SOU 16 Kok Foh Public Summary Report

Roundtable on Sustainable Palm Oil Public Summary Report Report no.: RA-82450216051 Certification assessment against the RSPO Principles & Criteria Malaysian National Interpretation 2014 & RSPO Supply Chain Certific ation Standard 2014

Sime Darby Plantation SOU 16: Kok Foh Kok Foh Palm Oil Mill, 72109 Bahau, Negeri Sembilan, Malaysia

Date of assessment: 23 – 27 May 2016

Report prepared by: Carol Ng Siew Theng (RSPO Lead Auditor)

Certification decision by: Abdul Qohar (Director of TUV Rheinland Indonesia)

Certification Body: PT TUV Rheinland Indonesia Menara Karya, 10 th Floor Jl. H.R. Rasuna Said Block X-5 Kav.1-2 Jakarta 12950,Indonesia Tel: +62 21 57944579 Fax: +62 21 57944575 www.tuv.com/id

TABLE OF CONTENTS

1.0 SCOPE OF CERTIFICATION ASSESSMENT 3

1.1 National Interpretation Used 3 1.2 Type of Assessment 3 1.3 Details of previous certificate 3 1.3 Location and Maps 3 1.4 Description of Supply Base 15 1.5 Dates of Plantings and Replanting Cycles 16 1.6 Other Achievements and Certifications Held 17 1.7 Area of Plantation (Total, Planted and Mature) 18 1.8 Organisational Information / Contact Person 19 1.9 Description of Company History, Socio-economy & Environment 19 1.10 Time Bound Plan for Other Management Units 20 1.11 Compliance to Rules for Partial Certification 21 1.12 Plan for certification of associated smallholders 22 1.13 Approximate Tonnages Certified 22 1.14 Approval for Certification 22 1.15 Date of Certificate Issued and Scope of Certificate 22 2.0 ASSESSMENT PROCESS 23

2.1 Certification Body 23 2.2 Qualifications of Lead Assessor and Assessment Team 23 2.3 Assessment Methodology 25 2.4 Stakeholder Consultation and Stakeholders Contacted 31 2.5 Date of Next Surveillance Visit 31 3.0 ASSESSMENT FINDINGS 32

3.1 Summary of Findings 32 3.2 Status of Previously Identified Non-conformances 76 3.3 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions 78 3.4 Noteworthy Positive Components 103 3.5 Issues Raised by Stakeholders and Findings Pertaining to Issues 105 3.6 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client 111 APPENDICES 112

Appendix 1: Details of Certificate 112 Appendix 2: Certification Audit Plan 113 Appendix 3: List of Abbreviations 122 Appendix 4: List of Stakeholders Interviewed and Contacted 124 Appendix 5: Observations and Opportunities for Improvement 128

RSPO Re-certification Assessment Report Sime Darby Plantation SOU 16: Kok Foh

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1.0 SCOPE OF CERTIFICATION ASSESSMENT

1.1 National Interpretation Used The operations of the palm oil mill(s) and its supply base of FFB were assessed against the Malaysia National Interpretation (MY-NI) year 2014 of the RSPO Principles & Criteria and the RSPO Supply Chain Certification Standard 2014. The palm oil mill applies the Module E – CPO Mills: Mass Balance supply chain model. 1.2 Type of Assessment The re-certification assessment was carried out on 1 mill and 8 estates under SOU16: Kok Foh owned by Sime Darby Plantation. The date of first certificate of this unit was 7 July 2011 issued by Control Union Certification. Subsequent certificates for this management unit were issued by Intertek Certification International This unit was previously certified by Intertek. 1.3 Details of previous certificate The details of previous RSPO certification of Sime Darby Plantation Sdn Bhd, SOU 24 Kok Foh Palm Oil Mill are as per the table below

Table 1: Previous RSPO Certification details of Kok Foh Palm Oil Mill

RSPO Membership no.: 1-0008-04-000-00 Previous RSPO Certificate no.: RSPO 928188 Date of previous RSPO certificate & validity: 30 November 2012 – 6 July 2016 (1 st certificate issued on 7 July 2011) Date of certification audit: 18 – 19 May 2009 (by Control Union Certification) Date of previous surveillance audit: 18 – 22 May 2015 (by Intertek Certification Interna- tional Sdn. Bhd.) Previous CPO tonnages claimed: 31,003.37 tonnes Previous PK tonnages claimed: 6,860.33 tonnes Current RSPO certificate no.: 824 502 16051 Current CPO tonnages claimed: 37,196 tonnes Current PK tonnages claimed: 9,050 tonnes

1.3 Location and Maps Table 2: GPS locations for all estates and mills included in certification assessment

Name of mill / es- GPS locations Location tate Latitude Longitude Kok Foh Palm Oil Mill Kok Foh Palm Oil Mill, 72109 Bahau, Negeri Sembilan 02°47.08’N 102°30.25’E Kok Foh Estate Kok Foh Estate, 72109 Bahau, Negeri Sembilan 02°47.08’N 102°30.25’E Sg. Senarut estate Sg. Senarut estate, 85100 Batu Anam, Johor 2°34.16’ N 102°45.20’ E Muar River estate Muar River estate, Locked Bag No.503, 85009 2°34.26’ N 102°45.08’ E Segamat, Johor Pertang estate Pertang estate, 72300 Simpang Pertang, Negeri Sem- 2°57.25’ N 102°18.12’ E bilan Sg. Gemas estate Sg. Gemas estate, 73400 Gemas, Johor 2°34.73’ N 102°38.86’ E Bukit Pilah estate Bkt Pilah estate, 73500 Rompin, Negeri Sembilan 2°33.73’ N 102°55.91’ E St. Helier estate St. Helier estate, 72100 Bahau, Negeri Sembilan 2°33.72’ N 102°33.73’ E Sg. Sabaling estate Sg. Sabaling estate, 72100 Bahau, Negeri Sembilan 2°50.56’ N 102°29.03’ E

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Figure 1: Locations of SOU 16: Kok Foh estates in Negeri Sembilan and Johor, Malaysia

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Kok Foh Palm Oil Mill

Figure 2: GPS Surveyed map of Kok Foh estate and Kok Foh Palm Oil Mill

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Figure 3: GPS Surveyed map of Sg. Senarut Estate

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Figure 4: GPS Surveyed map of Muar River Estate

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Figure 5: GPS Surveyed map of Pertang Estate

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Figure 6a: GPS Surveyed map of Bukit Pilah estate – Bukit Pilah, Kelpin and New Rompin Divisions

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Figure 6b: GPS Surveyed map of Bukit Pilah estate – Sg. Kelamah Division

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Figure 7: GPS Surveyed map of Sg. Gemas estate

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Figure 8a: GPS Surveyed map of St. Helier estate – Juasseh Division

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Figure 8b: GPS Surveyed map of St. Helier estate – St. Helier Division

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Figure 9: GPS Surveyed map of Sg. Sabaling

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1.4 Description of Supply Base

Table 3: FFB Supply Information for Kok Foh Palm Oil Mill for financial year (FY) July 2014/ June 2015 and June 2015/ July 2016 (up until April 2016 only

FFB supplied from FFB supplied in FY2014/15 FFB Contributors FY2015/16 (up until April 16) Tonnes % Tonnes % Company owned estates (within audit scope): Kok Foh Estate 48,358.09 26.80 35766.71 27.34 Sg. Senarut Estate 12,201.05 6.76 8055.73 6.16 Muar River Estate 27,187.09 15.07 17314.56 13.24 Pertang Estate 15,700.32 8.70 10032.67 7.67 Sg. Gemas Estate 20,699.06 11.47 17502.91 13.38 Bk. Pilah Estate 12,256.57 6.79 10159.82 7.77 St. Helier Estate 12,932.06 7.17 11634.10 8.89 Sg Sabaling Estate 2,602.15 1.44 1701.31 1.30 Subtotal 151,936.39 84.22 112167.81 85.75 Diverted FFB from RSPO certified company owned estates (outside audit scope): Bradwall Estate 534.18 0.30 - - Kemuning Estate 1,897.21 1.05 - - Sengkang Estate 860.98 0.48 - - Tampin Linggi Estate 2,301.24 1.28 1723.03 1.32 Subtotal 5593.61 3.10 1723.03 1.32 Non- certified / other sources*: Cheong Wing Chan 17,251.72 9.56 12383.94 9.47 Sern Lee Enterprise 5,626.18 3.12 - - Eng Huat Latex - - 4531.62 3.46 Subtotal 22,877.90 12.68 16,915.56 12.93 TOTAL 180,407.90 100 130,806.40 100

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Table 4: Certified tonnages claimed, certified tonnages purchased or sold, total and projected CPO and PK production from Kok Foh Palm Oil Mill

Amount (MT)

FFB CPO PK

Total Actual Production for FY2014/15 180,416.738 39,395.233 9,422.815

Conversion Rate for FY2014/15 - OER: 21.84% KER: 5.22%

Actual Certified Production for FY2014/15* 151,936.39 33,182.91 7931.08

Projected output for FY2015/16** 186,054.33 41,596.17 10,149.96

Projected conversion rate for FY2015/16** - OER: 22.36% KER:5.46%

Projected Certified Production for 166,054.33 37,196.17 9,049.96 FY2015/16 (Certified tonnages claimed)*

* Certified tonnages sold*** - 3541.57 -

* Calculated based on FFB supply information for mill’s regular supply base only. ** From Mill MPLAN Crop Budget 2015/2016 from mill’s regular supply base *** Total for past two financial years as per eTrace transactions for FY 2014/15 (3024.80 tonnes sold) and FY 2015/16 up until the time of this audit (516.77 tonnes sold)

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

Table 5: Age and year of plantings of company estate supplying to Kok Foh Palm Oil Mill

Oil palm planted area (ha) Age of Year of planting Sg. Sg. Ge- Bukit St. Helier Sg. planting* Kok Foh Muar River Pertang Senarut mas es- Pilah es- estate Sabaling (years)* Estate estate estate estate tate tate estate 1992/93 23 - - 148.22 24.08 - - - - 1993/94 22 - - 190.64 - - - - - 1994/95 21 118.59 ------1995/96 20 189.77 ------1996/97 19 16.88 - 93.82 121.92 72.41 32.37 - - 1997/98 18 342.53 - 44.74 - 101.44 - - - 1998/99 17 358.69 - 76.31 - - - - - 1999/00 16 333.61 - 296.01 - 144.04 - - - 2000/01 15 393.38 - - - 248.49 - - - 2001/02 14 412.55 243.63 77.49 - 311.95 38.66 - - 2002/03 13 - 23.43 - - - 163.52 53.66 - 2003/04 12 ------124.66 2004/05 11 - - - 145.54 - - 332.74 - 2005/06 10 - 143.24 115.23 - - 332.21 176.02 - 2006/07 9 - 147.39 132.29 211.36 - 195.35 - - 2007/08 8 ------2008/09 7 - - - 33.34 - - - - 2009/10 6 - - - 69.30 - - - - 2010/11 5 - - 65.65 64.54 - - 143.86 - 2011/12 4 - - - - - 14.32 145.32 -

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2012/13 3 - - 156.98 - - - - - 2013/14 2 - - 62.06 67.30 - - 36.8 - 2014/15 1 ------2015/16 0 - - - 87.08 - - - - TOTAL 2166.00 557.69 1459.44 824.46 878.33 776.43 888.40 124.66

Table 6: Planned oil palm replanting activities for SOU 16: Kok Foh

Total planned replanting area (ha)

Year Sg. Kok Foh Sg. Senarut Muar River Pertang es- Sg. Gemas Bukit Pilah St. Helier Sabaling Estate estate* estate tate estate estate* estate* estate* 2016/17 - - - 130.49 - - - - 2017/18 217.84 - 62.11 - - - - - 2018/19 225.78 - 79.47 24.08 - - - - 2019/20 224.15 - 114.49 - - - - - 2020/21 213.77 - 84.49 - - - - -

*Sg. Senarut, Bukit Pilah, St. Helier (Main division), and Sg. Sabaling is in progress of converting all oil palm planted area to rubber.

1.6 Other Achievements and Certifications Held

Table 7: Details of other certifications or awards held by SOU 16: Kok Foh Name of Certification Standard / Award Certification Date mill / estate achieved Body / Awarder Achieved SOU 16: Kok Foh Appreciation of High OER Achieve- Sime Darby Plantation September ment for FY2009/2010 2010 SOU 16: Kok Foh Best SOU (Annual Awards 2011) Sime Darby Plantation October 2011 SOU 16: Kok Foh Most Improved SOU (Annual Awards Sime Darby Plantation September 2014) 2014 Kok Foh Mill OSH Award 2014 – Silver Class for Malaysian Society for Year 2014 Kok Foh Palm Oil Mill Occupational Safety & Health Sg Senarut Es- CSR Awarded from LGM LGM December tate 2015 Muar River Estate 5S PSQM 3 JULY 2014 Muar River Estate 3rd place Award for Safety and Health Department of Occupa- 1 MAY 2013 at Work in the Plantation Sector For tional Safety & Health Segamat District (DOSH) and the Social Welfare Orgnization (PERKESO) Pertang Estate 5S Certification PSQM Team May 2014

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1.7 Area of Plantation (Total, Planted and Mature) Table 8: Oil Palm Planted Area Summary, FFB Production and Average yield/ha for SOU 16: Kok Foh

FFB Oil Palm Mature Immature Total area Production in Average Estate Name Planted area (Production) (Non-production) (ha) FY2014/15 yield/ ha (ha) area (ha) area (ha) (tonnes) Kok Foh Es- 2,307.85 2,166.00 2,166.00 - 48,358.09 22.33 tate Sg. Senarut 1988.77 557.69 557.69 - 12,309.80 22.07 estate Muar River 1590.72 1459.44 1240.40 219.04 27,414.07 21.86* estate Pertang es- 1052.49 824.46 670.08 154.38 15,700.32 23.03 tate Sg. Gemas 970.61 878.33 878.33 - 20,856.150 23.74 estate Bukit Pilah 3,667.31 776.43 776.43 - 12,256.57 15.72 estate St. Helier es- 1992.65 888.40 851.60 36.80 Ha 12932.06 15.06 tate Sg. Sabaling 124.66 124.66 124.66 - 2602.15 20.87 estate * Average yield/ha for Muar River estate is calculated based on previous financial year’s mature planted area which is 1256.15ha. Since then the mature planted area has reduced due to takeover of land by Tenaga Na- sional Berhad (TNB), the National Electricity Commission.

Table 9: Land use data for SOU 16: Kok Foh Land used for other purposes (ha) Oil Palm Rubber HCV Estate Total area Non- Planted planted areas* Palm Oil Mill Road, Hous- Name (ha) plantable Others area (ha) area (ha) (ha) & Buildings ing & Drainage area Kok Foh Es- 2,307.85 2,166.00 - 7.948 - 0.14 23.95 117.76 tate Sg. Senarut 1988.77 557.69 1327.52 3.94 22.69 - 62.51 18.36 estate Muar River 1590.72 1459.44 - 0.45 61.59 8.49 61.2 - estate Pertang es- 1052.49 824.46 130.49 0.07 33.74 - 62.48 1.32 tate Sg. Gemas - 970.61 878.33 1.78 1.78 7.23 71.12 12.15 estate Bukit Pilah 3,667.31 776.43 2781.53 7.99 36.85 - 72.5 estate St. Helier es- 945.81 1992.65 888.40 0.86 5.8 38.67 113.97 - tate Sg. Sabaling 124.66 124.66 1139.84 2.56 2.5 16.573 37.77 0.007 estate *As per the company’s HCV Report

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1.8 Organisational Information / Contact Person Contacts details of the company are as follows: Company Name: Sime Darby Plantation Sdn Bhd RSPO Membership no. 1-0008-04-000-00 Address: Kok Foh Palm Oil Mill, 72109, Bahau, Negeri Sembilan, Malaysia Contact Person: Aminudin Mohammad Nor (Senior Manager)

Telephone: +606-4576214/ +6019-3307610

Email: ldg.bk.pilah@simedarby,com

1.9 Description of Company History, Socio-economy & Environment

SOU 16 Kok Foh estates and mill are located in Negeri Sembilan and Johor. It is operating under Strategic Op- erating Unit (SOU) 16, which consist of one mill, namely Kok Foh Palm Oil Mill (POM), and eight contributing estates; Kok Foh Estate, Sungai Senarut Estate, Sungai Gemas Estate, Muar River Estate, Bukit Pilah Estate (consisting of 3 Divisions, i.e. Kelpin Division, New Rompin Division and Sg. Kelamah division), Sungai Sabaling Estate, Pertang Estate and St. Helier Estate (consisting of 2 divisions, i.e. Main Division and Juasseh Division). All the estate are situated inland with no borders to the ocean and located within the Jelebu, Jempol, and Kuala Pilah districts of Negeri Sembilan as well as the Segamat districts of Johor, central to southeast of West Malaysia. Kok Foh Palm Oil Mill is located within the land area of Kok Foh Estate.

The topography of the estates are predominantly flat to undulating with a maximum slope of 20° in small areas of each of the estates.

The following is a summary of demographic information related to the estates:

Table 10: General Information on Estates under SOU 16: Kok Foh

Estate Year of Nearest List of the List of schools in- Workers estab- town villages/housing area sur- side estate com- population lishment (km) rounding or within estate pound (local & foreign) Kok Foh Es- 1963 15 1. Gaddes Village - 222 tate 2. Cheong Wing Chan Estate 3. Batang Jelai Estate Sg. Senarut 1990 1 1. Taman Mina 1. Sg. Senarut Es- 262 estate 2. Taman Perumahan Rakyat tate Tamil School 3. Kg Baru Cina (Chinese New 2. Sg Senarut Estate Village) KEMAS Kindergarten Muar River 1906 2 1. Batu Bakar Village Muar River Estate 156 estate 2. Paya Lang Village Tamil School 3. Taman Suria 4. Taman Mawar Pertang es- 1958 42 1. Tambahtin Village Pertang Estate Tamil 161 tate 2. Felcra Penagoh School 3. Parit Gong Indigenous Peo- ple’s Village Sg. Gemas 1967 5 - - 94 estate Bukit Pilah 1941 1 1. Felcra Rompin B 1. Sg. Kelamah Es- 718 estate 2. Sri Rompin Village tate Tamil School 3. Bukit Pilah Village 2. Kelpin Estate Tamil

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4. Tanah Panjis Village School 5. Felda Sg Kelamah 3. Tanah Panjis Es- tate Tamil School St. Helier 1960 7 1. Jeram Padang Indigenous 1. St. Helier Estate 316 estate People’s Settlement Tamil School 2. Klebang Indigenous Peo- 2. Sialang Estate ple’s Village Tamil School 3. Jelai Village 3. Juasseh Estate 4. Taman Jaya Village Tamil School 5. Taman Anggerik Sg. Sabaling 1946 15 1. Gaddes Village Sg. Sabaling Estate 208 estate 2. KLK Estate Tamil School 3. IOI Estate

Kok Foh Palm Oil Mill was established in year 2010 and currently has a MPOB license no. 510425004000 valid from 1 March 2016 until 28 February 2017. The mill’s Department of Environment (DOE) license no. 002167 was issued to Kok Foh Palm Oil in year 2008 and has a current DOE compliance schedule for 1 May 2015 until 30 April 2016 with approved processing capacity of 60 tonnes/hour.

1.10 Time Bound Plan for Other Management Units The time frame laid out below is considered to be both challenging and realistic. The audit team is satisfied that the company conforms to the RSPO requirements for partial certification as laid out in Clause 4.2.4 of the RSPO Certification Systems document.

Table 11: Time Bound Plan of Sime Darby Plantations

Countries with SDP SOUs Total Status no. of Remarks Malaysia Indonesia Liberia SOUs RSPO 34 24 0 58 Malaysia: Effectively 34 SOUs in Malaysia have been Certified certified. Out of this, 6 previously certified SOUs, i.e.Sg Samak, Jeleta Bumi, Yong Peng, Sepang, Mostyn and Segaliud POM has been closed down and certificates withdrawn. There are no other uncertified SOUs in Malaysia Indonesia: 24 SOUs in Indonesia have been certified with one SOU pending certification (see below). Planned 0 1 1 2 SDP is progressively undergoing the RSPO Certifica- for Certifi- tion process towards 100% RSPO certification of es- cati- tates/mills. on/Underg oing Indonesia: PT Mitra Austral Sejahtera (MAS) has un- Stage 1 or dergone RSPO Main assessment and is delayed due Stage 2 to some social disputes. The target date for certifica- Assess- tion is by 2016 subject to the progress of the matter ment/ being resolved. RSPO EB Review Smallholders: As at December 2015, total of 24,820 Ha (59%) of total Ha, (42,008 Ha) of SDP’s associated smallholders in Indonesia has been certified. Cer- tification process for the remaining associated smallholders areas is on-going. SDP expect to achieve 100% RSPO certification of associated smallholders and outgrowers by end 2019.

Liberia: A new mill will be set up in Liberia and planned for commissioning in February 2016. Prepa- ration to undergo the RSPO Certification process is in progress and SDP targets to undergo RSPO Certi-

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fication by end 2017. *RSPO NPP process has been completed in 2011. Internal assessment against the draft Liberia NI has been completed and closing of gaps is in progress. Total SOUs 34 25 1 60 Other remarks: In March 2015, Sime Darby Plantation completed the acquisition of New Britain Palm Oil Limited (NBPOL). NBPOL is managed under a separate entity and the reporting of timebound plan will be under NBPOL’s management. NBPOL is considered as a different entity/member under the RSPO and NBPOL is 100% RSPO Certified.

1.11 Compliance to Rules for Partial Certification The summary of findings Compliance of the uncertified management units of Sime Darby Plantation against the rules for partial certification according to RSPO Certification System clause 4.2.4 is as stated below. Partial Certification Requirements Audit Findings (a) The parent organization or one of its Sime Darby Plantation Sdn. Bhd is RSPO member with mem- majorities owned and / or managed subsid- bership number is 1-0008-04-000-00. iaries is a member of RSPO. (b-d) A challenging time-bound plan for The company has a timebound plan both for Malaysia site and certifying all its relevant entities is submit- Indonesia sites as determined on the table 11 above. Almost ted to the Certification Body (CB) during all of the company’s SOUs have been certified with only one the first certification audit. The time-bound uncertified company remaining in Indonesia, PT Mitra Austral plan should contain a list of subsidiaries, Sejahtera (MAS), which has already undergone the RSPO Cer- estates and mills. tification Audit by PT Mutuagung Lestari, but certification is delayed due to some social disputes, as explained further below. Any revision to the time-bound plan or to the circumstances of the company shall cause the plan to be reviewed. for whether it is still appropriate, such that changes to the time-bound plan are permitted only where the organisation can demonstrate that they are justified (e) No replacement of primary forest or any PT MAS, as the only remaining SOU of Sime Darby Plantations area identified as containing High Conser- which has not been certified, has undergone certification audit vation Values (HCVs) or required to main- by PT Mutuagung Lestari. Compliance to this requirement was tain or enhance HCVs in accordance with therefore evaluated by the certification body. RSPO criterion 7.3. Any new plantings since January 1st 2010 must comply with the RSPO New Plantings Procedure

(f) Land conflicts, if any, are being resolved PT MAS has a number of ongoing social disputes involving the through a mutually agreed process, e.g. local communities in the hamlets of Kerunang & Entapang, RSPO Grievance procedure or Dispute Sanggau District, West Kalimantan, Indonesia, who were sup- Settlement Facility, in accordance with ported by TuK (facilitator) & Oxfam (represented by Oxfam RSPO criteria 6.4, 7.5 and 7.6. Novib (observer). A complaint regarding the dispute was made by the Project Affected Communities (PAC) to the RSPO on 5th November 2012, in which the PAC listed 14 demands, mainly related to the indigenous and land rights of the local community, disagreement over the plasma partnership arrangement between the local community and PT MAS, and requested contributions to the community. Regular discussion is ongoing between Sime Darby Plantation and the group of community (PAC) through bi-monthly Tim Kerja Perwakilan Petani (TKPP) meeting since November 2012. In October 2013, representatives from two of nine villages (Kerunang and Entapang) left TKPP and supported by TuK and OXFAM. They

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have then requested SDP to enter into Dispute Settlement Fa- cility (DSF) in June 2014. Hence, SDP is currently having ongoing negotiations with two groups of communities: 1) TKPP (7 of 9 villages) and 2) Kerunang & Entapang (2 of 9 villages)

Engagement with Kerunang/ Entapang: SDP visited the communities on 27 August 2014 to listen and have a better understanding on their requests. The subsequent meeting with the communities was held on 12 December 2014 and community is continuing to engage directly with SDP.

Engagement with RSPO: RSPO Secretariat is kept in progress by SDP through regular briefings and progress reports. The latest report submitted to RSPO is dated 7th August 2015.

Engagement with TKPP: The most recent TKPP meeting was held on 16th October 2015. The meeting was on reviews on the current and planned CSR activities for the communities. To date, 12 of the 14 demands have been closed.

(g) Labour disputes, if any, are being re- PT MAS, as the only remaining SOU of Sime Darby Plantations solved through a mutually agreed process, which has not been certified, has undergone certification audit in accordance with RSPO criterion 6.3. by PT Mutuagung Lestari. Compliance to this requirement was therefore evaluated by the certification body.

(h) Legal non-compliance, if any, are being PT MAS, as the only remaining SOU of Sime Darby Planta- resolved in accordance with the legal re- tions which has not been certified, has undergone certifica- quirements, with reference to RSPO crite- tion audit by PT Mutuagung Lestari. Compliance to this re- ria 2.1 and 2.2. quirement was therefore evaluated by the certification body.

1.12 Plan for certification of associated smallholders As seen from data in Table 3, the mill receives approximately 12 – 13 % of supply of FFB from non-certified independent sources, which are not associated smallholders of the mill. The mill does not have any associated smallholders and hence has not developed a plan for certification of associated smallholders.

1.13 Approximate Tonnages Certified The approximate tonnages certified, based production in [year] for company owned estates only are as follows: Crude Palm Oil (CPO) : 37,196 tonnes Palm Kernel (PK) : 9,050 tonnes

1.14 Approval for Certification Sime Darby Plantation SOU 16: Kok Foh has established and maintains an effective system to ensure compliance with the RSPO principles and criteria. The audit team has confirmed through the audit process that the company’s practices complies with, adequately maintains and implements the requirements of RSPO Principles and Criteria MY-NI: 2014. PT TUV Rheinland Indonesia approves Sime Darby Plantation SOU 16: Kok Foh as a producer of RSPO Certi- fied Sustainable Palm Oil.

1.15 Date of Certificate Issued and Scope of Certificate The scope of the certificate covers production of palm oil from Sime Darby Plantation SOU 16: Kok Foh and its supply base, which includes Kok Foh estate, Sg. Senarut Estate, Muar River Estate, Pertang Estate, Sg. Ge- mas Estate, Bukit Pilah Estate, St. Helier Estate, and Sg. Sabaling estate. The date of certificate issued is [Date of certificate to be included upon certification decision and issuance of certificate]. Further details of the certificate are as per Appendix 1.

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2.0 ASSESSMENT PROCESS 2.1 Certification Body

PT TUV Rheinland Indonesia is member of Group TÜV Rheinland Group, a global leader in independent testing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 500 locations in 65 countries on all five continents. PT TUV Rheinland Indonesia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, and SA 8000. PT TUV Rheinland Indonesia’s office is located in Jakarta, Indonesia.

2.2 Qualifications of Lead Assessor and Assessment Team

Name Position Qualifications / Experience

Education: B.Sc. Biotechnology & B.Sc. Environmental Management - Monash University.

Trainings attended: RSPO Lead Auditor Course – Wildasia; RSPO Supply Chain Certification Systems training course – David Ogg & Partners; RSPO Malaysian National Interpretation Requirements and Certification – SIRIM; Implementation of RSPO Principles & Criteria - QA Plus; RSPO Stepwise Support Programme - Proforest/WildAsia; OHSAS18001:2007 Auditor/Lead Auditor Training – Neville Clarke; ISO14001 Auditor/ Lead Auditor Training – Neville Clarke; SA8000 5 Day Basic Auditor Course – Global Group; Elabo- rating on the RSPO P&C Social and Labour Standards and the Mechanics of Social Auditing Workshop – Verité; Certification Body Biodiversity Forum & Lead Carol Ng Workshop – RSPO; 2nd Biodiversity Seminar – RSPO; Environmental Quali- Auditor ty Act 1974 – Department of Environment; ISCC System Certification Semi- nar & ISCC System GHG Training – ISCC.

Working experience: RSPO Lead Auditor (since March 2015), CDM Auditor (since year 2012), Assistant Manager (since year 2012) and Project Engineer (since year 2009) for TUV Rheinland Malaysia; currently responsible for conducting and coordinating RSPO certification projects; previous experience in year 2009 in implementing sustainable practices in Sime Darby plantations to comply with RSPO requirements, performing RSPO internal audits and implementing sustainability projects. Prepared training materials and conducted several RSPO requirements trainings and workshops to plantation management teams (2008). Education : Master of Engineering (Environmental) - Universiti Putra Malay- sia, B. Eng in Chemical Engineering - University of Wales, Swansea Auditor Trainings attended : ISO9001: Lead Auditor Training/Course, Internal Audi- (OSH & Azizan tor, IMS Lead Auditor/ Auditor Training in IMS (ISO9001, ISO14001 & Envi- Zakaria OHSAS18001) ron- Working experience: 10 years experience in chemical management and pol- ment) yurethane production and internal auditing for process compliance with integrated Environmental Management System (EMS) and OSH Management System. Education : Diploma in Public Administration- MARA Institute of Technology, Malaysia (1991). Certificate of Safety and Health Officer-Malaysian Insurance Auditor Institute (2003). Bachelor of Corporate Administration (Hons)-MARA University Yusof (OSH & of Technology, Malaysia (2003), Master of Science in Occupational Safety Khairan Envi- and Health Management-Northern University of Malaysia (2011), Candidate Nizar ron- for Phd in Occupational Safety and Health Management-Northern University of ment) Malaysia. Trainings attended: ISO 9001:2000 IRCA/IATCA Lead Auditor Training-

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International Management & Technology Limited (Kuala Lumpur), ISO 14001:2004 IEMA Approved EMS Advanced Lead Auditor Training Course- Aspects Moody Certification Ltd (United Kingdom). OH&SMS IRCA Certified Lead Auditor Training Course-Moody International (Kuala Lumpur). MS 1722 Lead Auditor Training-Niosh Certification (Kuala Lumpur) Working experience: Experience in managing, consulting, training and auditing quality, environmental, occupational safety and health management systems such as ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, MS1722:Part 1:2005 from 1996-Current. Contract Trainer of OSH & Environ- mental Legal & Other Requirements Lead Auditors course for SIRIM Training Services Sdn Bhd & NIOSH Certification Sdn Bhd. Contract Auditor for Envi- ronmental Management System for Sirim QAS International (2006). Depart- ment of Occupational Safety and Health Malaysia (DOSH) Registered Safety and Health Officer (2003-2006). Approved Human Resources Development Fund (HRDF) Trainer (2011). Assessor for Prime Minister’s Hibiscus Award and involving assessment for oil and gas companies, plantations industries, manufacturings, utilities, cleaning and transportations services (2003-2011). OSH and Environmental Auditor for TUV Rheinland Malaysia RSPO Principles & Criteria. Education: Bachelor of Engineering (Hons) (Civil Engineering), Universiti Sains Malaysia (1999); Master of Science in Highway and Transportation Engineering, Universiti Sains Malaysia (2000) and Ph.D. in Environment & Resource Studies, Mahidol University, Thailand (2008). Trainings attended: November 2010: Auditor’s Training Course on the Ma- laysian Criteria and Indicators 2002 (Malaysian Timber Certification Council); May 2012: Auditor’s Training Course on the Malaysian Criteria and Indicators (Natural Forest) (Malaysian Timber Certification Council); September 2012: Lead Auditor’s Training Course for Roundtable on Sustainable Palm Oil (RSPO) (Proforest and WildAsia); November 2012: ISO 14001 Lead Audi- tor’s Training Course (by SGS (M) Sdn. Bhd.) Working experience: Experience in project administration and community development with the Indigenous Knowledge Network Project (2004); Co- ordinated social development/sustainable livelihood projects as Consultant Environmental Sociologist for Orang Asli in Pahang under the United Nations Dr. Auditor Development Programme (UNDP)/Global Environment Facility (GEF) (2004- Savinder (Social) 2007); Contract Social auditor/technical expert for sustainable forest man- Kaur agement (Malaysia Criteria and Indicators (MC&I )(Natural Forest) & Forest Stewardship Council (FSC) and Roundtable for Sustainable Palm Oil (RSPO) for SGS (M) Sdn. Bhd. (2006-present). Consultant Environmental Sociologist for due diligence, social impact assessments for sustainable forest and oil palm management and has worked with various rural communities in Malaysia and Indonesia on High Conservation Value Forest assessments (HCVF) with Malaysian Environmental Consultants (MEC) Sdn.Bhd (2006-2011). Social Screening Consultant for the Sarawak Railway Screening Project-Social Screening Social commissioned by the Bintulu Development Authority, Sara- wak and assisted in APEC Transboundary Marine Spatial Planning and Man- agement Project (with Sea Resources Management (SRM) Sdn. Bhd. from 2010-2011. Conducted Participatory Needs Analysis for Local Community Oil Palm Mill in Telupid, Sabah with Alter Palm Oil Trade, Japan (2010-2011). Trainer for social impact assessment for PACOS Trust, Sabah. Registered HCV assessor with RSPO (2010). Social and HCV Auditor for TUV Rheinland Malaysia RSPO Principles & Criteria (2014-) Education: LLB(Hons), JohnMoores University, Liverpool, UK (1988), Certif- icate in Legal Practice (CLP) examination (1992) Trainings attended: RSPO-endorsed Lead Auditors course (November Rahayu Auditor 2014); RSPO P&C and Supply Chain Standard and System (SIRIM) (Febru- Zulkifli (Social) ary 2016); Social Aspects of the RSPOP&C (SIRIM) (February 2016); ISO14001 Lead Assessor course (Exemplar Globalcertified) (March 2016); Techniques of Auditing (SIRIM) (January 2016); Trained and certified as a

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mediator by the Malaysian Mediation Centre (2014); Certified as a Translator by the Institut Terjemahan dan Buku Malaysia (2014) Working experience : Manager of Dispute Settlement Facility - RSPO, and Managed the RSPO Human Rights Working Group (HRWG) focusing in par- ticular on Social Audits, Land Conflicts, Labour Rights and Human Rights (January 2014 –May 2015); Team Leader – Terengganu Turtle Conservation, WWF Malaysia (September 2003 – October 2013); Manager, Legal and Cor- porate Secretarial and Company Secretary – Crest Petroleum Berhad (March 2000 – August 2003); Deputy Manager, Legal and Corporate Secretarial and Assistant Company Secretary – Sistem Televisyen Malaysia Berhad (TV3) (June 1995 – March 2000); Legal Assistant – Shamsuddin & Co. Advocates & Solicitors (October 1994 – May 1995).

For the verification of closure of Major NCs, the lead auditor was assisted by the following auditor:

Name Position Qualifications / Experience Education : Masters in Engineering (Safety, Health & Environment) – Uni- versiti Malaya, B. Eng in Chemical Engineering – Universiti Teknologi Ma- laysia Trainings attended : RSPO Lead Auditor Training – Proforest (2010), RSPO SCC Course – David Ogg & Partners (2016), ISO9001:2008 Lead Vikneswa- Auditor Training – BSI (2010), OHSAS 18001: 2007 Lead Auditor Course – ran Para- Auditor Neville Clarke (2016), Safety & Health Officer (SHO) Course – NIOSH masivan (2010) Working experience: Worked in the palm oil industry for more than 10 years in various capacities; RSPO auditor since 2010; First Grade Steam Engineer for Boiler and Unfired Pressure Vessels certified by DOSH since 2007

2.3 Assessment Methodology

The certification assessment was conducted between 23 – 27 May 2016 as per the assessment program below. The assessment was carried out in accordance with PT TUV Rheinland Indonesia’s RSPO audit procedure as well as the RSPO Certification Systems document. During assessment, the qualified TUV Rheinland assessors used the RSPO standard as endorsed for the country in which the assessment took place and recorded their findings. Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without com- promising the integrity of the assessment in anyway. The mill and all estates except Sg. Sabaling estate (due to its small oil palm planted area which is planned for replanting to rubber) were visited and the assessment team carried out field and document assessments of compliance to all the RSPO principles and criteria. Common systems were identified and specific evidence was recorded for individual estates. Interviews were conducted at all estates and the mill. The company proposed the correction and corrective action for all identified non conformities raised to the certification body 30 days after the closing meeting, and provided relevant evidence for closure of the major non- compliances. On-site verification of closure of major non-conformances was conducted on 10 – 12 August 2016, which is slightly after 2 months after the closing meeting of the main assessment (delay due to tight schedule of audit team and auditee as well due to the local Eid celebrations). Implementation of corrective actions for minor non-conformities will be verified during the next surveillance audit. The certification assessment agenda is as explained below.

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Re-certification Assessment Agenda

Location/ Date Main activities Main sites 23 May 2016 Kok Foh Es- Opening Meeting: tate Meeting - Introduction to audit team and finalization of audit plan Room - Introduction to estates and the mill

Team 1: Kok Document review: Estate maps (GPS surveyed maps, soil map, boundary Foh Estate map, surrounding stakeholders map, slope and topography map), MPOB license, business management plan, land titles, Company Code of Business Conduct, legal compliance monitoring records, water management plan, HCV report and monitoring records, land application records, soil and leaf analysis records, fertilizer and compost application records, IPM records, OSH Manu- al, OSH Policy, legal compliance records, chemical stock card, MSDS, medical surveillance report, HIRARC formats, CHRA report, training records, EHS Manual & Policy, SOPs, legal compliance records, Environmental Aspect Im- pact/ Environmental Impact Evaluation, Schedule Waste Records, Waste Management Plan, Greenhouse gas Calculations, workers’ contracts, check roll, pay slips, pay deduction consent forms, passports, passport safekeeping form, foreign workers’ induction course certificate, SIA management plans, minutes of meetings and activity records for NUPW, gender committee, CSR programme records, continuous improvement plan, stakeholder list, stakeholder communication records, grievance mechanism, complaints book, company policies

Site visit: Composting at block 00KA, ganoderma infected area, water bodies (block 02KA) , security trenches, river riparian buffer zone (block 02KA), chemical store, chemical mixing area, diesel tank area, scheduled waste store, clinic, spraying activity, harvesting activity, fertilizer store, workshop, river riparian buffer zones, workers’ and staff housing area, and grocery shop.

Interviews: Estate manager, assistant managers, Sr. Assistant of Cheong Wing Chan estate (surrounding stakeholder), harvesters, Store Clerk, and Mandores, External contractor, workers at line site, grocery shop owner, Gender Committee Chairperson, Trade Union Chairman,

Team 2: St. Document review: OSH Manual, OSH Policy, legal compliance records, Helier estate chemical stock card, MSDS, CHRA Report, medical surveillance report, Hirarc, Aspect and Impact, Consignment Note, Workers’ contracts, pay slips, consent forms, passports, check-roll, SIA management plans, minutes of meetings and activity records for NUPW, gender committee, CSR programme records, continuous improvement plan, stakeholder communication records, grievance mechanism, complaints book, company policies and standard operating procedures.

Site visit: Harvesting and Spraying activity, chemical store/temporary store, chemical mixing area, diesel tank area, scheduled waste store, HCV 4 area (Sg. Muar)

Interviews: Acting Estate Manager, Assistant Managers, Supervisor, Man- dore, Medical Assistant and PSQM representatives, foreign workers (6), gender representative and Chief Clerk

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24 May 2016 Kok Foh Es- Stakeholder Consultation Meeting: tate/ Palm Oil - Welcome by company representative Mill Meeting - Introduction to TUV Rheinland & RSPO Certification Room - Feedback from stakeholders (open discussion) - Completion of feedback forms by stakeholders Team 1: Bukit Document review: Estate maps (GPS surveyed maps, soil map, boundary Pilah estate map, surrounding stakeholders map, slope and topography map), MPOB license, business management plan, land titles, Company Code of Business Conduct, legal compliance monitoring records, water management plan, HCV report and monitoring records, soil and leaf analysis records, fertilizer application records, IPM records, OSH Manual, OSH Policy, legal compliance records, chemical stock card, MSDS, medical surveillance report, HIRARC formats, CHRA report, training records, EHS Manual & Policy, SOPs, legal compliance records, Environmental Aspect Impact/ Environmental Impact Evaluation, Schedule Waste Records, Waste Management Plan, Green- house gas Calculations, workers’ contracts, check roll, pay slips, pay deduction consent forms, passports, passport safekeeping form, foreign workers’ induction course certificate, SIA management plans, minutes of meetings and activity records for NUPW, gender committee, CSR programme records, continuous improvement plan, stakeholder list, stakeholder communication records, grievance mechanism, line site inspection record, complaints book, company policies and standard operating procedures, muster briefing record, record of Visiting Medical Officer’s visit.

Site visit: Kelpin division - Water catchment (Block P01K), beneficial plants, worker’s housing and chemical store, chemical mixing area, diesel tank area, scheduled waste store, clinic, spraying activity, harvesting activity, fertilizer store, workshop, river riparian buffer zones, and workers’ housing area.

Interviews: Estate manager, assistant managers, Kelpin division foreign workers interviews at housing area, harvesters, Store Clerk, Mandores, Gen- der Committee Secretary and Chief Clerk

Team 2: Sg. Document review: OSH Manual, OSH Policy, legal compliance records, Gemas Es- chemical stock card, MSDS, medical surveillance report, Hirarc, Aspect and tate Impact, Consignment Note, workers’ contracts, pay slips, consent forms, passports, check-roll, SIA management plans, minutes of meetings and activity records for NUPW, gender committee, CSR programme records, continuous improvement plan, stakeholder communication records, grievance mechanism, complaints book, company policies and standard operating procedures.

Site visit: Chemical store/temporary store, chemical mixing area, diesel tank area, scheduled waste store.

Interviews: Acting Estate Manager, Assistant Managers, Supervisor, Man- dore, Medical Assistant and PSQM representatives, Gender Committee representative, foreign workers (6)

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25 May 2016 Team 1: Kok RSPO: Foh Palm Oil Document review: DOE license, MPOB license, business management Mill plan, greenhouse gas calculations (PalmGHG analysis), water management plan, BOD analysis records, land application records, EHS Manual & Policy, SOPs, legal compliance records, OSH Manual, OSH Policy SOP, legal compliance records, minutes of meeting for safety and health committee, HIRARC formats, accident records and statistics, noise monitoring report, Fire Certificate, Medical Surveillance report, Audiometric Test Report, Noise Mapping Report, CHRA report, training records, permits, Emergency Proce- dures, Environmental Aspect Impact/ Environmental Impact Evaluation, Schedule Waste Records, Waste Management Plan, Greenhouse gas Calcu- lations, Workers’ contracts, workers’ early repatriation document, check roll, pay slips, pay deduction consent forms, passports, passport safekeeping form, foreign workers’ induction course certificate, SIA management plans, minutes of meetings and activity records for NUPW, gender committee, CSR programme records, continuous improvement plan, stakeholder list, stakeholder communication records, grievance mechanism, line site inspection record, complaints book, company policies and standard operating procedures, muster briefing record.

Site visit: Land application, composting plant, mill pond, Receiving Bay, En- gine Room, Chemicals Store, Workshop, Scheduled Waste Store, Office and Security, mill, workers’ and staffs’ housing quarters.

Interviews: Mill Manager, Assistant Mill Managers, Medical Assistant and PSQM representatives, Foreign and local workers, Line Site Supervisor, Trade Union Chairman, Gender Committee Chairperson, Lab Supervisor, Ac- count Admin Officer.

SCCS: Document review : Supply chain SOPs, mass balance sheet, FFB reception reports, CPO & PK dispatch records, eTrace sales report, training records, monthly production reports,

Interviews: Mill manager, mill assistants, chief clerk, weighbridge personnel, office operator Team 2: Sg. Document review: OSH Manual, OSH Policy, legal compliance records, Senarut Es- chemical stock card, MSDS, medical surveillance report, HIRARC formats, tate CHRA report, training records and SOP, company policies and standard operating procedures, workers’ contracts, pay slips, consent forms, passports, check-roll, SIA management plans, minutes of meetings and activity records for NUPW, gender committee, CSR programme records, continuous improvement plan, stakeholder communication records, grievance mechanism, complaints book, company policies and standard operating procedures.

Site visit: Chemical store, chemical mixing area, diesel tank area, scheduled waste store, clinic, spraying activity, harvesting activity, fertilizer store, workshop, river riparian buffer zones, and workers’ housing area.

Interviews: Assistant Estate Managers, harvesters, Store Clerk, and Man- dores, Gender Committee representative, foreign workers (6), temple priest (1)

26 May 2016 Team 1: Document review: Estate maps (GPS surveyed maps, soil map, boundary Muar River map, surrounding stakeholders map, slope and topography map), MPOB li- Estate cense, business management plan, land titles, Company Code of Business Conduct, legal compliance monitoring records, water management plan, HCV report and monitoring records, soil and leaf analysis records, fertilizer application records, IPM records, OSH Manual, OSH Policy, legal compliance records, chemical stock card, MSDS, medical surveillance report, HIRARC

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formats, CHRA report, training records, EHS Manual & Policy, SOPs, legal compliance records, Environmental Aspect Impact/ Environmental Impact Evaluation, Schedule Waste Records, Waste Management Plan, Green- house gas Calculations, Workers’ contracts, workers’ early repatriation document, check roll, pay slips, pay deduction consent forms, passports, passport safekeeping form, foreign workers’ induction course certificate, SIA management plans, minutes of meetings and activity records for NUPW, gender committee, CSR programme records, continuous improvement plan, stakeholder list, stakeholder communication records, grievance mechanism, line site inspection record, complaints book, company policies and standard operating procedures, muster briefing record, record of Visiting Medical Of- ficer’s visit.

Site visit: Worker’s housing – Semampil Division, chemical store, chemical mixing area, diesel tank area, scheduled waste store, clinic, spraying activity, harvesting activity, fertilizer store, workshop, river riparian buffer zones, and workers’ housing area.

Interviews: Estate assistant managers, Nepalese and Bangladeshi workers at housing, harvesters, Store Clerk, and Mandores, Gender Committee members, local community.

Team 2: Per- Document review: OSH Manual, OSH Policy, legal compliance records, tang estate chemical stock card, MSDS, medical surveillance report, Hirarc, Aspect and Impact, Consignment Note, workers’ contracts, pay slips, consent forms, passports, check-roll, SIA management plans, minutes of meetings and activity records for NUPW, gender committee, CSR programme records, continuous improvement plan, stakeholder communication records, grievance mechanism, complaints book, company policies and standard operating procedures.

Site visit: Harvesting and Spraying activity, chemical store/temporary store, chemical mixing area, diesel tank area, scheduled waste store.

Interviews: Acting Estate Managers, Assistant Manager, Supervisor, Man- dore, Medical Assistant and PSQM representatives, Gender Committee representative, foreign workers (3), local rubber tappers (4), union representative (1)

27 May 2016 Closing Meet- Preparation of findings ing Presentation of findings

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Agenda for Verification of Closure of Major Non-conformities

The on-site verification of major non-conformities was done on 10 – 12 August 2016. On-site verification was only done for major non-conformities raised which were not purely document related, while those purely document related, the documented evidence was provided and reviewed off-site. The on-site verification was slightly delayed past the 60 days deadline due to Eid celebrations, however the auditee had demonstrated their commitment to compliance by providing all documented evidence prior to the on-site verification for review, which was tentatively accepted by the audit team until confirmation during the on-site verification.

Location / Date Auditor Main activities Main sites 10 August Carol Ng Sg. Gemas Verification of the following Major NCs by sampling of docu- 2016 estate ments and interviews: NC 1 (CR 2.1.1) B & D: Document review, personnel interviews and site visit NC 5 (CR 5.3.2): Document review NC 8 (CR 6.5.2): Document review and workers interviews NC 10 (CR 6.9.1): Document review, gender committee interviews and personnel interviews NC 11 (CR 6.9.2): Document review, gender committee interviews and personnel interviews Bukit Pilah Verification of the following Major NCs by sampling of docu- Estate ments and interviews: NC 1 (CR 2.1.1) B & D: Document review, personnel interviews and site visit NC 5 (CR 5.3.2): Document review NC 7 (CR 6.3.1): Document review, interviews and site visit NC 10 (CR 6.9.1): Document review, gender committee interviews and personnel interviews NC 11 (CR 6.9.2): Document review, gender committee interviews and personnel interviews 11 August Carol Ng & Muar River Verification of the following Major NCs by sampling of docu- 2016 Viknesvara Estate ments and interviews: n Parama- NC 1 (CR 2.1.1) B & D: Document review, personnel interviews sivam and site visit NC 8 (CR 6.5.2): Document review and workers interviews NC 10 (CR 6.9.1): Document review, gender committee interviews and personnel interviews NC 11 (CR 6.9.2): Document review, gender committee interviews and personnel interviews Sg. Senarut Verification of the following Major NCs by sampling of docu- Estate ments and interviews: NC 1 (CR 2.1.1) B & D: Document review, personnel interviews and site visit NC 8 (CR 6.5.2): Document review and workers interviews NC 10 (CR 6.9.1): Document review, gender committee interviews and personnel interviews NC 11 (CR 6.9.2): Document review, gender committee interviews and personnel interviews St. Helier Verification of the following Major NCs by sampling of docu- Estate ments and interviews: NC 1 (CR 2.1.1) B & D: Document review, personnel interviews and site visit NC 5 (CR 5.3.2): Document review NC 8 (CR 6.5.2): Document review and workers interviews NC 10 (CR 6.9.1): Document review, gender committee interviews and personnel interviews NC 11 (CR 6.9.2): Document review, gender committee inter-

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views and personnel interviews

12 August Carol Ng Pertang Es- Verification of the following Major NCs by sampling of docu- 2016 tate ments and interviews: NC 1 (CR 2.1.1) B, C & D: Document review, personnel interviews and site visit NC 5 (CR 5.3.2): Document review NC 6 (CR 6.1.2): Document review, interviews and site visit NC 8 (CR 6.5.2): Document review and workers interviews NC 10 (CR 6.9.1): Document review, gender committee interviews and personnel interviews NC 11 (CR 6.9.2): Document review, gender committee interviews and personnel interviews

2.4 Stakeholder Consultation and Stakeholders Contacted The stakeholder consultation involved both external and internal stakeholders. External stakeholders were notified to make comments on the certification assessment by placing an invitation to comment on the RSPO website. Stakeholders included those immediately linked with the operation of the company such employees, outgrowers, the local government, NGO’s, trade and labour unions and local communities. Stakeholder consultation took place in the form of meetings and interviews. Meetings with stakeholders were held to seek their views on the performance of the company with respect to the sustainability practices outlined in the RSPO Principles & Criteria, and to comment on aspects where improvements could be made. Meetings with local communities were held at their respective premises within and near the company’s area. A stakeholder consultation meeting was also held Kok Foh estate/palm oil mill’s meeting hall on 24 May 2016. Letters inviting individual stakeholders to the stakeholder consultation meeting were prepared and sent to the individual stakeholders, while electronic mail and telephone calls were made to arrange the meetings. In all the interviews and meeting, the objectives of the RSPO and the purpose of the assessment was clarified at the outset followed by an evaluation of the relationship between the stakeholders and the company before discussion proceeded to obtain the stakeholders feedback on the company’s compliance to different aspects of the RSPO Principles & Criteria. Although several stakeholders were not familiar with RSPO but they agreed with its objective and expressed their willingness to collaborate in the promotion of sustainable palm oil in North Sumatera province. In all interviews and meeting, the assessment team did not restrict discussion of both the positive and negative aspects of operations conducted by Sime Darby Plantation SOU 16: Kok Foh’s estates and mill. The stakeholder consultation meeting held with stakeholders during the audit was extensive and productive, with an attendance of more than 50 participants. This was followed by site inspections, including visits to the local communities, interviews with land claimants and contractors, and inspections of worker amenities and in- frastructure. All stakeholder issues raised were recorded and forwarded to the management for their written re- ponse, and this is summarized in Section 3.4.The list of stakeholders that attended the stakeholder consultation meeting and stakeholders interviewed during the assessment is included as Appendix 4.

2.5 Date of Next Surveillance Visit

The next surveillance visit is planned for May 2017.

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3.0 ASSESSMENT FINDINGS 3.1 Summary of Findings During the re-certification assessment, 10 nonconformities were assigned against the RSPO MY-NI 2014 Major Compliance indicators while 3 nonconformities were assigned against Minor Compliance Indicators. No non- compliances to the RSPO Supply Chain Certification Standard 2014 were raised. 28 observations or opportunities for improvement were identified. Further explanation of the non-conformities raised and corrective actions taken by the company are provided in Section 3.2. The observations & opportunities for improvement are listed in Appendix 5. The following is a summary of findings made for the criteria listed in the RSPO Principles & Criteria Malaysia National Interpretation 2014

• RSPO Principles & Criteria (P&C)

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

Findings: Sime Darby Plantation (SDP) maintains a general procedure for receiving and responding to requests for information from stakeholders as per their Estate Quality Management System (EQMS) Standard Opera- tion Manual (SOM) Procedure for External Communication issued on 1 November 2008. The procedure states that the manager is responsible to receive all external communication from external interested parties, to review it and if found to be authentic, to respond to it. The procedure states that the manager or assistant will assign a reference number, log in the date of receipt, customer’s name and address and the nature of communication or complaint, and any communication with the stakeholder should be documented. Timeframes of providing feedback is within 2 weeks for requests for direct feedback and within one week for requests pertaining to investigation. Communications with the media shall be directed to the Head of Corporate Communication of SBP. In addition, the estates are also to engage in pro-active communications with external interested parties (e.g. visitors, nearby residents, school visits, foreign dele- gates, educational tours, etc) to provide interested parties with requested information. There is evidence that the company maintains records of requests from third parties, for example Muar River estate was found to maintain records of information requests from government departments, which are primarily requests to complete surveys from the Labour Department and the Statistics Department, e.g.: i) Request for information on estate profile data as per letter dated 9 June 2015 from the Labour De- partment of Segamat requested to be provided before 22 June 2015. The form was completed and attached to the letter of request ii) Survey request on Investigation on Content of Knowledge for Malaysia 2015 (‘Penyiasatan Kan- dungan Pengetahuan Malaysia 2015’) requested by the Department of Statistics Malaysia.for year 2014. The survey was completed by the estate and signed by the manager. iii) Survey request on Investigation of Expenditure for Protection of the Environment 2014 by the De- partment of Statistics Malaysia request to be submitted before 30 September 2014. The survey form was completed and signed by the manager on 17 December 2014

As the information requested was for survey purposes only and not for specific management documents which affects the rights and responsibilities of stakeholders, this was noted as an observation. There is no evidence of requests for copies of specific management documents from the estates from external parties.

Compliance status: Full compliance

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

Findings: The company does not specifically define what documents can be made publicly available as per the list of documents under RSPO IN 1.2.1. For any requests for documents by external parties, the estate or mill management will review the request and forward it to the related department of the company to confirm approval to release any documents, for example, requests for land titles will be forwarded to the Land Management Department of the company, while OSH plans, SEIAs, pollution prevention and reduction plans, HCV documentation, and continual improvements plans will be forwarded to the Plantation Sus- tainability and Quality Management (PSQM) department for approval prior to release of any documents. Public Summary Reports are made publicly available on the RSPO website as per RSPO requirements, while the company’s human rights policy is available on the company’s website and entitled “Social and Humanity Management Policy”. There was no evidence of request from external parties for any of the documents required to be made publicly available, hence there is no evidence of non-compliance to this requirement.

Compliance status: Compliance with observations

Criterion 1.3: Growers and millers commit to ethical conduct in all business operations and transactions.

Findings:

The company has a documented Code of Business Conduct (COBC) in the form of a booklet which lists the core values for ethical conduct, including integrity, respect and responsibility, enterpreneurship, and success. The COBC also defines specific working standards pertaining to : - Cooperation - Prevention of Conflict of Interest - Handling Bribery - Provision of gifts, entertainment and sponsorships - Giving donations - Protection of shareholders - Dealing with colleagues and business partners - Dealings with government bodies, political parties and international organizations

The COBC training material sighted includes a website link to a complaint form, email addresses of contact persons to whom complainants can lodge complaints about breaches of the ethical conduct policy.

There is a record of COBC training done for managers and managers of all estates of this SOU as well as from other SOUs under SDP (66 personnel) on 5 August 2015 in the form of signed attendance list. The COBC declarations were signed online and the copies retained by HQ. Records were also sighted at Muar River estate personnel and mill staff at executive level who have signed a COBC form on 24 August 2015 stating that they acknowledge that they under the principles and rules in the COBC and agree to abide by them. The training was attended by 8 people including the assistant, chief clerk, medical assistant, weighbridge clerk, store clerk, 2 nd clerk, 2 field supervisors and the foreman. The company has an Anti-Corruption Policy which states that it has a zero-tolerance approach towards bribery and corruption in any form and is committed to behaving professionally, fairly, and with integrity in all our business dealings throughout its operating areas. Except for what is seen on the company’s website, there is no other evidence was sighted that it was communicated to all levels of workforce and operations.

Compliance status: Full Compliance

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Criterion 2.1: There is compliance with all applicable local, national and ratified international laws and regulations.

Findings: There is evidence of efforts of the compan to comply with legal requirements, e.g. as follows:

1) Kok Foh Palm Oil Mill currently has a MPOB license no. 54365004000 valid from 1 November 2015 until 31 October 2016 for processing of 240,000 mt of FFB a year. 2) Estates also have valid MPOB licences e.g.: - Kok Foh estate has an MPOB license no 527424002000 valid from 01/03/2016 to 28/02/2017. - Bukit Pilah estate has an MPOB license no. 524036002000 valid from 01/010/2015 to 30/09/2016. - Muar River estate has an MPOB license no. 518846002000 valid from 01/03/2016 to 28/02/2017. 3) The mill’s Department of Environment (DOE) license no. 002079 was issued to Kok Foh Palm Oil under the China Engineers (M) Sdn. Bhd. on 15 November 2010 and has a current DOE compliance schedule for 1 July 2015 until 30 June 2016 with approved processing capacity of 45 tonnes/hour. The DOE compliance schedule also states approval to process 50% of effluent (540 m 3) to the composting plant and 50% of effluent (540 m 3) for land application, with no discharge to waterways permitted under any circumstance. Maximum BOD permitted for land application is 5000mg/l. As seen from BOD records, POME applied to the field did not exceed the maximum BOD (see CR4.4). Composting plant was sighted at the mill and confirmed to be applied at Kok Foh estate. As the license is near expiry at the time of this audit, there is evidence that the mill has submitted a request to the Department of Environmment (DOE) to renew their license as seen in fax letter dated 3 May 2016 received from the DOE acknowl- edging receipt of request for renewal of license. 4) Kok Foh mill has a license for abstraction of surface water for commercial purposes only issued by the Director of Water Resources valid from 4 May 2015 to 30 June 2016 for 388.945 mt of raw water per year 5) A required by local law, the mill has a competent person who has completed the Course for Certified Environmental Professional in the Treatment of Palm Oil Mill Effluent (CEPPOME) dated registered 08/07/15. The same person has also attended a Course On Certified Environmental Professional In Scheduled Waste Management (CepSWaM) 0n 01-05/02/16 but not yet registered. 6) Found 2 units of fume hoods at Laboratory. Inspection for LEV by HT II was last done on 17/09/14. Mill found a statement of 99.66 % compliance status. 7) PE- Renewal or air receiver (compressor) was made on 25/02/16 to the Department of Occupational Safety & Health (DOSH). Inspection done on 12/04/16 for compressor unit no. NS PMT 848. 8) License for diesel from Ministry of Domestic Trade, Co-operatives and Consumerism (KPDNKK) application made 5/1/15. capacity 10,000 litre. expiry until 06/12/16. (pending Companies Commission of Malaysia confirmation for Account registration). 9) At Sungai Gemas Estate, among evidence of compliance found Form JKKP 8 (Annual Accident Report form) was sent to DOSH on 08/01/16 as required by law.

However the following issues were observed and collectively raised as Non-conformance no. RSPO00676:

A) Found several legal non-compliances at the mill, i.e: i) According to DOE license for prescribed premise dated 10/06/15, the factory have to ensure noise at boundary kept at 65 dBA Daytime and 55 dBA Nite. Boundary sampling done last as reported by Environmental Science (M) Sdn Bhd on 10/01/13. 12 sampling location. Daytime 4 location were higher than the limit. At nite most of the location sampled was higher than the limit. ii) Audiometric test was conducted on 05/10/15 involving 50 workers. 21 having hearing impairment, 8 standard threshold shift and need retest within 3 months. A quotation from a consultant dated 05/04/16 but test was not conducted untill date of audit. iii) Found 2 units of fume hoods at Laboratory without written approval from DOE, which is not in accordance with Regulation 38 of the EQ (Clean Air) Regulations 1978, Regulation 38 regarding Erec- tion etc. of chimney (fume hoods were installed prior to year 2014 before new EQ(Clean Air) Regula- tions 2014 was enforced). iv) Mill not yet have fire certificate and during audit only found a quotation to repair and make good of existing firefighting system.

B) Found several legal non-compliances pertaining to deductions as follows:

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i) The following deductions from employees’ wages were made without the prior permission in writing of the Director General (see Section 24 (4) of the Employment Act 1955): St.Helier Estate: AIG General Insurance (RM20); education fund, sports club. Sg.Gemas Estate: Temple fund deduction permit allows for upto RM4/mth deduction (effective from 1 October 2005). But the current deduction (RM10) exceeds the permissible amount. Sungei Senarut Estate: Electricity, mosque fund and temple fund. Pertang Estate: Water (the company applied for the permit on 10 May 2016 to PTK Kuala Pilah (attached with a list of 109 workers). Bukit Pilah estate: Deduction of workers‘ pay for mosque fund. Muar River estate: Electricity deductions Kok Foh mill: Electricity deductions and temple fund. ii) The following deductions from employees’ wages were made without request in writing of the employee (see Section 24 (4) of the Employment Act 1955): St.Helier Estate: education fund and sports club. Pertang Estate: Water. Kok Foh mill: temple fund

C) The management of Pertang Estate has not been able to demonstrate that termination of the services of local employees (rubber tappers) is currently being conducted only after first terminating the services of all foreign employees employed by him in a capacity similar to that of the local employee. This is not in accordance with Section 60 N of Employment Act 1955.

D) All estates: Clause 25 (0) of an old (undated version), Clause 24 (2) of the April 2013 version and Clause 23 (2) (May 2014 version) of foreign workers’ contracts restricts the rights of employees to join and participate in trade unions. (see Section 8 of the Employment Act 1955).

It was found that permit from the Labour Department for treatment of water used for housing is not available at Kok Foh mill, Sg Gemas Estate and Bukit Pilah Estate which is extracting water from water catchments for domestic water consumption. This is not in accordance with Clause 6 (1)(a) of the Workers’ Minimum Standards of Housing and Amenities Act 1990. However, the mill has taken immediate action to request for the permit for treatment of water for mill processing and for daily use of the workers at Kok Foh Palm Oil Mill as seen in letter dated 25 May 2016 to the Labour Department of Kuala Pilah, Negeri Sembilan. Bukit Pilah Estate is currently in progress of installing water tube wells (no construction started yet as approval was just received from HQ) which shall replace the water sourced from the water catchment for domestic consumption, and hence such permit will not be required for the water catchment but for the water tube wells. Progress of the application of permits will be followed up during the next audit. This was noted as part of Observation no. 1 in Appendix 5.

In addition, based on the punch card of one press operator, he worked 8.50 hours on 17th March 2016. His punch card record seemed to show that he worked overtime continuously from 12pm to 8pm, which contravenes Section 60A(a) of the Employment Act which states that workers should not work continuously for more than 5 hours without a period of leisure of not less than 30 minutes. However, as there is a cafeteria in the mill compound where workers can rest and not have to punch out, and worker was not interviewed to confirm how long he actually, workers, it was noted as an opportunity for improvement (OFI) that there should be another system to record the break time if the worker stays in the mill compound for his break. This was noted as part of Observation no. 1 in Appendix 5.

At Kok Foh mill, the collective consent given by the workers were not dated, thus it could not be confirmed if the consent for deductions was given prior to the period of deductions in the respective workers‘ pay slips. This was noted as part of Observation no. 1 in Appendix 5.

There is a Standard Operating Procedure for ensuring that legal requirements are met, titled, “ “Estate Quality Management System, Level 2: Standard Operating Manual, Appendix 5.2.4a: Procedure for Legal and Other Requirements dated 1 April 2008.”

However, the documented system of LORR for Kok Foh Mill and and all estates was found not properly updated as was not detailed enough to explained the actual legal requirements such as: a. OSHA 1994 only mentioned Part VI, where there were actually Section 24-27 under it and not clearly explained. General Duties of Employer and Self-Employed Persons under Section 15 was not included and

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explained (Sg. Gemas Estate). b. For OSHA 1994 mising Sections 16 (Safety and Health Policy), 17 (Duty of employer on others), 30 (Form- ing a Safety and Health Committee), 31 (Function of Safety and Health Committee) and 32 (Notification of incident) (Kok Foh Mill St Hellier and Pertang Estate). c. Safety and Health Officer Regulations 1996 in LORR suppose not applicable (Kok Foh Mill) d. Factories and Machinery (Safety, Health and Welfare) Regulations 1983, in the LORR under Requirement, not detailing explained the actual requirement instead asked to make referrence to the regulations in FMA for specific details on the conditions (Pertang Estate) e. Environmental Quality Act 1974 was found not included Section 22 Restriction on pollution of atmosphere, Section 23, Restriction on noise pollution. While Section 29 was mentioned as Restriction of Open Burning which actually it is Prohibition of discharge of waste into Malaysian waters (not applicable). While Section 29A is actual prohibition of open burning) which was not included (Sg. Gemas Estate) f. Found Pesticides (Labelling) Regulations 1984 was not included (All Estates). g. The ammendment of Factories and Machinery (Person In-charge) (Ammnd) Regulations 2014 was not included (Sg. Gemas). h. Scheduled for Factories and Machinery (Person Incharge) Regulations 2014 was mentioned as not applicable. i. Factories and Machinery (Safety, Health and Welfare) Regulations. was mentioned as not applicable. (Working at Height (Reg.12), Dangerous liquid (Reg. 14), Precaution Against Ignition (Reg. 16) Cleanli- ness (Reg. 23) and etc (St Hellier, Kpk Foh Mill and Pertang Estates) j. Environmental Quality Act 1974 not included Section 34B. k. Environmental Quality (Clean Air) Reg. 2014 was having requirement of previous regulation 1978 and mentioned as not applicable (St. Hellier and Pertang Estates) l. Occupational Safety and health (Classification, Lebelling and Safety Data Sheet of Hazardous Chemical) Regulations 2013, Regulation 13 should mention clearly Section 13 (4) to review Safety Data Sheet every 5 years by the supplier (St Hellier, Pertang Estates).

This was raised as Non-conformance no. RSPO00677.

Compliance status: Non-compliance

Non-conformance no. RSPO00676 A) Found several legal non-compliances at the mill, i.e: i) According to DOE license for prescribed premise dated 10/06/15, the factory have to ensure noise at boundary kept at 65 dBA Daytime and 55 dBA Nite. Boundary sampling done last as reported by Environmental Science (M) Sdn Bhd on 10/01/13. 12 sampling location. Daytime 4 location were higher than the limit. At nite most of the location sampled was higher than the limit. v) Audiometric test was conducted on 05/10/15 involving 50 workers. 21 having hearing impairment, 8 standard threshold shift and need retest within 3 months. A quotation from a consultant dated 05/04/16 but test was not conducted untill date of audit. vi) Found 2 units of fume hoods at Laboratory without written approval from DOE, which is not in accordance with Regulation 38 of the EQ (Clean Air) Regulations 1978, Regulation 38 regarding Erec- tion etc. of chimney (fume hoods were installed prior to year 2014 before new EQ(Clean Air) Regula- tions 2014 was enforced). vii) Mill not yet have fire certificate and during audit only found a quotation to repair and make good of existing firefighting system.

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tached with a list of 109 workers). Bukit Pilah estate: Deduction of workers‘ pay for mosque fund. Muar River estate: Electricity deductions Kok Foh mill: Electricity deductions and temple fund. ii) The following deductions from employees’ wages were made without request in writing of the employee (see Section 24 (4) of the Employment Act 1955): St.Helier Estate: education fund and sports club. Pertang Estate: Water. Kok Foh mill: temple fund

Non-conformance no. RSPO00677 Documented system of LORR for Kok Foh Mill and and all estates was found not properly updated as was not detailed enough to explained the actual legal requirements such as: a. OSHA 1994 only mentioned Part VI, where there were actually Section 24-27 under it and not clearly explained. General Duties of Employer and Self-Employed Persons under Section 15 was not included and explained (Sg. Gemas Estate). b. For OSHA 1994 mising Sections 16 (Safety and Health Policy), 17 (Duty of employer on others), 30 (Forming a Safety and Health Committee), 31 (Function of Safety and Health Committee) and 32 (Notifi- cation of incident) (Kok Foh Mill St Hellier and Pertang Estate). c. Safety and Health Officer Regulations 1996 in LORR suppose not applicable (Kok Foh Mill) d. Factories and Machinery (Safety, Health and Welfare) Regulations 1983, in the LORR under Require- ment, not detailing explained the actual requirement instead asked to make referrence to the regulations in FMA for specific details on the conditions (Pertang Estate) e. Environmental Quality Act 1974 was found not included Section 22 Restriction on pollution of atmosphere, Section 23, Restriction on noise pollution. While Section 29 was mentioned as Restriction of Open Burning which actually it is Prohibition of discharge of waste into Malaysian waters (not applicable). While Section 29A is actual prohibition of open burning) which was not included (Sg. Gemas Es- tate) f. Found Pesticides (Labelling) Regulations 1984 was not included (All Estates). g. The ammendment of Factories and Machinery (Person In-charge) (Ammnd) Regulations 2014 was not included (Sg. Gemas). h. Scheduled for Factories and Machinery (Person Incharge) Regulations 2014 was mentioned as not applicable. i. Factories and Machinery (Safety, Health and Welfare) Regulations. was mentioned as not applicable. (Working at Height (Reg.12), Dangerous liquid (Reg. 14), Precaution Against Ignition (Reg. 16) Cleanli- ness (Reg. 23) and etc (St Hellier, Kpk Foh Mill and Pertang Estates) j. Environmental Quality Act 1974 not included Section 34B. k. Environmental Quality (Clean Air) Reg. 2014 was having requirement of previous regulation 1978 and mentioned as not applicable (St. Hellier and Pertang Estates) l. Occupational Safety and health (Classification, Lebelling and Safety Data Sheet of Hazardous Chemi- cal) Regulations 2013, Regulation 13 should mention clearly Section 13 (4) to review Safety Data Sheet every 5 years by the supplier (St Hellier, Pertang Estates).

See also Observation no. 1 of Appendix 5

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

Findings:

There is documented evidence of legal ownership of the land sighted at the estates, however there were land titles found where the ownership was under the previous company’s name and not yet converted to SDP, while there were also land titles with terms stating only permission to plant with rubber but not oil palm. The details of land titles samples at certain estates are as follows:

a) Kok Foh estate has 8 land titles issued to the China Engineers (Malaysia) Sdn. Bhd., which is a sub- sidairy of Sime Darby Plantation as follows: i) Land title no. H.S.(D) 2138 (lot PT98/49) for 61.131 ha registered 5 July 1978 – specific terms state must be planted with oil palm only ii) Land title no. 1119 (lot 896) for 105.5 ha registered 9 March 1991 – specific terms state must be planted with oil palm only iii) Land title no. 71054 (lot 164) for 627.8688 ha registered 14 July 2002 – specific terms state must be planted with oil palm only iv) Land title no. 2159 (lot PT98/105) for 5.1739 ha registered 5 July 1978 – specific terms state to be used for agriculture only v) Land title no. H.S.(D) 2160 (lot PT98/106) for 186.9649 ha registered 5 July 1978 – specific terms state to be used for agriculture only vi) Land title no. H.S.(D) 17795 (lot PT3400) for 271.2812 ha registered 21 June 2011 – specific terms state to be planted with oil palm only vii) Land title no. H.S.(D) 2158 (lot PT98/104) for 815.0376 ha registered 5 July 1978 – specific terms state to be used for agriculture only viii) Land title no. 65972 (lot 83) for 198.9027 ha registered 17 July 2002 – specific terms state to be planted with oil palm only ix) Land title no. 2148 (lot PT 0098/94) for 33.9936 ha registered on 5 July 1978 - specific terms state to be planted with oil palm only. The land title currently states ownership under Austral Enterprises Berhad. The total area above is 2307.8537 ha which is consistent with the declared land area of Kok Foh estate. One land title at Kok Foh estate is currently under ownership of Austral Enterprises Berhad which was a previous subsidiary of Golden Hope Plantations (merged with Sime Darby Berhad in year 2007), with no evidence sighted that the company is currently in progress to change the ownership of the land title. b) Muar River estate has 10 land titles issued to Sime Darby Plantation Sdn. Bhd. as follows: i) Land title no. 2131 (lot 1988) for 3.4651 ha registered 3 January 2002 – specific terms state to be planted with rubber only ii) Land title no. 81251 (lot 596) for 1.4643 ha registered 28 November 2002 – no specific terms iii) Land title no. 86353 (lot 1006) for 16.3897 ha registered 28 November 2002 – no specific terms iv) Land title no. 47833 (lot 1405) for 1071.9094 ha registered 4 December 2009 – specific terms state to be planted with oil palm v) Land title no. 400 (lot 3060) for 1.4492 ha registered 15 June 1981 – specific terms state to be planted with rubber vi) Land title no. 401 (lot 3061) for 1.4568 ha registered 15 June 1981 – specific terms state to be planted with rubber vii) Land title no. 96709 (lot 842) for 14.8469 ha registered 28 November 2002 – no specific terms viii) Land title no. 359630 (lot 960) for 11.9129 ha registered 12 August 2009 – no specific terms ix) Land title no. 359647 (lot 1645) for 352.683 ha registered 28 August 2009– no specific terms x) Land title no. 395722 (lot 550) for 101.7784 ha registered 4 February 2010 – no specific terms xi) Land title no. 395723 (lot 551) for 16.5415 ha registered 4 February 2010 – no specific terms xii) Land title no. 37625 (lot 5886) for 8.8702 ha (88708 m 3) registered 23 July 1991– no specific terms

The total land title area above is 1602.767 ha. Out of this, a total of 11.77 ha was recently acquired by the National Electricity Company (Tenaga Nasional Berhad) from lot 1645 and lot 550, therefore total land title area was reduced to 1591.00 ha (small difference with the estate declared total land area of 1590.72 ha). There are 3 land titles above which have specific terms to plant with rubber. There was evidence that the company is in process to change the land use terms of the land titles as seen in correspondence emails between the company’s Land Management Department and the estate in August 2015. However to date,

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Page 39 of 132 there is no evidence of follow up by the Land Management Department. c) Sg. Senarut estate: Latest grant dated 31 May 2006 Geran No: 14987 (Lot 646) still bears the name Golden Hope Plantations Sdn. Bhd. Some of the land titles give permission only for rubber, not oil palm. d) Pertang estate: Some of the land titles give permission only for rubber, not oil palm. For the issues above identified where the land titles ownership are not yet changed to SDP or terms do not state permission for planting with oil palm, the company is aware of the issue and the Land Depart- ment of SDP has shown a plan with timeframes to apply for update of land titles where these changes are required. The department has a budget to implement the application process for all affected land titles within the company (not only for SOU 16: Kok Foh but other SOUs as well) in FY 2016/17 which com- menced in July 2016 (after the audit). The status of application to renew the land title terms and ownership will be reviewed during next surveillance audit. This was noted as an observation.

The estates do not regularly maintain their boundary stones. However, estate boundaries are clearly demarcated with trenches as confirmed during field visits. A stakeholder from the surrounding estate, i.e. the senior assistant of Cheong Wing Chan estate was interviewed and confirmed that there was no land dispute between their estate and Kok Foh estate and was aware that the boundaries were demarcated in the form of trenches. He also had not heard of any ongoing land dispute between the estate and other surrounding stakeholders. Other stakeholders including heads of surrounding villages of the estates interviewed during the stakeholder consultation meeting informed that they did not know of any ongoing land disputes.

There is no evidence that the company has instigated violence in maintaining peace and order in their current and planned operations.

Compliance status: Compliance with observations

See Observation no. 2 of Appendix 5

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

Findings:

There is also no evidence that there are any legal or customary rights of stakeholders identified pertaining to the company’s area. During stakeholder consultation meeting, the company stakeholders from all estates and the mill were interviewed and no issues pertaining to land disputes were informed. A stakeholder of Kok Foh estate from a surrounding estate, i.e. the senior assistant of Cheong Wing Chan estate was interviewed and confirmed that there was no land dispute between their estate and Kok Foh estate and was aware that the boundaries were demarcated in the form of trenches. He also had not heard of any ongoing land dispute between the estate and other surrounding stakeholders. Hence this requirement is not applicable.

Compliance status: Not applicable

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

Findings: Kok Foh palm oil mill has an online system called MPLAN which includes forecast figures for next 5 financial years (from FY2015/16 to FY 2019/20) generated by SDP headquarters for the following: - FFB Production from each estate, expected crop volume, and rate throughput - Mill Utilization

Total mill cost report for the following: - Mill intake (FFB) - CPO & PK production figures, - Oil extraction rates (OER) and Kernel extraction rate (KER)

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- Mill costs (reception, fruit handling, sterilization, threshing, pressing, clarification, depericarping, kernel recovery, boiler, power generation, product storage, laboratory, oil recovery, water treatment plant, effluent treatment plant, workshop & maintenance, EFB disposal, total station)

The estates also have a documented MPLAN generated from the same system for next five financial years from FY2015/16 to FY2019/20 which includes projected costs of the following: - Total mature estate hectarage (for each month), estimated crop production and yields per hectare - Estimated CPO, PK and palm product production - Direct costs pertaining to mature upkeep (water management, weeding, soil conservation, boundaries marking, census, P&D, sanitation), manuring, harvesting and transport - Estate costs including labour overhead, amenities, health, housing, sanitation, building upkeep, social activities and contributions, transport, foreign worker benefits - Administrative costs including wages, overtime, allowance, contract, materials, building upkeep, security, training, ICT, ESH, and incentives - Estates roads & bridges

The company estates have a replanting program as shown below:

Total planned replanting area (ha)

Year Sg. Sg. Ge- Bukit Sg. Kok Foh Muar Riv- Pertang St. Helier Senarut mas es- Pilah es- Sabaling Estate er estate estate estate* estate* tate tate* estate* 2016/17 - - - 130.49 - - - - 2017/18 217.84 - 62.11 - - - - - 2018/19 225.78 - 79.47 24.08 - - - - 2019/20 224.15 - 114.49 - - - - - 2020/21 213.77 - 84.49 - - - - -

Compliance status: Full compliance

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

Findings:

The estates have documented SOPs for estate operations documented in the Sime Darby Agriculture Reference Manual dated 1 July 2011 issued by Sime Darby Plantation Head Office, covering nursery techniques, replanting, land preparation, planting density, maturity age, field upkeep, manuring, canopy management, water management in coastal and peat plantings, ablation, ripeness standard, harvesting interval, loose fruit collection, plant protection, weed control, leguminous cover crop establishment, rainfall recording. The estates also have the Plantation Quality Management System (OSH Manual) Version 1 dated 20th August 2008.The mill has documented SOPs for mill operations titled “Mill Quality Management System - Standard operation Manual Version 1 dated 1 st November 2008”.

Implementation of SOPs is monitored by the company Plantation Advisors (PA) that conduct annual visits to the estate. The PA report includes field assessment observations with PA recommendations on improvements required to implementation of the SOPs. For Kok Foh Mill, the monitoring of the implementation of SOPs is done through the Mill Advisors (MA) report on the mill operations and point for improvements. Monitoring of the implementation of SOPs is also done through the checklists and forms that will be filled up by the operators and verified by the supervisors and assistant managers.

It was also observed that in all estates, Sime Darby Plantation Environment Safety and Health Manage- ment System (ESHMS) Manual been documented dated 1 July 2012, Revision 0, approved by the Execu- tive Vice President. The manual specifies the ESH requirements and arrangement for operations within all SOU within Sime Darby Plantations. The Manual is updated from the OSH Manual dated 20 August 2008,

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Version 1. The procedure includes OSH Policy and Objectives, Inspection, PPE, Work Permit, Crisis Management, and Training as well. As sampled in St Helier, Sungai Gemas, Pertang Estate and Kok Foh Mill, found SOP were established and some posted at work area and notice boards. What implemented is similar as sampled during site visit during audit.

Compliance status: Full Compliance

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

Findings:

SDP’s SOP for manuring is specified in the Sime Darby Agriculture Reference Manual: Oil Palm Planting issue no. 1 year 2011, version 2, issued 01/07/2011, which has a revised SOP for Manuring of Immature Palms dated 28 August 2013, and SOP for Manuring of Mature Palms dated 01 July 2011. There is evidence of implementation of the SOPs as follows:

The company’s Research & Development (R&D) Centre conducts annual leaf sampling and while soil sampling is done once every 5 years. For example, for Muar River estate, last soil sampling was conducted in June 2014 with analysis results issued in 21 October 2014 by Sime Darby Research Sdn. Bhd. for 9 soil samples.

All estates have a documented annual Agronomic & Fertilizer Recommendations Report for Oil Palm for each financial year issued by the R&D centre which was developed based on leaf nutritional status, e.g. as seen at Kok Foh estate and Muar River estate for FY 2015/16. The summary of leaf nutritional status is attached to these reports, and states nutritional status of N, P, K, Mg, Ca and Boron. The fertilizer recommendations included field number, hectarage, stand per hectare, and recommended amount of fertilizer to apply per stand for AC, Muriate of Potash, and compost.

There are records of nutrient recycling strategies in place, e.g. Kok Foh estate carries out EFB application, compost application and land application, with records of delivery, application and cost, and blocks applied recorded in a logbook. Records of planned and actual compost application for Kok Foh estate in FY2015/16 were sighted and it was found that compost application is mostly done according to program, with some delay. However, there are some inconsistencies between the calculated tonnages of compost to be applied against recommended compost recommendation from R&D department, e.g. - For block 96 KA, planned compost to be applied was 695.52 tonne in April and May 2016, however according to fertilizer recommendation, no manuring is recommended - For block 02KC, planned amount to be applied was 2084.67 tonnes in March and April 2016, however according to fertilizer recommendation, recommended amount to be applied was 2139.3 tonnes.

This was noted as an observation.

For other estate, only fertilizer application is carried out (composting and land application is only at Kok Foh estate), and records of fertilizer applications are maintained.

Compliance status: Compliance with observations

See Observation no. 3 of Appendix 5

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

Findings:

Detailed soil maps as well as slope and contour maps have been prepared for some estates by SDP’s R&D TTAS Precision Agriculture Unit. For example, soil map and slope information for estates sighted were as follows:

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- Kok Foh estate: Soil series identified for this estate includes Marang (29.35%), Durian (20.57%), Batu Anam (25.38%), Colluvium (8.73%), Malacca (15.97%). There are no highly sloped areas identified in this estate and the area is predominantly flat to undulating. No peat is identified in this estate while Marang soil is considered a partly sandy soil with low fertility which is being managed through composting. - Bukit Pilah estate: Soil series map for Bukit Pilah, Kelpin & New Rompin divisions states soil series identified as Bungor, Durian, Malacca, Mixed and unclassified while for Sg. Kelamah division, soil series identified include Durian, Gajah Mati, Malacca, Muchong and unclassified. The slope and contour map of this estate also shows no significant slope area, which land being predominantly flat to undulating. - Muar River estate: Soil Series map for this estate include colluvium/alluvium (27.99%), durian (57.88%) and segamat (14.13%).

The company has a Slope & River Protection Policy which states that any area > 25° must be excluded from any new plantation development and replanting programme and planting of forest trees for enrich- ment of the species is recommended. The policy was signed by the Managing Director of SDP on January 2015. The company implements an SOP for construction of terraces in accordance with Section 4: Land Preparation of the Sime Darby Agriculture Reference Manual: Oil Palm Planting issue no. 1 year 2011, version 2, issued 01/07/2011. The SOP defines terraces for different levels of slope, that terraces should be back sloped and also stated that areas with slope greater than 25° slope should not planted and best left for biodiversity purposes.

All estates have road maintenance programs. During on-site visits it was observed that roads and field drains are generally well maintained and these was not significant incidences of erosion observed.

No peat is identified in all estates.

Compliance status: Full compliance

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

Findings:

The mill has a water management plan in the form of Identification & Management of Wastewater for FY 2015/16 dated 18 July 2015, which identifies all wastewater produced from different locations of the mill, including processing, boiler, workshop, laboratory, washrooms, linesite & office, as well as the disposal methods, action plan to reduce fresh water usage and completion date. Examples of actions plans to reduce fresh waster consumption included using sterilizer condensate for dilution, to use hydrocyclone to reduce calcium carbonate usage, to carry out dry cleaning instead of wet cleaning where possible in the mill compound and workshop, and to recycle back treatment water from the boiler to clear the water sump.

During the last annual surveillance audit by Intertek, it was found that water Analysis for water supplied from treated pond water was not carried out as per National Standard for Drinking Water Quality, 2nd Version, January 2004 which is required once a month as per Group 1 (Table 1) requirement for Sg. Gemas Estate and Bukit Pilah Estate. It was found that both Sg. Gemas and Bukit Pilah estate is currently conducting water quality testing on a monthly basis for microbiological parameter and chemical parameters. Testing results for Sg. Gemas showed no issues However, for Bukit Pilah estate, there were no testing results found for January – February 2016. It was informed by the estate that this was because the pond was quite dry and hence no sampling was done, which based on the current drought season was accepted as a reasonable reason why sampling was not done.

Testing is done for Bukit Pilah pond, water tank, and house, as well as Kelpin pond, water tank and house. Results of water quality testing found some quality parameters had been exceeded, as follows:

Date of sample received 22/4/2016: Microbiological test showed no microbes detected except in Kelpin house sample where total coliforms was 13MPN/100ml.

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Date of sample received 20/4/2016: Chemical water analysis results showed pH was below the requirement of pH6.7 – 8.5 consistently for all samples and turbidity and Kelpin pond point 1 was 17NTU.

Date of sample received 17/03/2016: Microbiological water test showed 23 MTN/100ml of total coliforms for Bukit Pilah house, Kelpin pond and Kelpin – house

Date of sample received 19/10/2015: Chemical parameter tests show exceedance of quality for pH, COD and turbidity in all water samples.

It was confirmed on-site and through interviews with workers and the management that the water supply diverted from the pond to the housing is not used for cooking and drinking (the workers are supplied with separate clean water supply from the local authorities for this purpose), but only for cleaning and washing. It was also confirmed that water quality and supply at Kelpin is poor as water supplied from the water catchment to housing is murky and the workers do not have sufficient water for their daily use, as water received from the Local Water Authority is only sufficient for cooking and drinking. However, there was sighted evidence that Bukit Pilah estate is in progress to resolve the water issue above by installing and commission one water tube well at Kelpin divison as seen from approval email dated 20 May 2016 from EMS Southern Region Engineering Department of Sime Darby where request by the estate for Capex Ex- penditure Tender Recommendation was approved for contractor named Navalan Electrical Enterprise to carry out the installation. The installation of the water tube well is expected to proceed in July 2016 and completed in one month. The installation is expected to reduce issues of water quality and supply problems at the worker’s housing of Kelpin division. Although action had been taken to improve the water quality, additional clean water supply is still necessary until installation is completed due to the poor quality of the water and complants from workers. This was raised as an non-compliance under CR6.3.1.

Kok Foh mill conducts chemical parameter testing of palm oil mill effluent on a monthly basis where samples are sent to Sime Darby Research centre and samples taken are form the sludge pit, outlet raw pond no. 1, outlet raw pond no. 2, outlet mixing pond 2, outlet anaerobic pond no. 1, outlet anaerobic pond no. 2, facultative pond 1, facultative pond 2 and pome (land application). BOD results sighted for last few months for land application was found to be within the legal limit of 5000ppm, as follows: - Date of sample & received: 19 April 2016 ‰ POME (land application) BOD = 1275 mg/l - Date of sample: 15 March 2016; date received: 22 March 2016 ‰ POME (land application) BOD = 431 mg/l and final discharge = 296 mg/l - Date of sample: 12 February 2016; date received: 18 February 2016 ‰ POME (land application) BOD = 3510 mg/l and final discharge BOD – 326 mg/l

The mill conducts monitoring of water consumption as seen from records for current financial year FY2015/16 which shows amount of water used for process, domestic, actual and budgeted (including costs), as well as processed water used per tonne FFB. Total processed water used from July 2015 to April 2016 is 167,500 m 3 and domestic water use is 81,970m 3. Processed water used per tonne FFB ranged in each month from 1.11 to 1.39 water used/tonne FFB, with an average of 1.28 m 3 water used/tonne FFB.

Compliance status: Compliance with observations

See Observation no. 4 of Appendix 5

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

Findings:

Integrated Pest Management techniques are applied according to the Sime Darby Agricultural Reference Manual which was issued on 1 st July 2011, however, Section 15: Plant protection regarding Control of Rate in Oil Palm was last updated in year 2012. The updated document states that due to labour constraints, all estates are to adopt a calendar baiting approach with rat baiting campaigns carried out once every 6 months to suppress rat attacks, whether or not there is visible sign of rat damage. Additional census is only carried out when there is rat damage above the threshold level of 5%. There is evidence of implementation of IPM techniques for control of pests and diseases, e.g.:

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- Rat census is done after each rat baiting campaign where rat bait is replaced after each round of census and percentage update is calculated. Once percentage uptake has gone below 20%, the rat bait application will stop. Records of the rat baiting done and percentage uptake each round is recorded in a logbook. - Barn owl boxes: Established at some estates but not at Bukit Pilah estate. Muar River estate has established 147 barn owl boxes. Standard for establishment of barn owl boxes is one barn owl box every 10 hectares. - Bagworm/ nettle caterpillar control is carried out according to the company’s SOP as per their SDP Agri- culture Reference Manual issued 1 July 2011. The SOP specifies the steps for monitoring and surveillance include alert (initial detection of signs of leaves being eaten), census stage to confirm the extent of the damage observed (sample palms at one percent level by taking one palm at every ten palms at every tenth rows and country the number and larvae and pupae on both sides of the frond) and action stage where treatment is conducted when threshold levels are exceeded, i.e. 5 live larvae per palm for large species and 10 live larvae per palm for small species. Census should then done every 2 weeks untio pest census results show zero count for 3 consecutive rounds of census. Census records were sighted at Muar River estate as recorded in the Leaf Pest Census Form, where information recorded for each block where census is conducted includes the row number, palm number, species, larvae size (small, large and and empty bags) and live as well as empty/dead cocoons. A book for trunk injection records is maintained to records dates, fields, blocks and hectarage where chemical are applied. It was confirmed from the records that once the number of larvae sighted reaches below the threshold level, no more chemical application is done. - Kok Foh estate has significant attacks of ganoderma infection affecting the entire estate area. The estate does not carry out mounding due to the extent of the attacks but annual census is done, as seen from the ganoderma census summary records of the estate for FY2014-2015, the records shows the recorded number of normal palms, infected but productive palms, severely unproductive or moribund, standing palms and calculation of percentage infection. The summary shows an infecton rate of 15.25%

Compliance status: Full compliance

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

Findings:

Only pesticides under Class III and IV were being used in the estates. It was verified through the field visit that no Class I and II were being used or kept in the Chemicals Store. Pesticides were clearly identified through proper labelling on the pesticide containers. The classes of pesticides were displayed at the chemical stores. All the estates have updated records of the amount of pesticides used which include details of active ingredients and the amount applied per ha. Prophylactic use of pesticides is avoided and generally only applied upon census results where attacks of pests are found to be high. The exception is rat baiting campaigns done twice a year in accordance with the company’s SOP due to consistent issues with rat attacks.

Chemical Health Risk Assessment (CHRA) in accordance with the Use and Standards Of Exposure Of Chemicals Hazardous To Health (USECHH) Regulations 2000 have been conducted on 20 June 2015 at Muar River Estate (No: GST/CHRA/NS1/MuarRiver/2015-263) to identify all risk associated with chemicals by the registered assessor (JKKP HIE 127/171-2(124)).

Meanwhile at St. Helier Estate, found at chemical store there is no storage of any pesticides under class 1A & 1B and II such as pesticides being used and kept. Existing pesticides used categorized and registered under Pesticides Act 1974 and USECHH 2000. While at Pertang Estate, pesticides used classified as class II, III and IV as sampled in the Chemical Store according to USECHH 2000 and Pesticides Act 1974.

Store keeper and Sprayers at St. Helier Estate, found understand and able to explain the safety and

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Page 45 of 132 health aspect of pesticides, class and handling requirement. The signage and PPE were used by workers handling chemicals while handling pesticides as observed during field visits.

At St. Helier Estate Chemical and pesticides store was locked, safety data sheets (SDS) are available, first aid box available, containment also available, signage and warning sign also seen at entrance. PE-Pesticides kept locked in the chemical store. Proper signage and pictogram available at the entrance. Labeling were proper, emergency shower and eye bash were available, and with spillage kit.

At St. Helier Estate also, pesticides named Kenlon and Glyphosate, the SDS mentions that the chemical should not be allowed to come in contact with skin or clothing when handled. While SDS for another pesticide named glyphosate mentioned not to have it come in contact with eyes, skin and clothing. Found face mask use N95 as recommended by CHRA Assessor registered with JKKP on CHRA conducted July 2015. N95 is made of cloth and can absorb mist while sweating and contact with skin. According to Estate Manager and Regional HSE Manager the PPE were acceptable and suitable to be used as recommended by competent person. This was noted as an observation. At Sungai Gemas Estate, found continuous sprayer training was done on 26/01/16 which attended by 9 workers. Training for Trunk Injector (acephate) was done on 4 February 2016 which attended by 29 workers.

The health surveillance also been conducted on yearly basis by OSH Doctor (HQ/08/DOC/00/545) which has concluded that all workers are fit to work with all necessary measures taken such as appropriate training, proper PPE, meeting with reporting of accident programme. Medical surveillance was conducted from 16 March to 24 March 2016 for all 32 estate workers as per OSHA (USECHH Regulations) 2000. The recommendation by the registered OSH doctor is to have CHRA, SOP, PPE usage, emergency chemical spillage area and to keep the medical surveillance records for 30 years.

At St. Helier Estate, medical surveillance was conducted on 21 April 2016 on 10 workers on 21/04/16. 8 workers were exposed to Glyposate and Kenlon. 2 workers were exposed to Ammonia. It was found that a sprayer, mandore, a supervisor for manurer had not attended medical surveillance. However, there was evidence that the Estate Manager had already arranged to send them for medical surveillance as per a memo seen signed by him. It is noted that CHRA Assessment report (JKKP-HIE 127/171-2 (160) recommended in Form F (Action to be taken) that for application of pesticides, future no need to do health surveillance as no Organophsphate Chemicals.

While in Sungai Gemas Estate, medical surveillance was conducted on 29/01/16 for 16 workers. 9 trunk injectors exposed to methamidaphos (Ornanaphosphate), 5 sprayers, 1 workshop and 1 supervisor sent. Sampled chemical handler involve with water treatment and also trunk injector, sent for medical surveillance as name included in the report. At Koh Foh Mill, a medical surveillance was conducted for 13 workers and all not having any disease related to chemicals. 3 were normal and 10 abnormal but not chemical related. Lab Supervisor was tested.

The company does not engage any female workers to carry out work with chemicals in the field, inly male workers. This was confirmed during site visits, e.g. at St Helier Estate, it was observed that no ladies workers work as sprayers and involved with handling of pesticides. In Sungai Gemas Estate, there are no lady sprayers and manurers. While at Pertang Estate, a store clerk found pregnant and according to she just monitored the store activity and work handled by other workers.

Proper warning sign board with both languages (English/Malay) needed for spraying activities at Kok Foh Estate and Muar River Estate. This was noted as an observation.

Compliance status: Compliance with observations

See Observations no. 5 and 6 of Appendix 5

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

Findings:

At all estates and the mill sighted an Occupational Safety and Health (OSH) Policy dated January 2015

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Page 46 of 132 acknowledged by the Managing Director. The policy is the organization commitment in order to comply with the current legal and other related requirements. And also to established the OSH Management at all SOUs. The policy also dedicated to provide adequate knowledge, training and experience to ensure competency with continuous improvement in the OSH Management, preventing accident, safe and healthy environment for employee, contract workers and visitor as well. An OSH plan for FY 2015/2016 been established approved by the Manager which includes main program such as Risk Management, Emergency Pre- paredness, Chemical Safety Management, Scheduled Waste Management, Water Quality Monitoring, In- spection and Training.

At St. Helier Estate, OSH Policy was found displayed in the office released in 2015 by CEO. Kok Foh Mill, found EHS Program for FY 2015/2016 that included action plan. Among the programs were EHS Risk management, EHS structure, Incident reporting, Emergency Response Procedure (ERP), Chemical management, Personal and noise management, health and hygiene management, awareness and competency training, reporting/licensing, health and hygiene monitoring , awareness and competency training and reporting/licensing. In Pertang Estate, OSH Policy was posted in the meeting room as sampled.

Meanwhile at Kok Foh Estate, Hazard Identification Risk Assessment and Risk Control (HIRARC) have been established and reviewed dated 26 January 2016 by the Assistant and approved by the Manager. The activities includes in the office, P&D, census, drainage & irrigation, harvesting, manuring, nursery, pruning & sanitation, road & bridge, store, waste, weeding and workshop. The pruning activity have been assessed due to the incident happened last year on 18 April 2015 with activity such as reviewing the SOP, eye test for the workers, training on the new SOP and evaluation on the competency of the workers who are involve directly with pruning activity. An additional rubber grip has been added to the pole to enhanced and better handling during pruning. At Sg Senarut Estate, HIRARC FY 2015/2016 dated 2 January 2016 for harvesting been reviewed since there was fatal accident in other estate due to electrocution while doing the work under the power line. Measures have been taken appropriately to avoid recurrence of the accident.

However, the risk assessment need to be improved by better identification of likelihood and severity with the actual hazards and action plan with clear PIC and dateline mention as sampled in Kok Foh Mill, St Hellier, Sg. Gemas and Pertang Estates. Some improvement required to the HIRARC of the estates was noted as observations as below: 1) Risk assessment need to be improved by better identification of likelihood and severity with the actual hazards and action plan with clear PIC and dateline mention as sampled in Kok Foh Mill, St Hellier, Sg. Gemas and Pertang Estates. 2) Bkt Pilah: HIRARC was not reviewed immediately since there are few cases of accident happened as highlighted in the OSH meeting dated 19 February 2016 where the incidents happened on 5, 7 and 13 December 2015. As stipulated in the SOM Version 1, 2008 dated 1 November 2008, Section 8.0 - Review which says that HIRARC should be reviewed and updated at least once yearly or after there is an incident, near miss, dangerous occurrence and etc.. 3) Sg Senarut: It was found for some risks identified in the HIRARC that were assigned a score of 4 or higher did not have any recommended risk control, even though this is required as stated in the company’s ESH Management Manual. Example sighted in HIRARC dated 2/4/16 for weeding, for the cutting creeper on palms, with score 9 (medium) did not having any recommended risk control. While for manuring with job of application of the fertilizer scored as 9, neither of these medium level risks had any recommended risk control stated. 4) Muar River Estate: HIRARC was reviewed on 26 January 2016 and 4 April 2016 respectively due to incidents happened from harvesting activity (incident on 12 December 2015) and fronds stacking (28 March 2016). It was found that for risks identified in the HIRARC after the review were assigned a score of 4 or higher with only have SOP and PPE as recommended risk control. Further evidence on the risk control was not sighted and not demonstrated.

At Sg. Senarut estate, records of training for the selected harvesters been sighted together evidence prov- ing them with pole strapped with rubber and under full supervision. Training is based from the SOP - Har- vesting at Over Head Power Line (OHPL). Only well trained harvesters are allowed to perform the task at the area. Other activity been reviewed such as weeding, pruning and racking, roads and bridges, and security. However, It was found for some risks identified in the HIRARC that were assigned a score of 4 or higher did not have any recommended risk control, even though this is required as stated in the company’s ESH Management Manual. Example sighted in HIRARC dated 2 April 2016 for weeding, for the cutting creeper on palms, with score 9 (medium) did not having any recommended risk control. While for manuring with job

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Bahau, Negeri Sembilan, Malaysia

Page 47 of 132 of application of the fertilizer scored as 9, neither of these medium level risks had any recommended risk control stated.

Workers interviewed at Bukit Pilah estate (harvesters) and Muar River estate (sprayers) informed that PPE is provided to them for free, and for Muar River estate sprayers, their PPE is replaced immediately if they report it to be damaged. Workers confirmed that all medical expenditure is paid for by the company.

The usage, cleanliness and storage of Personal Protective Equipment (PPE) such as helmet, mask and safety shoes need apply and as recommended by legal, SOP, OSH Manual and CHRA Assessor recommendation.

However, there were a few observations related to PPE and safe work practices as follows:

1) Workers interviewed at housing of Bukit Pilah estate informed that when their PPE was damaged, it was not replaced or slow to be replaced by the management 2) Visited the chemical mixing area at Kok Foh Estate and Muar River Estate found out that the emergency shower is not contained to avoid the contaminated water release to the main drain. 3) Visited Bukit Pilah Estate chemical mixing area, there is no roofing available with empty containers were left/ located everyday under the sun and rain. It will deteriorate the containers under the weather. 4) The usage, cleanliness and storage of Personal Protective Equipment (PPE) such as helmet, mask and safety shoes need to be implemented and applied consistently at all estate and mill and as recommended by legal, SOP, OSH Manual and CHRA Assessor recommendation.

At Bukit Pilah Estate, a regular OSH meeting has been conducted as sighted on 13 May 2015, 28 August 2015, 18 November 2015 and 19 February 2016. The meeting highlighting on the previous meeting minutes, outstanding issues, accident report, near missed, OSH training and environmental issue. OSH Committee member and records of regular OSH meetings conducted have also been sighted at Sg Senarut Estate dated 8 March 2016, 30 December 2015, 17 September 2015 and 5 June 2016. An update from previous meeting been discussed, accidents report, workplace inspection, road maintenance, chemical store, chemical mixing area, workshop, ERT, OSH training. However, the OSH committee members who have failed to attend the meeting 3 times in a row may be removed from the committee as stipulated in the Safety & Health Committee 1996. One of the committee members was found to have missed 3 times but was found to be in the committee in December 2015. A decision has been made by the Chairman to remove her but she was still attending the meeting in March 2016. This was noted as an observation.

Meanwhile at Muar River Estate, a regular OSH meeting have been held and sighted dated 13 May 2016, 26 February 2016, 26 November 2015, and 19 August 2015. There was an accident occurred in 28 March 2016 as recorded in the OSH meeting which involved Class IV (Medical Leave - 1 day) due to dust from harvesting activity have entered the eyes. The victim been referred to clinic and follow up treatment to the general hospital. Another incident happened in 12 December 2015 (Class IV) where the dust from stacking fronds activity. The worker was referred to the clinic for treatment and obtained 1 day medical leave. Both incidents were reflected in the HIRARC by reviewing the harvesting and frond stacking activity dated 4 April 2016 and 26 January 2016, as mentioned above.

At St. Helier Estate, Safety and Health Committee (SHC) meeting was conducted on 30/03/16 attended by 17 workers, 24/12/15 attended by 13 workers, 28/09/15 attended by 18 workers. 10/06/15 attended by 14 workers. While at Sungai Gemas Estate, Organization Chart available for SHC Sungai Gemas. Chair- man is the Estate Manager, Medical Assistant is the secretary, 6 employer representatives and 5 employees/contractor rep. Meetings were conducted on 26 February 2016, 24 November 2015, 08 December 2015, and 9 September 2015. At Kok Foh Mill SHC Organization chart available as sampled. Chairman is Mill Manager; SHC meeting was conducted on 04 March 2016, 20 January 2016, 14 December 2015, and 17 September 2014.

At St. Helier Estate, First aid and CPR Training was conducted on 14 April 2016 attended by 17 workers. Accident and emergency procedure were available in OSH Manual dated August 2008. Under Chapter 13 (ERP) and 14 (Incident). While in Sungai Gemas Estate, 5 accidents cases have been reported involving foreign workers dated 16 April 2015, 18 April 2015, 21 April 2015, 25 May 2015), 8 June 2015. On 03 February 2016 an accident slipped and fall involving loose fruits collector at Block 1996A. On 23 February 2016 accident involving harvester where a cutter drop on legs and cuts with 4 days of MC.

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11 workers were trained as a first aider. At Pertang Estate, found a mandore and supervisor keeping first aid box lacking of triangular bandage and scissors for spraying and harvesting activity. However, there was no first aid box available during manuring activity at Block 92P as the mandore forget to bring it to the site. This was noted as an observation. Accidents were investigated as evidence of investigation reports dated 22 April 2016, 22 April 2016, Form JKKP 8 (Annual Accident Report form) sent to DOSH on 21 January 2016. Form JKKP 6 (Severe Accident Report form) for Indian worker on 10 August 2015 fall into a hole with fractured bones and 16 days mc. Accident on 11 February 2015 on harvester have been recorded. Loading spike struck right legs and 5 days MC. At Kok Foh Mill, training and spillage drill was conducted on 28 May 2015 involving 9 workers including laboratory, water treatment, and store

Sighted foreign workers compensation scheme and social security (SOCSO) contribution (Form 8A) paid for March 2016 for 199 workers amount RM 4,374.40. Foreign Worker Compensation Scheme Certificate of Insurance (Policy no. FW176004) with coverage from 16 November 2015 to 15 November 2016. Total payable RM 1,383.76 covered 18 foreign workers from 21 December 2015 to 20 December 2016 with total payable RM1,536.40 covered 20 foreign workers. In Sungai Gemas Estate, Form 8A SOCSO contribution was made in March 2016. Amount of RM 864 for 24 foreign workers. Contribution for January 2016 made RM 780.80 for 24 workers, February RM 780.80 for 24 workers. Foreign Workers Compensation Scheme Certificate of Insurance, Policy No. FW150746 from 01 July 2015 till 30 June 2016. Premium payable RM 3,062.80 for 40 workmen. Also available Conformation Slip of FWCS dated 13 July 2015. Slip reference JTK1688600. At Pertang Estate, monthly contribution (March and April) by using Form 8A to SOCSO with amount RM 1, 575.40 for 61 workers and RM 1,402.80 for 57 workers. Foreign workers compensation scheme RM 152.64 paid (Policy No. FW179511) from 26 February 2016 till 25 February 2017 for 2 workers, (Policy No FW182927) RM 76.32 from 6 March 2016 till 05 March 2017 for Makbul Mondal. (Policy No. FW149519) RM 5,810.32 from 1 July 2015 to 30 June 2016 for 47 workers and 29 others.

At St Helier Estate, found accident statistic in Loss Time Injury (LTI). Found JKKP 8 sent to DOSH on 31 December 2015 by Estate Manager. Total 4 accidents been reported (rubber) not involving palm oil. Kok Foh Mill have a board stating accident statistics in LTI.

Compliance status: Non-compliance Non-conformance no. RSPO00678 Kok Foh estate: A regular OSH meeting has been conducted as sighted on 17/3/2016, 16/12/2015, 28/7/2015, 16/6/2015 and 20/5/2015. However, there was no meeting between July 2015 to December 2015 as stipulated in the OSHA Act 1994 (Act 514) P.U. (A) 616/1996 which requires meeting to be held once in every 3 months. In addition, on 16 December 2015 only 11 participants from total of 25 persons that should attend the meeting. This is against the OSH (Safety & Health Committee) Regulations 1996 which requires 50% attendance from the committee.

See also Observations no. 7, 8, 9, 10 and 11 of Appendix 5

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

Findings:

At Bukit Pilah Estate, sighted a training programme have been established FY2015/2016 which includes activities such as harvester training, first aid training, scheduled waste management, chemical training, firefighting, RSPO training, PPE, social & gender, HCV & biodiversity and rat baiting training. Training matrix also been developed to all staffs and workers for necessity in their related daily works. The latest training was on 26 February 2016 for all sprayers which includes assessment of the training. Most of the sprayers can performed their daily task in a moderate result. A fire drill training also been conducted on 19 May 2016 for all workers, mandores, filed staff, medical assistant and to Assistant Manager as well. The training contents include safety policy, SOP, safety and demonstration of using fire extinguisher. Also training on 17 May 2016 about Cardiopulmonary resuscitation (CPR), 1st aid training to all mandores, and field staff includes the correct technique for CPR, treatment at workplace and how to react if incident happened. On 23 February 2016, training for harvesters been conducted based on the SOP and company policy including the

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Page 49 of 132 demonstration on the correct technique during harvesting. A spraying training been held on 22 August 2015 to educate workers of the correct method for spraying with safety awareness during spraying operations. Due to fatal incident (Class I) happened on 18 April 2015 at Kok Foh Estate, a series of improvement on the Pictorial Operational Guide: Frond cutting dated 12 May 2015 (Ref: SDPSB/05/15) approved by the State Department of Occupational Safety and Health (DOSH) dated 19 May 2015 have been prepared with training conducted to the related workers dated 26 & 27 May 2015 (45 workers).

A refresher training on spraying has been done on 3 March 2016 where a previous training to the sprayers also been conducted on 12 November 2014 by MyCrop Sdn Bhd on the safe spraying techniques and aspects with maintenance as well. PPE training also been held on 4 May 2016. A tractor driving has been done on 27 - 28 June 2015 in collaboration with the Agricultural Department to all the tractor drivers. Anoth- er pruning activity together with the assessment has been done on 9 July 2015 to all related workers. A chemical spillage drill has been done on 15 February 2016 for all chemical handling workers and sprayers as well. Training plan as mentioned in Training Need and Plan for FY 2015/2016 at St Helier Estate. PPE Training (for every 3 months), harvesting training SOP (for every 6 months), crop quality training (once in 6 months), Pruning training (for every six month) Spraying training (for every 6 months), Pest & Diseases Training, ERP, Risk Training, First Aid and hazard briefing (all every 6 months). At Kok Foh Mill, available training matrix that included all the training needs for YR 2015/2016 for RSPO requirements.

At St. Helier Estate, found evidence of training records available in folder Training for Workers, training for Executive and training for Staff. Training on tyres safety and maintenance done. Code of Business (COBC) attended by 12 workers done 30 March 2016, Pruning was done on 11 April 2016, Tractor driver was done on 24 August 2015, First aid training was done on 07 April 2016 (worker) 17 June 2015 (trained by NIOSH) attended by 8 workers. Fertilizer training 19 May 2015. At Pertang Estate, safety briefing on harvester on 23 May 2016 attended by 27 workers, Safety briefing for fertilizer gang, safety briefing for sprayers, PPE safety briefing, Excavator safety briefing, Contractor management training, (all conducted with photo evidence but no attendance list and date of briefing).

Compliance status: Full Compliance

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

Findings:

Kok Foh mill has a documented Environmental Aspects and Impacts (EAI) identification and Environmen- tal Impacts Evaluation (EIE) done for mill activities including reception, sterilizer, threshing, pressing, clarification, depericarping, kernel recovery, boiler, power generation, palm product storage and dispatch, la- boratrory, water treatent plant, effluent treatment plant, workshop and maintenance, lubrication and chemical store and scheduled waste store. At Kok Foh Estate, an Environmental Impact Assessment (EIA) has also been established and reviewed on 15 January 2016 by the Assistant Manager and approved by the Manager with activities such as transportation of FFB, spraying, and manuring. While the Environmental Impact Evaluation (EIE) for Sg. Senarut Estate has been reviewed dated 1 January 2016. Completed EAI and EIE was also sighted for other estates, i.e. St. Helier estate, Bukit Pilah estate, and Pertang estate.

However, Environmental Aspects and Impacts assessment and Environmental Impacts Evaluation for boiler construction in progress at the mill is not available. In addition, there was evidence that Environ- mental Aspect and Impact assessments was found not properly conducted: i) Only cover page updated but review not actually done • St. Hellier estate: Environmental Aspect Impacts document was only stated on cover page as last reviewed only 19/5/15, but actual content was last reviewed was on 08/08/12. Due to this, some legislation mentioned as Legal reference are outdated legislations, e.g EAI still includes EQ (Clean Air) Regu- lations 1978 and EQ (Scheduled Waste) Regulations 1989 although these have been superceded by

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EQ (Clean Air) Regulations 2014 and EQ (Scheduled Waste) Regulations 2005 respectively. For replanting, herbicides was not stated as having any legal reference (suppose to be Pesticides Act 1974). • Bukit Pilah estate: The Environmental Impact Evaluation (EIE) cover page states review was done on 13 August 2015, however the EIE forms was dated back in 10 January 2009. • Sg Senarut estate: The Environmental Impact Evaluation (EIE) cover page states review was done on 1 January 2016, however the EIE forms was dated back in 1 April 2013. In addition, the Serial No EIE/2013 is not completed in the form. There was no signature on who prepared the evaluation form. ii) Incorrect identification of potential for legal non-compliance • At Pertang Estate, Kok Foh estate, Bukit Pilah estate, and Sg. Senarut estate Environmental Impact As- sessment FY 2015/2016 found for several Environmental Load items (e.g. Land Contamination (spillage) for diesel, lubricant disposal of clinical item, herbicide spraying), there was a question on whether there is high potential on non compliance to environmental regulations, where the answer stated was “No’ but in actual there is potential for legal non-compliance. iii) Incorrect or outdated legislation stated as reference • Environmental Aspect and Impact Identification Form used at Pertang estate for fuel container and rags (discharge to land) legal reference was wrongly stated as EQ Regulations 1996 & EQ (Scheduled waste), while for petrol/diesel (land contamination), legal reference was wrongly stated as EQ (Scheduled waste) Reg. 1996 (year of regulations stated are not the latest versions) • The environmental impact from discharge to land is the selective weeding activity is rated at 9 (business impact) but not considering land contamination and community.

This was raised as Non-conformance no. RSPO00679.

There were also several observations pertaining to the EAI and EIE document: 1) Kok Foh mill, Kok Foh estate, Bukit Pilah estate and Sg. Senarut estate has a documented Environ- mental Aspects and Impacts (EAI) identification and Environmental Impacts Evaluation (EIE) done for mill activities. However, there is no evaluation of abnormal and emergency conditions, only for normal conditions. Environmental impacts such as oil spillages and leakages were identified as normal conditions, when these should be abnormal conditions 2) Template for EIE evaluations sighted at Bukit Pilah estate was inconsistent with the template in the Standard Operating Manual (SOM) Version 1, 2008 dated 1 Nov 2008, Appendix 5.4.1d (Environmental Impacts Evaluation Form). 3) EAI and EIE for some ongoing mill activities such as composting is not included. While for Kok Foh estate, EAI and EIE for some activities in the estate have yet to be done, e.g. for chemical store and scheduled waste store. 4) Sg. Senarut estate: The environmental impact from discharge to land aspect for selective weeding activity is rated as 9 (business impact) but not consider other impacts such as land contamination and impact to community.

Compliance status: Non-compliance

Non-conformance no. RSPO00679 1) Environmental Aspects and Impacts assessment and Environmental Impacts Evaluation for boiler construction in progress at the mill is not available.

2) There was evidence that Environmental Aspect and Impact assessments was found not properly conducted: iv) Only cover page updated but review not actually done • St. Hellier estate: Environmental Aspect Impacts document was only stated on cover page as last reviewed only 19/5/15, but actual content was last reviewed was on 08/08/12. Due to this, some legislation mentioned as Legal reference are outdated legislations, e.g EAI still includes EQ (Clean Air) Regu- lations 1978 and EQ (Scheduled Waste) Regulations 1989 although these have been superceded by EQ (Clean Air) Regulations 2014 and EQ (Scheduled Waste) Regulations 2005 respectively. For re-

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planting, herbicides was not stated as having any legal reference (suppose to be Pesticides Act 1974). • Bukit Pilah estate: The Environmental Impact Evaluation (EIE) cover page states review was done on 13 August 2015, however the EIE forms was dated back in 10 January 2009. • Sg Senarut estate: The Environmental Impact Evaluation (EIE) cover page states review was done on 1 January 2016, however the EIE forms was dated back in 1 April 2013. In addition, the Serial No EIE/2013 is not completed in the form. There was no signature on who prepared the evaluation form. v) Incorrect identification of potential for legal non-compliance • At Pertang Estate, Kok Foh estate, Bukit Pilah estate, and Sg. Senarut estate Environmental Impact As- sessment FY 2015/2016 found for several Environmental Load items (e.g. Land Contamination (spillage) for diesel, lubricant disposal of clinical item, herbicide spraying), there was a question on whether there is high potential on non compliance to environmental regulations, where the answer stated was “No’ but in actual there is potential for legal non-compliance. vi) Incorrect or outdated legislation stated as reference • Environmental Aspect and Impact Identification Form used at Pertang estate for fuel container and rags (discharge to land) legal reference was wrongly stated as EQ Regulations 1996 & EQ (Scheduled waste), while for petrol/diesel (land contamination), legal reference was wrongly stated as EQ (Scheduled waste) Reg. 1996 (year of regulations stated are not the latest versions) • The environmental impact from discharge to land is the selective weeding activity is rated at 9 (business impact) but not considering land contamination and community.

See also Observation no. 12 of Appendix 5

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

Findings:

HCV Re-assessment Report version 2.0 dated May 2016 has been prepared by the PSQM Department for SOU16: Kok Foh covering all estates. The report includes records of consultation activities with stakeholders including the village chief of Kg. Mukim Buluh Kasap 4 at Sg. Senarut/Sg. Gemas estate, villagers of Muar River estate including representative from Paya Long Village, and representatives from UMNO branch, village head of Geddes Village near Kok Foh estate, secretary of Sri Rompin village near Bukit Pilah estate, the JKKK heads of Taman Jaya village and Peka Jelai Village near St. Helier estate, JKKK head of Melayu Tambamtin at Pertang Estate, and some government agencies including officer from For- estry Department of Kuala Pilah, Negeri Sembilan, and Assistant Director for River and Beaches management, Department of Irrigation and Drainage. The report describes a total of 25.598 ha of HCV area identified in SOU 16: Kok Foh which only comprises HCV 4 areas as follows: Estate No. Assessment Area Block no. Hectarage Muar River Estate 1 Water catchment P93T 0.45 Sg. Senarut Estate 2 Water catchment R12C/P01 3.94 Sg. Gemas Estate 3 Water catchment P00F 1.28 4 Pond P00A 0.50 Kok Foh Estate 5 Water catchment (mill) P99KA 7.5 6 River reserve (Sg. Tebu) P02KA 0.448 Bukit Pilah Estate 7 Water catchment R00M1 4.88 8 Water catchment P01K/R96K1 0.80 9 Water catchment R94R 2.05 10 Water catchment P05S1 0.26 St. Helier Estate 11 River reserve (Sg. Muar) P05S 0.56

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12 Water catchment R11D 0.30 Sg. Sabaling 13 Water catchment R99B 2.56 Pertang Estate 14 Water catchment P06P 0.07 Total HCV area for SOU16 25.598

The names, expertise and working experience of the 2 HCV assessors from PSQM who conducted the assessment were listed in the report, with qualifications as follows - 1st assessor: 2 years woking experience at Taiping Zoo in education and conservation, appointed hon- orary wildlife warden by Sabah Wildlife Department, undergone Forest Management and Tree ID course by Sabah Forestry and Forest Research Centre, assisted in SDP Sustainable Initiative Projects – Reha- bilitation of Peat land in Raja Musa forest reserve - 2nd assessor: Certified SA800 Social Impact Assessment assessor with 3 years experience, undergone Forest Management and Tree ID course by Sabah Forestry and Forest Research Centre, assisted in SDP Sustainable Initiative Projects – Restoration & Rehabilition of Orang Utan Habitats in Bukit Piton Forest Reserve

The report also summarizes other potential or concerned areas observed within the estates although not all have been confirmed as HCV areas, including: - Sg. Sabaling estate: Low-lying waterlogged area (block P06A), forest border at blocks R981, P02 and R97 - Sg. Gemas estate: Forest border at P97B, pond at P01G - Muar River estate: Low-lying water logged area at P001G1, P00G1 and P13A, worship areas at P07G and P13A, DID drain at P06G and P14B, field drain, irrigation pond, cemetray at P00G1,and forest tree planting initiative at P14B - Kok Foh estate: POME at P99KA and smallholder area located between P01KB and P00KC - Bukit Pilah estate: Agroforestry area at R95M1 (planted with forest trees) and proposed TNB rentice site at R98M2 at Bukit Pilah division; low-lying waterlogged area (P05R) and ravine (R09R) at New Rompin division; teak planting area (P89), pond (P06K1) and low lying waterlogged area (R12C) at Kelpin Divi- sion; road reserve (P05S1/R01S), pond (R96S), teak planting (R08S), tongkat ali planting (P05S) and low-lying waterlogged area (R01S) at Sg. Kelamah Division - St. Helier estate: Forest border (R99S), teak planting (P04H) at St. Helier division; forest border (R96JA) and stream (R99J, P11B, and P11C) at Juassah Division - Sg. Sabaling estate: Worship area (R97C3), low-lying waterlogged area (R12D/R09A & R12D), cem- etary (R98A) - Pertang estate: Stream (P09P), pond (P10P), low-lying waterlooged ara (R99P) at Sg. Pertang Division; forest border (R95H), field drain (P08H), low-lying waterlogged areas (R95H) at Hoscote Division

The company’s HCV report includes evidence of consultation between the HCV assessment team with photos of consultation with Semelai people and Department of Irrigation and Drainage. However, other evidence of consultation with other stakeholders, e.g. Forestry/Wildlife Departments for HCV assessment was not sighted. This was noted as an observation.

The report also includes a list of common wildlife identified in the area of SOU 16 including their IUCN and WCA 2010 conservation status. Most species of animals identified were listed as least concern, including White throated kingfisher, common myna, crested serpent eagle, barn owl, red jungle fowls, in- termediate egret, lesser whisting duck, wild boar, long –tailed macaque, leopard cat, common civet cat, Malay civet, common cobra and monitor lizard. No threatened or protected species were identified in the list.

A Biodiversity Action Plan for Kok Foh Estate was sighted dated 22 July 2015 which includes activities, responsible poerson and time frames for action. Activities listed included: - Setting aside nature conservation areas, i.e. identification of potential areas for conservation, marking HCV areas on a map, marking areas with signages, allow growth of vegetation in these areas, to inform all personnel, contractors and suppliers that hunting and encroachment is not permitted, annual inspection by PSQM, etc - Rehabilitation and Habitat Enhancement: To provide signages for buffer zones, with all palms visibly marked, to conduct maintenance of the water catchment area, to install signboards prohibiting fishing and swimming at the water catchment, no chemical interventions and manuring to be carried out at areas where buffer zones are not established, to maintain soft grasses in mature plantings, to carry out U-

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frond stacking, and to construct terraces and silt pits where necessary. It was found during site visit to Kok Foh estate that the marking of palms at the river riparian buffer zone was not clear. The company took immediate action to establish a signage at the river stating no chemical spraying is permitted and demarcate the river. - Education & Awareness: Communication through Sime Darby website within sister estate about biodiversity area, to inform and train all sprayers to maintain soft grasses at the interrows, no spraying allowed at CSA area, riparian reserve areas, drain edges and along the road. There is evidence of spay- ing training done for 9 sprayers and 1 mandore on 3 March 2016 regarding spraying operations. Spray- ers interviewed on-site confirmed that they had been informed not to carry out spraying at the river buffer zones. - Introduction of new policies regarding management of steep slope, river buffer zone, etc (done by PSQM) - Interface with animals: To plant fruit trees ar worker villages and vacant areas, and report any cases of interface with wildlife to the Wildlife Department However, there was no evidence of HCV monitoring records or notes on the status of implementation of the action plan.

Biodiversity Action Plan for Muar River Estate for FY 2015/16 was also sighted and found to to have action plans as follows: - To identify natural waterways in the estate and comply with policy guidelines on minimum width for river reserves and demarcate the buffer zones with poles to identify areas where chemical spraying is not permitted. - To maintain soft grasses at mature plantings, to carry out U-frond stacking, and to construct terraces and silt pits where necessary - Training: To inform all sprayers to main soft grasses at interrows and no spraying allowed at buffer zones. Sprayers interviewed informed that they are aware that they are not spray at rivers or waterways and also not at the water catchment. - Planting of beneficial plants

Muar River estate has records of HCV monitoring done on 5 May 2016 and 14 May 2016 for identified HCV areas (water catchment) and potential HCV areas including the low-lying waterlogged area, DID drain, and forest tree planting area, with columns for observations on whether there was encorach- ment/signs of trespassing, wildlife issues/conflicts, pollution/erosion issues and others. No observations were noted in these aspects and remarks stated no signs of trespassing observed and signages are well maintained.

For Bukit Pilah estate, there are 4 water catchments in the estate and one water catchment at block P01K/R96K1 was visited. It was observed that the water catchment is currently quite dry due to drought season, and there is low risk of chemical contamination as there are no palms planted directly adjacent to the pond and hence no need to demarcate a buffer zone around this pond. However, the water quality of the pond was found to still be of poor quality and is being used for consumption. This matter was explained further under CR4.4.

Compliance status: Compliance with observations

See Observations no. 13 of Appendix 5

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

Findings: At Sg. Senarut Estate, a waste management plan FY2015/2016 has been documented dated 1 January 2016 prepared by the Assistant Manager and approved by the Manager. The type of schedule waste identified are SW102, SW103, SW305, SW306, SW410 (workshop), SW409 (chemical store) and SW404 (clinic). Other waste identified is rubbish (office), metal and used tyres (workshop). Latest collection was sighted with a consignment note dated 20 May 2016 with a collection of SW409, SW306, and SW410.

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For scheduled waste at Muar River Estate, spent hydraulic oil, spent lubricant oil, used batteries and used filters are been collected by Sime Darby Industrial (SDI) Sdn Bhd. The DOE has allowed SDI can collect those scheduled waste above during maintenance or servicing the vehicles at their respective estate with a letter dated 6 September 2011. The permission must be accordance with Third Schedule (Regulation 10) labelling of scheduled waste under Environment Quality Act (Scheduled Waste 2005) 1974. Also SDI must comply with other legal requirements as stipulated in the Scheduled Waste 2005 such as notification and updating to DOE, designated area, approved contractor to collect, inventory and with emergency contingen- cy plan. Clinic waste (SW404) is sighted with a collection on 4 May 2016 at 0.2kg. Sighted also collection for SW404 on 11 April 2016 (0.4kg) and on 7 March 2016 (0.5kg). Kualiti Alam Sdn Bhd is the approved contractor to collect the scheduled waste from all the estates with valid license from 1 May 2016 to 30 April 2017.

Sampled consignment notes for collection of scheduled wastes clearly mentioned the type of scheduled waste generated such as used fluorescent tube, contaminated rags/waste and fertilizer bags to match the inventory of the schedule waste in Kok Foh Mill, St Helier, Sungai Gemas and Pertang Estates. For example, at Sungai Gemas, Consignment Note No. 0094086 containing SW409 quantity 5 pallets/2 bags/3 pails was collected by Kualiti Alam. At Kok Foh Mill, sampled disposal to Kualiti Alam, SW322 (4 pails), SW 416 (1 box/pallet), SW 324 (1 pail), SW 102, 1 pallet, SW 401 (3 pallet drum 1 pail), SW 305 (1 pallet). Available also Scheduled waste inventory (5th Schedule) prepared by Mill Engineer dated 12/05/16. Lead Acid battery (SW102) Balance was 0.2810 Mt, Spent lubricating oil SW305 Balance was 0, Hydrau- lic oil SW306 Balance was 0.0620 Mt, IPA (SW322) Balance was 0.0308 Mt, Hexane SW324 Balance was 0.0040 Mt, Empty can container SW409 Balance was 0, Plastic container SW409 Balance was 0.2900 Mt and filters SW 410 Balance was 0.0060 Mt. Also available for March, February and January as sampled.

At Sungai Gemas the waste management plan was established and available approved by Estate Man- ager as sampled. Also available as sampled at Kok Foh Mill, Waste Management Action Plan for FY 2015/2016 available approved by Mill Manager 7 July 2015. Prepared by Quality Assurance Supervisor.

- Recycling bins is sighted at the Kok Foh Estate, Bukit Pilah, Sg Senarut and Muar River Estate however, the segregation for recycling organic and inorganic waste is not properly monitored at the estates. - The bins located outside the workshop at Muar River Estate were not labeled and monitored accordingly for scheduled and domestic waste. - The waste management plan does not clearly mentioned the type of scheduled waste generated such as used fluorescent tube, contaminated rags/waste and fertilizer bags to match the inventory of the schedule waste in Kok Foh Mill, St Hellier, Sg. Gemas and Pertang Estates. These points are noted as an observations

However, there was no evidence of fertilizer bags being returned back for reuse to the original supplier as approved by DOE and SOP for scheduled waste management. Observed in St. Helier, Sg. Gemas and Per- tang Estates as it was used and disposed internally. This was raised as Non-conformance no. RSPO00680.

Compliance status: Non-compliance Non-conformance no. RSPO00680 There was no evidence of fertilizer bags being returned back for reuse to the original supplier as approved by DOE and SOP for scheduled waste management. Observed in St. Helier, Sg. Gemas and Pertang Es- tates as it was used and disposed internally.

See also Observation no. 14 of Appendix 5

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

Findings:

Kok Foh Mill has records of renewable energy used for FY 2015/16 including monthly data on amount of

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FFB processed up until April 2016, amount of electricity generated from turbine no. 1 and turbine no. 2 using fibre and shell as renewable energy sources, amount of electricity used from TNB, total amount energy produced and % renewable total power generated. From the records it was sighted that amount of energy generated from the turbines between July 2015 to April 2016 was 1,437,740 kWH for turbine 1 and 1,415,160 kWH for turbine 2, while average % of renewable energy produced (calculated against total energy used from TNB) was 87.15%. The record shows that the mill’s action to optimise renewable energy is quite effective.

Diesel usage is also recorded and updated monthly from FY2012/13 to current financial year, where the record included monthly amounts of diesel used, FFB processed, and diesel/MT of FFB. The records showed the following data for each financial year:

Financial year (FY) FY 2012/13 FY 2013/14 FY 2014/15 FY 2015/16 Diesel used (li- 11,111.00 16,819.40 12,510.00 10,111.00 ters) FFB processed 205,647.26 192,346.76 180,416.75 130,771.97 (MT) Diesel/MT FFB 0.05 0.09 0.07 0.08

Compliance status: Full compliance

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

Findings:

There is no evidence that the company carries out replanting using fire. As seen during site visit year 2014 replanted area at Muar River Estate, there is no evidence of burning. Palms are felled, chipped and stacked, in accordance with the company’s SOP for land preparation. A sample memorandum of agreement dated 11 November 2013 between Muar River Estate and contractor named Hayati Enterprise for land preparation for replanting of 12.18ha abandoned area was sighted. The agreement specifies work to be carried out and includes requirements that works to be carried out include lning for planting, stacking and terracing, felling, chipping and shredding, construction of FFB evacuation paths, drain construction and other works, with no mention of use of fire. During site visits to housing, there was also no evidence found of burning wastes.

Compliance status: Full compliance

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

Findings:

The mill has a pollution & prevention plan for FY2015/16 which identifies environmental issues, mitigating measures, responsible persons and status. The environmental issues identified include BOD level at final discharge pond (mitigated by regular monitoring, analysis and desludging), leakages and spillages at the lubricant and chemical store (mitigated by regular cleaning and with spillage kit), measurement of dust particulate concentration (stack sampling analysis done twice a year), CPO tank level indicator & alarm system (to be installed).

Sime Darby Plantation has also established a Renewable Energy Implementation Plan, which is to establish a biogas plant at all mills in 11 phases from FY 2013/14 to FY2023/24. The plan for Kok Foh Mill is to establish a biogas plant in Phase 4, i.e. FY 2016/17. The status of implementation of this project will checked during the next surveillance audit.

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The mill currently carries out only land application of POME with no discharge to waterways, with 160 fur- rows established in block 003KB of Kok Foh estate. POME discharged is recorded daily in a manual logbook.

Pollution Prevention Plan FY 2015/2016 for Sg Senarut Estate has been documented dated 1 January 2016 prepared by the Assistant Manager and approved by the Manager. The prevention plan that been identified are leakage of pesticides, during mixing, spillage at diesel storage area, schedule waste, and open burning at line-site. Line-site monitoring has been frequently monitored to check on open burning with latest inspection was done on 11 May 2016.

Compliance status: Full compliance Criterion 6.1: Aspects of plantation and mill management including replanting that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

Findings: There is a social impact assessment for SOU 16 comprising all the estates and the mill which was prepared by an internal assessment (Social and Environmental Projects Unit, PSQM Department) team dated February 2016. The report is a baseline assessment which includes a profile of each individual estate and mill at SOU 16 and its stakeholders, assessment methodology, sampling, identification of positive and negative social impacts and mitigation of the identified impacts.

There is evidence of stakeholders’ participation during the assessment as observed in the list of participants and record of input from stakeholders in the SIA. The sampling methodology adopted was sound and adequate for the SIA. The respondents sampled in the SIA are village heads from neighboring local communities. Internal stakeholders such as the National Union of Plantation Workers (NUPW) local union executives, contractors, vendors, suppliers, staff, local and migrant workers from various divisions were interviewed in this study. Structured questionnaires and focus group interviews were used to elicit information from these respondents. A signed and dated attendance list was available for each category of stakeholders interviewed which demonstrates that the SIA was conducted in a participatory manner. This was observed at all estates and mills and is contained in the main SIA report.

Nonetheless, the following non-compliances were observed which were collectively raised as a Major non-conformity: 1) The SIA for Pertang did not include the local community of Kg. Pertang. The SIA only focused on 2 villages, Kg. Parit Gong and Kg. Tambahtin. Smallholders such as Pekebun Kecil Foo Ng Moi, Chong Fook Hong, Ladang Yau & family etc were also not consulted.

2) The management of Pertang Estate also did not conduct an impact assessment pertaining to the retrenchment of 34 rubber tappers (local workers) planned to be done on the 1st of July 2016 due to planned conversion of rubber to oil palm. The impacts arising from this retrenchment exercise are many, e.g. • Difficulties of workers finding new accommodation and new jobs. • Difficulties in getting their children transferred to other schools at such short notice. • The huge relocation cost to be incurred by the workers. • Emotional attachment to the estate and their place of worship. Many workers are fourth or fifth generation employees at the estate and spent their entire lives at the estate.

This was raised as Non-conformance no. RSPO00681.

The SIA management plan is based on a timetable outlined as follows and extracted from the SIA main assessment report and other stakeholder communication platforms, e.g. minutes of meeting with union leaders, general stakeholders, JCC, safety committee meetings et. All the issues captured in the SIA and the platforms mentioned are tabulated in an SIA Management Plan which is outlined as follows: 1. Area of concern/key findings 2. Action that should be taken 3. Status of completion 4. Persons-in-charge for implementation of actions 5. Time-line

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Evidence of implementation of the Social Impact Management Plan is as follows: 1. Issue Raised in SIA: Sungai Gemas Estate: Working Condition: Some foreign workers, especially harvesters need briefing on their entitlements and HR related matters, e.g. tall palm payments, pay slip explanation, salary calculation etc. The corresponding action plan was that the Management is to continuously brief workers, especially new ones on their benefit, entitlements etc. Action taken by the management was to conduct a briefing to the harvesters about their entitlements and HR related matters. Evi- dence of implementation is as follows: ° Report dated 18 April 2016 titled, “ Penerangan kepada pekerja ladang mengenai pengiraan gaji ” (Briefing to estate workers regarding calculation of salary) attended by all workers at Sg. Gemas Estate during the morning “Muster call”.

The Social Action Plan should include issues raised in various stakeholder meetings. Sg. Senarut and Pertang. This was raised as a negative observation.

The SIA for SOU 16 was recently conducted in February 2016. Nonetheless, the management plans to conduct an annual review of the SIA.

- Social Impact Assessment for Kok Foh mill had identified issues raised by stakeholders. The Action Plan captured all the issues raised, but for two of those items did not name any person in charge, commencement date for implementation, expected date of completion, and status. - Muar River estate: Social Impact Assessment had identified four issues raised by stakeholders, but the company captured only one issue in the Action Plan with no note on why other issues were not included. Both points above are noted as observations.

Compliance status: Non-compliance Non-conformance no. RSPO00681 1) The SIA for Pertang did not include the local community of Kg. Pertang. The SIA only focused on 2 villages, Kg. Parit Gong and Kg. Tambahtin. Smallholders such as Pekebun Kecil i.e. Foo Ng Moi, Chong Fook Hong, Ladang Yau & family etc. were also not consulted. 2) The management of Pertang Estate also did not conduct an impact assessment pertaining to the retrenchment of 34 rubber tappers (local workers) planned to be done on the 1st of July 2016 due to planned conversion of rubber to oil palm. The impacts arising from this retrenchment exercise are many, e.g.: • Difficulties of workers finding new accommodation and new jobs.

• Difficulties in getting their children transferred to other schools at such short notice.

• The huge relocation cost to be incurred by the workers.

• Emotional attachment to the estate and their place of worship.Many workers are fourth or fifth generation employees at the estate and spent their entire lives at the estate.

See also Observations no. 15 and 16 of Appendix 5

Criterion 6.2: There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties.

Findings:

There is a documented communications procedure sighted at Kok Foh Estate which emphasizes on the company’s commitment to open and transparent methods for communication and consultation between SOU 16 and its internal as well as external stakeholders.

There is a dedicated officer at each estate and mill responsible for consultation and communications. These personnel are generally the estate and mill assistant managers. Appointment letters for a social of- ficers were sighted at every estate and mill, e.g. at Kok Foh Mill dated 1 January 2016. The letter of appointment outlines the following responsibilities:

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° To investigate any report or claim with regard to social issues and to recommend applicable disciplinary actions, wherever necessary; ° To keep and maintain the confidentiality of all records complaints and corresponding action taken; ° To provide advice and counselling to workers in need related to social issues; and ° To assist the estate management in organizing any programmes or training related to social issues.

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 response to input from stakeholders are maintained: ° The list of stakeholders includes internal stakeholders (Sime Darby group estates and mill), statutory/government bodies, local communities people, trade unions (NUPW), smallholders, independent suppliers of materials and services (e.g. contractors, vendors, traders etc.), others (schools, hospitals etc.) complete with contact name, telephone and address. ° Minutes of Meeting between the Management of Sg. Senarut Estate with Internal and External Stakeholders dated 3 February 2016 held at Sg. Senarut Estate a to discuss general stakeholder concerns pertaining to SOU 16 operations (complete with attendance sheet). ° Minutes of Meeting titled, ‘Meeting on Retrenchment of Rubber Tapper at Pertang Estate’ between the Pertang Estate management and Rubber Tappers dated 7 April 2016 attended by 35 rubber tappers and management personnel. ° Minutes of Meeting between the management team of Bukit Pilah Estate and their external stakeholders which comprised representatives from the NUPW and the school, village heads and a contractor was held on 3 May 2016. ° Minutes of Meeting between management team of Kok Foh Mill on 4 March 2016 with contractors and lab supervisor. Minutes of Meeting between the management team of Bukit Pilah Estate and their external stakeholders which comprised representatives from the NUPW and the school, village heads and a contractor was held on 3 May 2016. ° Minutes of Meeting between the management team of Kok Foh Estate and representatives from the NUPW and All Malayan Estate States Union (AMESU) was held on 9 April 2014. Another meeting on 4 March 2016 was also held between the management team and contractors as well as a lab supervisor. ° Minutes of Meeting titled, ‘Mesyuarat Bersama Pihak Berkepentingan Di Sekitar Kawasan Ladang Pertang’ between the Management of Pertang Estate with External Stakeholders dated 28 April 2016 held at Pertang Estate a to discuss general stakeholder concerns pertaining to SOU 16 operations (attended by 16 stakeholder representatives, complete with attendance sheet). ° Minutes of Meeting of management of Muar River Estate on 24 July 2015 with smallholders. The minutes however did not indicate the number of attendees at the meeting. It was also observed that there has been no further meeting held between Muar River Estate and its stakeholders since then. There ought to be more regular meetings between the estate and its stakeholders.

Stakeholder List for Sg. Gemas Estate is incomplete: No DOE, address and contact number for Indian High Commission and Nepal High Commission are wrong.This was raised as a negative observation.

All estates maintain a list of stakeholders which include government bodies, vendors, and contractors, local community heads, nearby police stations, schools, and hospitals.

The estates maintain a map of surrounding stakeholders, for example: ° At Kok Foh estate, stakeholdeer map listed smallholders, Geddes Estate (which is a village), Ba- haru Estate, Felda Palong, Malay Rompin estate (under Kuala Lumpur Kepong or KLK), Batang Jelai estate (KLK), and Asli Village (within Felda Palong area) as a smallholder area

At Muar River Estate: The last stakeholder meeting was held on 24 July 2015. Minutes of stakeholder meeting was maintained and sighted. The estate management informed that the issues raised have been addressed, there is however no record that this is so. This is noted as an observation.

Compliance status: Compliance with observations

See Observation no. 17 of Appendix 5

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

Findings: There is a procedure for handling complaints and grievances as per the Procedure for External Commu- nication under Standard Operation Manual version 01 dated 1 November 2008. The procedure outlines the process in receiving and addressing grievances from both internal and external stakeholders. In addition, there is a Whistleblowing Policy (GPA No. B5) dated 27 February 2014 which is essentially an internal mechanism for reporting, investigating and remedying any wrongdoing, as defined in Clause 4.3 of the same policy in order to ensure that stakeholders are “able to raise genuine concerns in good faith without fear of reprisals or retaliation.”

There are several methods whereby a grievance can be channeled to the relevant authority at the estates and mill. Among the methods to channel complaints is via the morning muster/roll call, via respective supervisors (mandores), direct to the manager, in a complaints box located at the entrance to each estate/mill office or a complaints book which is filled by workers to report about their housing/work conditions. In addition, at the management level, there are periodical health and safety meetings, meetings between local union leaders and the management as well as gender committee meetings which are held in all estates and mill.

The audit team has checked the complaints book mentioned above and confirms that the system resolves disputes in an effective, timely and appropriate manner as the system is open to all internal stakeholders, i.e. all workers (local and foreign), staff, contractors, suppliers and smallholders.

Several Nepalese workers interviewed at Muar River estate reported that in case of any complaints/problems with housing the estate management responds quickly to rectify the issue. No issues with the estate management were reported by the workers, and workers informed that water quality, pay and other conditions were good. This was noted as a positive observation. However, it was found at Bukit Pilah estate that complaints from workers have not been resolved in an effective, time and appropriate manner, i.e.: 1) Water being sourced from the water catchment is murky and of very poor quality. While clean water is being supplied once every 2 days from JBA, workers interviewed informed that this is only sufficient for drinking and cooking but not sufficient for showering and cleaning. Workers informed that this issue has been ongoing for up to a year and made several complaints to management. It is noted that the estate has recently gotten approval to install water tubes to provide an improved water supply, however planned completion of installation is only after July 2016, with no additional alternative clean water sources provided for the workers in the meantime 2) The toilet at worker’s house no. 146 is badly damaged for about a month, unable to be used and pro- duces a bad smell. The worker living in this house has complained about the toilet but no repairs have been done. 3) Fire extinguisher at Muar River estate linesite house no. 7 was not at appropriate pressure. Fire extinguisher was observed to be missing at least 2 other houses. This is noted as an observation. Although the estate has a complaints book, some complaints are not adequately captured and followed up with, as workers interviewed also informed that they are not aware who is the appropriate person to lodge complaints to and they have made complaints to their mandore, the office clerks and other personnel but no follow up was done. There was an issue of Muar River estate allowing cow owners to let in cows into the estate and it was confirmed from interviews with a cow owner that the issues has been resolved since last year. However, documentation of the process by which the cow encroachment issue at Muar River estate involving 700 cows belonging to 10 owners was addressed, and its outcome was not available. However, this is noted as an observation.

Compliance status: Non-compliance

Non-conformance no. RSPO00682 It was found at Bukit Pilah estate that complaints from workers have not been resolved in an effective, timely and appropriate manner, i.e.: 1) Water being sourced from the water catchment is murky and of very poor quality. While clean water is

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being supplied once every 2 days from JBA, workers interviewed informed that this is only sufficient for drinking and cooking but not sufficient for showering and cleaning. Workers informed that this issue has been ongoing for up to a year and made several complaints to management. It is noted that the estate has recently gotten approval to install water tubes to provide an improved water supply, however planned completion of installation is only after July 2016, with no additional alternative clean water sources provided for the workers in the meantime 2) The toilet at worker’s house no. 146 is badly damaged for about a month, unable to be used and pro- duces a bad smell. The worker living in this house has complained about the toilet but no repairs have been done. 3) Although the estate has a complaints book, some complaints are not adequately captured and followed up with, as workers interviewed also informed that they are not aware who is the appropriate person to lodge complaints to and they have made complaints to their mandore, the office clerks and other personnel but no follow up was done. See also Observation no. 18 of Appendix 5

Criterion 6.4: Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express thei r views through their own representative institutions.

Findings: There is a document titled, “Procedures For Handling Social Issues (Appendix 5, Issue 1) dated 1 No- vember 2008” which is a general guideline to handle social issues, including issues which necessitate the identification of lawful and legitimate persons or individuals who are entitled to compensation.

There are Procedures for Handling Boundary Disputes and Procedures for Handling Squatters Disputes in the form of flowcharts which outline in very general terms, the process of settling disputes pertaining to land for local communities and squatters.

There are no land claims which necessitate compensation to date at SOU 16.

Compliance status: Full compliance

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

Findings: The audit team observed that there are employment contracts for local and most foreign workers and staff at SOU 16. For example, contract sighted for local worker, i.e. workshop assistant dated 1 February 2014 stating salary, annual salary increment in line with MAPA/AMESU, probationary period (6 months), confirmation of probation, transfer, transport allowance, electricity, other conditions of service with reference to MAPA/AMESU Collective Agreement 2010, working hours and Job specification.

There is also evidence to show that the migrant workers are legalized, i.e. through random checks on migrant workers’ passports (work permits). There are also pay slips for each employee. Workers’ pay slips are based on the check-roll which is filled in by the respective supervisors of the workers (local and foreign) whereas staff have a fixed monthly salary, the amount is stated in the employment contract. Work- ers work eight hours a day for 6 days a week. The audit team confirms that workers do not work on public holidays and week off days and that the overtime working hours and payments are generally in accordance with the Employment Act 1955. Foreign workers are insured under the Workmen’s Compensation Act 1952 (Act 273) whereas local workers and staff have social security (SOCSO) deductions, in accordance with the Employees Social Security Act 1969 (Amended 2003). The audit team also confirms that the local workers and staff and the employer also contribute to the Employees Provident Fund (EPF), in accordance with the Employees Provident Fund Act 1951 (Act 272).

At Bukit Pilah estate, it was informed by some Indonesian workers that they had paid for their own flights, however they had heard of some Javanese workers whose flights were borne by the company. However due to lack of time, it was not confirmed by the audit team whether the contracts of the workers stated the

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- Bukit Pilah estate, Kok Foh mill: Some of the recently recruited workers complained that they do not understand the pay slip, but those who have worked longer, do. Workers at Kok Foh mill complained about the quality of the treated water supplied to the line site, where the water is not filtered and therefore slightly brownish in colour, and has an unpleasant odour - At least two workers complained that their salaries were deducted to pay for outstanding electricity bills for the unit where they had lived with other workers who have since left the country. The amount deducted for one worker was of approximately RM600 at rate of RM50 per month until completion of the sum. Whilst it is true that any outstanding bills have to be settled, the worker ought to have been made to pay only his portion of the outstanding sum, and not those of his housemates who have since left the country. - At St. Helier estate, the passport safekeeping consent for foreign workers not signed by the management.E.g Ehsan Sahdan Mahmud (B1078489) from Indonesia and Nepalese Bir Bahadur Shrestha (071212012) & other Nepalese workers. While at Sg. Senarut Estate, the passport safekeeping form for foreign workers are not signed by management. E.g Guddu (M7961592) from India. However, it was noted that this was due to change in the passport consent form format and there was a previous version which was signed by the management. - Workers at Bukit Pilah estate informed that there is a shop in the linesite but the price of goods at the shop fluctuates, e.g. price of phone top up cards increases by 10%. Hence these points are noted as an observations.

However, the following non-conformities (collectively raised as a Major non-conformity) were observed:

1. Compliance with MAPA/NUPW Agreement: St. Helier, Sg. Gemas and Sg. Senarut: The management only began deducting RM3 from the employees’ salaries several months later (some have not backdated until August 2015) even though there is a MAPA/NUPW Field and Other General Employees Fringe Benefits Agreement, 2015 circular dated 4 August 2015 which states that the managers should discontinue the existing practice of deducting RM3/per month for each employee concerned towards the NUPW/AIA Personal Accident Group Scheme. 2. Contradiction between contract and practice or MAPA/NUPW Agreement: a. Clause 12: (Elaun Transportasi) of the employment contract for foreign workers states that airfare from the country of origin will be fully borne by the company. However, interviews with foreign workers from Indonesia, India, Nepal and Bangladesh at St.Helier, Sg.Gemas, Sg. Senarut and Pertang Estates, Kok Foh Mill and Nepalese workers at Muar River estate reveals that the workers paid their agents for their airfare. b. There is a difference between Clause 24.1 (Termination Clause) of the foreign workers’ contracts (April 2013 version) and Articles 19 and 20 of the MAPA/NUPW Collective Agreement 2015 pertaining to the critical and terminal illnesses, e.g. leprosy, TB, epilepsy, cancer, HIV and other terminal illnesses. Ar- ticle 20 of the MAPA/NUPW Agreement states that the employee is eligible for sick leave for such prolonged illnesses whereas the company’s contract requires termination of employment. In addition, Article 19 (a) (ii) also requires hospitalization leave. c. There is no evidence of payment of RM 200 to foreign workers’ families (Monetary Gift for Departure for Employment) (Clause 15 of the employment contract in Malay, April 2013 version) . 3. Third Party Contract Workers There is no mechanism on the part of the estate management to monitor compliance of contractors pertaining to the Labour Laws and other relevant legislation related to labour. 4. Validity of the contracts/ consent letters/other documents): ° All estates: There is no evidence of extension of employment contracts for foreign workers who have worked for more than 3 years. ° St.Helier Estate: Signatures of foreign workers’ contracts not standardized. E.g. Signature in contract and passport safekeeping form for foreign worker (Indian) Surya Trinadh Polisetti (Passport No: G 1926137) are different. The signature on the contract does not correspond to the passport. The same was observed for Devraj Titung (Nepali Passport: 104565).

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° Sg. Senarut Estate: Contracts for Ajay (M8495559) dated 11 August 2015, Guddu (M7961592) dated 11 August 2015, Rajbhar Jitendra (M1376945) dated 11 August 2015 not signed management. ° Pertang Estate: The signature of foreign workers on the contracts for foreign workers, their passport safekeeping form (surat penyerahan passport) and their passports are not the same. Examples sighted for Indonesian worker Ajah (Passport No: AT499310); Bangladeshi worker, Md. Azad (Passport No: AE4806828).

° Muar River estate:

i) One file containing contracts of foreign workers which are signed by both parties, but does not contain job description and duration of contract.

ii) Sighted another file containing contacts of employment of foreign workers which are not signed by the workers, and has no details of job description and place of employment, nor commencement and expiry dates. The document only contained the signature of company official.

iii) Sighted six contracts of employment of Nepali workers where the parties‘signatures were not placed in the appropriate places. E.g. The Nepali workers signed at the place which was meant for the company official, and the company official signed as a witness.

iv) Working contracts for 3 Nepalese workers at Muar River Estate, i.e. Hari Bahadur Sarki, Gorakh Bahadur, Dinesh Bk were not signed by a witness.

v) Workers whose contracts have expired more than five years ago did not sign any contract renewals. Workers only verbally informed the Assistant Manager of their intention to continue working, and no further contract was signed to formalise this arrangement

° Sg. Gemas estate: No contracts of employment for foreign workers who have worked more than 3yrs (e.g. Indian worker-Arvind Varma). Same was observed for some foreign workers at Sg.Senarut Estate.

5. Termination of Employment: Pertang estate: There was no element of informed consent in the termination of employment of 34 local rubber tappers. Workers not informed about the actual compensation details prior to signing the agreement. Management has not given the exact compensation details and date of compensation payment.

This was collectivey raised as Non-conformance no. RSPO00683.

The management of Pertang Estate began reimbursing RM3 from the employees’ salaries immediately after the MAPA/NUPW circular was received in August 2015. Also, the management of Sg. Gemas Estates updates the contracts for new foreign workers according to the latest template. In addition, all employment contracts, consent forms and agreements are signed, in order and well kept. These were raised as positive observations.

The company provides adequate housing, water (from the Johor Water Company (‘Syarikat Air Johor’) and electricity (from Tenaga Nasional Berhad, TNB) for its workers, in accordance with Workers’ Minimum Standard of Housing and Amenities Act 1990 (Act 446). Foreign workers are housed according to their ethnicity and religious beliefs and have adequate beds, clean running water from taps, kitchen and toilet facility. Workers are also provided with basic facilities such as bedsheet, pillows, pillowcases etc. for their living convenience. Site visit by the audit team to the mill and estate linesite from 23-26 May 2016 confirmed that the housing is generally well-maintained. Interviews with workers at the linesite also reveal that the housing facility is adequate and that communal clean-ups are conducted periodically. There is regular solid waste disposal system and routine maintenance for the upkeep of the linesite/housing. There is evidence of line-site monitoring by Medical Assistant sighted at Sg. Gemas Estate dated 4 May 2016 titled, ‘Housing Complex/Nest/Community Hall Inspections’, In addition, there is also a V.M.O’s book for Sg. Senarut Estate which shows visits to staff bungalow, workers’ complex (on 11 May 2016) and creche visit (on 11 May 2016). Workers generally mentioned that the housing conditions in the company are satisfactory, housing maintenance/repairs are done in a timely manner. This was raised as a positive observation.

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Interviews with foreign workers at all the estates reveal that the management provides and monitors workers’ access to adequate, sufficient and affordable food. Several Nepalese workers interviewed at Muar River estate informed that they paid for their own flight ticket through the agent when starting work for the company (a lump sum of 100,000lak including other expenses), however it was stated in their working contracts that flights would be borne by the company. At Bukit Pilah estate, it was informed by some Indonesian workers that they also paid for their own flights, however they had heard of some Javanese workers whose flights were borne by the company. However due to lack of time, it was not confirmed by the audit team whether the contracts of the workers stated the flights were borne by the company or not. The housing at the mill/ estate line-site which is combined for workers of Layang estate and Kok Foh POM was visited and found that the houses were in good condition. The housing was individual brick houses with 2 rooms each, as well as a bathroom and kitchen area. An Indonesian worker interviewed confirmed that basic furniture, including a queen size mattress, cupboards, water tanks, cooking facilities and food storage cupboard was provided free by the company. Found at Bukit Pilah estate housing at Kelpin division that the water being sourced from the nearby water catchment used by workers for cleaning is very murky. There is evidence of follow up action taken by the company to provide a clean water source as described under CR4.4, however non-compliance was raised under CR6.3.1 due to slow response of the company to address the workers’s complaints regarding the water quality as well as a damaged toilet. In addition, visit to the line site revealed that one house had a broken window frame which has not been fixed or replaced. Worker raised his concern that this exposed his belongings to thefts/burglaries. This was raised as Non-conformance no. RSPO00684.

There is one shop available at the Kok Foh mill/Layang estate (Kok Foh division) line-site. The Indonesian worker interviewed at the line-site informed that the prices of the food at the shop were reasonable. He also informed that the estate provides transport twice a month to the nearby town to buy food and other groceries. In addition, the workers have an option to make an order to a shop owner at the town and the shop owner will deliver the goods ordered to the workers. Workers at Bukit Pilah estate informed that there is a shop in the line-site but the price of goods at the shop fluctuates, e.g. price of phone top up cards increases by RM10. This was noted as an observation. However, the estate provides transport for the workers to purchase items from a nearby area when the workers receive their pay. Workers at Muar River estate informed that there is no shop in their linesite, however, there is a shop owner at a nearby town that brings the workers to their shop to order goods and he will brings the items ordered to the linesite. The workers are happy with this arrangement and find the prices of the goods at this shop reasonable.

Compliance status: Non-compliance

Non-conformance no. RSPO00683 1. Compliance with MAPA/NUPW Agreement: St. Helier, Sg. Gemas and Sg. Senarut: The management only began deducting RM3 from the employees’ salaries several months later (some have not backdated until August 2015) even though there is a MAPA/NUPW Field and Other General Employees Fringe Benefits Agreement, 2015 circular dated 4 Au- gust 2015 which states that the managers should discontinue the existing practice of deducting RM3/per month for each employee concerned towards the NUPW/AIA Personal Accident Group Scheme.

2. Contradiction between contract and practice or MAPA/NUPW Agreement: a. Clause 12: (Elaun Transportasi) of the employment contract for foreign workers states that airfare from the country of origin will be fully borne by the company. However, interviews with foreign workers from In- donesia, India, Nepal and Bangladesh at St.Helier, Sg.Gemas, Sg. Senarut and Pertang Estates, Kok Foh Mill and Nepalese workers at Muar River estate reveals that the workers paid their agents for their airfare. b. There is a difference between Clause 24.1 (Termination Clause) of the foreign workers’ contracts (April 2013 version) and Articles 19 and 20 of the MAPA/NUPW Collective Agreement 2015 pertaining to the critical and terminal illnesses, e.g. leprosy, TB, epilepsy, cancer, HIV and other terminal illnesses. Article 20 of the MAPA/NUPW Agreement states that the employee is eligible for sick leave for such prolonged

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Page 64 of 132 illnesses whereas the company’s contract requires termination of employment. In addition, Article 19 (a) (ii) also requires hospitalization leave. c. There is no evidence of payment of RM 200 to foreign workers’ families (Monetary Gift for Departure for Employment) (Clause 15 of the employment contract in Malay, April 2013 version).

3. Third Party Contract Workers There is no mechanism on the part of the estate management to monitor compliance of contractors pertaining to the Labour Laws and other relevant legislation related to labour.

4. Validity of the contracts/ consent letters/other documents): ° All estates: There is no evidence of extension of employment contracts for foreign workers who have worked for more than 3 years. ° St.Helier Estate: Signatures of foreign workers’ contracts not standardised. E.g. Signature in contract and passport safekeeping form for foreign worker (Indian) Surya Trinadh Polisetti (Passport No: G 1926137) are different. The signature on the contract does not correspond to the passport. The same was observed for Devraj Titung (Nepali Passport: 104565). ° Sg. Senarut Estate: Contracts for Ajay (M8495559) dated 11 August 2015, Guddu (M7961592) dated 11 August 2015, Rajbhar Jitendra (M1376945) dated 11 August 2015 not signed management. ° Pertang Estate: The signature of foreign workers on the contracts for foreign workers, their passport safekeeping form (surat penyerahan passport) and their passports are not the same. Examples sighted for Indonesian worker Ajah (Passport No: AT499310); Bangladeshi worker, Md. Azad (Passport No: AE4806828). ° Muar River estate: i) One file containing contracts of foreign workers which are signed by both parties, but does not contain job description and duration of contract. ii) Sighted another file containing contacts of employment of foreign workers which are not signed by the workers, and has no details of job description and place of employment, nor commencement and expiry dates. The document only contained the signature of company official. iii) Sighted six contracts of employment of Nepali workers where the parties‘ signatures were not placed in the appropriate places. E.g. The Nepali workers signed at the place which was meant for the company official, and the company official signed as a witness. iv) Working contracts for 3 Nepalese workers at Muar River Estate, i.e. Hari Bahadur Sarki, Gorakh Bahadur, Dinesh Bk were not signed by a witness. v) Workers whose contracts have expired, some more than five years ago, did not sign any contract renewals. Workers only verbally informed the Assistant Manager of their intention to continue working, and no further contract was signed to formalise this arrangement ° Sg. Gemas estate: No contracts of employment for foreign workers who have worked more than 3yrs (e.g. Indian worker-Arvind Varma). Same was observed for some foreign workers at Sg.Senarut Estate.

Non-conformance no. RSPO00684 Bukit Pilah estate: Visit to the line site revealed that one house had a broken window frame which has not been fixed or replaced. Worker raised his concern that this exposed his belongings to thefts/burglaries. St. Helier Estate: a) The refuse in the housing site (Block D) are not disposed of satisfactoriliy. (see Workers’ MInimum Housing and Amenities Act 1990 (Section 23 (i)(c)). b) Some of the perimeter drains around the workers’ linesite (Block D) are blocked. (see Workers’ MIn- imum Housing and Amenities Act 1990 (Section 23 (i)(b)).

See also Observations no. 19, 20, 21 and 22 of Appendix 5

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

Findings:

There is published statement in both English and Bahasa Malaysia, i.e. the Social Policy dated January 2015 which states that “The company shall respect the rights of all personnel to form and join trade unions of their choice and to bargain collectively.” The audit team confirms that the company abides by this policy and that staff are unionised under AMESU while local and foreign workers are members of the NUPW, if they choose to. Nonetheless, the management of Pertang Estate should ensure that all foreign workers are aware of their rights to join the union. At present, none of the foreign workers at the estate are unionized. This was raised as a negative observation. There is evidence of documented minutes of meetings with the local NUPW workers’ union representatives in all the estates and mill in SOU 16. Workers interviewed at Bukit Pilah estate Kelpin division informed that only a few of them are aware of the worker’s unions (NUPW & AMESU), while others were not. They had also not received any invitation to join the unions. This was noted as an observation.

At Kok Foh estate, sighted record of Meeting with Trade Union on 9 April 2016, and action plans and person in charge were identified to address the concerns, but no deadlines were given for implementation. This was also noted as an observation.

Compliance status: Compliance with Observations

See Observation no. 23 of Appendix 5

Criterion 6.7: Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions.

Findings:

There is documented evidence that minimum age requirement is met. Random checks of staff and local workers’ employment contracts and personal details as well as passports of foreign workers at all the estates and mill demonstrate compliance to the minimum age requirement of Malaysia, i.e. 15 years. Moreo- ver, the company has a dedicated Child Protection Policy and two other policies dated January 2015, namely the Social Policy and Social and Humanity Management Policy which states that the company does not condone child labour and to ensure a child-safe environment.

Compliance status: Full Compliance

Criterion 6.8: Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited.

Findings: The Social Policy and Social and Humanity Management policies dated January 2015 in both English and Bahasa Malaysia were sighted at all the estates and mill and adequately displayed on the company notice boards and meeting rooms. The Social Policy clearly specify that “All employees should be treated fairly in terms of recruitment, progression, terms and conditions of work and representation regardless of race, caste, nationality, gender, physique, sexual orientation, union membership, political view, religion and /or age”. The Social and Humanity Management policy states in less specific terms but equally expresses the company’s commitment to “Respect and give fair treatment in accordance with the rights of employees for the mutual benefits of the company and the employees”.

Interviews with foreign workers at all estates and the mill confirm that these workers are not discriminated

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Page 66 of 132 against. Foreign workers receive the same employment benefits such as pay, holiday entitlement and working hours as local workers. However, there is an apparent element of discrimination against workers, as workers interviewed at Bukit Pilah estate Kelpin division informed that while the quality of their water source used for cleaning and showering was poor, adequate clean water supply was being provided to the estate staff. This is noted as an observation.

Interviews with migrant workers at all estates and the mill confirm that migrant workers are recruited based on their skills (especially for harvesters) and medical fitness. The audit team confirms that the recruitment and selection of foreign plantation workers are based on passing the medical fitness by the country of origin (as revealed through interviews with foreign workers at all estates and mills) and later in Malaysia by FOMEMA (evident from the medical records of foreign workers which are kept at the estates and mill. An Indonesian worker at Layang estate who has been working at the estate for 7 years informed that he was engaged as a mandore, which is evidence that the company provides promotion opportunities to foreign workers although this is limited to mandore level.

Compliance status: Compliance with observations

See Observation no. 24 of Appendix 5

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

Findings:

There is a dedicated Gender Policy dated January 2015 designed to protect all employees from sexual harassment. The policy showcases the company’s commitment to providing a workplace that is free from sexual harassment and all other forms of violence against women, workers and community. The policy also commits to providing sufficient training and development for employees to increase their awareness and enhance their skills in line with this policy. The policy is also concerned about providing and creating opportunities for the development of women’s leadership at all levels and to ensure effective participation of women in decision-making.

In line with the requirements of the RSPO principles and criteria and the Gender Policy, the company has established a gender committee at each estate and mill comprising only female staff and workers. Accord- ing to the Gender Policy, the Gender Committee’s function is to implement and monitor the policy. Gender committee representatives from each estate and the mill were interviewed and appointment letters at each estate and mill which confirms that the gender committees are actively functioning. The gender committee organisational structure was also sighted at all estates and the mill and is adequately displayed. The gender committee meets on a quarterly basis. Minutes of meeting of the gender committee were sighted at the mill and estate. The following are documented evidence of the gender committees’ activities at the mill and estate : ° St. Helier Estate: Minutes of Gender Committee Meeting dated 18 April 2016 titled, ‘Minit Mesyuarat Jawatankuasa Persatuan Wanita’ attended by 13 members of the Gender Committee (complete with attendance list). ° Ladang Sg. Gemas: Minutes of Gender Committee Meeting dated 20 January 2016 attended by 9 members of the Gender Committee (complete with attendance list). ° Sg.Senarut Estate: Sexual Harassment Talk held on 12 February 2015 by PSQM staff Cik Eza Nurain binti Abdullah and Pn. Nur Nazifah binti Ahmad Roslan attended by 17 members of the Gender committee. ° Pertang Estate: Minutes of Gender Committee Meeting dated 20 May 2016 attended by 6 members of the gender committee (complete with attendance list).

There is a Gender Committee Handbook (First edition, 2014) prepared by the PSQM Department. This handbook, which is in English was designed to “provide guidance to Managers, Gender Committees and other relevant parties to the specific components of the Gender Policy: The handbook contains the following elements: ° Implementation framework (background understanding of the Gender Policy)

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° Detailed and specific complaints and grievance procedures to address gender-based issues; ° Guidelines for the setting up of Gender Committees and roles and responsibilities; ° Guidelines on the roles and responsibilities of the Management in supporting the initiatives and activities of the Gender Committee. ° Guidelines on monitoring and reporting for the evaluation of the effectiveness of the Policy’s implementation.

The Gender Policy also specifies the need for the policy to be understood by all employees, including external contractors and/or other relevant stakeholders.

There is no documented evidence of communication of the policy to all levels of the workforce. E.g. interviews with workers and staff at St. Helier estate, Sg. Senarut estate, Sg. Gemas estate and Pertang estate reveal that the workers do not understand what reproductive rights constitute.

1) The gender committee members lack awareness on RSPO requirement for sexual harassment policy, e.g. that the policies need to be communicated to all levels of the workforce 2) There is no activities planned for education and empowerment of women pertaining to sexual harassment issues or monitoring conducted for effectiveness of implementation of the sexual harassment policy, with the exception of St. Helier estate whereby a medical screening for 20 female workers and staff above 40yrs was organised with PERKESO (Program Saringan Kesihatan PERKESO (Mamogram) on site (Dr.from Baiduri Clinic) dated 8 March 2016. 3) There has neither been any refresher training for staff who attended training on sexual harassment nor are there new trainings to gender committee members. Staff who were trained previously have either left the service or transferred to other estates.

These were collectively raised as Non-conformance no. RSPO00685.

In addition, there is no clear policy to protect the reproductive rights of women. There is a phrase in the Social Policy which states that “the company is committed to ‘develop and apply a policy to ..... and to protect their reproductive rights.” (HQ) however no such policy was sighted. As there is no reproductive rights policy yet, there is no documented evidence of communication of the policy to all levels of the workforce. E.g. interviews with workers and staff at the reveal that the workers and staff do not understand what reproductive rights constitute. There are also no activities planned at Sg. Gemas, Pertang, Sg. Senarut for education and empowerment of women pertaining to reproductives right or monitoring conducted for effectiveness of such education. The gender committee members lack awareness on RSPO requirement for reproductive rights policy, e.g. that the policies need to be communicated to all levels of the workforce. These were collectively raised as Non-conformance no. RSPO00686.

The Gender Policy specifies the need for a complaints and grievance procedure and mechanism, acceptable to all parties to address gender-based issues. There are several separate documents which outline the procedures for resolving grievances pertaining to sexual harassment.

The Gender Committee Handbook (First Edition) in English details out specific complaints and grievance procedures to address gender-based issues. There is also an abbreviated specific procedure (in the form of a flowchart) in both English sighted at all estates and mill titled, “Sexual Harassment Procedure” which outlines the basic framework for handling of sexual harassment complaints. The flowchart showcases a systematic disciplinary procedure to be adopted when handling such complaints, culminating in penalty for the offender. There is also a written guideline in Bahasa Malaysia titled, “ Tatacara Aduan Gangguan Seksual ” which specifies the framework for handling of sexual harassment complaints and the need to maintain the confidentiality of the complainant. There is a complaints form to record any incidence of sexual harassment/domestic violence or gender-based issues.

Nonetheless, workers at Sg. Senarut and during the larger stakeholder consultation expressed their dissatisfaction with the grievance mechanism for sexual harassment in the form of a complaints form which they assert deters employees from voicing their grievances because they are concerned that their anonymity would not be respected and protected. This was raised as Non-conformance no. RSPO00687.

An Indian female worker who has retired at Bukit Pilah estate and who is living within her children could not recall whether she had attended any briefing pertaining to sexual harassment but informed that she

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Compliance status: Non-compliance Non-conformance no. RSPO00685 1) The gender committee members lack awareness on RSPO requirement for sexual harassment policy, e.g. that the policies need to be communicated to all levels of the workforce 2) There is no activities planned for education and empowerment of women pertaining to sexual harassment issues or monitoring conducted for effectiveness of implementation of the sexual harassment policy. 3) There has neither been any refresher training for staff who attended training on sexual harassment nor are there new trainings to gender committee members. Staff who were trained previously have either left the service or transferred to other estates.

Non-conformance no. RSPO00686 1) There is no clear policy to protect the reproductive rights of women. There is a phrase in the Social Pol- icy which states that “the company is committed to ‘develop and apply a policy to ..... and to protect their reproductive rights.” (HQ) however no such policy was sighted. 2) As there is no reproductive rights policy yet, there is no documented evidence of communication of the policy to all levels of the workforce. E.g. interviews with workers and staff at the reveal that the workers and staff do not understand what reproductive rights constitute. 3) There is no activities planned at Sg. Gemas, Pertang, Sg. Senarut for education and empowerment of women pertaining to reproductives right or monitoring conducted for effectiveness of such education 4) The gender committee members lack awareness on RSPO requirement for reproductive rights policy, e.g. that the policies need to be communicated to all levels of the workforce

Non-conformance no. RSPO00687 Workers at Sg. Senarut and during the larger stakeholder consultation expressed their dissatisfaction with the grievance mechanism for sexual harassment in the form of a complaints form which they assert deters employees from voicing their grievances because they are concerned that their anonymity would not be respected and protected.

Criterion 6.10: Growers and mills deal fairly and transparently with smallholders and other local businesses.

Findings:

Kok Foh mill does not display current and past prices for FFB as the final price paid to their external FFB suppliers is not determined by the mill but by the Global Trading & Marketing (GTM) department of Sime Darby Plantation which is based in Kuala Lumpur. All payment of FFB delivered is from the GTM. The FFB pricing is as specified in the contract between the mill and the external supplier. Procedure for calcu- lating prices, and for grading, FFB is based on MPOB.

The mill maintains records of contract agreements with their FFB suppliers, as seen from sample contract agreement for Cheong Wing Chan estate dated 1 January 2015 and Eng Huat Latex Concentrate Sdn. Bhd. dated 6 November 2015. The agreement specifies terms pertaining to FFB delivery, transport, quality, origins, processing and pricing. Pricing of FFB is as specified in the Third Schedule of the agreement the pricing formula is stated and is calculated based on MPOB monthly average traded price of CPO for peninsular Malaysia, MPOB cesses and CPO transport cost, oil extraction rate (OER) awarded (maximum of 22% or mill actual), MPOB monthly average traded price of PK for Peninsular Malaysia, other charges or additional governmenmt cesses/taxes/levy, KER awarded (maximum of 5% or mill actual) and mill’s processing cost. Schedule of payment is also specified in the first schedule of the agreement. An interview with a contractor during the stakeholder consultation on 24 May 2016 at Kok Foh Estate revealed that there is a contractual agreement between the contractor and the company (all contracts and tenders are handled at the HQ level) and that the contracts are fair, legal and transparent. An interview with a general contractor on 24 May 2016 at Kok Foh Estate revealed that payments for services rendered are made in a timely manner.

The Senior Assistant of Cheong Wing Chan estate was invited for an interview and informed that the FFB pricing of Kok Foh mill is determined based on the MPOB price which they can check directly from the MPOB website to confirm the price, hence there is no issue on the transparency of pricing. Payment

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Page 69 of 132 made from the GTM is also made in a timely manner as per the agreement of the contract.

Compliance status: Full compliance

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

Findings:

The company as a Corporate Policy Statement dated January 2015 which demonstrates the company’s commitment to minimizing impact on the local environment. The policy states the company’s commitment to ‘making a conscious and concerted effort towards the conservation and protection of the environment, rehabilitation of forests, protection of wildlife and enhancement of the well-being of communities within and around our operations’. In addition, the company has a Social Policy dated January 2015 which outlines the company’s commitment ‘To identify through consultation, the potential social benefits and deter- mine how they might be enhanced for themutual benefits of the company and the local community’.

Some examples sighted for CSR are as below: ° St. Helier Estate: Proof. Bill and payment dated 9 August 2015 and payment dated 7 September 2015 amounting to RM13711.11 and Bill and payment dated 9 January 2016 and payment dated 15 February 2016 amounting to RM797.00 ° St. Helier Estate: Briefing on tapping operations and demonstration on the tapping processes for 18 students and 4 lecturers from St.Mary’s University in San Antonio, Texas on 14 March 2016. ° St. Helier Estate: Permission given by the management to an ice-cream vendor from neighbouring local community to sell ice-cream at the school within St. Helier estate (letter dated 18 March 2016) helps support local livelihoods. ° St. Helier Estate: Request from the Association of Devotees of Sri Sakthi Velan Temple in a letter dated 18 May 2016 titled, “ Subject: Cutting of Banana Tree Leaves ” requesting permission from the management to harvest banana leaves for the annual religious festival at the Sri Sakti Velan temple. The management approved this request. ° St. Helier Estate: Request from Sekolah Jenis Kebangsaan Tamil Ladang St. Helier in a letter dated 17 February 2016 (ref: Bil (1) SJKTLSH/700/6/2) requesting the estate to grant permission to use the football field. This request was granted. ° Sg. Gemas Estate: The estate provided police assistance and usage of the estate football premises for a cross-country race organised by SJK (T) Ladang Fortrose dated 26 January 2016 participated by 35 children (estimated expenditure incurred: RM300). ° Sg. Gemas Estate: The estate provided tractor assistance to the Kuil Sri Maha Mariamman temple for their annual temple festival on 1 May 2016 participated by 100 people (estimated expenditure incurred: RM250). ° Sg. Gemas Estate: The estate organised a football tournament in conjunction with the Labour Day celebration to foster good relationship between the management and estate employees on 1 May 2016 participated by 90 people (estimated expenditure incurred: RM680). ° Pertang Estate: Donation of RM1000 to local Hindu temple on 13 April 2016. ° Pertang Estate: Condolence token of RM2000 to Late Marimuthu A/L Krishnan (Tractor driver) on 20 March 2016. At Kok Foh estate, a CSR activity is only carried out with the workers. It would be ideal if CSR activities be extended also to external stakeholders. This is noted as an observation.

Compliance status: Compliance with observation

See Observation no. 25 of Appendix 5

Criterion 6.12: No forms of forced or trafficked labour are used.

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Findings:

There is no evidence of forced or trafficked labour at SOU 16 as the audit team randomly checked contracts for local and foreign workers and found that these employees had signed contractual agreements. Interviews with these workers at all estates and the mill confirm that workers enter into employment volun- tarily and freely and can terminate their contracts giving a notice as per their agreement. An interview with the NUPW representative at the mill and during the stakeholder consultation on 24 May 2016 did not reveal any outstanding issues pertaining to forced or trafficked labour. The contracts for foreign workers and the MAPA/NUPW Collective Agreement clearly stipulate terms and conditions of termination of agreement. Senior staff and executive level employees are free to resign by giving one month’s notice in writing or forfeit one month’s salary in lieu of notice. However, at Bukit Pilah estate, a worker interviewed that they were informed by their agent in their home country that they would work in an oil palm mill, and not in the estate. Based on this assurance, he agreed to come to work in Malaysia. However, when he arrived, he found out that he had to work in the estate. Although this happened through no fault of the company, improvements could be made by engaging with the agents, emphasizing the need to give accurate picture, and be present during the briefing in the workers’ home country. This was noted as an observation.

There is also evidence of documented consent given by foreign workers when their passports were surrendered to the company for safekeeping, where the workers signed or affixed their thumbprint onto the declaration document that they had willingly and officially surrendered his passport to the company for safekeeping. However, an observation was made that this Declaration contained a document known as Safekeeping of Passport Form which was printed in English language – a language which the workers are not conversant in. There was also no evidence that the contents have been explained to them in the language which they understood. However, the workers interviewed that they were allowed to request to take back their passports to return to their home countries for holidays and upon termination of contract, or for official matters.

Workers whose contracts have expired also confirmed that despite there being no contract renewals, they chose to remain in the company’s employment out of their own free will. The workers also confirmed that should they choose to leave the company earlier than the contract term, they are free to do so. Docu- ments have also been sighted at the mill where one worker whose request to be repatriated after one year of service and prior to the expiry of his work permit, was approved and his passport returned to him for his travel back to his home country.

An interview with the NUPW local union at the mill and interviews with foreign workers at each estate and the mill did not reveal any elements of contract substitution. There is no documented evidence of a special labour policy which should include: ° No contract substitution; ° Post-arrival orientation programme to focus especially on language, safety, labour laws, cultural practices etc. This was raised as Non-conformance no. RSPO00688.

° Compliance status: Non-compliance

Non-conformance no. RSPO00688 There is no documented evidence of a special labour policy which should include: ° No contract substitution; ° Post-arrival orientation programme to focus especially on language, safety, labour laws, cultural practices etc.

See also Observation no. 26 of Appendix 5

Criterion 6.13: Growers and millers respect human rights.

Findings: The company has a Social and Humanity Management Policy dated January 2015 which states the com-

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Page 71 of 132 pany’s commitment to developing business ‘with a sense of humanity, while ensuring that they are socially beneficial and do not infringe basic human rights’. The said policy also recognizes the rights of employees, children, indigenous peoples, local communities and other stakeholders, taking into account gender concerns.

The company also as a Social Policy dated January 2015 which specifically outlines the company’s practice of non-discrimination of employees (see 6.8.1).

These policies, in both English and Bahasa Malaysia were sighted at all the estates and mill and adequately displayed on the company notice boards and meeting rooms.

Interviews with workers at the estates and mill confirm that the children of school-going age at the estate, i.e. children of staff and workers have access to pre-school, primary school and secondary school. The company’s human rights policy is embedded in their “Social and Humanity Management Policy” signed by the Managing Director dated January 2015. The policy is available on the company’s website.

Compliance status: Full Compliance

Principle 7: Responsible development of new plantings

Findings: There is no evidence of new plantings being carried out at any of the estates. All estates are long existing estates which are undergoing 1 st or 2 nd round of replanting. Hence this requirement is not applicable.

Compliance status: Not applicable

Criterion 8.1: Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations.

Findings:

The company has action plans for continual improvement as below:

Reduction in use of pesticides: Prophylactic use of pesticides is avoided and generally only applied upon census results where attacks of pests are found to be high. The exception is rat baiting campaigns done twice a year in accordance with the company’s SOP due to consistent issues with rat attacks. There was not found any evidence of usage of chemicals of class 1A or 1B, or paraquat

Waste reduction: At Sungai Gemas the waste management plan was established and available approved by Estate Manager as sampled. Also available as sampled at Kok Foh Mill, Waste Management Action Plan for FY 2015/2016 available approved by Mill Manager 7 July 2015. Prepared by Quality Assurance Supervisor. Waste management plans were als sighted at Bukit Pilah and Muar River estate. Recycling bins is sighted at the Kok Foh Estate, Bukit Pilah, Sg Senarut and Muar River Estate however, the segregation for recycling organic and inorganic waste is not properly monitored at the estates. See CR5.3 for more information.

Pollution and greenhouse gas (GHG) emissions: The mill has a pollution & prevention plan for FY2015/16 which identifies environmental issues, mitigating measures, responsible persons and status. The environmental issues identified include BOD level at final discharge pond (mitigated by regular monitoring, analysis and desludging), leakages and spillages at the lubricant and chemical store (mitigated by regular cleaning and with spillage kit), measurement of dust particulate concentration (stack sampling analysis done twice a year), CPO tank level indicator & alarm system (to be installed). Sime Darby Plantation has also established a Renewable Energy Implementation Plan, which is to establish a biogas plant at all mills in 11 phases from FY 2013/14 to FY2023/24. The plan for Kok Foh Mill is to establish a biogas plant in Phase 4, i.e. FY 2016/17. The status of implementation of this project will checked during the next surveillance audit. Pollution Prevention Plan FY 2015/2016 for Sg Senarut Estate has been documented dated 1 January 2016 prepared by the Assistant Manager and approved by the Manager. The prevention plan

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Page 72 of 132 that been identified are leakage of pesticides, during mixing, spillage at diesel storage area, schedule waste, and open burning at line-site. Line-site monitoring has been frequently monitored to check on open burning with latest inspection was done on 11 May 2016.

Social impacts: Continuous Improvement Plan social aspects for Sungai Gemas Estate FY 2015/2016: to provide job opportunities for the local community, road maintenance etc. sighted at Sungai Gemas Estate, which is a complete time-bound plan with responsibilities for implementation. Continuous Improvement Plan social aspects for Sungai Senarut Estate FY 2015/2016: citing planned areas for improvement such as improving the productivity and safety of workers, implementation of the SIME (Spot, Intervene, Modify and Execute) card implementation, Sime Darby Digital Supervision (SDDS) etc. sighted at Sungai Senarut Estate, which is a complete time-bound plan with responsibilities for implementation. Continuous Im- provement Plan social aspects for Pertang Estate FY 2015/2016: to provide job opportunities sighted at Pertang Estate, which is a complete time-bound plan with responsibilities for implementation.

Following the Social Impact Assessment (SIA) that was carried out by the Sustainable Strategy Unit of PSQM Department from 1 – 13 February 2016, and the feedback received, there is evidence that Action Plans have been drawn up to incorporate continual social impact improvements. Among the Action Plans sighted include that from Kok Foh Mill where all workers requested management to organise more social activities especially those related to sports and recreation. The management had organised a football tournament, Quran reciting activities and a barbeque to create a more balanced work-life environment. Workers had also requested that a designated place at the line site be allocated to enable to them to plant vegetables, so they could keep their expenses down. Management has already allocated this plot of land for this purpose.

At a stakeholder meeting dated 4 March 2016, a request was made by an external stakeholder for the mill to make a weight comparison at the weighing machine in ‘Jomalina’, because it was claimed by the stakeholder that there is often a variance in the gross weight reading. This was carried out by the mill in April 2016.

Local community surrounding the Bukit Pilah Estate requested for more frequent stakeholder engagements to be carried out. Management of the estate responded by planning two stakeholder meetings per year, and the first one was concluded on 3 May 2016.

At a meeting with smallholders near Muar River Estate on 24 July 2015, a stakeholder named Ah Kow informed that there has been a spate of thefts in his rubber smallholding. Management of Muar River Estate responded that the ins and outs to the estate would monitored with immediate effect.

Encourage optimising the yield of the supply base: Activities to optimize the yield of the supply base are continuously planned and documented as per the company’s MPLAN (see CR3.1 for information).

Compliance status: Full Compliance

• RSPO Supply Chain Certification System (SCCS)

The company is implementing the Module E – CPO Mills: Mass Balance supply chain model. The following is a description of the company’s supply chain management system according to the RSPO SCCS requirements, including status of compliance of the company to RSPO SCCS requirements:

Module E – CPO Mills: Mass Balance

E.1 Definition

Findings: It was confirmed that Kok Foh Palm Oil Mill is appropriately applying Mass Balance supply chain model as seen from mill crop report for last financial year 2014/15, approximately 84% of FFB received by the mill are sourced from its own certified supply base with a small percentage of approximately 3% received as occa- sional diverted crop from other estates under SDP which are certified to the RSPO Principles and Criteria

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(RSPO P&C) and about 12 - 13% of crop received from uncertified smallholders, including the following: - Cheong Wing Chan - Sern Lee Enterprise - Eng Huat Latex

The certified tonnages for Kok Foh Mill were calculated based on certified supply from Kok Foh mill only, as explained under Section 1.13 of this report

Compliance status: Full Compliance

E.2 Explanation

Findings: As recorded in Table 3, the estimated tonnage of CPO and PK products that could potentially be produced by the certified mill based on the projected output for FY 2015/16 from Kok Foh Mill’s MPLAN Crop Budget 2015/2016 and calculated from percentage FFB supply information in FY2014/15 for mill’s regular supply base only was determined to approximately 37196.17 tonnes of CPO and 9049.96 tonnes of PK. This is the certified tonnages for this year as stated in Section 1.13 of this report, and will be updated during every surveillance audit.

Kok Foh mill is registered on the current RSPO IT system, i.e. eTrace and all sales transactions are carried out by SDP’s Global Trading & Marketing Department (GTM) based in Kuala Lumpur. A copy of the sales of eTrace transactions done by the GTM office was provided. Based on eTrace report for Kok Foh mill for year 2015 only, the total amount of certified products sold was as follows:

CPO sold as ‘Mass Balance’ (MB) in FY2015/16 (All sales on 7 October 2015): 516.77 tonnes CPO sold as ‘Mass Balance’ (MB) in FY2014/15 (All sales on 13 May 2015): 3024.80 tonnes

All sales of certified CPO were to one of the company’s own refineries, i.e. Sime Darby Plantation Sdn Bhd - NURI Refinery. The annual amount of certified CPO and PK sold on eTrace is well below the previously certified annual tonnages of 31,003.37 tonnes of CPO and 6,860.33 tonnes of PK as per RSPO Certificate no. RSPO 928188 issued by Internal Certification International Sdn. Bhd.

From the mill Mass Balance sheet and dispatch records, it was found that the amount of certified CPO and PK products despatched from the mill were found to be inconsistent with the amount sold in eTrace. For example, total CPO dispatched as RSPO certified sustainable in FY2015/16 up until April 2016 was 21,491.50 tonnes while total CPO despatched was 28,823.01 tonnes respectively, which is higher than the actual amounts sold in eTrace as described above. It was verified that this was due to the company’s internal procedure where contracts for certified products to be dispatched to company own refineries as listed above are issued by GTM to the mill, however the final amount to be accepted as certified is determined at the respective refineries and is less than the actual certified amount dispatched, while remaining amount is accepted as non-certified.

Compliance status: Full Compliance

E.3 Documented procedures

Findings: The company has an SOP for RSPO Supply Chain Certification System and Traceability version 2 which was approved on March 2016 which is a general SOP applicable to all mills under Sime Darby Plantations and also applies for MSPO and ISCC certified mills. The SOP has been updated to define procedures for the applicable supply chain options which are now only Identity Preserved and Mass Balance (option for Segregation is no longer applicable). A summary of the SOP is as follows: i) Responsibilities: The Head of the operating unit shall have overall responsibility for SCCS implementation and may assign roles to relevant personnel for the implementation of this SOP ii) Control of documents & records: Specifies that records pertaining to SCCS shall be identified and maintained, states that appointed MR and identified personnel at each Critical Control Point shall be responsible to maintain the records, defines Critical Control Points and the estate and mill, and

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specifies that records shall be maintained for a period of ten years. iii) Delivery of FFB from the estate: Specifies that all FFB from estates shall be to the designated mill in the SOU, with crop diversion permitted from other sites permitted as defined in their flowchart for crop diversion. The information required in the estate weighbridge ticket or consignment note for all delivered FFB includes the RSPO certificate number iv) Receiving FFB at the mill: States that the mill shall receive from pre-determined estates, display the list of certified FFB suppliers with certificate number, defines requirements of the mill to verify the certification status of the supplying estate and states that the mill shall maintain records of all certified and non-certified FFB received v) Process monitoring: Specifies requirement for Mill certified to IP and MB, where those implementing IP shall ensure that there is no mixing of RSPO certified and non-certified material in the processing and storage of sustainable products, while for MB, FFB from both certified and non-certified estate can be processed together with mass balance products inputs and outputs monitored on real-time basis vi) CPO and PK dispatch: Specifies that all delivery shall be in accordance with the contract allocated by the Global Trading & Marketing Department (GTM), that outgoing documents including contracts and weighbridge tickets/dispatch notes shall specify the trade name (IP or MB) and RSPO certificate number, that the mill shall records and balance all receipts and deliveries of RSPO certified CPO and PK on a 3 monthly basis. This section also specifies that the GTM is responsible to make necessary transactions through the RSPO IT system or book and claim system and ensure there is no overselling vii) Non-conforming material/product: Specifies that where there has been contamination of certified material during process, storage or dispatch, the mill shall downgrade the supply chain status of the material, that volume of downgraded material shall be recorded and GTM shall be informed. Any oversold material shall be treated as non-conforming product viii) Product claims: Must be in compliance with the RSPO certification rules on Market Communications & Claim (2015) ix) Outsourced Contractor: Mill is to establish a list of outsourced contractors and inspect tankers/lorries before loading material to ensure no contamination, and may advise the certification body if audit of the contractors is deemed necessary x) Training: Training for all personnel at CCP shall be conducted xi) Reclassification of Mill’s Supply Chain model: Defines the procedure for reclassification of a mill’s implemented supply chain model and that the certification body shall be notified accordingly xii) Production Volume: Specifies that sales shall be limited to the certified volume, and where there is any projected overproduction, the mill shall inform PSQM, which shall in turn inform the certification body of the SOU.

The SOP has a list of all the company’s mills, their implemented supply chain module, their supplying estates (based on RSPO certification), list of other group estates diverting crop to the mill and diversion from group mills. Under this list, Kok Foh Palm Oil Mill is listed as implementing the Mass Balance supply chain option and the listed supplying estate and group estate diverting crop to the mill was confirmed to be consistent with the actual supply base and diverting estates.

There is evidence of implementation of this new procedure for Mass Balance at Kok Foh palm oil mill, e.g.: - Appointment letter for PIC for RSPO SCCS of one of the mill assistant managers on 11 April 2014 to assist in implementation of the SCCS requirements. - RSPO certificate number stated on FFB consignment notes as well as CPO dispatch records for RSPO certified material as seen on sampled tickets, e.g. FFB consignment notes received on 25 May 2016 from Bukit Pilah estate C/N no. 20608, Sg. Gemas estate C/N no. 14851 an St Helier estate C/N no. 073650 and CPO despatch ticket no 007859 issued to SDP Jomalina dated 29 April 2016.

There was evidence of training conducted on 16 April 2014 pertaining to RSPO SCCS by a trainer from PSQM and attended by 13 participants, including the mill manager, mill assistant, office operator, lab supervisor, weighbridge operator, admin account officer, supervisor and boilerman.

Compliance status: Full compliance

E.4 Purchasing and goods in

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Findings: The mill maintains documentation of the tonnages and sources of certified and non-certified FFB received. All tonnages of FFB received from certified estates are recorded at the mill weighbridge. The delivering estate will provide an FFB consignment note or FFB despatch advice ticket which includes the name of source (estate), vehicle and driver details, division, field, harvesting date and road, no. of bunches and weight. Con- signment notes or despatch advice tickets are attached with a printout from the respective estate which includes the estimated and actual weight and RSPO certificate number. For crop received from non-certified sources, the FFB consignment note samples from Cheong Wing Chan estate stated the year of planting, no. of bunches, estimated weight and vehicle number. The daily and monthly summary of FFB received from each sources are printed in a daily FFB summary report by supplier and after grading an processing, a Monthly Crop Report is auto-generated from the company’s FFB grading and OER Incentive System.

The company’s SOP for Supply Chain dated March 2016 specifies that sales shall be limited to the certified volume, and where there is any projected overproduction, the mill shall inform PSQM, which shall in turn inform the certification body of the SOU. It was confirmed from production and eTrace records that there was no overproduction of certified material sold through eTrace. Total amount of certified CPO produced in FY 2014/15 was determined to be 28,823.01 tonnes, which is below the previously certified tonnages of 31,003.37 tonnes, while total certified tonnages sold through e-Trace from the GTM office was only 6107.40 tonnes from December 2013 to May 2015 and 516.77 tonnes in October 2015. The total e-Trace confirmed transactions is also much less than the certified volume.

Compliance status: Full compliance

E.5 Record keeping

Findings: The total certified FFB received from certified sources, FFB received from non-certified sources, % certified and % not certified (calculated), total CPO produced, total CSPO produced (calculated from CPO produced and % certified material), CPO dispatched (divided into certified and non-certified) and total PK dispatched (divided into RSPO certified and non-certified) and CPO stock balance is summarized in a mass balance sheet and balanced once every 3 months on a mass balance sheet. The mass balance sheet has been updated for FY 2014/2015 and 2015/2016 up until April 2016. It was noted as an observation that the mass balance sheet does not include a column for total CPO dispatched and total PK dispatched, while should be included since these figures are obtained from the company’s SAP system and used for the calculation of the certified and non-certified CPO/PK dispatched in the mass balance sheet,.

It was confirmed that the monthly figures for certified and non-certified FFB received was consistent with Monthly Crop Reports, while total CPO produced was confirmed to be taken from the mill’s Monthly Produc- tion Report (Physical Movement). Figures for certified CPO dispatched and certified PK dispatched was determined to be calculated manually from mill CPO/PK contract dispatch log books. The dispatch log- books lists the number of CPO/PK contracts received from GTM, name of buyer, the type of CPO/PK requested (certified or non-certified) and total volume requested in the contract. For each contract, the total despatched each day and the date is recorded until the completion of dispatch of the total volume requested in the contract. Samples certified CPO despatch figures in the mass balance sheet for several month, e.g. August 2015, September 2015 and January 2016 were determined to have been calculated correctly from the dispatch logbook and the person in charge, i.e. the mill office operator, displayed a good understanding of how to input the figures required in the mass balance sheet. It was noted that the calculation of monthly CPO and PK dispatch figures in the mass balance sheet from the dispatch logbook is done manually and it would be better to have a format to input the contract figures dispatchd on daily basis, from which the monthly dispatched amount can be automatically calculated and be easily input into the mass balance sheet. This was noted as an opportunity for improvement.

The contract figures and requested material type (certified/non-certified) in the Monthly Production Report (Physical Movement) were checked against buyer contracts as requested from GTM and confirmed to be consistent with the requested amount and material type as stated in the contract.

For FY 2014/15, it was found that the total RSPO-certified CPO dispatched was as follows:

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1st quarter: 4702.95 MT 2nd quarter: 6747.25 MT 3rd quarter: 5524.53 MT 4th quarter: 6848.28 MT Total for FY 2014/15 = 28,823.01 MT

For FY 2015/16 up until April 2016, it was found that the total RSPO-certified CPO dispatched was as follows: 1st quarter: 7130.70 MT 2nd quarter: 8229.01 MT 3rd quarter: 4548.27 MT 4th quarter: 1583.52 Total for FY 2015/16 = 21,491.50 MT.

The amount of RSPO certified CPO sold for each financial year has not exceeded the annual certified tonnages as per the mill’s last RSPO certificate which is 31,003.37 tonnes.

Compliance status: Compliance with observations

3.2 Status of Previously Identified Non-conformances

Criterion 5.6.3 (Minor): 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.

Non-conformance no. 1 of 4 (Minor non-conformity): No evidence / unable to provide evidence of using PalmGHG or any equivalent RSPO acceptable methodology during audit.

Root Cause & Corrective Action: Root Cause and Corrective Action: Due to management still seeking more technical support from RSPO for submission data/calculation to RSPO Emission Reduction Working Group during this implementation period which is until 31/12/2016. Corrective Action Plan: To liase with RSPO Secretariat to seek further advice on the implementation of the carbon reporting and to get advise on the endorsement of calculators other than PalmGHG during this implementation period which is until 31/12/2016.

Verification result in year 2016: The GHG emission calculation has been done using Palm GHG Calculation Version 2.1.1 and the calculation results been submitted to RSPO dated 24 May 2016 to be reviewed by the RSPO Emissions Reductions Working Group. The final emission estimated 679.2 tCO 2e for CPO and PK. Overall summary for own crop estimated 16,012,737 tCO 2e, group at 14,741,587 and out-grower at 381.22. Total mill emissions calculated at 869.05 tCO 2e

Auditor Conclusions: Closed

Criterion 4.4.2 (Minor): 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.

Non-conformance no. 2 of 4 (Minor non-conformity): At Sg. Gemas Estate, there were no marking of buffer zone for the stream running through F 00C, F 01D and F 01E. There was evidence of chemical spraying to eradicate grasses beside the wing walls of the bridge crossing the river.

Root Cause & Corrective Action: Root Cause: The area was not marked as buffer zone due to the understanding of the estate that the area is not considered a river and not declared as buffer zone in the Biodiversity Report for Sg. Gemas Estate. Due to this

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Page 77 of 132 also, the spraying exercise was done as per usual operation. Estate follows recommendation in the Biodiversity Assesment.

Corrective Action: Estate will liase with R&D and PSQM Team (Social and Environmental Projects Unit) to make a site visit to check whether the area needs to be declared as a buffer zone or otherwise. Monitoring and maintenance of the area will follow based on the recommendation of the report of the visit. Visit to be scheduled on 16th June 2015.

Verification result in year 2016: Sg. Gemas management provided evidence of declaration by the R&D team of SDP that the area concerned is not a river but a steep ravine. The area was visited and confirmed to be a ravine area with no evidence of outflow of the water into natural waterways as the water movement was stagnant. This was further confirmed through interviews with estate workers.

Auditor Conclusions: Closed

Criterion 6.1.4 (Minor): 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 practices. There shall be evidence that the review includes the participation of affected parties.

Non-conformance no. 3 of 4 (Minor non-conformity): Action plan reviewed once a year was not comprehensive as per current operation for all estates audited (i.e. action plan to mitigate and reduce the impact does not covers employees (male, females, local and foreign workers).

Root Cause & Corrective Action: Root Cause: lssues from other meetings are not included in social action plan as per requirement. Currently action plan reviewed that we have only for meeting with nearby stakeholders. Corrective Action: To take up all the meeting issue (Gender Meeting, Union Meeting, stakeholder meeting and etc) and will review all the issue and action plan once a year.

Verification result in year 2016: There is an action plan sighted for each of the estates and mill in SOU 16 as explained in Section 3.1, CR6.1 of this report. However, the action plans for Sg. Senarut and Pertang did not include issues raised in various stakeholder meetings.This was raised as a negative observation in 6.1.3.

Auditor Conclusions: Closed with Observations

Criterion 6.5.3 (Minor): Growers and millers shall provide adequate housing, water supplies, medical, educational and welfare amenities to national standards or above, in accordance with Workers’ Mini- mum Standard of Housing and Amenities Act 1990 (Act 446) or above, where no such public facilities are available or accessible (not applicable to smallholders).

Non-conformance no. 4 of 4 (Minor non-conformity): Water Analysis for water supplied from treated pond water was not carried out as per National Standard for Drinking Water Quality, 2 nd Version, January 2004 which is required once a month as per Group 1 (Table 1) requirement for Sg. Gemas Estate and Bukit Pilah Estate.

Root Cause and Corrective Action: Root Cause: Lack of awareness on requirement for water analysis for water supplied from previously estate only submitted the water sampling for the analysis at every 6 months.

Corrective Action: Estate will submit water sampling to R&D lab or private lab starting on this month by 17th June 2015 and will do on monthly basis as per requirement.

Verification result in year 2016 :

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Both Sg. Gemas and Bukit Pilah estate is currently conducting water quality testing on a monthly basis for microbiological parameter and chemical parameters. Testing results for Sg. Gemas showed no issues However, for Bukit Pilah estate, there were no testing results found for January – February 2016. It was informed by the estate that this was because the pond was quite dry and hence no sampling was done, which based on the current drought season was accepted as a reasonable reason why sampling was not done.

Date of sample received 22/4/2016: Microbiological test showed no microbes detected except in Kelpin house sample where total coliforms was 13MPN/100ml.

Date of sample received 20/4/2016: Chemical water analysis results showed pH was below the requirement of pH6.7 – 8.5 consistently for all samples and turbidity and Kelpin pond point 1 was 17NTU.

Date of sample received 17/03/2016: Microbiological water test showed 23 MTN/100ml of total coliforms for Bukit Pilah house, Kelpin pond and Kelpin – house

Date of sample received 19/10/2015: Chemical parameter tests show exceedance of quality for pH, COD and turbidity in all water samples.

It was confirmed on-site and through interviews with workers and the management that the water supply diverted from the pond to the housing is not used for cooking and drinking (the workers are supplied with separate clean water supply from the local authorities for this purpose), but only for cleaning and washing. It was also confirmed that water quality and supply at Kelpin is poor as water supplied from the water catchment to housing is murky and the workers do not have sufficient water for their daily use, as water received from the Local Water Authority is only sufficient for cooking and drinking. However, there was sighted evidence that Bukit Pilah estate is in progress to resolve the water issue above by installing and commission one water tube well at Kelpin divison as seen from approval email dated 20 May 2016 from EMS Southern Region En- gineering Department of Sime Darby where request by the estate for Capex Expenditure Tender Recom- mendation was approved for contractor named Navalan Electrical Enterprise to carry out the installation. The installation of the water tube well is expected to proceed in July 2016 and completed in one month. Non- conformance no. RSPO00682 was raised due to complaints from workers at Bukit Pilah estate – Kelpin division regarding the poor water quality.

Auditor Conclusions: Closed with observations

3.3 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions

A total of 13 non-conformance were identified during this re-certification assessment. These consisted of 10 major non-conformities and 3 minor non-conformities. For the major non-conformances, the company has taken the necessary corrective action to close these non-conformances within 60 days of completion of the assessment, and this was verified by the audit team through document review as well as an on-site verification audit conducted on 10 – 12 August 2016 as well as checks of documents submitted by the company. For the minor non-conformances, the company has taken corrective action against these as well, and for those which could not be verified as closed through document checks or on-site visit, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as below:

• RSPO Principles & Criteria (P&C)

Criterion 2.1.1 (Major indicator): Evidence of compliance with relevant legal requirements shall be available.

Non-conformance no. RSPO00676 (Major non-conformity):

A) Found several legal non-compliances at the mill, i.e:

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Page 79 of 132 i) According to DOE license for prescribed premise dated 10 June 2015, the factory have to ensure noise at boundary kept at 65 dBA Daytime and 55 dBA Nite. Boundary sampling done last as reported by Envi- ronmental Science (M) Sdn Bhd on 10 January 2013. 12 sampling location. Daytime 4 locations were higher than the limit. At nite most of the location sampled was higher than the limit. ii) Audiometric test was conducted on 05/10/15 involving 50 workers. 21 having hearing impairment, 8 standard threshold shift and need retest within 3 months. A quotation from a consultant dated 05/04/16 but test was not conducted untill date of audit. iii) Found 2 units of fume hoods at Laboratory without written approval from DOE, which is not in accordance with Regulation 38 of the EQ (Clean Air) Regulations 1978, Regulation 38 regarding Erection etc. of chimney (fume hoods were installed prior to year 2014 before new EQ(Clean Air) Regulations 2014 was enforced). iv) Mill not yet have fire certificate and during audit only found a quotation to repair and make good of existing fire-fighting system.

B) Found several legal non-compliances pertaining to deductions as follows: i) The following deductions from employees’ wages were made without the prior permission in writing of the Director General (see Section 24 (4) of the Employment Act 1955): St.Helier Estate: AIG General Insurance (RM20); education fund, sports club. Sg.Gemas Estate: Temple fund deduction permit allows for upto RM4/mth deduction (effective from 1 Oc- tober 2005). But the current deduction (RM10) exceeds the permissible amount. Sungei Senarut Estate: Electricity, mosque fund and temple fund. Pertang Estate: Water (the company applied for the permit on 10 May 2016 to PTK Kuala Pilah (attached with a list of 109 workers). Bukit Pilah estate: Deduction of workers‘ pay for mosque fund. Muar River estate: Electricity deductions Kok Foh mill: Electricity deductions and temple fund. ii) The following deductions from employees’ wages were made without request in writing of the employee (see Section 24 (4) of the Employment Act 1955):

St.Helier Estate: education fund and sports club.

Pertang Estate: Water.

Kok Foh mill: temple fund

C) The management of Pertang Estate has not been able to demon strate that termination of the services of local employees (rubber tappers) is currently being conducted only after first terminating the services of all foreign employees employed by him in a capacity similar to that of the local employee. This is not in accordance with Section 60 N of Employment Act 1955.

Root Cause: A) i) Noise sampling carried out on 10/01/13 showed results higher than the permissible limit. Since there is no recommendation provided in the report by the consultant, the management overlooked on the action to be taken on the higher results shown.

ii) Consultant unable to find Occupational Health Doctor (OHD) to carry out the test at the Mill.

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iii) Approval for Fume Hood installation was not submitted due to misunderstanding on the regulation requirements by parties involved during construction which had caused the submission for written approval to be missed out.

iv) Mill was unable to apply for fire certificate due to pending mill building CCC (Certificate of Comple- tion and Compliance) from Majlis Daerah Jempol. Mill only received the CF on 15/5/2015. Upon receiving the CF, mill had appointed AMI Safety Sdn. Bhd. for the submission of Fire Certificate to BOMBA. AMI Safety Sdn. Bhd. was unable to complete the submission due to some administrative issue.

B) i) Sg Gemas and Sg Senarut Estate: Due to no mechanism to check on the permit availability.

Pertang Estate: The Labour Department or ‘Jabatan Tenaga Kerja’ (JTK) Kuala Pilah has referred the case to JTK Seremban upon the earlier request sent to JTK.

Bkt Pilah Estate: Due to no mechanism to check on the permit availability.

Muar River Estate: Due to no mechanism to check on the permit availability.

Kok Foh Mill: Mill has permit for Temple Deduction however do not have written approval for TNB deduction due to lack of monitoring on the requirement.

ii) St Helier Estate: Due to no mechanism to check on the workers consent availability.

Pertang Estate: Due to no mechanism to check on the workers consent availability.

Kok Foh Mill: Management had received deduction request by temple Chairman without consent letter from employee.

C) Pertang estate: There is a misunderstanding on the mechanism of the retrenchment between the management of Pertang estate and the workers.

D) The said terms and conditions in the workers contract available at the operating unit are not appropriate

Correction: A) i) The Boundary Noise Monitoring which was scheduled to be carried out on 29/8/2016 has to be postponed by the contractor to 10/9/2016. KFM requested the contractor to include any further recommendation to reduce the noise in the report

ii) Audiometric Testing for Kok Foh Mill employees is scheduled to be carried out on 19/9/2016. The follow up testing will depend on the final audiometric report.

iii) Mill have engaged competent Hygiene Technician to prepare proposal for approval before submission to DOE. Application for written approval was submitted to DOE on 14/7/2016.

iv) Mill has engaged Mecomb Sdn. Bhd at first for submission and acquired Fire Certificate. However, Mecomb Sdn Bhd is unable to carry out the job and has proposed Zaliza Niaga Sdn Bhd instead. KFM is in the midst of engaging Zaliza Niaga Sdn Bhd for a visit to the mill. Quotation has been obtained from Zaliza Niaga and site visit will be conducted by end of September 2016.

B) i) St Helier Estate: Estate management already conducted adhoc meeting with estate union on 31/5/2016 and they requested proposal to continue workers salary deduction and estate will follow up with JTK as soon as possible. Meantime, all deductions without JTK approval has been discontinued. OU will resume deduction once approval is granted by JTK

Sg Gemas and Sg Senarut Estate: The estate will apply for the valid/updated/latest permit/consent of deduction from employees and JTK. Meantime, all deductions without JTK approval has been discon-

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tinued. OU will resume deduction once approval is granted by JTK.

Pertang Estate: Application has been submitted to JTK Seremban. Meantime, all deductions without JTK approval have been discontinued. OU will resume deduction once approval is granted by JTK

Bkt Pilah Estate: Application have been submitted to JTK. Meantime, all deductions without JTK approval has been discontinued. OU will resume deduction once approval is granted by JTK.

Muar River Estate: Apply for permit from JTK for electricity deduction. Meantime, all deductions without JTK approval has been discontinued. OU will resume deduction once approval is granted by JTK.

Kok Foh Mill: Application have been submitted to Jabatan Tenaga Kerja (JTK) on 24 th May 2016. Pending processing by JTK Meantime, all deductions without JTK approval has been discontinued. OU will resume deduction once approval is granted by JTK.

ii) St Helier Estate: Meeting with local union has been conducted on 31/5/2016 and workers consent for all salary deduction has been obtained.

Pertang Estate: Management will request on the consent letter from all worker involved.

Kok Foh Mill: Management have obtained the consent letter from all affected workers.

C) Pertang estate: A different forum which comprises of PSQM has been established on 14 th July 2016 and investigation was carried out by PSQM. Meeting with all affected workers has been conducted on 14 th July 2016 whereby all the workers have been re-briefed on the retrenchment. D) The clause that restricting the rights of employee to join and participate the trade unions have been amended / deleted accordingly and new contracts has been distribute to the affected workers. Latest draft of contract employment is the final stage and the task force will monitor all terms and conditions in the contract from time to time.

Corrective Action: A) i) An improvement plan will be developed base by the KFM on the recommendation from the consultant and the plan will be monitored accordingly.

ii) MA to monitor on the results of each Audiometric test and ensure that mill to follow strictly Hearing Conservation Management Guideline distributed by Mill Operations Dept. on June 2016.

iii) Mill will discuss and review any project related to compliance to any regulations.

iv) In the future, Mill will review and follow up with related parties of any pending project related to compliance of any regulations. B) i) All Estates/Mill: Estate to establish a master list of all permit and licence required including salary deduction permit and the list includes the validity date and expiry date. This master list will be displayed at the office for monitoring purposes by Chief clerk and documented in the filing system.

ii) All Estates / Mill: Estate to establish a master list of all permit and licence required including salary deduction permit and the list includes the validity date and expiry date. Consent letter from the workers will also be obtained. This master list will be displayed at the office for monitoring purposes by Chief clerk and documented in the filing system.

Pertang Estate: Management will monitor on the wages deduction.

Kok Foh Mill: Management will ensure that consent letter from workers are available for any deduction.

C) Pertang estate: PSQM will monitor upon any retrenchment exercise in future to avoid any miscommunication.

D) Will ensure that all contracts in the future will state the appropriate terms and conditions prior to distri-

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butions.

Verification result: A) MILL LEGAL NON-COMPLIANCES: Evidence of actions taken to demonstrate actions in progress to close the legal non-compliances were sighted as below: i. Kok Foh mill has not taken immediate action to directly reduce the noise yet because as seen from the last boundary sampling report done by Environmental Science (M) Sdn Bhd on 10/01/13, there were no recommendations to reduce the noise levels at locations found to be higher than the legal limit and existing controls are already in place to reduce noise but still not adequate. The mill has provided evidence that they have engaged a new consultant, i.e. Procoma Environmental (M) Sdn. Bhd. (contract form dated 30 July 2016) to carry out a new boundary noise sampling to confirm that noise levels are still exceeding the legal limit and to provide recommendations for actions to be taken to reduce the noise level. The boundary noise sampling is expected to be completed in Septem- ber 2016 after which the company will carry out actions for noise reduction based on the findings and recommendations of the consultant. ii. The mill has provided evidence that they have engaged a new consultant, i.e. Procoma Environmen- tal (M) Sdn. Bhd. (contract form dated 30 July 2016) to carry out the annual baseline audiometric test. The test is expected to be completed in September 2016. iii. The mill provided evidence that they have appointed a consultant, i.e. HITEC IESH Holdings Sdn. Bhd. to conduct the installation of two chimneys (no. 3 and no. 4) for the fume hoods at the mill and to request for written approval to the DOE. Evidence sighted was letter from Kok Foh Palm Oil Mill to the DOE of Negeri Sembilan informing dated 24 June 2016 informing of the appointment of this consultant, letter from the consultant to the DOE dated 5 July 2016 reconfirming their appointment by the mill (stamped received by the DOE on 14 July 2016) and drawing of chimney layout plan prepared by the consultant for Notification under Regulation 5 Clean Air Regulation 2014 iv. The company provided evidence of contract form dated 12 August 2016 for engagement of Zaliga Niaga Sdn. Bhd. for fire certificate application, and additional contract form dated 24 September 2016 for checking and testing Fire Protection Systems with service for Kok Foh Palm Oil Mill for application of fire certification.

B) DEDUCTIONS i) Deductions made not in accordance with permit:

St. Helier: This estate has submitted an application to JTK Kuala Pilah in a letter dated 6 June 2016 requesting for permission to deduct workers salary for Education Fund, Sports Fund and AIG General Insur- ance. The application consisted of the cover letter by the estate manager, Appendix C form, letter of consent by the NUPW representative with signatures of all effected workers consenting to this deduction. While waiting for approval from JTK, deductions have been stopped since July 2016. This was clearly reflected in the pay slips for workers named Eswari A/P R. Chandran, Gopinathan A/L G. Hellapan Pillai and Muhamad Fatah for June 2016 and July 2016 that was sighted on-site.

Sg. Gemas estate: The estate had submitted an application to JTK Segamat as seen in letter dated 20 June 2016 to request for increase of the deductions for the temple from RM4 to RM10. The letter is stamped as received by JTK Segamat on 3 July 2016 and the estate received a response from JTK Segamat dated 9 August 2016 stating that the application is in process. The estate has also attached evidence of consent for deductions for temple received from 20 workers. While waiting for the revised permit, the estate has revised their temple deductions for the 20 affected workers to RM4, as seen from sample pay slips of workers since July 2016.

Sg. Senarut: This estate has submitted an application to JTK Segamat in a letter dated 21 June 2016 requesting for permission to deduct workers salary for Electricity, Surau Ldg Senarut (Mosque Fund) and Kuil 1 & 2 (Temple Fund). The application consisted of the cover letter by the estate manager, Appendix C form, letter of consent by the NUPW representative with signatures of all effected workers consenting to these deductions. The application was received by JTK Segamat on 3 July 2016. As a result of receiving this application, the Deputy Director of JTK Segamat made a visit to this estate on 18/7/2016 . During this visit, he requested additional documents such as workers pay slips, workers contracts, collective agreements and records of payments for the various items such as water and electricity. JTK is still processing the application. In the meantime, deductions for electricity have been stopped since July 2016. This was clearly reflected in the pay slips for 4 sampled workers for June 2016 and July 2016 that was sighted on-

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Page 83 of 132 site. Some of the estate workers interviewed said that they are aware and have consented to the deduction. Apart from this, the estate also requested for permission to deduct from workers salary for other non- statutory items.

Pertang estate: The estate submitted an application to JTK Kuala Pilah on 23 June 2016 requesting for permit for deductions for water as well as for Great Eastern Life Insurance, AMESU fees and cooperative fees, advances and NUPW fees. The JTK of Negeri Sembilan responded with permit to deduct water as per letter ref. no. (4) PMT 10501/2016/0038 dated 8 August 2016 which stated the following terms: • Deductions must be with the consent of workers and record of consent must be maintained (consent of 98 workers have been attached in the application) • Each worker and his dependant for which accommodation is prepared for by the company is given a subsidy of 4.77 m 3 of water per month (159 litres x 30 days = 4770 litres or 4.77m 3/person) • Amount of deductions per month cannot exceed 50% of the worker’s pay. • Permit is valid for 3 years and expires on 7 August 2019

For other applications for permit, it was confirmed by the JTK in letters dated 8 August 2016 that there is no need for permit for deductons related to NUPW fees, AMESU fees and cooperative fees or advances.

Bukit Pilah estate: The estate has submitted an application to JTK Kuala Pilah as seen on letter dated 25 June 2016 requesting permit for deductions not only for the mosque fund but for all other non-statutory deductions, including deductions for Kelphin Tamil School, SAINS (Negeri Sembilan Water Company) water, electricity, Amanah Saham Nasional Berhad, worker’s cooperative, Great Eastern Insurance for NUPW members, MAA Tafakul Berhad insurance, temple funds for New Rompin and Bukit Pilah Divi- sions, Sri Maha Mariaman Devotees Association of Kelpin Division, Sg. Kelamah Primary school deductions, and AIG Malaysia Insurance Berhad. Sighted also evidence that worker’s consent of all deductions was submitted to the JTK of Kuala Pilah. Due to disagreement with the NUPW representatives which was confirmed with some NUPW representatives during on-site interviews on 10 August 2016, the deductions could not be stopped temporarily until agreement was reached with the NUPW, which was reached in end of July 2016 and the estate then issued a memo dated 1 August 2016 to all staff, auxiliary police and estate workers of Bukit Pilah estate that deductions as above would cease pending the permit from JTK.

Kok Foh Mill: The mill provided evidence that they already had a permit for deduction for temple fund issued by the Labour Department on 15 April 2011. Terms of the permit stated deductions for for temple fund shall be limited to RM10 per month and all deductions shall not exceed 50% of the worker’s salary or 75% of the worker’s salary if including housing loans.

The mill has submitted an application for other non-statutory deductions on 20 May 2016 to the Labour Department of Negeri Sembilan, including request for permission for deductions of electricity, usage of store items for personal use, payment of NUPW insurance above the company’s subsidized amount, and motorcycle loans. The mill provided evidence of deductions for electricity having been temporarily stopped, as seen from sampled pay slips for workers below: - Raju a/l/ Periapan, pay slip for June 2016 showed electricity deductions of RM69, and no electricity deductions for July 2016 - Endang bin Ismarpay slip for June 2016 showed electricity deductions of RM20.25, and no electricity deductions for July 2016 - K. Badmanathan a/l/ Krishnan, pay slip for June 2016 showed electricity deductions of RM25.05, and no electricity deductions for July 2016

Muar River: Muar River estate has submitted an application to JTK Segamat in a letter dated 16 June 2016 requesting for permission to deduct workers salary for electricity for a minimum amount of RM5 and maximum amount of RM150. The application consisted of the cover letter by the estate manager, Appen- dix C form, letter of consent by the NUPW representative with signatures of all effected workers consenting to this deduction. This application was received by JTK Segamat on 21 June 2016. Interview with the NUPW representative for this estate also reveals that all the workers have consented to the deductions and they are aware that the stoppage of deductions will be done temporarily while awaiting the approval from JTK. In the meantime, deductions for electricity have been stopped since July 2016. This was clearly reflected in the pay slips for Suparja, Rokaya Gorakh Bahadur, Chudamani, Uddin Jasim and Monahar Das for June 2016 and July 2016 that was sighted on-site. Two of the estate workers interviewed said that

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Bahau, Negeri Sembilan, Malaysia

Page 84 of 132 they are aware and have consented to the deduction. Apart from this, the estate also requested for permission for deduction for the Sri Maha Mariamman Tem- ple Fund, Surau Al-Hadi (Mosque Fund), Yayasan Pembangunan Ekonomi Islam (Yapem) (Islamic Eco- nomic Development Foundation) and Tabung Haji (Pilgrims Fund). Stoppage of deductions for these non- statutory items will commence in August 2016. The workers were informed of this through the Memo Pem- berhentian Potongan Gaji Pekerja Bagi Bulan Ogos 2016 (Memo on Stoppage of Deductions From Work- ers Salary for August 2016) from the estate manager.

ii) Deductions made without consent of employees

St Helier estate: The estate has requested for permission to deduct from workers salary for other non- statutory items. It is to be noted here that the deductions for Education Fund ceased in October 2015. This was evident from the pay slip of Arumugam A/L Subramaniam for the month of April to October 2015. However the estate has applied to JTK for deduction for this purpose and consent was given by the workers for this deduction. This implies that most likely the workers were not well informed of the type of deduction they were consenting to.

Pertang estate: Consent of 98 workers have been attached in the application to JTK Kuala Pilah for deductions for water was sighted.

Kok Foh mill: Consent of 32 workers for deductions for temple fund was sighted

C) Termination of rubber tappers at Pertang estate During verification of closure of Major NCs done on 12 August 2016, it was confirmed through interviews with the management of Pertang estate and through interviews with the ex-rubber tappers that there were 34 rubber tappers planned for retrenchment and during the time of the verification, 5 had been re- employed by the company as mandores, while the rest accepted the compensation for termination and most had left the estate area except for another 6 workers whose application for reemployment is still being processed, or needed more time to stay within the estate area to looking for new housing or to wait for the end of the school year of their children before leaving. As such there are total of 11 ex-rubber tappers still staying at the estate. The remaining ex-rubber tappers interviewed informed that termination was not forced in favour of the company employing foreign workers, instead all the ex-rubber tappers had been given the option of re-employment or accepting compensation, and most had chosen compensation over re-employment to work in oil palm field work.

D) Clause in foreign worker’s contracts regarding restriction to join trade union: The company acknowledges that there are a number of inconsistencies with the current template of contracts used for foreign workers (as raised in non-compliance under CR6.5.2 as well) including the contra- dicting statement on restriction to join trade union with the company’s policy on freedom of association as well as other inconsistencies found during this and other audits for SDP management units. The company provided evidence of actions being taken to revise the contract template to resolve these issues (A copy of the draft contract template undergoing revision and comments for improvement was sighted). While the audit team acknowledges that technically this has not resolved the issue within 60 days as the contracts are still in draft, it is also acknowledged that inconsistencies in the contracts affects not only this SOU but the entire company as the same revised template will be intended for use throughout the whole of SDP’s plantations. Hence, additional time is required for SDP’s sustainability team to work together with their HR/recruitment department to revise the contract, ensure all inconsistencies including those not identified by the audit team have been removed, and have te draft undergo a proper review process by relevant personnel of the company before being approved for use throughout the company.

It was also confirmed from interviews with foreign workers at all estates that foreign workers are allowed to join trade unions if they wish (not mandatory). List of deductions for union fees sighted as the estates, i.e. Sg. Gemas estate includes foreign workers. Therefore the actual practice of the company is to permit foreign workers to join trade unions with no repercussions in the form of termination. This is inconsistent with the clause in the contracts regarding restriction to join trade unions but is the more beneficial and proper practice.

Auditor Conclusions: Closed with observations

Date of closure: 12 August 2016

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Criterion 2.1.2 (Minor indicator): A documented system, which includes written information on legal requirements, shall be maintained.

Non-conformance no. RSPO00677 (Minor non-conformity): Documented system of LORR for Kok Foh Mill and and all estates was found not properly updated as was not detailed enough to explained the actual legal requirements such as: a. OSHA 1994 only mentioned Part VI, where there were actually Section 24-27 under it and not clearly explained. General Duties of Employer and Self-Employed Persons under Section 15 was not included and explained (Sg. Gemas Estate). b. For OSHA 1994 mising Sections 16 (Safety and Health Policy), 17 (Duty of employer on others), 30 (Forming a Safety and Health Committee), 31 (Function of Safety and Health Committee) and 32 (No- tification of incident) (Kok Foh Mill St Hellier and Pertang Estate). c. Safety and Health Officer Regulations 1996 in LORR suppose not applicable (Kok Foh Mill) d. Factories and Machinery (Safety, Health and Welfare) Regulations 1983, in the LORR under Re- quirement, not detailing explained the actual requirement instead asked to make referrence to the regulations in FMA for specific details on the conditions (Pertang Estate) e. Environmental Quality Act 1974 was found not included Section 22 Restriction on pollution of atmosphere, Section 23, Restriction on noise pollution. While Section 29 was mentioned as Restriction of Open Burning which actually it is Prohibition of discharge of waste into Malaysian waters (not applicable). While Section 29A is actual prohibition of open burning) which was not included (Sg. Gemas Es- tate) f. Found Pesticides (Labelling) Regulations 1984 was not included (All Estates). g. The ammendment of Factories and Machinery (Person In-charge) (Ammnd) Regulations 2014 was not included (Sg. Gemas). h. Scheduled for Factories and Machinery (Person Incharge) Regulations 2014 was mentioned as not applicable. i. Factories and Machinery (Safety,Health and Welfare) Regulations. was mentioned as not applicable. (Working at Height (Reg.12), Dangerous liquid (Reg. 14), Precaution Against Ignition (Reg. 16) Clean- liness (Reg. 23) and etc (St Hellier, Kpk Foh Mill and Pertang Estates) j. Environmental Quality Act 1974 not included Section 34B. k. Environmental Quality (Clean Air) Reg. 2014 was having requirement of previous regulation 1978 and mentioned as not applicable (St. Helier and Pertang Estates) l. Occupational Safety and health (Classification, Lebelling and Safety Data Sheet of Hazardous Chemical) Regulations 2013, Regulation 13 should mention clearly Section 13 (4) to review Safety Data Sheet every 5 years by the supplier (St Hellier, Pertang Estates).

Root Cause: Due to the use of generic LORR provided by PSQM .

Correction: PSQM to amend the specific section mentioned in the LORR based on the current update. The updated section will then be circulated to Mill and Estates.

Corrective Action: PSQM will update the LORR based on Group Compliance Office‘s latest legal list applicable to Estate and Mill and will also incorporate the relevant legislation in the MYNI. The changes of legal requirements will then be notified to OU and OU will review on yearly basis.

Auditor Conclusions: Proposed corrective action plan accepted. Effectiveness of implementation will be verified at next surveillance audit

Criterion 4.7.4 (Major indicator): 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 and welfare shall be discussed at these meetings, and any issues raised shall be recorded.

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Non-conformance no. RSPO00678 (Major non-conformity): Kok Foh estate: A regular OSH meeting have been conducted as sighted on 17/3/2016, 16/12/2015, 28/7/2015, 16/6/2015 and 20/5/2015. However, there was no meeting between July 2015 to December 2015 as stipulated in the OSHA Act 1994 (Act 514) P.U. (A) 616/1996 which requires meeting to be held once in every 3 months.

In addition, on 16 December 2015 only 11 participants from total of 25 persons that should attend the meeting. This is against the OSH (Safety & Health Committee) Regulations 1996 which requires 50% attendance from the committee.

Root Cause: Members were not active & not cooperative as a member of OSH Committee.

Correction: OSH committee has been reviewed and to ensure the cooperation and responsibility are met, training has been requested from the ESH Unit, PSQM Department.

Corrective Action: Conduct a refresher training on OSH committee to ensure they understand their role and responsibility.

Verification result: Kok Foh estate provided evidence of OSH meeting done on 25 June 2016, which had 26 participants, including meeting minutes which included discussion on OSH training, safety issues, accident reports (2 accidents which occurred in April 2016), scheduled waste and environmental issues, workplace inspections results, training report and other matters. SDP’s PSQM department also conducted a separate training to the OSH committee of Kok Foh estate entitled “OSHA Duties/Responsibilities Training/ Sime Card Training on 27 July 2016 with signed attendance list of 21 participants. Photos of this meeting and training materials used were also sighted. The content of the training included explanation on the required frequency of OSH meetings and required quorum of meetings (which members and number of members required), as well as other topics such as responsibilities of all OSH committee members, topics to be discussed during OSH meetings, time frame for storage of OSH meeting records, OSH committee structure, and ERP.

Auditor Conclusions: Closed

Date of closure: 27 July 2016

Criterion 5.1.1 (Major indicator): An environmental impact assessment (EIA) shall be documented.

Non-conformance no. RSPO00679 (Major non-conformity): 1) Environmental Aspects and Impacts assessment and Environmental Impacts Evaluation for boiler construction in progress at the mill is not available

2) There was evidence that Environmental Aspect and Impact assessments was found not properly conducted: i) Only cover page updated but review not actually done • St. Hellier estate: Environmental Aspect Impacts document was only stated on cover page as last reviewed only 19/5/15, but actual content was last reviewed was on 08/08/12. Due to this, some legislation mentioned as Legal reference are outdated legislations, e.g EAI still includes EQ (Clean Air) Regulations 1978 and EQ (Scheduled Waste) Regulations 1989 although these have been superceded by EQ (Clean Air) Regulations 2014 and EQ (Scheduled Waste) Regulations 2005 respectively. For replanting, herbicides was not stated as having any legal reference (suppose to be Pesticides Act 1974). • Bukit Pilah estate: The Environmental Impact Evaluation (EIE) cover page states review was done on 13 August 2015, however the EIE forms was dated back in 10 January 2009.

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• Sg Senarut estate: The Environmental Impact Evaluation (EIE) cover page states review was done on 1 January 2016, however the EIE forms was dated back in 1 April 2013. In addition, the Serial No EIE/2013 is not completed in the form. There was no signature on who prepared the evaluation form.

ii) Incorrect identification of potential for legal non-compliance • At Pertang Estate, Kok Foh estate, Bukit Pilah estate, and Sg. Senarut estate Environmental Impact As- sessment FY 2015/2016 found for several Environmental Load items (e.g. Land Contamination (spillage) for diesel, lubricant disposal of clinical item, herbicide spraying), there was a question on whether there is high potential on non compliance to environmental regulations, where the answer stated was “No’ but in actual there is potential for legal non-compliance. iii) Incorrect or outdated legislation stated as reference • Environmental Aspect and Impact Identification Form used at Pertang estate for fuel container and rags (discharge to land) legal reference was wrongly stated as EQ Regulations 1996 & EQ (Scheduled waste), while for petrol/diesel (land contamination), legal reference was wrongly stated as EQ (Scheduled waste) Reg. 1996 (year of regulations stated are not the latest versions) The environmental impact from discharge to land is the selective weeding activity is rated at 9 (business impact) but not considering land contamination and community.

Root Cause: 1) There is no evaluation on EAI and EIE for the construction of the boiler. Mill was unaware of the requirements to conduct EAI and EIE for Engineering projects which was also not highlighted by the Department involved prior to start of the project.

2) i) & ii) All Estates: Lack of awareness, Insufficient review and incorrect legislation referred by the operating unit iii) All Estates: Lack of awareness, Insufficient review and incorrect legislation referred by the operating unit

Correction:

1) Mill to immediately finalize the EAI and EIE based on the MQMS-SOM.

2) i) & ii) All Estates: A schedule has been planned for the PSQM Department to provide a training on the Risk Assessment which will replace the current EAI and EIE form. Review and updates on information will be done accordingly. iii) All Estates: A schedule has been planned for the PSQM Dept.to provide a training on the Risk As- sessment which will replace the current EAI and EIE form. Review and updates on information will be done accordingly

Corrective Action:

1) Mill will review all requirements prior to starting of any engineering projects together with PSQM ESH. All future contracts only will be issued upon the completion of the EAI and EIE.

2) i) & ii) All Estates: To ensure the EAI and EIE are reviewed annually accordingly. iii) All Estates: To ensure the EAI and EIE are reviewed annually accordingly.

Verification result: 1) The mill provided copies of new EAI and EIE done for boiler constructions activity at the mill dated 1 June 2016, where environmental aspects and impacts identified include those pertaining to boilcon- struction activities such as welding (aspects: discharge of metal rods and acetylene gas to land/air, metal consumption and scrap metal discharge), grinding (aspects: noise and power consumption), hydrostatic test (aspects: leakage of contaminated water), painting (aspect: disposal of waste paint containers), crane works and movement of vehicles (aspects: smoke emissions, oil leakage and diesel consumption).

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2) The company’s PSQM departrment has acknowledged weaknesses in the understanding of the personnel at the mill and estates not only at SOU16: Kok Foh but other SDP management units as well as weakness in the current EAI and EIE evaluation forms being used, which is planned to be replaced with a new format as well as training to be done personnel from all SDP SOU’s. A sample of the revised EAI and EIE format combined with HIRARC assessment format to be used was provided in excel format and found to comprise several tabs, i.e. Identification of Environmental Aspects and Safety and Health Hazards, Safety and Health Assessment Form, Environmental Impact Assess- ment Form, Summary of Safety & Health Risk and Environmental Impacts, Magnitude Matrix table for Safety Hazards, and Magnitude Matrix table for Environmental Aspects. The company also provided the training materials prepared to be used during trainings to SOU personnel on how to use the new combined EAI, EIE and HIRARC format and how to conduct assessment of safety hazards and environmental aspects. The PSQM department also provided the training schedule for New Risk Management Workshop trainings planned to be conducted for FY 2016/17 for all SOUs which was planned from 11 August to 6 October 2016. Training for SOU 16: Kok Foh is planned for 22 Sep- tember 2016. While technically not closing the issue within 60 days, it is accepted as immediate evidence of the company’s efforts to resolve the issue of poor understanding of personnel at the SOU level on how to conduct EAI and EIE, which should be more effective than requiring the SOU personnel to redo the EAI and EIE using the existing templates and with poor understanding on how to conduct the evaluations. Effectiveness of the training by PSQM and implementation of the new for- met will be evaluated further during the next surveillance.

Auditor Conclusions: Closed with observations.

Date of closure: 27 July 2016

Criterion 5.3.2 (Major indicator): All chemicals and their containers shall be disposed of responsi- bly.

Non-conformance no. RSPO00680 (Major non-conformity): There was no evidence of fertilizer bags being returned back for reuse to the original supplier as approved by DOE and SOP for scheduled waste management. Observed in St. Helier, Sg. Gemas and Per- tang Estates as it was used and disposed internally.

Root Cause: Lack of awareness by the workers on the proper disposal and re-use of fertilizer bags. However, Estate is guided by the letter communicated to SDP by DOE dated 16th June 2016 Ref: AS91/110/619/161.

Correction: Empty fertilizer bags intended for re-use, Estate to clean thoroughly as per the internal SOP available. An inventory record was established to monitor the stock of used fertilizer bag .

Corrective Action: Estate to appoint person-in-charge to record the inventory of empty fertilizer bags to monitor the quantity of re-use and un-reused bags.

Verification result: The company provided a letter from the DOE dated 16 June 2016 stating permission to reuse fertilizer bags at the premises and confirming that fertilizer bags that can be reused are not categorized as scheduled wastes and do not need to be managed under the EQA (Scheduled Waste) Regulations 2005. The audit team hences accepts this as evidence from the legal authority to close this non- compliance with no need to manage fertilizer bags as scheduled wastes.

Auditor Conclusions: Closed

Date of closure: 16 June 2016

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Criterion 6.1.2 (Major indicator): There shall be evidence that the assessment has been done with the participation of affected parties

Non-conformance no. RSPO00681 (Major non-conformity): 1) The SIA for Pertang did not include the local community of Kg. Pertang. The SIA only focused on 2 villages, Kg. Parit Gong and Kg. Tambahtin. Smallholders such as Pekebun Kecil Foo Ng Moi, Chong Fook Hong, Ladang Yau & family etc were also not consulted. 2) The management of Pertang Estate also did not conduct an impact assessment pertaining to the retrenchment of 34 rubber tappers (local workers) planned to be done on the 1st of July 2016 due to planned conversion of rubber to oil palm.The impacts arising from this retrenchment exercise are many,e.g: • Difficulties of workers finding new accommodation and new jobs. • Difficulties in getting their children transferred to other schools at such short notice. • The huge relocation cost to be incurred by the workers. Emotional attachment to the estate and their place of worship. Many workers are fourth or fifth generation employees at the estate and spent their entire lives at the estate.

Root Cause: 1) Kg Pertang were left out due to the location of the village were mistakenly identified and the smallholders were overlooked during the assessment. 2) The element of the retrenchment was missing from the SIA report due to missed information to the assessor.

Correction: 1) A specific SIA has been conducted to cover Kg Pertang and the smalholders. 2) A specific SIA has been conducted on Pertang Estate ex-rubber tappers retrenchment issue.

Corrective Action: 1) Action plan will be monitored accordingly. 2) Yearly plan on SIA for retrenchment have been develop based on overall company replanting/conversion plan.

Verification result: The company has conducted an additional SIA on 14 July 2016 to cover Kg. Pertang, the smallholders and the Pertang estate ex-rubber tappers, which was initially documented in Powerpoint format and added on as an addendum to the current SIA document of SOU 16. Signed attendance lists of the SIA conducted was sighted. The additional assessment was conducted by two persons from SDP’s PSQM department. The SIA findings listed included remarks from management and possible action plans for findings as follows:

1) SIA findings from Kg. Pertang and 2 smallholders • No complaints or issues raised, hence no social action plan developed for Kg. Pertang and smallholders 2) SIA findings from Workers (Ex-tappers) (33 interviewees) • Accomodation arrangement: Initial agreement is the workers could stay in the company houses until December 2016, those who still could not find any accommodation in November requested to be given extension of stay. The estate management agreed to review such requests in No- vember 2016. • Worship facility: Workers requested Estate Management to allow them to continue their practices at the temple after they have moved out of the Estate, and this is allowed by management with proper security measures (entry records, security pass, etc) • Re-employment possibility: Workers who are interested to be re-employed, have submitted their request to the Management. Management will consider for the reemployment for those workers have submit their application

During verification of closure of Major NCs done on 12 August 2016, phone interview was done with Kg. pertang village head to confirm the SIA findings. The Kg. Pertang village head had a complaint regarding

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Page 90 of 132 flooding of the village due to land clearing of rubber area, which not mentioned in the SIA findings. It was likely this was not mentioned during the SIA interviews as it was a relatively recent issue, and the village head confirmed that the estate management had already taken action to assist to reduce the impacts of the flooding by opening a drain near the village. Photographic evidence of this action taken was also sighted. Another phone interview was conducted with Mr. Acanah, a neighbouring smallholder who was not included I the SIA interviews done by PSQM who owns some land planted with bananas and he had to pass through the estate area to go to his plot. Mr. Acanah mentioned that he has requested a permit from the estate to go through the estate for an extended period, i.e. 6 months to one year as currenly he has to get a daily permit to enter which is tedious. It was explained by Pertang estate management that they are aware of this request but did not permit it as they had issue with Mr. Acanah previously and hence only permitted him to enter the estate area with daily permit. PSQM should consider to include these issues raised by the Kg. Pertang village head and Mr. Acanah in the SIA findings for Kg. Pertang.

It was confirmed through interviews with the management of Pertang estate and through interviews with the ex-rubber tappers that there were 34 rubber tappers planned for retrenchment and during the time of the verification, 5 had been re-employed by the company as mandores, while the rest accepted the compensation for termination and most had left the estate area except for another 6 workers whose application for reemployment is still being processed, or needed more time to stay within the estate area to looking for new housing or to wait for the end of the school year of their children before leaving. As such there are total of 11 ex-rubber tappers still staying at the estate. The remaining ex-rubber tappers interviewed informed that termination was not forced in favour of the company employing foreign workers, instead all the ex-rubber tappers had been given the option of re-employment or accepting compensation, and most had chosen compensation over re-employment to work in oil palm field work.

Auditor Conclusions: Closed with observations

Date of closure: 14 July 2016

Criterion 6.3.1 (Major indicator): 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.

Non-conformance no. RSPO00682 (Major non-conformity): It was found at Bukit Pilah estate that complaints from workers have not been resolved in an effective, timely and appropriate manner, i.e.: 1) Water being sourced from the water catchment is murky and of very poor quality. While clean water is being supplied once every 2 days from JBA, workers interviewed informed that this is only sufficient for drinking and cooking but not sufficient for showering and cleaning. Workers informed that this issue has been ongoing for up to a year and made several complaints to management. It is noted that the estate has recently gotten approval to install water tubes to provide an improved water supply, however planned completion of installation is only after July 2016, with no additional alternative clean water sources provided for the workers in the meantime 2) The toilet at worker’s house no. 146 is badly damaged for about a month, unable to be used and pro- duces a bad smell. The worker living in this house has complained about the toilet but no repairs have been done. 3) Although the estate has a complaints book, some complaints are not adequately captured and followed up with, as workers interviewed also informed that they are not aware who is the appropriate person to lodge complaints to and they have made complaints to their mandore, the office clerks and other personnel but no follow up was done.

Root Cause: Estate overlooked on the workers complaint and estate management will review it and solve the problem as soon as possible.

Correction: To completely record and make sure all workers complaint is completed by the estate management.

1) Water supply for drinking (consumable) has been increased – by appointing contractor (Shamiza En- terprise) - 2000L/2 days) and another contractor (Cisco Logistic) has been appointed to supply water for

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Page 91 of 132 other use (not consumable) – 200,000 gallon/day.

2) The toilet for house no. 146 has been fixed.

3) Complaints recorded in the complaint book is attended accordingly and monitored by Assistant Man- ager.

Corrective Action: To ensure all workers complaint is treated and recorded accordingly.

Verification result: During on-site verification conducted on 10 August 2016, it was confirmed that action had been taken since end of May 2016 to resolve the complaints of the workers at Kelpin Division of the estate (where the non-compliance was found) as follows: 1) Evidence was sighted that water supply for drinking and cleaning has been increased. Sighted contract forms for payment to contractor named Shamiza Enterprise for 14 deliveries of Sains water to Kelpin Division between 26 April to 22 May 2016 (contract form dated 30 May 2016), 19 deliveries between 24 May to 26 June 2016 and 16 Deliveries between 1 to 23 July 2016 (contract form dated 30 July 2015). Delivery of drinking water is once every 2 days of 2000 litres per delivery, which is water for drinking only. While for provision of additional clean water for washing and cleaning, there is evidence of contract form of payment of another contractor, i.e. Cisco Logistics which was engaged to deliver water on daily payment to the Kelpin Division pump house, with records of 316 trips done from 27 May to 30 June (contract form dated 30 June 2016) and 187 trips done in July 2016 (contract form dated 30 July 2016) with 25 gallons delivered daily 2) Complaints book shows several complaints recorded and actions taken, including the broken toilet at house 146 which has now been repaired as seen from photos and confirmed during on-site verification on 10 August 2016. 3) The estate assigned personnel to be in charge of taking and following up with worker’s complaints from Kelphin division. It was confirmed through interviews with the workers that they have been informed who they can lodge complaints to and that the estate management now assists very well to resolve any complaints raised by the workers.

Auditor Conclusions: Closed

Date of closure: 10 August 2016

Criterion 6.5.2 (Major indicator): Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sick- ness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc.) shall be available in the languages understood by the workers or explained carefully to them by a management official.

Non-conformance no. RSPO00683 (Major non-conformity):

1. Compliance with MAPA/NUPW Agreement: St. Helier, Sg. Gemas and Sg. Senarut: The management only began deducting RM3 from the employees’ salaries several months later (some have not backdated until August 2015) even though there is a MAPA/NUPW Field and Other General Employees Fringe Benefits Agreement, 2015 circular dated 4 Au- gust 2015 which states that the managers should discontinue the existing practice of deducting RM3/per month for each employee concerned towards the NUPW/AIA Personal Accident Group Scheme.

2. Contradiction between contract and practice or MAPA/NUPW Agreement: a.Clause 12: (Elaun Transportasi) of the employment contract for foreign workers states that airfare from the country of origin will be fully borne by the company. However, interviews with foreign workers from In- donesia, India, Nepal and Bangladesh at St.Helier, Sg.Gemas, Sg. Senarut and Pertang Estates, Kok Foh Mill and Nepalese workers at Muar River estate reveals that the workers paid their agents for their airfare. 2b. There is a difference between Clause 24.1 (Termination Clause) of the foreign workers’ contracts (April 2013 version) and Articles 19 and 20 of the MAPA/NUPW Collective Agreement 2015 pertaining to the critical and terminal illnesses, e.g. leprosy, TB, epilepsy, cancer, HIV and other terminal illnesses. Article 20

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Page 92 of 132 of the MAPA/NUPW Agreement states that the employee is eligible for sick leave for such prolonged illnesses whereas the company’s contract requires termination of employment. In addition, Article 19 (a) (ii) also requires hospitalization leave. 2c. There is no evidence of payment of RM 200 to foreign workers’ families (Monetary Gift for Departure for Employment) (Clause 15 of the employment contract in Malay, April 2013 version).

4. Validity of the contracts/ consent letters/other documents): • All estates: There is no evidence of extension of employment contracts for foreign workers who have worked for more than 3 years. • St.Helier Estate: Signatures of foreign workers’ contracts not standardised. E.g. Signature in contract and passport safekeeping form for foreign worker (Indian) Surya Trinadh Polisetti (Passport No: G 1926137) are different. The signature on the contract does not correspond to the passport. The same was observed for Devraj Titung (Nepali Passport: 104565). • Sg. Senarut Estate: Contracts for Ajay (M8495559) dated 11 August 2015, Guddu (M7961592) dated 11 August 2015, Rajbhar Jitendra (M1376945) dated 11 August 2015 not signed management. • Pertang Estate: The signature of foreign workers on the contracts for foreign workers, their passport safekeeping form (surat penyerahan passport) and their passports are not the same. Examples sighted for Indonesian worker Ajah (Passport No: AT499310); Bangladeshi worker, Md. Azad (Passport No: AE4806828). • Muar River estate: i) One file containing contracts of foreign workers which are signed by both parties, but does not contain job description and duration of contract. ii) Sighted another file containing contacts of employment of foreign workers which are not signed by the workers, and has no details of job description and place of employment, nor commencement and expiry dates. The document only contained the signature of company official. iii) Sighted six contracts of employment of Nepali workers where the parties‘ signatures were not placed in the appropriate places. E.g. The Nepali workers signed at the place which was meant for the company official, and the company official signed as a witness. iv) Working contracts for 3 Nepalese workers at Muar River Estate, i.e. Hari Bahadur Sarki, Gorakh Bahadur, Dinesh Bk were not signed by a witness. v) Workers whose contracts have expired, some more than five years ago, did not sign any contract renewals. Workers only verbally informed the Assistant Manager of their intention to continue working, and no further contract was signed to formalise this arrangement • Sg. Gemas estate: No contracts of employment for foreign workers who have worked more than 3yrs (e.g. Indian worker-Arvind Varma). Same was observed for some foreign workers at Sg.Senarut Es- tate.

Root Cause: 1. Insufficient monitoring on the latest MAPA/NUPW agreement updates. 2. a) As per current practise, SDP is paying the flight ticket to the workers from the last point of embarkation checkpoint at source country to Malaysia, a standard practice that applies to all countries. Thus, any travels expenses from villages far from the last checkpoint of embarkation is not included. For Bangladeshi workers, the contract is based on government to government under the Memorandum of Understanding on the employment of workers between the Government of Malaysia and the Government of the People’s Republic of Bangladeshi which SDP only pays a specific amount as Bon to Malaysian government. Based on the explanation above, management is not aware that workers paid to their agent due to no complaints made by the workers formally. b) Lack on the monitoring of the clause stated in the workers contracts. c) Insufficient monitoring on the company benefits by the operating units. Monetary departure gift is only for Indonesian workers and does not apply to non-Indonesian workers, and hence the contract for

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non-Indonesian workers used was incorrect. 3. Due to Estate’s understanding that the vendor letter of declaration is already sufficient as a mechanism to ensure the contractor complies to labour laws. Hence, no further monitoring done. 4. The contract extension by Workers Management Unit was not made available at the Operating Unit. • St Helier Estate: The new foreign workers coming from various education level and most of them cannot write. The signatory inside the contract was not counter check with the passport as the passport was send to the immigration for work permit endorsement. • Sg Senarut Estate: Contracts were overlooked by the management • Pertang Estate: The foreign workers coming from various education level and most of them cannot write. The signatory inside the contract was not counter check with the passport. • Muar River estate: i, ii) Estate management no updated of contract of employment. iii) Estate management over looked about this matters. iv) Estate management over looked about this matters. v) Estate management not aware and no directive or any documents related to the extension of employment contracts from WMC or related department. • Sg. Gemas estate: The estate not aware of the requirement of employment contracts. 5. Pertang Estate: There is a missed communication between the management and the workers involved.

Correction: 1. The OU will reimburse each employees’ involved accordingly. Note: List of the effected workers and the reimbursement amount will be provided. 2. a) Foreign workers Management Unit to provide the contract agreement on the statement of payment and evidence of the airfare payment. This airfare allowance are not applicable for Bangladeshi workers which was recruited under G2G programme. b) HR dept. has been informed on the difference and the clause will be revised accordingly. c) HR dept. has been informed on the difference and the clause will be revised accordingly. Effective July 2016 the departure gift was cease and replaced with new arrival allowance of RM150 for all workers which will be paid in their first month salary. 3. Estate to brief contractors on the minimum requirements of labour law. PSQM to establish a checklist for operating unit to check on the availability of the documents pertaining to labour law . 4. Contract extension for workers more than three years will be updated in stages. • St Helier Estate: Estate have prepared a new contracts and ensure the signature of the workers are identical with their passport. • SSE: The management signed the contract immediately. • Pertang Estate: Estate have prepared a new contracts and ensure the signature of the workers are identical with their passport • Muar River estate: i, ii ) Estate management will amended and updated of contract of employment. iii) Estate Management will be amended or prepare a new contract workers. iv)Estate management getting signature for witness by Field Supervisor. v) Estate management will prepare the extension of employment contract for workers more than 3 years. • Sg. Gemas estate: The estate will prepare the extension of employment contracts for the workers have worked more than 3 years. 5. Pertang estate: A different forum which comprises of PSQM has been established on 14 th July 2016 and investigation was carried out. Meeting with all affected workers has been conducted on 14 th July 2016 whereby all the workers have been re-briefed on the retrenchment.

Corrective Action: 1. Chief clerk has been appointed to ensure that any new updates on the MAPA/NUPW will be monitored accordingly. 2. a) SDP will monitor on the Airfare allowance in the future which WMU will confirmed the payment b) New task force has been developed to monitor on the terms and conditions in the foreign workers contracts. c) Chief Clerk to ensure all documents are recorded in good order. 3. Estate to do regular checking, on the availability of the documents related to labour laws. PSQM will include the monitoring of contract workers documents into the internal assessment checklist. 4. SDP HR is in the midst of updating new version of contract with Legal Department and related depart-

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ment to include extension contract clause as part of the contract which is planned to be out by end of the year 2016. This contract will then be communicated with all SOUs. • St Helier Estate: To ensure the contract being sign before surrender the passport to WMU for permit endorsement .The management must counter check the workers signatory between the contract and the passport • Sg Senarut Estate: Management will ensure all contracts are recorded accordingly. • Pertang Estate: To ensure the contract being sign before surrender the passport to WMU for permit endorsement. The management must counter check the workers signatory between the contract and the passport. • Muar River estate: i, ii, iii, iv) Estate management will monitor on the contracts of employment by developing a checklist for all the clauses and requirements of all contracts. v) Estate management will provide the contracts of extension agreement upon signed and written request from the workers. • Sg. Gemas estate: The extension employment of contract will be sign soon 5. Pertang estate: PSQM will monitor upon any retrenchment exercise in future to avoid any miscommunication.

Verification result: 1. Compliance with MAPA/NUPW Agreement: The current practice of all estates is that RM11 is deducted from foreign workers as NUPW fees including RM 3 for the personal accident group scheme, however since the issuance of the MAPA/NUPW Field and Other General Employees Fringe Benefits Agreement, 2015 circular dated 4 August 2015, the estates now reimburese RM3 to all foreign workers under NUPW as subsidy for the personal accident insurance scheme. For the estates identified in the non-conformity, evidence was sighted of reimbursement of the subsidy from August 2016 where this was not done immediately after the issuance of the circular, i.e:

St. Helier: Deductions for the NUPW/AIA Personal Accident Group Scheme ceased from December 2015. The reimbursements for the RM3 deducted from the workers from August to November 2015 will be done in August 2016 and this was stated in a memo by the estate manager dated 8/8/2016 to all estate workers who are NUPW members. This have to be verified during the next surveillance audit. Pay slips for Eswari A/P R. Chandran, Gopinathan A/L G. Hellapan, Muhamad Fatah and Mahyudin for June 2016 and July 2016 that were sighted on-site showed that the estate is subsidizing the RM3 for this insurance.

Sg. Gemas estate: Evidence of reimbursement of RM3 deductions per month made for NUPW/AIA Per- sonal Accident Group Scheme which was not reimbursed in August and September 2016 for workers under the NUPW scheme was sighted from sampled workers pay slips in June 2016 for workers named Rusni, Kamlesh Kumar and Ram Kripal, which showed insurance subsidy payment of RM9 (RM3 for June 2016, and reimbursement of RM6 for August & September 2015). It was confirmed from sampled pay slips of the workers from August, September and October 2016 that subsidy of RM3 per month started from Oc- tober 2016 onwards.

Sg. Senarut estate: The estate manager issued a letter dated 15/7/2016 to all workers in the estate who are NUPW members informing them that the MAPA/NUPW collective agreement dated 28/4/2015 states that there was a revision stating that the employer shall contribute to the RM3 per month towards the NUPW/AIA Personal Accident Group Scheme. This will commence from August 2015 based on the MAPA/NUPW Circular dated 4/8/2015. The deductions, however, were only stopped in January 2016. As such, reimbursements on June 2016 was done for 3 months period from October to December 2015 and the reimbursement for August and September 2015 was done in July 2016. The pay slips of workers named Shafiqul Islam, Mohinur Islam, Milon, Jayadi, Idris Ali and Saraj Miah were sampled and all reimbursements were clearly stated as Insurance Subsidy in their pay slips.

2. Contradiction between contract and practice or MAPA/NUPW Agreement: 2a. During on-site verification on 10 – 12 August, several foreign workers from each estate visited were interviewed informed that they had paid a lump sum to their agents including airfare, however as there was no record of the payment, it could not be ascertained if the lump sum payment actually included airfare, and whether payment was made to SDP’s own agents or other agents. In addition, there is possibility that said workers had paid to other agents within the worker’s country which are not engaged directly by SDP and hence not within the control of the company. There was evidence provided from SDP’s Human Re- sources Department for charges made out to the respective estates for new incoming workers, including the list of workers names and various charges deducted including for airfare subsidy of each workers.

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Sampled interviewed workers were crossed checked against the list of charges and it was confirmed that airfare subsidy was paid by the estates for the workers to the company’s HQ. As there is evidence of payment of worker’s airfare by the company and no documented evidence kept by workers on who they made payment of their airfare to to confirm that the sum paid included airfare, it is suspected that airfare being paid by workers is possibly due to request from agents in their home country. Several observations/opportunities for improvement are noted as below: i) Most workers interviewed also were not aware of their contract terms that their airfare is meant to be paid by the company. Hence, payment of airfare was voluntary and there is no element of lying to workers regarding free airfare to coierce them to come work for the company. However the company should ensure newly arriving workers are informed of this clause and advise workers to report to them if they have paid their agents for airfare, so that the company can further investigate possibility of unscrupulous practices by these agents. ii) Employment contracts of workers currently state that their airfare is ‘subsidized’ instead of fully paid. Nevertheless, the price of the airfare subsidy paid by the estate for foreign workers airfare was cross checked against typical prices of airfare from travel from their home countries and confirmed to be equivalent or more than the normal airfare price, for example, airfare subsidy payment for Indonesian workers is RM 900 and RM 600 for Indian workers.. However, the term ‘subsidy’ implies the company does not fully pay for airfare, hence the wording should be revised if it is indeed fully covered. This observation has been noted by the company is being considered in the review of SDP’s employment contract template.

2b. The company acknowledges that there are a number of inconsistencies with the current template of contracts used for foreign workers (as raised in non-compliance under CR2.1.1 as well) including the difference between Clause 24.1 (Termination Clause) of the foreign workers’ contracts (April 2013 version) and Articles 19 and 20 of the MAPA/NUPW Collective Agreement 2015 pertaining to the critical and terminal illnesses, e.g. leprosy, TB, epilepsy, cancer, HIV and other terminal illnesses. The company provided evidence of actions being taken to revise the contract template to resolve these issues (A copy of the draft contract template undergoing revision and comments for improvement was sighted). While the audit team acknowledges that technically this has not resolved the issue within 60 days as the contract template is still in draft, it is also acknowledged that inconsistencies in the contracts affects not only this SOU but the entire company as the same revised template will be intended for use throughout the whole of SDP’s plantations. Hence, additional time is required for SDP’s sustainability team to work together with their HR/recruitment department to revise the contract, ensure all inconsistencies including those not identified by the audit team have been removed, and have te draft undergo a proper review process by relevant personnel of the company before being approved for use throughout the company. As time of the audit and the verification, there were no cases found of employees terminated or provided long sick leave due to such illnesses, hence it could not be ascertained which is the actual practice.

2c. Clarification received from the company is that payment of RM200 (Monetary Gift for Departure to Lo- cation of Work) is provided only to the families of Indonesian workers and not to other foreign workers due to agreement with the Indonesian immigration department. The error is therefore in the employment contracts of other foreign workers which includes the generic statement that the monetary gift will be provided to their families. This was confirmed through interviews with Indonesian workers who confirmed that their families received the monetary gift, whereas other foreign workers confirmed their families did not received such a gift. The company has been made aware of this discrepancy in their worker’s contracts as well as several other issues pertaining to contract as raised during this and several other audits done at other SDP management units, and the company provided evidence that the worker’s contract template is currently under review and will be revised to remove the discrepancies. This will be followed up further during the next surveillance audit.

3. Third Party Contract Workers The company conducted a briefing for contractors of all estates under SOU 16 at Kok Foh POM on 21 July 2016, which included 21 participants as seen from attendance list for this briefing. Sighted materials of this training entitled ‘Workers Contract, Monthly Palyship and Documentation’ which describes the labour requirements which contractors are required to comply with. The estates have also required their contractors to carry out assessment of compliance to labour requirements and complete an assessment of compliance checklist as per “Contractor’s Document Compliance Checklist Related to Labour Law”. This is a self-declaration by the contractors themselves based on their own judgement of their level of compliance. The actual level of compliance will be verified during the internal audit done by PSQM for the operating unit. As this is a newly implemented mechanism, the intent is for the company to guide

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Page 96 of 132 contractors on how to comply with labour requirements rather than immediately penalizing them for non- compliance. The effectiveness of this process and the actual level of compliance of the contractors to the labour requirements in the law needs will be evaluated further during next surveillance. Evidence of assessment of compliance of contractor to labour requirements was sighted as follows:

Sg. Gemas estate: Done for one contractor supplying FFB transport services, i.e. Supramaniam Palanis- am Enterprise, where results of evaluation showed records maintained include all except contracts of employment and overtime records.

St. Helier estate: St Helier estate conducted their own RSPO Contractor Briefing on Workers Contract, Monthly Pay Slip and Documentation on 23/7/2016 at the estate meeting room. Contractors that attended the briefing were 1) V. Nadarajan Enterprise (machinery repairs) 2) RSKP Brothers (FFB Transport). These contractors have carried out the assessment of compliance to labour requirements and completed an assessment of compliance checklist as per “Contractor’s Document Compliance Checklist Related to Labour Law”.

Sg. Senarut estate: Cekap Sepakat Enterprise (FFB transporter) is the only contractor that attended RSPO Contractor Briefing on Workers Contract, Monthly Pay Slip and Documentation held on 21/7/2016 Kok Foh Mill that was conducted by the Assistant Manager for Pertang Estate. Training for the other contractors that were unable to attend is planned to be carried out in August 2016 though exact date has yet to be confirmed. This contractor have filled up the Self-Declared Contractors Document Compliance Checklist Related to Labour Law based on their own judgement of their level of compliance.

Muar River Estate: The following contractors attended the RSPO Contractor Briefing on Workers Con- tract, Monthly Pay Slip and Documentation held on 21/7/2016 at Kok Foh Mill that was conducted by the Assistant Manager for Pertang Estate: 1) Cekap Sepakat Enterprise (FFB transporter) 2) Ponvel Enterprise (Machinery rental and earthwork contractor) 3) Cheong Tong Motor (Supply of spare parts and repair for machineries) These contractors have carried out the assessment of compliance to labour requirements and completed an assessment of compliance checklist as per “Contractor’s Document Compliance Checklist Related to Labour Law”.

Pertang estate: Assessment of compliance done for 5 contractors, and results were for some contractors is that some contractor maintain labour-related documents well but certain documents pertaining to labour requirements are not made available, e.g. one contractor named Ponvel Enterprise did not have available records of permits, worker’s passports, overtime records, attendance records, medical checkups done, work schedule, records of working hours and annual leave records.

4. Validity of the contracts/ consent letters/other documents):

Sg. Gemas estate: There are 27 foreign workers who have been working more than 3 years, including 5 Bangladeshis, 13 Indonesians, 9 Indians, Evidence of contracts extension sighted for all workers who have worked more than 3 years was sighted, e.g. i) Aravind Varna (Indian), original contract dated 13/11/2010 and 3 rd contract extension dated 13/11/2015 sighted and valid for one year ii) Jumadi (Indonesian), joined 12.08.2013 and 3 rd contract extension sighted dated 26 July 2016 iii) Rusni (Indonesian) joined 16.07.2012 and 4 th contract extension sighted dated 4 July 2016 iv) Atika Putra (Indonesian) joined 16.07.2012 and 4 th contract extension sighted dated 4 July 2016

St. Helier estate: Contract extensions were sighted for 11 Indonesian workers and 5 Indian workers who has worked 3 years or more (some have worked for only 2 years, and contract extension was prepared for them due to misunderstanding by the estate staff).

New contracts for foreign worker (Indian) Surya Trinadh Polisetti (contract dated 15 July 2013) and for Devraj Titung (Contract date 12 August 2014) was sighted. Signature on contracts was confirmed to be

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Page 97 of 132 consistent with signatures on the worker’s passports.

During on-site verification on 11 August 2016, the was sighted that the estate maintains copies of em- ployments contracts together with copies of their passports for easy comparison of worker’s signature. Sample contracts and passports of workers showed consistent signatures, i.e. for workers below: i) Justin Thanga Nadar (contract dated 25 July 2016) ii) Dinabandhu Mondal (contract dated 09 August 2016) iii) Gopal Biswas (contract dated 09 August 2016) iv) Sukanto Mitra (contract dated 09 August 2016) v) Kabindra Biswas (contract dated 09 August 2016)

Sg. Senarut estate: During on-site verification on 10 August 2016, contract extensions have been sighted for 29 workers who have been working above 3 years. It was confirmed that all necessary information, including workers details, date, signature of worker, management and witness have been stated on the contract extensions. The estate has a plan to prepare contract extensions for remaining foreign workers (non-harvesters) who have worked more than 3 years.

The estate provided new contracts prepared for workers named Ajay (M8495559) dated 11 August 2015, Guddu (M7961592) dated 11 August 2015, Rajbhar Jitendra (M1376945) dated 11 August 2015 using contract template version dated January 2015 and it was confirmed that the contracts were signed by management.

Muar River estate: During on-site verification on 11 August 2016, it was confirmed that extension of employment contracts have been prepared for all foreign workers who have worked for more than 3 years, and new employment contracts were developed for all foreign workers who having been working less than 3 years. Job descriptions, duration of contracts and other relevant information were stated in all contracts. New working contracts for 3 Nepalese workers at Muar River Estate, i.e. Hari Bahadur Sarki, Gorakh Bahadur, Dinesh Bk were provided and confirmed to have been signed by a witness. In addition, contracts for all other foreign workers were checked and confirmed to have been duly signed by workers, management and a witness in correct places. Workers have also signed on the front page where the job description, duration and other details are stated. Muar River estate has also prepared contract extensions for all foreign workers who have been working more than 3 years, including 13 Indonesian workers, 12 Bangladeshi workers, 1 Sri Lankan and 1 Nepalese. This was cross checked and confirmed against the estate’s master namelist of workers.

Pertang estate: During on-site verification, contract extensions were sighted for all 24 foreign workers working more than 3 years, including 15 Indonesian workers, 3 Bangladeshi, 5 Indians and 1 Nepalese.

New contracts using contract template dated January 2015 (previous version was format dated April 2013) were also sighted for Indonesian worker Ajah (Passport No: AT499310); Bangladeshi worker, Md. Azad (Passport No: AE4806828). Signatures on the the new contracts was consistent with the signature on their passports.

Samples of other workers contracts was compared with their passports with results as follows: i) For contract of worker named Chepang Santosh (Nepalese) dated 27.11.2015, signature on contract was consistent with his passport ii) For contract of worker named Abdulloh Rahman (Indonesian) dated 04.01.2016, signature on contract was consistent with his passport iii) For contract of worker named Mawardi (Indonesian) dated 04.01.2016, signature on contract was consistent with his passport

Auditor Conclusions: Closed with observation

Date of closure: 12 August 2016

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Criterion 6.5.3 (Minor indicator): Growers and millers shall provide adequate housing, water supplies, medical, educational and welfare amenities to national standards or above, in accordance with Workers’ Minimum Standard of Housing and Amenities Act 1990 (Act 446) or above, where no such public facilities are available or accessible (not applicable to smallholders).

Non-conformance no. RSPO00684 (Minor non-conformity): Bukit Pilah estate: Visit to the line site revealed that one house had a broken window frame which has not been fixed or replaced. Worker raised his concern that this exposed his belongings to thefts/burglaries. St.Helier Estate: a) The refuse in the housing site (Block D) are not disposed of satisfactoriliy. (see Workers’ MInimum Housing and Amenities Act 1990 (Section 23 (i)(c)). b) Some of the perimeter drains around the workers’ linesite (Block D) are blocked. (see Workers’ MIn- imum Housing and Amenities Act 1990 (Section 23 (i)(b)).

Root Cause: Bukit Pilah Estate: Delayed in replacing the broken window frame.

St.Helier Estate: a) The refuse seen during the visit are the recycle waste collected by our worker. b) There were banana trees planted by our workers near the parameter drains. This have contribute to broken drain and blocking the water flow from line sites

Correction: Bukit Pilah Estate: To complete replace broken window as soon as possible.

St.Helier Estate: a)The refuse immediately collected by our contractor b) All banana Trees along the parameter drain will be removed immediately

Corrective Action: Bukit Pilah Estate: A staff has been appointed to ensure all complaints are treated in timely manner accordingly.

St.Helier Estate: a)Training and Gotong Royong will be conducted to ensure all workers understand the requirement to maintain clean compound b) There will be a continuous monitoring on the workers housing area.

Verification result: During on-site verification on 10 August 2016, it was seen from the Workers Complaints Record Book Kelphin Division w.e.f. March 2008 there are records of some complaints, actions taken to resolve these complaints, and photographic evidence of actions taken, e.g.: - Broken toilet at house 146 which was fixed on 29 May 2016 - Broken door at house no. 1 which was fixed on 2 June 2016 - Broken door at house no. 150 which was fixed on 1 June 2016 - Leaking ceiling at house no. 145 which was fixed (no date stated) - Broken bedroom door at house no. 160 which was fixed on 6 June 2016 - Stuck toilet at house no. 1 which was desludged on 19 July 2016.

During the verification, 3 Indonesian male foreign workers from Bukit Pilah estate Kelpin Division were interviewed, including some who were present during the initial interviews done during the recertification audit. The workers were appreciative and confirmed that the company had since taken immediate action to make repairs for their housing and advise the workers on who are the appointed representatives that workers can make complaints too. The workers also confirmed that there was no backlash from the management for the complaints that were made during the recertification audit.

Auditor Conclusions: Closed

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Date of closure: 10 August 2016

Criterion 6.9.1 (Major indicator): A policy to prevent sexual and all other forms of harassment and violence shall be implemented and communicated to all levels of the workforce.

Non-conformance no. RSPO00685 (Major non-conformity): 1) The gender committee members lack awareness on RSPO requirement for sexual harassment policy, e.g. that the policies need to be communicated to all levels of the workforce 2) There is no activities planned for education and empowerment of women pertaining to sexual harassment issues or monitoring conducted for effectiveness of implementation of the sexual harassment policy. 3) There has neither been any refresher training for staff who attended training on sexual harassment nor are there new trainings to gender committee members. Staff who were trained previously have either left the service or transferred to other estates.

Root Cause: Insufficient training and awareness on these matters.

Correction: Refresher training has been conducted to all employees on the Gender Committee by the SEPU Unit, on 22 nd July 2016 and the training were then extended to all workers.

Corrective Action: Estate will ensure a continuous refresher training to all employee accordingly

Verification result: A training by PSQM entitled ‘Introduction to Reproductive Rights Policy & Gender Committee Refresher Training’ was conducted on 22 July 2016 for 34 participants at Kok Foh mill, including managers, assistant managers and gender committee representatives, with evidence of attendance lists and photos. Training materials entitled “Gender Committee Awareness Program” used during the training was sighted and covered topics such as what is the gender committee, the company’s Gender Policy and Social policy, the roles of the gender committee to empower and develop women as well as for implementation of effective and procedures and mechanisms pertaining to sexual harassment, discrimination and others, women’s issues such as domestic violence, types of sexual harassment, and prevention methods. The company’s mechanism for complaints and complaints form for sexual harassment was also explained in the training materials. During interviews with gender committee representatives from each estate on 10 - 12 August 2016, it was confirmed that they had attended the training and was able to explain what was briefed regarding sexual harassment and domestic violence, and the mechanism for grievances pertaining to these issues.

There is evidence sighted that the representatives of each estate has conducted a similar training at their estates on the “Gender Committee Awareness Program” and the trainings were done using the same training materials. Details of the estate trainings as confirmed during the verification audit was as below:

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Page 100 of 132 tent, including types of sexual harassment, the company’s gender policy and complaints mechanism. St. Helier estate: Estate level training was done on 26 July 2016 at meeting room at St Helier for 20 female workers (including rubber tappers) and on 27 July 2016 as a townhall (medical) at the St. Helier Hall for 20 female workers. Kok Foh mill & estate: Combined training for mill and estate female workers was done on 27 July 2016 with 16 participants, including records of meeting minutes and photos. Pertang estate: Estate level training was done on 25 July 2016 by a female assistant to 9 female participants. Training attendance list and photos were sighted. Sg. Sabaling: Estate level training was done on 9 August 2016 for over 60 male and female workers. Signed attendance lists, photos and summary of the briefing signed by the gender committee chairperson as well as the secretary were sighted. Some of the workers in the attendance list were noted to be not present and there should be a separate session held for the workers who were not present during this briefing.

Female workers interviewed at all estates confirmed that they had joined the trainings and they were trained using the same training materials. They were able to explain well the company’s policies on sexual harassment, domestic violence and the grievance mechanism.

Auditor Conclusions: Closed with observations

Date of closure: 12 August 2016

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

Non-conformance no. RSPO00686 (Major non-conformity): 1) There is no clear policy to protect the reproductive rights of women. There is a phrase in the Social Policy which states that “the company is committed to ‘develop and apply a policy to ..... and to protect their reproductive rights.” (HQ) however no such policy was sighted. 2) As there is no reproductive rights policy yet, there is no documented evidence of communication of the policy to all levels of the workforce. E.g. interviews with workers and staff at the reveal that the workers and staff do not understand what reproductive rights constitute. 3) There is no activities planned at Sg. Gemas, Pertang, Sg. Senarut for education and empowerment of women pertaining to reproductives right or monitoring conducted for effectiveness of such education 4) The gender committee members lack awareness on RSPO requirement for reproductive rights policy, e.g. that the policies need to be communicated to all levels of the workforce

Root Cause: SDP’s understanding is that the reproductive right policy is already embedded in the Social and Hu- manity Policy. Therefore, no specific Reproductive Rights Policy Established.

Correction: Training on awareness of the Reproductive Rights policy has been conducted to all employees by SEPU Unit on 22nd July 2016 and the training were then extended to all workers.

Corrective Action: Estate will ensure a continuous refresher training to all employee accordingly

Verification result: It was confirmed that the company’s Social and Humanities Policy dated January 2015 includes a statement of protection of reproductive rights of women and hence not required to develop a separate policy for protection of reproductive rights. It is noted that the policy does not specify any commitment to ongoing activities such as education and awareness programmes for the purpose of implementation of this policy. This is noted as an opportunity for improvement.

The company has developed training materials entitled ‘Introduction to Reproductive Rights’ Policy in our Plantation’. The training material includes discussion on issues pertaining to gender discrimination, sex-

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Page 101 of 132 ual health, and family planning, and includes the definition of reproductive rights, global statistics on reproductive issues, SDP’s policy on protection of reproductive rights, as well as the efforts taken by SDP to protect the reproductive rights of their workforce and a reminder to go through the Gender Committee to report any issue pertaining to this. The material ends with a quiz to check the understanding of training participants.

A training by PSQM entitled ‘Introduction to Reproductive Rights Policy & Gender Committee Refresher Training’ was conducted on 22 July 2016 for 34 participants at Kok Foh mill, including managers, assistant managers and gender committee representatives, with evidence of attendance lists and photos. Training materials used for the session were entitled ‘Introduction to Reproductive Rights’ Policy in our Plantation’. The training material included discussion on issues pertaining to gender discrimination, sexual health, and family planning, and includes the definition of reproductive rights, global statistics on reproductive issues, SDP’s policy on protection of reproductive rights, as well as the efforts taken by SDP to protect the reproductive rights of their workforce and a reminder to go through the Gender Committee to report any issue pertaining to this. The material ends with a quiz to check the understanding of training participants.

During interviews with gender committee representatives from each estate it was confirmed that they had attended the training and was able to explain what was briefed regarding the company’s reproductive rights policy

There is evidence sighted that the representatives of each estate has conducted a similar training at their estates on the “Gender Committee Awareness Program”, and the trainings were done using the same training materials. Details of the estate trainings as confirmed during the verification audit was as below:

Sg. Gemas estate: Estate level training was done on 10 August 2016 for 5 female workers (all general workers). Evidence of photos and signed attendance list was sighted. Bukit Pilah estate: Estate level training was done on 25 July at Kelpin Division for about 30 female workers, 26 July 2016 at Bukit Pilah/New Rompin Division for 39 female workers and 27 July 2016 at Kelamah Division for about 30 female workers. Evidence of signed attendance lists and photos of the training was sighted. It is noted that some female workers at each division were not able to join the the training, and the estate should conduct a separate sessions for those who could not join. Muar River estate: Estate level training was done on 1 August 2016 between the gender committee, management, assistant and some worker representatives to brief on the training on company policies pertaining to sexual harassment and reproductive rights. Sg. Senarut: Estate level training was doneon 10 August 2016 between gender committee representatives and females workers, with training attendance list and photos sighted showing 7 participants in the training. One participant was interviewed and was able to explained well on the training materials content, including on the company’s reproductive rights policy. She confirmed that there is no restriction of the company in reproductive rights of workers and previously there were workers with very large families, up to 13 children, and the estate accommodated by providing an additional house for workers with large families. St. Helier estate: Estate level training was done on 26 July 2016 at meeting room at St Helier for 20 female workers (including rubber tappers) and on 27 July 2016 as a townhall (medical) at the St. Helier Hall for 20 female workers. Kok Foh mill & estate: Combined training for mill and estate female workers was done on 27 July 2016 with 16 participants, including records of meeting minutes and photos. Pertang estate: Estate level training was done on 25 July 2016 by a female assistant to 9 female participants. Training attendance list and photos were sighted. Sg. Sabaling: Estate level training was done on 9 August 2016 for over 60 male and female workers. Signed attendance lists, photos and summary of the briefing signed by the gender committee chairperson as well as the secretary were sighted. Some of the workers in the attendance list were noted to be not present and there should be a separate session held for the workers who were not present during this briefing.

Auditor Conclusions: Closed with observations

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Date of closure: 12 August 2016

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

Non-conformance no. RSPO00687 (Minor non-conformity): Workers at Sg. Senarut and during the larger stakeholder consultation expressed their dissatisfaction with the grievance mechanism for sexual harassment in the form of a complaints form which they assert deters employees from voicing their grievances because they are concerned that their anonymity would not be respected and protected.

Root Cause: Insufficient training and awareness on this matter.

Correction: Refresher training has been conducted on the grievance mechanism for sexual harassment and to inform them that all records are protected.

Corrective Action: Estate will ensure a continuous refresher training to all employee and all mechanism is well communicated accordingly.

Verification result: A training by PSQM entitled ‘Introduction to Reproductive Rights Policy & Gender Committee Refresher Training’ was conducted on 22 July 2016 for 34 participants at Kok Foh mill, including managers, assistant managers and gender committee representatives, with evidence of attendance lists and photos. Es- tate level trainings on the subjects were also conducted at each estate. During on-site verification conducted between 10 to 12 Augustb 2016, it was confirmed that participants in the briefings had been briefed on the grievance mechanism for sexual harassment. Although it is confirmed that the company still requires them to complete the form, it was informed that the anonymity of complainants will be protected and access to the complaints form restricted only to relevant persons-in-charge. At the time of this audit and the verification, there were no cases of sexual harassment reported, hence the efflectiveness of implementation of this system to ensure the anonymity of complainants could not be confirmed and will be evaluated further in future if such cases arise.

Auditor Conclusions: Evidence of implementation of corrective action plan accepted. Effective- ness of implementation will be verified at next surveillance audit

Criterion 6.12.3 (Major indicator): Where temporary or foreign workers are employed, a special labour policy and procedures shall be established and implemented.

Non-conformance no. RSPO00688 (Major non-conformity): There is no documented evidence of a special labour policy which should include: ° No contract substitution; ° Post-arrival orientation programme to focus especially on language, safety, labour laws, cultural practices etc.

Root Cause: SDP’s understanding is that the policy is in across many types of documentation and implementation. In terms of implementation, we have Foreign Workers Management Centre who handles the foreign workers and includes the post arrival orientation programme before their posting to respective estates.

Correction: Foreign Workers Management Unit has SOP that clearly spell out on the requirement on no contract of substitution and post arrival orientation programme. SOP as per attached.

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Corrective Action: Foreign Workers Management Unit has SOP that clearly spell out on the requirement on no contract of substitution and post arrival orientation programme.

Verification result: The company provided their SOP no. WMU/WMC-S0PP/MARCH2016 for the Workforce Management Centre (WMC) Sua Betong, which is the main recruitment centre of SDP where orientation and induction for all newly arrived foreign workers is carried out before the workers are relocated to respective SOUs within Malaysia. The SOP includes the elements of a labour policy to protect migrant workers. Details to ensure no contract substitution and post arrival orientation programme are defined in this SOP as follows: - Section 3.3.4 WMCO4 regarding deployment of workers specifies that Employment contract with the foreign workers will be endorsed at Operating Units (OU) and there shall be no substitution of contract - Section 3.3.3 WMCO4 regarding Induction Programme specifes the objectives of the programme is to comply with the government guidelines/ requirements (Malaysian Palm Oil Association [MPOA] & MAPA), on foreign workers induction process incorporating modules on Company’s overview, basic labour laws, criminal law and procedures, immigration regulations, work safety, Malaysian culture and language. Under Section B. Scope, it is specified that induction materials are guided by MPOA/ MAPA modules with inputs from PSQM, Corporate Communication and Group IR (Corporate video and safety) and shall include the following:- i) Introduction to Sime Darby Plantation & Oil Palm ii) Language and Culture in Malaysia/ Estates/ Mills i) Safety and Health in the Workplace iii) Civil/ Crime Laws, Drug Laws and Road Transport Laws iv) Immigration Regulations v) Labor Law/ Employment Contract vi) Child Protection Act

Auditor Conclusions: Closed

Date of closure: 26 July 2016

No non-compliances were raised against the RSPO Supply Chain Certification System (SCCS)

3.4 Noteworthy Positive Components

No. Clause Positive Observation

1. - - Good filing system maintained at mill and estates. Documents requested were re- trieved quite fast. - Good cooperation from all estate and mill staff throughout the audit process 2. - Good housekeeping observed in Mill and Sg. Gemas, Pertang Estates as evidence of 5’S implementation. Communication and informations disseminated with clear signages and fully utilization of notice board as observed. 3. 4.2.4 Kok Foh Mill has a composting plant producing approximately 2400 MT of compost a month and fully applied at Kok Foh estate and part of the SOU’s recycling strategy

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4. 6.3.1 Workers at Kok Foh estate, Sg. Senarut and Muar River Estate generally mentioned that the working environment in the company is very positive. The workers are satisfied with the work and living conditions. All workers at these estates reported that in case of any complaints/problems with housing the estate management responds quickly to rectify the issue. No issues with the estate management were reported by the workers, and workers informed that water quality, pay and other conditions were good. 5. 6.4 1. The management of Sg. Gemas Estates updates the contracts for new foreign workers according to the latest template. 2. All employment contracts, consent forms and agreements are signed, in order and well kept. 6. 6.5 The management of Pertang Estate began reimbursing RM3 from the employees’ salaries immediately after the MAPA/NUPW circular was received in August 2015.

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3.5 Issues Raised by Stakeholders and Findings Pertaining to Issues

A) Issues Raised during Stakeholder Consultation Meeting Below are the issues raised/comments received during stakeholder consultation done on 24 May 2016 at Kok Foh estate/mill meeting room and results of verification of the issues or comments from the audit team.

No. Issues Raised Audit Verification/Comments 1. Commented that run-off during heavy rain will carry sedi- All estates have road maintenance mentation into the rivers. He remarked however, that programs. During on-site visits it was Sime Darby estates have among the best road system observed that roads and field drains (tarred), with minimal run-off. are generally well maintained and these was not significant incidences of Sekolah Kebangsaan Rompin (Rompin National School) erosion observed. receives contributions from Kok Foh estate, being part of their CSR activity. CSR activities are being carried out by the company as described under Suggestions: CR6.11. However it was noted as an - A sedimentation trap be constructed to minimise river observation that at Kok Foh estate, a sedimentation. CSR activity is only carried out with the workers. Records of contributions to - Cleaning of undergrowth to avoid snake bites. Rompin National School were not sighted.

Management should take suggestions into consideration. 2. Since FRIM conducts mainly forest research, he wants to The company’s HCV report includes know what FRIM can offer to, or assist the estate in. So evidence of consultation between the far the only interaction FRIM has had with the estate only HCV assessment team with photos of revolved around matters pertaining to land encroachment. consultation with Semelai people and However, since this is a matter which is not within the Department of Irrigation and Drainage. scope of FRIM, and since FRIM does not have any en- However, other evidence of consulta- forcement powers, there is nothing it could do. tion with other stakeholders, e.g. For- estry/Wildlife Departments for HCV as- There has been no request from the estate on FRIM’s sessment was not sighted. This was opinion with regard to any HCV issues. Note: Ladang noted as an observation. It is also not- Pertang is next to the Pasoh Forest Reserve. ed that stakeholders interviewed throughout this audit did not mention Suggestion: any specific potential HCV areas within - To have an educational centre where the public are the estate areas that they wish to be informed of oil palm operations as well as the im- protected. portance of the mill. Management should take suggestions into consideration. 3. There is a good relationship between Geddes Estate Vil- CSR activities are being carried out by lage and the estates. He mentioned that FELDA gives the company as described under RM10,000 to each household affected by natural disas- CR6.11. Noted as positive feedback ter. from Geddes Estate Village.

Suggestion: - Sime Darby to give some contributions to the local community as part of the company’s Corporate Social Responsibility, being their immediate neighbours. How- ever, he confirms that no requests for contribution has been made yet to Sime Darby. 4. The school (SK Rompin) did request for funding, and CSR activities are being carried out by Sime Darby has so far given only between RM300 to the company as described under RM500 per year. CR6.11.

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Suggestion: - Carry out social activities which the local community can participate in. 5. No issues with regard to estate boundaries or land dis- The estates do not regularly maintain putes. their boundary stones. However, estate There is a graveyard located near the border with Ladang boundaries are clearly demarcated with Kok Foh. Requests not to prohibit the community from trenches as confirmed during field vis- Ladang Geddes to use the estate road to gain access to its. A stakeholder from the surrounding the graveyard. estate, i.e. the senior assistant of Cheong Wing Chan estate was interviewed and confirmed that there was no land dispute between their estate and Kok Foh estate and was aware that the boundaries were demarcated in the form of trenches. He also had not heard of any ongoing land dispute between the estate and other surrounding stakeholders. Other stakeholders including heads of surrounding villages of the estates interviewed during the stakeholder consultation meeting informed that they did not know of any ongoing land disputes. Hence there are no identified land disputes in SOU16: Kok Foh estates. 6. There were plans to build a road for the community to ac- The company’s report includes evi- cess the graveyard, which they use about 10 times a dence of consultation between the year. At the moment, each time they need to go to the HCV assessment team with photos of graveyard, the Auxiliary Police would have to open the consultation with Semelai people and gate. Department of Irrigation and Drainage. No feedback was sought from the local community when Other evidence of consultation with preparing the SIA and HCV assessments. stakeholders for HCV assessment was not sighted. This was noted as an observation. It is also noted that stakeholders interviewed throughout this audit did not mention any specific potential HCV areas within the estate areas that they wish to be protected. It was found that the SIA only focused on 2 villages, Kg. Parit Gong and Kg. Tambahtin. However, the SIA for Per- tang did not include the local community of Kg. Pertang. Smallholders such as Pekebun Kecil i.e. Foo Ng Moi, Chong Fook Hong, Ladang Yau & family etc. were also not consulted. This was raised as Non-conformance no. RSPO00681 . 7. Noted the positive impact for the local community, namely Noted as a positive comment. employment opportunities. 8. There are no issues. Confirms that foreign workers are No issues pertaining to any of these also allowed to join NUPW as members. aspects were found during this recertification audit. Confirms that PPE are issued by employers, and are re- placeable when spoilt/damaged.

Confirms that annual leave taken is payable cumulatively in December of each year.

Minimum wage is being practiced. Terms of employment

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are based on MAPA – NUPW agreement.

Following circular by NUPW in August 2015, employers now no longer deduct RM3.00 per month from salary in October 2015.

Among other benefits include issuance of cooking oil and 5kgs rice per worker every two months, and hand phone top-ups worth RM5.00 per person.

Water from SAINS is subsidized, but treated water from the water catchment area is provided free of charge. Only have to pay for own electricity bill.

Rubbish collection: 3 times per week, and the collector also takes away bulky items.

9. Compared to before, there have been a lot of improve- Noted as a positive comment. It was ments in terms of safety, management, etc. Payment sys- found that payment of contractors and tem is now more effective, efficient and made online. suppliers are made by SDP’s GTM There is no need to follow-up. Very pleased with the cur- office and payment made from the rent practice. GTM is also made in a timely manner as per the agreement of the contract. No tender system because printing business is limited, and he is supplying only to the local estate offices (Com- ment from printing supplier)

Supplies pumps and spare parts to the mill. So far, so good. No issues to raise (comment from mill equipment supplier). 10. Was brought up in the estate. Agrees that there are a lot Scheduled wastes included fluorescent of improvements compared to before. Aspects of safety tubes are being managed accordingly and social engagements have improved. Economic status as described under Section 3.1, CR5.3. of the local community has also improved over the years.

Confirms that in the agreement signed with Sime Darby, there is a clause that states that florescent lights fall under ‘scheduled waste’ and need to be disposed of appropriately. Agreement also emphasizes that safety measures need to be complied with by his workers when working within Sime Darby premises.

11. Aspects of safety is emphasized, and the mill is very strict No issues were found pertaining to about wearing PPE, including contractors and suppliers usage and issuance of PPE. Please who are visiting see Section 3.1, CR 4.7. 12. There is a new circular from the Indonesian embassy that There were a number of issues found contract extensions are frozen for now, until insurance pertaining to contracts, contract matters are resolved (Foreign Workers Protection extensions and contract terms, as Scheme). However, this issue does not apply to new described in Section 3.1, CR6.5 and workers. The problem lies when contract extensions of raised as Non-conformance no. existing workers are not reported to the Konsulat resulting RSPO00683. in non-renewal of insurance. Any extension of contract come with a new agreement.

No problem with the agent.

For all employment contracts, the Indonesian embassy uses a standard template. Template issued by company can also be used concurrently (signing of two contracts). It is mandatory for workers to keep a copy of the contract.

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Contract are issued in two languages, i.e. Bahasa & Eng- lish.

For workers who have finished their contract, their flight home is borne by the company. Those going back on holiday, would have to pay for their own airfare. For new workers, the practice varies between companies.

Suggestion: - Insurance coverage be increased from its current limit of RM10,000.00. There was an incident where the medical cost of one workers reached RM30,000 for the treatment of cancer. - Increase in local and foreign workers’ welfare. 13. Gender Committee has less than 30 members. Most re- The were several non-compliances cent Gender Committee activities was Mothers’ Day cel- found pertaining to CR6.9.1 and ebration. CR6.9.2. These were raised as Non- conformances no. RSPO00685, Trainings/capacity building was held twice, i.e. in Port RSPO00686 and RSPO00687. Dickson and Merlimau. It covered topics such as sexual harassment, child care, women’s reproductive rights, how Gender Committee activities can be carried out, how to get approval, who is the person in charge, relevant RSPO requirements, etc. Gender Committee is now planning to train its own committee members, make them understand what child abuse is, understand about women’s reproductive rights, sexual harassment, and domestic violence. Each estate has two representatives on the Gender Committee.

Issues related to sexual harassment, domestic violence, reproductive rights are also being disseminated to the male family members during meeting. Male workers don’t go for training, but they are briefed during morning muster.

Complaints form that needs to be filled up has a column identifying the complainant. This practice may need to change as it may stop victims/whistleblowers from lodg- ing a report especially on matters relating to domestic violence and sexual harassment. A previous domestic violence case was not formally documented as requested by the victim. However, the matter was handled at management level within the estate.

Depending on the case, names of complainants are kept confidential. In serious cases, Puan Malliga from HQ would be called to provide counselling.

14. Creche that is available is clean and the staff is trained. Noted as positive feedback on the Stakeholder interviewed informed that he was brought up creche. in the estate creche; and did not encounter any problems. Confirms that the creche functions well, and she has four children there. 15. There are issues of cow owners allowing their cattle to It was found that there is an issue of Muar roam in the estates area. Cow owners are requested to River estate allowing cow owners to let in reign in their cows so they would not loiter into the estate. cows into the estate and it was confirmed from interviews with a cow owner that the Suggestion: issues has been resolved since last year. - Upgrade laterite to tarred road. However, documentation of the process

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by which the cow encroachment issue at Muar River estate involving 700 cows belonging to 10 owners was addressed, and its outcome was not available. However, this is noted as an observation.

16. Regarding cows, best way is to talk to the owners, and As above. dig trenches to disable cows from coming in. This cow issue is of concern when trees are still small.

17. No issues to raise. Company pays according to the Confirmed during this audit that there agreement. Medical benefits are increased every 3 years. are no issues pertaining to salary payment. See Section 3.1, CR6.5. 18. There is a recent circular which mentioned the recent Management should communicate this change to increase the housing loan (under employees’ benefit to their workers. Housing Ownership Scheme) from RM60,000 to RM100,000. Applicable only to those who owns their own piece of land. Noted: Some workers may not be aware of this benefit as yet. 19. Basic wages of those who have just joined is higher than Found several legal non-compliances those who have been working longer. pertaining to deductions which was raised under Non-conformance no. Confirms that workers are not forced to make salary de- RSPO00676. ductions.

Overtime work is seasonal, but this year’s harvest has been low. Maximum working hours is 10, and maximum 12 (with overtime).

There is insurance subsidy, but no meal allowance (it is one or the other).

RM3.00 NUPW payment was implemented in October 2015 as per NUPW circular of August 2015 where 2 months’ worth of payment was refunded to workers. 20. Suggestions: These suggestions should be taken - Carry out more activities or events where local commu- into consideration by the management. nity can be invited. - More frequent communications be carried out with stakeholders. 21. Suggestions: These suggestions should be taken - Promote and practice healthy habits. into consideration by the management. - To report infectious diseases e.g. dengue to the government health clinic. 22. Suggestion: These suggestions should be taken - To set up a committee to assist local workers who wish into consideration by the management. to go for early retirement (in terms of training, material and emotional assistance). 23. Suggestions: These suggestions should be taken - Increase CSR activities into consideration by the management. - Ensure health of foreign workers - Fund contributions for Gender Committee activities. 24. Suggestion: These suggestions should be taken - To invite Suruhanjaya Tenaga (Power Commission) to into consideration by the management. carry out inspection on electrical installations around the mill and estates. 25. Suggestion: These suggestions should be taken - To assist in improving workers’ livelihood by getting the into consideration by the management.

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Gender Committee to produce a product for sale.

B) Issues Raised during Stakeholder Interviews On-site Below are the issues raised/comments received during stakeholder consultation done during on-site visits at all estates and the mill during the recertification audit, and results of verification of the issues or comments from the audit team.

No. Issues Raised Audit Verification This issue was found at Bukit Pilah estate Kelpin division housing where is Water supply: was found that complaints from work- 1. Treated water from water catchment that is used for bathing ers have not been resolved in an effec- cause them to have skin itchiness. tive, timely and appropriate manner. This was raised as Non-conformance no. RSPO00682 . Agent: Although this happened through no What was promised by agent is different from what they fault of the company, improvements actually end up doing. E.g. was promised work in the mill, could be made by engaging with the 2. but ended up in estate. agents, emphasizing the need to give accurate picture, and be present during the briefing in the workers’ home country. This was noted as an observation. Airfare: This issue was raised as part of Non- There appears to be discrepancies where workers from Java conformance no. RSPO00683. 3. are claimed to have had their airfare paid by the company, whereas for workers from Lombok had to pay for their own airfare. Housing: This issue was found at Bukit Pilah estate 4. Some appear to be in need of serious repair despite (verbal) Kelpin division housing and was raised as reports made. E.g. unusable toilet, broken window frame. Non-conformance no. RSPO00684. This issue was found at Bukit Pilah estate Outstanding electricity bill: Kelpin division housing, and reasons for One worker complained that he had to pay the electricity ar- the deductions were discussed in detail rears of previous occupants before electricity could be re- with the estate management, and noted as connected to the unit. This amounted to a total of RM600, an observation. Whilst it is true that any 5. and RM50 per month was deducted from his monthly pay. outstanding bills have to be settled, the No letter of consent for this deduction was signed. worker ought to have been made to pay Another worker had to pay RM35 per month for outstanding only his portion of the outstanding sum, electricity bill of the house he lives in. and not those of his housemates who have since left the cou ntry. This issue is related to the issue regarding Water supply for Friday prayers: lack of clean water was found at Bukit Pilah Complained that requests to have water supply provided be- 6. estate Kelpin division housing. This was fore Friday prayers were not heeded. raised as Non-conformance no.

RSPO00682 . Repair works: This issue was found at Bukit Pilah estate 7. Slow/no response to requests for repairs. E.g. unusable toi- Kelpin division housing and was raised as let and broken window frame. Non-conformance no. RSPO00684. Grocery shop at line site: This was noted as an observation under 8. Expensive. E.g. RM5.00 mobile phone credit top-ups can CR6.5.4 cost up to RM5.60 Trade Union: This was noted as an observation under 9. Not all are aware of Trade Union, some have never heard CR6.6. about it.

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

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

Signed on behalf of Sime Darby Plantation Signed on behalf of PT TUV Rheinland Indonesia SOU 16: Kok Foh

…………………………………………. Carol Ng Siew Theng Lead Auditor Date: 25 September 2016

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APPENDICES Appendix 1: Details of Certificate

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Date / Auditor / Procedure - EM/QM Element - Organizational Unit and Processes Interviewee Time (1) Abbrev. Standard Chapter Sunday, Audit team travels from KL to hotel at Carol Ng 22 May Bahau, Negeri Sembilan (afternoon): (CN), 2016 Garden View Hotel Yusof Nizar 39, Jalan Tasik Bahau 1, Pusat Per- (YN), Az- niagaan Bahau, Negeri Sembilan, izan Zakar- 72100 Bahau, Malaysia ia (AZ), Dr. Savinder Kaur (SK), Rahayu Zulkifli Monday, 23 May 2016 – Kok Foh Estate & St Helier Estate 08.30am – Opening meeting at Kok Foh Estate All Top Manage- 09.30am Meeting Room ment and Re- - Introduction by audit team leader lated Managers

- Presentation of estates and mill by

respective managers

- Finalization of audit plan Team 1 – Kok Foh Estate (Carol, Azizan & Rahayu) 9.30am – Estate production data CN Estate manager 12.30pm • Area statements / assistants • FFB supply information • Replanting program • Smallholder/ outgrower certification plan (if applicable) RSPO Land legality, best practices, finan- Principle 2: CR2.2 – 2.3 cial viability, HCV, Principle 3: (all) • Land titles, land conflict (if any) Principle 4: CR4.2, CR 4.3, IN • Business management plan & re- 4.4.2, CR4.5 planting programme Principle 5: CR 5.2, 5.5 • Soil fertility & management (sloped Principle 6: CR 6.4 areas, marginal soils, peat areas, EFB application, etc) • Integrated pest management • High Conservation values (HCV) • Zero burning policy • Customary rights 9.30am – Environment, OSH, training, con- AZ Estate manager RSPO 12.30pm tinuous improvement / assistants Principle 4 : CR 4.4 (except • Water management plan 4.4.2), 4.6, 4.7, 4.8 • Field operations (spraying, har- Principle 5 : CR 5.1, 5.3, 5.4, vesting, manuring) 5.6 • Worker interviews Principle 8 : all • SOPs & Internal audit • Chemical stores & Workshops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance • EIA/ Aspects Impacts analysis • Waste management • Energy efficiency monitoring and records

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Date / Auditor / Procedure - EM/QM Element - Organizational Unit and Processes Interviewee Time (1) Abbrev. Standard Chapter • GHG analysis and management • Continuous improvement plan 9.30am – Social aspects – Transparency, RZ Estate manager/ Principle 1: (all) 12.30pm workers, local communities, assistant man- Principle 2: CR2.1 (social), communication, CSR ager/ local Principle 6: all • Requests for information & re- communities / Principle 8 (Social) sponses workers • Ethical conduct policy • Workers/ Contractor interviews & personnel records • Labour policies • Trade union representatives & records • Housing • Local communities • Communication & consultation procedures/ complaints • Contracts • Working hour & overtime records, pay slips • SEIA (if applicable) Team 2 – St. Helier Estate (Dr. Savinder & Yusof) 9.30am – Estate production data SK Estate manager/ 12.30pm • Area statements assistant man- • FFB supply information ager/ local • Replanting program communities / • Smallholder/ outgrower certification workers plan (if applicable) Principle 1: (all) Social aspects – Transparency, Principle 2: CR2.1 (social), workers, local communities, Principle 6: all Principle 8 (Social) communication, CSR • Requests for information & re- sponses • Ethical conduct policy • Workers/ Contractor interviews & personnel records • Labour policies • Trade union representatives & records • Housing • Local communities • Communication & consultation procedures/ complaints • Contracts • Working hour & overtime records, pay slips • SEIA (if applicable)

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Date / Auditor / Procedure - EM/QM Element - Organizational Unit and Processes Interviewee Time (1) Abbrev. Standard Chapter 9.30am – Legal Requirements, SOPs, OSH, YN Estate manager RSPO 12.30pm Training, Environment / assistants/ Principle 2: CR2.1 (OSH & En- • Field operations (spraying, har- workers vironment) vesting, manuring) Principle 4: CR4.1, 4.6, 4.7, 4.8 • Worker interviews Principle 5: CR5.1, 5.3 • SOPs & Internal audit • Chemical stores & workshops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance • EIA/ Aspects Impacts analysis • Waste management 12.30pm – Lunch 1.30pm 1.30pm – Continue audit/document review at All auditors Estate manager 5.00pm same location / assistants/ workers 5.00pm – Soft closing All auditors Estate manager 5.30pm / assistants/ workers 5.30pm End of Day 1

Tuesday, 24 May 2016 – Stakeholder Consultation; Audit at Bukit Pilah & Sg. Gemas Estates 9.00am- Preparation for stakeholder consul- All auditors Relevant per- Relevant personnel to assist 10.00am tation – Kok Foh Estate Meeting sonnel with setting up projecter, mi- Room crophone and meeting room at Kok Foh Estate Meeting Room for presentation to 30 – 50 participants 10.00am - Stakeholder Consultation – Kok All auditors Relevant per- SD representative(s) may give 12.30pm Foh Estate Meeting Room sonnel welcome note to stakeholder • Introduction/welcome note consultation participants. After • which all SD personnel shall Presentation by TUV Rheinland on not be present during the dis- RSPO & purpose of meeting cussion with stakeholders, ex- • Open discussion with stakeholders cept worker/union repre- • Stakeholder survey forms sentatives and gender committee members (Please request them to attend) 12.30pm – Lunch 1.30pm Team 1 – Bukit Pilah Estate (Carol, Azizan & Rahayu)

1.30pm – Estate production data CN Estate manager 5.00pm • Area statements / assistants • FFB supply information • Replanting program • Smallholder/ outgrower certification plan (if applicable) RSPO Land legality, best practices, finan- Principle 2: CR2.2 – 2.3 cial viability, HCV, Principle 3: (all)

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Date / Auditor / Procedure - EM/QM Element - Organizational Unit and Processes Interviewee Time (1) Abbrev. Standard Chapter • Land titles, land conflict (if any) Principle 4: CR4.2, CR 4.3, IN • Business management plan & re- 4.4.2, CR4.5 planting programme Principle 5: CR 5.2, 5.5 • Soil fertility & management (sloped Principle 6: CR 6.4 areas, marginal soils, peat areas, EFB application, etc) • Integrated pest management • High Conservation values (HCV) • Zero burning policy • Customary rights 1.30pm – Environment, OSH, training, con- AZ Estate manager RSPO 5.00pm tinuous improvement / assistants Principle 4 : CR 4.4 (except • Water management plan 4.4.2), 4.6, 4.7, 4.8 • Field operations (spraying, har- Principle 5 : CR 5.1, 5.3, 5.4, vesting, manuring) 5.6 • Worker interviews Principle 8 : all • SOPs & Internal audit • Chemical stores & Workshops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance • EIA/ Aspects Impacts analysis • Waste management • Energy efficiency monitoring and records • GHG analysis and management • Continuous improvement plan 1.30pm – Social aspects – Transparency, RZ Estate manager/ Principle 1: (all) 5.00pm workers, local communities, assistant man- Principle 2: CR2.1 (social), communication, CSR ager/ local Principle 6: all • Requests for information & re- communities / Principle 8 (Social) sponses workers • Ethical conduct policy • Workers/ Contractor interviews & personnel records • Labour policies • Trade union representatives & records • Housing • Local communities • Communication & consultation procedures/ complaints • Contracts • Working hour & overtime records, pay slips • SEIA (if applicable) Team 2 – Sg. Gemas Estate (Dr. Savinder & Yusof)

1.30pm – Estate production data SK Estate manager/ 5.00pm • Area statements assistant man- • FFB supply information ager/ local • Replanting program communities / • Smallholder/ outgrower certification workers plan (if applicable)

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Date / Auditor / Procedure - EM/QM Element - Organizational Unit and Processes Interviewee Time (1) Abbrev. Standard Chapter

Social aspects – Transparency, Principle 1: (all) workers, local communities, Principle 2: CR2.1 (social), communication, CSR Principle 6: all • Requests for information & re- Principle 8 (Social) sponses • Ethical conduct policy • Workers/ Contractor interviews & personnel records • Labour policies • Trade union representatives & records • Housing • Local communities • Communication & consultation procedures/ complaints • Contracts • Working hour & overtime records, pay slips • SEIA (if applicable) 1.30pm – Legal Requirements, SOPs, OSH, YN Estate manager RSPO 5.00pm Training, Environment / assistants/ Principle 2: CR2.1 (OSH & En- • Field operations (spraying, har- workers vironment) vesting, manuring) Principle 4: CR4.1, 4.6, 4.7, 4.8 • Worker interviews Principle 5: CR5.1, 5.3 • SOPs & Internal audit • Chemical stores & workshops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance • EIA/ Aspects Impacts analysis • Waste management 5.00pm – Soft closing All auditors Estate manager 5.30pm / assistants/ workers 5.30pm End of Day 2

Wednesday, 25 May 2016 – Kok Foh Mill & Sg. Senarut Estate Team 1 – Kok Foh Mill (Carol, Yusof & Rahayu) 08.30am – Mill supply base & production rec- CN Sime Darby 12.30pm ords Sustainability • FFB reception records Management • CPO & PK production records representatives • OER & KER Mill manager / Supply Chain Certification Supply Chain Certification Audit assistants Standard 2014 • Supply Chain Management Man- GTM Repre- ual, SOPs, & related records sentative • eTrace Transaction records • Sales invoices • SCC training records • Weighbridge slips

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Date / Auditor / Procedure - EM/QM Element - Organizational Unit and Processes Interviewee Time (1) Abbrev. Standard Chapter RSPO Transparency & ethical conduct Principle 1: all • Requests for information & respons- Principle 3: all es Principle 4 : CR 4.4 • Ethical conduct policy Principle 5 : CR 5.1, 5.3, 5.4, • Business management plan & re- 5.6 planting programme Principle 6 : CR6.10 • POME and water quality analysis Principle 8 : all records • Water management plan • Waste management • EIA/ Aspects Impacts analysis • Energy efficiency monitoring and records • GHG analysis and management • FFB pricing mechanism (if applicable) 08.30am – Legal Requirements, OSH, Train- YN Mill manager / RSPO 12.30pm ing, SOPs assistants/ Principle 2 : CR2.1 (OSH & en- • Mill inspection workers vironment) • Workshops & stores Principle 4 : CR4.1, 4.7, CR4.8 • SOPs & Internal audit • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance 08.30am – Social aspects – Workers, local RZ Mill manager / RSPO 12.30pm communities, communication, assistants Principle 2: CR2.1 (Social), CSR /Local commu- Principle 6: all • Mill inspection nities / workers Principle 8 (social) • Workers/ Contractor interviews • Housing • Local communities • List of workers • Contracts • Working hour & overtime records, pay slips • Land conflict (if any)

Team 2 – Sg. Senarut Estate (Dr. Savinder & Azizan) 08.30am – Estate production data SK Estate manager/ 12.30pm • Area statements assistant man- • FFB supply information ager/ local • Replanting program communities / • Smallholder/ outgrower certification workers plan (if applicable)

Social aspects – Transparency, Principle 1: (all) workers, local communities, Principle 2: CR2.1 (social), 2.2 & 2.3 communication, CSR, HCV Principle 5: CR5.2 • Requests for information & re- Principle 6: all sponses Principle 8 (Social) • Land disputes (if any) • Workers/ Contractor interviews &

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Date / Auditor / Procedure - EM/QM Element - Organizational Unit and Processes Interviewee Time (1) Abbrev. Standard Chapter personnel records • Labour policies • Trade union representatives & records • Housing • Local communities • Communication & consultation procedures/ complaints • Contracts • Working hour & overtime records, pay slips • HCV management 08.30am – Legal Requirements, SOPs, OSH, YN Estate manager RSPO 12.30pm Training, Environment / assistants/ Principle 2: CR2.1 (OSH & En- • Field operations (spraying, har- workers vironment) vesting, manuring) Principle 4: CR4.1, 4.6, 4.7, 4.8 • Worker interviews Principle 5: CR5.1, 5.3 • SOPs & Internal audit • Chemical stores & workshops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance • EIA/ Aspects Impacts analysis • Waste management 12.30pm – Lunch 1.30pm 1.30pm – Continue audit/document review at All auditors Estate manager 5.00pm same location / assistants/ workers 5.00pm – Soft closing All auditors Mill/ Estate 5.30pm manager / assistants/ workers 5.30pm End of Day 3

Thursday, 26 May 2016 – Muar River Estate & Pertang Estate Team 1 – Muar River Estate (Carol, Azizan & Rahayu) 8.30am – Estate production data CN Estate manager 12.30pm • Area statements / assistants • FFB supply information • Replanting program • Smallholder/ outgrower certification plan (if applicable) RSPO Land legality, best practices, finan- Principle 2: CR2.2 – 2.3 cial viability, HCV, Principle 3: (all) • Land titles, land conflict (if any) Principle 4: CR4.2, CR 4.3, IN • Business management plan & re- 4.4.2, CR4.5 planting programme Principle 5: CR 5.2, 5.5 • Soil fertility & management (sloped Principle 6: CR 6.4 areas, marginal soils, peat areas, EFB application, etc)

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Date / Auditor / Procedure - EM/QM Element - Organizational Unit and Processes Interviewee Time (1) Abbrev. Standard Chapter • Integrated pest management • High Conservation values (HCV) • Zero burning policy • Customary rights 8.30am – Environment, OSH, training, con- AZ Estate manager RSPO 12.30pm tinuous improvement / assistants Principle 4 : CR 4.4 (except • Water management plan 4.4.2), 4.6, 4.7, 4.8 • Field operations (spraying, har- Principle 5 : CR 5.1, 5.3, 5.4, vesting, manuring) 5.6 • Worker interviews Principle 8 : all • SOPs & Internal audit • Chemical stores & Workshops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance • EIA/ Aspects Impacts analysis • Waste management • Energy efficiency monitoring and records • GHG analysis and management • Continuous improvement plan 8.30am – Social aspects – Transparency, RZ Estate manager/ Principle 1: (all) 12.30pm workers, local communities, assistant man- Principle 2: CR2.1 (social), communication, CSR ager/ local Principle 6: all • Requests for information & re- communities / Principle 8 (Social) sponses workers • Ethical conduct policy • Workers/ Contractor interviews & personnel records • Labour policies • Trade union representatives & records • Housing • Local communities • Communication & consultation procedures/ complaints • Contracts • Working hour & overtime records, pay slips • SEIA (if applicable) Team 2 – Pertang Estate (Dr. Savinder & Yusof) 8.30am – Estate production data SK Estate manager/ 12.30pm • Area statements assistant man- • FFB supply information ager/ local • Replanting program communities / • Smallholder/ outgrower certification workers plan (if applicable) Principle 1: (all) Social aspects – Transparency, Principle 2: CR2.1 (social), workers, local communities, Principle 6: all communication, CSR Principle 8 (Social) • Requests for information & re- sponses • Ethical conduct policy

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Date / Auditor / Procedure - EM/QM Element - Organizational Unit and Processes Interviewee Time (1) Abbrev. Standard Chapter • Workers/ Contractor interviews & personnel records • Labour policies • Trade union representatives & records • Housing • Local communities • Communication & consultation procedures/ complaints • Contracts • Working hour & overtime records, pay slips • SEIA (if applicable) 8.30am – Legal Requirements, SOPs, OSH, YN Estate manager RSPO 12.30pm Training, Environment / assistants/ Principle 2: CR2.1 (OSH & En- • Field operations (spraying, har- workers vironment) vesting, manuring) Principle 4: CR4.1, 4.6, 4.7, 4.8 • Worker interviews Principle 5: CR5.1, 5.3 • SOPs & Internal audit • Chemical stores & workshops • HIRARC • OSH Committee & safety records • Accident records • Training & PPE issuance • EIA/ Aspects Impacts analysis • Waste management 12.30pm – Lunch 1.30pm 1.30pm – Continue audit/document review at All auditors Estate manager 5.30pm same location / assistants/ workers 5.00pm – Soft closing All auditors Estate manager 5.30pm / assistants/ workers 5.30pm End of Day 2

Friday, 27 May 2016 – Closing Meeting 8.30am- Prepare for Closing Meeting All - 10.30am - Consolidate findings 10.30am- Closing Meeting All Top Manage- 12.30pm - Summary of findings ment and Re- lated Managers 12.30pm End of audit Audit team travels back to KL

Appendix 3: List of Abbreviations

AMESU All Malayan Estate States Union BOD Biological Oxygen Demand

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Page 124 of 132 PERKESO Pertubuhan Kebajikan Sosial (Social Welfare Organization) PIC Person-in-charge PKO Palm Kernel Oil PMT P Permit/Pendaftaran Mesin Teka nan (Permit / Registration of Pressure Machine) POM Palm Oil Mill POME Palm Oil Mill Effluent PPE Personal Protective Equipment PSQM Plantation Sustainability and Quality Management QMO Quality Management Officer R&D Research and Development SDI Sime Darby Industrial SDP Sime Darby Plantation SDS Safety Data Sheets SEPU Social, Environment and Project Unit Sg. Sungai (River) SHC Safety & Health Committee SIA Social Impact Assessment SPMS Sustainable Plantation Management System SOCSO Social Security Organization SOP Standard Operating Procedure SOM Standard Operation Manual SOU Strategic Operation Unit SW Scheduled Wastes SS Suspended Solids TN Total Nitrogen TNB Tenaga Nasional Berhad (National Electricity Commission) TS Total Solids UN United Nations USECHH Use and Standards Of Exposure Of Chemicals Hazardous To Health WTP Wastewater Treatment Plant

Appendix 4: List of Stakeholders Interviewed and Contacted

Name of No. Institution / Position Remarks Stakeholder Stakeholders Interviewed during Public Consultation Meeting 1. Mohd Jasni MPOB 2. Zulkefli Mansor MPOB 3. Mohd Farid Segamat Hospital 4. Nazree Daud Segamat Hospital 5. Shahibol Mazlan Sekolah Kebangsaan Rompin 6. Ahmad Awang FRIM 7. Low Nam Cheng Village Head, Geddes Estate 8. Leong Kong Ying Geddes Estate 9. M. Krishnan NUPW Bukit Pilah Estate 10. K. Nandakumaran Bahau Print Enterprise Supplier 11. Mohd Sabari Saaban Electrical Contractor 12. Wong Kin Soon Lotus City Bearings Supplier 13. Victor Tay IHM Supplier 14. Asuti Kurniasih Indonesia Embassy Consulate 15. Argiapa S Indonesia Embassy Consulate 16. Othman Said AMESU Juasseh 17. V. Kesavan AMESU Kok Foh Estate 18. Tamil Arasi Chairperson, Gender Committee Kok Foh Estate 19. Hj Shariff Kg Batu Anam, Sg Muar Estate 20. Suzila Sulong Sg Sebaling Estate 21. Rokiah Ramli Sg Muar Estate 22. Azman Mohd Sumber Sari Supplier

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23. Mohd Amin Jamaras Trade Union Rep, Kok Foh Estate 24. Arif Angsar Field Supervisor, Sg Muar Estate 25. Sugana d/o Selvaraja Clerk, St Helier Estate 26. Mohd Farid Husin Suruhanjaya Tenaga (Energy Commission) 27. Zaidah Mokhtar Clerk, Bukit Pilah Estate Stakeholders Interviewed On-Site 1. Lai Pak Hoe Neighbouring smallholder – Layang Estate 2. Pang Sin Kee Neighbouring smallholder – Layang Estate 3. Mohd Rahim Auxiliary police – Layang Estate 4. Famiza Wife of mill electrician 5. Rohidi Layang estate mandore (Indonesian) 6. Azhari Kadir Manager – Kok Foh Estate 7. Syahir Asst Manager – Kok Foh Estate 8. Amin Asst Manager – Kok Foh Estate 9. Munadi Mandore – Sprayer 10. Awan Afendi Harvester 11. Gopal Bahadur Harvester 12. Kadam Ssrestsa Harvester 13. Mohana Store Clerk – Kok Foh Estate 14. Kesavan Workshop Supervisor 15. Alimah Store Clerk – Bukit Pilah Estate 16. Hamizul Abdul Rahman Manager – Sg Senarut Estate 17. Aidi Mazrol Ab Manan Asst Manager – Sg Senarut Estate 18. Mohd Shahbuddin Asst Manager – Sg Senarut Estate 19. Sahid Mandore - Sprayer 20. Rupran Harvester 21. Hasanudin Harvester 22. Nurmayadi Harvester 23. Puspha Store Clerk – Sg Senarut Estate 24. Abul Husin Chemical Mixer 25. Nizam Workshop Supervisor 26. Fauzi Harvester – Sg Muar Estate 27. Janak Ataedi Tractor Driver 28. Samsul Tractor Driver 29. Azlinda Store Clerk 30. Jamal Workshop Supervisor Staff, Malaysian 31. N. Kamalam Chairperson, Gender Committee, Kok Foh Estate female. Letchumanan a/l Staff, Malaysian 32. Chairman, Trade Union, Kok Foh Estate Romugam male. Kanagarajah a/l Ponvel Enterprise/External contractor supplying 33. Malaysian male. Ponisan transport 34. Sahabudin Kok Foh Estate Worker Indonesian, male. 35. Sahli Kok Foh Estate Worker Indonesian, male. 36. Mohd Fajar Kok Foh Estate Worker Indonesian, male. 37. Romi Kok Foh Estate Worker Indonesian, male. 38. Bahadur Tapa Kok Foh Estate Worker Nepali,male. 39. Kedam Srestsa Kok Foh Estate Worker Nepali, male. Staff, Malaysian, 40. Zaidah Mokhtar Secretary Gender Committee, Bukit Pilah Estate female. 41. Rizal Bukit Pilah Estate Worker Indonesian, male. 42. Mohd Ripi Bukit Pilah Estate Worker Indonesian, male. 43. Mohd Faizul Bukit Pilah Estate Worker Indonesian, male 44. Imbul Bukit Pilah Estate Worker Nepali, male. 45. Hairudin Bukit Pilah Estate Worker Indonesian, male. 46. Anuar Abd Rahim Kok Foh Mill, Process Supervisor Malaysian, male. 47. Amin Kok Foh Mill, Line Site Supervisor Malaysian, male

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48. Ahmadi Kok Foh Mill Worker Indonesian, male 49. Heron Dermawan Kok Foh Mill Worker Indonesian, male. Moorthi a/l 50. Kok Foh Mill Worker Malaysian, male. Paramasevam 51. Mohd Nor Ibrahim Kok Foh Mill Worker Malaysian, male. 52. Faizal Abd Razak Kok Foh Mill Worker Malaysian, male. 53. Mogan a/l Arjunan Kok Foh Mill Worker Malaysian, male. Radeyandiran a/l 54. Kok Foh Mill Worker Malaysian, male. Balakrishnan 55. Kamal Mohd Hussien Kok Foh Mill Lab Supervisor Malaysian, male. 56. Mohd Farooq bin Alis Kok Foh Mill, Ramp Operator Malaysian, male. 57. Norfazilah Nong Kok Foh Mill, Gender Commitee Chairperson Malaysian, female. Shahrul Mizan Mohd 58. Kok Foh Mill, Accounts & Admin Officer Malaysian, male. Eunos 59. Chanard Muar River Estate, Medical Assistant Malaysian, male. 60. Supran Muar River Estate, Harvester Indonesian, male. 61. Herman Muar River Estate, Harvester Indonesian, male. 62. Sahibun Muar River Estate, Harvester Indonesian, male. 63. Supriyadi Muar River Estate, Harvester Indonesian, male. 64. Dahar Muar River Estate, Harvester Indonesian, male. 65. Mohamad Isamullah Muar River Estate, Worker Bangladeshi, male. 66. Saiful Islam Muar River Estate, Worker Bangladeshi, male. 67. Gurak Muar River Estate, Worker Nepali, male. 68. Dinesh Muar River Estate, Worker Nepali, male. 69. Muzaful Husein Muar River Estate, Worker Bangladesh, male. 70. Hasnal Muar River Estate, Assistant Manager Malaysian, male 71. Shafique Muar River Estate, Assistant Manager Malaysian, male 72. Prema Gender Committee member/Muar River Estate, Malaysian, female. 73. Mega Gender Committee member/Muar River Estate, Malaysian, female. 74. Linda Gender Committee member/Muar River Estate, Malaysian, female. 75. Rokiah Gender Committee Chairperson/Muar River Estate, Malaysian, female. 76. Saiful Islam Muar River Estate, Worker Bangladeshi, male. 77. Abu Raihan Muar River Estate, Worker Bangladesh, male. 78. Sobzhan Mia Muar River Estate, Worker Bangladesh, male. 79. Ramalingam Muar River Estate, Mandore/ Cattle owner Malaysian, male. 80. Khairisyahrin Mukhtar Acting Manager-St. Helier Estate 81. Mohd Syafiq Assistant Manager - St. Helier Estate Iskandar Halim 82. Assistant Manager - St. Helier Estate Kamarudin 83. Norizanis Store Clerk -St. Helier Estate 84. Amizul Abdul Rahman Manager - Sg. Gemas Estate Amir Shah b. Mohd 85. Assistant Manager - Sg. Gemas Estate Shahid 86. Rosliza bt. Ghazali Medical Assistant - Sg. Gemas Estate 87. Ghazali Said Kok Foh Mill Manager Noor Rizman b, 88. Assistant Manager - Kok Foh Mill Kasmuri 89. Mohd Yusof Awaludin Assistant Manager - Kok Foh Mill Mohd Khairi b. Abdul 90. Assistant Manager - Kok Foh Mill Kudus 91. Mohd Khairul Anwar Medical Assistant - Kok Foh Estate 92. Senin b. Sumirin Manager - Pertang Estate 93. Mohd Ashraf b. Omri Assistant Manager - Pertang Estate Yogarubana A/L 94. Assistant Manager - Pertang Estate Amaran 95. Rohaida Hanapi Store Clerk - Pertang Estate 96. Mohd Azizul Abdullah Medical Assistant - Pertang Estate 97. Surajit Biswas Foreign worker: St. Helier Estate (mandore) Indian (male)

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Indonesian general 98. Doni-Indonesia Foreign worker: St. Helier Estate worker (rubber) (male) Indian general 99. Nethi Foreign worker: St. Helier Estate worker (male) Indonesian 100. Ehsan Foreign worker: St. Helier Estate harvester (male) Indonesian 101. Erwin Foreign worker: St. Helier Estate harvester (male) Indonesian 102. Agus Saparwadi Foreign worker: St. Helier Estate harvester (male) Malaysian staff 103. Suguna A/P Arjunan Gender Representative: St. Helier Estate (female) Puan Rosliza binti Gender Chairwoman: Sg. Gemas Estate & Sg. Malaysian staff 104. Ghazali Senarut Estate (female) 105. Ahid- Foreign worker: Sg. Gemas Estate Indonesian (male) 106. Hirwan Jayadi Foreign worker: Sg. Gemas Estate Indonesian (male) 107. Ferdus Foreign worker: Sg. Gemas Estate Bangladeshi (male) 108. Malaikannan Muthu Foreign worker: Sg. Gemas Estate Indian (male) 109. Rafik Mandal Foreign worker: Sg. Gemas Estate Indian (male) 110. Amar Bahadur Tamang- Foreign worker: Sg. Gemas Estate Nepalese (male) Puan Devaki A/P Malaysian staff 111. Gender Representative: Sg. Senarut Estate Kunji Krishnan (female) 112. Mangsor Bin Norrani Local community head: Kg.Buloh Kasap 4 Malaysian (male) 113. Thanam Perumal Creche minder: Sg. Senarut Estate Malaysian (female) 114. Adi Foreign worker: Sg. Senarut Estate Indonesian (male) 115. Ajah Foreign worker: Sg. Senarut Estate Indonesian (male) 116. Mohd. Sajib Kazi Foreign worker: Sg. Senarut Estate Bangladeshi (male) 117. Dipankar Biswas Foreign worker: Sg. Senarut Estate Bangladeshi (male) 118. Ganapati Hindu temple priest: Sg. Senarut Estate Malaysian (male) 119. Sanjay Kumar Foreign worker: Pertang Estate Indian (male) 120. Suryamani Paudel Foreign worker: Pertang Estate Nepalese (male) 121. Mohd. Azad Foreign worker: Pertang Estate Bangladeshi (male) Vijayakumar A/L 122. Retrenched rubber tapper: Pertang Estate Malaysian (male) Suparyan @Munisamy Sutherosono A/L 123. Retrenched rubber tapper: Pertang Estate Malaysian (male) Durjadhana Kestenin A/L K. 124. Retrenched rubber tapper: Pertang Estate Malaysian (male) Kannappan 125. Rajuedeaw A/L Krishan Retrenched rubber tapper: Pertang Estate Malaysian (male) 126. Rajan A/L Anandan Union Leader: Pertang Estate Malaysian (male) Chief Clerk: Pertang Estate & Gender Committee 127. Pn.Norleza Shamsudin Malaysian (female) Chairwoman

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Appendix 5: Observations and Opportunities for Improvement

No. Criteria Observations / Opportunities for Improvement 1. 2.1.1 1) It was found that permit from the Labour Department for treatment of water used for housing is not available at Kok Foh mill, Sg. Gemas estate and Bukit Pilah estate which are extracting water from water catchments for domestic water consumption. This is not in accordance with Clause 6 (1)(a) of the Workers’ Min- imum Standards of Housing and Amenities Act 1990. However, the mill has taken immediate action to request for the permit for treatment of water for mill processing and for daily use of the workers at Kok Foh Palm Oil Mill as seen in letter dated 25 May 2016 to the Labour Department of Kuala Pilah, Negeri Sembilan, while for Sg. Gemas estate, evidence of efforts taken to apply for the water permit had also been sighted. Bukit Pilah Estate is currently in progress of installing water tube wells (no construction started yet as approval was just received from HQ) which shall replace the water sourced from the water catchment for domestic consumption, and hence such permit will not be required for the water catchment but for the water tube wells. Progress of the application of permits will be followed up during the next audit 2) Based on the the punch card of one press operator, he worked 8.50 hours on 17th March 2016. His punch card record seemed to show that he worked overtime continuously from 12pm to 8pm, which contravenes Section 60A(a) of the Employment Act which states that workers should not work continuously for more than 5 hours without a period of leisure of not less than 30 minutes. However, as there is a cafeteria in the mill compound where workers can rest and not have to punch out, and worker was not interviewed to confirm how long he actually, workers, it was noted as the OFI that there should be another system to record the break time if the worker stays in the mill compound for his break. 3) At Kok Foh mill, the collective consent given by the workers were not dated, thus it could not be confirmed if the consent for deductions was given prior to the period of deductions in the respective workers‘ pay slips 2. 2.2.1 1) Sg. Senarut: Latest grant dated 31 May 2006 Geran No: 14987 (Lot 646) still bears the name Golden Hope Plantations Sdn. Bhd. 2) Sg. Senarut and Pertang. Some of the land titles give permission only for rubber, not oil palm. 3) One land title at Kok Foh estate is currently under ownership of Austral Enter- prises Berhad which was a previous subsidiary of Golden Hope Plantations (merged with Sime Darby Berhad in year 2007), with no evidence sighted that the company is currently in progress to change the ownership of the land title. 4) There are 3 land titles are Muar River estate which states specific terms to be planted with rubber, i.e. - Land title no. 2131 (lot 1988) - Land title no. 400 (lot 3060) - Land title no. 401 (lot 3061) As SDP’s Land Management Department has a plan to commence with application for conversion of land title terms and ownership starting July 2016, this was noted as an observation to followed up during the next audit. 3. 4.2 At Kok Foh estate, found that there are some inconsistencies between the calculated tonnages of compost to be applied against recommended compost recommendation from R&D department, e.g. - For block 96 KA, planned compost to be applied was 695.52 tonne in April and May 2016, however according to fertilizer recommendation, no manuring is recommended

QMF: RSPO-007a-13(Rev.0) RSPO Re-certification Assessment Report Sime Darby Plantation SOU 16: Kok Foh

Bahau, Negeri Sembilan, Malaysia

Page 129 of 132 - For block 02KC, planned amount to be applied was 2084.67 tonnes in March and April 2016, however according to fertilizer recommendation, recommended amount to be applied was 2139.3 tonnes 4. 4.4 Testing is done for Bukit Pilah pond, water tank, and house, as well as Kelpin pond, water tank and house. Results of water quality testing found some quality parameters had been exceeded, as follows: • Date of sample received 22/4/2016: Microbiological test showed no microbes detected except in Kelpin house sample where total coliforms was 13MPN/100ml. • Date of sample received 20/4/2016: Chemical water analysis results showed pH was below the requirement of pH6.7 – 8.5 consistently for all samples and turbidity and Kelpin pond point 1 was 17NTU. • Date of sample received 17/03/2016: Microbiological water test showed 23 MTN/100ml of total coliforms for Bukit Pilah house, Kelpin pond and Kelpin – house • Date of sample received 19/10/2015: Chemical parameter tests show exceedance of quality for pH, COD and turbidity in all water samples. Noted as observation since this water is not being used for cooking or drinking and only used for cleaning and washing, and in addition the estate is in progress to install a water tube well to alleviate the issue. 5. 4.6.5 At St. Helier Estate also, pesticides named Kenlon and Glyphosate, the SDS mentions that the chemical should not be allowed to come in contact with skin or clothing when handled. While another pesticide named glyphosate mentioned not to have it come in contact with eyes, skin and clothing. Found face mask use N95 as recommended by CHRA Assessor registered with JKKP on CHRA conducted July 2015. N95 is made of cloth and can absorb mist while sweating and contact with skin. The type of PPE used should be reviewed to avoid chemical contamination. 6. 4.6.6 Proper warning sign board with both languages (English/Malay) needed for spraying activities at Kok Foh Estate and Muar River Estate. 7. 4.7 Fire extinguisher at Muar River estate linesite house no. 7 was not at appropriate pressure. Fire extinguisher was observed to be missing at least 2 other houses. 8. 4.7.2 1) Risk assessment need to be improved by better identification of likelihood and severity with the actual hazards and action plan with clear PIC and dateline mention as sampled in Kok Foh Mill, St Hellier, Sg. Gemas and Pertang Estates. 2) Bkt Pilah: HIRARC was not reviewed immediately since there are few cases of accident happened as highlighted in the OSH meeting dated 19 Feb 2016 where the incidents happened on 5, 7 and 13 Dec 2015. As stipulated in the SOM Version 1, 2008 dated 1 Nov 2008, Section 8.0 - Review which says that HIRARC should be reviewed and updated at least once yearly or after there is an incident, near miss, dangerous occurrence and etc.. 3) Sg Senarut: It was found for some risks identified in the HIRARC that were assigned a score of 4 or higher did not have any recommended risk control, even though this is required as stated in the company’s ESH Management Manual. Ex- ample sighted in HIRARC dated 2/4/16 for weeding, for the cutting creeper on palms, with score 9 (medium) did not having any recommended risk control. While for manuring with job of application of the fertilizer scored as 9, neither of these medium level risks had any recommended risk control stated. 4) Muar River Estate: HIRARC was reviewed on 26 Jan 2016 and 4 Apr 2016 respectively due to incidents happened from harvesting activity (incident on 12 Dec 2015) and fronds stacking (28 Mar 2016). It was found that for risks identified in the HIRARC after the review were assigned a score of 4 or higher with only have SOP and PPE as recommended risk control. Further evidence on the risk control was not sighted and not demonstrated. 9. 4.7.3 1) Workers interviewed at housing of Bukit Pilah estate informed that when their PPE was damaged, it was not replaced or slow to be replaced by the management

QMF: RSPO-007a-13(Rev.0) RSPO Re-certification Assessment Report Sime Darby Plantation SOU 16: Kok Foh

Bahau, Negeri Sembilan, Malaysia

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2) Visited the chemical mixing area at Kok Foh Estate and Muar River Estate found out that the emergency shower is not contained to avoid the contaminated water release to the main drain. 3) Visited Bukit Pilah Estate chemical mixing area, there is no roofing available with empty containers were left/ located everyday under the sun and rain. It will deteriorate the containers under the weather. 4) The usage, cleanliness and storage of Personal Protective Equipment (PPE) such as helmet, mask and safety shoes need to be implemented and applied consistently at all estate and mill and as recommended by legal, SOP, OSH Man- ual and CHRA Assessor recommendation. 10. 4.7.4 The OSH committee members who have failed to attend the meeting 3 times in a row may be removed from the committee as stipulated in the Safety & Health Committee 1996. One of the committee members was found to have missed 3 times but was found to be in the committee in December 2015. A decision has been made by the Chairman to remove her but she was still attending the meeting in March 2016 11. 4.7.5 There was no first aid box available during manuring activity at Block 92P of Pertang as the mandore forget to bring it to the site (first aid kit was sighted for other field activities) 12. 5.1 1) Kok Foh mill, Kok Foh estate, Bukit Pilah estate and Sg. Senarut estate has a documented Environmental Aspects and Impacts (EAI) identification and Envi- ronmental Impacts Evaluation (EIE) done for mill activities. However, there is no evaluation of abnormal and emergency conditions, only for normal conditions. Environmental impacts such as oil spillages and leakages were identified as normal conditions, when these should be abnormal conditions 2) Template for EIE evaluations sighted at Bukit Pilah estate was inconsistent with the template in the Standard Operating Manual (SOM) Version 1, 2008 dated 1 Nov 2008, Appendix 5.4.1d (Environmental Impacts Evaluation Form). 3) EAI and EIE for some ongoing mill activities such as composting is not included. While for Kok Foh estate, EAI and EIE for some activities in the estate have yet to be done, e.g. for chemical store and scheduled waste store. 4) Sg. Senarut estate: The environmental impact from discharge to land aspect for selective weeding activity is rated as 9 (business impact) but not consider other impacts such as land contamination and impact to community. 13. 5.2.1 The company’s HCV report includes evidence of consultation between the HCV assessment team with photos of consultation with Semelai people and Department of Ir- rigation and Drainage. However, other evidence of consultation with other stakeholders , e.g. Forestry/Wildlife Departments for HCV assessment was not sighted 14. 5.2.2 Biodiversity Action Plan for Kok Foh estate does not include information on status of implementation of action plans and no evidence of monitoring so the status of implementation of action plans is not clear 15. 5.3.1 1) Recycling bins is sighted at the Kok Foh Estate, Bukit Pilah, Sg Senarut and Muar River Estate however, the segregation for recycling organic and inorganic waste is not properly monitored at the estates. 2) The bins located outside the workshop at Muar River Estate were not labeled and monitored accordingly for scheduled and domestic waste. 3) The waste management plan does not clearly mentioned the type of scheduled waste generated such as used fluorescent tube, contaminated rags/waste and fertilizer bags to match the inventory of the schedule waste in Kok Foh Mill, St Hellier, Sg. Gemas and Pertang Estates.

16. 6.1.1 The Social Action Plan should include issues raised in various stakeholder meetings (Location: Sg. Senarut and Pertang)

QMF: RSPO-007a-13(Rev.0) RSPO Re-certification Assessment Report Sime Darby Plantation SOU 16: Kok Foh

Bahau, Negeri Sembilan, Malaysia

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17. 6.1.3 1) Social Impact Assessment for Kok Foh mill had identified issues raised by stakeholders. The Action Plan captured all the issues raised, but for two of those items did not name any person in charge, commencement date for implementation, expected date of completion, and status. 2) Muar River estate: Social Impact Assessment had identified four issues raised by stakeholders, but the company captured only one issue in the Action Plan with no note on why other issues were not included 18. 6.2.1 1) Muar River Estate: The last stakeholder meeting was held on 24 July 2015. Minutes of stakeholder meeting was maintained and sighted. The estate management informed that the issues raised have been addressed, there is however no record that this is so. 2) Stakeholder List for Sg. Gemas Estate is incomplete: No DOE contact information, while address and contact number for Indian High Commission and Nepal High Commission are wrong. 19. 6.3.2 There was an issue of Muar River estate allowing cow owners to let in cows into the estate and it was confirmed from interviews with a cow owner that the issues has been resolved since last year. However, documentation of the process by which the cow encroachment issue at Muar River estate involving 700 cows belonging to 10 owners was addressed, and its outcome was not available. 20. 6.5.1 At Bukit Pilah estate, it was informed by some Indonesian workers that they had paid for their own flights, however they had heard of some Javanese workers whose flights were borne by the company. However due to lack of time, it was not confirmed by the audit team whether the contracts of the workers stated the flights were borne by the company or not. 21. 6.5.2 1) Bukit Pilah estate, Kok Foh mill: Some of the recently recruited workers complained that they do not understand the pay slip, but those who have worked longer, do. 2) At least two workers complained that their salaries were deducted to pay for outstanding electricity bills for the unit where they had lived with other workers who have since left the country. The amount deducted for one worker was of approximately RM600 at rate of RM50 per month until completion of the sum. Whilst it is true that any outstanding bills have to be settled, the worker ought to have been made to pay only his portion of the outstanding sum, and not those of his housemates who have since left the country. 3) At St. Helier estate, the passport safekeeping consent for foreign workers not signed by the management.E.g Ehsan Sahdan Mahmud (B1078489) from Indonesia and Nepalese Bir Bahadur Shrestha (071212012) & other Nepalese workers. While at Sg. Senarut Estate, the passport safekeeping form for foreign workers are not signed by management. E.g Guddu (M7961592) from India. However, it was noted that this was due to change in the passport consent form format and there was a previous version which was signed by the management. Hence this is an OFI. 22. 6.5.3 Kok Foh mill: Workers complained about the quality of the treated water supplied to the line site, where the water is not filtered and therefore slightly brownish in colour, and has an unpleasant odour. 23. 6.5.4 Workers at Bukit Pilah estate informed that there is a shop in the linesite but the price of goods at the shop fluctuates, e.g. price of phone top up cards increases by 10% 24. 6.6.1 1) Workers interviewed at Bukit Pilah estate Kelpin division informed that only a few of them are aware of the worker’s unions (NUPW & AMESU), while others were not. They had also not received any invitation to join the unions. 2) The management of Pertang Estate should ensure that all foreign workers are aware of their rights to join the union. At present, none of the foreign workers at

QMF: RSPO-007a-13(Rev.0) RSPO Re-certification Assessment Report Sime Darby Plantation SOU 16: Kok Foh

Bahau, Negeri Sembilan, Malaysia

Page 132 of 132 the estate are unionised. 3) Kok Foh estate: Meeting with Trade Union on 9 April 2016, and action plans and person in charge were identified to address the concerns, but no deadlines were given for implementation. 25. 6.8.2 There is an apparent element of discrimination against workers, as workers interviewed at Bukit Pilah estate Kelpin division informed that while the quality of their water source used for cleaning and showering was poor, adequate clean water supply was being provided to the estate staff. 26. 6.11.1 Kok Foh estate: CSR activities are only carried out with the workers. It would be ideal if CSR activities be extended also to external stakeholders. 27. 6.12.2 1) Bukit Pilah estate: A worker interviewed that they were informed by their agent in their home country that they would work in an oil palm mill, and not in the estate. Based on this assurance, he agreed to come to work in Malaysia. However, when he arrived, he found out that he had to work in the estate. Although this happened through no fault of the company, improvements could be made by engaging with the agents, emphasizing the need to give accurate picture, and be present during the briefing in the workers’ home country. 2) Declaration for Passport Safekeeping is printed in English language – a language which the workers are not conversant in. There was also no evidence that the contents have been explained to them in the language which they understood. 28. SCCS 1) The mass balance sheet does not include a column for total CPO dispatched E5 and total PK dispatched, while should be included since these figures are obtained from the company’s SAP system and used for the calculation of the certified and non-certified CPO/PK dispatched in the mass balance sheet. 2) The calculation of monthly CPO and PK dispatch figures in the mass balance sheet from the dispatch logbook is done manually and it would be better to have a format to input the contract figures dispatched on daily basis, from which the monthly dispatched amount can be automatically calculated and be easily input into the mass balance sheet.

QMF: RSPO-007a-13(Rev.0)