Report number: 817884RSPOCUCRPT -2011-01-AS

RSPO Assessment Report PUBLIC SUMMARY

KL - Kepong Berhad, Jeram Padang Palm Oil Mill, 72100 Bahau, Negeri Sembilan, Malaysia.

This public summary has been prepared in accordance with RSPO requirements and the information included is the result of a full RSPO assessment of the Mills and supply base as included in the scope of the certificate.

Report prepared by: A. Senniah (Lead assessor). Certification decision made by: Gerben Stegeman.

Control Union (Indonesia) Control Union (Malaysia) S/B Jl Kramat 3A, Persiaran Raja Muda Musa, Cilandak Timur Off Jalan Sg Berith, Jakarta Selatan 12560 Teluk Gadong, 41100, Klang, Phone: 062-21-7884 2016 Selangor. Malaysia. Phone 03-3377 1600 / 1700 [email protected] [email protected]

Control Union Certifications. (Head office) Meeuwenlaan 4-6, P.O. Box 161. 8000 AD Zwolle. The Netherlands. [email protected] Phone: 0031 38436 0100

Control Union Certifications is a member of the Control Union World Group - an international inspection and certification body. CU performs assessments and certification in many agricultural based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic Exchange, Eurepgap, HACCP, BRC, GMP and GTP.

CU is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CU Organic program (according to the EU regulation 2092/91) and EUREPGAP program. When requested a copy of the accreditation certificate can be obtained from CU.

www.controlunion.com

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Contents page №

1. Scope of the Certification Assessment...... 3 1.1 National Interpretation used...... 3 1.2 Assessment type. (estate and mill)...... 3 1.3 Location map...... 3 1.3.1 See Appendix “A” 1.3.2 Location address of the mill and approximate tonnages certified. (CPO and PK)...... 3 1.4 Description of supply base...... 3 1.4.1 General description...... 3 1.4.2 Location of the supply base including...... 4 Control Union code for the certificate. Location address. GPS reference. 1.4.3 Statistics of supply base including...... 4 Control Union code for the certificate. Area of oil palm. Mature area. Estimated annual FFB production in tonnes. Planting years. Replanting Cycle. 1.5 Organisational information/contact person...... 5 1.6 Audit against the rules for partial certification...... 5 1.6.1 Introduction...... 5 1.6.2 Audit findings in relation to the rules for partial certification.... 5 1.7 Date certificate issued and scope of certificate...... 6

2. Assessment Process...... 7 2.1 Certification body...... 7 2.2 Qualifications of the assessment team...... 7 2.2.1 Qualifications of the lead assessor...... 7 2.2.2 Qualifications of the assessment team...... 7 2.3 Assessment methodology...... 9 2.3.1 General overview...... 9 2.3.2 Assessment agenda including...... 11 Assessment dates. Sites visited. Main activities. Total number of person days spent on site. 2.4 Stakeholder consultation...... 12 2.4.1 Summary of how stakeholder consultation was organised..... 12 2.4.2 List of National and International stakeholders consulted...... 12 2.5 Date of next surveillance visit...... 12

3 Assessment Findings...... 13 3.1 Lead assessor’s summary and recommendation for certification...... 13 3.2 Summary of the findings by criteria...... 14 3.3 Non conformity registers...... 22 3.4 Issues raised during stakeholder consultation & company responses.... 25

4 Certified organisation's acknowledgement of Internal Responsibility...... 26 4.1 Formal sign-off of the assessment findings...... 26 List of Abbreviation...... 27

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1. SCOPE OF THE CERTIFICATION ASSESSMENT.

1.1 National Interpretation used. The management of the Palm Oil Mill(s) and associated suppliers of FFB were assessed for compliance against the International RSPO criteria as interpreted and endorsed for Malaysia.

1.2 Assessment type. (Mill & Plantations). Palm Oil Mill and Plantations owned by KL - Kepong Berhad in Bahau Region.

1.3 Location maps. 1.3.1 Maps showing the location of the mill and plantations included in the assessment. Kindly refer to Appendix “A”.

1.3.2 Location of mill and approximate tonnages certified. (These figures exclude any output product from non-certified suppliers). Name of Mill Location address GPS reference Projected Annual output for 2011 (mt) FFB CPO Palm Kernel Jeram Padang KM 12, Jalan Jelai-Rompin,72100 Bahau, 2° 44' 6.4" N 261,052 56,126 13,052 Palm Oil Mill Negeri Sembilan, Malaysia. 102° 24' 30.6" E

1.4 Description of supply base. 1.4.1 General description. The certification unit and the supply base are the 9 estates that make up the KLK Bahau region, located near Bahau in Negeri Sembilan, Peninsular Malaysia. There are no plans to expand the land holding and therefore Principle 7 is not applicable to this assessment. All the 9 estates are owned by Kuala Lumpur Kepong Berhad and supplying FFB to the Jeram Padang palm oil mill.

Kuala Lumpur Kepong Berhad owns and operates 20 palm oil mills for processing the crop from its 76 oil palm estates located in Malaysia and Indonesia, as well as the FFB that it purchases from small holders. Kuala Lumpur Kepong Berhad is a pioneering member of RSPO and has been actively involved in the Roundtable process from its inception. Kuala Lumpur Kepong Berhad is implementing a programme to achieve RSPO Certified Palm Oil for all its production.

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1.4.2 Location of the supply base. SOU CU Name of Plantations Locations address. GPS references Code PO1 Batang Jelai Estate KM 7, Jalan Rompon-Jelai, 73500 Rompin, Negeri N 02° 42’ E 102° 28’ Sembilan, Malaysia. PO2 Gunong Pertanian KM 4, Jalan Simpang Durian-Bahau, 72400 Simpang N 03° 4’ E 102° 16’ Estate Durian, Negeri Sembilan, Malaysia. PO3 Jeram Padang Estate KM 12, Jalan Jelai-Rompin, 72109 Bahau, Negeri N02° 43’ E102° 24’ Sembilan, Malaysia. PO4 Kombok Estate KM 4, Jalan Sg Gadut-Rantau, 71209 Rantau, Negeri N 02° 37’ E 101° 59’ Sembilan, Malaysia. PO5 Renjok Estate KM 17, Jalan Karak-Mancis, 28600 Karak, Pahang, N03° 18’ E102° 04’ Malaysia. PO6 Sungei Kawang KM 18, Jalan Karak-Temerloh, 28500 Lanchang, Pahang, N 03° 47’ E 102° 14’ Estate Malaysia. PO7 Tuan Estate KM 22, Jalan Karak-Mancis, 28600 Karak, Pahang, N 03° 16' E 102° 05’ Malaysia. PO8 Ulu Pedas Estate KM24, Jalan Seremban-Tampin, 71409 Pedas, Negeri N 02° 38’ E 102° 03’ Sembilan, Malaysia. PO9 Air Hitam Estate KM 18, Jalan Bahau-Temerloh, Bandar Sri Jempol, 72109 N 02° 56’ E 102° 24’ Negeri Sembilan. * The plantation consists of a group of estates and in the report, “Estate” is used because it is the registered name of that supply base.

1.4.3 Statistics of the supply base. CU Name Area of oil palm (ha) Projected FFB Planting years Replanting Code Oil Mature Immature Production Cycle (years) Palm (2011) (mt) PO1 Batang Jelai 1,454 1454 - 35,138 1986 - 2006 25 Estate PO2 Gunong Pertanian 681 494 187 12,344 1984-2011 25 Estate PO3 Jeram Padang 1,505 1,427 78 36,446 1986 - 2008 25 Estate PO4 Kombok Estate 2,270 2,270 - 39,931 1992-2010 25 PO5 Renjok Estate 258 258 - 7054 2000/2001/2002 25 PO6 Sungei Kawang 1,788 1,788 - 33,810 1998-2011 25 Estate PO7 Tuan Estate 897 884 13 24,619 1998-2010 25 PO8 Ulu Pedas Estate 903 903 - 17,791 1986-2009 PO9 Air Hitam Estate 2,603 2363 240 53,917 1987 – 2008 25

Percentage of planted areas of different ages. CU Name Before 1990 1991 – 1995 1996-2000 2001 – 2005 2006 – 2010 2011 Code PO1 Batang Jelai Estate 4.61 15.61 41.41 32.46 5.91 - PO2 Gunong Pertanian Estate 61.53 8.22 2.79 0.00 7.78 19.68 PO3 Jeram Padang Estate 4 29 30 26 11 - PO4 Kombok Estate - 19 37 25 19 - PO5 Renjok Estate - - 64 36 - - PO6 Sungei Kawang Estate 0 0 37 50 10 3 PO7 Tuan Estate - - 61.20 37.35 1.45 - PO8 Ulu Pedas Estate 14.34 3.64 25.62 27.26 29.14 - PO9 Air Hitam Estate 14.91 22.28 14.75 32.77 11.29 4.00

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1.5 Organisational information and contact person: Company name: KL – Kepong Berhad Business address: 1, Jalan S. P. Seenivasagam, 30000 Ipoh, Perak. Group name if applicable: Not applicable. Office telephone: +605 2417844 Contact person: Mr Sin Chuan Eng. Mobile telephone: +60195120900 Fax: +6052535018 e-mail: [email protected] Web site: www.klk.com.my RSPO membership number: 1-0014-04-000-00 [ Old membership number: 050-04(O)]

1.6 Audit against the rules for Partial Certification 1.6.1 Introduction. Control Union Certifications awarded an RSPO certificate to the KLK (Sabah) Tawau Region in Sabah on 4th March 2009 and KLK (Sabah) Lahad Datu Region on 6th July 2010. The total area of oil palm audited and certified amounts to around 40,000ha of the KLK oil palm plantations. Site visits have been made to plantations in Kalimantan and Belitung Island and compliance with the rules for partial certification were noted.

Again during this main assessment, meetings with the management representatives were carried out on the 21st July 2011 in order to verify the rules for partial certification and time bound plan. The audit team was satisfied that the company conforms to the RSPO’s requirements for partial certification as laid out in the Final RSPO Certification Systems document.

Progress will be verified and reported in subsequent surveillance visits.

1.6.2 Audit team’s findings in relation to the rules for partial certification. 1a. The organisation is a member of RSPO: Compliance KLK is a member of the RSPO. Membership number:1-0014-04-000-00 [Old membership number: 050-04(O)] found. 1b. A time-bound plan for achieving certification of all relevant entities: Compliance The time frame laid out below is considered to be both challenging and realistic. found. General Name of plantations. Locations Time bound timetable for certification

KLK (Sabah) Tawau Region East Malaysia Certified on 4th March 2009 KLK (Sabah) Lahad Datu East Malaysia Certified on 6th July 2010 Region KLK (Kekayaan POM) Peninsular Malaysia Audited. Report under peer review by RSPO. KLK (Jeram Padang POM) Peninsular Malaysia Audited. Report finalized. KLK (Kuala Pertang POM) Peninsular Malaysia December 2013. KLK Changkat Chermin POM Peninsular Malaysia December 2013. KLK Tanjung Malim POM Peninsular Malaysia December 2013 KLK Batu Lintang POM Peninsular Malaysia December 2013 KLK – Gohor Lama POM Langkat, Sumatera December 2014. Utara KLK Padang Brahrang POM Langkat, Sumatera December 2014 Utara KLK Berau POM Berau, Kalimantan Timur December 2014 Mandau POM Riau, Sumatera Timur December 2014 Nilo POM Riau, Sumatera Timur December 2014 Tapung Kanan POM Riau, Sumatera Timur December 2014 Parit Sembada POM Belitung, Sumatera December 2014 Timur Steelindo Wahana Perkasa Belitung, Sumatera December 2014 POM Timur

1c. i. There are no significant land conflicts. Compliance found. Evidence: On site interviews with management and local stakeholders satisfied the audit team that there are no significant land conflicts. Further verification of documents conducted on 21st July 2011 revealed that there are no land conflicts. 1c. ii. No replacement of primary forest or any area containing HCVs since November 2005. (Or 2007 Compliance according to National Interpretations). found.

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Evidence: No replacement of primary forest or any area containing HCV since November 2005. This was also verified during the verification exercise on 21st July 2011 by the CUC Senior Lead Auditor during the document inspection process. 1c. iii. No labour disputes that are not being resolved through an agreed process. Compliance found. No labour conflicts were noted. If any were to arise, it would be resolved through an agreed process. This was confirmed by interviewing relevant stakeholders from the labour union, workers representatives, staff, labour officers and managers. 1c. iv. No evidence of non-compliance with law in any of the non-certified holdings. Compliance found. Land records were inspected and a sample of documents was reviewed. The review demonstrated compliance with the law. Verification exercise took place on 21st July 2011 and further confirmed that there are no disputes.

1.7 Date certificate issued and scope of certificate Name of Client: KL - Kepong Berhad. Client number: CU817884 Certificate number: C817884CU-RSPO-01.2012 Certification Decision Date: 25th September 2012 Issued by Control Union Group scheme: Yes Certifications Address Meeuwenlaan 4-6 8025 BS Zwolle Telephone 0031 (0) 38 426 0100 Fax 0031 (0) 38 423 7040 Email [email protected] Website www.controlunion.com/certification

Scope Name of Mill: Jeram Padang Palm Oil Mill Scope (Summary of suppliers of FFB): PO1 Batang Jelai Estate PO2 Gunong Pertanian Estate PO3 Jeram Padang Estate PO4 Kombok Estate PO5 Renjok Estate PO6 Sungei Kawang Estate PO7 Tuan PO8 Ulu Pedas PO9 Air Hitam Projected mass balance CPO and PK: 56,126 tonnes and 13,052 tonnes Certificate registration code: CU-RSPO-817844 Type of certification: Single site: Yes Group scheme: Yes

Certifier (contact person) Gerben Stegeman. Signature

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2. ASSESSMENT PROCESS.

2.1 Certification Body. Control Union Certifications is a member of the Control Union World Group - an international inspection and certification body. CU performs assessments and certification in many agricultural based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic Exchange, GLOBALGAP, HACCP, BRC, GMP and GTP.

CU is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CU Organic program (according to the EU regulation 2092/91) and EUREPGAP program. When requested a copy of the accreditation certificate can be obtained from CU.

2.2 Qualifications of the audit team. 2.2.1 Qualifications of the lead assessor: A. Senniah REQUIREMENT QUALIFICATIONS Compliance A minimum of post high school (post Post graduate qualification in human resource Yes secondary school) training in either management with more than 10 years working agriculture/forestry, environmental science or experience in plantation. social sciences; At least 5 years professional experience in More than 10 years working experience in Yes area of work relevant to the assessment (e.g., plantation. Involved in RSPO auditing since April palm oil management; agriculture/forestry; 2009. Fully trained in similar agriculture certification ecology; social science); programmes such as RSPO SCCS, Global Gap, ISCC and GMP. Training in the practical application of the Involved in RSPO assessment since April 2009. Yes RSPO criteria, and RSPO certification Member of CUC RSPO audit team. Involved in systems; audits conducted in Malaysia and Indonesia. Successful completion of an ISO 9000:19011 Completed ISO 9001:2008 lead auditor course in Yes lead assessors course; September 2009. A supervised period of training in practical Member of CUC RSPO audit team since April 2009. Yes assessmenting against the RSPO criteria or Involved in audits conducted in Malaysia and similar sustainability standards, with a Indonesia since April 2009 in 8 different companies minimum of 15 days assessment experience in Malaysia and Indonesia. and at least 3 assessments at different organisations.

2.2.2 Qualifications of the audit team member. RSPO Requirement Assessor Qualification Compliance Fluent in main local A. Senniah Able to understand local language and Yes languages and English. English. Muhd Jamalul Arif Able to understand local language and Yes English. R. Sahathevan Able to understand local language and Yes English. Gayan Mahesh Fluent in English language. Yes Wejesiriwardana Edy Susanto Fluent in English language. Yes

Field working experience in A. Senniah Working experience in palm oil Yes the palm oil sector, or a plantation. Involved in RSPO audits since demonstrable equivalent. April 2009. Muhd Jamalul Arif Bin Involve in RSPO auditing since Yes Hamid November 2010. Auditing experience in GMP and Global gap. R. Sahathevan Working experience in palm oil Yes plantation. Involve in RSPO auditing since May 2009. Gayan Mahesh Auditing experience in similar Yes Wejesiriwardana programmes such as ISO 9001, GMP and Organic farming. Edy Susanto Involve in RSPO auditing since Yes

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November 2010 in Indonesia for the Scheme Smallholder and estate assessment. Good agricultural practices A. Senniah Working experience in palm oil Yes (GAP), integrated pest plantation. Involved in RSPO audits since management (IPM), April 2009. pesticide and fertilizer use. Muhd Jamalul Arif Bin Involve in RSPO auditing since Yes Hamid November 2010. Auditing experience in GMP and Global gap. R. Sahathevan Working experience in palm oil Yes plantation. Involve in RSPO auditing since May 2009. Gayan Mahesh Auditing experience in similar Yes Wejesiriwardana programmes such as ISO 9001, GMP and Organic farming. Edy Susanto Involve in RSPO auditing since Yes November 2010 in Indonesia for the Scheme Smallholder and estate assessment. Health and Safety A. Senniah Working experience in palm oil Yes assessment on the farm and plantation. Involved in RSPO audits since in processing facilities. (For April 2009. example OHSAS 18001 or Muhd Jamalul Arif Bin Involve in RSPO auditing since Yes occupational. Health and Hamid November 2010. Auditing experience in safety assurance system). GMP and Global gap. R. Sahathevan Working experience in palm oil Yes plantation. Involve in RSPO auditing since May 2009. Gayan Mahesh Auditing experience in similar Yes Wejesiriwardana programmes such as ISO 9001, GMP and Organic farming. Edy Susanto Involve in RSPO auditing since Yes November 2010 in Indonesia for the Scheme Smallholder and estate assessment. Workers welfare issues and A. Senniah Working experience in palm oil Yes social assessment plantation. Involved in RSPO audits since experience. (For example April 2009. with SA8000 or related social Muhd Jamalul Arif Bin Involve in RSPO auditing since Yes or ethical accountability Hamid November 2010. Auditing experience in codes). GMP and Global gap. R. Sahathevan Working experience in palm oil Yes plantation. Involve in RSPO auditing since May 2009. Gayan Mahesh Auditing experience in similar Yes Wejesiriwardana programmes such as ISO 9001, GMP and Organic farming. Edy Susanto Involve in RSPO auditing since Yes November 2010 in Indonesia for the Scheme Smallholder and estate assessment. Environmental and A. Senniah Working experience in palm oil Yes ecological assessment. (For plantation. Involved in RSPO audits since example experience with April 2009. organic agriculture, ISO Muhd Jamalul Arif Bin Involve in RSPO auditing since Yes 14001 or environmental Hamid November 2010. Auditing experience in management systems). GMP and Global gap. R. Sahathevan Working experience in palm oil Yes plantation. Involve in RSPO auditing since May 2009. Gayan Mahesh Auditing experience in similar Yes Wejesiriwardana programmes such as ISO 9001, GMP and Organic farming. Economic issues. A. Senniah Working experience in palm oil Yes plantation. Involved in RSPO audits since

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April 2009. Muhd Jamalul Arif Bin Involve in RSPO auditing since Yes Hamid November 2010. Auditing experience in GMP and Global gap.

Gayan Mahesh Auditing experience in similar Yes Wejesiriwardana programmes such as ISO 9001, GMP and Organic farming.

2.3 Assessment methodology. 2.3.1 General overview. The assessment was carried out in conformity with the procedures as laid down in the CUC RSPO Procedure Manual and the program manual for the assessor and certifier. During the assessment, the qualified CUC assessors used the RSPO standard as endorsed for Malaysia and recorded their findings.

Palm Oil Mills, in general, have more than one estate as a supply base and it is normal that one estate (or plantation) is considered to be the “main estate”. This is normally the location for the opening and closing meetings and for the open stakeholder meeting held during a main assessment.

Following the opening meeting the audit team conducted a field inspection of this main estate to include: Chemical stores. Storage. MSDS leaflets. Herbicide mixing areas. PPE. Ventilation. Security. Field inspections. Herbicide application programmes. Harvesting sites and efficiency. Fertilising operations. SOP’s. Soil maps. Land preparation. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations. Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts. Child labour. First aid. Awareness. Re-planting sites. Zero burn. HCV’s. Identification. Management plans. Environmental Impact Assessments. Implementation. Riparian zones. Width. Current and future management. Non maintenance regimes. Water management. Water courses. Water monitoring. Road maintenance. Run off. Social amenities. Social Impact Assessments. Local communities. Contributions made. Employment opportunities. Social impacts. Complaints procedures. Work shops. Oil traps. Safe working environment. PPE. Diesel tanks. Environmental waste management. Line sites. Interviews with householders. Inspection of water discharge points. Water improvement plans. Waste disposal. Documentation review.

Palm Oil mill audits include: Mill and workshop inspections. Documentation. Worker interviews. Mill. SOP’s. Safe working environment. Gen sets. Walk ways. Signs. EFB. POME treatment. Emissions. Mass balance. Diesel tanks. PPE. Fire extinguishers. First aiders and boxes. Fuel and water usage. OSH. Training. Management structure. First aiders. Full document review. Completion of the checklist. Review and documentation of evidence. All aspects of RSPO P&C’s applicable. Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts.

Document review for the main estate and at least one POM: Principles 1 to 8. We considered each and every applicable RSPO principle and criteria for both the main estate and the mill. The client was asked to ensure that all documents, procedures, maps and records referred to in the standard are available. The list below is a summary of the records and management plans, including company policies, budgets, and management plans etc.

Verification. Verification of implementation was done through field observations, workshop and chemical store inspections, worker and community interviews and mill inspections as summarised above.

Sampling. Having considered principles 1 to 8 in detail for one estate and mill, where the many policies and SOP’s is applicable to all estates and the mill being same, the sampling formulae is used to determine the number of estates which will be audited for site specific information and records. The audit team sought compliance by filed audits and by reviewing the following site specific information and records.

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 Records of requests and responses.  2.1 Evidence of compliance with relevant legal indicators.  2.2 The right to use the land can be demonstrated and is not legitimately contested by local communities with demonstrable rights  2.3 Records of negotiated agreements.  3.2 Annual replanting programmes.  4.1 Records of monitoring.  4.2 Fertilizer records. POME and EFB application records.  4.3 Soil maps and general description of the soils.  4.4 Protection of watercourses.  4.4 Water management plans.  4.4 Monitoring of effluent BOD.  4.4 Water usage in mill per tonne of FFB processed.  4.5 IPM plans.  4.5 Pesticide toxicity records.  4.6 Pesticide and herbicide records.  4.6 Disposal of agrochemical waste materials.  4.7 OSH plans. Gender committee etc.  4.7 Accident records.  4.7 OSH training records.  4.8 Training records.  5.1 Environmental Impact assessments and plans.  5.2 HCV / RTE species assessments and management plans.  5.3 Documented sources of pollution and management plans.  5.4 Energy use.  5.6 Plans to mitigate all polluting activities.  6.1 Environmental and social impact assessments and plans.  6.2 Communications and stakeholder lists.  6.3 Dispute resolution procedures.  6.4 Compensation payments for loss of customary rights.  6.5 Pay and conditions.  6.5 Housing and other social facilities.  6.6 Minutes of meetings.  6.7 Implementation of child policy.  6.8 Evidence of equal opportunities.  6.9 Proof of implementation of policy to protect woman.  6.10 FFB pricing mechanism and fair deals for suppliers.  6.11 Records of contributions to local communities.  7.1 Social and environmental impact assessments and management plans.  7.2 Soil suitability for new planting.  7.3. No replacement of HCV or primary forest.  7.4 Identification of fragile soils.  7.5 Confirmation of Free prior and informed consent.  7.6 Identification and compensation for the loss of customary rights.  7.7 Clear evidence of no burning for new planting.  8.0 Commitment to continual improvement in key areas.

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2.3.2 Assessment agenda. Date Location Main activities 22nd May KLK Bahau Travelling by auditors to location. 2011 (Sunday) 23rd May Jeram Padang POM 09.30 Opening meeting. Jeram Padang POM 2011 Chaired by the audit team leader. (Monday) Introduction by team leader. Presentation by respective managers. Presentation of Oil Mills source of FFB by respective manager. Jeram Padang POM Jeram Padang Palm Oil Mill Audit.

Mill inspection and Document audit include the auditing of: Workshops Stores POME and EFB management Housing Workers interview Environmental issues Water treatment Store OSH. Safe working environment. SOPs. Document audit Gunong Pertanian Field operations and Document Audit include the auditing of: Estate Chemical stores. The storage. MSDS leaflets. Herbicide mixing areas. Jeram Padang Estate PPE. Ventilation. Security. Field inspections. Herbicide application programmes. Harvesting sites and efficiency. Fertilising operations. SOP’s. Soil maps. Land preparation. POME. EFB. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations. Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts. Child labour. First aid. Awareness. HCV’s. Identification. Management plans. Environmental Impact Assessments. Implementation. Riparian zones. Width. Current and future management. Non maintenance regimes. Water management. Water courses. Water monitoring. Road maintenance. Run off. Social amenities. Social Impact Assessments.Medical. Local communities. Contributions made. Employment opportunities. Social impacts. Complaints procedures. Work shops. Oil traps. Safe working environment. PPE. Diesel tanks. Environmental waste management. Line sites. Interviews with householders. Inspection of water discharge points. Water improvement plans. Waste disposal. 24th May Jeram Padang 09.30 Open stakeholder meeting at Jeram Padang Estate 2011 Estate (Any issues raised during the open stakeholder meeting is discussed (Tuesday) separately with the management) Ulu Pedas Estate Field operations and Document Audit include the auditing of: Kombok Estate Chemical stores. The storage. MSDS leaflets. Herbicide mixing areas. PPE. Ventilation. Security. Field inspections. Herbicide application programmes. Harvesting sites and efficiency. Fertilising operations. SOP’s. Soil maps. Land preparation. POME. EFB. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations. Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts. Child labour. First aid. Awareness. HCV’s. Identification. Management plans. Environment Impact Assessments. Implementation. Riparian zones. Width. Current and future management. Non maintenance regimes. Water management. Water courses. Water monitoring. Road maintenance. Run off. Social amenities. Social Impact Assessments. Medical. Local communities. Contributions made. Employment opportunities. Social impacts. Complaints procedures. Work shops. Oil traps. Safe working environment. PPE. Diesel tanks. Environmental waste management. Line sites. Interviews with householders. Inspection of water discharge

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points. Water improvement plans. Waste disposal.

25th May Tuan Estate Estate field operations and Document audit 2011 Renjok Estate (As above). (Wednesday) Sg Kawang Estate 26th May Ayer Hitam Estate Field operations and Document audit 2011 Batang Jelai Estate (As above). (Thursday) 27th May Jeram Padang POM Preparation for closing meeting. 2011 Additional field visits and meetings with managers as necessary. (Friday) Jeram Padang POM Closing meeting Chaired by the audit team leader. Welcome and introduction by the team leader. Presentation of findings by the audit team. Questions and answers. Final summary by team leader. End of assessment. Number of assessors participating: 5 Number of days spent for the assessment on site: 5 Total number of person days used for the assessment on site: 25

2.4 Stakeholder consultation Stakeholder consultation 2.4.1 Summary of how the stakeholder consultation was organised. Number of stakeholders included in the companies application form to CUC and who were 80 included in the stakeholder consultation process: Number of additional National and International stakeholders identified by the company and by - CUC and who were also included in the stakeholder consultation process: Number of responses received: 11 Notification of the planned assessment was also posted on the CUC and RSPO web sites in accordance with the RSPO requirements. All stakeholders were sent a letter which included full details of the company to be assessed, the names and addresses of the mill and the supply base, the dates of the assessment and the date time and place of an open stakeholder meeting. They were invited to make any comments and given the following bullet points to assist them.

1. Do you have any remarks on the RSPO standard? 2. What is your relation with the applicant? 3. Are there any plantation or mill management practices that affect you? 4. Do you consider any management is in conflict with the RSPO principles and criteria? 5. Do you have any suggestions for management? 6. Are you aware of any HCV in the plantations or in adjacent land? 7. Are you aware of any endangered or rare species? 8. Are there any adverse (or positive) effects on local communities? 9. Additional comments. 10. Are you likely to attend the open stakeholder meeting? 11. Do you have any comments about the assessment team and would you like to meet with them? 12. Do you have any comments of the applicant’s management of any other plantations? Number of persons who attended the open stakeholder meeting: 52 Subsequently to the stakeholder meeting, the audit team discussed the issues raised with management representatives of the company and follow up visits to specific sites were conducted. (See 3.3 below)

2.4.2 List of the National and International stakeholders consulted. Environmental NGO WWF Social Security Organisation (Socso) Environmental NGO Malaysia Nature Society Employee Provident Fund Women Aid Organisation Department of Occupational Safety and Health Tenaganita Department of Labour Wildlife Conservation Society Immigration Department National Union of Plantation Workers Department of Environment

2.5 Date of next surveillance visit: Within 9-12 months of 1st certification

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3. ASSESSMENT FINDINGS.

3.1 Lead assessor’s summary and recommendation for certification: The lead assessor and one auditor conducted a pre assessment in April 2011, sampling a selection of estates and mill which make up the KLK Jeram Padang Certification unit. This assessment was conducted by using the RSPO P&C standards as part of gap analysis. Areas for improvement were identified for the management to execute before the main assessment.

Since the pre-assessment, it was noted that the managers have implemented the following improvements: Identified all water courses and riparian zones both on maps and on the ground. Implemented a non maintenance regime in the identified riparian zones. Introduced monitoring of water entering and leaving the estates at key points. Identified the need for and implemented improvements to the linesite waste water discharge points. Improved ventilation in chemical stores. Combined various OSH documents. Installed contained concrete areas in workshops with oil traps. Made significant improvements to ensure safe working environments. Ensured that all workers are fully informed as to policies and procedures that may affect them.

The stakeholder announcement was posted on the RSPO website for 30 days prior to the main assessment and it offered stakeholders the opportunity to give feedback and comments. Up to the time of finalising this public summary report, there was a report commissioned by a NGO called EIA, regarding the company’s operations in Indonesia, for destroying the peat forest and claiming that PT. Menteng was operating without a plantation business permit and had cleared the land and carried out open burning. CUC took this report as a formal query by the stakeholder and conducted verification audit on 21st July 2011. This verification was carried out by the CUC Senior Lead Auditor and CU Malaysia Managing Director with the management team from KLK represented by the Sustainability Department General Manager and his team. The verification revealed that the concession area is out of the moratorium area and the peat depth is within the legal classification of peat allowable. Also it was found that KLK has the necessary permits for oil palm development and no open burning was carried out. So, with this, all allegations made were based on misleading and false information and cannot be upheld. Since there were no additional issues, and with the closure of the allegations, it was concluded that the RSPO certification process would not be affected.

A separate session on stakeholders’ consultation meeting was held between the CUC auditors and the stakeholders without the presence of the KLK management representatives on 24th May 2011. This stakeholders' consultation was extensive and informative. It was attended by 52 stakeholders comprising of representatives from government officials, Village Heads, surrounding communities, state workers union representative and operating units’ worker union representatives. No complaints or grievances were raised. Positive comments were received during the stakeholder meeting. Subsequent to the stakeholders meeting, the surrounding communities were visited and interviewed to capture more feedback from the stakeholders. There were neither grievances nor complaints received from the communities during the interviews. The feedbacks from the stakeholders were presented to the management and this has been summarised in section 3.4 below.

The Jeram Padang Palm Oil Mill and the supply base estates have demonstrated compliance with all applicable laws and regulations that are relevant to the respective estate and mill operations. Evidence of compliance with the regulations including permit requirements, regulations on environmental, worker issues and tax payment inspected during the audit. The evidence is well documented and maintained. It is summarised in section 3.2 below.

There is clear commitment from the KLK Management team to embrace RSPO P&C at all levels of Management. The assessment team finds that field operations, ground cover and soil management, IPM measures, soil erosion control and the replanting sites are in compliance with RSPO’s requirements and follows good agriculture practices.

The Palm Oil Mill demonstrated a safe working environment and staffs are qualified and able to implement RSPO requirements. The workers social benefits extended to their families and dependents. Worker interviews and focus group discussions went smoothly and this reflects the stability and well-being of the workforce. There were no complaints or grievances highlighted by workers and stakeholder during the interview or meeting.

It is therefore the recommendation of the lead assessor that: A certificate of compliance is awarded. Signed:

Name: A. Senniah Date: 27th July 2011

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3.2 Summary of the findings by criteria: Findings: Comments: Compliance 1.1 Records of all requests for information All records of meetings, requests for Yes are maintained. information and responses are maintained as Records of responses to those per stakeholder consultation log book/requests requests are maintained and the action and response log book. Each book also taken, dates and persons involved and contains an example of how to handle and found to be timely. record a request. The above records are maintained for a minimum period as defined by the company. 1.2 Public documents are available and No restriction as to the documents that was Yes include legal, social and environmental publicly available with the exception of documents and contain current and confidential commercial information. Publicly past FFB prices. available documents are Land Titles/user The process and outcome of any rights, Plans and impact assessments relating compensation claims are documented to environmental and social impacts, Pollution and are also made publicly available prevention plans, Details of complaints or as applicable. grievances, Negotiation procedure, Commercially sensitive documents Continuous improvement plans. The company were available as verified by the audit hires all staff accordingly. There is no team. compromise when it relates to the competency of the staff that might lead to jeopardizing the company position. Meaning, the staff at each relevant department have the relevant qualifications. 2.1 Clear compliance with the law in all RSPO “Applicable Laws and Regulations”. No Yes areas sampled. evidence of non-compliance to all laws and Good systems in place to track and regulations. i.e. OSHA regulation 1994 (Act implement changes in the law. 514), Factories regulation (Act 139), National The laws affecting the oil palm industry land code (Act 1965), Environmental Quality are listed and available to all Act, Pesticide Act, Industrial relation Act, Solid managers. waste management, Employment Act 1955 (act 265), workers Minimum Standard of Housing and Amenities Act 1990, Workmen compensation Act 1952, Trade Union Act 1959, Land Acquisition, Children and young person (Employment) Act 1966, Employee Social security Act, Estate Hospital Assistant (Registration) Act 1965, Immigration Act 1959/63 (Act 155), land conservation Act 1960, MPOB Act, Petroleum (Safety Measures) Act 1984, Police Act 1952 to appoint Auxiliary Police, Protection of wild life Act 1987, Road Transport Act 1987, Building Act 1974, Wages council Act 1947, Water Act 1929 to protect waterways; 26 permits and licenses are there for mills. MDC Publishers Sdn Bhd sends out periodical revisions on laws if any and follow-up are carried out by staff. Beside this, the Head Office will track any changes in law and keep all estates informed thorough an internal circular and memorandums. 2.2 Land titles / country leases for all Land titles inspected for all estates and the Yes properties in accordance with the law mill. Boundary stones and markers checked of the land. and verified in the field. Copies of land titles Legal boundaries are identified and are held on file. All land use entitlements were confirmed on site during field visit. checked and comply with the term. i.e “The The company has mechanism for the said land is demised herein expressly and only resolution of conflicts and where there for the purpose of cultivation of oil palm and/or have been disputes; there is proof of an agricultural crop of economic value”. And progress in an acceptable manner to “Special terms and conditions: The said land is

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all parties. expressly and only for the Palm Oil Mill”. The Land acquisition mainly from the GPS maps clearly identify the boundary stones government. and the boundary stones and markers were physically verified. 2.3 There is no land encumbered by Not applicable because there were no Yes customary rights. The Land was customary rights issues raised by the internal originally owed by the government. and external stakeholders during the open Copies of land titles confirm this. stakeholder meeting and during the visit of surrounding communities. 3.1 The company has a documented Financial planning with a 5 year projection was Yes working plan that covers a minimum checked and verified. Information including period of 5 years; projecting out from areas of mature and immature crops. Mt/ha the date of the assessment. It includes yield of FFB. Five years replanting plan was crop yield projections, OER trends, also available. costs and income. There is a replanting programme projected for a minimum of 5 years. Both of the above are updated on annual basis. 4.1 The company has generic SOP’s, The SOP’s and records sighted cover: Group Yes which are up to date and covers all Policy for all estates and the Agriculture of Oil plantation and mill activities from Palm. Issued to the estates on 20th August seedling to the despatch of CPO and 2007. Also addresses all best practices. As PK or PKO. required, updates are circulated and then Detailed and comprehensive records included in the file and implemented. Sighted reflecting annual monitoring was 40 SOP’s covering all aspects of plantation available. management. The records of operational results are Mill Management: SOP’s for mills are the covered by the monitoring records. same. 13 operations stages from FFB reception on weighbridge to CPO despatch. 4.2 The company has records of regular Sighted the Oil palm Manuring Yes soil, leaf and visual field inspection by recommendations 2010/2011 by Applied the agronomist. Leaf analysis is Agricultural Resources (AAR). The conducted on an annual basis to recommendations are followed and records determine fertiliser requirement. maintained by field and date of application. All fertiliser programs are well planned, Soil sampling is done once a year. Leaf implemented, and recorded. sampling was also carried out to analyse and Legume cover crop is used to minimise determine the soil and palm nutrient level. impact of bare soil. Based on these result and field visit by the EFB application to areas determined Agronomist, final fertilizer recommendations by the foliar analysis. This will be are made. Zero burn policy. EFB application is carried out by AAR recommendations carried out in accordance with the after their analysis. recommendations of the agricultural research POME is used for land application. department. Dry decanter Cake is used as soil Fertiliser application records are conditioner. comprehensive as per Actual BOD level for POME is monitored and recommendations. as per required regulation standard of 5,000ppm. 4.3 Each estate has soil maps, which Sighted soil maps that show soil types which Yes identifies fragile soils, if applicable. are predominantly alluvial. The SOP 9 covers SOP in place for plantings on steep Erosion control and details the actions to take slopes which includes the use of to control erosion. In mature fields there are 8 terracing. Biomass recycling (see specific action points and these are specific to above) frond staking and silt pit used to all plantations. control surface run off. (minor NC There is a road maintenance Most of the operating units were not having under 4.3.3) programme but not comprehensive. complete programme with detailed No peat soil. location, type of work and date. Culvert SOP includes a documented water maintenance and road side drain upkeep management programme. were missing including housing site road Other fragile soils have been identified maintenance and replanting area road and an SOP is in place for their upkeep. Probase road upkeep details in the management. programme were missing. A minor NC was raised under 4.3.3.

Planting of mucuna is practised, frond staking

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to stop surface run off, flat and accessible area is maintained with grass cutting at harvesting path and road side, no blanket spray, only selective and circle spray and treated with the right choice of chemicals. 4.4 Watercourses (and wetlands) are All estates have identified watercourses and Yes identified on maps and management the appropriate width of buffer zone is plans are in place for restoring riparian established (in accordance to guidelines by the buffer zones. Drainage and Irrigation Department) and the Water management includes the non-maintenance buffer zone is then monitoring of all water courses as they implemented i.e. no fertiliser applications and enter and leave the estate(s). spraying of agrochemicals within riparian Water management plans also zones. includes Drinking water analysis. Water usage monitoring records are in place in BOD levels of effluent are monitored the mill which shows the average use of 1.52 on a regular basis and below standard tonnes of water per tonne of FFB processed. of 5000ppm. Sighted a generic water management plan Water usage per tonne of FFB covering water source, construction of processed monitored in the mill. reservoir and water quality analysis, including No drainage into protected areas. the protection of water courses and wetlands. These plans also monitor water quality and usage. Piped water supply and emergency response plans were available to mitigate any drought. (Minor NC Although most of the operating units are under 4.4.7) conducting water analysis for drinking water it is noted that some of the operating units are not conducting the water analysis as per the Minimum Housing Standard requirement. A minor NC was raised under 4.4.7. 4.5 The following were sighted with reference Sighted and verified evidence that the Yes to the IPM System: Integrated Pest Management and disease A documented IPM system that was control systems were carried out. These implemented. include cultural controls, chipping and The monitoring of IPM used, which pulverizing of felled palms at the time of re- includes the training of staff and planting. In addition, the use of biological workers. controls was verified. Pests are control through The planting of beneficial plants. pesticide chemical spraying after carrying out Record of pesticide use per ha. a census of pest attack at relevant locations. The monitoring of pesticide toxicity Monthly census for bagworm is carried out and units. threshold limit is 5% and if more than 5% of larva population, a specific chemical has been used to control the impact from bagworm. The rat damage census has a threshold limit of 5% and was verified the treatment of using Butik S, where more than 5% of FFB eaten, has been done. Also checked and verified the barn owl occupancy census and the rhinoceros beetle census at replanting areas and immature fields. Census results were mapped or tabled and documented. Pre and post treatment census to determine the effectiveness of each action was taken. Monitoring the owl occupancy rate shows that the occupancy is about 53%. Throughout all estates the use of beneficial plants such as Tunera subulata, Cassia cobanensis, Antigonon spp. are very evident that biological control were used as a preventive measures. Tunera were also extensively planted. Replanted sites are restructured to allow enough light for these plants. Leguminous cover crops were also well-established to suppress growth of noxious weeds.

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The SOP 3 covers all the documented IPM for major pest, use of biological control, cultural control, surveillance, evaluation, and record keeping. Barn owl boxes have been erected at the rate of 1/10ha. 4.6 Written justification for all Chemical stores at all estates and mills were Yes agrochemicals used is available. inspected and found to be in compliance with All pesticides are officially registered. requirements. Well ventilated. Locked. MSDS Records of all pesticides used in leaflets and first aid kits readily available. Also accordance with RSPO sighted warning notices in these areas. requirements with details of Pre-mixing takes place in bunded areas with application but some operating shower facilities. Inspection of records, units are not maintaining complete interviews with the workers and medical staff records. Minor NC is raised. confirmed that annual checkups take place by Records show that the agrochemicals registered OSH medical practitioner. Female used are in accordance with product workers are accompanied by female nurse and label recommendations for target pregnant and breast feeding woman were species. assigned to other work not involving Chemical stores are well ventilated and agrochemicals. secured with MSDS leaflets and first aid kits readily available. All workers were given PPE by the company All workers are trained in the use of and confirmed by workers during interview with agrochemicals and this training was them in the field. The use of Paraquat is recorded. reduced by replacing gradually with (Minor NC under Used chemical containers and other glyphosate. waste materials were stored in 4.6.10) sheltered waste stores in a safe way Sighted the use of paraguat has been

and disposed of in accordance with gradually reduced and the records of usage

laws and regulations. have been sighted in all the estates.

The use of WHO type 1a or 1b However, observed some of the operating chemicals, such as paraquat are being centres are not keeping complete records of demonstrably reduced. application details records of other pesticide Annual medical checkups are use in accordance with the RSPO conducted and recorded. requirements. For instance, the application Records and interviews confirm that no requirement per hectare was missing. The work with agrochemicals for breast updating of the application records was not feeding or pregnant woman is allowed. carried out regularly. A minor NC is raised under 4.6.10.

4.7 The company has an OSH plan, which Sighted the OSH Plan, which includes a Yes was being implemented in all estate training programme. Action plans with offices and mills. designated responsible person identified. OSH committees are identified and All occupational hazards and risks have been responsible persons for safety assessed and identified. programs are included in responsibility Verified guidelines on accident and emergency charts. procedures. Accident records were analysed The company maintains records of all by the Safety executive on site and target set meetings with workers and minutes is zero. Only minor thorn prick cases noted. show that health, safety and welfare Accidents details reported to DOSH issues were included amongst other periodically. Safety measures explained to matters. workers and included in all training. Also Worker accident insurance was in displayed on muster grounds. place and up to date. Interviews with workers confirmed knowledge Workers exposed to high risk were of the plans and procedures and first aid identified and records show that training records were inspected and also regular health examination takes place. confirmed by interview. Safe working Risk assessments include all identified environments observed in mills and places of areas of risk both in the plantations work. and mills with preventative measures Sighted the accident insurance policy that and responsibilities. covers any accidents during travelling to work All workers have been trained in OHS and during work related accidents. and this was regularly updated. Fire fighting team available in estate and mills. Records include photographic Training has been provided by internal safety evidence and signed attendance executives and external trainers. sheets. CHRA was conducted by qualified CHRA

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Accident and emergency procedures officer No. JKKP HIE 127/171-2 (228). Last were included in the OHS plans and conducted in 2008 and valid for 5 years. risk assessments. Another separate risk assessment HIRARC Trained First aiders at all work sites. conducted by the OSH department for the First aid kits at all places of work. operation chemical handling, workshop, field Training programmes were carried out. operation and other general work. Rating used Accident records were maintained and start from low, medium or high. When the risk reviewed at the OHS meetings. Further is high, preventive measures has been training and preventative action were developed to address the risk. then considered and implemented. 4.8: Training plans and records were in Verified annual training programme for all Yes place as appropriate for all staff and workers. Regular assessments take place to workers. ensure all workers were up to date with Contractors and their workers were training. Section 10 of the KLK-RSPO master trained in accordance with company copy gives details of all training required for procedures. operatives. This is laid out by month. Training programmes include safe handling of chemical, first aid etc. Training for spraying, driver, harvesting and save handling of chemicals record were in place. Mill training covers all the work stations. The Mill has qualified and certified chargemen, boilerman, electrician and engineers. 5.1 Documented and implemented impact Environment impact assessment and pollution Yes assessments in accordance with prevention plans were available. All processes RSPO and legal requirements. and activities that may pollute were identified Regular reports were prepared on with the potential hazard. The level of risk is environmental management in assessed and then a plan is prepared with accordance with relevant regulations. target date, persons responsible and status. Processes covered: Plantation maintenance of mature crop. Harvesting in field. FFB collection. Transport to mill. Workshop processes. Linesite management. These activities are sub-divided into activities. Transport Policy was available. Vehicles have permits. It was verified that for drivers, compulsory to attend competency training were conducted by safety executive. Safety helmet requirement complied by motor cycle riders. Sighted that the mill has pollution control devices such as spill kit, oil trap at all the outlet drains, vehicle washing bay and continuous emission monitoring system. 5.2 HCV assessments completed, which Management plans for HCV habitats, including Yes include the identification of any ERTs were in place although there is no ERT protected, rare, threatened or identified in the HCV assessment. Water endangered species. catchment is identified as HCV 4. No forest Measures to protect any HCV’s, destruction was allowed. Summary of the including ERT species and habitats HCV, management and monitoring plan was were in place. available. Activities to manage biodiversity Measures taken to protect species and along river riparian were carried out. Person habitats are in accordance with local responsible, target date and status were relevant laws and the company takes recorded. action to control illegal and inappropriate hunting, fishing or collecting activities. Posters and information regarding protected species were visible in the appropriate places. The company has identified, trained and appointed an individual person from the estates, who monitors plans associated with HCV and ERT species. 5.3 Waste products have been identified Sighted documented evidence of waste Yes

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and documented. products management includes used oil, old Plans to avoid pollution were in place battery, used laboratory chemical, clinical to include careful mixing of waste, effluent, EFB, smoke, dust, fibre and agrochemicals, diesel tank bunding, shell, empty chemical container, boiler ash, dedicated waste stores, concreted and scrap iron, used tire, house old waste, line site bunded workshops, oil traps and waste water. Operational waste products controlled household waste disposal. collected and stored in sheltered waste stores Linesite discharge is also included in and disposed through authorised collector Tex the plans. Cycle Sdn Bhd who was licensed by the DOE. Hazardous waste were stored in a dedicated store and disposed of by a (Minor NC licensed company in accordance with Mitigation plans developed and practised. under 5.3.2) product label and existing regulation. However, it is noted although a few operating There were records of all disposals of units don’t have oil spillage, most of the waste. operating units have spillage, concluding mitigation plans are not completely effective to avoid pollution as per the plans. A minor NC was raised under 5.3.2. 5.4 All energy used in the mills was Energy use records include accurate Yes monitored. measurements of renewable energy use per Fossil fuel records were maintained tonne of FFB processed. Power consumption and trends shown. in the POM is about 20Kw/mt FFB and in one CDM project to collect biogas from the day the mill uses about 200mt of fiber and mill effluent ponds was under 40mt of shell to fuel its boiler. Diesel consideration by the management as a consumption is 0.22litres/mt FFB. continuous improvement plan. Company already maximise the renewable energy use. All the shell and fibre is consumed internally. 5.5 Fire was not used for any land Recent re-planting shows that no burning was Yes preparation or for replanting. carried out. Field visits, interview with workers, Photographic records of zero burn. stakeholders, SOP’s and manager interviews The company has procedures in place confirm that the previous crop is felled down, to assist in the event of fire in the field chipped, shredded and spread. No evidence of and facilities under Emergency burning anywhere on any operating units. Response Plan. 5.6 The mill(s) have identified the sources Management of wastes generated by Yes of pollution and emissions. operating units includes collection, storing and Various and regular measurements disposing through authorised collectors. were taken of the emissions and Once the polluting activity is identified, it is pollutants. mitigated or collected and kept in the schedule Measurements of emissions obtained waste store and recycle wherever possible were used to develop strategies for such as Shell, fibre, EFB, effluent is recycled. improvement. CDM project in the planning. POME is treated in a series of effluent ponds and the final discharge was regularly monitored for BOD levels before goes for land application. No discharge to watercourse. 6.1 Documented and implemented social All social impacts due from estate/mill Yes impact assessments prepared in operations have been identified through participation with affected parties, for extensive consultation with relevant plantations and mills. stakeholders and mitigation measures have Social impacts were monitored and been determined. These have been managed with the participation of local incorporated into the appropriate action plans communities. to be executed by designated personnel within The schedule for environmental a specified timeframe. management monitoring and reporting was identified and reports were prepared in accordance with this schedule. Where there was an out-growers scheme, the company pays attention to the potential social impacts of their activities. 6.2 Clear and transparent systems of The stakeholder meeting and interviews Yes

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consultation and communication with confirmed that communications and local stakeholders. relationships between the operating units and An extensive list of stakeholders was stakeholders are good and no issues that maintained with names and addresses. needed verification. Identified lines of communication. The company maintains records of meetings with local community representatives and issues raised. The action taken in response to those issues was also recorded. The company has identified and appointed an executive as the main contact person on social issues and who was responsible for communicating with local communities and stakeholders. 6.3 There were a complaints and dispute Documented evidence was inspected. Yes resolution procedures which were Confirmation by interview with workers and publicly available to all potentially stakeholders that the system is accepted and affected parties. action taken in timely manner. Records of complaints which include the action taken, the outcome of the action taken and any follow up requirements was available. Procedures for the identification and calculation of fair compensation for the loss of customary right of the land were publicly available although there was no customary issue. 6.4 The company has procedures in place Not applicable as no customary rights issues. Yes for the identification, calculation and compensation for the loss of customary rights of the land which include involvement with the community representatives and relevant agencies. There were no customary issues or land compensation issues. 6.5 Contracts of pay and conditions were All pay was documented under a monthly Yes documented and were in compliance checkroll payslips system. Workers were given with the law. payslip and acknowledged receipt by signing Workers contract and payment were them. Deductions were permitted. All terms documented. Wages were as per and conditions of contract were recorded collective agreement with the labour under Labour Registration Cards. union (NUPW). Payslip were prepared Direct contracts of employments evident and and given to workers and interview with workers confirm that they acknowledged by workers during understand what was in the contract. receiving the wages. Two rooms housing complete with kitchen and Deduction was permitted and agreed toilet were provided. Internal clinic available for by the employees. free medical treatment. External visits by a Housing, water supplies, medical, doctor to the operating units were verified. educational and welfare amenities Educational facility was provided by the were supplied to the workers. Basic company at kindergarten and by the amenities include community hall, government to the workers children at the soccer field, basket ball court and a estate school. Bus fee for the school children badminton court were available. was subsidised by the company. The written agreements with contractors specify that contractors Deduction is not clearly recorded. A minor (Minor NC must abide by labour laws. Under NC under 6.5.2 is raised. under 6.5.2) criteria 6.5.2 Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. Working hours, deductions, overtime (maximum of 90 hrs per month), sickness, holiday entitlement, maternity

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leave, reasons for dismissal, period of notice, etc) are available in the language understood by the workers or explained carefully to them by a plantation management official in the operating unit. But the deduction on pay slip was not clearly recorded as to what it is being deducted for. A minor NC under 6.5.2 is raised. 6.6 Published statement recognizing Meetings with labour union and worker Yes freedom of association was available. representatives are carried out. Minutes of Minutes of meetings with trade unions meeting with worker representatives were and worker representatives was recorded. Besides the labour union meeting, documented. meetings with worker reps through the various committees (e.g.: OSH Committee and Sexual Harassment Committee) were verified. 6.7 There is a documented and published All policies state minimum age requirement of Yes company policy on worker ages in 16. Reference to Child Employment Policy of accordance with national laws. the company. No observation of under-aged The policy was being implemented. persons working in the fields and Labour Registration Cards inspected. Interview with stakeholders and labour union confirm that there was no child labour. Child Labour Policy was in place. 6.8 There was a publicly available equal Policy displayed in office and muster grounds. Yes opportunities policy. Wage records inspected and rates confirmed No evidence of discrimination. Workers as being the same for male, female workers were treated equally with regard to and migrant workers other than EPF & Socso working opportunities. contributions. Equal opportunities Policy publicly displayed in office and at linesite. Employees were aware of this policy as verified through interviews and meetings. 6.9 Policy on sexual harassment and Sexual harassment policy publicly displayed in Yes potential violence’s were displayed and office and at linesite. Policy also documented explained to all employees. under SOP 40. Worker interviews confirmed The company has a policy on the that no sexual harassment takes place. All protection of reproductive rights. female employees have direct access to the The sexual harassment policy was gender committee which handles any sexual being implemented through gender harassment issues. Gender committee was committee. formed by the female staff and workers. The reproduction rights policy was being implemented. No restriction on pregnancy and confirmed by female employees. The company has set up a specific gender committee to facilitate the grievance mechanism. 6.10 Pricing mechanism for FFB input was SOP covers the procedure of FFB price Yes available and interview with calculation. Contractual agreements for smallholder reveal that he understands construction work include contractor’s details, the process. There was only one pricing, term and condition for work and outside independent FFB supplier payment. Interview with smallholders during called as Multinet. stakeholder consultation confirmed that they Contractual agreements were available understand the procedure. All payments were for mainly construction work and made in a timely manner. signed by both parties to indicate understanding and acceptance. Contracts inspected were fair, legal and transparent. Suppliers and contractors were paid in a timely manner. This was confirmed by contractors and FFB supplier during interview with them and inspection of payment records confirmed prompt

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payment. 6.11 The company makes contributions for Contribution through Head Office and Yes local development and records were internally by the operating units was verified. maintained. The operating units contribute to local development through consultation with surrounding community and workers. Mostly assistance given to schools and community by providing transport, permission to use the estate facility and donations. Donation to worshiping places is given. Since most of the operating units were located in the vicinity of township, most of the community have access to government roads and facilities. 7.1 to Not applicable as no new planting. N/A 7.7 8.1 Clear evidence of continual improvement Continuous improvement programme covers Yes in key areas include: the following: Reduction in the use of class 1a and Minimise use of highly toxic herbicides. class 1b agrochemicals. Maximising recycling and minimise waste by Environmental impact reductions. re-use the used herbicide containers for mixing Waste reduction. herbicides. All the used containers and Pollution emission reductions. lubricants are collected at schedule waste Social impact improvements. store and disposed responsibly through Records were in place of follow up licensed waste collectors. Recycling was actions as a result of both internal and introduced to workers to recycle domestic external audits. waste. Social improvement includes new housing. Implementation of safety and health measures enhanced with training and collection of information through internal feedback system to identify training needs. Internal audits by safety executive and RSPO team to ensure continuous improvement and compliance to RSPO P&C.

3.3 Non conformity registered. This section gives an over view of new or revised non-conformities raised during this assessment and of actions taken to close out non-conformities sighted during the previous assessments. Major non-conformities raised during a main assessment will prevent CU from making a positive certification decision for the concerned units/products. The NC number is comprised of 2 parts to include the year in which the NC is raised as well as a sequential number.

Date: 27th May 2011 Number settled (See 5.1): 0 Number outstanding (See 5.2): 5

NON CONFORMITY REPORT NC number: 1/2011 Client name: KL-Kepong Berhad Date raised: 27th May 2011 Major or Minor: Minor Raised by: A. Senniah Aspect of standard: 4.3.3 Presence of road maintenance programme

Evidence of non-conformity: Most of the operating units were not having complete programme with detailed location, type of work and date. Culvert maintenance and road side drain upkeep were missing, including the housing site road maintenance and replanting area road maintenance records.

Assessors signature:

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Date: 27th May 2011 Proposed corrective action / improvement action by company.

Timeline for conformance: Time of next annual surveillance. Review of corrective /improvement action:

Assessors signature:

Date:

NON CONFORMITY REPORT NC number: 2/2011 Client name: KL-Kepong Berhad (Jeram Padang Palm Oil Mill Certification Unit) Date raised: 27th May 2011 Major or Minor: Minor Raised by: A. Senniah Aspect of standard: 4.4.7 Evidence of water management plans. Evidence of non-conformity: Although most of the operating units were conducting water analysis for drinking water, it is noted that some of the operating units were not conducting the water analysis as per the drinking water requirement. Water management plan did not identify water emergency during drought and water shortage issues at nursery.

Assessors signature:

Date: 27th May 2011 Proposed corrective action / improvement action by company.

Timeline for conformance: Time of next annual surveillance. Review of corrective /improvement action: Assessors signature:

Date:

NON CONFORMITY REPORT NC number: 3/2011 Client name: KL-Kepong Berhad (Jeram Padang Palm Oil Mill Certification Unit) Date raised: 27th May 2011 Major or Minor: Minor Raised by: A. Senniah Aspect of standard: 4.6.10 Records of pesticide use (including active ingredients used, area treated, amount applied per ha and number of applications) were maintained for either a minimum of 5 years or starting November 2007.

Evidence of non-conformity: Some of the operating centres were not keeping complete records as per the RSPO standard requirement. For example, application per hectare was missing. Updating of the application records were not carried out regularly.

Assessors signature:

Date: 27th May 2011 Proposed corrective action / improvement action by company.

Timeline for conformance: Time of next annual surveillance. Review of corrective /improvement action:

Assessors signature:

Date:

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NON CONFORMITY REPORT NC number: 4/2011 Client name: KL-Kepong Berhad (Jeram Padang Palm Oil Mill Certification Unit) Date raised: 27th May 2011 Major or Minor: Minor Raised by: A. Senniah Aspect of standard: 5.3.2 Having identified wastes and pollutants, an operational plan should be developed and implemented, to avoid or reduce pollution.

Evidence of non-conformity: Pollution identified. Mitigation plans were developed and practised but during the assessment, it was noted that there are oil and fuel spillages in most locations. Most of the operating units, were not implementing the mitigation methods to avoid pollution.

Assessors signature:

Date: 27th May 2011 Proposed corrective action / improvement action by company.

Timeline for conformance: Time of next annual surveillance. Review of corrective /improvement action:

Assessors signature:

Date:

NON CONFORMITY REPORT NC number: 5/2011 Client name: KL-Kepong Berhad (Jeram Padang Palm Oil Mill Certification Unit) Date raised: 27th May 2011 Major or Minor: Minor Raised by: A. Senniah Aspect of standard: 6.5.2 Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. Working hours, deductions, overtime (maximum of 90 hrs per month), sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc) were available in the language understood by the workers or explained carefully to them by a plantation management official in the operating unit.

Evidence of non-conformity: Deduction in the pay slip was not clear as to what the deduction is made for.

Assessors signature:

Date: 27th May 2011 Proposed corrective action / improvement action by company.

Timeline for conformance: Time of next annual surveillance. Review of corrective /improvement action:

Assessors signature:

Date:

Observations. Client name: KL-Kepong Berhad (Jeram Padang Palm Oil Mill Certification Unit) Date raised: 27th May 2011 Raised by: A. Senniah

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MSDS was available as per RSPO requirement. CHRA report recommendation that MSDS to be translated to local language wherever possible. Translation was in progress during the RSPO assessment. It would be an advantage to the operating centres if the translations were completed.

Assessors signature:

Date: 27th May 2011

3.4 Issues raised during stakeholder consultation and company responses. (The subjects raised and responses by the company will be reviewed at the first annual surveillance assessment). Subject raised Company response and proposed Assessment team findings action to be taken. Stakeholder highlighted that KLK should Management said that they will definitely Biodiversity area is checked during consider developing green corridor or consider this. At the moment management assessment at it is noted that efforts biodiversity area near the mill and already developing biodiversity area along are being carried out. Further follow estate. the river riparian. up during the annual assessment. One of the stakeholder congratulated KLK will continuously enforce safety at Positive comment. KLK for their efforts taken towards work site. enforcing safety and a safe working environment. Stakeholders hope that there will be continuous improvement. Representative from the school thanked KLK management will consider if there is a Positive response. the KLK management for introducing written request from the school RSPO in KLK. There is lot management. improvements noticed since RSPO introduced. Relationship between School and KLK management is good. They like to know whether KLK have any plans to donate used computer for the estate children. Is there any RSPO committee for Yes. KLK management is committed to Positive response. individual estate to monitor and comply with RSPO and every operating maintain the enforcement of RSPO centres have own RSPO committee and within an estate? Regional committee. Stakeholder requested for increased in Management agree to look into this matter. Positive response. subsidy for kindergarden. MPOA representative highlighted that Management highlighted that corrective Audit team checked the firearm safety there was a case where firearm lost in action and SOP is in place. locker, safety room, SOP and one of the operating units. Corrective interviewed the Manager. The action taken by the operating units. He corrective action implemented and it requests that auditors check this issue. is in the opinion of the audit team that efforts have been taken by the management. Representative from police said that Management will continuously ensure the Positive response. there were no illegal issues. Safety in safety in the estate. the estate is in control. Police have regular discussions with the operating units. Is RSPO will be a continuous process? KLK management is committed to comply Positive comment. What will happen if after certificate with RSPO. It is a daily work culture for all issued KLK does not continue the the operating centres and it will continue. present status? Union leader congratulated KLK for Management said it is their committment to Positive comment. complying with all the labour comply with MAPA-NUPW agreement. requirements and MAPA-NUPW agreement. Labour department office highlighted No issues raised by any party. that regular checks are carried out at all the operating units. Housing complies with labour requirement.

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4. Certified organization’s acknowledgement of internal responsibility

4.1 Formal sign off of assessment findings. Acknowledgement of internal responsibility by the client.

I the undersigned, being the legal representative of the inspected company, agree with the contents of this report and accept the liability in execution of the instructions given in the report. Name: Sin Chuan Eng Position: General Manager Signature:

Date: 19 August 2011

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List of Abbreviations

BRC British Retail Consortium CHRA Chemical Health Risk Assessment CoC Chain of Custody CPO Crude Palm Oil CSR Corporate Social Responsibility CU Control Union CUC Control Union Certifications DOE Department of Environment EFB Empty Fruit Bunch EIA Environment Impact Assessment ERT Endangered Rare or Threatened species EU European Union EUREPGAP Euro-Retailer Produce Good Agricultural Practices FFB Fresh Fruit Bunch FSC Forest Stewardship Council FSC COC Forest Stewardship Council Chain of Custody FSC FM Forest Stewardship Council Forest Management GGL Green Gold Label GMP Good Manufacturing Practice GOTS Global Organic Textile Standard GSSB Golden Sphere Sdn. Bhd. GTP Good Trading Practice GPS Global Positioning System HACCP Hazard Analysis and Critical Control Point HCV High Conservation Value HCVF High Conservation Value Forest IPM Integrated Pest Management JAS Japanese Agricultural Standard KDC Kulumpang Development Corporation Sdn Bhd KLK Kuala Lumpur Kepong MDC MDC Publishers Sdn Bhd ( Company Name) MSDS Material Safety Data Sheet NC Non Conformity OE Organic Exchange OSH Occupational Safety and Health OSHAS Occupational Safety and Health Assessment Scheme P&C Principle and Criteria PEFC Programme for the Endorsement of Forest Certification PK Palm Kernel POME Palm Oil Mill Effluent PPE Personal Protective Equipment RSPO Roundtable on Sustainable Palm Oil RSPO NI Roundtable on Sustainable Palm Oil National Interpretation SA8000 Social Accountability 8000 Sdn Bhd Sendirian Berhad SIA Social Impact Assessment SOCSO Social Security Organisation SOP Standard Operating Procedure USDA/NOP United States Department of Agriculture – National Organic Program WHO World Health Organization

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