RSPO Audit Report

Audit Report

1st Annual Surveillance Audit for

PT. HARI SAWIT JAYA - Negri Lama 2 Mill and Its Supply Bases

FMS40024

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

Audited Address: Negri Lama 2 Mill: Negeri Lama Seberang Village, Bilah Hilir District, Labuhan Batu Regency, North Sumatera IDN Its supply bases: Negri Lama Utara Estate: Negeri Lama Seberang Village, Bilah Hilir District, Labuhan Batu Regency, North Sumatera IDN Negri Lama Central Estate: Negeri Lama Seberang Village, Bilah Hilir District, Labuhan Batu Regency, North Sumatera IDN Negri Lama Selatan Estate: Negeri Lama Seberang Village, Bilah Hilir District, Labuhan Batu Regency, North Sumatera IDN Aek Kuo Estate: Aek Korsik Village, Aek Natas District, Labuhan Batu Regency, North Sumatera IDN

Date of audit: 18/03/2016

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 9 1.6 Date of Plantings 14 1.7 Area of Plantation 14 1.8 Approximate Tonnages Offered for Certification (CPO and PK) 15 1.9 Other Certificates Held 19 1.10 Organisational Information/Contact Person 19 1.11 Time Bound Plan for Other Management Units 19 1.12 Partial Certification Requirements 22 1.13 Date of Issue of Certificate 23

2.0 AUDIT PROCESS 23 2.1 Certification Body 23 2.2 Audit Methodology 24 2.3 Qualification of the Lead Auditor and Audit Team Members 24 2.4 Stakeholder Consultation 25 2.5 Date of Next Surveillance Visit 29

3.0 AUDIT FINDINGS 30 3.1 Action taken on previous audit issues 30 3.2 Claim and use of certification mark and or logo 30 3.3 Description of audit findings 31 3.3.1 RSPO Principle and Criteria, Indonesian National Interpretation 31 3.3.2 Mill Supply Chain Requirements 139 3.3.2.1 Supply Chain Certification Standard 139 3.3.2.2 Supply Chain Certification System 153 3.4 Recommendation 155 3.5 Environmental and social risk for this scope of certification for planning 155 of the surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of 155 Assessment Findings

List of Tables Page 1 Mill and Estates GPS Locations 8 2 FFB Production of the Supply Base 9 3 Age Profile of Planted Palms 14 4 Land use Description of Negri Lama Selatan, Negri Lama Central, Negri 14 Lama Utara and Aek Kuo Estate in 2016 5 Estate and Area Planted 15 6 Negri Lama Selatan, Negri Lama Central, Negri Lama Utara and 15 Aek Kuo FFB Production Trend 2011-2015 7 Negri Lama II Mill Total CPO and PK Production 2015 and Estimate 16 Production of 2016 8 Negri Lama I Mill Total CPO and PK Production of 2015 17

9 Actual Negri Lama II Mill Production of CPO and PK derived from Negri 18 Lama Selatan, Negri Lama Central, Negri Lama Utara, and Aek Kuo Estate FFB in 2015 10 Actual Negri Lama I Mill Production of CPO and PK derived from Negri 19 Lama Selatan, Negri Lama Central, Negri Lama Utara, and Aek Kuo Estate FFB in 2015 11 Estimated Negri Lama II Mill Production of CPO and PK from Negri 20 Lama Selatan, Negri Lama Central, Negri Lama Utara, and Aek Kuo Estate FFB in 2016 12 Certificates Held by Mill and Estates 21 13 RSPO Certification Time Bound Plan 22 14 List of internal and external stakeholder 28 15 Actual Negri Lama I Mill RSPO Certified CPO and PK Delivered in 2015 29

List of Figures Page 1 Map of Negri Lama Selatan Estate and Negri Lama I and II Mill 10 2 Map of Negri Lama Central Estate 11 3 Map of Negri Lama Utara Estate 12 4 Map of Aek Kuo Estate 13

List of Appendixes Page A Audit Plan 155 B Previous Nonconformities, Corrective Actions and Opportunity for 160 Improvement Summary C Nonconformities, Corrective Actions and Opportunity for Improvements 163 Summary D Stakeholder’s issues and comment 166 E Definition of, and action required with respect to audit findings 168 F Definition of, and action required with respect to audit findings for 169 Supply Chain Certification System

Executive Overview

This is the first Annual Surveillance Audit. SAI Global has audited Negri Lama II Mill, PT. Hari Sawit Jaya and its supply bases operations that comprising one mill, four oil palm estate, support services and infrastructure. Negri Lama II Mill, PT. Hari Sawit Jaya once has been RSPO SC certified as independent Palm Oil Mill which sometimes received certified FFB from PT. Hari Sawit Jaya (Negri Lama Utara Estate, Negri Lama Central Estate and Negri Lama Selatan Estate) and PT. Andalas Intiagro Lestari (Aek Kuo Estate). During this audit the organization change the processor of the certified FFB from Negri Lama I Mill to Negri Lama II Mill.

During this first annual surveillance audit two Major Nonconformities were identified and CARs were issued. Follow up audit has been conducted to review the corrective action taken to the Major Nonconformities and objective evidences reviewed that Major Nonconformities could be closed out.

At the conclusion of this audit, Negri Lama II Mill, PT. Hari Sawit Jaya 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 certificate can continue for PT. Hari Sawit Jaya, Negri Lama II 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 45,328 MT Estimated tonnage of certified PK produced 10,907 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) KAK Aek Kuo Estate (Kebun Aek Kuo) KNC Negri Lama Central Estate (Kebun Negri Lama Central) KNS Negri Lama Selatan Estate (Kebun Negri Lama Selatan) KNU Negri Lama Utara Estate (Kebun Negri Lama Utara) KTU Head of Administration (Kepala Tata Usaha) 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)

PND Negri Lama II Mill (Pabrik Negri Lama Dua) PNS Negri Lama I Mill (Pabrik Negri Lama Satu) POME Palm Oil Mill Effluent PP Government Regulation (Peraturan Pemerintah) PPE Personal Protective Equipment PK Palm Kernel PKB Joint Working Agreement (Perjanjian Kerja Bersama) 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. Hari Sawit Jaya, Negri Lama II Mill and Its Supply Base on 14 to 18 March 2016 with two Major Nonconformities identified. Follow up audit has been conducted on 17 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 first 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 three (3) FFB supply bases owned by PT. Hari Sawit Jaya and one (1) Oil Palm Estate owned by subsidiary.

1.3.1 Palm Oil Mill and Estate

Negri Lama II Mill, PT. Hari Sawit Jaya Location: Negeri Lama Seberang Village, Bilah Hilir District, Labuhan Batu Regency, North Sumatera Indonesia GPS Location: East 100⁰ 02' 08'' North 20 21’ 35” Mill capacity: 45 MT FFB/hour (permit: 60 MT FFB/hour)

1.3.2 Oil Palm Estate

1.3.2.1 Negri Lama Selatan Estate, PT. Hari Sawit Jaya

Location: Negeri Lama Seberang Village, Bilah Hilir District, Labuhan Batu,Regency, North Sumatera Indonesia GPS Location: East 99o 59’ 08” – 100o 02’ 36” North 2o 16’ 29” – 2o 23’ 28”

1.3.2.2 Negri Lama Central Estate, PT. Hari Sawit Jaya

Location: Negeri Lama Seberang Village, Bilah Hilir District, Labuhan Batu,Regency, North Sumatera Indonesia GPS Location: East 99o 58’ 45” – 100o 02’ 37” North 2o 21’ 15” – 2o 25’ 40”

1.3.2.3 Negri Lama Utara Estate, PT. Hari Sawit Jaya

Location: Negeri Lama Seberang Village, Bilah Hilir District, Labuhan Batu,Regency, North Sumatera Indonesia GPS Location: East 99o 58’ 56” – 100o 02’ 35” North 2o 23’ 54” – 2o 28’ 30”

1.3.2.4 Aek Kuo Estate, PT. Andalas Intiagro Lestari

Location: Aek Korsik Village, Aek Natas District, Labuhan Batu Regency, North Sumatera Indonesia GPS Location: East 99o 54’ 18” – 99o 59’ 00” North 2o 22’ 58” – 2o 26’ 00”

1.4 Location of mill and estates

PT. Hari Sawit Jaya Negri Lama II Mill and supply bases and PT. Andalas Intiagro Lestari 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

Negri Lama II Mill (PND), 0 100⁰ 02' 29'' E 2 21’35” N PT. Hari Sawit Jaya

Negri Lama Selatan Estate (KNS), o o o o 99 59’ 08” – 100 02’ 36” E 2 16’ 29” – 2 23’ 28” N PT. Hari Sawit Jaya Negri Lama Central Estate (KNC), o o o o 99 58’ 45” – 100 02’ 37” E 2 21’ 15” – 2 25’ 40” N PT. Hari Sawit Jaya Negri Lama Utara Estate (KNU), o o o o 99 58’ 56” – 100 02’ 35” E 2 23’ 54” – 2 28’ 30” N PT. Hari Sawit Jaya Aek Kuo Estate (KAK), o o o o 99 54’ 18” – 99 59’ 00” E 2 22’ 58” – 2 26’ 00” N PT. Andalas Intiagro Lestari Source: PT. Hari Sawit Jaya, March 2016

1.5 Description of supply base

The FFB source are three (3) oil palm estates owned by PT. Hari Sawit Jaya and one (1) Oil Palm Estate owned by subsidiary PT. Andalas Intiagro Lestari and the third party estate. Supply from the third party was bought only when needed. 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. There is no scheme smallholder associated with Negri Lama II Mill. The hectarage and estimated FFB production of the plantation are shown on Table 2.

Table 2: Estimated FFB Production of the supply base

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

Negri Lama Selatan Estate 4,570 106,565

Negri Lama Central Estate 3,136 76,489

Negri Lama Utara Estate 2,367 34,214

Aek Kuo Estate PT. Andalas Intiagro Lestari 1,055 9,904

Total 11,128 227,172

Source: Asian Agri, March 2016

Figure 1 Map of Negri Lama Selatan Estate and Negri Lama I and II Mill

Source: PT. Hari Sawit Jaya, March 2016

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Figure 2 Map of Negri Lama Central Estate

Source: PT. Hari Sawit Jaya, March 2016

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Figure 3 Map of Negri Lama Utara Estate

Source: PT. Hari Sawit Jaya, March 2016

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Figure 4 Map of Aek Kuo Estate

Source: PT. Andalas Inti Lestari, March 2016

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1.6 Date of plantings

Table 3: Age Profiles of Planted Palms in 2016

Aek Kuo Negri Lama Negri Lama Negri Lama Estate, PT. Year of Selatan Central Utara Andalas % of Planted Total Planting Estate Estate Estate Intiagro Area (KNS) (KNC) (KNU) Lestatri (KAK) 1993 - - 426 - 426 3.10% 1994 - - 529 266 795 5.78% 1995 - - - 58 58 0.42% 1996 - - - - - 0.00% 1997 - - - 150 150 1.09% 1998 - - 194 100 294 2.14% 1999 - - - - - 0.00% 2000 - - - - - 0.00% 2003 - - - 481 481 3.50% 2006* 189 - - - 189 1.37% 2010* 1,116 822 - - 1,938 14.09% 2011* 1,465 625 552 - 2,642 19.21% 2012* 743 1,689 214 - 2,646 19.24% 2013* 1,057 - 452 - 1,509 10.97% Mature 4,570 3,136 2,367 1,055 11,128 80.93%

2014* - - 838 547 1,385 10.07% 2015* 116 - 691 431 1,238 9.00% Immature 116 - 1,529 978 2,623 19.07%

Total 4,686 3,136 3,896 2,033 13,751 100.00% Source: Asian Agri, 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 open area since November 2005. Plantation of 2006 – 2015 was replanting.

Table 4: Land use description of Estates in 2016

Aek Kuo Negri Negri Estate, PT. Lama Lama Negri Lama Andalas Total AREA Selatan Central Utara Estate Intiagro (Ha) Estate Estate (KNU) Lestatri (KNS) (KNC) (KAK) Mature area 4,570 3,136 2,367 1,055 11,128 Immature area 116 - 1,529 978 2,623 Total planted area 4,686 3,136 3,896 2,033 13,751

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Aek Kuo Negri Negri Estate, PT. Lama Lama Negri Lama Andalas Total AREA Selatan Central Utara Estate Intiagro (Ha) Estate Estate (KNU) Lestatri (KNS) (KNC) (KAK)

Emplacement 47 10 25 55 137 HCV - - 109 - 109 Nursery 26 - - - 26 Mill 16 - - - 16 POME 15 - - - 15 Total unplanted area 104 10 134 55 303

Total certified area 4,790 3,146 4,030 2,088 14,054 Source: PT. Hari Sawit Jaya, March 2016

Table 5: Estates and Area Planted in 2016

ESTATE MATURE (HA) IMMATURE (HA) Negri Lama Selatan Estate 4,570 116 Negri Lama Central Estate 3,136 - Negri Lama Utara Estate 2,367 1,529 Aek Kuo Estate PT. Andalas 1,055 978 Intiagro Lestari Total 11,128 2,623 Source: PT. Hari Sawit Jaya, March 2016

1.8 Approximate tonnages offered for certification (CPO and PK)

Approximate tonnages offered for certification is estimated based on the organisation last three years actual FFB/CPO/PK production from Negri Lama Selatan, Negri Lama Central, Negri Lama Utara and Aek Kuo Estate and possibility increasing of young palm production in several estates (see Table 3, 8 and 9).

Table 6: Negri Lama Selatan, Negri Lama Central, Negri Lama Utara and Aek Kuo Estate FFB Production Trend 2011 – 2015

YEAR Actual Production (MT)

2011 187,252 2012 130,139

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YEAR Actual Production (MT)

2013 116,200 2014 124,310 2015 186,414 Source: PT. Hari Sawit Jaya, March 2016

Table 7: Negri Lama II Mill Total CPO and PK Production of 2015 and Estimate Production of 2016

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

Actual Production Jan – Dec 2015 Negri Lama Selatan 995 213 60 Negri Lama Central 713 153 43 Negri Lama Utara 447 96 27 Aek Kuo Estate - - - Sub Total Own Estate* 2,155 462 130 Other Supply Base 159,889 28,635 8,533  The 3rd Party Total actual production 162,044 29,097 8,663 Estimated Production Jan – Dec 2016 Negri Lama Selatan 106,565 21,313 5,117 Negri Lama Central 76,489 14,917 3,672 Negri Lama Utara 34,214 6,845 1,642 Aek Kuo Estate 9,904 2,253 476 Sub Total Own Estate* 227,172 45,328 10,907 Other Supply Base 5,000 898 267  The 3rd Party Total estimated production 232,172 46,226 11,174 Source: PT. Hari Sawit Jaya, March 2016

The FFB from Negri Lama Selatan, Negri Lama Central, Negri Lama Utara and Aek Kuo Estate are processed together with FFB from other supply based, therefore Negri Lama I Mill used RSPO Supply Chain Mass Balance Model – Module E.

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Table 8: Negri Lama I Mill Total CPO and PK Production of 2015

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

Actual Production Jan – Dec 2015

Negri Lama Selatan 32,673 7,239 1,508

Negri Lama Central 54,312 10,075 2,388

Negri Lama Utara 75,739 15,999 3,478

Aek Kuo Estate 23,690 5,949 1,264

Sub Total Own Estate* 186,414 39,262 8,638 Other Supply Base - - -  The 3rd Party

Total actual production 186,414 39,262 8,638

Source: PT. Hari Sawit Jaya, March 2016

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Table 9: Actual Negri Lama II Mill Production of CPO and PK derived from Negri Lama Selatan, Negri Lama Central, Negri Lama Utara, and Aek Kuo Estate FFB in 2015*

FFB Production (ton) Palm Oil (MT) PK (MT) Negri Negri Negri Negri Negri Negri Negri Negri Negri Month Aek Aek Aek Lama Lama Lama Total Lama Lama Lama Total Lama Lama Lama Total Kuo Kuo Kuo Selatan Central Utara Selatan Central Utara Selatan Central Utara January ------February ------March ------April ------May ------June ------July ------August ------September 995 713 447 - 2,155 213 153 96 - 462 60 43 27 - 130 October ------November ------December ------Total 995 713 447 - 2,155 213 153 96 - 462 60 43 27 - 130 Source: PT. Hari Sawit Jaya, March 2016 *Negri Lama Selatan, Negri Lama Central, Negri Lama Utara, and Aek Kuo Estate are the certified FFB sources

Previously Negri Lama II Mill is RSPO SC Certified as independent Palm Oil Mill. The mill has only received FFB from certified supply bases in September 2015. In 2015, the other FFB from certified sources are processed in Negri Lama I Mill.

Audit Report

Table 10: Actual Negri Lama I Mill Production of CPO and PK derived from Negri Lama Selatan, Negri Lama Central, Negri Lama Utara, and Aek Kuo Estate FFB in 2015*

FFB Production (ton) Palm Oil (MT) PK (MT) Month Negri Negri Negri Negri Negri Negri Negri Negri Aek Negri Lama Lama Lama Lama Total Lama Lama Aek Kuo Total Lama Lama Lama Aek Kuo Total Kuo Central Selatan Central Utara Selatan Utara Selatan Central Utara January 2,234 4,262 4,262 1,668 12,426 458 437 838 368 2,101 115 125 219 93 552 February 2,153 2,540 3,951 1,564 10,208 470 479 819 363 2,131 107 125 195 84 511 March 2,290 3,501 4,954 1,595 12,340 494 653 1,017 367 2,531 114 173 246 86 619 April 2,374 4,051 5,917 1,784 14,126 510 753 1,212 408 2,883 115 195 287 94 691 May 2,830 5,302 7,112 2,031 17,275 621 1,002 1,485 473 3,581 126 232 317 98 773 June 2,750 4,813 6,648 2,274 16,485 576 870 1,324 507 3,277 112 194 268 101 675 July 2,904 4,601 6,898 2,727 17,130 629 863 1,421 628 3,541 121 190 287 124 722 August 3,727 5,733 8,619 1,673 19,752 840 1,116 1,849 779 4,584 170 259 390 161 980 September 2,859 4,776 6,568 2,549 16,752 647 933 1,413 612 3,605 133 220 306 129 788 October 3,279 5,490 7,534 2,188 18,491 759 1,098 1,662 538 4,057 145 241 334 106 826 November 2,821 4,540 6,577 1,895 15,833 654 910 1,450 468 3,482 133 212 310 97 752 December 2,452 4,703 6,699 1,742 15,596 581 961 1,509 438 3,489 117 222 319 91 749 Total 32,673 54,312 75,739 23,690 186,414 7,239 10,075 15,999 5,949 39,262 1,508 2,388 3,478 1,264 8,638 Source: PT. Hari Sawit Jaya, March 2016

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Table 11: Estimated Negri Lama II Mill Production of CPO and PK from Negri Lama Selatan, Negri Lama Central, Negri Lama Utara, and Aek Kuo Estate FFB in 2016*

FFB Production (ton) Palm Oil (MT) PK (MT) Negri Negri Negri Negri Negri Negri Negri Negri Negri Month Aek Aek Aek Lama Lama Lama Total Lama Lama Lama Total Lama Lama Lama Total Kuo Kuo Kuo Selatan Central Utara Selatan Central Utara Selatan Central Utara January 5,810 4,458 2,768 1,308 14,344 1,162 869 554 298 2,883 279 214 133 63 689 February 6,164 4,712 2,416 1,276 14,568 1,233 919 483 290 2,925 296 226 116 61 699 March 7,120 5,399 2,344 1,098 15,961 1,424 1,053 469 250 3,196 342 259 113 53 767 April 8,643 5,491 2,443 678 17,255 1,729 1,071 489 154 3,443 415 264 117 33 829 May 9,122 5,850 2,479 597 18,048 1,824 1,141 496 136 3,597 438 281 119 29 867 June 9,639 6,347 2,654 784 19,424 1,928 1,238 531 178 3,875 463 305 127 38 933 July 9,521 6,571 2,440 864 19,396 1,904 1,281 488 197 3,870 457 315 117 41 930 August 11,323 8,331 3,820 718 24,192 2,265 1,625 764 163 4,817 544 400 183 34 1,161 September 10,784 7,878 3,365 779 22,806 2,157 1,536 673 177 4,543 518 378 162 37 1,095 October 10,091 7,603 3,223 622 21,539 2,018 1,483 645 141 4,287 484 365 155 30 1,034 November 9,641 7,378 3,233 623 20,875 1,928 1,439 647 142 4,156 463 354 155 30 1,002 December 8,707 6,471 3,029 557 18,764 1,741 1,262 606 127 3,736 418 311 145 27 901 Total 106,565 76,489 34,214 9,904 227,172 21,313 14,917 6,845 2,253 45,328 5,117 3,672 1,642 476 10,907 Source: PT. Hari Sawit Jaya, March 2016 *Negri Lama Selatan, Negri Lama Central, Negri Lama Utara, and Aek Kuo Estate are the certified FFB sources

Currently Negri Lama II Mill amends the certification to be RSPO P&C Certified with supply bases were previous supply base of Negri Lama I Mill. Negri Lama II mill will receive 3rd party FFB if there is trouble with Negri Lama I Mill. FFB from 3rd party supply bases will processed together with FFB from own estates, therefore Negri Lama II Mill uses RSPO Supply Chain Mass Balance Model – Module E.

Audit Report

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 45,328 MT Estimated tonnage of certified PK produced 10,907 MT

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 12: Certificates Held by Mill and Estates

MILL/ESTATE OTHER CERTIFICATION HELD

Negri Lama II Mill ISO 14001:2004 by SGS Indonesia, Certificate number: ID05/65250, Expired date: 10 June 2017 Negri Lama II Mill, ISCC by SGS Germany GmbH, certificate number: EU-ISCC-Cert- Negri Lama Selatan Estate, DE100-20152530, Expired 31 August 2016. Negri Lama Central Estate, Negri Lama Utara Estate, Aek Kuo Estate Source: PT. Hari Sawit Jaya, March 2016

1.10 Organizational information/contact person

PT. Hari Sawit Jaya

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. Hari Sawit Jaya and PT. Andalas Intiagro Lestari 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.

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Table 13: 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 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, Regency, Riau 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 Brought forward Certified on 11 Jaya District, from 2012 to June 2012 Pelalawan & Inhu 2011 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 Brought forward Certified on 11 Jaya District, from 2012 to June 2012 Pelalawan & Inhu 2011 Regency, Riau Tungkal Ulu Pulau Pauh / Tungkal Ulu Pulau Pauh / 2011 Certified on 15 Mill Penyabungan / Estate Penyabungan / August 2012 Merlung Village, Merlung Village, Tungkal Ulu Tungkal Ulu District, District, Tanjung Tanjung Jabung Jabung Regency, Regency, Jambi Jambi Tungkal Ulu Renah Mendalo, 2012 Certified on 11 (Plasma) Merlung, Muara July 2013 Papalik District, Tanjung Jabung Barat Regency, Jambi Muara Bulian Singoan / Bukit Sari Muara Bulian Singoan / Bukit Sari / 2011 Certified on 28 Mill / Bulian Jaya Estate Bulian Jaya Village, August 2012 Village, Muara Muara Bulian / Bulian / Pemayung Pemayung District, District, Batang Batang Hari Regency, Hari Regency, Jambi Jambi Muara Bulian Maro Sebo Ilir 2012 Certified on 12 (Plasma) District, Batanghari July 2013

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

Regency, Jambi

Muara Bulian Maro Sebo Ilir 2012 Certified on 12 (KKPA) District, Batanghari July 2013 Regency, Jambi Topaz Mill Petapahan Village, Topaz & Seed Petapahan Village, 2013 Certified on 30 Tapung District, Garden Estate Tapung District, March 2015 Kampar Regency, Kampar Regency, Riau Riau Taman Raja Lubuk Bernai / Taman Raja & Lubuk Bernai / 2013 Certified on 20 Mill Kampung Baru / Badang Estate Kampung Baru / February 2015 Pelabuhan Dagang Pelabuhan Dagang / / Pematang Pauh Pematang Pauh Vilage, Tungkal Ulu Vilage, Tungkal Ulu District, Tanjung District, Tanjung Jabung Regency, Jabung Regency, Jambi Jambi Segati Mill Langkan / Segati Estate Langkan / Penarikan / 2014 On progress Penarikan / Tambak / Sotol Tambak / Sotol Village, Langgam Village, Langgam District, Pelalawan District, Pelalawan Regency, Riau Regency, Riau Penarikan & Pangkalan Sarik / 2014 On progress Gondai Estate Baru Village, Langgam / Siak Hulu District, Pelalawan / Kampar Regency, Riau Penarikan (KKPA) Pangkalan Sarik / 2016 On progress Baru Village, Langgam / Siak Hulu District, Pelalawan / Kampar Regency, Riau Gunung Sahilan Gunung Sahilan 2016 On progress (KKPA) Village, Lipat Kain District, Pelalawan Regency, Riau Tanah Datar Tanah Datar Tanah Datar Tanah Datar Petatal Brought Forward Certified on 18 Mill Petatal Village, Estate Village, Talawi from 2015 to May 2015 Talawi District, District, Asahan 2013 Asahan Regency, Regency, North North Sumatera Sumatera Bahilang Estate Bahilang Village, Tebing Tinggi District, Serdang Bedagai Regency, North Sumatra Aek Nabara S1-S3 / Sukadame Aek Nabara S1-S3 / Sukadame Brought Forward Certified on 6 Mill Village, Bilah Hulu / Estate Village, Bilah Hulu / from 2015 to March 2015 Kota Pinang Kota Pinang District, 2013 District, Labuhan Labuhan Batu Batu Regency, Regency, North North Sumatra Sumatra Teluk Panjie Teluk Panjie Teluk Panjie Teluk Panjie Village, Brought Forward Certified on 21 Mill Village, Kampung Estate Kampung Rakyat from 2015 to April 2015 Rakyat District, District, Labuhan 2013 Labuhan Batu Batu Regency, North Regency, North Sumatra Sumatra

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

Peranap Mill Simelinyang / Pauh Peranap Estate Simelinyang / Pauh Brought Forward Certified on 7 Ranap / Sengkilo Ranap / Sengkilo from 2016 to January 2015 Village, Peranap Village, Peranap 2013 District, Indragiri District, Indragiri Hulu Hulu Regency, Regency, Riau Riau Peranap (Plasma) Simelinyang / Pauh 2016 On progress Ranap / Sengkilo Village, Peranap District, Indragiri Hulu Regency, Riau Bungo Tebo Tuo Sumai / Sungai Bungo Tebo Tuo Sumai / Sungai 2016 Certified on 3 Mill Rambai Village, Estate Rambai Village, PWK December 2015 PWK Sumai / Tebo Sumai / Tebo Ulu Ulu District, Bungo District, Bungo Tebo Tebo Regency, Regency, Jambi Jambi Bungo Tebo Tuo Sumai / Sungai 2016 On progress (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 Regency, Batu Regency, North North Sumatra Sumatra Pangkatan Sennah Village, Bilah 2017 Certified on 26 Hilir District, Labuhan May 2015 Batu Regency, North Sumatra Gunung Rahuning Village, Pulau Maria Rahuning Village, 2017 Certified on 7 Melayu I Bandar Pulau Estate Bandar Pulau District, September 2015 District, Asahan Asahan Regency, Regency, North North Sumatra Sumatra 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 23 Seberang Village, Village, Bilah Hilir December 2015 Bilah Hilir District, District, Labuhan as Independent Labuhan Batu Batu Regency, North Mill - Audited in Regency, North Sumatra March 2016 as Sumatra Aek Kuo Aek Korsik Village, Mill and supply Aek Natas District, bases Labuhan Batu - HGU No.02-12- Regency, North 00-00-2-00074 Sumatra 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 as independent Mill Regency, North Sumatra

Sumatra Source: PT. Hari Sawit Jaya, March 2016

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1.12 Partial Certification Requirements

All Management Units have been audited for RSPO Certification based on Table 13: 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. Other HGU of the rest of area is still in process for technical consideration in gaining Location Permit from Land Agency (BPN) of Labuhan Batu Regency.  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: 6 April 2015 Date of previous audit: 17 – 19 February 2014 (certification audit), 14 May 2014 and 4 October 2014 (follow up audit).

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

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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 14 to 18 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 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 (Negri Lama II Mill, Negri Lama Selatan Estate, Negri Lama Central Estate, Negri Lama Utara Estate and Aek Kuo 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) (Negri Lama II Mill, Negri Lama Selatan Estate, Negri Lama Central Estate, Negri Lama Utara Estate and Aek Kuo Estate) - All HCV aspects of P&C including identification, management and monitoring HCV (Negri Lama II Mill, Negri Lama Selatan Estate, Negri Lama Central Estate, Negri Lama Utara Estate and Aek Kuo Estate).

Audit plan is available in Appendix A of this report on page 153.

2.3 Qualification of the lead auditor and audit team member

Eko Purwanto – Lead Auditor and best agriculture practice, HCV, 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

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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 Environmental 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.

Dirgantara Bayu Lezmana – Audit Team Member and auditor for land use tittle and Occupational Health and Safety issues in Mill and Estates Dirgantara Bayu Lezmana, graduated bachelor degree majoring in occupational health and safety from University of Indonesia. He had experienced in field of QHSE MS (Quality, Health, safety and environment Management system) for several sectors of industry, such as: chemical manufacturing, construction and oil and gas exploration. Registered as lead auditor (ISO 9001, ISO 14001, OHSAS 18001 and ISPO) within the international professional auditor membership (IRCA & RABQSA) and also registered in local government ministry of manpower AK3U & HIMU (Safety officer & Industrial Hygienists) and ISPO Lead Training Auditor from ministry of Agriculture. He currently joined as management systems auditor at SAI Global Indonesia since 2012.

Jarot Widyatmaka - Audit Team Member and auditor for Social aspects. Jarot Widyatmaka graduated with Industrial Engineering, Trisakti University in 1998. He has experience as a consultant and auditor quality management system for several years he had received training Lead Auditor for ISO 9001 (2000), ISO 14001 (2003), OHSAS 18001 (2010), ISPO (2014) RSPO (2014), while also training for social audits as Lead Auditor SA 8000 (2011) and Lead Auditor SMETA (2010). Over the last 15 years he was involved in the audit of the quality management system (ISO 9001) and social audits for various sectors, among others in his industry, Previous working experience at PT Surveyor Indonesia as a quality management system consultant (1998-2006) and then at PT SGS Indonesia as Lead Auditor for the quality management system (2006-2011) and joined PT SAI Global Indonesia in 2011. in June 2014 he has attended and passed for ISPO auditor training class XII

R. Yosi Zainal Muhammad – Auditor in witness for best agriculture practice and HCV. R. Yosi Zainal Muhammad graduated as bachelor from Department of Forest Resources Conservation and Ecotourism, Faculty of Forestry, Bogor Agricultural Institute in 2008. He has work experience as Sustainability Assistant at Musim Mas Group (2008-2009), Research Assistant at World Agroforestry Centre for The Palm Oil Carbon Footprint Project and as Sustainability Supervisor at Bima Palma Group (2011-2015). He has experience in management of sustainable palm oil (RSPO and ISPO), environment management, social impact and safety management system at palm oil plantations. He joined SAI Global since December 2015 as Auditor for the ISO 9001:2008, ISPO, and RSPO. He involved in quality management system for various industry sectors, RSPO and ISPO. He also has trained in Calculation of Palm Oil Footprint Carbon (2011),

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Safety Specialist (2013), Social Impact Assessment (2014), ISO 9001:2008 Lead Auditor (2015), ISO 9001:2015 Transition Auditor (2016), and ISPO Lead Auditor (2016).

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 163.

Table 14: List of internal and external stakeholder

STAKEHOLDERS METHODS OF CONSULTATION

Internal stakeholder (mill & estates)

Deputy Secretary of SPSI Individual discussion

Chairman of Gender Committee Individual discussion Group discussion for workers with similar role, Workers otherwise individually interviewed External Stakeholders (mill & estates) Head of Villages, respective people and villagers representatives. Individual discussion - Sidomulyo Village - Sidomulyo 2 Village FFB Supplier Individual discussion

Social and Labour Agency An invitation letter to comment was sent

Agriculture and Plantation Agency An invitation letter to comment was sent

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STAKEHOLDERS METHODS OF CONSULTATION

Environment Agency An invitation letter to comment was sent National land Agency – Badan Pertanahan An invitation letter to comment was sent Nasional (BPN) Labuhan Batu Regency District Police (Polsek Bilah Hilir) Individual discussion

District Head (Camat Bilah Hilir) An invitation letter to comment was sent NGOs: AMAN (Aliansi Masyarakat Adat Nasional), GAPKI, Sawit Watch, WWF and Walhi Sumatera An invitation letter to comment was sent Utara Bupati Labuhan Batu Regency 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.

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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. There was also no delivery of RSPO certified CPO and PK in 2015 from Negri Lama II Mill. However RSPO certified CPO and PK in 2015 delivered from Negri Lama I Mill.

Table 15. Actual Negri Lama I Mill RSPO Certified CPO and PK Delivered in 2015

RSPO Certified CPO RSPO Certified PK Month Delivered Delivered January - - February - - March - - April - - May - - June - - July - - August - 712,63 September - - October - 1.387,37 November 500,00 950,00 December - - Total 500,00 3.050,00

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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  List stake holders has been YES Information request and their respond were determined in a documented procedure. stakeholders? (E.g. listed by category established, divided into 3 Communication procedure was established and implemented by the organisation. and stakeholders listed should be site category e.g Village (Desa), Communication procedure describes the method to follow up the information specific) Government, NGO & request from interested party. All information requests from stakeholder were listed Contractor b. What is the frequency of updating the and recorded by Mill and Estate on logbook “Record of information request and stakeholder list?  Updating frequency of responses (Buku Register Surat dan Tanggapan)”, The information includes the stakeholder list was conducted problem of social, legal and environmental. c. Is there evidence of stakeholder yearly, last updated data of verification? stake holder was February The Organization has determined the type of information that is available and d. What type of information is provided? 2015. accessible to all stakeholders. List of information to the public specified in the (E.g. Environmental, social and legal)  Verification of stakeholder was document "Daftar Dokumen yang dapat diakses Stakeholder” (List of document that conducted by organisation ? can be accesed by stakeholders) No:06/NLGroup/GM/III/2015, dated 5 March 2015. e. What is the frequency and level of access  Type of information provided Information that is available to stakeholders such as : to this information? such as environmental - Report of RKL – RPL/UKL-UPL. f. How and where is the information aspects, health & safety aspect disseminated? and social aspects as long as - Permit of company such as (Ijin Prinsip, Ijin Lokasi, HGU,HCV Assessment) g. Who is responsible for providing & the information/data was not - HSE Report (P2K3 & AK3) updating information? concerning of confidential information (financial aspects - Operational license for equipment (Compressor, Diesel Engine) h. Is there an SOP available to describe the (costs & revenue detail) and process (of information Organization has established a mechanism for receiving and providing information supplier data. in the procedure SOP AA-GL-5008.1-R1  Access of information was

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) sharing/dissemination)? received and follows up All information can be accessed by interested parties. Provision of information to be maximum 10 days after known by Estate Manager and approved by the Estate Manager/Mill i. Are stakeholders aware of the type of information available and the procedures approval by local management. Manager/Group Manager. If the information is confidential trade must go through the approval of Head Office. Provision of information to the relevant agencies for accessing the information?  All information can be accessed by interested parties. recorded in the logbook "Buku Register Surat dan Tanggapan". Provision of information to be All information provided in several stakeholders are in accordance with the terms known by Estate Manager and and language used, for example in the form of reports and the contents of the approved by the Area report. Delivery of Information is delivered in bahasa. Manager. If the information is confidential trade must go through the approval of Head Office. Provision of information to the relevant agencies recorded in the logbook "Buku Permintaan Informasi dan Tanggapan".  PIC for providing information was Public Relation (Humas)- Mr.Glorius Alexander Bangun and distributed to related person in charge.  Organization has established a mechanism for receiving and providing information in the procedure SIMP – PROS – 04, dated 4 February 2013  Awareness was verified by each stake holder

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.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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  Yes, “Penanganan Permintaan YES Organization has established a mechanism for receiving and providing information ensure constructive response to Informasi Stakeholder” SOP in the procedure of Communication, Participation and Consultation “Penanganan stakeholders? AA-GL-5008.1-R1 & Permintaan Informasi Stakeholder” SOP AA-GL-5008.1-R1 & “Mekanisme “Mekanisme b. Who is the personnel in charge (PIC)? Komunikasi/Komsultasi Masyarakat Lokal atau kelompok lain yang terkena Dampak Komunikasi/Komsultasi atau kepentingan dengan pihak kebun/pabrik SOP AA-GL-5009.1-R1, which explain c. Does the SOP cover the elements under Masyarakat Lokal atau the mechanism of response to requests for information by referring to the list of 1.1.1? kelompok lain yang terkena stakeholders and stakeholder information according to the principles and criteria for Dampak atau kepentingan d. Is there a clear time frame for response to sustainable palm oil. Request for information outside of the list of public information dengan pihak kebun/pabrik request for information? should be approval of top management and the provision of information comes with SOP AA-GL-5009.1-R1 Person an official receipt. e. Are records of requests for information in Charge was (Public and responses maintained? Relations) Humas in Group With the use of the log book Buku Register Surat dan Tanggapan", the organization f. Are responses to requests for information Negeri Lama and SSL (estate and Mill) can monitor all of the information that is communicated to timely and appropriate? Department stakeholders. Request for information directly response by management and its  Yes the SOP was covering follow up as soon as possible.

element 1.1.1 Based on the logbook, majority of the letter containing the request for funding the activities of government institutions and local communities. However, organizations are routinely required to submit reports to the regulatory agencies, such as: quarterly report of hazardous waste material to Environmental Agency of district and province, Report to the CTF return period PPh21, P2K3 Report (Office of Manpower and Transmigration), and Report of the implementation of the RKL / RPL (Environmental Agency of the district, the province and the Ministry of Environment, monthly industrial survey report, etc

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);

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) • 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  The document was listed in YES A list of information that can be obtained by other stakeholders in PT. Hari Sawit listed in (c) below made publicly available? Daftar Stake Holder Negri Jaya, Negri Lama group in a Daftar Dokumen yang dapat di akses Stakeholder, No: Lama Group. b. Where are the documents placed? 06/NL Group/GM/III/16 contains material information communicated to the public  Document located in Kantor such as: c. Is the information provided adequate? Negri Lama by Humas Note: At minimum, an information  The document available such - Survey report (plantation, manufacture & monthly industrial) for BPR summary of the document listed below as monitoring plans of - Report of RKL – RPL/UKL-UPL. should be made available. environment pollution and  Land titles/user rights (Criterion 2.2) report of HSE (P2K3 & AK3) - Report of Hazardous Material, Monitoring of environment - Legal boundaries ,land use,  Yes, all monitoring report were - HSE Report (P2K3 & AK3) classification, total area, grant publishly available. title, permit validity , NCR rights, Documents also available to the public placed in the respective sections within the  Occupational health and safety plans organization. Such as land title right/ HGU certificate placed in KTU and other. (Criterion 4.7); Information provided adequate at minimum, an information summary of the

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) - risk assessment and mitigation, document listed such as : emergency response plan, • Land titles/user rights (Criterion 2.2) training, accident records - Legal boundaries ,land use, classification, total area, grant title,  Plans and impact assessments permit validity, NCR rights relating to environmental and social • Occupational health and safety plans (Criterion 4.7); impacts (Criteria 5.1, 6.1, 7.1 and - risk assessment and mitigation, emergency response plan, training, 7.8); accident records - main social and environmental • Plans and impact assessments relating to environmental and social impacts impacts and mitigation (Criteria 5.1, 6.1, 7.1 and 7.8); measures, - main social and environmental impacts and mitigation measures,  HCV documentation (Criteria 5.2 and • HCV documentation (Criteria 5.2 and 7.3); 7.3); - identification on HCV areas, maps, management and monitoring - identification on HCV areas, HCV maps, management and • Pollution prevention and reduction plans (Criterion 5.6); monitoring HCV - identification of pollutants, management and reduction measures  Pollution prevention and reduction • Details of complaints and grievances (Criterion 6.3); plans (Criterion 5.6); - nature of complaints, parties involved, status of case - identification of pollutants, • Negotiation procedures (Criterion 6.4); management and reduction - SOP, consultative, neutral, inclusiveness, timeframe, responsibility measures • Continual improvement plans (Criterion 8.1);  Details of complaints and grievances - for all elements under 8.1, (Criterion 6.3); • Public summary of certification assessment report; - nature of complaints, parties - follow RSPO format involved, status of case • Human Rights Policy (Criterion 6.13).  Negotiation procedures (Criterion - policy statement comply to the requirements of 6.13 6.4); - SOP, consultative, neutral, Monitoring plan associated with public documents already established and inclusiveness, timeframe, available. For example for environmental documents: CSR monitoring 2015, the responsibility management of HCV, RKL-RPL was reported every six months to BLH, reports  Continual improvement plans related to the management of K3 (occupational health and safety) are reported (Criterion 8.1); every three months to Man power Office , reports LB3 and liquid waste are reported - for all elements under 8.1, every three months to BLH, etc.  Public summary of certification assessment report; Update monitoring report publicly available. Evidence of delivery of the report in the - follow RSPO format form of receipts properly documented and archived in a file Receipt.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Human Rights Policy (Criterion 6.13). - policy statement should comply Monitoring plan associated with public documents already established and to the requirements of 6.13 available. For example 'Worker contributions to BPJS' its reported monthly, the d. Do the management documents contain number of security personnel gardens and mills' to Police monitoring plans and reports? e. Are all monitoring reports publicly Update monitoring report publicly available. Evidence of delivery of the report in the available? form of receipts properly documented and archived in a file Receipt.

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. a. Is there a written policy committing to a  Yes there was written policy Yes Organization has established the policy "Principles of Business Ethics" PT Hari code of ethical conduct and integrity in all commitment to all operations. Sawit Jaya dated 26 November 2012, by Mr. Kelvin Tio (Management Director) operations and transactions?  Policy already include fairness, Asian Agri Group. PT Hari Sawit Jaya committed to continue practicing responsible b. Does the policy include as a minimum: corruption, information. business ethics. Its consists of 5 policy can be summarized in :  A respect for fair conduct of  Policy documented and - Not abusing power and position owned in the company in any form for personal business? communicated through all use  A prohibition of all forms of corruption, organisation by put in the - Do not use labour illegally traded bribery and fraudulent use of funds banner and poster around the - No violence, threats and harassment both mentally, physically, sexually, verbally and resources? estate (each division office and in the estate include mill) and in writing against any party  A proper disclosure of information in accordance with applicable  Documentation & regulations and accepted industry communication of policy was conducted in Bahasa

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) practices? c. Is the policy documented and communicated to all levels of the workforce and operations, including contracted third parties? How is it communicated? d. Are the documentation and communication done in the appropriate languages?

Note to auditor: The workforce should be interviewed to determine level of understanding of policy

Audit Report

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 on 1 evaluation form (Reviewed 2016). Updating of law and regulations change list of legal requirements) February 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 1 February 2016. Information on applicable legal and other (Compliance to regulations and requirements have been reviewed and summarised. Copies of the legal its change) Note to auditor: A due diligence on the requirements were 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,

Audit Report

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: - Heavy equipment operator (SIO) - First aider certified by Dinas NAKERTRANS - HIPERKES certified for paramedics and doctors - Boilers operator for mill - Electrical safety officer (K3 LIstrik) officer The permit of equipment utilization were available at each units (estate and mill): - 2 units of boiler at mill - 3 units of sterilizer at mill - Pressure vessels, such as: 2 units of compressor capacity s 120 litres at Negeri Lama Utara Estate and 160 litres at Aek Kuo Estate, 1 back pressure vessel at mill, - 1 unit lightning arrester. - Motor diesel (genset) 3 units at mill capacity 400 Kw and 320 Kw, inspection date: April 2013. While 2 units at Aek Kuo Estate capacity 136 kva and 32.5 Kva and also 3 units at Negeri Lama Utara Estate capacity each 52 Kva, 135 Kva and 32.5 Kva 1 unit steam turbine capacity 1200 kw, inspection date April 2013. - Electricity installation approval of ministry of manpower at Negri Lama II Mill - Lifting equipment: 15 units Excavators capacity 500 Kg at mill

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and 1 unit excavator at Aek Kuo Estate

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 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. - IUNC Red List, CITES, HCV Toolkit, UU No. 32/2009, Act No. 41/1999, No. 5/1990, Act No. 9/1985, Act No. 11/1974, Government Regulation No. 7/1999, Government Regulation No. 35/1991, and Prosident Degree No. 32/1990.

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.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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. 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 April 2015 covered the implementation of the all applied regulations. Status of compliance  Check list and corrective action with the applicable environment, OHS, plantation, labour, social laws and audit internal year 2015. regulations were evaluated, and evaluation of compliance result indicated that 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 April 2015. 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.:  Procedure.AA-GL-5001.1-R0 The SPO officer in charge was responsible to identified and updated the YES personnel in charge (PIC), source of info, (Compliance to regulations and regulation applicable to the organisation, also to socialize to related functions.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) frequency of update) for tracking changes its change) Update and reviewed was conducted periodically once within a year. and communication of changes to  Procedure (AA-EMS-432-PR) relevant sections of the legislation? Law regulation and other requirements  Procedure (AA-EMS-452-PR) Compliance evaluation  List of regulations compliance evaluation form (AA-4320002a- LT) Review period 2015 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 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  SK HGU certificate no. 01 and The total area coverage for all land titles (HGU) were resumed 14,053.74 Ha, as YES ownership or lease of the land available? Keputusan Menteri Dalam details: 11,777.08 Ha For HSJ Negeri Lama (+) 2,087.91 ha for Aek Kuo (+) (e.g. land titles, lease documents) Negeri no. 02/HGU/1988, dated 188.75 Ha for extension. 9 February 1988, covering: b. Are there documents showing history of The completes legal documents showing history of land tenure includes the actual 11,777.08 Ha. land tenure available? (e.g. legal legal use were available as below: documents showing land status change,  SK HGU certificate no.2, 1997 and Decree of the Minister of  Land titles HGU; certificate no. 01 and Keputusan Menteri Dalam Negeri no. SIA and EIA reports, HCV assessment 02/HGU/1988, dated 9 February 1988, covering: 11,777.08 Ha reports) Agrarian Affairs / Head of National Land Agency, dated 27  Land titles HGU Extension No.02-12-00-00-2-00074 issued on 29 February c. Are there documents showing the actual January 1997, 2016 includes SK BPN Sumatera Utara No.3/HGU/BPN.12/XI/2015 dated 8 legal use of the land available? no.12/HGU/BPN/97; covering December 2015 regarding extension land titles issues for PT Hari Sawit d. Are the documents complete? 2,087.91 ha. Jaya for area coverage 188,75 Ha  SK HGU certificate no.3, and  IUP-B (Izin usaha perkebunan Budidaya) No. 180/293/Huk/2014 dated 3rd SK BPN Sumatera Utara December 2014 from Labuhan Batu Regent for coverage area extension No.3/HGU/BPN.12/XI/2015 190.96 Ha dated 8 December 2015  Plantation Operation Permit SPUP (Surat Pendaftaran Usaha Perkebunan) regarding extension land titles No.HK.350/410/DJ.Bun.5/V/2001 dated 28th May 2001, capacity 45 ton

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) issues for PT Hari Sawit Jaya FFB/hr. area wide 11.777, 08 Ha for area coverage 188.75 Ha  Site Permit/Izin Lokasi from Labuhan Batu Regent No.503.593/259/ptnh/2013 dated 03rd September 2013 for area usage ± 190.96 Ha at Desa Sidomulyo village, Bilah Hilir District, Labuhan Batu Regent, North Sumatera Province  Site Permit (Izin Lokasi) issued as indicated in Decree of the Governor of North Sumatera #593/9/K/BKPMD/Tahun 1987 dated 4th May 1987, covering an area of 11,000 hectares for village of Selat Besar, Tanjung Halaban, Sei Tampang and Village of Kuala Bangka, Subdistrict Kuala Hilir  Approval letter investor (Surat persetujuan tetap penanaman modal Dalam Negri )No.145/I/PMDN/1980  Business extension Izin usaha perluasan No.9/1/IU/II/PMDN/Industri/2011 dated 15 Mar 2011. IUT 66040 in toi 79540 ton CPO  Registered company / Tanda Daftar perusahaan (TDP) No.020610100219 dated 17th June 2014 valid for 5 years The organisation has already followed up the previous audit findings regarding plantation area outside the HGU/land title certificates, the additional land tittle/HGU as listed, covering area 188,75 Ha. Moreover there are also available the “Izin Lokasi” and IUP-B for coverage area 190.96 Ha. Nevertheless, there is need to conduct further follow up on next surveillance audit regarding the remaining area outside HGU to synchronize between actual area statement and HGU certificates. 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  Situation Map / HGU map Area has been measured by government BPN and recorded on Situation Map / YES boundary markers?  Site visit observation on KNS HGU map. Documented working instruction (NLG-WI-001/Rev.0/01-12-15) regarding the b. Is there physical presence of boundary (South Negeri Lama) estate markers?  working instruction (NLG-WI- monitoring and maintenance of boundary markers was established. Within the 001/Rev.0/01-12-15) monitoring procedure was defined that maintenance conducted twice within a year. c. Is there an SOP for boundary demarcation and maintenance of boundary Legal boundaries marker were sighted during audit visit and maintained along the and maintenance? markers perimeters of estate lands which were mapped with Global Positioning System

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) (GPS). Field observation was conducted to pegs number as below: Note to auditor: Ground verification of boundary  Negri Lama Selatan (KNS) Estate Peg no.02 with the coordinates N 02 ° 20' markers using GPS should be conducted. 52.6 '; E: 100 ° 02' 20.7' Priority should be on boundaries with other  Negri Lama Selatan (KNS) Estate Peg no.06 coordinates: N 02 ° 19' 36.4'; estates, community areas, protected area and E: 100 ° 01' 15.1' rivers

In the case of Associated Smallholders: d. Are there documents showing that the boundaries of associated smallholders have been recorded and verified by the mill? e. In case of boundary breach, is there proof of a mitigation plan being implemented? 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 was any land YES - Procedures of Land dispute There was no land dispute at PT. Hari Sawit Jaya. disputes? resolution mechanisms AA-GL- Organizations have established procedures of Land dispute resolution 5003.1-RI, dated 22 August Note to auditor: Due diligence should be mechanisms AA-GL-5003.1-R1. Describes the mechanism of compensation 2011 conducted on the management to provide before land clearing and land conflict resolution mechanisms between companies evidence that there has been no historical or - Interviews with auditee and land owners. The land cleared for oil palm plantations should ensured not be current land dispute a problem and there is no dispute over land ownership. - Site observation

b. If there are or have been disputes, are there: - Documents to proof legal acquisition? - Records of FPIC process? c. If there has been acquisition involving compensation, are there: - Records that Fair compensation has been provided and accepted by parties involved?

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) - Records that all affected parties are consulted and represented? - Documents of negotiations/discussion available?

Note to auditor: There should be direct 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 YES - Procedures of Land dispute There was no land dispute at PT. Hari Sawit Jaya. significant land conflict? (i.e. preventing resolution mechanisms AA-GL- the company from operating normally) Organizations have established procedures of Land dispute resolution 5003.1-RI, dated 22 August mechanisms AA-GL-5003.1-RI, dated 22 August 2011. Describes the mechanism b. If the company has cases of conflict, are 2011 records of the following available? of compensation before land clearing and land conflict resolution mechanisms between companies and land owners. The land cleared for oil palm plantations - Status of conflict - Interviews with auditee should ensure not be a problem and there is no dispute over land ownership. - SOP/ mechanism for conflict - Site observation 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 YES - Procedures of Land dispute Based on public consultation andThere was no land dispute at PT. Hari Sawit of disputed area? resolution mechanisms AA-GL- Jaya. b. Is a dispute map available? 5003.1-RI, dated 22 August Organizations have established procedures of Land dispute resolution 2011 c. Is there documented evidence of mechanisms AA-GL-5003.1-RI, dated 22 August 2011 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? - Interviews with auditee Described the mechanism of compensation before land clearing and land conflict resolution mechanisms between companies and land owners. The land cleared - Site observation Note to auditor: Actual ground verification for oil palm plantations should ensured not be a problem and there is no dispute over land ownership. 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  Yes, policy has been YES - The company's policy not to be apply military means and or using intimidation circumvent instigated violence to maintain established related to violent, in procedures of Land dispute resolution mechanisms AA-GL-5003.1-RI, peace and order in current and planned point 1.(in policy dated 22 August 2011 operations?  There was no military action or b. Is there any evidence of: policy - Described the steps of land acquisition from the socialization, permits of - The use of confrontation and location, an inventory of public land ownership, measuring parcels cultivated intimidation by the company to society, process of negotiating the price of compensation, compensation and maintain peace and order? payment settlement, consultation when needed - Use of para-militaries and mercenaries in the plantation?

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 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

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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?  Land dispute resolution Yes, procedures concerning of FPIC was available in (Land dispute resolution YES mechanisms Land dispute resolution mechanisms AA-GL-5003.1-RI, dated 22 b. Is there evidence that the identification of mechanisms AA-GL-5003.1-RI, legal, customary or user rights has been dated 22 August 2011 August 2011) done through FPIC process?  Identification of legal & Maps have been developed for each estate indicating Legal demarcation and customary right was done c. Is there evidence that the FPIC process planted areas. Planted areas of the Estate are wholly on Government land, leased through FPIC under HGU. has been implemented in accordance to  Map provided information of the company SOP? Where is this evidence legal customary or user right? Procedure was presented to the head of the village around the plantation. recorded? (E.g.: Documents, Minutes of  Yes there was map for meeting, Records, Agreements, Maps etc.) showing legal customary u& d. Is there a map of the extent of legal, user rights. customary or user rights? Is this map of  Map was made based on SIA appropriate scale (1: 10,000)? & HCV assessment on 2011 & 2013 e. Was the map produced through participatory mapping with reference to  Yes, map have title, legend, SIA and HCV assessment? source & scale 1:10000  Map was accepted by the f. Does the map have a title, legend, source, relevant communities scale and projections/georeference? g. Are the maps accepted by the relevant communities?

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;

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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 YES - Procedures of Land dispute Procedure was presented to the head of the village around the plantation (Land affected parties available? resolution mechanisms Land dispute resolution mechanisms Land dispute resolution mechanisms AA-GL- b. Is there evidence that the agreement is dispute resolution mechanisms 5003.1-RI, dated 22 August 2011). prepared through proper FPIC process? AA-GL-5003.1-RI, dated 22 There was no land disputed at the time of audit. c. Does the agreement contain the following: August 2011 - An action plan developed through - Interviews with auditee consultation with affected parties, is inclusive and evidence that members - Site observation 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 and iterative negotiations - Clause which states that the negotiated agreement is legally binding

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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 Procedure was presented to the head of the village around the plantation (Land YES - Procedures of Land dispute (maps, agreement, records, impact dispute resolution mechanisms Land dispute resolution mechanisms AA-GL- resolution mechanisms Land assessment, benefit sharing and legal 5003.1-RI, dated 22 August 2011 dispute resolution mechanisms arrangements) is available in appropriate AA-GL-5003.1-RI, dated 22 forms and languages, understood and August 2011 accessible to affected parties? - Interviews with auditee Note to auditor: this should be cross checked to a sample of the affected parties - Site observation

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. a. Who is the representative of the Evidence shows that people have determined their representatives through the YES - Procedures of Land dispute community in the negotiation process? local village chief. Based on the proof of delivery of compensation is also visible resolution mechanisms Land signature of the head of the village which is also accompanied by current photo b. Is the representative accepted by the dispute resolution mechanisms handover compensation community? AA-GL-5003.1-RI, dated 22 c. Is the record of appointment to represent August 2011 the community available and shared with - Interviews with auditee other parties? - Site observation

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. Hari Sawit Jaya – Negri Management plan established for period 2015 - 2022 has been used to achieve business or management plan with a Lama II Projection year 2015 economic viability and long-term financial. The plan was approved by the top minimum planning period of 3 years? – 2022 management. The Management Plan has include: b. Does it include the following:  PT. Hari Sawit Jaya – Negri - Land area statement (planting years, non-planted areas, i.e. HCV, - Land area statement (planting Lama Selatan, Negri Lama conservation areas, fragile soils, enclaves) with updated location maps. years, non-planted areas, i.e. HCV, Central, Negri Lama Utara Maps should have title, legend, source, scale and conservation areas, fragile soils, and Aek Kuo Estate Operation projections/georeferenced enclaves) with updated location Projection year 2015 - 2022 - Plan for management of scheme smallholders (where appropriate) maps. Maps should have title, - Quality of planting materials legend, source, scale and - Crop projection = Fresh Fruit Bunches (FFB) yield trends projections/georeferenced - Mill extraction rates = Oil Extraction Rate (OER) trends - 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) - Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends - Quality of planting materials - Forecast prices - Crop projection = Fresh Fruit - Financial indicators – profitability forecast (income vs cost) Bunches (FFB) yield trends - Projected expansion (area, mill capacity, infrastructure, social - Mill extraction rates = Oil Extraction amenities) Rate (OER) trends - General strategy and allocation for environmental and social - Cost of Production = cost per tonne management (refer to P5, P6 and P8) of Crude Palm Oil (CPO) trends The parameters listed in the management plan that includes revenue and - Forecast prices earnings, projected crop production (FFB yield trend), the extraction rate of CPO - Financial indicators – profitability and PK (Production forecast up to 2020), harvesting, processing FFB and CPO. forecast (income vs cost) The achievement of the management plan is reviewed every month in the Estate - Projected expansion (area, mill Unit Report (LUK) and Mill Unit Report (LUP) according to the current month. capacity, infrastructure, social Reviewing of LUK and LUP was conducted monthly. Planting material are 70% amenities) Topaz, 10% Socfin, 10% Dami Mas and 10% Lonsum. - General strategy and allocation for environmental and social The organisation has a system to improve practices in line with new information management (refer to P5, P6 and and techniques through continual improvement. All staffs can propose continual P8) improvement. Continual improvement was communicated to all unit c. Is this management document subjected managements. 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. Hari Projected annual replanting programme was described in the “Replanting YES projected for a minimum of five years? Sawit Jaya Program of PT. Hari Sawit Jaya”. Detail Annual Replanting Programme for 2015 – b. Has it been documented?  LUK (Estate Unit Report 2023 has been documented. The progress of implementation (realisation) has been documented in monthly LUK (Estate Unit Report). c. Is the progress of implementation documented? Program (Ha) Realisation (Ha) d. How does the programme take into Year KN KA consideration fragile soils such as peat? KNS KNC Total KNS KNC KNU KAK Total U K Is there a longer projection period (see 2010 1116 822 1938 1116 822 1938 C4.3)? 2011 1465 625 552 2642 1465 625 552 2642 e. Is there evidence of a yearly review of 2012 743 1689 214 2646 743 1689 214 2646 the replanting programme? 2013 1057 452 50 1559 1057 452 50 1559 2014 838 547 1385 838 547 1385 2015 99 691 431 1221 99 691 431 1221

Area (Ha) Year KNS KNC KNU KAK Total 2016 0 0 669 574 1243 2017 0 0 480 0 480 2018 0 0 0 0 0 2019 0 0 0 0 0 2020 0 0 0 0 0

Fragile soils such as peat have taken into consideration on the replanting programme of PT. Hari Sawit Jaya. Longer projection period is applicated. The replanting program is reviewed annually in management review meeting.

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 (APM) a. Have the SOPs for mills and plantation  Mill Policy Manual (MPM)  AA-APM-OP-1100.01-R1 Nursery been documented?  Records of APM and  AA-APM-OP-1100.02-R1 Land Preparation b. Does the SOP cover key processes, MPM dissemination dated  AA-APM-OP-1100.03-R1 Creation and Maintenance of Road harvesting, transportation, manuring, 02-September-2015  AA-APM-OP-1100.04-R1 Creation and Maintenance Trenches IPM, GAP, Supply Chain requirements for  Laporan Unit Kebun  AA-APM-OP-1100.05-R1 Soil and Water Conservation the mill, etc.? (Estate Operation Report)  AA-APM-OP-1100.06-R1 Planting Leguminous Cover Crop c. Is a copy of the SOP available on site and December 2015  AA-APM-OP-1100.07-R1 Oil Palm Planting is it documented in an appropriate  Mill operation summary  AA-APM-OP-1100.09-R1 Manuring language? (MOS) period December  SOPs for IPM: 2015 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. The SOPs were appropriate and adequately cover all estate processes and activities and were available at the point of use. Based on field observation at estate and mill it was demonstrated that SOPs are implemented and understood by workers.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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?  Master list of mill documents The master list of mill documents (include procedures and work instruction) were YES b. How does the company keep track of (include procedures and work compiled within 1 bundled documents named “APM” (Agriculture Policy Manual) for Estate and “MPM” (Mill Policy Manual) for Mill. The updated procedures were revisions? instruction) “MPM” (Mill Policy Manual). received from head office sustainable department sent to all mill related functions. c. Is there mechanism for:  R&D Bahilang CPO The APM and MPM Documents were available on Bahasa Indonesia language - Translation of SOP into work interlaboratory crosscheck on and disseminated by head office sustainable department, records of instructions in appropriate 7th March 2016 dissemination was evident dated 02-September-2015. languages?  VE (Visit Engineering) Report. - Records of training for all levels? Np. PNS-VE-FULL-01-15 dated The internal control was conducted by R&D Bahilang regarding the CPO - Internal control (e.g. audit and 18th April 2015 interlaboratory crosscheck using statistical method to compare the quality of CPO review, field inspection) procedure for each mill, last visit conducted on 7th March 2016; records was sighted that the in place to monitor consistent result shown there is no big issues on PNS (Negri Lama I Mill) and PND (Negri implementation of SOPs? Lama II Mill). The company has keep track of revisions. - Trained and competent personnel assigned to carry out internal control The documented mechanism has include: activities? - Translation of SOP into work instructions in appropriate languages? - Implementation audits to be carried - Records of training for all levels? out regularly covering - Internal control (e.g. audit and review, field inspection) procedure in implementation of all the SOPs? place to monitor consistent implementation of SOPs? - Procedure to address non- - Trained and competent personnel assigned to carry out internal control compliance and corrective action for activities? continuous improvement? - Implementation audits to be carried 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  R&D Bahilang CPO In Estates, Head of Assistant and Afdeling Staf inspected and monitored the YES following? interlaboratory crosscheck on activities at the site on a regular basis. The result of internal control to - Measurements or results of internal 7th March 2016 monitoring activities was available and reviewed, such as monitoring of control and monitoring activities  VE (Visit Engineering) Report. FFB Quality and Harvest Area. (refer 4.1.2) Np. PNS-VE-FULL-01-15 dated

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) - Records of corrective actions and 18th April 2015 R&D Pest and Disease Visit was conducted by R&D officer, dated on 16- improvement undertaken  R&D Pest and Disease Visit 17 June 2015. Monitoring for action plan progress form Visit Agronomy Report Report, dated on 23-25 June 2015, its Action status of 100% closed for  Visit Agronomy report under prunning, midrib on circle, and attacking of Tirathaba low. Records of  Visit Agronomy Quetionary corrective action and improvement from internal audit were available in the report  FFB Quality Monitoring Form of Visit Agronomy Report (Appendix 2 Action Plan includes issues and action).

For Mill, internal control was conducted by R&D Bahilang regarding the CPO interlaboratory crosscheck using statistical method to compare the quality of CPO for each mill, last visit conducted on 7th March 2016; records was sighted that the result shown there is no big issues on PNS (Negri Lama I Mill) and PND (Negri Lama II Mill).

Moreover the organisation conducted monitoring and checking for all applicable procedures, mill operation performance activities through periodic visit of corporate engineering called VE (Visit Engineering), The Report sighted; No. Report. PNS-VE-FULL-01-15 dated 18th April 2015 was sighted includes Mill key performance, assessment overall mill operations, process efficiency, plant maintenance, management supervision, manpower statement, production cost, EHS management system and sustainability. The result of above audit was on scoring system summarized 76% (above the target 40%) with score 313 out of 414. The corrective action plans was established and followed up by mill, the records was also evident. 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  Documented procedure (AA- The documented procedure (AA-MPM-OP-14000.02_R1) was established to YES sourcing? MPM-OP-14000.02_R1) defined the mechanism of FFB receiving station that applicable to all FFB include incoming from third party. The category of FFB, such as: unripe, ripe, over ripe, b. Is there a list of approved third-party FFB mechanism of FFB receiving suppliers?  The list of approved third party empty bunch, abnormal and long stem. FFB of PNS mill suppliers The list of approved third party FFB of PNS mill suppliers was evident for period c. Is there proof of observed implementation  Daily records of received FFB March-2016, includes: Sumiyatik, KPKS Wahyu Agung, Esteria, SPS 99, UD.ULA of SOP?  Sortation log book Tersia, Berkah Tani Sawit, Si Tolong Nadangol, WIra Tunas, PT, SSTL, Naburju, d. Is there daily and summary records of Sawit Tani Negeri, Imbalo and HMS. volume and origins of third-party FFB The daily records of received FFB were evident for period of March-2016, include received? the sortation log book that defined the category of FFB.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) e. Have these records been verified against the available document?

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  Agriculture Policy Manual No. Procedure for Good Agricultural Practices in managing soil fertility was YES Practices in managing soil fertility? AA-APM-OP-1100.09-R3 documented in Manuring Procedure No. AA-APM-OP-1100.09-R3, that the first b. Is there evidence that the SOPs have  Work Instruction of Leaf principle of fertilizer application was each the palm oil stand shall receive a type of fertilizer in accordance with recommendation dosage form R&D. been implemented and monitored? Sampling in Field  Field observation The SOP was available in Work Instruction of Leaf Sampling in Field, Rev 00, January 2016. It has been implemented and monitored in the fertilizer recommendation based on annual leaf sampling unit (LSU). LSU was analysed by

Nusa Pusaka Kencana Laboratorium for Fertilizer Recommendation 2015, PT. Hari Sawit Jaya.

Based on field observation shows that plants are in good condition. The application was according to documented SOP and WI. The 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 application report 2015 and application report. The fertiliser program was linked to the agronomic report in b. Is there records to proof that the fertiliser LUK (Estate Monthly Report). program is linked to the agronomic 2016  LUK (Estate Unit Report)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) report? Record of manuring realisation in 2015 shows that the realisations are in c. Is there records of fertilizer usage per accordance with the plan/recommendation. The realisation are as follows: tonne of FFB production (>in Summary Planning / Table, specific types of fertilizers)? Type Realization Achievement Recommendation ZA 1,119,709 1,119,795 100% RP 256,595 256,616 100% Bunch ash 60,151 60,151 100% Kieserite 1,730 1,881 109% Dolomite 113,050 113,050 100% HGFB 93,824 93,824 100% Cu-EDTA 18,748 18,749 100% Zn-EDTA 18,748 18,749 100% Fe-EDTA 128 82 64% MOP 1,574,925 1,578,019 100%

Fertilizer usage per tonne of FFB production was listed at KNC in 2015 other between :

Realization Type /tonne FFB ZA 21,04 RP 4,82 Bunch ash 1,13 Kieserite 0,04 Dolomite 2,12 HGFB 1,76 Cu-EDTA 0,35 Zn-EDTA 0,35 Fe-EDTA 0,00 MOP 29,59

4.2.3 There shall be evidence of periodic tissue and soil sampling to monitor changes in nutrient status.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there SOPs for tissue and soil  Work Instruction of Soil Profile The SOP for soil sampling unit was available in the Work Instruction of Soil Profile YES sampling? Sampling Taking Sampling Taking, R&D AA IK about Soil Profile, Rev : 00, 14 January 2016. b. Is there evidence of implementation of the  Soil sampling report Implementation of soil sampling analysis result was recorded in soil sampling SOPs, including availability of records? report. It was demonstrated of reporting by R&D dated on January 22, 2011 at c. Is there records of tissue and soil Block of E92i/1992, D92z/1992, and D92q/1992, Afdeling of 2, KNC and analysis? explained of profile soil analysis data. And for KNS was conducted on 16

d. Is the results of the study incorporated December 2010, Div of 3, at block of I-97-f/1997, J-39-q/1993, H-91-k/1991, G-91- into the fertilizer program? r/1991, G-91-w/1991, G-91-z.

Records of soil analysis was available and the result of study incorporated into the fertilizer program each 6 (six) years. Soil analysis was used within agronomy and R&D program (fertilizer program).

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  Agriculture Policy Manual No. There was a nutrient recycling strategy at KNC include bunch / boiler ash from YES place? AA-APM-OP-1100.09-R3 burning EFB in Boiler and SOP was available in the Agriculture Policy Manual – Manuring, No. AA-APM-OP-1100.09-R3 that bunch ash was only recommended b. Does the strategy include the following?  Recapitulation of fertilizer for of dosage to mature palm oil by R&D. The target time-bound was explained in the  Clear objectives and time-bound mature Recapitulation of fertilizer for mature. Boiler ash management was carried out the targets  Daily Mill Report application for ground at estate area as organic fertilizer. Record of monitoring  Inventory of was available in recapitulation evaluation of fertilizer. - EFB - POME Inventory from palm oil process in 2015, as follows : - Fibre - EFB of 3.119.220 kg (as organic fertilizer) - Boiler ash - Fiber of 1.871.532 kg (as boiler fuel) - Kernel shell - Boiler ash 46.788 kg (as organic fertilizer) - Palm residues from replanting - Kernel of 1.088.181 kg (as boiler fuel) and 177.510 kg (sold)  Biomass recycling program  Implementation and monitoring Monitoring records was available in Daily Mill Report 2015. records

Note to auditor: Ground verification required

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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  Map of Soil and Land Suitability There was soil map showing presence in Map of Soil and Land Suitability Area at YES fragile soils and problem soils (refer to KNS, PT. HSJ. Area total of 4.851 ha, scale of 1:30.000. Estimate System: 4.3.6)? Universal Transverse Mercator, Sistem Grid : UTM, Datum : WGS 84, Central Meridian : 990 BT. The following of soil classification. b. Are maps georeferenced and of

appropriate scale (1:50,000)? Land Area SPT Soil Classification Suitability (ha) 1 Typic Endoaquepts S3-r 404 2 Histic Humaquepts S3-r 74 3 Typic Haplosaprists, peat < 1 m S3-r 173

4 Typic Haplosaprists, peat 1 - 3 S3-r 818 m 5 Typic Haplosaprists, peat > 3 m N1 3.382 Total 4.851

Planting on peat (including thickness > 3 m) conducted in year 2006, 2010, and 2011, at that time, there was no prohibition of planting on peat yet. Moratorium on planting on peat (Presidential Decree No. 10/2011) newly published on May 20th, 2011.

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  Agriculture Policy Manual No. SOP of planting on slopes was available in AA-APM-OP-1100.05-R2 and SOP to YES for plantings on slopes? AA-APM-OP-1100.05-R2 minimise soil erosion based on local soil and climate conditions was available in AA-APM-OP-1100.05-R2. b. Does the management strategy include

the following? The organisation has management strategy for planting on slopes above certain - Identification of steep areas not limit such as terracing, as referred to company’s SOP and work instructions. The suitable for planting Work instruction described preparation for planting including planting on slopes area - Policy of planting on slopes has been developed by organisation: - SOPs to minimise soil erosion - Flat undulating 0o – 5o based on local soil and climate - Rolling 6o - 12o conditions, e.g. ground cover - Hilly 13o - 20o management, biomass recycling, - Steep >20o terracing, and natural regeneration

or restoration instead of replanting Practices to control and minimize erosion have been applied by : c. Is there proof of records of field - Terracing inspection on SOP implementation? - Making the catchment where runoff water, called: “Tapak Kuda”. - Making the catchment where runoff water, called “Rorak”. - Planting legume cover crop.

There was proof of records of field inspection on SOP implementation in Subsidence Monitoring.

4.3.3 A road maintenance programme shall be in place.

a. Is there a road maintenance programme  Road maintenance program in PT. HSJ has a road maintenance program in place with supporting budget and YES in place with supporting budget and 2015 resources in Planning and Realization for Manual and Mechanical Maintenance, resources? as follows : b. Is there road maintenance records?

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Manual Mechanic (m) (m) Planning 408,875 57,131 Realization 41,429 41,429

Realization was not full form planning because of road condition is still good condition by now. During observation, there was no damage of road in PT. HSJ area.

(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  Agriculture Policy Manual No. PT. HSJ has procedure to provide guidance on subsidence management in Water YES subsidence management? AA-SOP-OP-1100.17-R1 Management No. AA-SOP-OP-1100.17-R1 about Water Management. Subsidence pipe position based on peat depth and topography have been b. Does the SOP make reference to the  Recapitulation of Peat RSPO BMPs on peat? Subsidence Monitoring determined by R&D Department was between of stand in row free from weed and  Water Level Monitoring Data midrib pile to reach the substratum (mineral soil). Measuring was half-yearly c. How is subsidence being monitored? conducted and Water height monitoring was weekly with optimum size of 50-70 d. Are there records of subsidence cm. Control of drainage or water management, especially in the area of peat, monitoring? used tools such as Stick-scale monitoring, and sluices (water gate) or drain block so as to maintain the ground water level. Its SOP reference to the RSPO PC, e. How is subsidence being minimised? HCV, ISPO, and HCS.

f. Is there a water management programme and evidence of implementation? The subsidence was half-yearly monitored in Recapitulation of Peat Subsidence For existing plantings on peat, the water Monitoring. The last monitoring, for example on January 2016, Block E10h. Result table should be maintained at an average demonstrated was similar with previous monitoring and its result under standars. of 50cm (between 40 - 60cm) below This follow was result of subsidence monitoring at KNS during the past 5 years. ground surface measured with groundwater piezometer readings, or an Period Result (cm) average of 60cm (between 50 - 70cm) 2011 0 below ground surface as measured in 2012 1.88 water collection drains, through a network

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) of appropriate water control structures 2013 2.00 e.g. weirs, sandbags, etc. in fields, and 2014 1.55 watergates at the discharge points of 2015 Feb 0.67 main drains (Criteria 4.4 and 7.4). 2015 Aug 2.92 g. Is there a ground cover management 2016 Feb 3.58 programme and is there evidence of implementation? PT. HSJ was available water management programme in Water Level Monitoring Data. It was reviewed at Block of E12w, Afdeling of 3, KNC, dated on December 2015 with result of 70 cm.

Ground cover management was planting of legume cover crop.

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  Agriculture Policy Manual SOP for Drainability assessment was available in SOP of Replanting Agriculture NO before replanting on peat? Policy Manual No. AA-APM-OP-1100.20-R4. That before replanting, estate (Minor NCR management and operation conducted the stages of land clearing that apply of 2016-01 is open) b. Was a flood risk map provided as a result of the drainability assessment? method zero burning and drainability assessment. This assessment to identify and keep off the planting in non-productive area and has a high potential for flooding. c. If the drainability assessment shows that Other than that, this assessment was used to measure that peat area can be an area is unsuitable for replanting, are distributed using gravity. there alternative plans in place for rehabilitation and alternative use in Minor Non Conformity: accordance to the RSPO BMPs? Drainability assessment before replanting for peat land has not been conducted

Correction: Conduct drainability assessment prior to replanting on peat land.

Root Cause:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) The lack of river water level data as a basis of Drainability Assessment

Corrective Action: Monitoring of water level of Penampakan River and Bilah River conducted weekly starting at April 2016.

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).

 Agriculture Policy Manual No. Management strategy for soil problem was available in Environment Impact YES AA-APM-OP-1100.05-R1 Assessment (EIA), Study of palm oil plantation and process at PT. Hari Sawit a. Is there a management strategy in place  Subsidence and Water Jaya, Labuan Batu Regency, North Sumatera Province. Peat area management for other fragile and problem soils? Management monitoring experienced many obstacles, such as striking deficiency of macro and micro b. Does the management strategy include nutrients, soil subsidence, lower support capacity, so that was feared of plant will SOPs for the management of other fragile be uprooted. Lack of macro and micro nutrients in peat land caused very great and problem soils? influence for growth of plant.

c. Is inspection and implementation records The management strategy was available in Agriculture Policy Manual No. AA- available? APM-OP-1100.05-R1 about Soil and Water Conservation. Inspection and implementation records were available in Inspection for subsidence and Water Management monitoring.

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.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a water management plan in The main source of water for Mill activity is surface water – Bilah River. Permit of YES  Permit of surface water usage place for mill and plantation with identified water abstraction from surface water has been obtained on 22nd of July 2013 and from Keputusan Kepala Badan actions? valid through 3 years. Flow meters were installed to monitor water usage. The Pelayanan Perizinan Terpadu volume of water usage is monitored monthly both for process and domestic b. Does the plan include the following? Propinsi Sumatera Utara usage. Water consumption data July – December 2015 was sighted. The  Identification of water sources Nomor: organisation has program to reduce water consumption, e.g. reduce floor cleaning  Efficient use of water 610/51/BPPTSU/2/12.1/VII/201 using water, reuse steriliser condensate water in clarification station, recycle water 3 on 22 July 2013  Renewability of water source from oil cooler turbine to water basin.  LUP (Laporan Unit Pabrik)  Impacts on catchment area and Surface water quality is monitored every six months. Surface water quality was local stakeholders  Water analysis measurement analysed both for upstream and downstream. Monitoring result of surface water for period 2015 by UPT.  Access of clean drinking water all quality was reviewed for 1st and 2nd semester 2015 against PP #82/2001 class II. year round for stakeholders Laboratorium Kesehatan Quality of river water was in line with PP #82/2001 class II.  Avoidance of surface and ground Daerah Water management plan include water source and distribution identification, water contamination  Records of water consumption period 2014 and 2015 at mill volume of water utilization, parameter/standards of water utilization, identify the c. Have the identified actions in the plan and estate. impacts include water effluents/wastes and also the method to reduce and control. been implemented?  Water management The monitoring of water volume utilization was conducted, records was also programme sighted that YTD December-2015 achieved 214,942 m3 in volume that above the year period 2014 are 198,679 m3 due to exceed in FFB been processed. The organisation has established a program to reduce water consumption, such as: repair the boiler steam outlet pipelines toward turbines by installed joint expansion to replace the elbow in order to reduce losses; to recycle the vacuum drier water discharge into kernel processes operation; steam optimization by setting the boiler main valve; recycle the sterilizer condensates for solution oil phase decanter and water dilution press in order to minimize water usage. (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.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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? wetland in PT. Hari Sawit Jaya, area and documented in riparian map with scale 1:80,000. There were identified b. Are the water courses and wetlands documented in HCV water courses and wetland in PT. Hari Sawit Jaya. Protection of waterways and protected? Identification report wetlands have been made by the company with the following way : c. Are the riparian and buffer zones • AA-APM-OP-1100.05-R1-Soil - Protection of riparian areas (20 m left and right side) with no chemical crops maintained and restored in existing and Water Conservation care activities both fertilizer and herbicide spraying plantation and replanting areas? • Riparian restoration program - Conduct rehabilitation of riparian d. Is there SOP for riparian and buffer zone protection? • Field observation Policy of riparian buffer zone management at or before replanting was provided in e. Has the SOP been implemented? 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, 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 :

Audit Report

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

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). a. Is the mill effluent treatment process in YES  Permit of waste water POME is monitored monthly as required by permit of waste water discharge place? th discharge from Bupati Labuhan (IPLC) on 19 of September 2013. The permit was valid through 5 years. The b. Is there a process in place for checking Batu Nomor: result of POME monitoring was reviewed including measurement of BOD for and monitoring water discharge quality, 503.660/277/BLH/WAS/2013 period July 2015 – February 2016. The Ministry of Environment Decree Permen particularly BOD? on 19 September 2013 05/2014 required that BOD of POME discharged is less than 100 mg/litre. The result of POME quality during this period was under 100 mg/litre. c. Is the water discharge quality in  Analysis Report of Waste

compliance with national regulations? Water Quality for PNS, KNS and KNC. d. Does the mill have a license for treatment, discharge or land application of mill effluent, and is the mill in compliant with the requirements of the license?

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

a. Are there procedures to measure mill Mill Operation Summary 2014 and Mill water use per tonne of FFB is monitored monthly. Result of monitoring of mill YES water usage, and are the procedures 2015 water use per tonne of FFB was sighted for 2014 and period January to implemented? December 2015. It was noted that mill water use per tonne of FFB period January

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) b. Are there records of mill water use per to December 2015 (1.11 m3/ton FFB) was below compared with year 2014 (1.39 tonne of Fresh Fruit Bunches (FFB)? m3/ton FFB). All of them were below the budget.

The organisation has a program to reduce water consumption, such as: - repair the boiler steam outlet pipelines toward turbines by installed joint expansion to replace the elbow in order to reduce losses; - to recycle the vacuum drier water discharge into kernel processes operation; - steam optimization by setting the boiler main valve; - Recycle the sterilizer condensates for solution oil phase decanter and water dilution press in order to minimize water usage.

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 Plan Document of IPM Plan was available at PT. HSJ. Stages of IPM program were : YES  Tyto alba monitoring - Visual observation (visual plant e.g. leaves or broken stems and fruit rot) b. Does the IPM plan include the following?  Planning and realization for - Conducting a census (to determine the distribution and level of attack)  Identification of potential pests and Beneficial plant - Control (manual, biological or chemical). thresholds  Record of rate census - Census of evaluation (to see the effect of control).  What are the techniques used  Record of caterpillars census IPM program covered census of caterpillars, termites and rodents and upkeep of (cultural, biological, mechanical and beneficial plant. physical methods)?  What are the native species used as Biological control used Tyto alba and Beneficial plant (Cassia tora). Other than that, part of the biological control protect the predator species, such as Kobra hitam (Naja sumatrana), Elang tikus method? (Elanus caeruleus), ect, so that can reduce the use of chemical. The last  Does it help in reducing the use of monitoring (census) of Tyto alba at Afdeling of 2, KNC, dated on January 2016 chemicals over a period of time? was recorded form 12 cages, found 3 adults. For Benefial plant at KNC was  Prophylactic use of pesticides planted 197 stand of Cassia tora, 100 stands of Turnera subulata, 100 stands of  Minimization of pesticide use Antigonon leptosus and at KNS 2357 stands of Cassia tora, 1594 stands of

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Review on the plans to suit the Turnera subulata, 771 stands of Antigonon leptosus. present condition such as replanting? Rate census was conducted every 2 months coincide with the census palm leaf- eating caterpillars. The last census on February 2016 at Block of F10b, Afdeling of c. Is there an SOP to implement the plan 4, KNC, area of 34 ha and its result that attacking level <5%. and monitor its effectiveness?

d. Is there records of pest occurrence and control?

4.5.2 Training of those involved in IPM implementation shall be demonstrated.  Training record Records of training provided to those involved in the implementation of IPM were YES a. Is there records of training provided to available at PT. HSJ. The last training was conducted on 6 November 2015 by R&D for Agronomy Staff and Foreman in Clinic IPM and Pest and Disease those involved in the implementation of IPM? Training. List of 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)  Company Policy PT. HSJ has a policy on safe use of chemicals in Company Policy. The company YES  Agriculture Policy Manual No. implement and maintain integrated health and safety in accordance with national AA-APM-OP-1100.11-R1 and international management standard applicable.

PT. HSJ have SOPs for using of selective products that are specific to target pests, weeds, or diseases and which have minimal effect on non-target species available in Agriculture Policy Manual No. AA-APM-OP-1100.11-R1 about Management Pesticide. This procedure was explained that using pesticide based a. Does the organization have a policy on on target, such as Fungicide to control fungus of pathogen (example: Benomil, safe use of chemicals? Heksakonazol, Mankozeb, and Triadimefon), Herbicide to control weed (example : b. Does the organization have SOPs for use Fluroksipir, Glifosat, Paraquat, Sulfosat), and Insectiside to control insect pest of selective products that are specific to (example : deltametrin, sipemetrin, sihalotrin). target pests, weeds, or diseases and which have minimal effect on non-target It was available a list of all pesticide with target species and justification in Using species? of Pesticide and Its Target in 2015. For example the uses of Tricoderma 10.194 i. Measures to avoid the litre to keep the resistance of Ganoderma attack. Daily monitoring of pesticide development of resistance (such uses was available in foreman book. as pesticide rotation) should be applied. Less harmful alternatives and IPM was applied by planting of beneficial plants, ii. Is there a list of all pesticide with building house of owl, detection and census of caterpillar. target species and justification of use? Pesticides used by the supply bases of Negri Lama II Mill has license and iii. The justification should consider registered in the Agriculture Department as mentioned in Pesticide Commission less harmful alternatives and IPM. Book “Buku Komisi Pestisida”: 1. Eagle (Isopropilamina glyphosate 480 g/L), license RI.01030119941170, c. Is there evidence of implementation of valid through January 9th 2017. SOP on the ground? 2. Gramoxone (paraquat 200 g/l), License RI.010301197436, valid through

March 18th 2019. 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

Audit Report

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

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  Document of Pesticide PT. HSJ has a pesticide application program in Document of Pesticide Chemical YES application program? Chemical Budget in 2015 Budget in 2015. b. Is records of pesticides use available?  Records of pesticide using in Pesticide Monitoring Records of pesticide using in Pesticide Monitoring in 2015 KNC, as follows : c. Do the records detail the active ingredients used and their LD50, area No Description Quanity treated, amount of active ingredients 1 Glifosat (ltr) 7.246 applied per ha and number of 2 Fluroksipir (ltr) 1.199 applications? 3 Metil Metsulfuron (kg) 124 4 Paraquat (ltr) 6.275 5 Triclopir (ltr) 253

6 2,4 D-Amina 30

Records of pesticide using in Pesticide Toxicity Monitoring in 2015 are as follows :

Active Active Chemical Application Type Ingredien Ingredient Amount Per ha t Amount Gramoxone Ion Paraquat 6,754.2 1,350.8 0.4 200 gr/l Metsulindo 20 Metil 174,939.6 34,987.9 11.1

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) WP Metsulforun 20% Smart 480 AS Isoprofil 4,709 2,260.4 0.7 Amina Glifosat 480 g/l Starane 200 Floroksipir 1,120 224 0.1 EC 200 g/l Regent 50 SC Fipronil 50 g/l 389 19.5 0.0

(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 Integrated Pest Management (IPM) program included: YES a. Does the company have an IPM plan?  SOP AA-APM-OP-1100.10-R1  Visual observation (e.g. broken leafs or stems and fruit rotten) b. Has that plan been implemented? Pest and Diseases Control  Report of pest and diseases,  Conducting census to determine the distribution and level of attack. c. Is the effectiveness of the IPM plan December 2015 and January  Control (manual, biological or chemical), e.g hand picking, light trap, planting monitored? 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  Census of evaluation (to see the effect of control) pesticides have been minimised in  LUK (Estate Report) accordance with Integrated Pest  Field observation Management (IPM) plan? IPM plan was well implemented and documented, e.g.:

e. Has there been prophylactic use of  Census of caterpillar is conducted monthly. Based on result of caterpillar pesticides? If so, justification must be census in 2015, there was no caterpillar attack therefore there was no provided in accordance to National Best pesticide use. Practices.  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

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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 Negri Lama Central and Negri Lama Selatan 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 KNS, KNC, KNU and KAK. 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  Memorandum No. PT. HSJ already has a list of pesticides that are included in WHO Class 1A YES listing of WHO class 1A, class 1B, and 001/HP/INT/IX/2009 (extremely hazardous) 28 types, class 1B (highly hazardous) 56 types and Stockholm or Rotterdam Conventions  List of Agriculture Minister Stockholm Rotterdam convention pesticide. pesticide? Regulation No. 1/2007 b. Is there a policy, procedure or  Memorandum form Estate PT. HSJ has also established procedure on safe use of pesticides. Procedure described on safe use of pesticides and selection including minimise and management plan committing to minimise Manager No. eliminate use of these pesticides and paraquat. and eliminate use of these pesticides and 059/MR/KNC/MAR/16

paraquat? PT. HSJ was still using type of pesticide that listed by WHO class 1B (highly c. Are there records of minimisation of hazardous) which is Paraquat diclorida. Implementing of Paraquat diclorida was pesticides and paraquat use? managed in Memorandum No. 001/HP/INT/IX/2009, dated no 1 September 2009 d. Where there is the use of the above regarding reduction the use of herbicide containing Paraquat diclorida. pesticides or paraquat, has justification in line with national best practice guidelines Moreover, KNS have Memorandum form Estate Manager No. been documented? 059/MR/KNC/MAR/16, dated on 14 March 2016 about reducing Paraquat diclorida form 6,320 litre in 2015 become 6,300 litre in 2016.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) e. Does physical verification of inventory in the chemical store agree back to the The following are monitoring for Paraquat diclorida at PT. HSJ: inventory records? Year Total (litre) 2012 9.227 2013 10.698 2014 4.878 2015 6.754 2016 (Feb) 857

It was increasing in 2015 from 2014 period because of replanting process and immature plant upkeep.

(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  Agriculture Policy Manual AA- There was SOP for chemical / pesticide handling and training workers list at PT. YES handling? APM-OP-1100.11-R1 HSJ. It was described chemicals identification, MSDS availability, chemical b. Is there a training plan and training  Training Certificate handling (label and hazard symbol, storage based on hazard nature, use of PPE), and expire chemical handling. It was available in Procedure No. AA-APM-OP- records for workers who apply or handle  Risk assessment analysis 1100.11-R1 pesticides?

c. Is there evidence that training has been The workers have get the limited pesticide using training from Committee of conducted in an appropriate language Fertilizer and Pesticide Supervision, Province of North Sumatera, on 7 October understood by the workers? 2014 and valid 5 years. Training certificates were available. Total of participant d. Are pesticides handled, used or applied was 17 persons from KNC and 11 persons from KNS. Training was conducted in only by persons who have completed the Bahasa Indonesia and covered handling of agrochemical concentrate and necessary training? spraying method including pesticide hazard.

e. Are the workers involved in chemical Based on interview with sprayer workers, workers knew handling of the hazards handling or application able to and risks related to chemical used. During interview they used the appropriate demonstrate understanding of the safety and application equipment. Pesticide used was accordance with the hazards and risks related to chemicals product label and MSDS that available in chemical store. Based on risk used when interviewed? assessment analysis for sprayer activity at Document of KNS-HSJ 2015/2016, f. Are pesticides always applied in PPE for sprayer includes glasses, mask, apron, boot shoes, and long-sleeved

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) accordance with the product label? shirt and can be easily replaced if damaged with report to foreman or Afdeling staff. The PPEs monitoring was daily conducted by foreman in the each morning. g. Are MSDS for pesticides used readily available for easy reference? h. Is appropriate safety and application equipment provided and used? i. Is PPE used appropriate according to recommendations in any risk assessments done? j. Is appropriate PPE provided and used, and can it be easily replaced if damaged? k. Does the management checked the workers usage of 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  Documented procedure (AA-KL- Pesticides were stored in the determined area separated from fertiliser and other YES documented and implemented? 06-EFP) Handling Hazardous chemicals. Pesticides storage was provided in each Division. Pesticides storage Wastes. was locked areas with limited access. The storage was ventilated through cross b. Are all pesticides stored according to  Documented procedure (AA- flow ventilation. MSDS and hazard symbol label were provided nearby of recognised best practices? APM-OP-1100.11-R1) regarding pesticides. Emergency shower and eyewash were also provided to anticipate in c. Is there evidence that empty pesticide pesticide application case of an emergency of chemical handling. PPE for handling of chemicals were containers are properly stored and  Field observation at central provided including boots, apron, safety glass, respiratory mask and hand gloves. disposed off and not used for other warehouse and division The possible spill was managed. Secondary containment was provided around purposes? warehouse include spraying the pesticides storage area. Spill kit was also provided in the area. EHS patrol was regularly performed monitor possible spill. All empty pesticides containers d. Is there evidence observed in the field activities at estate operation were triple rinsed and collected in the temporary storage of hazardous waste. that pesticide containers are indiscriminately disposed (in dump site) Pesticides containers were transported by authorised transporter, PT Shali Riau or used for other purposes, .e.g. as waste containers, flower pots? Lestari. Records of pesticides containers quantity were evident. Liquid waste from pesticides was reused for the next spraying applications. 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

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) application? Weeding Control AA-APM-OP-1100.10-R1 Pest & Diseases Control and AA-APM-OP-1100.11-R1 Management Pesticides. Training and dissemination on work instruction including b. Is there training provided on work  AA-APM-OP-1100.10-R1 Pest instruction including risk and impacts of & Diseases Control risk and impacts of pesticide applications has been performed by the organization regularly. Training and dissemination records were sighted. pesticide applications?  AA-APM-OP-1100.11-R1 Management Pesticides  Training and dissemination Site visit in KNS and KNC has been done to observe the spraying and pesticide record application in field. Interview with spraying workers were evident that all of them  Field observation to spraying has a good knowledge regarding the pesticide usage and its material usage and activity 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  Not Applicable There was no the pesticides aerially applied. NA there documented justification? b. Is the impact and risk associated with 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).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Training program and There was no smallholder associated with Negri Lama II Mill, PT. HSJ. YES realization a. Has the company provided information  Training certificate PT. HSJ has provided information materials on pesticide handling to all materials on pesticide handling to all employees. Training and dissemination on work instruction including risk and employees and associated smallholders  Foreman book impacts of pesticide applications has been performed by regularly organization. (if any) (see Criterion 4.8)? Training and dissemination records were sighted. b. Is there evidence of periodic training (in appropriate language) of employees and Site visit at KNC has been done to observe the spraying and pesticide application

associated smallholders on pesticide in field. Interview with spraying workers were evident that all of them has a good handling? knowledge regarding the pesticide usage and its material usage and toxicity. All the workers have used the personal protective equipment (PPE) meet with the safety rules and work instruction such as: apron, safety goggles, mask, hand Note: Interview with workers and smallholders on their knowledge and skills in pesticides gloves and safety boot. All precautions attached to the products properly observed, applied, and understood by workers. Checking the workers usage of handling. appropriate PPEs is daily conducted through Foreman Book.

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).

 Documented procedure (AA-KL- YES All empty pesticides containers were triple rinsed and collected in the temporary 06-EFP) Handling Hazardous storage of hazardous waste. Pesticides containers were transported by authorised a. Is there an SOP for proper disposal of Wastes. transporter, PT Shali Riau Lestari. Records of pesticides containers quantity were waste material?  Documented procedure (AA- evident. Liquid waste from pesticides was reused for the next spraying b. Is there training provided to workers and APM-OP-1100.11-R1) regarding applications. pesticide application managers on proper waste disposal?  Field observation at central Training/briefing regarding disposal of waste material has been conducted to all c. Is there evidence of implementation of warehouse and division workers and staffs. Based on interview with workers, they understood the disposal proper ways for waste disposal by the warehouse include spraying of waste material. company? activities 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.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there an updated list of pesticide  Presensi (attendance) of The periodical medical check-up was conducted for all spraying operators by third YES operators? pesticides operators party laboratory (Pramita Medan) include the package of cholinesterase, (Major NCR b. Is there records of annual medical  Last medical check-up spirometry, urine and bloods examination. 2016-02 is closed) surveillance of pesticide operators? conducted on period June and November 2015 by third party The records were sighted; last medical check-up conducted on period June and c. Is there medical and treatment records of laboratory (Pramita Medan) November 2015 for KNC estate with 120 operators and 21 personnel for KNS all pesticide operators? estate; however not all pesticide operators (at least 5 personnel taken sampled) were not conducted medical check-up.

The abnormal/suspected patient will be followed up by company doctor and monitored to ensure that the patients are proper to do the job normally.

Major Non Conformity: Not all pesticide operators were conducted medical check-up at KNC estate.

Correction: Conduct Medical Check Up for pesticides operator that has not been checked on 2nd Semester 2015.

Root Cause: Lack of KTU checks at the time of registration of Medical Check Up participants

Corrective Action: KTU conduct control of employee record whether they have Medical Check Up or not, using form “List of MCU Participant”.

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

a. Is there a policy statement preventing  Presensi (attendance) of There was established the documented procedure related to pesticide spraying YES pregnant and breast-feeding women from pesticides operators activities that prevent the pregnant and breast-feeding women to conduct its handling pesticides?  monthly check of pregnancy activities.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) b. Is there a lists of female workers handling  Visit to clinic There is conducted monthly check of pregnancy to all women spraying operators. pesticides available? Last check was conducted on January-2016 for KNC and KNS Estate women c. Does the company have a system to spraying operators, the records were evident. Moreover the clinics also provide the contraception facility (e.g. implant/spiral, pill, etc.) in order to support identify pregnant and breast-feeding women? government programme of family planning (KB/Keluarga Berencana). Moreover based on observation and interview with several women pesticides d. Is there evidence showing that pregnant operators at field visit, there is no pregnant and breast feeding women were on and breast-feeding women are not working activities. 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  OHS Policy (dated 26 Documented policy in Bahasa Indonesia related to occupational health & safety YES place? November 2012, approved by (OHS) was established and integrated to company policy also approved by  Is it written in an appropriate Managing director) Managing Director (Kelvin Tio) dated November 26th 2012 that consists of: language?  MPM (Mill Policy Manual) compliance to regulations, implement and monitoring OHS management system,  Has the policy been approved by an  APM (Agricultural Policy setting objective and target, etc. The socialization of its policy by provide banner, authorized personnel and dated? Manual) displayed at several area within office and buildings also by conduct induction to  Does the policy cover mitigation of  OHS Objectives and employees. Several documented procedures related to OHS aspects were integrated within the MPM (Mill Policy Manual) and APM (Agricultural Policy risks to workers health and safety at programme period 2015 and all workplace activities? 2016 Manual). There were also separated OHS Management systems Procedures and  Are the workers aware of and  Site visit observation to estate records established for operational activities that integrated with Environmental understand the policy? and mill management system since the company certified with ISO. The objectives and programmes related to health and safety were established for b. Is there a health and safety plan in each estate; includes: to reduce the number of accidents and 5S programme; place? safety meetings and briefings for all employees and contractors; safety  Does the plan include targets for inspections. The objective and programmes for mill, includes: reduce the number improving occupational health and accidents; preventive maintenance programme; PPE provisions and

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) safety? implementation of health surveillance. Within the OHS objective and programmes  Does the plan reflect guidance was included the time frame; person in charge and cost estimation. The provided in the ILO Convention 184 monitoring of each objectives and programmes were conducted periodically by (see Annex 1)? the person in charge. Evidences were sighted for several OHS programmes / OHS Management c. Is there evidence of implementation of system manual, such as: the plan? Medical check-up for mill operators was conducted for period November- d. Is the effectiveness of the health and December 2015 by third party laboratory (Pramita lab Medan); the packages safety plan monitored? include spirometry, audiometry and urine/bloods laboratory. The result indicated 2 e. Is the health and safety plan made persons suspected deaf conductive and under monitoring by company doctors. publicly available? The OHS monitoring and measurement was conducted periodically twice within a year, records were sighted for period July – December 2015 include the f. Is there an action plan if targets are not measurement of noise, vibration and temperature, so far the results were within achieved? the threshold limit values. Several mandatory PPE are available by the organization to the employees and visitors such as: helmet, safety shoes, ear plugs, ear muffs and respirators. Also there were deployed several PPE symbols at the at risk areas. It was also several working tools and machineries that utilized at mills and estate are equipped with safety devices, such as knives cover that using by harvester and also pressure release valve at mill processing machineries. Several tools and equipment that regulates within the law are already certified and inspected by local government ministry of manpower (Disnaker Labuhan Batu Regency), such as: pressure vessels, lifting equipment, electricity installation, etc. (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.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Have risk assessments been conducted  Risk analysis (Period 19 The quantitative method of risk analysis was conducted for all activities at Mill and YES for all operations where health and safety September 2015) Estate. is an issue? The mills risk analysis was covered activities such as: transportation, weighbridge receiver, FFB sorter, loading ramp, transfer carriage, sterilizer, tippler, thresher, b. Does the risk assessment cover all the organization’s processes and activities? press, clarifier, engine room, water treatment, effluent plant, workshop, warehouse, diesel tank, laboratory, offices and traffic activities. c. If any accidents had occurred, were these While the estates risk analysis were covered activities such as: Loading FFB, included in the risk assessments with estate maintenance, fertilizer, pesticides & herbicides, harvesting, workshop action plans to prevent further activities at traksi and also warehousing. recurrence? According to the procedure, at least OHS risk assessment document must be d. Have the procedures and action plans reviewed once a year and/or when incident happened will consider as review been documented and implemented to agenda. OHS risk assessment records 2015-2016 were sighted for all Mill and address the identified issues? Estates. The analysis method were described within the documented instruction that analysis was considered frequency of hazard and consequences of risks that e. Have all precautions attached to products summarized the risk level from low risk to extreme risks. Within the risk analysis been properly observed and applied to was also considered the hierarchy of control to take action of risk control such as the workers? elimination, substitution, engineering, administrative and PPE. Action plan was developed as followed up the existing high risk in order to reduce to lowest residual risk analysis. (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.

a. Are all workers involved in the operation  Training Programme 2015-2016 OHS training has been programmed and provided appear balanced with OHS YES appropriately trained in safe working  Training attendance hazard and risk at Mill and Estates. Basic OHS training performed internally by practices (see Criterion 4.8)?  Licenses/certificates of trainings safety officer in charge at mill and estate, the training record and programme b. Are OSH training programs and training (licenses for boiler operator, related to OHS were sighted and verified during this audit, e.g. licenses for boiler operator, licence for operator of generator set, licence of heavy equipment records available and conducted by licence for operator of generator operator, pesticide training for sprayers, etc. qualified persons? set, licence of heavy equipment operator, pesticide training for The PPE for each activity has been established, e.g. working at mill, working at c. Is adequate and appropriate protective sprayers, etc.) generator set, welder, working at laboratory, harvester, sprayer, fertilizer storage, equipment available to all workers at the  Site visit observation to estate chemical storage, etc. The distribution list of PPE was kept by supervisors place of work to cover all potentially and mill (“mandor”) hazardous operations, such as pesticide Observation during this audit generally concluded that PPE has been well application, machine operations, and land provided and implemented. Workers were interviewed during this audit and preparation, harvesting and, if it is used, generally they understood the risk of their work and the purpose of using PPE.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) burning? Several mandatory PPE are available by the organization to the employees and visitors such as: helmet, safety shoes, ear plugs, ear muffs and respirators. Also d. Is PPE provided to workers and replaced when damaged? there were deployed several PPE symbols at the at risk areas  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 from local KNC (Negeri Lama Central Estate) YES responsible person/persons to implement authority regarding EHS The structure of OHS Committee (P2K3) was established and approved by local OSH? committee (P2K3) authority (Labuhan Batu Regency) as approval letter No.Kep.281/P2K3/DSTKT- b. Are meetings between the responsible  Records of OHS Committee 4/2016 dated 07th March 2016, that the safety expert/AK3U (Arif R Harahap) acts persons and workers conducted on a periodical meeting as the secretary. regular basis, or as required by law, if Meetings of OHS committee (P2K3) were conducted monthly and attended by all any? member and chairman, last minutes of meeting dated 7th January 2016 was c. Are minutes of meeting recording sighted, with agenda to reduce the number of incidents. attendees and issues discussed available? KNS (Negeri Lama South Estate) The structure of OHS Committee (P2K3) was established and approved by local d. Are concerns of all parties about health, safety and welfare discussed at these authority (Labuhan Batu Regency) as approval letter No.Kep.354/P2K3/DSTKT- meetings? 4/2016 dated 01st March 2016, that the safety expert/AK3U (Robiansyah PS) acts as the secretary. Meetings of OHS committee (P2K3) were conducted monthly and attended by all Note to Auditor: Interviews with workers reflect member and chairman, last minutes of meeting dated 7th January 2016 was compliance to a-d above. sighted, with agenda regarding the health aspects of mechanics.

PND (Negeri Lama-II Mill) The structure of OHS Committee (P2K3) was established and approved by local authority (Labuhan Batu Regency) as approval letter No.Kep.147/P2K3/DSTKT- 4/2015 dated 03rd September 2015, that the safety expert/AK3U (Ahmad Alwi)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) acts as the secretary. Meetings of OHS committee (P2K3) were conducted monthly and attended by all member and chairman, last minutes of meeting dated 15th January 2016 was sighted, with agenda regarding the safety inspection and housekeeping at mill.

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  Documented procedures related There were several documented procedures related to emergency response in YES emergencies? to emergency response (AA- local language Bahasa Indonesia. The emergency conditions have been identified  Do these cover all major potential EMS-447-PR) including general fire, land fire, chemical spillage and earth quake. The procedure emergencies, such as, but not  Emergency response team form described the roles and responsibilities of each emergency response team include limited to fire, chemical spillage, and (AA-447-01-LT) the mechanism how to conduct medical evacuation to near hospital/local health potential natural disasters specific  Accident reporting and centre, the emergency contact number of each internal emergency team and for the region, e.g. earthquakes, investigation form of RKK (AA- external related parties such as public fire station at local area Kabupaten volcanoes, etc.? SOP-OP-1400.02) Labuhan Batu and Public health centre “Puskesmas Labuhan Batu” were also  Are accidents investigated and  Incident statistics quarter report available. The composition of emergency response team was established at forms action taken to prevent recurrence? to local authority (Labuhan Batu (AA-447-01-LT) consist of ERT commander, head of transport and logistics and  Are accident records provided to the Regent) also several fire fighters and first aider. local authority in accordance with  Site visit observation to estate Regarding accident reporting and investigation, it was available the form of RKK (AA-SOP-OP-1400.02) to conduct the reporting and investigation of accidents, local legal requirements, if any? clinic  Available in the appropriate which within the forms are described the accident chronology, cause and impact language of the workforce? of the accident also to find the root causes of the accident happened and formulized the corrective and preventive action. The incident statistics were b. Are the instructions on emergency reported quarterly within a year to local authority (Labuhan Batu Regent) by safety procedures clearly understood by all officer obtained from supervisors (mandor) and clinics. workers? The emergency kits such as first aid box and emergency shower/eyewash were c. Are assigned operators trained in First available at mill and several locations at estate. First aid kits were regularly Aid present in both field and other checked as checklist was sighted. Mill and Estate was supported with one clinic operations? centre and first aid room at each division office. The group leader (mandor) was provided with first aid kits. Certified first aiders were also available as part of d. Is there records of training of the first emergency team structure. aiders? e. Is first aid equipment available at

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) worksites? Is the equipment available during conduct of field manual work? e. Are first aid kits adequately stocked and regularly checked in accordance with local legal requirements? f. Are records of all accidents kept and periodically reviewed for continuous improvement?

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

a. Is there evidence that all workers are  Site visit observation/interview The insurance were provided for all employees (include permanent and NO provided with medical care (refer to to estate clinic outsources) that mandatory from government (BPJS Ketenagakerjaan); the (Minor NCR Criterion 6.5.3), and covered by  The BPJS Ketenagakerjaan packages for accident insurance (JKK) were 0.54 in percentages. The monthly 2016-03 is open) accident insurance by the company? monthly payment for period Jan- payments were evident for period January – February 2016. For contract workers, the contract Feb 2016. However it was not all employees are covered within the insurance as it is to be between the company and the non-conformance within this audit report. contractor shall be in compliance. Minor Non Conformity: b. For accidents that have occurred, is there evidence that the affected workers Not all workers are covered by accident insurance (BPJS Ketenagakerjaan). received appropriate medical treatment, and was able to claim and receive Correction: compensation under the insurance Registering workers which are not registered in BPJS Ketenagakerjaan (accident policy (if relevant)? insurance) c. Is there evidence that the insurance policies are valid? Root Cause: The high number of worker turnover and lack of registration monitoring of new employees to BPJS Ketenagakerjaan. Registration was centralized at Medan Office.

Corrective Action:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) KTU monitor any new employees entering and programmed proposal of registration of BPJS Ketenagakerjaan to HRD Medan Office.

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. a. Are occupational injuries recorded  Incident statistics quarter report KNC (Negri Lama Central Estate) YES using Lost Time Accident (LTA) to local authority (Labuhan Batu The incident statistics were reported quarterly within a year to local authority metrics? Regent) (Labuhan Batu Regent) by safety officer (Mr. Arif) obtained from supervisors

(mandor) and clinic. Records sighted for period year 2015, include the investigation report. The number of lost times and accident statistics as presented below: Fatality = 0; Permanen disabled = 0; Lost time = 30; Property damage = 0; Medical aid = 9; First aid case = 66.

KNS (Negri Lama South Estate) The incident statistics were reported quarterly within a year to local authority (Labuhan Batu Regent) by safety officer (Mr.Robby) obtained from supervisors (mandor) and clinics. Records sighted for period year 2015, include the investigation report. The number of lost times and accident statistics as presented below: Fatality = 0; Permanen disabled = 0; Lost time (days) = 31; Property damage = 0; Medical aid = 6; First aid case = 0.

PND (Negeri Lama II Mill) The incident statistics were reported quarterly within a year to local authority (Labuhan Batu Regent) by safety officer (Mr. Ahmad). Records sighted for period year 2015, include the investigation report. The number of lost times and accident statistics as presented below: Fatality = 0; Permanen disabled = 1; Lost time (days) = 5; Property damage = 0;

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Medical aid = 0; First aid case = 0.

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. 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 4.8.1 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) 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 programme 2015 – There was established training programme that feedbacks from regulations and YES workers, smallholders and contract 2016 basic competence as training needs identification. workers whom training must be provided  Training records (attendance list All functions and levels included contract employees within the organisation were to? and certificates) covered by the training programme. The training needs identified appear sufficient b. Is there a formal training programme in  Site visit observation to estate and complete, this including training related to OHS, environmental, social, training required by regulations, training related to operation of Mill and Estates. place that covers all aspects of the RSPO and mill and interviews with all Training programme 2015 and 2016 were sighted, the training programme was Principles and Criteria? Does the formal employees and contract training program include: workers established based on the training needs identification. Realization of training programme 2015 were sighed for all staff, workers and contract workers, includes:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Regular assessment of training Basic safety and sustainable awareness (1-Oct-2015); Hazardous waste handling needs of all staff, workers, (15-Nov-2015); Safety awareness (05-Sept-2015); Total productive maintenance smallholders and contract workers; (17-Jan-2015). Hatch and carry training (28-Sept-2015); HCV awareness (23 Oct-  Training for workers on smallholder 2015); Fire safety training (September-2015). plots;  Documentation of all the training assessment needs, formal training conducted and the list of participants attending these formal training;  Does the training for workers cover, at minimum, to the following: o The health and environmental risks of 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 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.

Audit Report

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

4.8.2 Records of training for each employee shall be maintained.

a. Are training records maintained for each  Training attendance The system to record personal training was established-in the attendance record; YES employee?  Individual training history the training which has been completed by each person was recorded and updated.

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  Document of ANDAL, RKL RPL Impact assessment was documented in document of ANDAL, RKL RPL approved YES the scope of operation covering at #PC.220/383/B/II/1994 by Department of Agriculture of Republic of Indonesia on 26th of February 1994. minimum the following:  AA-EMS-431-PR – Environmental  Building new roads, processing mills aspect identification and Negri Lama II Mill, Negri Lama Selatan Estate, Negri Lama Central Estate, Negri

or other infrastructure; evaluation Lama Utara Estate and Aek Kuo Estate have implemented procedure for  Putting in drainage or irrigation  Result of evaluation of identifying environmental aspect and evaluating its impact based on systems; environmental aspect and impact Environmental Management System ISO 14001:2004.  Replanting and/or expansion of

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) planting areas;  Report of RKL RPL 2nd semester The result of environmental aspect and impact identification and evaluation was  Management of mill effluents 2015 documented. As required by the procedure, the information of environmental is (Criterion 4.4);  Receipt note of RKL RPL reviewed and updated annually.  Clearing of remaining natural submission vegetation; Last review and update of environmental aspect and impact register for Negri  Management of pests and diseased Lama II Mill, Negri Lama Selatan Estate, Negri Lama Central Estate, Negri Lama palms by controlled burning (Criteria Utara Estate and Aek Kuo Estate was performed on 4 January 2016. 5.5 and 7.7). Document of environmental impact assessment included: b. Has the EIA been conducted and  Building new roads, processing mills or other infrastructure; documented according to local  Putting in drainage or irrigation systems; requirements?  Replanting and/or expansion of planting areas; c. Does the assessment include consultation  Management of mill effluents; with relevant stakeholders to identify  Clearing of remaining natural vegetation; impacts and to develop any mitigation  Management of pests and diseases palms by controlled burning; measures?  Result of stakeholder consultation.

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  Report of RKL RPL 2nd semester Implementation of RKL RPL is reported every six months. The report of 2nd YES plan in place? 2015 Semester 2015 of RKL-RPL was submitted to North Sumatera Province and b. Is the environmental management plan  Receipt note of RKL RPL Labuhan Batu District Environmental Agency, Central of Environmental documented to include the following: submission Management Regional Sumatera and Ministerial Office of Environment on 11  Identification of responsible person(s); February 2016. Negeri Lama Dua Mill and estates have ensured that all paln  Potential impacts from current mentioned in EMP were implemented. Control measure were defined and practices; implemented for ensuring that negative environmental impact were prevented or  Measures to mitigate negative mitigated. There were several types of control measures defined: engineering impacts; control, administrative control and PPE. The implementation of those control  Timetable for change (where changes measures are monitored during monthly environmental patrol and also round of in current practices are required). internal audits.

c. Has the environmental management plan been implemented?

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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. Hari Sawit Jaya 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. Hari monitoring protocol. operational changes? Sawit Jaya 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 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: 5.2.1 • 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:

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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). a. Has a High Conservation Value (HCV)  HCV assessment and analysis HCV assessment has been conducted and documented in "Report of YES assessment been conducted and cover the of the existence Identification and Analysis of the existence of High Conservation Value (HCV) following: area at Negri Lama Selatan, Central and Utara Estate and Aek Kuo Estate in  Presence of protected areas that September 2012 by Faculty of Forestry, Bogor Agricultural University (IPB). All could be significantly affected by the assessors are RSPO approved HCV assessor. grower or miller;  Conservation status (e.g. IUCN Stakeholder consultation was carried out on 12 June 2012, attended by status), legal protection, population community around from Aek Korsik, Sei Sentang, Kuala Bangka, Sidomulyo, status and habitat requirements of Tanjung Haloban, Selat Besar, Negeri Lama Seberang, Sei Tarolat, and Tanjung rare, threatened, or endangered Haloban Village. Peer review was conducted by Reviewer in January 2013. (RTE) species that could be Record of HCV Assessment, in the form of a report, including a map of HCV area significantly affected by the grower or was available. Besides presenting data and map of HCV area, the report also miller. includes a list of rare and threatened wildlife species from 4 (four) main wildlife  Identification of HCV habitats, such as groups, such as mammals, birds, herpetic-faunas and fishes. rare and threatened ecosystems, that could be significantly affected by the The HCV assessment includes Negri Lama Utara protected area, palm plantation grower or miller; area of Negri Lama Utara, palm plantation area of Negri Lama Central, plant waste pond of Negri Lama Selatan, and palm plantation area of Negri Lama b. Was the HCV assessment performed by a Selatan in accordance with Guidelines of Indonesia HCVs Identification, version qualified HCV assessor? on June 2008. Maps of HCV Area in Palm Oil Plantation, PT. Hari Sawit Jaya, c. Was the HCV assessment performed in Labuan Batu and North Labuan Batu Regency, North Sumatera Province. consultation with relevant stakeholders?

d. Does the HCV assessment include

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) checking of available biological records? e. Does the HCV assessment include both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors)? f. Was the HCV assessment performed in accordance to the latest methodology available at global and national level? g. Are identified HCVs mapped? (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?  HCV assessment and analysis HCV assessment results in the area of PT Hari Sawit Jaya was identified of 108 YES b. If HCVs and/or RTEs are present, has a of the existence Ha HCV areas, as follows :

management plan containing appropriate  Conservation Management Plan measures that are expected to maintain  Report of HCV Management HCV / Components HCV Area Area (ha) and/or enhance them been prepared? The HCV 1.2. Critically endangered Negeri Lama Utara 106 measures should include the following: species protection area  Ensuring that any legal requirements HCV 1.3. Areas that contain Refer to HCV 1.2 Refer to habitat for viable population of HCV 1.2 relating to the protection of the species or habitat are met; endangered, restricted range or  Avoiding damage to and deterioration protected species of HCV habitats such as by ensuring HCV 1.4. Areas that contain Refer to HCV 1.2 Refer to that HCV areas are connected, habitat of temporary use of HCV 1.2 corridors are conserved, and buffer species or congregation of zones around HCV areas are created; species  Controlling any illegal or inappropriate HCV 2.3. Areas that contain Refer to HCV 1.2 Refer to hunting, fishing or collecting activities, representatives population of HCV 1.2

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and developing responsible measures most naturally occurring to resolve human-wildlife conflicts species. (e.g. incursions by elephants). HCV 3. Rare or endangered Refer to HCV 1.2 Refer to c. Are the measures contained in the ecosystem HCV 1.2 management plan actively implemented to HCV 4.1. Areas of ecosystem Refer to HCV 1.2 Refer to maintain and/or enhance HCV values? important for the provision of HCV 1.2 water and prevention of floods d. Are the HCV values and the presence of for downstream communities. RTEs periodically monitored? HCV 6. Areas critical for Cemetery 2 e. Are the field inspections conducted maintaining the cultural identity regularly to ensure implementation of of local communities mitigation plan (especially along areas Total 108 bordering natural area)? Based on report of HCV identification, there were status of vulnerable IUCN , App

II CITES, and Protecting of Government Regulation of No. 7 / 1999, as follows :

 IUCN (Vulnerable) between other Lutung simpai (Presbytis thomasi), Beruk (Macaca nemestrina), Bangau tongong (Leptoptilos javanicus), and Bangau bluwok (Mycteria cinerea)  CITES (App II) between other Kucing kuwuk (Felis bengalensis), Lutung simpai (Presbytis thomasi), Beruk (Macaca nemestrina), Rangkong badak (Buceros rhinoceros), Kangkareng perut putih (Anthracoceros albirostris), Ular python (Python reticulatus), Biawak (Varanus salvator), and Kobra hitam (Naja sumatrana)  PP No. 7 / 1990 between other Kucing kuwuk (Felis bengalensis), Burung madu kelapa (Anthreptes malacensis), Kipasang belang (Rhipidura javanica), Cekakak belukar (Halcyon smyrnensis), Elang-ular bido (Spilornis cheela), Alap-alap capung (Microhierax fringillarius), Burung madu belukar (Anthreptes singalensis), Elang hitam (Ictinaetus malayensis), Elang tikus (Elanus caeruleus), Elang brontok (Nisaetus cirrhatus), Kuntul kecil (Egretta garzeta), Elang kelelawar (Macheiramphus alcinus), Rangkong badak (Buceros rhinoceros), Undan putih (Pelecanus onocrotalus), Bangau tongong (Leptoptilos javanicus), Bangau bluwok (Mycteria cinerea), Elang-laut perut putih (Haliaeetus leucogaster), Burung madu sepah raja (Aethophyga

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) siparaja), Caladi tilik (Dendrocopsos moluccensis), and Kangkareng perut putih (Anthracoceros albirostris)

There was no water area (river, swamp, and reservoir) as water provider and manage the hydrology and protection area, but PT. HSJ have the land cover was peat land, so that conducted the water management to protect of area from fire and flood. Area that important for identification of local communities was cemetery at block of C13.

Implementing for HCV management and monitoring PT. HSJ in accordance with the Conservation Management Plan. Some activities that has been conducted, other between : damage monitoring of protect area, installation of boundary area, installation of area HCV information board include penalties of the UU No. 5/1990, installation of board the ban on hunting, and making of boundary ditch. Other than that, also conducted half-yearly fauna and flora monitoring by Sustainability Officer and Foreman.

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  Company Policy PT HSJ has policy to protect RTE species from Managing Director, that PT. HSJ YES to protect RTE species?  Conservation Management Plan was not conducted of new planting in high carbon stock, high conservation value b. Is there a programme to regularly  HCV Management and area (includes was fauna and flora protected), and peat area.

educate the workforce about the status of Monitoring Report Program to disseminate HCV area for workers was periodically conducted. The the RTE species? last refresh HCV Awarness dated on 23 October 2015 by Environment and c. Is there evidence or action taken to Sustainability Officer. It was attended by around communities from Sido Mulyo implement the rules and programs? E.g. Village and total of 20 employees. Inspections conducted to check no traps/snares put up within or nearby Inspection of HCV area was periodically conducted by HCV Foreman. List of areas. inspection, such as potential for fire and hunting disturbance. Information for d. Have appropriate disciplinary measures Penalties of the UU No. 5/1990 have not been communicated directly to all been imposed in accordance with employees and the local community during HCV socialization and through the company rules and national law, should HCV sign boards and warnings board. any individual working for the company is found to have captured, harmed,

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) collected or killed any RTE species?

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  Conservation Management Plan HCV management and monitoring at PT. HSJ was available in the Conservation NO ongoing monitoring of status of HCV and  HCV Management and Management Plan, one of its activity was half-yearly fauna and flora monitoring (Minor NCR RTE species that are affected by Monitoring Report and reported in HCV Management and Monitoring Report, PT. HSJ. The last 2016-04 is plantation or mill operations? report was for Semester of 2 of 2015. open) b. Is the status documented and reported? Minor Non Conformity: c. Are the outcomes of monitoring fed back The outcome of HCV monitoring has not been fed back into the management plan into the management plan?

Correction: Carry out Management Review and Program Supported by Management Budgeting to respond to HCV Reports

Root Cause: There is no written documentation regarding feedback of HCV reports by management.

Corrective Action: Carry out regular meetings to discuss and review feedback, monitoring results and progress of HCV management.

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:

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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  Memorandum of Understanding HCV set-asides present with existing rights of around communities at PT. HSJ. YES rights of local communities? No. 01/SPKT/NLG/III/2016 The community Sidomulyo Village were affected. It has been conducted agreement between PT. HSJ with Sidomulyo Village available in Memorandum of b. Who are the affected communities?  HCV assessment and analysis of the existence Understanding No. 01/SPKT/NLG/III/2016 about Joint Management for Cemetery c. Is the identified HCV areas mapped? and Protect Area at Block of C13, dated on March 14, 2016 and valid for 5 years. d. Is there evidence of stakeholder consultation and negotiated agreement, HCV areas were mapped in Map of HCV Area in Palm Oil Plantation PT. Hari in accordance to FPIC principles, with Sawit Jaya, Labuan Batu and North Labuan Batu Regency, North Sumatera local community to optimally safeguard Province. both the HCVs and rights of local communities? e. If a negotiated agreement cannot be reached, is there evidence of sustained efforts to achieve an agreement? Refer to 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 Result of evaluation of Identification of waste and pollution sources from Negri Lama II Mill, Negri Lama YES produced? environmental aspect and Selatan, Negri Lama Central Estate, Negri Lama Utara Estate and Aek Kuo impact Estate activities was evident. The sources of pollution, type and control method of b. Is there a registry/list of pollution waste were documented. sources? Wastes identified were among others: POME, used oil, used oil filter, agrochemical and chemical containers, contaminated rags and domestic wastes. The source of pollution, type and control method of waste was recorded. The waste products from estate generally were domestics waste and also several hazardous waste from estate operations activities as detailed below (but not

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

 Ex-pesticides containers (bottles and jerry cans)  Used battery from the heavy vehicles  Plastics  Medical waste (first aid usage)  Polybag  rags  and fertilizer containers  Emissions from vehicles

While at the Mill it was several hazardous waste generated from the mill operations, in detailed below (but not limited):  POME  Palm shell  Fibre  Depricaper waste  Empty bunch  Boiler ash  Chemicals jerry can and bottles  Gunny sacks from chemicals materials  Sacks resulted from fertiliser 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 (genset, boilers)

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

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there an inventory of chemicals and - Procedure AA-APM-OP- All agrochemical containers were rinsed and then disposed to licensed vendor: YES their containers that are used and kept on 1100.11-R1 and AA-KL-04- PT. Shali Riau Lestari for transporter. Hazardous waste manifests were sighted site? EFP – Agrochemical Waste for handling of agrochemical containers on 5th of February 2015. Liquid waste b. How are chemicals and their containers Handling from agrochemical was reused for the next spraying application. The disposal stored and disposed off? Is it in - Balance sheet of agrochemical methods of were described on documented Procedure AA-APM-OP-1100.11-R1. accordance to best practices? (as containers Records of chemical containers quantity disposed were evident. Liquid waste prescribed by manufacturers’ labels, local from agrochemical was reused for the next spraying application. While the ex- requirement, national or international best fertilizer sacks was also rinsed and reuse for fertiliser distribute “untilan” at estate practice) operations. c. Are collection and disposal records of License of hazardous wastes temporary storage (TPS B3) as issued from chemicals and their containers Labuhan Batu Regent No. 503.660/BLH-LB/WAS/2014 dated 30 December 2014 maintained? and was valid for 5 years defined that the time limit was 180 days but if produce (less than) < 50 kg per days may store more than 180 days. The license include: lubrication oil, battery, oil filter, rugs and medical wastes; include pesticides/chemical containers. Manifest of disposal were sighted for 8th December 2015 and 6 February 2016. 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. a. Is there a documented waste management - Procedure AA-KL-05-EFP – Identification of waste and pollution sources from Negri Lama II Mill, Negri Lama YES and disposal plan to avoid or reduce Selatan, Negri Lama Central Estate, Negri Lama Utara Estate and Aek Kuo Industrial Waste Handling pollution? - Procedure AA-AMP-OP- Estate activities was evident. The sources of pollution, type and control method of 1100.11-R1 and AA-KL-04-EFP waste were documented. Wastes identified were among others: POME, used oil,

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) b. Does the waste management and disposal – Agrochemical Waste Handling used oil filter, agrochemical and chemical containers, contaminated rags and plan, at minimum, include measures for: - Procedure AA-AMP-OP- domestic wastes. Procedure waste handling including hazardous waste handling  Identifying and monitoring sources of 1100.11-R1 and AA-KL-06-EFP has been established and implemented. The procedure required waste to be waste and pollution? – Hazardous Waste Handling segregated from point of sources. In addition Mill and Estate also established  Improving the efficiency of resource - Permit of temporary storage of waste register, which described wastes sources from each activity/location, its utilisation and recycling potential of hazardous waste for Negeri classification (organic, inorganic or hazardous), and its disposal, reusing or wastes as nutrients or converting Lama Selatan Estate recycling. Mill and Estate including housing has provided different colour of waste them into value-added products (e.g. #503.660/322/BLH- bin for each type of waste. Organic and inorganic wastes from Mill and Estate through animal feeding LB/WAS/2014 including housing were disposed to landfill in the Estate area. Areas of organic programmes)? - Permit of temporary storage of and inorganic wastes disposal was far from housing, in the flood-free area and not  Appropriate management and hazardous waste for Negeri in swamp area and completed with warning sign not burning wastes. disposal of hazardous chemicals and Lama Satu Mill There are evident the measurement periodical report include air ambience quality; their containers? #503.660/206/BLH- emissions of vehicles and other engines (boilers, generators, etc.) also the  Reduction, re-use and recycle of LB/WAS/2014 programme on how to reduce the fuel usage and environmentally friendly. waste? - Contractual agreement of PT. Hazardous waste was reported to North Sumatera Province and Labuhan Batu Hari Sawit Jaya and PT. Shali District Environmental Agency, Central of Environmental Management Regional c. Is there evidence that the plan has been Riau Lestari #029/SRL- Sumatera and Ministerial Office of Environment. Receipt note was also sighted. implemented? PKU/MOU/III/2015 on 9 d. Is there evidence that waste has not been February 2015 disposed off using open fire? - Permit of PTShali Riau Lestari as hazardous waste transporter

- Hazardous waste manifest - Report of hazardous waste management 2nd, 3rd and 4th quarter 2015 - Receipt note of report of hazardous waste management submission

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.

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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  Fossil fuels efficiency Negri Lama II Mill and its supply bases have been develop the programme/plan YES the use of fossil fuels and to optimise programme on how to conduct efficiency for utilization of fossil fuel by develop the standard to renewable energy?  Renewable energy (Fibre and manage the consumption each of vehicles and electricity generator (genset) within litre per hours both for organization owned and contractors; the monitoring b. Has the plan been implemented and is it shell) optimization programme conducted by monthly and reported to technical department. In order to support monitored?  Records of diesel fuels usage  Records of fibre and shell usage the target, there are several programme executed on how to efficiency of fossils c. Does the monitoring system encompass fuels, such as: the following :  Renewable energy use/tCPO or palm  Boiler modification by operated water treatment and turbine to reduce product; the utilisation of electrical generator (Genset)  Direct fossil fuel use/tCPO or tFFB;  Nozzle calibration and preventive maintenance for genset and vehicles  Estimated fuel use by on-site contract  Turbine powers generate to supply electricity to composting activities in workers and transport and machinery order to reduce genset utilization operations;  Electricity use in operations. Also it was developed the plan/programme regarding optimization of renewable

d. Was energy efficiency taken into account energy known as fibre and shell as boiler energy source at mills, the target was during the construction or upgrading of all sets on 80% as minimum energy availability, monitoring also conducted monthly operations? by calculate the calories resulted from fibre and shell and utilize as boiler fuels whether during the construction or upgrading of all operations. 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 2014 2015 (Fibre and shell) (ton/ton) (ton/ton) Per tonnage FFB 20.1 16.2 % utilization 100 100

Fossil fuels 2015 2016 (YTD February) Vehicles (litre) 239,629 13,582

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Genset (litre) 300,414 37,518 Per tonnage CPO 2.32 2.40

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 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

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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. Hari Sawit Jaya – Negri Lama II Mill and its supply bases. 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. No fire has been used for land preparation. 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.

(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.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Has an assessment of all polluting Identification of Environmental Identification of pollution and emission sources was evident. The source of YES activities been conducted including Aspect pollution, type of pollution and its control were documented, e.g. stack of boiler, gaseous emissions, particulate/soot electricity generator and heavy equipment, methane from WWTP and fertiliser. emissions and effluent (see Criterion Monitoring of pollution and emission quality of sources identified has been 4.4)? programmed.

b. Is there a documented list of all identified Monitoring and measurement results for 2nd semester 2015 were sighted for : polluting activities?

- boiler emission against Environment Ministry Decree #07/2007, - diesel electricity generator emission against Environment Ministry Decree #Per13/Menlh/2009, - vehicle and heavy equipment emission against Environment Ministry Decree #05/2006, - odour emission against Environment Ministry Decree #50/Menlh/11/96, - noise against Environment Ministry Decree #48/Menlh/11/96, - also ambient air quality against Government Regulation #41/1999.

The source of pollution, type of pollution and its control was documented. The information of pollution and emission sources at Negeri Lama II Mill was reviewed including boiler emission, methane from 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 Greenhouse gas emissions The program was identify the source of greenhouse gas emissions as listed YES significant pollutants and GHG reduction Programme year 2015 below: emissions? b. Are there plans to reduce or minimise the 1. Methane from POME at mill 2. Fossil fuels emissions from vehicles and engines identified pollutants and GHG emissions? 3. Chemical fertilizer c. Do the plans include objectives, targets 4. Electricity usage and timelines for reduction that are 5. Land conversion responsive to context? 6. Peat lands emissions

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Are the plans being implemented? Was there any changes? Is it justified? There are also established the GHG reduction plan completed with objectives, e. Is the treatment methodology for POME targets and timelines as below:

recorded? (refer to C 4.4.3) No Program Target 2015 1 Increasing the efficiency of fossil From 3.5 km/liter to 3.8 fuel use km/litre 2 Reducing the water usage From 1.3 m3/ton FFB to 1.25 m3/ton FFB 3 Optimizing fibre and shell as 90% minimum available boiler fuel 4 POME debit Max 2.5 m3/ton CPO 5. Grow fruit plants in each Within 10 meters for each tree employee house

The records of each programme were sighted as evident implementation. Negeri Lama II Mill waste water was processed through a series of waste water treatment ponds: anaerobic ponds, facultative ponds and aerobic 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.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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 Calculation of GHG emission, The GHG emission calculation for Negri Lama of PT. Hari Sawit Jaya use Palm NO emission of pollutants including calculation Year assessment 2015. GHG V 2.1.1 as RSPO requirement. The reporting was not yet periodically (Minor NCR greenhouse gases from estate (plantation) delivered to the RSPO interest. Calculation was sighted and summarized as 2016-05 is and mill operations? follows: open)

b. Is there regular reporting of the monitoring outcomes? How often and to whom is Desc Own Crop Group Out grower reporting done? c. Is the monitoring and reporting conducted Total field emissions (tCO₂e) 1,124,307.30 0 23,275.23 using appropriate tools? What tool is being Total mill emissions (tCO₂e) 23,962.11 0 0 used to assess, monitor and report on

GHG emissions? Minor Non-Conformity: There was no regular reporting to RSPO on progress for these significant

Please refer to specific guidance for GHG pollutants and emissions from estate and mill operations. requirements. Correction: The organisation will clarify to RSPO regarding reporting of GHG emission.

Root Cause: The sustainability team in Teluk Panjie did not aware that GHG emission should be reported to RSPO.

Corrective Action: Carry out training to the site’s sustainability team regarding GHG emission regular reporting to RSPO

Audit Report

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  SIA / AMDAL document (1994) Based on the results of the Social Impact Assessment/AMDAL documents YES was the last SIA conducted? and HCV Assessment (2014) report/HCV Assessment, it appears that the assessment also includes stakeholders, community leaders figure, and related government agencies etc. b. Is the process in conducting the SIA  All process of SIA /Amdal was and the findings documented? documented include the through a public consultation which visible on participant attendance at SIA findings. report. c. Does the SIA cover all of the potential  Yes, SIA/AMdal Documents Social impact assessment result was documented in “AMDAL” document (1994) impact factors, including: Covering for all impact factors and High Conservative Value Assessment Documents 2013. Social impacts  Access and use rights; were identified as follow: land ownership and control, job opportunities, living  Economic livelihoods (e.g. paid standards of the community, health & disease, education facilities, road access

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) employment) and working and bridges, local economics. conditions; Assessment was conducted through involvement of local community. And also  Subsistence activities; some interview was conducted with leaders’ community. Scope of assessment  Cultural and religious values; covered around 5 villages (Sidomulyo, Tanjung Haloban, Sei Kasih, Selat Besar,  Health and education facilities; Negeri Lama Seberang). Evidence of participatory action from local communities  Other community values, was also sighted in related SIA documentation including photos, questionnaires, resulting from changes such as etc. improved transport SIA assessment involving the communities around the estate and all relevant /communication or arrival of stakeholders, this can be viewed from the evidence of attendance list of public substantial migrant labour force. consultation and a list of names of the respondents, the informant at the time of interview and assessment SIA. Noted there are several sample respondents from communities affected by the activities of PT Hari Sawit Jaya. Affected parties 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 monitoring the success of implemented plans Positive impacts were identified such as: Regional development, increased population of the village economy and Ease of road access. Negative impacts were identified such as: increase of road due to FFB transport (public health), Noise and dust coming from transport (social cultural), unfair donation for community estate (social cultural).

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  Yes there has been assessment Yes there has been assessment involve consultation with the affected parties YES consultation with the affected parties? involve consultation with the such as head village, government, public. Records of participatory assessment Who are the affected parties? affected parties such as head were available such as photograph and attendance list. SIA method is done by interview and questionnaire. Assessment has been done with the participation of b. Is there record of how the participatory village, government, public assessment has been conducted? based on AMDAL Assessment affected parties such as head of villages, village representatives and district police head. Were the affected parties able to conducted by the organisation

express their views through their own on 1994 also based on High representative institutions, or freely Conservation Value Assessment Affected parties have been able to express their views through their own representative institutions, or freely chosen spokespersons, during the chosen spokespersons, during the on 2014 identification of impacts, reviewing findings and plans for mitigation, and identification of impacts, review of  Record of participatory findings and planning for mitigation? assessment were available such monitoring the success of implemented plans. This is demonstrated by interview

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) as photograph and FGD Result result available on AMDAL of PT. Hari Sawit Jaya and PT. Andalas Intiagro period February 2011 Lestari.

(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  Document of Social Impact Positive impacts were maintained with organisation and necessary action was YES outline the plan on mitigation, Assessment/AMDAL/HCV planned by the organization. Overall of negative impacts were followed up with implementation and monitoring Assessment PT Hari Sawit Jaya, corrective action. according to the SIA report? 2014 Evidence of participatory action from local communities was also sighted in b. Have plans for avoidance or mitigation  Record of questionnaires and related SIA documentation including photo and also management and monitoring social impact report which is verified by head village of around estate of negative impacts and promotion of interview with stakeholder the positive ones, and monitoring of  Matrik Pengelolaan Sosial period and mill. Effectiveness analysis of negative impact management was conducted by organization and described in the report of Matrik Pengelolaan Sosial period impacts been developed? 2015. 2015. c. Have these plans been documented, with clear timetables? Is the timeline reasonable? 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?  Document of Social Impact YES b. Has the plan been updated as Assessment /AMDAL PT Hari Matrik Pengelolaan Sosial periodically reviewed to ensure the planning of social aspect/impact based on assessment was implemented. It was reviewed every necessary (i.e. in cases where the Sawit Jaya, 1994 year alongside with Social Assessment monitoring. review has concluded that changes  The monitoring of social impact

should be made to current practices)? was conducted as per matrix.  Photograph and attendance Plan for avoidance or mitigation of negative impacts and promotion of the c. Have the changes to the plan been register. positive ones are update as necessary in case the review concluded that implemented?  Documentation Matrix changes should be made to current practices. d. Is there evidence that the review has pengelolaan social and

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) been done with the participation of the RKL/RPL has been Some changes to the plant have been implemented, such as road maintenance affected parties? established/recorded. and road watering due to dry season that caused dust. e. Has the process been Review was conducted along with participation of affected parties, this evidence recorded/documented? by photograph and attendance list.

The process of avoidance or mitigation of negative impacts and promotion of the positive ones and monitoring of impacts identified was documented in “Matrix Pengelolaan Sosial” and RKL/RPL.

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 No Smallholder scheme in PT Hari There was no Smallholder scheme in PT Hari Sawit Jaya NA involved? Sawit Jaya

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  List of local communities & other Documented procedure for communication and consultation with public was YES local communities and other affected interested parties has been established in procedure “Mekanisme komunikasi/konsultasi masyarakat lokal or interested parties? established for KNC,KNS & PNS atau kelompok lain yang terkena dampak atau kepentingan dengan pihak kebun/pabrik” (Mechanism local communication / public consultation for b. Is there SOP being developed by the  Procedure for communication company for communication and and consultation SOP AA-GL- interested parties) SOP AA-GL-5009.1-R0),. The procedure was made already accommodate all stakeholders and with consultation between the company 5009.1-R0, dated 22 August understandable language (Indonesian). and the local communities and other 2011. affected or interested parties?  FPIC Approach has been incorporated in the SOP for for Describes stakeholders consisting of: the community around the estate / factory, c. Is the FPIC approach incorporated in communication and consultation local governments, related institutions labour unions, NGOs, can deliver the SOP for communication and with the local communities and communications to the company in the form of requests for information, consultation with the local other affected or interested expression of aspiration, demands / claims, complaints / grievances against the communities and other affected or parties plantation and processing plant palm oil. The company facilitates the delivery of interested parties?  SOP has been developed with this communication through incidental meetings of stakeholders and provision of d. Has the SOP been developed together local communities /interested suggestion boxes placed in all division office, large office and office security. with the local communities and other parties by meeting formally. Result of communication and consultation was recorded in the ‘log book’, e.g. affected or interested parties using  SOP socialized to the interested road maintenance, donation, facilities support, invitation for memorial, etc. Most appropriate existing local mechanisms parties during stakeholder of requests were an invitation to follow the event held by the stakeholders. and in languages understood by these meeting on 2013. Communication and consultation has considered differential access to parties?  Interviews with affected parties information for male/ female, workers, villagers representative both old and new villagers including ethnics e. Has the SOP been socialized with the for effectiveness of SOP has local communities and other affected been conducted or interested parties taking into account the 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? 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 f. YES be responsible for communication - Decree of staffing The company has appointed a liaison officer to deal specifically with issues and consultation with the affected Document and License related to communication with the public, namely KTU. Staffs are appointed parties? - Job description Document directly by the decree from the manager. b. Has the position been made official and License staff has been For Kebun Negeri Lama Central (KNC) was appointed Mr. Parlahutan sighted. Tampubolon (KTU), for Kebun Negeri Lama Selatan (KNS) was appointed Mr. with clear and proper job description? Sholihun (KTU). c. Have the affected parties been made aware and have access to the person in charge? e.

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 stakeholders has been Stakeholder list was made and mentioned interested party. Stakeholder list YES  List of stakeholders (local maintained of .Records covered District Head, Forestry and Plantation Department, Environmental communities and other affected communication has been kept Agency, Labour, transmigration and social Department, National Land Agencies, or interested parties etc.); properly include action taken , Camat, Village Head around estate and mill, FFB supplier, Police of district,  Records of all communication, Worker union and gender committee. Stake holder list was made detail, address including confirmation of receipt and phone numbers were mentioned in the list. It was update on November or endorsement; 2016.  Evidence that efforts have been There was a record meeting with stake holder on 2016 discussing complaint to made to ensure understanding by the organisation and also needs of the stake holder. This meeting was attended affected parties; with stake holders (Kepala Desa-Village Head) and Religious leaders,  Record of actions taken in response to input from stakeholders.

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 Specific Guidance:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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  there was a system to maintain YES SOP:AA-HR-308.5-R0, dated 11 Dec 2009 (Procedures of complaints & complaints and grievances for all complaint and grievances for all grievances). Describe stakeholders consisting of: the community around the affected parties? affected parties in estate / factory, local governments, related institutions labour unions, NGOs, can b. Who in the company is responsible to  Responsible person for deliver communications to the company in the form of requests for information, receive complaints and grievances? complaints & grievances was expression of aspiration, demands/claims, complaints / grievances against the Head Dept/Manager plantation and processing plant palm oil. The company facilitates the delivery of c. Is the existence of the system been  Communication of the system made known and communicated to all this communication through incidental meetings of stakeholders and provision of was informed to all personnel suggestion boxes placed in all division office, large office and office security. parties? through “Master Morning/apel d. Is there evidence that the system is Pagi” The procedure was made already accommodate all stakeholders and with understood by all parties?  All person has been understand understandable language (Indonesian). ,verified by interview e. Is training provided to the workers on Mechanisms of complaints and grievances of workers described in Company  Training has been provided the procedures/systems? Regulation 2015 – 2017 which has been approved by Manpower Ministry of  Yes, the system has covered to Indonesia. Described in Chapter X Article 23 on the settlement of complaints. In f. Is the system effective to ensure that ensure the procedures has Paragraph 1 states that in case of a complaint or feeling less satisfied from the complaints or grievances are effective workers on the particular situation, the worker is obliged to deliver and talk to addressed or resolved in an effective,  Procedure has managed for their superior directly politely and orderly. Complaints or grievances should be be timely and appropriate manner? reporting of a grievance for settled by deliberation. g. Does the mechanism or procedure supervisor (assistant) and higher Paragraph 2. If a worker complaint cannot be resolved along with immediate provide a way for workers to report a position. superior, the supervisor immediately submits the matter to their superior higher grievance against a supervisor to  Log of complaint has been in phases to be completed. someone other than the supervisor? established, include the root cause and action plan. h. How is a complaint or grievance Paragraph 3. If the local discussion has not reached a conclusion, it can be  non retaliation / non reprisal requested for the completion of the field of local employment agency office or

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) investigated, addressed and resolved? policy has been established/ other relevant agencies in accordance with applicable employment. Are complaints dealt with by  Identification of the person will The mechanism is also set in the procedure of complaints and grievances of mechanisms such as JCC? be protected. workers SOP:AA-HR-308.5-R0, dated 11 Dec 2009. The complainant lodged a i. Is there a non-retaliation or non-  Yes it was included in the RSPO complaint orally or in writing to the assistant that she is employed. Oral delivery reprisal policy that protects complaint system. of the response was also orally. When the complainant asked for follow-up then complainants or whistle-blowers? it should make complaints/grievances to each division office or estate office. j. Is the privacy of parties protected? Letter of complaint documented in a logbook the complaint/grievances of workers. Letters will be reviewed and clarified by the k. Where a resolution is not found assistant/askep/KTU/Section Head and followed up. Every complaint resolution mutually, is there a process for documented in the minutes, presence and photos complaints to be brought to the RSPO 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  Log book to record complaints / There was complaint about allowance (natura on 2014) from workers. Mediation YES resolution process documented? grievance has been established was conducted by Dinas social & Tenaga Kerja Kabupaten Labuhan Batu as sighted letter mediation from them No:560/138/DSKT-3/2015 responded by letter b. Are outcomes or decisions reported and documented. from management on 6 March 2015, No:023/HR-R01/EXT/03/15 signed by to the parties?  Any feedback received from the workers was followed up by Manager of Negri Lama II Mill. c. Who has access to the union (SPSI). documentation of the process and/or  Access of document was given outcomes? to manager.

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.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Are procedures for identifying legal,  Procedure of Land dispute Organizations have established procedures of Land dispute resolution YES customary or user rights in place? resolution mechanisms AA-GL- mechanisms AA-GL-5003.1-R1. Describes the mechanism of compensation b. Are procedures for identifying people 5003.1-R1 before land clearing and land conflict resolution mechanisms between companies and land owners. The procedure described mechanism for entitled to compensation in place?  Procedure for identifying people identifying legal, customary or user rights and for identifying people entitled to entitle to compensation has bee c. Are those procedures jointly established compensation. The procedure was available at all Estate Office. developed, agreed and accepted by  Procedures were agrees & local communities? accepted by local communities The procedures were agreed and accepted by local communities as evidence that those procedures jointly developed with local communities.

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. a. Has a procedure for calculating and  Procedure of Land dispute Procedure for calculating and distributing fair compensation (monetary or YES distributing fair compensation resolution mechanisms CR-AGR- otherwise) has been established and implemented by estate. Procedure (monetary or otherwise) been 102-GRL.06-11-1 monitored and evaluated in a participatory way, and corrective actions taken as established and implemented?  Interview with stakeholder on 16 a result of this evaluation. It’s evident through public consultation with stakeholder. Equal opportunities have been provided to both female and male b. Are the procedures jointly developed, March 2016. heads of households to hold land titles. agreed, accepted and clearly understood by affected parties? Based on interview with stakeholder it was evidence that all the procedures are jointly developed, agreed, accepted and clearly understood by affected parties. It c. Is the procedure monitored and also verified that the procedure monitored and evaluated in participatory way and evaluated in a participatory way? Have corrective action been taken as result of the evaluation. corrective actions been taken as a result of this evaluation? The procedures does take into account of the gender differences in the power to d. Does this procedure take into account claim rights, ownership and access to land, differences of transmigrants and the following: long-established communities, differences in ethnic groups’ proof of legal versus  Gender differences in the power communal ownership of land. to claim rights;  Ownership and access to land; There was no smallholder scheme associated with PT. Hari Sawit Jaya – Negri Lama II Mill.  Differences of transmigrants and

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) long-established communities; The latest HGU processing for PT. Hari Sawit Jaya has been done on February  Differences in ethnic groups’ 2016 resulting Land titles (HGU) Extension No.02-12-00-00-2-00074 issued on proof of legal versus communal 29 February 2016 includes SK BPN Sumatera Utara No.3/HGU/BPN.12/XI/2015 ownership of land. dated 8 December 2015 regarding extension land titles issues for PT Hari Sawit Jaya for area coverage 188.75 Ha. The procedures were implemented. e. Where there are schemed

smallholders, is there effort to ensure PT. Andalas Intiagro Lestari, Aek Kuo Estate is now on process for HGU equal opportunity has been provided extension. All compensations process with local communities is completed. The to. process now is process for technical consideration in gaining Location Permit from Land Agency (BPN) of Labuhan Batu Regency.

(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.

 Is the process and outcome of  Procedure of Land dispute It was noted that there was no ongoing progress of new land acquisition during YES negotiated agreements and resolution mechanisms CR-AGR- interview with sampled villager’s representative, all previous land acquisition was compensation claims documented? 102-GRL.06-11-1 solved before Land Use Title-Hak Guna Usaha (HGU).

 Does this documentation include  Records of compensation The latest HGU processing for PT. Hari Sawit Jaya has been done on February evidence of the participation of  Interview with stakeholder on 16 2016 resulting Land titles (HGU) Extension No.02-12-00-00-2-00074 issued on affected parties? Is there any March 2016. 29 February 2016 includes SK BPN Sumatera Utara No.3/HGU/BPN.12/XI/2015 approval/signed by effected parties?  dated 8 December 2015 regarding extension land titles issues for PT Hari Sawit  Was consent obtained from all parties Jaya for area coverage 188.75 Ha. The procedures were implemented. to make the documents publicly available? PT. Andalas Intiagro Lestari, Aek Kuo Estate is now on process for HGU extension. All compensations process with local communities is completed. The process now is process for technical consideration in gaining Location Permit from Land Agency (BPN) of Labuhan Batu Regency.

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.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. What types of employment  Ttype of employment are SKU- Wages/remuneration and calculations performed using Payroll Application YES arrangements are there in the H/B (Permanent) & PHL (Daily andrecorded in the computer system each month. company? (E.g. contractual, workers) 1. Payment of wages in 2015 based on the North Sumatera Governor's Decree outsourced, apprenticeships, direct  Documentation of pay & No.188.44/69/KPTS Tahun 2015 (Kabupaten Labuhan Batu), Minimum hires, piecemeal basis, etc.) condition were available in CBA. wage on palm oil sector was IDR 2,012.500,-/month (for PHL) and for SKU- H based on Surat Edaran BKS-PPS No.14/BKS-PPS/2015, dated 27 b. Is there documentation of pay and  Living wages was established for January 2015 was Rp. 1.952.640/month. conditions for each employee? each region (Riau Province) and reviewed yearly. Last updated 2. Payment of wages in 2016 based on the North Sumatera Governor's Decree c. Is there a definition for living wage in on 2015 No.188.44/639/KPTS Tahun 2015 (Kabupaten Labuhan Batu), Minimum the country? If not, how was the  Employment remuneration wage on palm oil sector was IDR 2,085.050,-/month decision on wage for employees and payment slip 2016 (January- contract workers made? February) Salary slip in November, December 2015 and also proved that the payment of wages has met predetermined minimum wage. The minimum wage consists of  North Sumatera Governor's Decree No.188.44/639/KPTS basic wage plus a fixed allowance. Tahun 2015  Contract of workers (SKU- Based on interview with worker it was noted that payments for workers were H/SKU-B) and PHL determined according to daily attendance register and over time shift. Daily  PKB (Perjanjian kerja bersama) attendance for workers was recorded and controlled manually by the each which endorsed by Dirjen Assistant. Pay and conditions for employees and for contract workers always pembinaan hubungan industrial meet at least legal or industry minimum standards and are sufficient to provide dan jamsostek No. Kep. decent living wages. There was no deduction of worker wage. 88/PHIJSK- PKKAD/PKB/VI/2015, dated 18/6/20156  Interview with worker and worker union on 15 March 2016 (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  Pay & conditions of employee Agreement/contract of employment for workers has been included in the YES employment clearly detailed in the detailed in contracts and employee contract. In the agreement regulates the : working hours, deductions, employment or service contracts? CBA/PKB (Perjanjian kerja overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal,

(E.g. working hours, deductions, bersama) which endorsed by period of notice, etc.). overtime, sickness, holiday Dirjen pembinaan hubungan Contract of employment available in languages understood by the workers (in entitlement, maternity leave, reasons industrial dan jamsostek No. Bahasa Indonesia) and explained carefully to the worker by HRD officer. Each

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) for dismissal, period of notice, etc.) Kep. 88/PHIJSK- employment contract signed by the employee concerned and have understood PKKAD/PKB/VI/2015, dated (PKWT), a copy of the employment contract provided to employees. Sighted b. Is the contract prepared in languages understood by the workers, explained 18/6/20156 contract of workers : 1. Mr.JL, at Process Unit at Mill/Factory, started to work on 5 January 2016. carefully to workers by management  Contracts were understood by officials, and signed by both the both sides, signed by employee Basic Salary was Rp.1,932,000,- (Rp.80,500 x 24 days) Premium Process Rp. 2,799,300,- with deduction for Social Security (JAmsostek) Rp 40,249,- authorised signatory of the company & management. and Health social Security (BPjs) Rp. 18,700,- and employee?  C & D Pay & conditions provided were comply with local legal 2. Mr.SK, at Process Unit at Mill/Factory date 5 January 2016. Basic Salary c. Does the pay and conditions requirement North Sumatera Rp. 1,932,000,- (Rp.80,500 x 24 days) Premium process Rp. 3,016,450,-. provided in labour laws, union Governor's Decree with deduction for Social Security (JAmsostek) Rp 40,249,- and Health agreements or direct contracts of No.188.44/639/KPTS Tahun social Security (BPjs) Rp. 18,700,- employment comply with: 2015 Salary was complied with local legal requirement.  The decent living wage as  Pay received by the employee provided in the National consistent with the terms of It was verified during interview with worker and worker union on 15 March 2016 Interpretation for the country; or contract and the law. that contract PHL was signed by respected workers. E.g Agus P in Processing  The local legal requirements in  No cases identified for breach by unit of Negri Lama II Mill. Based on interview with workers and labour union, meeting the minimum wage; or the company or complaint. there are no records of breach by the company. Salary has been delivered  The industry minimum standard  Interview with worker and worker routine in each month without problem. for a similar position or work union on 15 March 2016 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 Interview and site observation There was housing and water supplies, medical, educational and welfare YES

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) adequate housing and other basic amenities available for the workers in mill and estates. For Negri Lama Selatan necessities such as that listed below to Estate provided 334 houses, Negri Lama Central Estate 233 houses and 47 national standards or above, where no houses for factory/mill (Pabrik Negeri Lama Satu) complete with electricity and such public facilities are available or water Mill were supplier and 2 rooms + toilet. Source of water were taken from accessible? small dam in the complex of plant. Education were provided with level  adequate housing; elementary (SD Sidomulyo & SD Bina Dharma) 5 Km from the workers housing,  adequate electricity; SD Muhamadiyah. Junior high school (SMP Negeri 3) and high school in Negeri  clean water supplies (availability of Lama. Also provided transportation for student of the school. Local market was clear water all year round); available in Kebun Negeri Lama Central (every Thursday). And for medical  medical services (distance to facilities were available such as central clinic and each estate/mill. Complete with health care facility i.e. clinic, doctor & paramedics. Mosque & church also available at each estate & hospital); mill/factory.  children education (distance to school and schooling attendance (%) of children under 12)  welfare amenities.

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 - Yes, based on Interview with Monitoring of workers access to food was conducted monthly. Organisation YES demonstrable efforts to monitor and employee of Negeri Lama Central provided Rice for workers and the family. Markets in Posko Pekan Kamis Desa improve workers’ access to adequate, Estate, Negeri Lama Selatan Sidodadi with the range of 5000 m, every payday traders will be closer to the sufficient and affordable food? Estate and Mill location of the estate to trade the basic needs of. Access to the market is always - Field visit in emplacement/ taken care of by graders regularly, so that during the rainy season can still be housing of employee passable. In Emplacement/employee housing there are also some stalls and small shops seller staple necessities. Employees are not difficult to obtain basic commodities every day. Employee housing access to the main road is less than 1 km with road conditions were pretty good, the market which provide food and basic goods needs easily found not far from the location of the company

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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  "Sustainable palm oil policy Asian YES The company has a written policy “the freedom of association in PKB (Perjanjian statement in local languages Agri Group" approved by kerja bersama) which endorsed by Dirjen pembinaan hubungan industrial dan recognising the rights of employees to Management Director 2014 jamsostek No. Kep. 88/PHIJSK-PKKAD/PKB/VI/2015. In article 2 “the freedom of association?  PKB (Perjanjian kerja bersama) recognition of the organization (union labour)” Employers and unions work b. Are the employees, including migrant which endorsed by Dirjen together to establish order, peace and tranquillity strive and work within the and transmigrant workers and contract pembinaan hubungan industrial framework of national development and human Indonesia to increase the workers, allowed to form associations dan jamsostek No. No. Kep. company's production economically. and bargain collectively with their 88/PHIJSK-PKKAD/PKB/VI/2015 employer? dated 21 April 2015, registered on The company also issued Policy of freedom of association which published in 18 June 2015 "Sustainable palm oil policy Asian Agri Group in Article 2 states that the c. Was the outcome, if any, from the  Interview with employee company provides equal opportunity for all employees to organize, association collective bargaining process between  All types of employment was free and the develop a career according to capabilities. the company and the association to form associations and bargain respected, implemented and adopted collectively. in full or partially by the company?  Labour law available in UU d. Are there Labour laws and union No.13, Year 2003. Were agreements, or in their absence direct socialised by HRD/KTU to all contracts of employment detailing employee or using CBA for new payments and other conditions, made employee. available in the languages understood by the workers or explained carefully to

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) them by a management official?

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

a. Are there documented minutes of  Yes, there was Minutes of Minutes of meeting were available for meeting between (union) employee and YES meetings between the company and meeting available between union management on 30 May 2015, discussed of Ramadhan festive celebration. main trade unions or workers & management. representatives?  Minutes of meeting available b. Are the minutes made readily available upon request. 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. a. Is the minimum working age for  Minimum working ages was 18 as YES Organisation has policy for minimum age for worker and mentioned in the workers together with working hours per company regulations (PP) company regulations that have been approved by the Indonesian Manpower clearly defined in the company’s 2014-2016 and UU NO. 13 year based on Decision Letter No.KEP.80/PHIJSK-PKKAD/PP/II/2013. Chapter III recruitment policy? 2003,Head HRD Memorandum The acceptance and job placement and job requirements, in article 3 paragraph No:21/HRD/INT/VII/2009. b. Are workers employed above the 1 states the requirements of the worker's age: at least 18 years old at the time of minimum school leaving age of the  Employer employed above admission. Also Memorandum from Head HRD Asian Agri Group country or who are at least 15 years of minimum school age(18 years) No.21/HRD/INT/VII/2009, dated 6 July 2009 about minimum age and probation

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) age?  There was no worker under 18 for underage worker. years old. c. Is there evidence that the nature of According to observation in the estates and mill, there is no worker under 18 work for workers under 18 is in  Based on interview and document years old. accordance with International Labour verification there was no workers Organisation (ILO) Convention 138? below minimum age.

d. Does ground verification show evidence of employment of workers below the minimum working age?

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. a. Is there a company policy on non-  Sustainable palm oil company Policies on equal opportunities and treatment to get the job described in the YES discrimination and equal opportunities? policy Asian Agri Group in Article “Sustainable palm oil policy Asian Agri Group in Article 13 states that the Does it at least cover the items 13 approved 01 December 2014 company provides equal opportunity for all employees to organize, mentioned in the criteria (6.8)?  Policy made available in the association and develop a career according to capabilities strategic area in the estate and b. Is the policy made publicly available for the relevant stakeholders? plantation.  Policy has been implemented c. Is there evidence that the policy has based on verification by interview been implemented? to employee

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

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  Based on Interview with Worker list of Mill and Estate mentioned that all workers came from different YES groups including local communities, employee there was no back grounds (race, religion, gender). Worker proportion based on many ethnic. women, and migrant workers have not discrimination Ethnic diversity of worker and also during interview with workers, no been discriminated against?  Employees were happy with the discrimination was identified based on religion, ethnic, gender. During interview with workers (local worker and migrant worker), no discrimination was identified b. Are the employees and groups treatment of the company. based on religion, ethnic, gender. including local communities, women,  There was no complaint against and migrant workers happy with the the company relating to way the company is treating them? discrimination or other reasons.

c. Are there complaints against the company on issues relating to discrimination? d. What is the nature of complaints employees and groups including local communities, women, and migrant workers have lodged against the company, if any?

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  Records of employee were In the recruitment process, the company has set the standard of competence YES a record of their employees’ work maintained include medical that inferred in the Position Description and Job Profile. Recruitment selection, credentials and medical history? history and credentials. hiring and promotion are based on skills, capabilities, qualities, and medical fitness. b. Does the company explicitly state the  Indiscriminatory policy during recruitment was stated clearly. Job opportunities were communicated and given to surrounding villagers at first indiscriminatory policy during the recruitment selection, hiring and  Review of the policy was priority where no discrimination found observed during interview and related records of workers being employed. All workers are treated equally in promotion process? conducted yearly  Recruitment was conducted accordance with company regulation including rights of worker as well. The c. Is the company’s indiscriminatory based on skill, capabilities as compliance in accordance with national laws has been evaluated by the policy reviewed regularly? seen on process period 2014 for organisation as described in criterion 2.1

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Are the company’s employees position mill compouond, recruited and promoted based on skills, inventory and helper in the capabilities, qualities, and medical factory. fitness necessary for the job? How is this evidenced?

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.

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 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 6.9.1 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  Policy on the prevention of sexual YES Policy on the prevention of sexual harassment written in company policy date 1 prohibit any form of sexual and all harassment written in company December 2015, point 15. other forms of harassment and policy date 1 December 2015, violence? point 15 Organization also establishes the sexual harassment handling procedures AA- b. Has this policy been documented,  Policy was documented and HR-309.01-R0. Describes the sexual harassment policy, workflow of sexual implemented and communicated implemented through harassment handling, kind of sexual harassment, example of sexual harassment clearly to all levels of the workforce? socialisation in all division by acts. banner and poster placed. Based on workers interview, it was informed that there was no sexual c. Is there a clear protocol for the  Protocol to handle the harassment and violence within the organization company to deal/handle such issues/complaint was established

issues/complaints received from the in SOP Prosedur Pencegahan &

workforce? Penanganan Kasus Pelecehan Seksual No: AA-HR-309.01-R0

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Is there a list of awareness programs  Awareness training has been or training provided to the workforce in established. relation to these issues?  Gender Committee has been e. Has the company formed a Gender established, list has been Committee to address areas of established and include several concern to women? Is there a list of issues such as women rights the members sitting in the committee? training, counselling, child care What are the Terms of Reference of facilities, breastfeed for women, the committee? Does it include the  Policy was regularly reviewed handling of issues such as: (once a year).  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. 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  There was a policy to protect YES Policy on the protection of reproductive rights of all (Point 15, especially of reproductive rights of all, especially of reproductive rights for women. women written in Asian Agri Company Policy date December 1st year 2014 women?  Yes policy documented. Signed by Mr.Kelvin Tio as Managing Director. b. Has this policy been documented,  All personnel understand implemented and communicated  Company Policy date December Organisation has developed policy and the implementation of reproductive rights clearly to all levels of the workforce? 1 year 2014 (protection of for women in the estates (Kebun Negeri Lama Central & Kebun Negeri Lama reproductive rights) Point 15. Selatan) such as monitoring of women condition during morning presence prior

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) c. How is this policy communicated to all  Interview with workers go for spraying/manuring. levels of the workforce?  Procedure complaint mechanism for sexual harassment AA-HR- 309.01-R0

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  Mechanism to handle The company has a mechanism to handle employment grievances in SIM- YES to handle employment grievances, that employment grievances has been SOP:AA-HR-308.5-R0 , dated 11-12-2009, The procedure already provided respects anonymity and protects established in SOP:AA-HR-308.5- mechanism to report grievance point 4.1, that applied for all complainants where requested? R0 , dated 11-12-2009 position(staff/supervisor/manager). Follow up of grievances were conducted by b. Does the mechanism provide a way for  Mechanism provision to provide Head Dept/Manager & HRD Department workers to report a grievance against a report a grievance has been supervisor to someone other than that established supervisor?  Mechanism was documented in procedures c. Is the mechanism documented,  Follow up of grievances were implemented and communicated conducted by Head clearly to all levels of the workforce? Dept/Manager & HRD d. Has the company identified personnel Department who will be responsible to receive and  There was no harassment/abuse manage complaints received from the reported during audit period 2015. workforce?  Policy reviewed as necessary e. Has the company received any reports whenever there was changed of or complaints of harassment or abuse? company How was it addressed or resolved? f. Is the policy reviewed regularly?

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

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?  FFB pricing mechanism The FFB pricing mechanism were established that based on CPO and PK prices YES b. Is current and past prices paid for  FFB Price mill display minus the transport cost and multiple with OER divide with taxes (PPN 10%) as illustrated as below: Fresh Fruit Bunches (FFB) publicly  Documented procedure (AA-GL- CPO and PK prices - transport (X) OER / 10% taxes. available? How? 510.1-R0) regarding on how to handling the complaints The FFB price still affected from market price, mill competitors and condition of c. Was there any complaints on FFB the FFB.  Site visit observation to estate pricing? and mill and interviews with all The price of FFB was published / displayed on the front yard of the mill. d. How was the complaint handled? employees and contract workers There is available the documented procedure (AA-GL-510.1-R0) regarding on how to handling the complaints may come from suppliers, the public relations e. What was the solution? (HUMAS) and/or administration had (KTU) will faced the suppliers regarding FFB pricing issues. So far there is no complaint from the suppliers regarding the FFB pricing. (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).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. What is the mode of  FFB pricing mechanism So far there is no smallholders supplied for the mill, nevertheless there are YES recording/documenting transactions  FFB Price mill display available the third party FFB suppliers. The FFB suppliers were separated into between millers with middlemen and/or  Site visit observation to estate contract base and non-contract base suppliers. For PNS mill only available the smallholders? and mill and interviews with all non-contract base suppliers (intermittent supply) with no bond. b. Is there evidence that growers/millers employees and contract workers The FFB price still affected from market price, mill competitors and condition of the FFB. The price of FFB was published / displayed on the front yard of the mill. have explained FFB pricing and pricing The FFB pricing mechanism were established that based on CPO and PK prices mechanisms for FFB? minus the transport cost and multiple with OER divide with taxes (PPN 10%) as c. Are there any inputs/services rendered illustrated as below: by the millers to smallholders/middle CPO and PK prices - transport (X) OER / 10% taxes. men? Are these inputs/services having Since there is no available smallholders (plasma); so there is no applicable for any influence to the pricing and pricing the inputs/services rendered by the millers to smallholders/middle men and mechanisms for FFB? recycle waste. 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?

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  Site visit observation to estate So far there is no smallholders supplied for the mill, nevertheless there are YES between the miller and smallholders/ and mill and interviews with all available the third party FFB suppliers. middle men? employees and contract workers There is no contractual agreement between mill and suppliers, since there are no available long term contractual FFB suppliers, there is only available non- b. Do all parties understand the contract base FFB suppliers (intermittent supply) with no bond. contractual agreements they have entered into? The only contractors working in estate and mills are CV Harimas as the housing contractors, there is sighted contracts (SPK) No.6178MM.AAS/XV/03/16 dated c. Are all contractual agreements fair, 04 March 2016 with details information: price, specification, volume in bill

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) legal and transparent? quantity, fines, timeframe, terms of payment and working evaluation. 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  Records for cash transfer bank For the FFB suppliers there is provide with cash transfer evident. Records YES smallholders/middle men? Mandiri dated 16-March 2016 for sighted for cash transfer bank Mandiri dated 16-March 2016 for all FFB b. What is the mode of all FFB suppliers, such as suppliers, such as Sumiyatik, Mukhtar Pinem, KPKS Wahyu Agung, Edy Ahmad, Esteria Manurung, etc. recording/documenting transactions Sumiyatik, Mukhtar Pinem, KPKS Wahyu Agung, Edy Ahmad, between millers with middlemen and/or smallholders? Esteria Manurung, etc. 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.

Guidance: 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 6.11.1 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

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) profit/turnover should be used for social development projects, and minimum quotas for local employment.

a. Have the local development needs and YES - CSR Program PT HSJ period Records of organization contribution to regional development were evident, priorities been identified in consultation 2015 and 2016. among either: agreement contract, and social assistance list. with local communities? (refer also to C - Realization of CSR Program from 6.2) CSR program has been implemented which mostly are CSV (Corporate Share January – December 2015 b. What are the contributions made to Value) to local farmers: facilitation of KUD (farmer group) establishment, local development? Are they in dynamic training for KUD (farmer groups), credit service to farmer groups, accordance with the results of procurement of fertilizers with credit scheme, technical trainings (harvesting, consultation? disease control for plantation, FFB quality inspection, etc.) c. Are there efforts to improve or CSR program was provided by the organization and deployed in to CSR maximise employment opportunities at program. Activity of CSR was identified by the estate/mills (Rekapitulasi Laporan the company for local communities? Kegiatan CSR), including: repairs the village road, mosques renovation in surrounding villages, checks and medical for free, etc. Implemented document was recorded within photo and minutes of aid delivery. Sighted for evidence of community development for Sidomulyo village & Sungai(Sei tarorat),Sungai Kelapa for rural road services maintenance in 2016 and also for local community celebration such as wedding ceremony Batak (Mandungi Adat) Hula-hula & Boru. Period 2016 has been conducted Penyuluhan Teknis Budidaya Kelapa Sawit (January) to KUD Rp.250.000,- out of Rp.6.000.000,- Also for equipment for mosque ,provided on 30/6/2015 to Desa Sidomulyo Mesjid Nurul Iman costing Rp.10.000.000 ,- Another local business was supported for growers and mills, main supports were pertinent to procurement spare parts and vehicle maintenance. The local business is assigned and controlled by central purchasing in Head Office. S

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

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a complete registry of There are no scheme smallholder associated with PT. Hari Sawit Jaya NA independent smallholders in the supply base? 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  Company policy on 1 December YES There was no forced labour in Kebun Negeri Lama (Central,Selatan) and Mill or trafficked labour? 2014, no forced labour allowed in (Pabrik Negeri Lama Satu). All the labour/employment has the right conform to the organisation b. How does the company define forced their contract. The contract contains no forcing to the labour. The contract was  Interview with employee

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) or trafficked labour?  Perjanjian Kerja Bersama (PKB), agreed between labour and company. The form of labour contract such as : Perjanjian Kerja Bersama (PKB), PKWT contract and PHL contract. c. What is the process of recruiting PKWT contract. SKHU-Bulanan & SKHU-Harian dan Pekerja Harian foreign/ migrant workers directly and/or Interview with the employment concluded that there was no compliant and any Lepas. through licenced outsourcing agencies/ grievances regarding the contract and their right. labour suppliers? During the audit there was no migrant workers in Kebun Negeri Lama d. Who is the person responsible for (Central,Selatan) and Mill (Pabrik Negeri Lama Satu. selecting/ screening labour suppliers/ a. The company policy stated there was no forced/trafficked labour, on 1 May outsourcing agents? 2015 and also on PKB/Collective Bargain Agreement between Union (FP- e. Do the foreign workers have to pay a SPSI) and Organisation (BKS-PPS) period 2015 – 2017 fee to the employment recruitment b. Forced/trafficked labour defined for those workers with bonded and unclear agency or labour suppliers in the contract of worked. workers’ countries of origin? If yes, c. There was no migrant/foreign workers in the company identified through does it jeopardise decent living wage? interview with workers,company representatives and government agent (DinasTenaga Kerja social kabupaten Labuhan Batu). f. Are there restrictions on workers from leaving the mill or estate or their housing facilities outside working 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

Audit Report

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  Interview with employee There was no substitution contract occurred. Workers get the job and contract YES substitution occurring?  Perjanjian Kerja Bersama (PKB), conforms to agreement between company and its workers. b. Are foreign workers asked to sign a PKWT contract. SKHU-Bulanan & contract upon arriving in the receiving SKHU-Harian, PHL (Pekerja country? If yes, is that contract Harian Lepas) identical to the one signed in the country of origin? c. Are workers given a copy of their employment contracts? If yes, is the contract 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.

Audit Report

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 employee There was no migrant/foreign workers in the company identified through YES procedures for temporary or  Perjanjian Kerja Bersama (PKB), interview with workers, company representatives and monthly report to foreign/migrant workers? Does the PKWT contract. SKHU-Bulanan & government agent (Dinas Sosial &Tenaga Kerja kabupaten Labuhan Batu) special labour policy include: SKHU-Harian, PHL (Pekerja  Statement of the non-discriminatory Harian Lepas) 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.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a company policy on human  Interviewed with employee Organization has established the policy "Principles of Business Ethics" PT Hari YES rights?  Perjanjian Kerja Bersama (PKB), Sawit Jaya dated 26 November 2012, by Mr. Kelvin Tio (Management Director) b. How is this communicated to all PKWT contract. SKHU-Bulanan & Asian Agri Group.

employees, including outsourced SKHU-Harian workers, customers and suppliers? If  Interview with government Communication & socialisation were conducted by providing refreshment training of policy for employee (sighted for period 2015) by training, how often is the training representatives (DinasTenaga

conducted? Kerja social Kabupaten Labuhan Batu) Person in charge to communicating policy was KTU (Kepala Tata Usaha and all c. Who has the task of communicating Managers. the policy internally and externally? d. Does the company have any There was no outstanding case of human rights violations. outstanding cases of human rights violations?

Audit Report

PRINCIPLES 7: RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS All land inside the concession area has been developed before RSPO established, the latest land clearing for new planting was carried out in 2003, planting year 2006 - 2015 is replanting; therefore Principles 7 is not applicable.

Audit Report

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  Internal audit period April 2015 Internal audit was conducted within period April 2015 regarding the sustainable improvement?  VE (Visit Engineering) Report. palm oil, included the environment and health and safety aspects. The corrective Np. PNS-VE-FULL-01-15 dated action was followed if there are any non-conformances raised. Moreover the b. Describe the main components of the plan. 18th April 2015 organisation conducted monitoring and checking for mill operation performance c. Has the action plan been implemented?  OHS Objectives and through periodic visit of corporate engineering called VE (Visit Engineering), The programme period 2015 and Report sighted; No. Report. PNS-VE-FULL-01-15 dated 18th April 2015 was d. Provide examples of continual 2016 sighted includes Mill key performance, assessment overall mill operations, process improvements that have been efficiency, plant maintenance, management supervision, manpower statement, implemented. production cost, EHS management system and sustainability. The result of above e. Are history records available to develop the audit was on scoring system summarized 76% (above the target 40%) with score action plan? 313 out of 414. The corrective action plans was established and followed up by mill, the records was also evident. f. Are records of implementation of the action The records also sighted regarding objectives and programmes related to health plan available? and safety for each estates and mill; that for estates includes: to reduce the g. Does the action plan include strategies for: number of accidents and 5S programme; safety meetings and briefings for all

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) • Reduction in use of pesticides employees and contractors; safety inspections. The objective and programmes for (Criterion 4.6)? Is IPM widely mill, includes: reduce the number accidents; preventive maintenance programme; implemented? PPE provisions and implementation of health surveillance. Within the OHS • Environmental impacts (Criteria 4.3, objective and programmes was included the time frame; person in charge and cost 5.1 and 5.2)? estimation. The monitoring of each objectives and programmes were conducted • Waste reduction (Criterion 5.3)? periodically by the person in charge. • Pollution and greenhouse gas (GHG) emissions (Criteria 5.6 and 7.8)? Evidence of several improvements was shown, e.g. • Social impacts (Criterion 6.1)? • Optimising the yield of the supply  Reduction in use of certain chemicals: base? • The organisation committed that Paraquat only used for specific species: a h. Do growers have a system to improve few species of ferns, such as: Stenochlaena and Lycopodiophyta. practices in line with new information and techniques, and a mechanism for • Reduction of Paraquat consumption disseminating this information throughout  Environmental impacts: the workforce? • Segregation of domestic water run off with industrial waste water by building trench around shell storage area to prevent contaminated water to open drainage • Improvement in monitoring of fuel consumption by calibrating fuel injection pumps and check fuel nozzle pipe. • Improvement in monitoring of domestic water consumption by installing flow meter to monitor water consumption in housing • Recycle the water cooler turbine discharge water basin; • Recycle the condensate water discharge water dilution; • Minimize duration of mill cleaning to be every two weeks.  Waste reduction: • Reduction in discharged waste water. The project including: Injection of water from hydro cyclone and blow down boiler to boiler chimney. It can prevent blow down boiler drain to water body, reduce waste water treated in WWTP.  Pollution and emissions:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) • Reduction of potential particulate release to the atmosphere by increase boiler ash capture by the chimney  Biodiversity conservation • 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 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 three (3) oil palm estate owned by PT. Hari Sawit Jaya, one (1) oil palm estate owned by PT. Andalas Intiagro Lestari and third party estates. PT. Hari Sawit Jaya and PT. Andalas Intiagro Lestari are subsidiary of PT. Inti Indosawit Subur (RSPO member number 1- 0022-06-000-00. The third party estates are excluded from certification. All FFB are processed together, both from own estates (certified sources) 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 Negri Lama II 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. HARI SAWIT JAYA – Negri Lama II Mill

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

RSPO IT Platform Registration number: RSPO_PO1000003004

Site Address: Negeri Lama Seberang Village, Bilah Hilir District, Labuhan Batu Regency, North Sumatera IDN

Management Representative: Ms. Asrini Subrata

Site type: Palm Oil Mill

Site capacity: 45 MT FFB per hour (Permit 60 MT)

Certified palm product sold: None

Audit Report

Certified palm product used: 2,155 Ton

App/Cert No: FMS40024 Audit Type: 1st Annual Surveillance Audit

SAI Global Auditor/Team: Eko Purwanto Audit Date: 17/03/2016 Activity/Audit No: WI-842854

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 – December 2016

Estimated tonnage of certified palm product produced: 45,328 MT CPO and 10,907 MT PK

Estimated of tonnage of non certified palm product produced 898 MT CPO and 267 MT PK (or based on need)

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 a. Has the estimated tonnage of CPO and PK products recorded by certification body, i.e.: (that could potentially be produced by the certified Certification audit: C mill) been recorded by the certification body (CB) in Estimated CPO : 51,040 MT the public summary of the P&C certification report ? Estimated PK : 10,640 MT

Audit Report

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

ASA1: Estimated CPO : 45,328 MT Estimated PK : 10,907 MT

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 C allowed to deliver in a year ? deliver in a year.

The actual tonnage produced has been recorded in each subsequent annual surveillance report, i.e: ASA1: Actual CPO : 462 MT C c. Does the actual tonnage produced have to then be Actual PK : 130 MT recorded in each subsequent annual surveillance In this period, certified CPO and PK produced by Negri Lama I report ? Mill. Negri Lama II Mill only processed certified FFB one day in September 2015.

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. HARI SAWIT JAYA – Negri Lama II Mill has met all for the appropriate supply chain through the RSPO registration requirements for the appropriate supply chain supply chain managing organization (RSPO IT platform C through the RSPO supply chain managing organization (RSPO or book and claim)? IT platform), with register number RSPO_PO1000003004.

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) b. The mill must also meet all reporting requirements for the appropriate supply chain through the RSPO supply The mill also has met all reporting requirements for the chain managing organization (RSPO IT platform or appropriate supply chain through the RSPO supply chain 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 C established to ensure the production of sustainable and non-sustainable CPO/PK/CPKO produced by the Mill 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,

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) Procedure of Book Keeping. The procedure described mechanism to monitor the supply chain of certified CPO, PK and CPK production are sustainable, from 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-SM-405.2.R0, procedure of RSPO eTrace system  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 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 C  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

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) 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 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, Head of Administration, weighing clerk, security, storage keeper etc. has been trained for refreshment of Traceability and Mass Balance on 13 August 2015 and 21 April 2015. d. Is the person able to demonstrate awareness of The assigned persons were able to demonstrate awareness of the site’s procedures for the implementation of the site’s procedures for the implementation of RSPO SCC this standard? standard. C All employees contribute to implementation of RSPO SCC have been trained by competent persons. The latest training was performed on 13 August 2015 and 21 April 2015.

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

a. Has the site had documented procedures for receiving The Procedure of Traceability (AA-MPM-OP-1400.17-R4) and C 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 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 Mass Balance (AA-MPM-OP-1400.18-R4) have mentioned the b. Has the site had documented procedures for receiving C non-certified FFBs? 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 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 C 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 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 C 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 a. Does the site verify and document the volumes of base unit. During weighing on weighbridge the FFB sources is certified FFBs received ? identified; whether received from own estate (block number C and division) or from third party. Weighing slip and receiving report issued clearly stated the weight off FFB received and its

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) 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 2,502 MT (certified) and 159,889 MT (non-certified). During this period, most of certified FFB processed by Negri Lama I Mill. The site has two weighbridge, which are: - Avery Weigh Tronix / 1801 / Serial No. XX F10475 with maximum capacity of 50 MT. The weighbridge has been calibrated by UPT Metrologi Rantau Prapat based on certificate No.510.3/179/MT.RP/15-TU dated March 2015. Work order for period 2016 calibration was available (WOPND/601007).

Records of certified FFB received: - Weighbridge card No.A116105653 dated 16/03/2016 described the commodity was certified FFB, sourced from Negeri Lama Selatan Estate (KNS), Division 1, Block G10c. Nett tonnage was 6,850 KG. Time in 13.27, Time out 13.40. Transporter: Internal, unit: BK9872YK, driver Riyan. - Weighbridge card No.PNDA116105702 dated 16/03/2016 described the commodity was certified FFB, sourced from Negeri Lama Central Estate (KNC), Division 4, Block F10a and F10b. Nett tonnage was 7,010 KG. Time in 19.17, Time out 19.30. Transporter: Internal, unit: BK9496CJ, driver Ngationo. - Laporan Harian Pabrik (Mill Daily Report) dated 31 January 2016, mentioned: certified FFB received todate was

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) 14,040.75 MT.

It was verified that receiving of FFB was traceable to the supply 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 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.A515120082 dated 31/12/2016 rd b. Does the site shall verify and document the described the commodity was 3 party FFB, sourced from volumes of non-certified FFBs received ? ESTERIA M QQ SMA 1. Nett tonnage was 6,777 KG. Time C in 07.31, Time out 08.27. Transporter BK8948YB, driver Boiman. - Weighbridge card No.515120085 dated 31/12/2016 described the commodity was 3rd party FFB, sourced from SUMIYATIK-AB QQ SMA 1. Nett tonnage was 8,216 KG. Time in 08.32, Time out 09.06. Transporter BK9949YE, driver Andi. - Laporan Harian Pabrik (Mill Daily Report) dated 31 January 2016, mentioned: FFB received todate from third party was 1,332.61 MT.

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 is a projected overproduction of certified tonnage site have to inform CB immediately if there is a projected C ? overproduction of certified tonnage. There is no overproduction during last certification period.

Audit Report

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

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 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 During audit in Negeri Lama II Mill, the responsible personnel C RSPO certified FFB on a three-monthly basis ? take a long time (more than a day) to provide data regarding (Major NCR 2016- receipt, process and delivery of oil palm product. 06 is closed)

Major Non Conformity: Not enough evidence that the site has record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO and PK on a three-monthly basis.

Correction: Carry out corrections and update bookkeeping - mass balance reports in accordance with the new format from the group management.

Root Cause: There is a new book keeping – mass balance format for units which have RSPO area less than ISCC area, Mill admin was

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) unable to fill the new format.

Corrective Action: Carry out training to mill admin and related personnel regarding the new format of Book Keeping – Mass Balance Report. b. The site shall record and balance all deliveries of During audit in Negeri Lama II Mill, the responsible personnel C RSPO certified CPO and PK on a three-monthly take a long time (more than a day) to provide data regarding (Major NCR 2016- basis ? receipt, process and delivery of oil palm product. 06 is closed)

Major Non Conformity: Not enough evidence that the site has record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO and PK on a three-monthly basis.

Correction: Carry out corrections and update bookkeeping - mass balance reports in accordance with the new format from the group management.

Root Cause: There is a new book keeping – mass balance format for units which have RSPO area less than ISCC area, Mill admin was unable to fill the new format.

Corrective Action: Carry out training to mill admin and related personnel regarding the new format of Book Keeping – Mass Balance Report.

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) c. Are all volumes of palm oil and palm kernel oil 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 C conversion ratios stated by RSPO ? ratios stated by RSPO.

d. Is the site only able to deliver Mass Balance sales The site is only able to deliver Mass Balance sales from a from a positive stock ? positive stock. There is no delivery of RSPO certified CPO during 2015 as well as early 2016. Positive stock can include product ordered for delivery within three months. However, a site is allowed to sell short.(ie Delivery records observed are: product can be sold before it is in stock.) - Transfer stock No. TS 02302/DD22/02/16 dated 04/02/2016 regarding delivery of 500 MT CPO (other scheme certified) from PT. Hari Sawit Jaya, Negeri Lama 2 Mill to PT. Hari Sawit Jaya, Tangki Timbun Lubuk Gaung, Dumai. - Weighbridge card No.PNDC116100163 dated 13/02/2016 described the commodity was other scheme certified CPO (ISCC) from Negeri Lama 2 Mill to PT. Hari Sawit Jaya, C Lubuk Gaung Bulking – Dumai based on the above TS. Nett tonnage was 23,010 KG. Time in 11.05, Time out 14.15. Transporter: CV. Teman Setia (SPK #02002/SPK/HSJ/CPO ISCC/16 dated 17 February 2016), unit: BK8637VO, driver Supardi. - Laporan Harian Pabrik (Mill Daily Report) dated 31 January 2016, mentioned: CPO delivered todate was 2,713 MT (certified) and 55 MT (non-certified), and PK delivered 584 MT (certified), no non-certified PK delivered. Lubuk Gaung Bulking is under PT. Sari Dumai Sejati which has been RSPO SC certified model IP, SG and MB by Control Union based on certificate number CU-RSPO SCC 821960

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) start date 30/08/2012 expired date 29/08/2016. 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 organization) palm kernel crush, the crush still falls under the responsibility of the mill and does No outsourced activity NA 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, Daniel Sitompul, Dirgantara Bayu Lezmana, Jarot Widyatmaka and Yosi Zainal

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: 13 July 2016

Signed for and on behalf of PT. SAI Global Indonesia

Inge Triwulandari Technical Manager Date: 18 July 2016

Appendix “A” – Audit Record

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

13/03/2016 Day 1, Sunday

GA118 Eko, Daniel, ETD 12.40 – Travelling Jakarta – Kuala Namu – Negeri Tara, Jarot, ETA 15.10 Lama Yosi And 7.5 hour by car

14/03/2016 Day 2, Monday

Eko, Daniel, Tara, Jarot, Opening Meeting 08.00 Yosi Verification on corrective action of previous audit issues Document review and site visit: Negri Lama Central Estate and Negri Lama Utara Estate RSPO Criteria: 2.1.1 for HCV aspect Eko + Yosi Criteria: (Estate) 4.1.1, 4.1.2, 4.1.3 08.30 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: 5.2 all indicators Criterion: 7.3 (if applicable) Criterion: 8.1 Verification on corrective action of previous audit issues Document review and site visit: Negri Lama Central Estate and Negri Lama Utara Estate RSPO Criteria: 3.1. all indicators Daniel 08.30 Criteria: 2.1.1 for environment aspect Criterion: 4.4.1, 4.4.2, 4.4.3, 4.4.4 Criterion: 4.6.6, 4.6.10 Criterion: 5.1, 5.3, 5.4, 5.5 and 5.6 all indicators Criterion: 8.1 Verification on corrective action of previous audit issues Document review and site visit: Negri Lama Central Estate and Negri Lama Utara Estate RSPO Criteria: 2.1 all indicators for OHS aspect Tara Criteria: 2.2.1 and 2.2.2 08.30 Criterion: (Mill) 4.1.1 , 4.1.2, 4.1.3, 4.1.4 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 Audit Report Audit meetings plus functions/ processes/ Times* Date Auditor # Shifts* areas/ *shifts audited: From - To Verification on corrective action of previous audit issues Document review: Negri Lama Central Estate and Negri Lama Utara Estate RSPO Criteria: 1.1; 1.2; 1.3 all indicators 08.30 Criteria: 2.1 all indicators for social aspects Jarot Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator 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 Observation of housing and General Facility, 14.00 Interview with employees representative. 15/03/2016 Day 3, Tuesday Verification on corrective action of previous audit issues Document review and site visit: Negri Lama Selatan Estate and Aek Kuo Estate RSPO Nursery and Replanting Eko + Yosi Criteria: 2.1.1 for HCV aspect 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: 5.2 all indicators Criterion: 7.3 (if applicable) Criterion: 8.1 Verification on corrective action of previous audit issues Document review and site visit: Negri Lama Selatan Estate and Aek Kuo Estate RSPO Daniel Criteria: 2.1.1 for environment aspect 08.30 Criteria: 2.2.1 and 2.2.2 Criterion: 4.4.1, 4.4.2, 4.4.3, 4.4.4 Criterion: 4.6.6, 4.6.10 Criterion: 5.1, 5.3, 5.4, 5.5 and 5.6 all indicators Criterion: 8.1 Verification on corrective action of previous audit issues Document review and site visit: Negri Lama Selatan Estate and Aek Kuo Estate RSPO Criteria: 2.1 all indicators for OHS aspect Tara Criteria: 3.1. all indicators 08.30 Criterion: (Mill) 4.1.1 , 4.1.2, 4.1.3, 4.1.4 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

QEF08sa.RSPO.01 / Issue Date: 2009-Apr-15 © SAI Global Indonesia Copyright 2009 Page 158 of 171 Audit Report Audit meetings plus functions/ processes/ Times* Date Auditor # Shifts* areas/ *shifts audited: From - To Verification on corrective action of previous audit issues Document review and site visit: Negri Lama Selatan Estate and Aek Kuo Estate RSPO Criteria: 1.1; 1.2; 1.3 all indicators 08.30 Criteria: 2.1 all indicators for social aspects Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all Jarot indicator 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 Observation of housing and General Facility, Interview with employees representative, 14.00 labour union and committee gender (Mill and Estate), 16/03/2016 Day 4, Wednesday Document review and site visit: Negri Lama II Mill RSPO Partial Certification Requirements (RSPO P&C Eko + Yosi Certification System 4.2.4) 08.00 RSPO Supply Chain Certification Standard, November 2014 (Module E) RSPO Supply Chain Certification System, November 2014 (5.3) Document review and site visit: Negri Lama II Mill RSPO Tara 08.00 Criterion: 4.4.1, 4.4.2, 4.4.3, 4.4.4 Criterion: 4.6.6, 4.6.10 Criterion: 8.1 Document review and site visit: Negri Lama II Mill RSPO 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: Negri Lama II Mill RSPO 08.00 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 Jarot Criterion: 8.1 Observation of Facility in Mill Interview with FFB supplier, contractors, local people, village head, religious leader and 10.00 social leader. Interview with employees representative 17/03/2016 Day 5, Thursday

Negeri Lama I Mill

QEF08sa.RSPO.01 / Issue Date: 2009-Apr-15 © SAI Global Indonesia Copyright 2009 Page 159 of 171 Audit Report Audit meetings plus functions/ processes/ Times* Date Auditor # Shifts* areas/ *shifts audited: From - To Document review and site visit: RSPO Supply Chain Certification Standard, Eko + Yosi November 2014 (Module C) 08.00 RSPO Supply Chain Certification System, November 2014 (5.3) Negeri Lama Estates Document review and site visit: Daniel 08.00 Environment aspects Document review and site visit: Tara 08.00 Legal and OHS aspects Document review and site visit: Jarot 08.00 Social aspects Eko, Daniel, Tara, Jarot, Closing Meeting 17.00 Yosi

18/03/2016 Day 6, Friday

7.5 hour by car and Eko, Daniel, Traveling Negeri Lama – Kuala Namu – Tara, Jarot, GA 191 Jakarta Yosi ETD 17.00 – ETA 19.25 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

Non Conformities No RSPO Criterion Details Corrective Action Completion Date PIC Status Initial Certification 1 2.1 indicator Major 1 There was no documented  Compliance with several law and regulations has 14 May 2014 Environment Closed and 4.7 indicator evidence of compliance with laws been re-evaluated on 4th of March 2014. The and minor 1 and regulations. evaluation result was recorded in “Evaluasi Sustainability Kepatuhan Hukum” and has covered PP 27/2012, Officer Permen 1/1981; Permen 25/2008; Kepmen KTU 609/2012, Kepmen 186/1999, Kepmen 187/1999, Kepmen 13/2011, PP 50/2012, Kepmen 100/2004 (PKWT & BHL), PP 8/1981 (perlindungan upah), Kepmenakertrans no.150/1990 (Jamsostek PHL). Compliance with law and regulations is evaluated annually.  Update evaluation of compliance periodically to ensure all regulations are registered.  New PHL is directly registered to Jamsostek after recruitment. 2 2.2. indicator Major 1 Aek Kuo Estate: Monitor based on Form of Evaluation of legal 4 October 2014 Legal Officer Closed compliance.  There is oil palm planting area Medan HO outside HGU in which is still under process Negeri Lama Selatan, Central dan Utara Estate:  There is oil palm planting area outside HGU in which is still under process 3 2.2. indicator Major 2 Although legal pegs were shown Maintain all legal pegs 14 May 2014 Environment Closed however there was no evidence that and legal pegs were maintained and Sustainability demarcated. Officer

4 4.2. indicator minor 1 There was no record of leaf analysis Check the completeness of document in unit periodically 14 March 2016 Environment Closed at the time of internal audit and Sustainability Officer AUDIT REPORT No RSPO Criterion Details Corrective Action Completion Date PIC Status

5 4.4 indicator minor 1 Although system to manage water Negeri Lama I Mill: 14 May 2014 Environment Closed sources has been defined however and inconsistency was found. Develop schedule of measurement of water discharge from Mill which is not treated in WWTP. Sustainability Officer Negeri Lama Utara Estate: Develop checklist reporting of ground water utilisation. Dissemination of PPE and working cloth cleaning to the spraying operator.

Aek Kuo Estate: Develop checklist of oil trap condition and trench condition. Develop schedule of measurement of domestic waste water and oil trap.

6 4.6 indicator Major 1 There was no evidence that State validation date of permit of agrochemical in LUK. 14 May 2014 Estate Manager Closed agrochemicals used were approved Column of monitoring is added in LUK (add expired and registered agrochemicals date). permitted by government. 7 4.6 indicator Major 3 There was no evidence that spraying Conduct training to new spraying operator 14 May 2014 Estate Manager Closed was applied by trained personnel

8 4.7 indicator Major 1 It was still found several poor Ensure all employees and contractor use PPE by 14 May 2014 Safety Officer Closed working safety practices at site monitoring PPE use periodically implementation as written below and no OHS program. Establish schedule of document reviewing periodically. 9 4.7 indicator minor 3 It was noted the existing risk  Establish schedule of document reviewing periodically. 14 May 2014 Safety Officer Closed analysis at the estate & mill is not  Ensure that control of risk assessment has been fully covered the routine and non- implemented. routine at risk activities as written below. 10 4.7 indicator minor 6 It was found incomplete of first aid Establish schedule of first aid boxes checking 14 May 2014 Public Relation Closed boxes that brought by estate periodically Officer supervisors (mandor). 11 5.1 indicator Major 2 There was no evidence that regular Develop checklist monitoring of external report. 14 May 2014 Estate/Mill KTU Closed report on environmental management was sent to related institution.

AUDIT REPORT No RSPO Criterion Details Corrective Action Completion Date PIC Status 12 5.3 indicator Major 1 There was no evidence that all Establish schedule of document reviewing periodically. 14 May 2014 Environment Closed waste and pollutions sources were and identified and documented. Sustainability Officer 13 5.3 indicator Major 2 Not all hazardous waste handling Request Medan Regional Office to return receipt note of 14 May 2014 Environment Closed were conducted as required by hazardous waste report to Kementrian Lingkungan and regulation. Hidup period July – September 2013 Sustainability Officer 14 5.3 indicator minor 2 Quantity of several wastes was not Monitor balance sheet by Traksi Assistant. 14 May 2014 Traksi Closed recorded properly. Assisstant 15 5.6 indicator Major 2 There was no evidence that pollution Establish checklist of environmental monitoring and 14 May 2014 Environment Closed and emission quality of the source measurement. and identified was monitored. Sustainability Officer 16 8.1 indicator Major 1 There was no evidence that Establish schedule of document reviewing periodically. 14 May 2014 Environment Closed continuous improvement plan was and documented Sustainability Officer

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

Non Conformities

Desa Negeri Lama Seberang, Kec. Bilah Hilir,, Kab. Labuhan Batu, Labuhan Batu, Organisation Name: PT. Hari Sawit Jaya Location: Sumatera Utara, Indonesia, Negeri Lama I Mill Date: 18/03/2016 Audit team leader: Eko Purwanto Activity/Report ID: WI-842854 License/Certificate No.: FMS40024 Organisation’s acknowledgement of receipt of NCR Employee Name: Welly Pardede Date NCR Accepted: 18/03/2016

Section 1 Section 2 Section 3 Section 4

Details of non-conforming SAI Correction : Root Cause and Corrective SAI Global SAI Global Verification of N situation and Objective Verification Action : Response Review: Corrective Action for C (immediate fix) Standard(s) Evidence : (how and (action to prevent recurrence) Effectiveness: R Classification & clause(s) when) Nr .

01 RSPO PC Minor Non-conforming : Due Date: Conduct drainability Root Cause: Response: Verification of Effectiveness: 2013 Drainability assessment before Next Audit assessment prior to The lack of river water level Acceptable Verification will be performed on replanting on peat land. Criterion replanting for peat land has not data as a basis of Drainability next surveillance audit. 4.3.5 been conducted Assessment SAI 9/05/2016

Follow up Reviewer: Minor NCR 2016-01 is open Objective evidence : Method: Corrective Action: Onsite Eko Purwanto There is no evidence that Monitoring of water level of Name Drainability assessment before Penampakan River and Bilah replanting for peat land has River conducted weekly Eko Purwanto been conducted starting at April 2016. Date: 17/06/2016

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

02 RSPO PC Major Non-conforming : Due Date: Conduct Medical Check Root Cause: Response: Verification of Effectiveness: 2013 Not all pesticide operators were 18/05/2016 Up for pesticides operator Lack of KTU checks at the Acceptable All submitted evidence have been that has not been checked Criterion conducted medical check-up at nd time of registration of Medical reviewed and verified can be 4.6.11 KNC estate. on 2 Semester 2015. Check Up participants effectively implemented. Non SAI 9/05/2016 Conformance consider as closed. Follow up Reviewer: Objective evidence : Method: Corrective Action: Eko Purwanto The last period of medical Evidence KTU conduct control of Major NCR 2016-02 is closed check-up on June and submitted employee record whether they to November 2015 at KNC Estate have Medical Check Up or not, Name shows that at least 5 personnel Team using form “List of MCU of pesticide operator taken Leader Participant”. Eko Purwanto sampled were not conducted medical check-up at KNC estate Date: 17/06/2016

03 RSPO PC Minor Non-conforming : Due Date: Registering workers which Root Cause: Response: Verification of Effectiveness: 2013 Not all workers are covered by Next Audit are not registered in BPJS The high number of worker Acceptable Verification will be performed on Ketenagakerjaan (accident Criterion accident insurance (BPJS turnover and lack of next surveillance audit. 4.7.6 Ketenagakerjaan). insurance) registration monitoring of new SAI 9/05/2016 employees to BPJS Follow up Ketenagakerjaan. Registration Reviewer: Minor NCR 2016-03 is open Objective evidence : Method: was centralized at Medan Eko Purwanto Based on interview with KNS Onsite Office. Name Estate pesticide operators, There are at least 2 personnel at Eko Purwanto KNS estate (Siti Fatimah and Corrective Action: Sutini) were only covered social KTU monitor any new Date: security (BPJS Kesehatan) from employees entering and their husbands programmed proposal of 17/06/2016 registration of BPJS Ketenagakerjaan to HRD Medan Office.

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

04 RSPO PC Minor Non-conforming : Due Date: Carry out Management Root Cause: Response: Verification of Effectiveness: 2013 The outcome of HCV monitoring Next Audit Review and Program There is no written Acceptable Verification will be performed on Criterion has not been fed back into the Supported by documentation regarding next surveillance audit. Management Budgeting to 5.2.4 management plan feedback of HCV reports by SAI respond to HCV Reports management. 9/05/2016 Follow up Minor NCR 2016-04 is open Reviewer: Objective evidence : Method: Onsite Corrective Action: Eko Purwanto Based on HCV Monitoring Name Report in 2015 PT. Hari Sawit Carry out regular meetings to Jaya, the outcome of HCV discuss and review feedback, Eko Purwanto monitoring has not been fed monitoring results and back into the management plan. progress of HCV Date: management. 17/06/2016

05 RSPO PC Minor Non-conforming : Due Date: The organisation will Root Cause: Response: Verification of Effectiveness: 2013 There is no regular reporting of Next Audit clarify to RSPO regarding The sustainability team in Acceptable Verification will be performed on Criterion the monitoring outcomes reporting of GHG Teluk Panjie did not aware next surveillance audit. emission. 5.2.4 that GHG emission should be SAI reported to RSPO. 18/07/2016 Objective evidence : Follow up Minor NCR 2016-05 is open Reviewer: There was no regular reporting Method: Onsite Corrective Action: Eko Purwanto to RSPO on progress for these Name significant pollutants and Carry out training to the site’s emissions from estate and mill sustainability team regarding Eko Purwanto operations. GHG emission regular reporting to RSPO Date: 18/07/2016

AUDIT REPORT Section 1 Section 2 Section 3 Section 4

06 RSPO SC Major Non-conforming : Due Date: Carry out corrections and Root Cause: Response: Verification of Effectiveness: 2014 Not enough evidence that the 18/05/2016 update bookkeeping - There is a new book keeping – Acceptable All submitted evidence have been mass balance reports in Module E site has record and balance all mass balance format for units reviewed and verified can be Criterion receipts of RSPO certified FFB accordance with the new which have RSPO area less effectively implemented. Non E.5.1 and deliveries of RSPO certified SAI format from the group than ISCC area, Mill admin 9/05/2016 Conformance consider as closed. Follow up management. CPO and PK on a three-monthly was unable to fill the new Reviewer: basis. Method: format. Evidence Eko Purwanto Major NCR 2016-05 is closed

submitted Objective evidence : to Corrective Action: Name Based on observation in Negeri Team Carry out training to mill admin Lama II Mill, the responsible Leader and related personnel Eko Purwanto personnel take a long time regarding the new format of (more than a day) to provide Book Keeping – Mass Balance Date: data regarding receipt, process Report. and delivery of oil palm product. 17/06/2016

Appendix “D” – Stakeholder’s issues and comment

Date Stakeholder Observation

- Calculations for harvester base 3, 173 (minimum), 198, 227. payday every 5th (once a month) with a transfer to the BRI. in addition to the salary also get rice at 15 kg (minimum of 23 HK) for the PHL while for SKU wife and children also get kind (rice), to reach 39 kg. the two men are already registered in BPJS Health and BPJS Workers (Jamsostek). Working hour start 07:00 to 14:00 could also until 5:00 p.m. to 4:00 p.m. to get premi. Schoolchildren in elementary Bina Dharma (in the complex) for the outside the garden there are facilities shuttle. Schools are free of charge. Amenities at home are: Electricity (flame start 18.00 - 24.00) and then goes back on the hours of 4:00 to 06:00. The drinking water was also provided by the company. If there is damage report to foreman Harvest, then will proceed to the foreman 1 / Assistant. Personal protective tools provided by companies such as helmets, shoes, clothes, gloves. - Payment every 5th day of the month. Working time was 14 – 15 Workers 07:00 to 14:00 hours. At the time of the audit did not March 2016 (sprayer, working due to helping her Husband harvesting. They have Harvester) 3 children. Eldest child was at elementary school Sidomakmur, Class 6. And for continuing to SMP established at Gelagah. For daily shopping at the Market area KLS or in a stall. - Organization provided the daily work plan in the morning briefing by foreman. - Workers have been trained by foreman and Afdeling staff for implementing each its working - Workers knew the technically working, such as :  Harvester: criteria on ripe fruit, penalty if harvest for over and under ripe, work target (basis).  Sprayer: type of pesticide was used, dosage, spray target, spray technique. - Foreman conducted inspection for ensuring the work quality and was recorded in foreman book inspection - Workers knew the type of fauna protect and its penalties. Other than that, what was conducted if met of fauna in land. - Activities already carried out a meeting with the manager Deputy every three months. Last meeting held on 19-12-2015. Secretary (PUK Discuss the APD, the improvement of public facilities, PPP-SPSI), industrial relations no problem (including the fulfillment of Martin Purba the rights of employees) with a total membership of 400. (vice- Public Relations for PT HSJ is Sofya Alexander wake. 15 March chairman), Recording PPP PUK SPSI, Letter No: 284 / PUK, dated 2016 Ponirin (PUK- November 5, 2003. A total of 290 house. Chairman PPP SPSI), Kurniawan (Secretary- SPSI) AUDIT REPORT

Date Stakeholder Observation

- They supply FFB TBS mostly to Negri Lama I Mill. 17 farmer groups with an area of 3,545 Ha. - Program extension for Farmers Group, The problem with scrolling program for communities (CSV) threatened by 15 March CSV (created traffic conditions. For the improvement of infrastructure 2016 Share Value) Partnership (roads) because it is often broken (backhoe / bulldoser) so difficult to borrow. (2015) have not been implemented. Especially the way in Block 3 (1.200 M), Block 2 (800 M) and will be conducted in 2016 by the organisation. - In charge of receiving and managing complaints from female workers. - Once in 6 months there is a meeting for all gardens. (KAK, KNS, KNC, KNU). Last Meeting on April 20, 2015, Club House Negri Lama with a new agenda inauguration, proker 15 March Chairman of the exposure. 2016 Gender Committee - Already there are activities for the Gender Committee ie Pap smear for women employees in November 2015, the employees of the implant to the Negri Lama health centers. - If there is a case, will be reported to the Public Relations and then report to the Manager / GM. - There is already a role with the communities, with the CSR fund houses of worship including mosques, churches, leaching trenches, improvement of educational facilities. - The hope is associated with a Village program makes Desa Sidomulya get a high school education / equivalent making it easier for students to continue their education. - Landscape River area has not yet been acted upon dry ditch by the Public Relations and is planned to be cleaned. 16 March Village Head Suroan activities (public java) kendurian (clean village) 2016 and Community refuse reinforcements. representatives - No problem with relationships village / company, which needed is tapak (school locations) outside the estate location. - Since there CSR PT HSJ, receive local assistance 2 (class). Total students are around 300. Problems with the chair / table for student / student and existing aid learning tool (Board of Madrasah Al-Hamlet Ittihadul Wathoniyah Sidodadi- Sidomulyo Village). - Inform for the existence of schools and the need for water, if possible no water from the river that can be directed to 16 March the village as well as education for the guard. 2016 District Police

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.