.

Objective evidence: Teluk Panjie Estate: One of TPA (childcare) officer was not trained yet regarding first aid.

2016- RSPO Minor Non-conforming situation: Due Date: Pay the rest of unpaid Root cause: Response: Verification of Effectiveness: 08 Criterion Not all employee been covered by Next audit insurance. High rates of PHL workers Acceptable (please Verification will be performed on 4.7 accident insurance. turnovers made Registration of see section 4 for next surveillance audit. indicator BPJS Ketenagakerjaan details) Minor 6 SAI (worker insurance) performed Requirement: Follow up Minor NCR 2016-08 is open All workers shall be provided with step by step. Method: Reviewer: medical care, and covered by Onsite accident insurance. Eko Purwanto Name Corrective Action: Eko Purwanto Objective evidence: Conduct update of employees insurance membership so that Date: Teluk Panjie Estate: payments can be done. 18/04/2016 Date: There was only 432 employees from 633 employees been paid for their 07/06/2016 accident insurance.

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2016- RSPO Minor Non-conforming situation: Due Date: Input feedback from HCV Root cause: Response: Verification of Effectiveness: 09 Criterion Monitoring of conservation Next audit monitoring report 2015 to Feedback of HCV was only Acceptable (please Verification will be performed on 5.2 management plan has not give the Conservation discussed in the management see section 4 for next surveillance audit. indicator outcomes and feed back into the Management Plan 2016. meeting and not documented details) Minor 4 management plan. SAI it in the next Conservation Follow up Management Plan. Minor NCR 2016-09 is open Method: Reviewer: Requirement: Onsite Eko Purwanto Where a management plan has Corrective Action: Name been created there shall be ongoing Conservation officer ensure Eko Purwanto monitoring: Date: • The status of HCV and RTE that all feedback from HCV monitoring that discussed in 18/04/2016 species that are affected by Date: the management meeting is plantation or mill operations shall always be documented in the 07/06/2016 be documented and reported; next Conservation • Outcomes of monitoring shall be Management Plan. fed back into the management plan.

Objective evidence: Teluk Panjie Estate: HCV Monitoring report 2015 has not give outcomes and feed back into the Conservation Management Plan 2016.

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2016- RSPO Minor Non-conforming situation: Due Date: Make arrangements Root cause: Response: Verification of Effectiveness: 10 Criterion There was no evidence that Next audit regarding the rights in Previously approval only Acceptable (please Verification will be performed on 5.2 negotiated agreement has been accessing HCV 6 delivered orally. see section 4 for next surveillance audit. indicator reached between company with details) Minor 5 local community to optimally SAI

safeguard both the HCVs and rights Follow up Corrective Action: Minor NCR 2016-09 is open of local communities. Method: Conservation officer ensures Reviewer: Onsite that approval available in Eko Purwanto Name Requirement: written. Eko Purwanto Where HCV set-asides with existing Date: rights of local communities have been identified, there shall be 18/04/2016 Date: evidence of a negotiated agreement 07/06/2016 that optimally safeguards both the HCVs and these rights.

Objective evidence: Teluk Panjie Estate: There was no evidence that negotiated agreement has been reached between company with local community to optimally safeguard both the HCVs and rights of local communities regarding HCV 6 in Block B88d, Afdeling II.

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2016- RSPO Major Non-conforming situation: Due Date: - Put all ex lubricant Root cause: Response: Verification of Effectiveness: 11 Criterion Not enough evidence that all Next audit container at hazardous - The limited space in existing Acceptable (please All submitted evidence have been 5.3 chemicals and their containers has waste storage. hazardous waste storage. see section 4 for reviewed and verified can be indicator been disposed of responsibly and - Sticked all label/symbol - The hazardous waste details) effectively implemented. Non Major 2 comply with regulation SAI Conformance consider as closed. of hazardous waste storage keeper was not Follow up Method: characteristic in related understood yet the Reviewer: Requirement: Onsite hazardous waste importance of hazardous Major NCR 2016-11 is closed All chemicals and their containers Eko Purwanto shall be disposed of responsibly. characteristic symbols.

Date: Name Objective evidence: Corrective Action: 18/04/2016 Eko Purwanto Teluk Panjie Estate: - Conduct repositioning in the It was found that ex lubricant hazardous waste storage. Date: container was not stored at - Safety officer give training hazardous waste storage, but put on 07/06/2016 to the hazardous waste the ground behind oil warehouse, so that the ground is contaminated keeper regarding the importance of hazardous

characteristic symbols. Teluk Panjie Mill: Several label/symbol of hazardous waste characteristic were found not sticked, e.g. in ex paint container and tube lamp.

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

Details of non-conforming situation SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of Corrective

Action for Effectiveness: and Objective Evidence : Verification (immediate fix) Action : Response Review: (how and (action to prevent recurrence)

when)

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2016- RSPO Major Non-conforming situation: Due Date: Conduct refreshment Root cause: Response: Verification of Effectiveness: 12 criterion Not enough evidence that the policy 10/05/2016 meeting to discuss The previous Gender Acceptable (please All submitted evidence have been 6.9 required items based on to prevent sexual and all other forms Committee meeting held in see section 4 for reviewed and verified can be indicator of harassment and violence has the SOP. 2014 was already discussed details) effectively implemented. Non Major 1 SAI been communicated to all levels of required items. Conformance consider as closed. the workforce Follow up Method: Reviewer:

Evidence Corrective Action: Eko Purwanto Major NCR 2016-11 is closed Requirement: submitted to Chairman of Gender A policy to prevent sexual and all Team Leader Committee ensure that Date: Name other forms of harassment and required items are discussed violence shall be implemented and in every meeting based on the 18/04/2016 Eko Purwanto communicated to all levels of the SOP. workforce. Date: 07/06/2016 Objective evidence: Teluk Panjie Estate/Mill: At the latest Gender Committee performed meeting in September 2015, however this meeting was not discussed required items.

Opportunities for improvement

None

Appendix “D” – Stakeholder’s issues and comment

Date Stakeholder Observation

1 March Union representatives have been interviewed during the audit, Union 2016 the focus of the interview devoted related payment of wages, Representatives discrimination, and complaints, employees, communication with the company.

Generally, no conflict found so far and the company has taken actions gradually to response issues addressed in the meeting.

1 March Estate has established gender committee as facilitated by Gender 2016 company which comprises members from several female workers Committee in Mill and Estate. Gender committee has planned activity program such as gender policy awareness, health community female group, etc.

The training program for gender committee has been established and may include training for woman rights

Based on result from the interview to committee chief in Mill and Estate, no indication of sexual harassment issues being reported since the committee formed.

Regular pregnancy test was also done monthly by each estate to ensure no pregnant/breastfeeding workers endangered with agrochemical works.

1 March Interview has been done to several community leaders in Community 2016 surrounding Mill and Estate (refer to “public consultation leaders attendance register”) such as village leaders from: Teluk Panjie Village, Community Leader and Police.

Based on interview result with leaders, principally the company has implemented CSR program to support peoples in term of infrastructure development, provision of education and sanitation facilities, heavy equipment support (grader), local economic support (cattle breeding and fisheries), etc.

“Humas” (Public relation officer) was assigned to perform public consultation with communities. No land conflict identified where the land was previously granted by government (not taken over from local communities).

As told by the leaders, there was no air or water pollution caused by the company due to continuous effort in managing the environmental risks. The company has also employed local peoples (in majority) both for Mill and Estate.

1 March Interviews have been done to workers both in Mill and Estate with Employees 2016 several job backgrounds such as ‘upkeep, spraying worker, harvester, Operator Kernel (refer to “public consultation attendance register”). All workers have been equipped (free of charge) with PPE, working equipment, housing, electricity, clean water, medical facilities, etc. Wages including overtime hours, premium and bonus were also payed according to current regulation No response receipt from regulatory bodies and NGOs.

Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 165 of 167 AUDIT REPORT Appendix “E” – Definition of, and action required with respect to audit findings:

Major Nonconformities occur when system is failing to meet a relevant compulsory indicator.

Action required: This category of findings requires SAI Global to issue a formal NCR; to receive and approve client’s proposed correction and corrective action plans; and formally verify the effective implementation of planned corrections and corrective action. Correction and corrective action plan must be submitted to SAI Global for approval within 14 days of the audit. Follow-up action by SAI Global must ‘close out’ the NCR or reduce it to a lesser category within 90 days or less where specified. Certificate of conformance to the RSPO Criteria cannot be issued while any major nonconformity is outstanding. Major nonconformities raised during surveillance audit shall be addressed within 60 days, or the certificate will be suspended. Major nonconformities not addressed within a further 60 days will result in the certificate being withdrawn.

Minor Nonconformities occur when system is failing to meet other indicators.

Action required: This category of findings requires SAI Global to issue a formal NCR; to receive and approve client’s proposed correction and corrective action plans; and formally verify the effective implementation of planned corrections and corrective action. In this instance, a certificate may still be awarded providing the root cause of the problem is identified and an acceptable plan is put in place to achieve the outstanding requirements in an agreed time frame. Verification will be made at subsequent surveillance audits. Minor nonconformities will be raised to major if they are not addressed by the following surveillance audit.

Opportunity for Improvement is a documented statement, which may identify areas for improvement, but shall not make specific recommendation(s). Client may develop and implement solutions in order to add value to operations and management systems. SAI Global is not required to follow-up on this category of audit finding.

AUDIT REPORT Appendix “F” – Definition of, and action required with respect to audit findings for Supply Chain Certification System:

Major Nonconformities occur when system is failing to implement and/or maintain requirements of Supply Chain Certification System.

When non-conformances rose after the certification, RSPO shall be informed of these non-conformances within 7 days since non-conformance rose. A maximum of one month is given to the certified client to satisfactorily address the non-conformances. The effectiveness of the action taken for the non- conformances shall be assessed before closing o ut the non-conformances. Should the non- conformances not be addressed within the one month maximum time frame, a suspension or withdrawal of the certificate and a full re-audit may be necessary.

Where objective evidence indicates that there has been a demonstrable breakdown in the supply chain caused by the certified client’s action or inactions, and that palm oil product that has been or is about to be shipped is falsely identified as RSPO certified product immediate action needs to be taken by SAI Global, and the RSPO Supply Chain certification shall be suspended until such time that it has been addressed. The RSPO shall be notified within 24 hours of this occurrence and further impacts on relevant supply chain certifications.

Area of concern issued when there is an area of the system for which the client is required to investigate potential non-conformity.

Action required: SAI Global may require client to formulate preventive action plan for approval prior to next planned audit/certification decision or alternatively may follow up client’s preventive action at the next planned audit. Lack of client attention to such issues implies that a preventive action system is not working effectively.