SGS RSPO Doc

SGS RSPO Doc. Number: GP 7003A

(Principles & Criteria) Doc. Version date: 01 April 2013 Page: 1 of 90

RSPO PRINCIPLES & CRITERIA CERTIFICATION REPORT

Public Summary Information

Certificate No.: SGS-RSPOPM-00969 Project Number: MY 02619 Validity Period: 25 Jul 2012 – 24 Jul 2017 RSPO Membership Report Ref. No.: 1-0013-04-000-00 No.: Client Name: FELDA Palm Industries Sdn Bhd Website: http://www.FELDA.net.my/

Scope: Production of 35,200 MT of CPO and 9,280 MT of Palm Kernel at Kilang Sawit FELDA Semenchu with a capacity of 54MT/hour using the Mass Balance ( MB ) module

Type of Certificate INDIVIDUAL Holder: Number of Mill: 01 Number of Sites: 7 estates CPO Production (MT) - FY 2014: 33,852.23 - Estimated FY2015: 35,200

Mill Capacity: 54MT/hour PK Production (MT) - FY 2014: 9,049.99 -Estimated FY2015: 9,280

Address: Head Office Contact Person: Felda Palm Industries Sdn Bhd Name: En. Norazam Abdul Hameed Street and number: Level 20 Position: General Manager Town/City Menara Felda Tel: +60-3-2859 1633 State/Country Platinum Park Fax: +60-3-2698 7816 Zip/Postal code No 11 Persiaran KLCC Email: [email protected] Country 50088 Kuala Lumpur Contact Person: (Mill Manager) Mill Address Mr. Zailani bin Zainuddin FELDA Palm Industries Sdn Bhd Mill Manager Kilang Sawit FELDA Semenchu, FELDA Palm Industries Sdn Bhd 89100 Kota Tinggi, Johor, Kilang Sawit FELDA Semenchu, Malaysia 89100 Kota Tinggi, Johor, [email protected] Malaysia [email protected]

Country: Malaysia Plantation Unit Total Certified Area 15,405.95 Being Evaluated: Supply Base Name & Address (Ha):

1. FELDA Semenchu - Pejabat FELDA FFB Production Semenchu, Kota Tinggi (MT)

-Actual 2. FELDA Pasak - Pejabat FELDA FY 2014: Pasak, Kota Tinggi 329,329.49 SGS RSPO, SGS (Malaysia) Sdn. Bhd., No. 26, Jalan Anggerik Vanilla, 31/93, Kota Kemuning, 40460 Shah Alam, Malaysia CONTACT PERSON: ABDUL HAYE SEMAIL Tel: +6 (03)5121 2320 - Fax: +6 (03)5122 5927 WWW.SGS.COM

GP 7003A Page 2 of 90

- Estimated 3. Air Tawar 1 - Pejabat FELDA Air FY2015: Tawar 1, Kota Tinggi 333,250

4. Air Tawar 2 - Pejabat FELDA Air Tawar 2, Kota Tinggi

5. Air Tawar 3 - Pejabat FELDA Air Tawar 3, Kota Tinggi

6. Air Tawar 4 - Pejabat FELDA Air Tawar 4, Kota Tinggi

7. Air Tawar 5 - Pejabat FELDA Air Tawar 5, Kota Tinggi

End of Public Summary

GP 7003A Page 3 of 90

BASIC EVALUATION INFORMATION MAIN EVALUATION Evaluation Dates: 6th – 10th June 2011 Team Leader/Team:  Abdul Haye Semail (Lead Auditor –Social)  James S H Ong (Agronomy)  Joshua Mathews (Safety & Health, Environment) Affiliate Project Manager: Date: Report approved by: Abdullah Din Date: 26 July 2012 Certification approved by: Kenny Looi Date: 27 July 2012 Database logged by: Othman Shahziela Date: 27 July 2012 SURVEILLANCE 1 Evaluation Dates: 1st – 3rd July 2013 Team Leader/Team:  Abdul Haye Semail (Lead Auditor – Safety & Health, Supply Chain)  Haji Aziz Bakar (Agronomy)  Mohd Faisal Jaafar (Environment & Social)  Muhammad Shazaley Abdullah (Trainee Auditor) Affiliate Project Manager: Date: Report reviewed & approved by: Abdullah Din Date: 13 Aug 2013 Certification approved by: Kenny Looi Date: 14 Aug 2013 Database logged by: Othman Shahziela Date: 14 Aug 2013 SURVEILLANCE 2 Evaluation Dates: 25th – 27th August 2014 Team Leader/Team:  James S H Ong ( Lead Auditor – Good Agricultural and manufacturing practices, Supply Chain )  Mohd Faisal Jaafar – Legal, Environmental, Health, Safety  Dayang Suhanie Khalid – Social and Continuous Improvement Affiliate Project Manager: Date: Report reviewed & approved by: Haye Semail / Hoo Boon Han Date: 6 Jan 2015 Certification approved by: Kenny Looi Date: 7 Jan 2015 Database logged by: Othman Shahziela Date: 7 Jan 2015 SURVEILLANCE 3 Evaluation Dates: Team Leader/Team: Affiliate Project Manager: Date: Report reviewed & approved by: Date: Certification approved by: Date: Database logged by: Date: SURVEILLANCE 4 Evaluation Dates: Team Leader/Team: Affiliate Project Manager: Date: Report reviewed & approved by: Date: GP 7003A Page 4 of 90

Certification approved by: Date: Database logged by: Date: GP 7003A Page 5 of 90

TABLE OF CONTENTS SUMMARY ...... 6 BASIC EVALUATION INFORMATION...... Error! Bookmark not defined. List of Abbreviation ...... 7 1. Scope of CERTIFICATION ASSESSMENT ...... 8 1.1 National Interpretation Used ...... 8 1.2 Certification Scope ...... 8 1.3 Location and Maps ...... 8 1.4 Description of Supply Base and Mill Processing Capacity ...... 9 1.5 Date of Planting and Cycle ...... 10 1.6 Other Certification Held ...... 11 1.7 Organizational Information and Contact Person ...... 11 1.8 Time-bound Plan for Other Management Units ...... 12 1.9 Area of Plantation...... 12 1.10 Date Certificate Issued and Scope of Certificate ...... 13 2. Assessment Process ...... 13 2.1 Certification Body ...... 13 2.2 Assessment Methodology, Programme, Site Visits ...... 13 2.3 Qualification of Lead Assessor and Assessment Team ...... 15 2.4 Stakeholder Consultation and List of Stakeholders Contacted ...... 16 3. Assessment Findings ...... 16 3.1 Summary of Findings ...... 16 3.2 Corrective Action Request ...... 53 3.3 Noteworthy Positive & Negative Observation ...... 53 3.4 Status of Non-Conformities Previously Identified ...... 53 3.5 Issues Raised by Stakeholders and Findings ...... 53 4. Acknowledgement of Organization Internal Responsibility ...... 53 4.1 Date of Next Surveillance Visit ...... 53 4.2 Date of Closing Non-Conformities ...... 53 4.3 Acknowledgement of Internal Responsibility and Formal Sign-off Assessment Findings...... 54

LIST OF TABLES Table 1: Mill and Supply Base Estates and GPS Location ...... 8 Table 2: Actual ( Jan '14 - Dec '14) and Projected FFB from Supply Base ( Jan '15 - Dec'15 ) ...... 9 Table 3: Actual ( Jan'14 - Dec'14) and Projected ( Jan'15-Dec'15) Mill Processing ...... 10 Table 4: Planting Age Profile for Supply Base ...... 11 Table 5: Area Statement of the Supply Base ( 2014 ) ...... 12 Table 6: Assessment Programme ...... 13 Table 7: Auditor's Profile ...... 15

GP 7003A Page 6 of 90

SUMMARY

FGV, as part of Felda Group and the world's largest plantation operator, with some 850,000 hectares of predominantly oil palm plantations across Malaysia and Indonesia, is taking a lead in its commitment to agricultural sustainability.

Felda Group actively participate in the Roundtable on Sustainable Palm Oil (RSPO) certification. As one of its earliest members, together with the prestige of being the first complete palm oil supply chain to attain the International Sustainability and Carbon Council (ISCC) further cements our position at the head of the industry table when it comes to sustainability.

In addition, FGV is also embarking on various projects and programmes, via a multi pronged technological, biological and social approach, to get the most from its production by reducing waste and increasing efficiency, while ensuring that environmental sustainability remains at the fore in its farming operations.

FGV today produces around ten percent of the world’s palm oil, yet the scale of its production has not affected the Group’s ongoing commitment to sustainable agricultural practices. The Group, via its comprehensive programmes, remains focused to obtain complete RSPO certification for each and every palm oil estate and oil mill under its purview.

As an advocate of good agricultural practices, both in its commercial estates and through its agricultural extension arm to assist settlers and smallholders, the Felda Group has become the first smallholder organisation in the world to attain the RSPO certification. The Group is implementing an aggressive programme to have all of its mill complexes certified by 2017.

Apart from RSPO certification, FGV’s biodiesel facility in Pahang is the first outside Europe to obtain the International Sustainability and Carbon Certification standards, which is the world’s most comprehensive and only certification for biofuel and bioliquids

The Group has also been committed to the certification system of RSPO through a time bound plan. As part of the commitment, the FELDA Group invited SGS (Malaysia) Sdn Bhd (SGS) to certify FELDA Semenchu Palm Oil Mill (FSPOM) and its Fresh Fruit Bunch (FFB) supplying bases in located in the district of Kota Tinggi, Johor, Malaysia through an assessment process. The assessment process was conducted according to the requirements of the QUALIPALM Programme, a SGS verification programme, for compliance to RSPO principles and criteria interpreted nationally as the baseline in April 2008 which also includes the national interpretation for the smallholder released in November 2010. This is the audit report for the Annual Surveillance Assessment 02 which has been conducted on the 25th – 27th August 2014

GP 7003A Page 7 of 90

LIST OF ABBREVIATION

Short Form Meanings CAR Corrective Action Request CHRA Chemical Health Risk Assessment CPO Crude Palm Oil DID Department of Drainage and Irrigation, Malaysia DOE Department of Environment, Malaysia EFB Empty Fruit Bunch EIA Environment Impact Assessment EMS Environmental Management System EQA Environmental Quality Act ERT Endangered, Rare and Threatened species ESA Environmentally Sensitive Area FFA Free Fatty Acids FFB Fresh Fruit Bunches FR Forest Reserve Ha Hectare HCV High Conservation Value HDPE High Density Polyethylene IPM Integrated Pest Management ISO International Organisation for Standardisation IUCN International Union for Conservation of Nature and Natural Resources JCC Joint Consultative Committee JUPEM Jabatan Ukur dan Pemetaan Malaysia (Department of Survey and Mapping Malaysia) K Potassium kWh Kilowatt hour M Meter Mg Magnesium mm Millimeter Mt Metric ton MYNI Malaysia National Interpretation N Nitrogen NGO Non Governmental Organisation OA Orang Asli (Indigenous People) OER Oil Extraction Rate OSH Occupational Safety & Health P Phosphate P & C Principles and Criteria PK Palm Kernel POME Palm Oil Mill Effluent PPE Personal Protective Equipment PT Pejabat Tanah (Coding for Pahang Land Office) SOP Standard Operating Procedures Sdn Bhd Sendirian Berhad (Private Limited) SEIA Social and Environment Impact Assessment Sg Sungai / River SGS Societe Generale de Surveillance SOP Standard Operating Procedures SPC Senior Plantation Controller USECHH Use and Standards of Exposure of Chemicals Hazardous to Health WHO World Health Organisation yr Year

GP 7003A Page 8 of 90

1. SCOPE OF CERTIFICATION ASSESSMENT

1.1 National Interpretation Used The operations of the mill and their supply based of FFB were assessed against the Roundtable on Sustainable Palm Oil (RSPO), Principles and Criteria (P&C) – Malaysia National Interpretation (MY-NIWG dated November 2010).

1.2 Certification Scope The scope of certification includes the production of Kilang Sawit FELDA Semenchu and its supply base according to the standard of Roundtable on Sustainable Palm Oil (RSPO), Principles and Criteria (P&C) – Malaysia National Interpretation (MY-NIWG dated November 2010) and RSPO Supply Chain Certification Standard dated 25 November 2011.

1.3 Location and Maps Kilang Sawit FELDA Semenchu is located in Kota Tinggi, Johor, Malaysia (Figure 1). The GPS locations of the mills are shown in Table 1. Table 1: Mill and Supply Base Estates and GPS Location

Mill/Supply Base Latitude Longitude

FELDA Palm Industries Sdn Bhd, 01034.7’ N 10406.2’ E Kilang Sawit FELDA Semenchu, 89100,Kota Tinggi,Johor,Malaysia

Semenchu, Pejabat FELDA Semenchu, 81900 01034.5’ N 10405.5’ E Kota Tinggi,Johor,Malaysia

Pasak, Pejabat FELDA Pasak, 81960 Kota 01042.7’ N 103057.4’ E Tinggi, Johor, Malaysia.

Air Tawar 1, Pejabat FELDA Air Tawar 1, 01037.7’ N 10402.8’ E 81920, Kota Tinggi, Johor, Malaysia.

Air Tawar 2, Pejabat FELDA Air Tawar 2, 010 40.6’ N 10401.27’ E 81920, Kota Tinggi, Johor, Malaysia.

Air Tawar 3, Pejabat FELDA Air Tawar 3, 01042.22’ N 103059.10’ E 81920, Kota Tinggi, Johor, Malaysia.

Air Tawar 4, Pejabat FELDA Air Tawar 4, 01037.4’ N 10405.4’ E 81920, Kota Tinggi, Johor, Malaysia.

Air Tawar 5, Pejabat FELDA Air Tawar 5, 01035.6’ N 10406.3’ E 81920, Kota Tinggi, Johor, Malaysia.

GP 7003A Page 9 of 90

Figure 1: Location Map of Kilang Kelapa Sawit Semenchu and its Supplying Base Estates

1.4 Description of Supply Base and Mill Processing Capacity The FFB is sourced from seven estates which are directly managed by FELDA Palm Industries Sdn Bhd. The budgeted crop yields from each estate are listed in Table 2 below. However in 2012, a new Palm Oil Mill was build in Felda Air Tawar 2. As a result from 2014 onwards, FFB from Pasak, Felda Air Tawar 1,2 and 3 were processed in the new Mill.

Table 2: Actual ( Jan '14 - Dec '14) and Projected FFB from Supply Base ( Jan '15 - Dec'15 )

FFBs (Tonnage) Estates Actual (Year 2014) Projected (Year 2015)

Felda & FTP Semenchu 53,730.25 55,000

Felda Pasak 17,601.71 17,400

Felda & FTP Air Tawar 1 45,111.07 41,500

Felda & FTP Air Tawar 2 64,753.28 70,850

Felda & FTP Air Tawar 3 48,348.43 43,500 GP 7003A Page 10 of 90

45,000 Felda & FTP Air Tawar 4 42,216.63

Felda & FTP Air Tawar 5 57,568.12 60,000

Subtotal (own RSPO certified 329,329.49 333,250 supply base) Non RSPO certified, Outside crops 70,225 70,000

Total crop processed: 399,554.49 403,250

Ref: Amir Hamzah 30/1/15, 7/5/15 Note: In 2014 onwards, crop from Pasak and Felda Air Tawar 1,2,3 sent to new mill at Felda Air Tawar 2.

Table 3 shows FFB supplied and produced by the 7 supply bases which are directly managed by FELDA Palm Industries Sdn Bhd and FELDA Technoplant Sdn Bhd including independent smallholders. The smallholders are included in the certification programme within 3 years as per clause 4.2.3 of the RSPO certification system (approved document 26th June 2007). In 2014, total FFB processed in the oil mill (directly managed estates, diversion, smallholders and out-growers) are 223,740.00 MT. It is important to take note that the crop from external growers can also be from the independent smallholders within the scheme, who do not wish to be managed by FELDA.

Table 3: Actual ( Jan'14 - Dec'14) and Projected ( Jan'15-Dec'15) Mill Processing

Mill Production Figures (MT) (Audited Estate)

Mill Actual (2014) Projected (2015)

CPO PK CPO PK

POM (RSPO certified) 33,852.23 9,049.99 35,200 * 9,280 *

POM (Non RSPO 15,517.84 3,935.59 15,400 4,060 certified)

12,985.58 50,600 13,340 49,370.07 Total

KER:5.80 % OER: 22.0% KER: 5.80% OER: 22.07% Ref: Amir Hamzah 30/1/15,7/5/15 Note*: Production of CPO and PK only projected for 3 supplying estates (i.e. Felda & FTP Semenchu, Felda & FTP Air Tawar 4, 5) , the other 4 estates (i.e. Felda Pasak, Felda Air Tawar 1,2,3) divert to other mill.

1.5 Date of Planting and Cycle The estates were planted since 1970s during which the FELDA settlement was initiated. The palms ware considered matured when approaching four years after planting and productive until the age of 25 years. A replanting program for all estates involved are available and being projected for the next five (5) financial years (FY 14/15 to FY 18/19). The age profiles for all the estates are simplified in Table 4 below. GP 7003A Page 11 of 90

Table 4: Planting Age Profile for Supply Base

Planting Age (Ha) Name of supplying estate Immature >4 - 14 years >14 - 25 years >25 years Felda & FTP 0 2,506.63 0 0 Semenchu Felda Pasak 46.53 313.83 502.38 0 Felda & FTP Air 0 0 2,232.86 0 Tawar 1 Felda & FTP Air 0 3,103.96 0 0 Tawar 2 Felda & FTP Air 123.05 2,144.42 0 0 Tawar 3 Felda & FTP Air 0 2,041.65 0 0 Tawar 4 Felda & FTP Air 0 2,390.64 0 0 Tawar 5 Total 169.58 12,501.13 2,735.24 0 Ref: Amir Hamzah 30/1/15

1.6 Other Certification Held FELDA Semenchu Palm Oil Mill is also being certified by other certification as below:  ISO 9001-2000 (Certificate No. AR 4096)  ISO 14001-2004 (Certificate No. ER0367)  OSHAS 18001-2007 (Certificate No. SR0243)

1.7 Organizational Information and Contact Person The company contact person details are as follows:

Name: En. Norazam Abdul Hameed

Designation: General Manager

Felda Palm Industries Sdn Bhd Level 20 Menara Felda Address: Platinum Park No 11 Persiaran KLCC 50088 Kuala Lumpur Malaysia

Tel: +60-3-2859 1633 Contact No.: Fax: +60-3-2698 7816

Email address: Email: [email protected]

GP 7003A Page 12 of 90

1.8 Time-bound Plan for Other Management Units FELDA is a member of RSPO and has been involved in the certification since October 2004; the membership number with RSPO is 1-0013-04-000-00. FELDA owns and operates 70 mills and 70 oil palms estates/management units covering approximately 723,000 hectares in Malaysia and Indonesia. FELDA has developed a timebound plan (Appendix C) for the phased implementation of the RSPO P&C, commencing with mills and estates. FELDA will use the experience gained from achieving certification of the first few mills and estates to implement the RSPO P&C in parallel with the remainder of its operations. The SGS assessment team considers that FELDA is on the right track which is reasonable and challenging, given the widespread geographic locations of its properties, the resources required and the numbers of smallholders involved.

1.9 Area of Plantation The areas of supplying estates for this operating unit are listed in Table 5. Details of production area (mature/immature) are also listed.

Table 5: Area Statement of the Supply Base ( 2014 )

Conservation Total Titled Name of Estates Mature Immature HCV Area (Ha) Others Area (Ha) Area (Ha)

0 0 - Felda & FTP 2,506.63 - 2,506.63 Semenchu 0 0 - Felda Pasak 816.21 46.53 862.74 0 0 - Felda & FTP Air 2,232.86 - 2,232.86 Tawar 1 0 0 - Felda & FTP Air 3,103.96 - 3,103.96 Tawar 2 0 0 - Felda & FTP Air 2,144.42 123.05 2,267.47 Tawar 3 0 0 - Felda & FTP Air 2,041.65 - 2,041.65 Tawar 4 0 0 - Felda & FTP Air 2,390.64 - 2,390.64 Tawar 5 0 0 - 15,405.95 Total: 15,236.37 169.58

Others: Include roads, linesite, bridges and any others facilities and amenities.

Ref: Amir Hamzah 30/1/15

GP 7003A Page 13 of 90

1.10 Date Certificate Issued and Scope of Certificate The certificate issue date is the date of RSPO approval of the main assessment report. The certificate has been issued on 25th July 2012 for FELDA Semenchu Palm Oil Mill and valid for five years. This certification scope is “FELDA Semenchu Palm Oil Mill and its supply base according to the standard of Roundtable on Sustainable Palm Oil (RSPO), Principles and Criteria (P&C) – Malaysia National Interpretation (MY-NIWG dated November 2010) and RSPO Supply Chain Certification Standard dated 25 November 2011”.

2. ASSESSMENT PROCESS

2.1 Certification Body Founded in 1878, the SGS Group is the world’s largest auditing, inspection, testing and verification organization. Truly global and benefiting from unique international network of more than 1180 offices, 321 laboratories and 50’000 full time staff, the SGS Group is able to provide its international clientele with a comprehensive range of services in more than 145 countries. SGS has no manufacturing, trading or financial interests which could compromise its independence. Its guarantee of independence, its reputation for professionalism, integrity and impartiality, as well as it remarkable international network, place the SGS Group in a unique position. The RSPO Programme is the SGS Group’s RSPO Certification Programme internationally accredited by the RSPO Executive Board to carry out oil palm plantation and supply chain certification/verification and accreditation for global RSPO certification.

2.2 Assessment Methodology, Programme, Site Visits The assessment was conducted in three audit days and involving three estates of FELDA Semenchu including the Semenchu Palm Oil Mill . The audit covers documentation review, internal procedures, management system, field inspection as well as identification of any significant issues for both environment or social issues. A sample of stakeholders was consulted during the assessment to get their feedback on the management doing. The assessment was conducted based on random samples and therefore nonconformities may exist which have not been identified. The methodology for objective evidence collection included physical site inspection, observation of tasks and processes, interview with workers, families and stakeholders, documentation review and monitoring data. The assessment program is included as shown in Table 6 below. Table 6: Assessment Programme

Date Location Activities 24/8/14 - Kota Tinggi Auditors arrive overnight Kota Tinggi

25/8/14 - Kompleks FELDA Semenchu Introduction to the audit by AGM Wilayah Johor - Felda Semenchu , FELDA Semenchu Briefing by the SGS on the auditing approach Formulation of audit schedule Field Visit @ Semenchu Estate: GP 7003A Page 14 of 90

Spraying, Harvesting & Interview with workers Worker’s PPE and Mandore’s First Aid Kit EFB , Frond Stack, road condition Settler’s lot . Sprayed area  Documentation Review – Semenchu Estate  Presentation of interim Findings for Semenchu Estate

26/8/14 - Air Tawar 4 & 5 Estate • Travel to Air Tawar 4 & 5  Rain in the morning : Document Review  Riparian /Buffer Sg Layau & Sg Air Papan  Sprayed and fertiliser applied area Blk 13  Harvesting Areas  Fertilizer Application  Frond stack on terrace  Boundary stone with Tradewind Estate  Storage Chemical , Type 1b store, and Fertiliser , premix area, Empty Chemical container store, emergency shower, First Aid kit  Linesite  Interview workers . Documentation Review . Interview with wakil , Gender Committee , Union, . 27/8/14 - • KKS Semenchu - FELDA Semenchu Palm Oil  Mill records on production RE usage , Mill water usage  Site & facilities visit  Supply Chain audit  SOP  Record Keeping  Training Document Review . Licenses . Safety and health . Environmental impact assessment and management plans . Social impact assessment and management plans . Chemical Health Risk Assessment (CHRA) . Grievance settling mechanism . Training documents . Interviews with scheme smallholders and independent smallholders . Inspection to chemical store, chemical mixing and fertilizer store . High Conservation Value areas

Document Review & Supply Chain audit . Purchasing & Payment Mechanism and Transparency . Union Agreement GP 7003A Page 15 of 90

. Schedule Waste Collection records . Premise Inspection . POME Ponds . By-products management . Storage (Schedule Waste, Lubricant) . Flow meters . Safety and health

. 11:00 • Preparation for closing meeting 12:30 p.m Closing meeting • Presentation on Audit Findings and Non Compliance • Discussion • 2:00 p.m Auditors travel to next audit job / KL

2.3 Qualification of Lead Assessor and Assessment Team SGS Malaysia Sdn Bhd holds copies of educational qualifications, certificates and audit logs for each of the audit team members. SGS has evaluated the qualifications and experience of each audit team member and has registered the following designations for conducting RSPO Assessment. Summary of auditors’ educational background and experience are listed in Table 7 below. Table 7: Auditor's Profile

Evaluation Team Notes

Team Leader – James S H Ong, a Bachelor of Agriculture Science holder and agronomist in Plantation, Good SGS (M) Sdn Bhd. He has many years working experience in agriculture Agriculture & sector in Malaysia and has been working in estates as well in the manufacturing agrochemical and fertilizer industry. He is well versed with Good Agricultural Practices, Supply practices .He has undergone ISO 14001 and RSPO Lead Auditor and RSPO Chain Supply Chain training and involved in a number of audits on oil palm plantations, supply chains and traders.

He is also involved in ISCC audits. Auditor 1 –Legal, Mohd Faisal Jaafar is a degree holder in forestry from Universiti Putra Regulation, Malaysia. Faisal has a 7 years experience in operating Malaysian Timber Environment and Certification Scheme with specialization in forest management certification Safety, and forest plantation management certification. Has undergone the necessary ISO 9000 Lead Auditor course and ISO 14000 Lead Auditor course as well as has gathered substantial auditing experience pertaining to oil palm certification.

Auditor 2 –Social Dayang Suhanie Khalid, a graduate in Bachelor of Forestry Science, is an & continuous auditor for Forestry Chain of Custody. In 2013, she successfully completed the Lead Auditor training of RSPO. And in 2014 , attended a Social integrity Improvement workshop organized by RSPO. Her competency will serve the industry well especially on audits involving plantations who are certified under the Roundtable on Sustainable Palm Oil (RSPO)

GP 7003A Page 16 of 90

2.4 Stakeholder Consultation and List of Stakeholders Contacted As this is a surveillance audit, only relevant stakeholders were identified and interviewed Stakeholder consultation took place in the form of meetings and interviews held within the Semenchu Complex, during the field operation, line site as well as in the respective estate and mill office . See Appendix D for stakeholder’s details and comments.

3. ASSESSMENT FINDINGS 3.1 Summary of Findings 3.1.1 Principles & Criteria As outlined, objective evidence was obtained separately for each of the RSPO Indicators and criterion for the mills and estates. The results for each indicator from each of the operational areas were evaluated to provide an assessment of conformity. A statement is provided for each of the RSPO indicators in order to support the findings of the assessment team. There is 3 Major Non-conformities and 6 Minor Non-conformities identified during this assessment for the P& C and 1 Non-comformity for the Supply Chain. Details for each Non-conformities are given in Appendix A. Major Non-conformities has to be closed out within the period of 60 days after the assessment. Minor Non-compliances and Observations will be followed up during the next Annual Surveillance Audit which is scheduled to be conducted within the period of twelve months after the RSPO approval of Main Assessment.

Principle 1: Commitment to Transparency Criterion 1.1: Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate language & forms to allow for effective participation in decision making. 1.1.1 Records of requests and responses must be maintained. Major

Findings In compliance: Yes: X No: Objective FELDA Semenchu has established “Rekod Permohonan dan Maklumbalas” for the purpose of evidence: maintaining record of request to or from stakeholder as evident in document FAS-RSPO L4/K1.1/1.1.1. The document is compiled in “Maklumat Kepada Stakeholder” files. FELDA Semenchu has compiled the lists of all stakeholders and made available during the audit. Minutes of monthly meetings held between the scheme smallholders and management are evident. Other meetings between oil mill and scheme representatives are also verified in order to understand the allocation of oil extraction rates, quality of crop and value. The scheme representatives have records of each smallholders land title or grant with land survey map carried out by the Department of Land Survey, Johor.

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 1.2.1 Land titles / user rights (C 2.2)

Findings In compliance: Yes: x No: Objective Non-confidential documents are not made available to the relevant stakeholders (Minor CAR 40). evidence: All management documents are made publicly available through the company’s official letter that was addressed to all stakeholders as per in the company’s stakeholder list.

Example of the letter observed is a letter [Ref No.: (01)3115/RSPO/2-1-1] dated 17 January 2014 specifying that the company is ready of made publicly available all management documents to all interested stakeholders. The letter also stated that all managements documents are made publicly available through an official letter addressing to the company that covers the following: GP 7003A Page 17 of 90

 Land titles;  Management plans; and  Procedures (Grievances and Negotiation Procedures).  Minor CAR 40 Closed 1.2.2 Safety and health plan (C 4.7)

Findings In compliance: Yes: x No: Objective Refer to 1.2.1 evidence:

The safety and health plan includes the programme for the medical surveillance for the workers ( June 2014 ) as well as the awareness training conducted to manurers in January 2014. 1.2.3 Plans and impact assessment relating to environmental and social impacts (C 5.1, 6.1, 7.1, 7.3)

Findings In compliance: Yes: x No: Objective Refer to 1.2.1 evidence: The SEIA is documented in the doc No. : RSPO 2010 ( Kriteria 5.1/5.3/5.6 ) dated 24/03/14 1.2.4 Pollution Prevention Plan (C 5.6)

Findings In compliance: Yes: No: Objective Refer to 1.2.1 evidence: The Pollution Prevention Planonly records the ‘Rekod beg Baja Kosong’ from Jan – Jul 2014. 1.2.5 Details of complaints and Grievances (C 6.3)

Findings In compliance: Yes: x No: Objective Refer to 1.2.1 evidence: A sample on the detail of a complain was compiled in the C1.2 Dokumen Pengurusan file dated 9/4/14 that reports the intrusion of cattle into the settler’s farm. Response was done on the next day by the manager and clarification was given to the complainant. 1.2.6 Negotiation procedures (C 6.4)

Findings In compliance: Yes: x No: Objective Refer to 1.2.1 evidence: The estate will refer to the ‘Tatacara perundingan’ Doc. No: Prosedur ML-11A/L2-PR1(0): March 2012: Prosedure Perundingan FELDA It also includes a flowchart on how the negotiation and settlement can be solved 1.2.7 Continuous improvement plan (C 8.1)

Findings In compliance: Yes: x No: Objective Refer to 1.2.1 evidence: At Air Tawar 4, the continous improvement plan are for : a) Reduction of certain pesticide / Pengurangan pengunaan racun perosak tertentu through the reduction of paraquat , increase of barn owl nest , increase the grazing cattle and the planting of beneficial plant b) Environmental impact /Kesan ke atas alam sekitar through the use of subsoil fertilizer, smart weeding through reduction of water usage c) Maximise recycling and minimizing waste through sales of fertilsier bags, return of empty chemical container to supplier, sales of waste paper and sales of scrap iron. d) Pollution prevention plan through increase of subsoil application of fertilizer, expand river reserve and the segregation of waste e) Social impact through repainting stafffquarters, freetuition for schoolchildren and the repair of worker’s hostel Principle 2: Compliance with Applicable Laws and Regulation Criterion 2.1: There is compliance with all applicable local, national and ratified international laws and regulations. GP 7003A Page 18 of 90

2.1.1 Evidence of compliance with legal requirements Major

Findings In compliance: Yes: X No: Objective List of all applicable laws including international laws and convention ratified by Malaysian government evidence: is available. However, it was found to be lack of international treaties and inadequate hard copies were kept according to the list. Licenses and permits were not displayed. At the time of surveillance visit, the audit team observed that copies of legal documents are available with the compilation of a list of applicable laws and regulations at both mill and estate levels. Examples of files/legal documents/licenses verified during the Surveillance Audit are as follows: No. Details Validity 1. MPOB licence 500845202000 for producing and transporting 01 Apr 2014 to 31 FFB for Semenchu Estate Mar 2015 2. MPOB licence 500842802000 for producing and transporting 01 Apr 2014 to 31 FFB for Air Tawar 5 Estate Mar 2015 3. MPOB licence 500163604000 for Buying FFB, Selling CPO, 01 Apr 2014 to 31 Storaging FFB and CPO, Producing and Transporting CPO for Mar 2015 Semenchu Estate 4. License to enhance the efficiency of effluent by installing the 22 April 2014 biogas plant, approval from the DOE with a number P- KBKKS(01)/003/2014 as per required under Regulation 6, Environmental Quality (Prescribed Premises)(Crude Palm Oil)Regulations, 1977. 5. License to install dust collector and chimney, approval from the November 2010 DOE with the license no. APB/2010/160 as per required under Regulation 36&38, Environmental Quality (Clean Air) Regulations, 1978. 6. License to Operate Palm Oil Mill as per required under 01 July 2014 – 30 Environmental Quality (Prescribed Premises)(Crude Palm June 2015 Oil)Regulations, 1977, Environmental Quality (Clean Air) Regulations, 1978 and Environmental Quality (Scheduled Waste) Regulations, 2005. License no. 002165 is made available to the audit team. 7. Scheduled Control Permit (Permit Barang Kawalan Berjadual) 30 July 2014 – 29 for Storaging of Diesel, for Semenchu POM:- July 2015 BPGK.JK.KTG.PERMIT 0029 (PD) No. Permit: J 010092 8. Approval to install and operate the boiler, incinerator and diesel Dated 12 July 2014 genset from DOE, Ref No: ASJ(B) 31-152-000-022JLD02 9. Certificate of Fitness for Water Tube Boiler (Semenchu POM) – Until 06 July 2015 Certificate No. JH PMD 1009 10. Certificate of Fitness for Overhead Travelling Crane (Semenchu Until 06 July 2015 POM) – Certificate No. PMA 9645 11. Certificate of Fitness for Overhead Travelling Crane (Semenchu Until 06 July 2015 POM) – Certificate No. PMA 9650 12. Certificate of Fitness for Steriliser No 1 (Semenchu POM) – Until 06 July 2015 Certificate No. PMT 62422 13. Certificate of Fitness for Steriliser No 2 (Semenchu POM) – Until 06 July 2015 Certificate No. PMT 62423 14. Certificate of Fitness for Steriliser No 3 (Semenchu POM) – Until 06 July 2015 Certificate No. PMT 66069 15. Certificate of Fitness for Steriliser No 4 (Semenchu POM) – Until 06 July 2015 Certificate No. PMT 66036 16. Certificate of Fitness for Vacuum Dryer (Semenchu POM) – Until 06 July 2015 Certificate No. PMT 55961 17. Certificate of Fitness for Vacuum Dryer (Semenchu POM) – Until 06 July 2015 GP 7003A Page 19 of 90

Certificate No. PMT 55962 18. Certificate of Fitness for Water Softener (Semenchu POM) – Until 06 July 2015 Certificate No. PMT 119546 19. Certificate of Fitness for Water Softener (Semenchu POM) – Until 06 July 2015 Certificate No. PMT 119547 20. Certificate of Fitness for Thermal Deaerator (Semenchu POM) Until 06 July 2015 – Certificate No. JH PMT 10528 21. Certificate of Fitness for Air Receiver (Semenchu POM) – Until 06 July 2015 Certificate No. JH PMT 10190 22. Certificate of Fitness for Air Receiver (Semenchu POM) – Until 06 July 2015 Certificate No. JH PMT 10191 23. Certificate of Fitness for Back Pressure Receiver (Semenchu Until 06 July 2015 POM) – Certificate No. PMT 17868 24. Certificate of Fitness for Pressure Filter (Semenchu POM) – Until 06 July 2015 Certificate No. PMT 20303 25. Certificate of Fitness for Pressure Filter (Semenchu POM) – Until 06 July 2015 Certificate No. PMT 20304 26. Certificate of Fitness for Pressure Filter (Semenchu POM) – Until 06 July 2015 Certificate No. PMT 20975 27. Certificate of Fitness for Back Pressure Receiver (Semenchu Until 06 July 2015 POM) – Certificate No. JH PMT 15212 28. Certificate of Fitness for Air Compressor (Semenchu POM) – Until 06 July 2015 Certificate No. JH PMT 15213

Besides the above, there is an Audiometric Testing Programme conducted to all workers stationed at high pitch area such oil extraction station, kernel plant, press station, boiler plant, engine room and water treatment. Latest programme conducted in June 2014 resulted in out of 65 workers inspected, 5 of them has been declared as exposed to high pitch area (as mentioned above) with a decibel above 85dB where they have been declared as having hearing impairment which require them to conduct the test to monitor their hearing status as per required within the Regulation 22(b) of the Factories and Machinery (Noise Exposure) Regulation, 1989 on a yearly basis. Based on the report produced by licensed DOSH Doctor, the audit team observed that the doctor recommends that all of 5 workers to equipped with an approved ear PPEs such as earplugs and earmuffs. In addition, for continuous monitoring of this issue, the company has also taken action to schedule another test for these workers that is scheduled to be conducted on September 2014.

In addition, the audit team also observed that the company has taken action to conduct an Environmental Air Monitoring on a quarterly basis. Latest monitoring was conducted on 21-22 May 2014 and the report dated 02 June 2014 (Ref No: ETD/A/FPIKSS/2014-02/10912) been produced where the audit team observed that the Total Suspended Particulate (TSP) monitored at points A1 and A2 cmploed with the Malaysian Recommended Environmental Air Quality Guidelines limit at 260 µg/m3, in addition, the report also states that the Sulphur dioxide (SO2) and Nitrogen Oxide (NO2) monitored at points A1 and A2 were within the above guidelines.

The land titles for the planted area are viewed during the audit. Every settler has two Land Titles (e.g. housing area and farm). Samples of land titles observed during the audits are as below:

Estate Land titles Owners Purpose Date No. Semenchu PM 3172 Ahmad Atan Agricultural 26 Sept 2000 Semenchu PM 3155 Rukiah Markasan Agricultural 26 Sept 2000 Semenchu PM 3191 Shahadan Sirat Agricultural 26 Sept 2000 Semenchu PM 3147 Suradi Alias Agricultural 26 Sept 2000 GP 7003A Page 20 of 90

Semenchu PM 689 Jamalluddin Baharum Agricultural 26 Sept 2000 Semenchu PM 3160 Ali Samsuri Agricultural 26 Sept 2000 Semenchu PM 676 Mohd Ma’amin Agricultural 26 Sept 2000 Air Tawar 5 PM 3333 Said Haron Agricultural 27 Sept 2000 Air Tawar 5 PM 3447 A. Majid Mohamad Agricultural 27 Sept 2000 Air Tawar 5 PM 3406 Abd Hamid Abdullah Agricultural 27 Sept 2000 Air Tawar 5 PM 3403 Salam Ismail Agricultural 27 Sept 2000 Air Tawar 5 3292 Md Ismail Putimin Agricultural 27 Sept 2000

FELDA has shown effort to comply with legal requirements. The biomass plant were operated in conjunction between FELDA Palm Industries Sdn Bhd and FNI Biofuel Sdn Bhd as evident in a contract dated 22 March 2010 which indicates that the land for biomass plant were rented to FNI. The operating permit will be handled by FNI Biofules Sdn Bhd. FELDA Semenchu has also established a list of personnel who will monitor to comply with legal compliance as evident in “Pematuhan Undang-Undang Setempat, Kebangsaan & Antarabangsa Job Spesifikasi”.

2.1.2 A documented system, which includes written information on legal requirements Minor

Findings In compliance: Yes: X No: Objective A documented list of information on legal requirements is evident during the audit. FELDA Semenchu evidence: has identified Mr. Abu Rahman Abd Talib, Assistant Manager while Air Tawar 5 has assigned Aliyas Mohamad, Felda Supervisor as the person’s responsible to monitor the compliances.

2.1.3 A mechanism for ensuring that they are implemented Minor

Findings In compliance: Yes: X No: Objective A mechanism to ensure that the legal requirements are implemented at both the oil mill and plantation evidence: schemes is available. The mill is displaying MPOB licenses and permits as compliance to the legal requirements.

2.1.4 A system for tracking any changes in the law Minor

Findings In compliance: Yes: X No: Objective Any changes in the law will be monitored by the headquarters. The latest change is on the minimum evidence: wages act and evidence in “Pekeliling Kadar Upah Minima Pekerja Ladang” which has been circulated to all estates Criterion 2.2: The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights. 2.2.1 Evidence of legal ownership of the land including history of land tenure Major

Findings In compliance: Yes: X No: Objective The land titles for the planted area are viewed during the audit. Every settler has two Land Titles (e.g. evidence: housing area and farm). Samples of land titles observed during the audits are as below:

Semenchu PM 3147 Suradi Alias Agricultural 26 Sept 2000 Semenchu PM 689 Jamalluddin Baharum Agricultural 26 Sept 2000 Semenchu PM 3160 Ali Samsuri Agricultural 26 Sept 2000 Semenchu PM 676 Mohd Ma’amin Agricultural 26 Sept 2000 Air Tawar 5 PM 3333 Said Haron Agricultural 27 Sept 2000 Air Tawar 5 PM 3447 A. Majid Mohamad Agricultural 27 Sept 2000 Air Tawar 5 PM 3406 Abd Hamid Abdullah Agricultural 27 Sept 2000 Air Tawar 5 PM 3403 Salam Ismail Agricultural 27 Sept 2000 Air Tawar 5 3292 Md Ismail Putimin Agricultural 27 Sept 2000

All land titles are specifically meant for agriculture purposes and according to the law, FELDA office will only keep copy of the Land Title whereas the original is available with individual settlers

2.2.2 Growers must show that they comply with the terms of the land title. [This indicator is Major to be read with Guidance 2]

Findings In compliance: Yes: X No: Objective The land titles allowed the cultivation of agriculture purposes (e.g. oil palm, rubber and other evidence: agricultural crops) and released on a 99 years leasing period. The land title is valid until year 2112.

2.2.3 Evidence that boundary stones along the perimeter adjacent to state land and other Minor reserves are being located and visibly maintained

Findings In compliance: Yes: X No: Objective Every scheme has land survey maps, whereby detailed boundaries of each settler are marked on the evidence: map. Based on the mapping, State Mapping and Survey Department is progressively placing boundary stones between the settlers land. In Air Tawar 4, Block 12, boundary of the neighbouring estate, JTOP was visited and the marker was maintained . N01° 37’ 09.5” , E104° 07’ 27.9” It was also reported in the previous audit , the boundary stone at Seluyut Forest Reserve is clearly demarcated on the ground.

2.2.4 Where there are, or have been, disputes, proof of resolution or progress towards Minor resolution by conflict resolution processes acceptable to all parties are implemented. (CF 2.3.3, 6.4.1 and 6.4.2)

Findings In compliance: Yes: X No: Objective There is no land claim or disputes evident in FELDA Semenchu. evidence: Criterion 2.3: Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent. 2.3.1 Where lands are encumbered by customary rights, participatory mapping should be Major conducted to construct maps that show the extent of these rights.

Findings In compliance: Yes: X No: Objective The land title for each settler was given according to Group Settlement Areas Act 1960 (Act 530), evidence: where the land is classified as Melayu Reserve Land. Procedures are available to transfer the land title to the next of kin or a landowner’s son in the event of the death of the landowner. There is no land claim or disputes evident in FELDA Semenchu.

2.3.2 Map of appropriate scale showing extent of claims under dispute Major

Findings In compliance: Yes: X No: GP 7003A Page 22 of 90

Objective There is no land claim or disputes evident in FELDA Semenchu. Clear physical boundary demarcation evidence: is observed during site visits.

2.3.3 Copies of negotiated agreements detailing process of consent (C 2.2, 7.5, 7.6) Minor

Findings In compliance: Yes: X No: Objective There is no land claim or disputes evident in FELDA Semenchu. evidence:

Principle 3: Commitment to Long-Term Economic and Financial Viability Criterion 3.1: There is an implemented management plan that aims to achieve long-term economic and financial viability 3.1.1 Annual budget with a minimum of 2 years of projection Major

Findings In compliance: Yes: X No: Objective 5 years Annual Crop Budget and operation budgets covering harvesting, crop collection and evidence: transporting, weeding, roads and drains, pruning and pruned frond piling, circle raking and management fee have been budgeted from 2012 to 2017. Environmental aspects on road maintenance, silt pits construction as per soil erosion programme, domestic waste collection and maintenance of fire belt along the boundaries are included in the budget. Estimated cost per hectare for 2013 is RM 4,437.47 where RM 2,953.61 is Production Cost and RM 1,483.86 is for transport. Annual projection cost per MT FFB production is RM164.35.

3.1.2 Annual replanting programme projected for a minimum 5 years with yearly review Minor

Findings In compliance: Yes: X No: Objective There are no plans for replanting in the next 5 years as stipulated in Executive Director’s letter evidence: dated 12th May 2011. The oldest palm in FELDA Semenchu is 10 years old.

5 year Replanting Programme 2014/2019 Estate 2015 2016 2017 2018 2019 Felda & - - - - - FTP Semenchu Felda - 228.91 - - 243.01 Pasak Felda & - - - - - FTP Air Tawar 1 Felda & - - - - - FTP Air Tawar 2 Felda & - - - - - FTP Air Tawar 3 Felda & - - - - - FTP Air Tawar 4 Felda & - - - - - FTP Air Tawar 5 Total - 228.91 - - 243.01

GP 7003A Page 23 of 90

Principle 4: Use of Appropriate Best Practices by Growers and Millers Criterion 4.1: Operating procedures are appropriately documented and consistently implemented and monitored. 4.1.1 Documented Standard Operating Procedures (SOP) for estates and mills Major

Findings In compliance: Yes: X No: Objective The estate will refer to the following manuals for the Standard Operating Procedures (SOP) for evidence: estates: a) Manual Ladang Sawit Lestari Edisi II (2012 ) : Pembangunana Tanam Semula Sawit b) Manual Ladang Sawit Lestari Edisi II(2012 ): Pembajaan c) Manual Ladang Sawit Lestari Edisi II (2012 ): Sawit Matang d) Manual Ladang Sawit Lestari Edisi II (2012 ): Pengurusan Tapak Semaian Sawit

It has different documents that guide the estate for different operations in the estates for e.g a) MLSL ( Ed. 2 ) – Sec 1( 1.0 ) : Pemilihan , Penyediana dan infrastruktur tapak Semaian Sawit b) MLSL ( Ed. 2 ) – Sec 4( 1.0 ) Mengumpan tikus di Ladang Sawit matang c) MLSL ( Ed. 2 ) – Sec 5( 4.0 ) Pembajaan Sawit Matang ( > 37 bulan selepas Tanam ) d) MLSL ( Ed. 2 ) – Sec 3( 11.0 ) Penanaman tumbuhan berfaedah untuk Kawalan Jangka Panjang ulat Pemakan Daun

4.1.2 Records of monitoring and the actions taken are maintained and kept for a Minor minimum of 12 months

Findings In compliance: Yes: No: Objective In Air Tawar 4, records are kept for the following activities : evidence: a) Record of harvesting ( Rekod penuaina BTB Harian ) b) Manuring Record ( Rekod kerja pembajaan ) c) Pruning ( Rekod kerja mencantas Pelepah )

Air Tawar 5 Estate also has a monitoring file known as ‘ Record Pemantaun Mandor ‘ that the mandor records: a) Number of workers b) Equipment/ Peralatan c) Chemical used / Bahan Kimia d) Vehicle/ Kenderaan However in Semenchu Estate, the monitoring only records the ‘availability ‘ of the resources and it lacks the monitoring of work done or action for that particular operation as required by the indicator

OBSERVATION 01

Criterion 4.2: Practices maintain soil fertility at, or where possible improve soil fertility to a level that ensures optimal and sustained yield. 4.2.1 Monitoring of fertilizer inputs through annual fertilizer recommendations Minor

Findings In compliance: Yes: No: x Objective Annual fertilizer recommendation is documented in the ‘ Fertilizer Recommendation summary for evidence: 2014 ‘

The fertilser is recommended to be applied in different month and from the ‘Rekod kerja pembajaan’ 2014 , application is on time. For example application of Peringkat 1D, Block 20 was sighted. GP 7003A Page 24 of 90

Fertilsier : 8.3: 6.1:19.5:2.5+0.5 B2O3 Month Recommended dosage Month actual Dosage recommended to kg /palm applied applied /palm be apply Jan / Feb 2.7 Feb 2.7 Apr/May 2.7 Mac 2.7 Jun/Jul 2.7 Jun 2.7 Ogos/Sep 2.65 Not applied yet

Similar records are also found in Air Tawar 4 and based on the recommendation and applied , the estate is applying as per recommendation. This is reordd in the ‘Laporan kemajuan Pusingan Pembajaan Harian/Bulanan sehingga 31 Julai 2014 ‘

Records of the application by the settlers are recorded yearly by En Mohd Redzuan, Settler/ Peneroka Supervisor . He has started to monitor in 2013, by filling in the ‘Rekod Pengunaan Agrokimia dikalangan peneroka mengurus kebun sendiri’ . Mr Redzuan is monitoring both the fertilizer and agrochemical .

In Air Tawar 4, records of application by settlers are still in the process of being compiled as we were shown the record of the programme for a group of 4 settlers ( Mohd Aris Abdullah, Hj Kasah Nasir, Sukardi Md Aminand Selamat Zainal ) that they group- purchased the fertilizer and agrochemicals .

Minor CAR 52 4.2.2 Evidence of periodic tissue and soil sampling to monitor changes in nutrient status Minor

Findings In compliance: Yes: X No: Objective Evidence of annual periodic tissue sampling is available to monitor changes in nutrient status evidence: undertaken by FELDA Agricultural Services Sdn Bhd (FASSB) had been conducted in all the estates and the results formed the basis to ascertain soil fertility and recommendation for the application of fertilizer. This is done prior to recommendation of the following year. This is found in the ‘Laporan Agronomi’ FTPSB Semenchu Date of visit: 26/6/13 Agronomist: Syed Mohd Faizal Syed Ali Agronomy Graded: B Estate visited: Air Tawar 4 .

4.2.3 Monitor the area on which EFB, POME and zero-burn replanting is applied Minor

Findings In compliance: Yes: No: Objective evidence: In Air Tawar 4, records of EFB delivery ‘ Penghantaran Tandan Kosong ‘ is available e.g. No. Pass 08014262 dated 15/7/14, 6.01 MT was delivered . From the map, Kawasan Penaburan EFB 2014, it is delivered Block 9 and 13 of Peringkat 1 where it is reported to have sandy soils.

No records of EFB application monitoring was done as the EFB is sent to the field by the mill without informing the estate/Semenchu

Observation 02 Criterion 4.3: Practices minimize and control erosion and degradation of soils. 4.3.1 Documented evidence of practices minimizing soil erosion and degradation Minor (including maps) GP 7003A Page 25 of 90

Findings In compliance: Yes: X No: Objective evidence: A letter by the Semenchu Manager dated Jan 2014 gave instruction to reduce soil erosion by : a) Placement of EFB b) Planting of LCC c) Silt pits along the road d) L-shaped staking of frond

Records of practices of EFB placement for 2013 is available.

Topography map was sighted at Air Tawar 4.

In Air Tawar 4 where the area is slightly more hilly than Semenchu, practices of proper frond stacking against the slope was evident in the fields to minimize erosion and degradation.

Terracing were also evident in the fields.

During the audit , roads were also accessible during the visit although after a downpour . We managed to visit the boundary of Block 12 in Air Tawar 4 to the neighbouring JTOP-Tradewind estate.

4.3.2 Avoid or minimize bare or exposed soil within estates Minor

Findings In compliance: Yes: No: Objective Although Semenchu and Air Tawar practices operations that avoids or minimize bare or exposed evidence: soil within estates however some settlers have taken back the land for their own management do not seemed to be practicing as such as some of the settler’s field are bare and prone to erosion.

Similarly in Air Tawar 4, the control of some noxious weeds like Clidemia sp. has resulted in the fields looking quite bare and exposed.

Observation 03 4.3.3 Presence of road maintenance programme Minor

Findings In compliance: Yes: x No: Objective For road maintenance, the Doc. No. MLSL ( Ed 2 ) – Sec.4 ( 10.0 ) June 2012 ‘Menyelenggara evidence: Jalan Pertanian ) is used as a reference.

It explains the objectives of providing roads for harvesting , transport of FFB and fertilizer as well as for accessibility. In Air Tawar 4, a Contract Document No. 2000121025 is sighted for the road maintenance that includes grading, compacting, cambering, culverts etc for the Peringkat 2 of Air Tawar 4 dated 25/5/14

As in 4.3.1., during the audit , roads were also accessible during the visit although after a downpour . We managed to visit the boundary of Block 12 in Air Tawar 4 bordering the neighbouring Tradewind estate.

4.3.4 Subsidence of peat soils should be minimized through an effective and documented Minor water management programme

Findings In compliance: Yes: X No: Objective There is no peat soil in Semenchu and hence no water management plan monitoring is required evidence: for peat soils subsidence.

GP 7003A Page 26 of 90

4.3.5 Best management practices should be in place for other fragile and problem soils Minor (e.g. sandy, low organic matter and acid sulphate soils)

Findings In compliance: Yes: X No: Objective The Rengam series soil is known for its coarse sandy characteristic and when it is not managed evidence: well can be susceptible to erosion. Air Tawar 4 is applying EFB as per recommended by the agronomist to improve its organic material in the soil . During audit , this EFB application was sighted in Block 13.

Criterion 4.4: Practices maintain the quality and availability of surface and ground water. 4.4.1 Protection of water courses and wetlands, including maintaining and restoring Major appropriate riparian buffer zones at or before replanting along all natural waterways within the estate.

Findings In compliance: Yes: No: x Objective The estate will refer to the SOP in the Manual Lestari 1A: Doc. No: ML-1A/l.2-PR5(0) March 2012 evidence: ‘Prosedur Pengenalpastian Kawasan Curam dan Rizab Sungai ‘ on the protection of water courses and wetlands, including maintaining and restoring appropriate riparian buffer zones at or before replanting along all natural waterways within the estate. They will identify rivers based on ‘JUPEM’ ( State maps ) and the local communities and the buffer zone will be based on the DID guidelines. Some streams (e.g in Semenchu ) which once flow but due to the plantation development, flows only during the rainy season were not identified and appropriately marked as riparian. Unfortunately due to the demands of the settlers to maximize the plant density , planting along the riparian is seen in FELDA replanting programme. Moreover, there is no markings of bufferzone made within Air Tawar 5 Estate to demarcate the bufferzone to inform the spraying and fertilizer operators .

During the audit in Air Tawar 4, the buffer zone of Sg Layau Kiri was visited . A signage ‘ Sempadan sungai di larang menceroboh’ was erected . Although there were signages to demarcate the buffer zone, there were evidence of both spraying and fertilizer application were being done within the riparian/rizab sungai in Block 13.

Major CAR 53 On 7/12/14 , Air Tawar 4 submitted evidence of buffer zone training attended by workers Moh Ansori and Mohammad Shipon on 24/11/14 Pictorial evidence also submitted to show the estate and the workers went to the site to identify the non-conformities issued during the audit. Markers were also place to show the buffer zone. Similar markers and strips were submitted on 12/12/14 to show that Air Tawar 5 has taken measures to inform workers on the riparian buffer zone. The manurers and spary operators workers were also briefed by the management prior to the operation . Pictures of New signboard placed at waterways to indicate riparian zone were also submitted by Semenchu Estate. MAJOR CAR 53 closed 4.4.2 No construction of bunds/weirs/dams across the main rivers or waterways passing Major through an estate

Findings In compliance: Yes: X No: Objective evidence: There was no construction of bunds/weirs/dams seen across the main rivers or waterways in the estates visited. Likewise, all streams and drainage sighted were without any obstruction.

GP 7003A Page 27 of 90

4.4.3 Outgoing water into main natural waterways should be monitored at a frequency Major that reflects the estates and mills current activities which may have negative impacts (Cross reference to 5.1 and 8.1)

Findings In compliance: Yes: X No: Objective The last sampling was done in June 2013. Sample was sent to the FPISB Makmal Analisa evidence: Pengeli.

In 2014, the sampling of water has not been done by FASSB Department as it was reported that from satellite image by FGV, no rivers were identified in Air Tawar Region and as a result no sampling was conducted . However there are plans that sampling will still be done within the 3rd quarter of the year. Previously the results of the quality of the water samples were within the acceptable level quality index of class III category in accordance with the Interim National Water Quality Standard 2006 (INWQS) of the DOE.

For POME discharge, documented evidence of quarterly submission to the Jabatan Alam Sekitar known as ‘Laporan Effluen Suku Tahunan ‘for the first and second quarter is available . Mode of discharge : Alur air DOE Licence 002165 ) Quarter BOD mg/l DOE requirement for BOD mg/l 1st quarter Jan - March 45,27,49 100 2nd quarter Apr – Jun 147,51,71 100

As per report , the discharge generally comply with the DOE

4.4.4 Monitoring rainfall data for proper water management Minor

Findings In compliance: Yes: X No: Objective Rainfall is recorded daily , summarized monthly and monitored yearly. evidence: Raindays is also recorded. Rainfall for 2013 (Jan – Dec) Estate Total rainfall (mm ) No. of raindays ( if available )

Felda & FTP Semenchu 3135 193

Felda Pasak 3550 184 Felda & FTP Air Tawar 1 3590 180 Felda & FTP Air Tawar 2 1695 119 Felda & FTP Air Tawar 3 930 110 Felda & FTP Air Tawar 4 1185 87 Felda & FTP Air Tawar 5 1875 139

4.4.5 Monitoring of water usage in mills (tonnage water use/tonne FFB processed) Minor

Findings In compliance: Yes: X No: Objective Water usage for the mill is pumped from the nearby a flowing stream that flows within the evidence: Semenchu Estate ( known by the mill staff as Sungai Air Tawar 5 ) . According to the Lab personnel, no permit/license or reporting of water usage is required for the use of water from the stream as it is not a gazette stream. GP 7003A Page 28 of 90

The mill is monitoring the daily water usage per metric ton FFB produced. The report is found in the ‘Amalan Pengilangan Baik’ file under ‘Pengunaan Air’ is readily available in Water Consumption (ton/MT FFB) for year 2014

Month MT / day water BTS process MT water / MT BTS June 25,077.5 19,780 1.27 July 26,879.2 20,750 1.30 Aug ( as to 26th ) 26,225.8 21,810 1.20

For a comparison , in 2013 , water used per ton FFB processed was 1.87MT

4.4.6 Water drainage into protected areas is avoided wherever possible. Appropriate Minor mitigating measures will be implemented following consultation with relevant stakeholders.

Findings In compliance: Yes: X No: Objective The effluent is not discharged into protected areas . evidence: 4.4.7 Evidence of water management plans Minor

Findings In compliance: Yes: No: x Objective No water management plan was found in Air Tawar 4 and Air Tawar 5 although in the previous evidence: audit a water management plan was being established with improvement being made to include all sources of water.

Minor CAR 54 Criterion 4.5: Pests, disease, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques. 4.5.1 Documented IPM system Minor

Findings In compliance: Yes: No: Objective The IPM systems is documented in different section in thefollowing manuas:l evidence: a) Manual Ladang Sawit Lestari Edisi II (2012 ) : Pembangunana Tanam Semula Sawit b) Manual Ladang Sawit Lestari Edisi II(2012 ): Pembajaan c) Manual Ladang Sawit Lestari Edisi II (2012 ): Sawit Matang d) Manual Ladang Sawit Lestari Edisi II (2012 ): Pengurusan Tapak Semaian Sawit

which is the revised edition of the ‘Manual Pengurusan Rancangan’ 2010.

However the section of management of bagworm outbreak and its control was unable to be extracted from the manuals although they have a SOP on planting of beneficial plant for long term leaf eating caterpillar control ( MLSL ( Ed.2) sec3 ( 11.0) Nevertheless in their C4.5 file , there is a write up on ‘ risalah Kawalan tananaman : ‘’Pengetahuan ringkas biologi dan kitaran hidup ulat pemakan daun utama untuk stategi Pengawalannya di ladang Kelapa Sawit’

Closed CAR 43 but raised Observation 04

4.5.2 Monitoring extent of IPM implementation for major pests Minor

Findings In compliance: Yes: X No: GP 7003A Page 29 of 90

Objective The only active monitoring is rat census that is done every 6 months. evidence: The last census was done in Nov 2013 , ‘Borang bancian Serangan Tikus ke atas buah tandan sawit ‘. The estate goes through the protocol of requesting the baits from the regional office before getting approval from HQ and informing the surrounding settlers concerning the operation and eventually the bait was only applied in March 2014. Another census was conducted 2 weeks after the baiting and fields having damage <5% will not be baited again . This was evidence in the the record for Peringkat/Block 1A and 1B where the damage or ‘peratus serangan tikus’ was recorded as 2%.

4.5.3 Recording areas where pesticides have been used Minor

Findings In compliance: Yes: X No: Objective Recording and issuance of pesticide to a certain block is recorded in the ‘Store Bin Card’ and evidence: monitoring of areas and labour used where operation where pesticides have been used will be recorded in the form of hard copy in the ‘Rekod Kerja Intergrasi Sawit ‘ book . The executive will eventually transfer the information into the FELDA RML Checkroll software system where it will monitor the costing of each operation.

4.5.4 Monitoring of pesticide usage units per hectare or per ton crop e.g. total quantity of Minor active ingredients (a.i) used/ton of oil

Findings In compliance: Yes: X No: Objective evidence: Monitoring of pesticide usage units per hectare or per ton crop e.g. total quantity of active ingredients (a.i) used/ton of FFB/BTS was evident during the audit

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 categorized as World Health Organization Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented. 4.6.1 Written justification in Standard Operating Procedures (SOP) of all agrochemical Major use

Findings In compliance: Yes: No: Objective The justification is found in the ‘Garis Panduan’ No. Doc: ML-1A/L3-GP1(0) March 2012 : evidence: Justification Pengunaan Bahan Kimia. The file 4.6 Agrokimia has the label of most of the chemical used together with its MSDS however it does not state or justifies the use of a particular chemical

Observation 05

4.6.2 Pesticides selected for use are those officially registered under the Pesticides Act Major 1974 (Act 149) and the relevant provision (Section 53); and in accordance with ESECHH Regulations (2000)

Findings In compliance: Yes: X No: Objective Pesticides selected for use are those officially registered under the Pesticides Act 1974 (Act 149) evidence: and the relevant provision (Section 53); and in accordance with ESECHH Regulations (2000). In Air Tawar 4 the registered products used are: a) Serba Kimai Challenge Glyphosate Isoproplamine 41% w/w) b) Juru 20DF ( 20% metsufuron methyl ) c) Garlon Mix d) Serba Kimia Action 13L (Paraquat Dichloride 13.0% w/w) e) surfactants

GP 7003A Page 30 of 90

4.6.3 Pesticides shall be stored in accordance to the Occupational Safety and Health Act Major 1994 (Act 514) and Regulations and Orders and Pesticides Act 1974 (Act 149) and Regulations

Findings In compliance: Yes: No: Objective Observed at Air Tawar 4 that the following are evidenced during the field visit in the chemical evidence: storage: a) Personnel Protective Equipments (PPE) was used by the staff in attendant b) Spill kit using sand c) Hazard signs d) Material Safety Data Sheet (MSDS) e) Ventilation f) Lighting g) Solid door and good roofing h) Emergency phone numbers posted on the chemical store wall

However although a store for Paraquat / Type 1b just beside the chemical store, newly delivered Paraquat was not stored in the designated store.

Observation 06

4.6.4 All information regarding the chemicals and its usage, hazards, trade and generic Major names must be available in language understood by workers or explained carefully to them by a plantation management official at operating unit level

Findings In compliance: Yes: No: Objective Information regarding the chemicals and its usage, hazards, trade and generic names are evidence: available in language understood by the personnel and is filed in the C4.6 Agrokimia file. It has the list of chemical used, label of each chemical used as well as the MSDS of each chemical.

At Air Tawar 4 agrochemical store , MSDS of chemicals were available for the various active ingredient however the MSDS for the specific brand of agrochemicals being presently used were lacking e.g Action 13SL, Juru, Challenge and for Garlon Mix. In Semenchu ,there was a reused of chemical container ( Basta ) for wetting agent

Observation 07 4.6.5 Annual medical surveillance as per CHRA for plantation pesticide operators Major

Findings In compliance: Yes: X No: Objective In Semenchu , 5 sprayers records in the Medical Surveillance and Health Surveillance Report evidence: compiled by Dr Binder Singh , Occupational Health Doctor were checked and they were ‘fit to work’ . The operators involved were all male workers. The results of exposure monitoring were analyzed. The surveillance reports showed that all pesticide operators were healthy and suffered no detrimental effects as a result of their job because their exposure to the chemicals was below the Permissible Exposure Limit The sprayers were: a) Salim AR b) Yusuf c) Kaji d) Jumaidi e) Jamaludin

GP 7003A Page 31 of 90

4.6.6 No work with pesticides for confirmed pregnant and breast feeding women Major

Findings In compliance: Yes: X No: Objective No female are used as spray operators evidence:

4.6.7 Documentary evidence that use of chemical categorized as World Health Minor Organization Type 1A or 1B, or listed by the Stockholm or Rotterdam Conventions and paraquat, is reduced and/or eliminated. Adoption of suitable economic alternative to paraquat as suggested by the EB pending outcome of the RSPO study on IWM

Findings In compliance: Yes: No: x Objective Paraquat is still being used as one of the herbicide in Semenchu Estate. evidence:

Records show that they are monitoring monthly and records in Semenchu Estate dates back to 2010. In the file C4.6 Agrokimia a memo dated 5/8/10 from the Ketua Perkebunan , Wilayah Johor Bahru informs the estates to reduce the use of Paraquat. The following is the information on the paraquat usage in Semenchu Year Paraquat usage ( Lit ) 2010 624 2011 1000 2012 3213.50 2013 1540 2014 ( as of July 1008 2014 )

Usage in settler’s managed lots are in the progress being recorded but not monitored and not included in the estate overall paraquat usage.

Minor CAR 55 4.6.8 Documented justification of any aerial application of agrochemicals. No aerial Major spraying unless approved by relevant authorities

Findings In compliance: Yes: X No: Objective No aerial spraying conducted in Semenchu Estate, Air Tawar 4 & 5 evidence: 4.6.9 Evidence of chemical residues in CPO testing, as requested and conducted by the Minor buyers

Findings In compliance: Yes: X No: Objective There was no request by buyers of chemical residues testing in CPO. evidence: 4.6.10 Records of pesticides use (including active ingredients used, area treated, amount Minor applied per hectare and number of applications) are maintained for either minimum of 5 years or starting November 2007

Findings In compliance: Yes: No: Objective Records of pesticide use (including active ingredients used, area treated, amount applied per ha evidence: and number of applications, pesticide a.i used per MT FFB were monitored and maintained in the ‘Rekod Racun 5 tahun & Pengiraan a.i / ha and a.i / MT FFB .

However rodenticide was not included in the records

Observation 08 GP 7003A Page 32 of 90

Criterion 4.7: An occupational health and safety plan is documented, effectively communicated and implemented 4.7.1 Evidence of documented Occupational Safety Health (OSH) plan which is in Major compliance with OSH Act 1994 and Factory and Machinery Act 1967 (Act 139)

Findings In compliance: Yes: No: x Objective All Estates had adopted the FELDA Group’s Occupational Safety and Health (OSH) policy (Dasar evidence: Keselamatan dan Kesihatan Pekerjaan) and it was sighted displayed at their offices. Correspondingly, FELDA Technoplant Sdn Bhd had published its subsidiary OSH policy and they too were seen displayed at their respective estate office. All these policies were in line with the Group OSH policy. Translating the policy’s statement into action, the Estates had documented, communicated and implemented across all levels of their organization their own OSH plan and programme, much in line with the Group OSH Policy commitment, which centred around prevention of accident and ill health at workplace, compliance to all applicable legal and other requirements and continuous OSH improvement. All Estates had made available appropriate and adequate PPE free of charge to its workers. The PPE that had been commonly given were safety boots, helmets, goggles, aprons, nitrile rubber and cotton gloves. Records of PPE issued to workers had been maintained and sighted. Immediate Supervisor and OSH Committee members were responsible to monitor the implementation and compliance on the use of PPE. During the site assessment, it was observed that no signage to remind workers to wear appropriate PPE was posted at the appropriate places. Some sprayers were using short-sleeve and round-collared shirt during spraying work. Such inappropriateness would expose the skin to chemical drift. It was also observed that there was insufficient clean water for usage ( to wash hands and face in event of emergency) Risk Assessment for Mill and Estate dated 05 May 2014 (Air Tawar 4) and 20 June 2014 (Air Tawar 5) available covering all operations within the mill and estates. The risk assessment is found to be approved by the manager.

Safety and health committee meeting is conducted quarterly. Based on record the meeting has been conducted as follows for 2013/2014: Date Venue 16 January 2014 Semenchu 20 May 2014 Semenchu 06 February 2014 Air Tawar 5 14 April 2014 Air Tawar 5 10 June 2014 Semenchu POM 15 April 2014 Semenchu POM 24 February 2014 Semenchu POM Observed also the minutes of the meeting is available that is prepared by the appointed safety and health officer and approved by the manager who acts as the chairman of the meeting. Organization chart of the OSH committee is available. Despite the above, the following elements are found missing:  HIRARC – Specific PPE does not being specified for each of the working field within the HIRARC (Air Tawar 5 & Semenchu Estates).  Training on First Aid was not conducted in Air Tawar 5 Estate.  Lack of emergency procedures at working fields (Air Tawar 5 & Semenchu Estates).  Inadequate First Aid kit content (i.e.: eyewash for sprayer team) (Air Tawar 5 & Semenchu Estates)  First Aid Kit is not made available at working field i.e. Harvesting Team (Air Tawar 5) & Spraying Team (Semenchu) Major CAR 56

Closing of Major CAR: GP 7003A Page 33 of 90

Following to the audit, FELDA has taken action to ratify the Major CAR which details can be summarized as follows:  HIRARC has been revised to include the specific PPEs for each of the working fields such as harvesting, manuring and spraying. HIRARC for Mill also has been revised to further details of each of the PPEs to be applied for the respective working areas. The revised HIRARC dated 10 November 2014;  Training on first aid has been conducted to all workers handling the first aid. Observed that the client has submitted the evidence through an email dated 13 November 2014. Based on the evidence submitted, the audit team observed that the training has been conducted on 11 November 2014;  Emergency procedures has been established and evidence in the form of the ERP itself as well as the pictorial evidence showing the location of the ERP has been submitted through an email dated 10 November 2014;  First Aid kit has been refurbished and evidence in the form of the pictorial evidence showing the newly refurbished kit has been submitted through an email dated 10 November 2014.

Major CAR 56 closed 4.7.2 Records should be kept of all accidents and periodically reviewed at quarterly Major intervals

Findings In compliance: Yes: x No: Objective Annual accident summary cases will be recorded in JKKP 8 form for submission to DOSH evidence: Headquarters, Putrajaya annually. Latest submission of JKKP 8 form is on 06 January 2014 (Semenchu), 08 January 2014 (Air Tawar 5). For Mill, the JKKP 8 form has been submitted on 28 January 2014. Observed that all three submitted forms showed no accidents occur throughout 2013.

4.7.3 Workers should be covered by accident insurance Major

Findings In compliance: Yes: X No: Objective All workers in FELDA Semenchu are covered with group insurance. Samples of insurance policy evidence: evident during the audit are as below: a. FELDA Semenchu:  Policy No: LWX/93055197/26/07/MRW  Period of Insurance: 09 Sept 2014 to 08 Sept 2015  Insurance Provider: AXA Affin General Insurance Bhd.

b. FELDA Air Tawar 4:  Policy No: LWX/93063665/26/08/MRW  Period of Insurance: 02 Sept 2014 to 01 Sept 2015  Insurance Provider: AXA Affin General Insurance Bhd.

Criterion 4.8: All staffs, workers, smallholders and contractors are appropriately trained. 4.8.1 A training programme (appropriate to the scale of the organization) that included Major regular assessment of training needs and documentation, including records of trading for employees are kept

Findings In compliance: Yes: X No: Objective Training matrix for training needs of workers and staff is available. A training plan is evident for evidence: FTPSB Air Tawar 1 is available and conducted accordingly. All training required by staff is identified and recorded in “Penilaian Keperluan Latihan Pekerja (FAS-RSPO L1/K4.8/4.8.1)”. Records of training conducted are evident as below:

Estate Training Details Date Semenchu Chemical Handling; 07 Jan 2014 GP 7003A Page 34 of 90

02 April 2014 July 2014 SOP for Spraying 06 February 2014 04 May 2014 PPE for Spraying 06 March 2014 04 June 2014 SOP for Manuring 05 Jan 2014 05 Feb 2014 03 Apr 2014 05 May 2014 09 Jul 2014 SOP for Harvesting 05 Jan 2014 04 Feb 2014 06 Apr 2014 06 May 2014 10 Jul 2014 PPE for Harvesting 10 Mar 2014 06 Jun 2014 Air Tawar 5 SOP Spraying 02 January 2014 Disposal of Scheduled Waste 13 March 2014 PPE usage for all working 10 January 2014 fields Semenchu POM PPE usage for all working 11 January 2014 fields Safe Operating Procedures 16-17 April 2014 Effluent Treatment and Bio Polishing Plant

Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity Criterion 5.1: Aspects of plantation and mill management, including replanting, that have environmental impacts are identified and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. 5.1.1 Documented aspects and impacts risk assessment that is periodically reviewed and Major updated

Findings In compliance: Yes: X No: Objective Environmental impact assessments are available at all the schemes and oil mill. evidence: In addition, the Environmental Impact and Aspect Identification are available. The document dated 01 January 2014 (Semenchu) and 20 June 2014 (Air Tawar 5) is available specifying the identification of the impact, procedure and guidance on as a follow-up to the following activity: a. Ganoderma monitoring; b. Marking of boundary stone; c. Rat baiting; d. Slashing of ground flora; e. Pre-lining; f. Chemical application; g. Construction of road; h. Control of rhinoceros beetles; i. Terracing; GP 7003A Page 35 of 90

j. Construction of drain; k. Planting of legume cover crops; l. Transportation of seedlings; m. EFB mulching; n. Fertilizer application; o. Fronds pruning and stacking; p. Transportation of FFB; q. Harvesting; r. Storage and disposal of scheduled waste container; s. Genset usage; Besides the above, there is also Identification of Environmental Aspect and Evaluation of Significance Form for Semenchu POM that is made available to the audit team during the Surveillance Audit. The document dated 06 May 2014 detailing the following environmental aspects:  Receiving of FFB;  Handling of FFB and dispatch of CPO;  Weighbridge;  Sterilizer;  Operating at ramp;  Effluent pond;  Treshing plant;  Dispatch of EFB to estate;  Extracting the oil from FFB;  Oil Room;  Genset;  Workshop;  Laboratory;  Canteen;  Office;  Sludge Pitch;  Storage tank;  Boiler; and  Thermal deaerator

5.1.2 Environmental improvement plan to mitigate the negative impacts and promote the Minor positive ones, is developed, implemented and monitored

Findings In compliance: Yes: X No: Objective Surveillance 02 Audit evidenced that the company has established the action plan and mitigation evidence: measures for each of the impacts identified highlighted in the plan. Document entitled “Laporan Aspek Impak Alam Sekitar Melalui Aktiviti Perladangan, Bahan dan Pencemaran” dated 01 January 2014 (Semenchu) and 20 June 2014 (Air Tawar 5) has included the action plan and mitigation measures for each of the impacts identified highlighted in the plan Criterion 5.2: The status of rare, threatened or endangered species (ERTs) and highly 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. 5.2.1 Identification and assessment of HCV habitats and protected areas within land Major holdings and attempt assessments of HCV habitats and protected areas surrounding landholdings

Findings In compliance: Yes: X No: Objective FELDA sustainability team has conducted an assessment on the High Conservation Value (HCV) evidence: areas within the landholdings and they have interviewed the officers of the neighboring Panti GP 7003A Page 36 of 90

Forest Reserve and Department of Wildlife and National Parks to understand the situation of HCV in the areas to be certified. HCV document dated 4th May 2011 is viewed. The assessment methodology, the classification and type of HCVs available in the schemes, classification of flora and fauna according to IUCN and Wildlife Act 2010 (Act 716), interviews with respective government agencies and management plans are documented. Generally, within the scheme HCV 4 and HCV 6 are reported, while HCV 1 is reported in Panti Forest Reserve.

5.2.2 Management plan for HCV habitats (including ERTs) and their conservation Major

Findings In compliance: Yes: X No: Objective Based on the above-mentioned HCV assessment conducted, FELDA has established the evidence: management plan of the HCV habitat identified as well as its conservation. The HCV management plan highlighted the values identified, the management plan and implementation status of plan. Values identified highlighted within the management plan are as follows: a. Estates boundary bordering the Forest Reserve e.g. Panti FR; b. Sungai Seluyut River; c. Water catchment area; and d. Sacred sites 5.2.3 Evidence of a commitment to discourage any illegal or inappropriate hunting, Minor fishing or collecting activities and developing responsible measures to resolve human-wildlife conflicts

Findings In compliance: Yes: X No: Objective The scheme management discourages hunting in their own landholdings and neighboring evidence: landholdings especially for Semenchu Estate, AT4 & AT5. As reported in the HCV assessment report, there is no threatened species under IUCN status. However there are some protected species under National Status (Wildlife Conservation Act 2010) as indicated in page 41 of Semenchu Complex HCV reports dated May 4th 2011. Posters depicting these pictures has been pinned up in the scheme for awareness and measures been taken to regularly (quarterly) to monitor their presence for enhancement.

Criterion 5.3: Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. 5.3.1 Documented identification of all waste products and sources of pollution Major

Findings In compliance: Yes: X No: Objective FELDA has prepared a documented identification of all waste products and sources of pollution as evidence: per reflected in the document entitled ‘Pelan Pengenalpastian dan Pengurusan Bahan Buangan (Waste Identification & Management Plan)’ that identify waste generated from all identified activities within the management of the estates and mill as follows: - Fertilizer bag; - Recyclable material such as paper, plastic, bottle and steel; - Used PPE; - Tire; - Pesticide container; - Organic domestic waste; - Palm fronds; - EFB; - POME; - Mesocarp Fibre; - In addition, the document also specifies the location of source of wastes and prescribed methods for handling and disposal. The document is made available to the auditor during the audit. Domestic waste of all FELDA settlers is disposed by appointed contractor at the waste centre in Bandar Penawar. The licensed contractor collects the domestic waste from each scheme at alternate daily basis (i.e. in a week domestic waste is collected 3 times). According to the GP 7003A Page 37 of 90

contractor, each scheme requires 2 trips for domestic waste collection per day and each trip is approximately 5MT of domestic waste which is translated to 30MT waste per week per scheme. The domestic waste is segregated at the waste centre in Bandar Penawar instead of at the source (i.e. at settler’s house).

5.3.2 Having identified wastes and pollutants, an operational plan should be developed Minor and implemented to avoid or reduce pollution

Findings In compliance: Yes: No: x Objective Documental plans have been developed and submitted on 8th September 2011 by both oil mill and evidence: schemes management on the identification of waste products and its disposal plan that is to be conducted in a responsible manner. As mentioned earlier, FELDA has prepared a documented identification of all waste products and sources of pollution as per reflected in the document entitled ‘Pelan Pengenalpastian dan Pengurusan Bahan Buangan (Waste Identification & Management Plan)’ that identify waste generated from all identified activities within the management of the estates and mill, the location of source of wastes and prescribed methods for handling and disposal. The document is made available to the auditor during the audit.

As reflected in Section 3.0 of the above plan, the Estate Manager is responsible to notify the DOE for any scheduled waste container that has been shipped off. In addition, the same section also states that the Assistance Manager is responsible to ensure that all waste is identified, segregated and disposed off accordingly. Furthermore, Section 6.2.4 of the same plan also stated that the disposal of scheduled waste container shall be disposed of through licensed scheduled waste collector. However, the audit team notes that the plan is not properly implemented whereby there is evidence of scheduled waste containers stockpiled (Semenchu) in the storage that is not disposed off through licensed scheduled waste collector. This is supported with no evidence of disposal of scheduled waste container kept by the estate except the reuse of such containers for pre-mixing.

There is also evidence of action plan for recycling programme for all recyclable materials covering materials such as plastic, paper, glass bottle and paper boxes. The audit team observed that the programme includes the grouping and segregating all materials before being sold to collector. To verify this, the audit team has taken action to visited the workers quarters in Air Tawar 5. However, it is observed that a recyclable materials being dumped in the landfill indicating the recycling programme is not properly implemented. There is also evidence of scheduled waste material spilled within the linesite compound In Air Tawar 4, empty 20 lit chemical containers were not triple rinsed and punctured and there were missing smaller empty chemical containers e.g Juru , Garlon Mix etc that were used for the year . Moreover there were no official disposal done during the year

For Semenchu POM, the audit team observed that the scheduled waste material has been disposed off according to the law through the licensed scheduled waste collector. Observed latest disposal dated 21 June 2014 made by the mill covering used oil. The disposal was conducted through Alivirgo Sdn. Bhd. whom having the license issued by the DOE, license no. 001365 with a validity until 30 April 2015.

Minor CAR 57 5.3.3 Evidence that crop residues/biomass are recycled (Cross reference C 4.2) Minor

Findings In compliance: Yes: X No: Objective In Semenchu estate, biomass like EFB are recycled and found applied in the field for soil evidence: fertility/organic improvement. Criterion 5.4: Efficiency of energy use and use of renewable energy is maximized. 5.4.1 Monitoring of renewable energy use per ton of CPO or palm product in the mill Minor

Findings In compliance: Yes: X No: Objective evidence: GP 7003A Page 38 of 90

Month BTS/FFB Fibre ( 14.60%) Shell ( 4.91%) kWh kWh/MT FFB MT June 19,780 2,887.88 971.20 547,200 27.66 July 20,750 3,029.50 1,018.83 547,200 26.37 Aug ( till 21810 3,184.6 1,070.87 564,480 25.88 26th )

Semenchu Oil Mil uses renewable source of energy mainly from the by-products of mesocarp fibre and kernel shells. The oil mill has monthly records of shells and fibre used in the oil mill and the energy derived in terms of kilo joules (KJ) per mt CPO.

5.4.2 Monitoring of direct fossil fuel use per ton of CPO or kW per ton palm product in the Minor mill (of FFB where the growers has no mill)

Findings In compliance: Yes: X No: Objective The direct diesel (fossil fuel) usage was recorded promptly by oil mill. evidence: The latest quarterly records are as per tabulated below:

Month BTS/FFB MT Diesel usage L/MT May 18,640 9,619 0.33 June 19,780 7,160 0.36 July 20,750 8,315 0.40 Aug ( till 26th ) 21810 - -

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 Guidance or other regional best practice. 5.5.1 No evidence of open burning. Where controlled burning occurs, it is as prescribed Major by the Environmental Quality (Declared Activities) (Open Burning) Order 2003

Findings In compliance: Yes: X No: Objective FELDA scheme’s replanting approach is a non-burning method whereby the old trunk is pushed evidence: down and chipped into smaller pieces. Another non-burning approach adopted by independent and also scheme settlers is planting of oil palm seedlings under older previous live palm stand, which is commonly called under-planting. Here the smallholders can earn the income from older palm while the young seedlings are at immature stage. Later the older palms are poisoned stage by stage until the immature palms are ready for harvesting.

5.5.2 Previous crop should be felled/mowed down, chipped/shredded, windrowed or Minor pulverized/ploughed and mulched

Findings In compliance: Yes: X No: Objective Previous crop is felled or mowed down, chipped or shredded, windrowed, pulverized or ploughed evidence: and mulched.

5.5.3 No evidence of burning waste (including domestic waste) Minor

Findings In compliance: Yes: No: x Objective Verification in Semenchu Estate shows evidence of burning of EFB occurs on the field. In addition, evidence: verification within the workers quarters in Air Tawar 5 Estate showed evidence of burning of domestic waste in the landfill. Minor CAR 58 Criterion 5.6: Plans to reduce pollution and emissions, including greenhouse gases are developed, implemented and monitored. GP 7003A Page 39 of 90

5.6.1 Documented plans to mitigate all polluting activities (Cross reference C 5.1) Major

Findings In compliance: Yes: X No: Objective As mentioned earlier, FELDA has prepared a documented identification of all waste products and evidence: sources of pollution as per reflected in the document entitled ‘Pelan Pengenalpastian & Pengurusan Bahan Buangan (Waste Identification & Management Plan)’ that identify waste generated from all identified activities within the management of the estates and mill, the location of source of wastes and prescribed methods for handling and disposal. The document is made available to the auditor during the audit.

5.6.2 Plans are reviewed annually Minor

Findings In compliance: Yes: No: x Objective FELDA has prepared a documented identification of all waste products and sources of pollution as evidence: per reflected in the document entitled ‘Pelan Pengenalpastian & Pengurusan Bahan Buangan (Waste Identification & Management Plan)’ that identify waste generated from all identified activities within the management of the estates and mill, the location of source of wastes and prescribed methods for handling and disposal. Plans to de-sludge the ponds, dispatch of schedule waste are viewed. Empty fertilizer bags, tyres, glass bottles, plastics, paper and empty chemical containers are identified as pollutants by the FELDA scheme management. However such plan is observed to be not annually reviewed as per required by the standard. This is observed at Semenchu & Air Tawar 5 Estates.

Minor CAR 59 5.6.3 Monitor and reduce peat subsidence rate through water table management (Within Minor ranges specified in C 4.3)

Findings In compliance: Yes: X No: Objective There is no peat soil in Semenchu Complex and hence no water management plan monitored evidence:

Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers 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. 6.1.1 A documented social impact assessment including records of meetings Major

Findings In compliance: Yes: No: x Objective At Felda Air Tawar 5, the SIA questionnaire has been distributed to the community, internal and evidence: external stakeholder starting on 15 March 2014. Summary and analysis of SIA that contain on Positive Impact Analysis, Negative Impact Analysis has been reported on 19/04/2014 Document in Manual RSPO entitled Penilaian Impak Sosial dan Pelan Tindakan untuk Pembaikan made available during the audit has several content as below: 1. Pengenalan 2. Kaedah a) Penilaian dengan stakeholder dalaman b) Penilaian dengan stakeholder luaran 3. Keputusan 4. Penganalisaan Keputusan 5. Pelan Tindakan untuk Pembaikan Prestasi Sosial

Social impact Assessment (SIA) has been done for all sites however not fully covered all elements as required in the RSPO MY-NI and not include the local and independent expertise (Felda GP 7003A Page 40 of 90

Semenchu, Air Tawar 5 and mill)

The questionnaire/consultation has lack several elements such as:  Occupational safety, new replanting, workers health, workers working condition, workers wages, term of employment, workers living condition, labour contract, communication.  Lack in records of meeting, list of person involved in the meeting. There is lack of evidence on implementation of plan, monitoring of activities/implementation and action taken from monitoring data.

MAJOR CAR 60 Mill and estate has conducted another stakeholder meeting and assessment (mill dated 01 Sept. 2014, Felda Semenchu and Felda Air Tawar 5 dated 15 Sept. 2014) in order to gauge the real positive and negative impact in social aspects. Copy of meeting summary and record of SIA report has been sent to SGS (M) on 12 November 2014 found that everything has been considered and delivered by the mill and estate to their stakeholders at least as sets out in the RSPO guidance note. (Major CAR 60 Closed)

6.1.2 Evidence that the assessment has been done with the participation of affected Minor parties

Findings In compliance: Yes: No: x Objective The assessment did not represent all affected parties such as migrant workers and list of person evidence: involved/represent each affected parties are not available in the estates audited .

Minor CAR 61 6.1.3 A timetable with the responsibilities for mitigation and monitoring is reviewed and Minor updated as necessary

Findings In compliance: Yes: X No: Objective Time plans to mitigate the negative impact and time to review the plans are documented. evidence: Observed the latest revision for 2014 is available at Air Tawar 5 and mill specifying the following issues of concern and its action plan covering the responsible person, implementation status and commenced date as well as date of completion:  wages paid;  Occupational Safety and Health;  Communication/Dialogue with Management;  Other Facilities such as grocery stores, crèche, recreation facilities, kindergarten and mosque; and  Issues of migrant workers such as wages, renewal of passports and permits as well as their insurance policy.

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. 6.2.1 Documented consultation and communication procedures Major

Findings In compliance: Yes: X No: Objective Procedure for consultation and communication is available (F.Semenchu and F. Air Tawar 5) evidence: through document entitled “Komunikasi, Penglibatan dan Rundingan” (Communication, Involvement and Consultation) with document’s number ML-1A/L2-PR3 (0). In summary the above document specifies the following: 1. Objective; 2. Scope; 3. Responsibilities; 4. Definition; 5. Reference; GP 7003A Page 41 of 90

6. Procedure; a. Internal Communication; b. External Communication; c. Involvement and Consultation 7. Records

Felda Air Tawar 5 has developed the flowchart on Manual Prosedur Ladang Sawit, Komunikasi Penglibatan dan Komunikasi Dalaman that include responsible person in charge on every stage of communication. In addition, there are many evidence consultation and communication forums conducted between the FELDA scheme management and the settlers. Women have ‘Gerakan Persatuan Wanita’ (GPW), monthly meetings with block leaders of settlers through JKKR, JKKK, Jawatan Kuasa Tanam Semula (JKTS) and Jawatankuasa Persepakatan Bersama or Joint consultative committee (between oil mill and schemes) meeting, documents are viewed. Observed at estates and mills confirmed that there is complaint book available for internal and external. At the mill, the procedures can be found in SOP with reference number FPI/L2/QOHSE-6.0.

6.2.2 A nominated plantation management official at the operating unit responsible for Minor these issues

Findings In compliance: Yes: X No: Objective Felda Semenchu: evidence: Stated under Section 3.0 Responsibility in Komunikasi, Penglibatan dan Rundingan Procedure that: a. Estate manager is responsible to communicate with the client/external stakeholders and conduct an assessment on all issues/complaints received and making a decision following the assessment made; b. Estate manager shall communicate with the estate’s staff to achieve quality, environmental, social and occupational, safety and health goals. The manager also shall evaluate all suggestion received via suggestion box, workers representative or from workers during weekly assembly.

Felda Air Tawar 5 has developed the flowchart on Manual Prosedur Ladang Sawit, Komunikasi Penglibatan dan Komunikasi Dalaman that include responsible person in charge on every stage of communication. Appointment letter for person in-charge in social aspect (Petugas Pembangunan Komuniti/Sosial) were made available during the audit with Mr. Jamaluddin bin Sibon as the person in charge starting 03-03-2011 and appointment of Md Lizan b. Md Dom as Panel Komunikasi dan Perundingan (ref. no:(05) 3104/RSPO/6-2-3) on 17 January 2014.

In the mill , En. Muhammad Arif Bin Abdullah, the Assistant Manager has been appointed on the 02 January 2013. as Communication Officer . 6.2.3 Maintenance of a list of stakeholders, records of all communication and records of Minor actions taken in response to input from stakeholders

Findings In compliance: Yes: x No: Objective FELDA maintained the stakeholders list that includes local banks, contractors, vendors, local evidence: community heads, local authority services, government agencies including the list of neighbouring mills and estates, NGOs etc. Observed that the latest meeting with stakeholders is available in the form of minutes of meeting and record of discussion. The record of meeting dated 24 June 2014 (Bil:04/2014) is maintained and made available to the auditor.

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. 6.3.1 Documentation of the process by which a dispute was resolved and the outcome Major

Findings In compliance: Yes: X No: GP 7003A Page 42 of 90

Objective ‘Prosedur Menangani Aduan dan Rungutan’ (ML-1A/L2-PR4(0)) dated March 2012 is available evidence: specifying procedure for handling the grievances and disputes raised by external and internal stakeholders in particular workers. Procedure for consultation and communication is available through document entitled “Komunikasi, Penglibatan dan Rundingan”. (Communication, Involvement and Consultation). In summary the above document specifies the following: 1. Objective; 2. Scope; 3. Responsiblities; 4. Definition; 5. Reference; 6. Procedure; a. Internal Communication; b. External Communication; c. Involvement and Consultation 7. Records

There is a documented system of recording the request, complaints and grievances from settlers. There is also a procedure in place to handle the inheritance of land within a settler’s family. The procedures were given to the settlers with a 30 days period for further consultation if there is a need for amendments in the procedure. There were no negative responds during the consultation period. Observed at Air Tawar 5 found that there is flow chart for managing complaint on “Polisi Pemberian Maklumat”.

6.3.2 The system resolves disputes in an effective, timely and appropriate manner Minor

Findings In compliance: Yes: X No: Objective evidence: Check on complaint and communication records found that, all complaints are being resolve in effective, timely and appropriate manner and for some ‘big’ issue such as workers housing, the operation unit will take into consideration and proposed to Head Quarters for budget allocation and further action taken. 6.3.3 The system is open to any affected parties Minor

Findings In compliance: Yes: X No: Objective Section 6.2.4 and 6.2.5 of the above procedures specifies that the above system is open to evidence: external stakeholders such as mass media group and other stakeholder such as DOE and DOSH

Criterion 6.4: Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions. 6.4.1 Establishment of a procedure for identifying legal and customary rights and a Major procedure for identifying people entitled to compensation

Findings In compliance: Yes: X No: Objective Procedure for Identifying Legal and Customary Rights and Identifying People Entitled to evidence: Compensation is available [Doc: ML-1A/L2-PR12(0)] Prosedur Mengenalpasti Hak Perundangan dan Adat dated March 2012 is documented. The nearby communities have the standard Jawatankuasa Kemajuan dan Keselamatan Kampung (JKKK), which meets once a month to discuss and act on any issues brought by the members of the community. The estate management maintains close rapport with the leaders and considers issues brought by the JKKK as official complaints for action to be taken. 6.4.2 A procedure for calculating and distributing fair compensation (monetary or Minor otherwise) is established and implemented. This takes into account gender differences in the power to claim rights, ownership and access to land; and long- established communities; differences in ethnic groups’ proof of legal versus GP 7003A Page 43 of 90

communal ownership of land. Findings In compliance: Yes: X No: Objective There is evidence of documented SOP [Doc: ML-1A/L2-PR13(0)] Prosedur Penghitungan dan evidence: Pengagihan Pampasan dated March 2012 that includes identification procedure, calculating and distributing fair compensation procedure and documentation on outcome of compensation.

6.4.3 The process and outcome of any compensation claims is documented and made Minor publicly available

Findings In compliance: Yes: X No: Objective evidence: No evidence on dispute on legal and customary rights. No claim on estate land.

Criterion 6.5: Pay and conditions for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages. 6.5.1 Documented of pay and conditions Major

Findings In compliance: Yes: X No: Objective Workers and Settlers are paid in cash. All the pays of workers and settlers are well documented. evidence: Every worker is provided with a monthly pay slip with a signed acknowledgement from the workers. Random check and inspection on the pay slips of the workers revealed that field workers generally receives a salary between RM 800 to RM 2,000 depending on weather condition as well as total tonnage of fruit extraction (for harvester workers). Interview with the workers indicates that they are happy with the salary earned, clinical facilities, transport arrangements to the clinic for sick workers and free medical benefits provided by FELDA management.

All payment are found to be made following the Panduan Peraturan Pengurusan dan Penggajian Pekerja Ladang Tempatan Bil.01/2012, Syarat-syarat Perkhidmatan Petugas Syarikat and Kadar Upah Pekerja Ladang 2012 Bil.01/2012.

Mill: There is Perjanjian Bersama di antara Felda Palm Industries Sdn Bhd and Union Workers of Felda Palm Industries Sdn Bhd (Peninsular)

6.5.2 Labour laws, union agreements or direct contracts of employment detailing Minor payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc) are available in the language understood by the workers or explained carefully to them by a plantation management official in the operating unit

Findings In compliance: Yes: X No: Objective Contracts of foreign workers from both Indonesia and Bangladesh are viewed. The auditor evidence: observed that the Bangladesh workers has contract in Bangla language prior to arrival in Malaysia. Induction course booklets prepared by Indonesian Embassy (Panduan bagi Tenaga Kerja Indonesia) by BPTKI/Mataram are given to every Indonesian worker prior to arrival. Induction course booklet covers the legal matters to follow up in the country and the worker’s rights in the country while working in Malaysia. Contract covers the type of work, working hours and days, holiday entitlement and pay, work pay, medical entitlement, workmen compensation scheme, accommodation and basic amenities, work related equipment supply and the rights of the worker upon death including the responsibility of the management to the immediate family of a deceased worker. Should there is a dispute raised with regard to the term and agreement of the employment, FELDA has made a commitment to attend all complaints and disputes and documented it. Mutual agreement on the system is demonstrated through the “Surat Perjanjian Kontrak Pekerjaan” (Agreement Letter for Employment Contract). Based on record, the auditing team observed that there are no such incidences whereby the workers are not agreeable with the rate of pays given to them. GP 7003A Page 44 of 90

6.5.3 Growers and millers provide adequate housing, water supplies, medical, Minor educational and welfare amenities 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) Findings In compliance: Yes: x No: Objective As a temporary measures to enhance the living condition of the workers hostel, the estates evidence: management has initiated the upgrading of the workers hostel whereby each of the hostels to be equipped with one exhaust fan and one wall-fan to mitigate heat within the hostel. Evidence of the upgrading process in the form of pictorial figure as well as official Work Order from the estate management to the sub-contractor (3083/01/RSPO and 3092/01/RSPO dated 26 June 2013) to execute the process is made available to the audit team during the audit. The estates also has reduce number of workers in percabin from 8 person to 4 person percabin room. Estate management still waiting the budget allocation in order to reallocate the workers to the permanent housing area. Letter of follow up has made available dated 22 July 2013 (ref no.: (03) 3104/16/3). There is evidence on site visit from the Government Labour Department to the cabin areas and no issues has been raised by the personnel. 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. 6.6.1 Documented minutes of meetings with main trade unions or workers Major representatives

Findings In compliance: Yes: X No: Objective Evidence of record of meeting with foreign workers at Air Tawar 5 dated 10 Feb. 2014 to discuss evidence: on Appointment of Workers Representative and Minutes of meeting on Jawatankuasa Kebajikan Tenaga Kerja Ladang Bil surat:01/2014 dated 11/1/2014.

Mill: Mesyuarat Agung Kesatuan Cawangan Semenchu kali ke-13 Sesi 2013-2016 dated 17 May 2014

6.6.2 A published statement in local languages recognizing freedom of association Minor

Findings In compliance: Yes: X No: Objective The company does not provide restriction for Malaysian workers to form workers union. Foreign evidence: workers are subjected terms and conditions of employment which restrict them from having association. In all estates and mill, a published statement in local language recognizing freedom of association was placed on the notice board of the management office. Some of policy being displayed are: Polisi Kebebasan Menggangotai Kesatuan/Khidmat Sukarela (ML-1A/L2-PO8(0) dated 28 June 2011; Polisi Kebebasan Mengganggotai Khidmat Sukarela (20 Dec. 2010)

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. 6.7.1 Documented evidence that minimum age requirement is met Major

Findings In compliance: Yes: X No: Objective There is a policy on child labor displayed infront of estate’s office dated 20 Disember 2010. evidence: According to the policy, the minimum age to work is 17 as per Children and Young Persons Employment Act, 1966. FELDA schemes have a good set up of kindergarten and schools. Those children who help their parents are allowed to help them without affecting their studies. Field visits did not show any evidence of children being used. This is due to the fact that FELDA have sufficient foreign workers to work for settlers through FELDA Technoplant Sdn Bhd. There is evidence on distribution of letter of Larangan Menggajikan / Guna khidmat Kanak-kanak di bawah Umur 16 Tahun has been sent to all wholesaler, contractor and settlers dated 13 May GP 7003A Page 45 of 90

2010. 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. 6.8.1 A publicly available equal opportunities policy Major

Findings In compliance: Yes: X No: Objective Equal opportunity policy is available dated 20 December 2010. The policy also found to be posted evidence: company’s notice board. In summary the policy specifies equal treatment and does not associates with all in appropriate discrimination such as race, caste, national origin, religion, disability, gender, sexual orientation union membership, political affiliation or age. 6.8.2 Evidence that employees and groups including migrant workers have not been Minor discriminated against

Findings In compliance: Yes: x No: Objective There is no evidence which confirmed the discrimination against foreign workers. Based on evidence: records, the auditing team observed that equal opportunities are demonstrated through the following issues: a. Similar daily wages for foreign workers and local workers. b. Working hours where similar treatment is given between both the foreign and local work

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. 6.9.1 A policy on sexual harassment and violence and records of implementation Major

Findings In compliance: Yes: x No: Objective Sexual harassment policy (Polisi Gangguan Seksual – Seksyen 22, Kod Etika dan Tatalaku evidence: Petugas) dated 20 December 2010 is made available. The policy is found to be posted on the company’s notice board. FELDA schemes have an organization chart for Gender Committee. The Gender Committee Representative is responsible for handling the sexual harassment issues in the work places. Letter of appointment as a Gender Committee Chairman on 01 August 2014 with reference number (13) 3115/RSPO/6-9-2 has nominated Ms. Normahfuza husna Tahil as the new chairman replacing Mrs. Zaliha bt Sulaiman. The minutes of the meeting of Gender Committee is available and viewed during the Assessment. Latest meeting was on 02 June 2014.

6.9.2 A specific grievance mechanism is established Minor

Findings In compliance: Yes: X No: Objective 3.11 Prosedur Menangani Aduan oleh Gender Committee (ML-1A/L2-PR10(0) on March 2012 evidence: including: 1.0 Objective 2.0 Peranan dan Tanggungjawab Ahli-ahli dan Jawatankuasa 3.0 Proses Pengaduan 4.0 Carta Alir Pemprosesan Aduan

Air Tawar 5: Prosedur Aduan Gangguan Seksual, Jawatankuasa Bertindak Wanita (Gender Committee) flowchart Carta Aliran prosedur SIasatan Domestik, Prosedur Tindakan Segera Untuk Kes Tatatertib Kesalahan Berat

Kilang: Prosedur Aduan Gangguan Seksual dan Keganasan Rumah Tangga (flowchart) GP 7003A Page 46 of 90

Criterion 6.10: Growers and mills deal fairly and transparently with smallholders and other local businesses. 6.10.1 Pricing mechanisms for FFB and inputs/services shall be documented Major

Findings In compliance: Yes: X No: Objective Pricing mechanism for FFB abides to the Manual Penggredan Buah Kelapa Sawit (2nd edition) evidence: release by MPOB. While for Felda, the price ‘asas kilang’ is RM21.50/MT FFB and for outgrower is RM19.50/MT FFB . However it is operate in automatic system ( or automatically calculated ) for calculation based on the total FFB tonnage received. Sample of ‘akaun penerimaan BTS’ were reviewed and found to be in order. As it was reported in the previous report, Semenchu oil mill receives 25% of external crop. Pricing mechanism depends on the declared FFB price daily by Malaysian Palm Oil Board (MPOB) .The payment carried out to growers of external crop is well documented with the cheque number, date of issuing cheque, payment voucher, name of grower and their company’s name and the total amount paid to them.

6.10.2 Current and past prices paid for FFB shall be publicly available Minor

Findings In compliance: Yes: X No: Objective Voucher issued to the growers is transparent in terms of declaring the price for FFB per ton, crop evidence: weight, quality of crop and OER declaration based on quality of crop.

Observed that the mill is maintaining all the current and past prices paid for FFB.

6.10.3 Evidence that all parties understand the contractual agreements they enter into and Minor that contracts are fair, legal and transparent

Findings In compliance: Yes: X No: Objective A letter of offer valid for 2 years of purchasing FFB from external growers with pricing mechanism evidence: reflected in the letter is viewed.

It is confirmed that there is document and record showing that all related parties understand the contractual agreement. There is Baucar Bayaran, Cheque,Penyata Akaun Bayaran BTS (Persendirian),signed by person in charge, reviewed by financial clerk, and sign by mill manager.

6.10.4 Agreed payments shall be made in a timely manner Minor

Findings In compliance: Yes: X No: Objective The payment is made on time and FELDA Semenchu has also flexible working hours depending evidence: on the need of the growers. Record of payment for outside grower maintained in the Senarai Cek Keluar. The payment (cheque) will be made twice in a week (Monday and Wednesday)

Criterion 6.11: Growers and millers contribute to local sustainable development wherever appropriate. 6.11.1 Demonstrable contributions to local development that are based on the results of Minor consultation with local communities

Findings In compliance: Yes: X No: Objective There are considerable contributions made by FELDA for the development of local businesses. evidence: a. The contractors who deliver the FFB to oil mill from the schemes are part of the settler’s co- operative scheme. Job opportunity is given within the settler community for transporting GP 7003A Page 47 of 90

the crop. b. FELDA has licensed the D’mart mini market to settlers. Settler’s children are also provided job there. c. Petrol station enterprises is given to FELDA Settlers children d. Many shop lots were built up and many settlers’ children are carrying out small business entrepreneurship there. e. Bank was set up in the Air Tawar 5 with Auto teller machine (ATM) providing a financial facility to the scheme and other neighboring schemes as well to ease transactions for the local business within FELDA. f. FELDA allowed the building of primary schools and kindergartens in FELDA’s land with housing facilities for teachers. g. Special buses are provided to children to go to secondary schools. h. Auxiliary police and police stations in general provide security to the schemes. i. Development of a community centre for the handicapped children is almost on the verge of completion. j. Post offices are available in every scheme. k. Clinic was built in every scheme. l. Library for settlers and their children.

Principle 7: Responsible Development of New Plantings This whole Principle is not applicable to this assessment as there are no new plantings. The company is only involved in re-planting programme after felling of old palms and there is no plan for expansion.

Principle 8: Commitment to Continuous Improvement in Key Areas of Activity 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. 8.1.1 Minimize use of certain pesticides (C 4.6) Major

Findings In compliance: Yes: X No: Objective A letter is evident dated 13th May 2010 from the Manager of Air Tawar 3 to all smallholders on the evidence: safe usage of agrochemical. It was emphasized to reduce the usage of Paraquat. Based on records the audit team note that the usage of Paraquat has been gradually decrease since 2010 where in 2010, the usage is 1,680 compare to 2011 and 2012 that recorded 1,244 and 1,000 respectively.

8.1.2 Environmental impacts (C 5.1) Major

Findings In compliance: Yes: X No: Objective The auditor note that the plan to improve environmental and promote the positive ones is available evidence: within the document entitled “Laporan Aspek Impak Alam Sekitar Melalui Aktiviti Perladangan, Bahan dan Pencemaran” dated 01 April 2013 and 22 February 2013 for estates and mill respectively. FELDA also has updated to include the action plan and mitigation measures for each of the impacts identified highlighted in the plan. Document entitled “Laporan Aspek Impak Alam Sekitar Melalui Aktiviti Perladangan, Bahan dan Pencemaran” has been updated to include the action plan and mitigation measures for each of the impacts identified highlighted in the plan.

8.1.3 Maximizing recycling and minimizing waste or by-products generation Major

Findings In compliance: Yes: X No: Objective Documental plans have been developed and submitted on 8th September 2011 by both oil mill and evidence: schemes management on the identification of waste products and its disposal plan that is to be conducted in a responsible manner. As mentioned earlier, FELDA has prepared a documented identification of all waste products and GP 7003A Page 48 of 90

sources of pollution as per reflected in the document entitled ‘Pelan Pengurusan Bahan Buangan (Waste Management Plan)’ that identify waste generated from all identified activities within the management of the estates and mill, the location of source of wastes and prescribed methods for handling and disposal. The document is made available to the auditor during the audit. Monitoring of weekly domestic waste started since the establishment of the plan and currently is still on-going. There is document on Pengenalpastian Bahan Buangan (FAS-RSPO L1/K 5.3/ 5.3.1) for year 2014

8.1.4 Pollution prevention plans (C 5.6) Major

8.1.5 Social impacts (C 6.1) Major

Findings In compliance: Yes: X No: Objective Observed both estates and mill has a SIA plan, implementation, monitoring and action taken evidence: based on monitoring record.

8.1.6 A mechanism to capture the performance and expenditure in social and Minor environmental aspects

Findings In compliance: Yes: X No: Objective FELDA has a mechanism to capture the social and environmental aspects in their accounting evidence: system through the yearly financial budget meeting and planning.

3.1.2 Supply Chain Module E – Mass Balance for CPO Mill For supply chain, Semenchu Palm Oil Mill has maintained the use of Module E in this assessment. The findings and objective evidence find during the assessment are outlined in the table below. The results for each indicator from each of the operational areas were evaluated to provide an assessment of conformity. A statement is provided for each of the RSPO indicators in order to support the findings of the assessment team.

Module E: Mass Balance

Module E.1: Documented Procedures Criterion E.1.1: The facility shall have written procedures and/or work instructions to ensure the implementation of all the elements specified in these requirements. E.1.1.1 Complete and up to date procedures covering the implementation of all the elements in these requirements

Findings In compliance: Yes: X No: GP 7003A Page 49 of 90

Objective Semenchu palm Oil Mill has established written procedures to ensure the implementation of all evidence: elements specified in these requirements as evident in Standard Operating Procedure for Mill RSPO Supply Chain Certification System document number FGVPM-RSPO SCCS dated February 2013. The SOP includes: a. Penyeliaan (QOSHE Committee & FGVPM PSQM) b. Organization Chart c. Management Functions & Job Descriptions d. Traceability e. Mass Balance, Supply Chain Verification (Incoming FFB, Outgoing CPO), Claim f. Controlling of Non Conformance Material g. Record Keeping h. Training

E.1.1.2 The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements

Verifiers and guidance: This person shall be able to demonstrate awareness of the facilities procedures for the implementation of this standard. Findings In compliance: Yes: X No: Objective En. Mohd Tahrir b Rohani (Mill Manager) is the appointed person having overall authority over the evidence: implementation of these requirements and compliance with all applicable requirements as stated in the appointment on 5/5/14

His job responsibilities is clearly defined in the SOP as below:  To ensure all RSPO SCCS requirements within the RSPO Supply Chain Standard is comply with;  As a responsible to confirm and finalizing the SCCS related documents, mass balance data and schedule as well as other SCCS related documentations such as delivery note sent to the customer

Criterion E.1.2: The facility shall have documented procedures for receiving and processing certified and non- certified FFBs. Findings In compliance: Yes: No: Objective Although the previous audit , Semenchu Palm Oil Mill was able to present the documented evidence: procedure however in this audit , the procedure was unable to be sighted as the document No: FPI/L2/QOSHE-12.0 presented by the personnel do not have the relevant documented information. The staff has shown during the audit , that the weighbridge system will tick on the system whether the source is from RSPO supply based related to Semenchu ( e.g Semenchu Estate, Air Tawar 4 & 5 ) . Non-certified sources will not be ‘ticked’. This is found in the ‘Fail Pembekal/Pembeli

OBSERVATION 01 .

Module E.2: Purchasing and Goods In Criterion E.2.1: The facility shall verify and document the volumes of certified and non-certified FFBs received. Findings In compliance: Yes: X No: Objective Now Semenchu Palm Oil Mill will only consider that crop that comes from Semenchu, Air Tawar 4 evidence: and Air Tawar 5 to be considered to be RSPO certified.

GP 7003A Page 50 of 90

Crop from Pasak , Air Tawar 1,2 and 3 are now considered non-certified since the last audit as the estates are not sending to Semenchu Palm Oil Mill

Records are sighted in the ‘Laporan Daily Figures ISCC/RSPO ( BTS,CPO, Kernel ) on a daily basis.

received FFB from RSPO certified sources under FELDA Semenchu (Pasak, Air Tawar 1, 2, 3, 4 & 5) as well as non-RSPO certified from outside crop. Procedure of receiving certified FFB is available in the SOP under subsection Supply Chain Verification – FFB Delivery to Mill. All incoming sustainable and non-sustainable FFB are recorded in the mass balance table.

Criterion E.2.2: The facility shall inform the CB immediately if there is a projected overproduction. Findings In compliance: Yes: No: Objective The new staff was unable to present evidence that procedure established by Semenchu Palm Oil evidence: Mill to inform CB for any projected overproduction is available

Currently, the capacity for production approved by Jabatan Alam Sekitar Negeri Johor is 45 MT/Hour.

OBSERVATION 02

Module E.3: Record Keeping Criterion E.3.1: The facility shall maintain accurate, complete, up-to-date and accessible records and reports covering all aspects of these requirements. Findings In compliance: Yes: X No: Objective Records are sighted in the ‘Laporan Daily Figures ISCC/RSPO ( BTS,CPO, Kernel ) on a daily evidence: basis. On the end of the month , the report will also record the summary of the month’s a) Volume received RSPO and Non-RSPO b) Amount processed RSPO and Non-RSPO c) % RSPO and % non-certified d) Volume dispatch RSPO, Book and Claim and non- RSPO e) Volume balance for the products f) And the information of the Palm kernel

Record Keeping procedure for Semenchu POM stated that all documents, records and reports covering all aspect of Supply Chain Certification System should be made accessible during CB audit. Semenchu Palm Oil Mill did maintain accurate and up to date record of incoming raw material as well as outgoing CPO and PK as evident in monthly production report.

Criterion E.3.2: Retention times for all records and reports shall be at least five (5) years. Findings In compliance: Yes: X No: Objective Document retention time for Semenchu Palm Oil Mill is 10 years as stated in the RSPO SCCS file evidence:

Examples of documents retained are as below:  All approved operations for POM  List of Supplying Estate with exact location and address  List of all customer of sustainable CPO/PK.  Training records GP 7003A Page 51 of 90

 Internal Audit Checklist

Criterion E.3.3 a) The facility shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO, PKO and palm kernel meal on a three-monthly basis. Findings In compliance: Yes: No: x Objective Semenchu Palm Oil Mil did maintained records and balance of receipts of RSPO certified and evidence: non-certified FFB as well as delivered certified and non-certified CPO in Laporan Daily Figures ISCC/RSPO ( BTS,CPO, Kernel ), OER

However, the mass balance table is not adequately captured in a three monthly basis.

NC 03

Criterion E.3.3 b) All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system according to conversion ratios stated by RSPO. Findings In compliance: Yes: X No: Objective Weighbridge ticket and delivery note record the sources and weight of all incoming RSPO certified evidence: FFB and outgoing RSPO certified CPO.

The conversion used are based on actual OER and KER. The Palm oil mill only processed the FFB to CPO and PK .

Criterion E.3.3 c) The facility can only deliver from a positive stock. However, a facility is allowed to sell short. Findings In compliance: Yes: X No: Objective Although the SCCS procedure did not state, the mill has been delivering from a positive stock evidence:

Criterion E.3.4: The following trade names should be used and specified in relevant documents (e.g. purchase and sales contracts, *product name*/MB or Mass Balance). The supply chain model used should be clearly indicated. Findings In compliance: Yes: X No: Objective Delivery Order and Weighbridge tickets for certified products delivered to customer will indicates evidence: the *product name*/MB or mass balance as required by the standard.

Samples of Delivery a. Date: 26/8/14 b. Product Type: Palm Kernel I Sawit ( or Isi sawit ) ( PK/MB ) c. Delivery Order No / Akuan Penghantaran Sawit : L00000173 d. Bil hantaran: L00000173/2014 e. Quantity: 41.23MT f. Contract No: RSPG 6913N

For FELDA products with RSPO will be coded in the contract as RSPG .e.g. RSPG 6908 whereas if it is non-RSPO it will be coded ‘N’ in front of the contract number e.g N2150 6913

As of today, CPO is sold under Book and Claim whereas only PK is sold as RSPO MB.

GP 7003A Page 52 of 90

Criterion E.3.5: In cases where a mill outsources activities to an independent palm kernel crush, the crush still falls under the responsibility of the mill and does not need to be separately certified. The mill has to ensure that the crush is covered through a signed and enforceable agreement. Findings In compliance: Yes: No: Objective Not Applicable evidence:

Module E.4: Sales and Good Out Criterion E.4.1: The facility shall ensure that all sales invoices issued for RSPO certified products delivered include the following information: a) The name and address of the buyer b) The date on which the invoice was issued c) A description of the product, including the applicable supply chain model (Segregated) d) The quantity of the products delivered e) Reference to related transport documentation Findings In compliance: Yes: X No: Objective Delivery Notes for outgoing certified products delivered contain all information as required in E.4.1. evidence: Samples of delivery notes observed as below:

a. Name and Address of Buyer: FKP-Pasir Gudang ( Felda Kernel Crushing Plant ) , Kaw. Perindustrian P.Gudang b. Date: 26/8/14 c. Product Type: Palm Kernel I Sawit ( or Isi sawit ) ( PK/MB ) d. Delivery Order No / Akuan Penghantaran Sawit : L00000173 e. Bil hantaran: L00000173/2014 f. Quantity: 41.23MT g. Contract No: RSPG 6913N

The mill sells the PK to the crushing plant.

Module E.5: Training Criterion E.5.1: The facility shall provide the training for all the staff as required to implement the requirements of the Supply Chain Certification System. Findings In compliance: Yes: No: Objective In 2014, training has been conducted by Semenchu POM for staff on the introduction of the evidence: ALAF( Akademi Latihan FELDA ) / Makmal computer on the use of the new software concerning the new weighbridge system and MPR software system ( Mill performance Report ) related for sustainability SCCS. This was attended by En Ali Saman /Lab and Mohd Affandy ( Asst manager ) on 19/6/14. In Sept 2013, the Assistants of the mills and staff of weighbridge has attended a course concerning the MPR and RSPO ISCC that is implemented to streamline the documentation required for the certification standards for FELDA

Module E.6: Claims Criterion E.6.1: The facility shall only make claims regarding the use of or support of RSPO certified palm oil that are in compliance with the RSPO Rules for Communication and Claims. Findings In compliance: Yes: X No: Objective No claims has been applied evidence: GP 7003A Page 53 of 90

3.2 Corrective Action Request There are total of 3 Majors and 6 Minors were raised. Please refer to the Appendix A for the details findings and relevant correction actions have been taken. 3.3 Noteworthy Positive & Negative Observation The operating unit is trying to implement good RSPO sustainability practices in order to get certified in the presence of smallholders who act as major ‘decision-makers’ . The SPO Unit/ PSQM Department Felda Global Ventures Plantations (Malaysia) Sdn Bhd who monitors the certification of FGV and FPISB will try to make an effort to respond to all CARs raised during the audit in a timely manner to show their commitment in RSPO certification. Please refer to Appendix A for the Observation raised during the current surveillance. 3.4 Status of Non-Conformities Previously Identified Please refer to Appendix B for the CARs raised in the previous audit. 3.5 Issues Raised by Stakeholders and Findings Stakeholders did not provide any comments in writing regarding the FELDA Semenchu environmental and social performance. All interviewed stakeholders had positive comments about FELDA Semenchu

4. ACKNOWLEDGEMENT OF ORGANIZATION INTERNAL RESPONSIBILITY 4.1 Date of Next Surveillance Visit The next surveillance audit is planned before August 2015

4.2 Date of Closing Non-Conformities

Reference Class Date Issued Date Closed Farm Major 3 Jul 2013 2 Sep 2013 Farm Minor 3 Jul 2013 2 Jul 2014 Mill NC 3 Jul 2013 2 Sep 2013 6.5.3 Minor 33 3 Jul 2013 25-27/8/14 1.2 Minor 40 3 Jul 2013 25-27/8/14 4.5.1 Minor 43 3 Jul 2013 25-27/8/14 6.2.3 Minor 48 3 Jul 2013 25-27/8/14 6.8.2 Minor 51 3 Jul 2013 25-27/8/14 4.4.1 M53 27/8/14 11/12/14, 7/12/14 4.7.1 M56 27/8/14 13/12/14 6.1.1 M60 27/8/14 11/12/14 6.1.2 Minor 61 Next surv 11/12/14 Mill NC 03 27/8/14 25/11/14 E3.3

GP 7003A Page 54 of 90

4.3 Acknowledgement of Internal Responsibility and Formal Sign-off Assessment Findings SGS Malaysia acknowledges and confirms acceptance of the Report contents and including the assessment findings. SGS Malaysia accepts the responsibility for addressing the opportunities of improvement detailed in this report.

Signed on behalf of FELDA Palm Signed on behalf of SGS Malaysia Sdn Industries Sdn Bhd Bhd

GP 7003A Page 55 of 90

Appendix A: CORRECTIVE ACTION REQUEST

52 4.2.1 Date Due Date 25/08/14 Next surv Recorded> Date> Closed> Non-Conformance: Monitoring of fertilizer inputs through annual fertilizer recommendations on the settlers were not recorded

Objective Evidence: Records of the application by the settlers are recorded yearly by En Mohd Redzuan, Settler/ Peneroka Supervisor . He has started to monitor in 2013, by filling in the ‘Rekod Pengunaan Agrokimia dikalangan peneroka mengurus kebun sendiri’ . Mr Redzuan is monitoring both the fertilizer and agrochemical .

In Air Tawar 4, records of application by settlers are in the process of being compiled as we were shown the record of the programme for a group of 4 settlers ( Mohd Aris Abdullah, Hj Kasah Nasir, Sukardi Md Amin and Selamat Zainal ) that they group- purchased the fertilizer and agrochemicals . Minor CAR 52

Close-out evidence:

M53 4.4.1 Date Due Date 26/08/14 28/10/14 7,12/12/14 Recorded> Date> Closed> Non-Conformance: There was no protection of water courses and wetlands, including maintaining and restoring appropriate riparian buffer zones at or before replanting along all natural waterways within the estate.

Objective Evidence: During the audit in Air Tawar 4, the buffer zone of Sg Layau Kiri was visited . A signage ‘ Sempadan sungai di larang menceroboh’ was erected . However there were evidence of spraying and fertilizer application is being done within the riparian/rizab sungai in Block 13. Some streams (e.g in Semenchu ) which once flow but due to the plantation development, flows only during the rainy season were not identified and appropriately marked as riparian. ( unfortunately due to the demands of the settlers to maximizing the plant density , planting along the riparian will be seen in FELDA replanting ) Moreover, there is no markings of bufferzone made within Air Tawar 5 Estate to demarcate the bufferzone and thus facilitating the spraying and fertilizer operation conducted by the workers on the field

MAJOR CAR 53 Close-out evidence: GP 7003A Page 56 of 90

On 7/12/14 , Air Tawar 4 submitted evidence of buffer zone training attended by workers Moh Ansori and Mohammad Shipon on 24/11/14 Pictorial evidence also submitted to show the estate and the workers went to the site to identify the non-conformities issued during the audit. Markers were also place to show the buffer zone. Similar markers and strips were submitted on 12/12/14 to show that Air Tawar 5 has taken measures to inform workers on the riparian buffer zone. The manurers and spary operators workers were also briefed by the management prior to the operation . Pictures of New signboard placed at waterways to indicate riparian zone were also submitted by Semenchu Estate. MAJOR CAR 53 closed

54 4.4.7 Date Due Date 25,26/08/ Next surv Recorded> Date> Closed> 14 Non-Conformance: There was no evidence of water management plans

Objective Evidence: No water management plan was found in Air Tawar 4 and Air Tawar 5 Minor CAR 54

Close-out evidence:

55 4.6.7 Date Due Date 25,26/08/ Next surv Recorded> Date> Closed> 14 Non-Conformance: There was no documentary evidence that use of chemical categorized as World Health Organization Type 1A or 1B, or listed by the Stockholm or Rotterdam Conventions and paraquat, is reduced and/or eliminated. Adoption of suitable economic alternative to paraquat as suggested by the EB pending outcome of the RSPO study on IWM

Objective Evidence: Usage in settler’s managed lots are in the progress being recorded but not monitored and not included in the estate overall paraquat usage. Minor CAR 55

Close-out evidence:

M56 4.7.1 Date Due Date 25,26/08/ 25/10/14 13 Nov 2014 Recorded> Date> Closed> 14 Non-Conformance: Evidence of documented Occupational Safety Health (OSH) plan which is not compliance with OSH Act 1994 and Factory and Machinery Act 1967 (Act 139) Objective Evidence: GP 7003A Page 57 of 90

Elements missing in safety and health plan as below: HIRARC – Specific PPE does not being specified for each of the working field within the

Training on First Aid was not conducted in Air Tawar 5 Estate.

Inadequate First Aid kit content (i.e.: eyewa Estates First Aid Kit is not made available at working field i.e. Harvesting Team (Air Tawar 5) & Spraying Team (Semenchu)

MAJOR CAR 56 Close-out evidence: Following to the audit, FELDA has taken action to ratify the Major CAR which details can be summarized as follows:  HIRARC has been revised to include the specific PPEs for each of the working fields such as harvesting, manuring and spraying. HIRARC for Mill also has been revised to further details of each of the PPEs to be applied for the respective working areas. The revised HIRARC dated 10 November 2014;  Training on first aid has been conducted to all workers handling the first aid. Observed that the client has submitted the evidence through an email dated 13 November 2014. Based on the evidence submitted, the audit team observed that the training has been conducted on 11 November 2014;  Emergency procedures has been established and evidence in the form of the ERP itself as well as the pictorial evidence showing the location of the ERP has been submitted through an email dated 10 November 2014;  First Aid kit has been refurbished and evidence in the form of the pictorial evidence showing the newly refurbished kit has been submitted through an email dated 10 November 2014. 57 5.3.2 Date Due Date 25,26/08/ Next surv Recorded> Date> Closed> 14 Non-Conformance: Having identified wastes and pollutants, an operational plan was not developed and implemented, to avoid or reduce pollution. Objective Evidence: • In Air Tawar 4, empty 20 lit chemical containers were not triple rinsed and punctured and there were missing smaller empty chemical containers e.g Juru , Garlon Mix etc that were used for the year . Moreover there were no official disposal done during the year. • The operational plan is not properly implemented whereby there is evidence of scheduled waste containers stockpiled (Semenchu) in the storage that is not disposed off through licensed scheduled waste collector. This is supported with no evidence of disposal of scheduled waste container kept by the estate except the reuse of such containers for pre-mixing. • Recycling programme is not properly implemented whereby the audit team observed that a recyclable materials being dumped in the landfill in the linesite compound. • There is also evidence of scheduled waste material spilled within the linesite compound. Minor CAR 57

Close-out evidence:

58 5.5.3 Date Due Date 25,26/08/ Next surv Recorded> Date> Closed> 14 GP 7003A Page 58 of 90

Non-Conformance: Evidence of burning waste (including domestic waste) sighted Objective Evidence: Verification in Semenchu Estate shows evidence of burning of EFB occurs on the field. In addition, verification within the workers quarters in Air Tawar 5 Estate showed evidence of burning of domestic waste in the landfill. Minor CAR 58 Close-out evidence:

59 5.6.2 Date Due Date 25,26/08/ Next surv Recorded> Date> Closed> 14 Non-Conformance: Plans were not reviewed annually

Objective Evidence: FELDA has prepared a documented identification of all waste products and sources of pollution as per reflected in the document entitled ‘Pelan Pengenalpastian & Pengurusan Bahan Buangan (Waste Identification & Management Plan)’. However such plan is observed to be not annually reviewed as per required by the standard. This is observed at Semenchu & Air Tawar 5 Estates. Minor CAR 59

Close-out evidence:

M60 6.1.1 Date Due Date 25,26/08/ 25/10/14 11/12/14 Recorded> Date> Closed> 14 Non-Conformance: Incomplete documented social impact assessment including records of meetings Objective Evidence: • Social impact Assessment (SIA) has been done for all sites however not fully covered all elements as required in the RSPO MY-NI and not include the local and independent expertise (Felda Semenchu, Air Tawar 5 and mill) The questionnaire/consultation lack several elements such as: • Occupational safety, new replanting, workers health, workers working condition, workers wages, term of employment, workers living condition, labour contract, communication. • Lack of records of meeting, list of participants involved in the meeting. • There is no evidence on implementation of plan, monitoring of activities/implementation and action taken from monitoring data ( e.g PDCA ) MAJOR CAR 60

Close-out evidence: GP 7003A Page 59 of 90

Mill and estate has conducted another stakeholder meeting and assessment (mill dated 01 Sept. 2014, Felda Semenchu and Felda Air Tawar 5 dated 15 Sept. 2014) in order to gauge the real positive and negative impact in social aspects. Copy of meeting summary and record of SIA report has been sent to SGS (M) on 12 November 2014 found that everything has been considered and delivered by the mill and estate to their stakeholders at least as sets out in the RSPO guidance note. (Major CAR 61 Closed)

61 6.1.2 Date 25,26/08/ Due Date Next surv 11/12/14 Recorded> 14 Date> Closed> Non-Conformance: Evidence that the assessment has been not been done with the participation of affected parties Objective Evidence: • The assessment did not represent all affected parties such as migrant workers and list of person involved/represent each affected parties are not available (Both estates)

Minor CAR 61

Close-out evidence: Copy of meeting summary shows that both estates has considered the need for migrant workers and record of SIA report showed that the stakeholder meeting has included migrant workers as well as gender representative with various age distribution. (Minor CAR 61 Closed)

GP 7003A Page 60 of 90

SUPPLY CHAIN

C 03 E.3.3 Date Due Date 27/0814 27/11/14 25/11/14 Recorded> Date> Closed> Non-Conformance: Mass balance table is not adequately capturing balance stock, process figures, OER as well as not in a three monthly bases. Objective Evidence: Semenchu Palm Oil Mil did maintained records and balance of receipts of RSPO certified and non-certified FFB as well as delivered certified and non-certified CPO in Laporan Daily Figures ISCC/RSPO ( BTS,CPO, Kernel ), OER

However, again the mass balance table is not adequately captured in a three monthly basis.

NC 03

Close-out evidence: On 25/11/14, evidence of the Mass Balance Table for the quarterly Jan-Mar, Apr-Jun, Jul- Sept and Oct-Dec were submitted by Kilang Sawit Semenchu for 2014. It shows the amount of both RSPO and Non-RSPO FFB received , CPO and PK processed and dispatched. NC 03 - CLOSED

GP 7003A Page 61 of 90

OBSERVATIONS

OBS # Indicator Observation Detail 01 4.1.2 (Minor) Date 25,26/08/1 Due Date

Recorded> 4 Date> Closed> Non-Conformance: 4.1.2 (Minor) : Records of monitoring and the actions taken was not maintained and kept for a minimum of 12 months

Objective Evidence: It only records the ‘availability ‘ of the resources and it lacks the monitoring of work done or action for that particular operation as required by the indicator ( this recording was not available in Semenchu but available in Air Tawar 4 ) Observation 01 Close-out evidence:

OBS # Indicator Observation Detail 02 4.2.3 Date 25,26/08/1 Due Date

Recorded> 4 Date> Closed> Non-Conformance:

Monitor the area on which EFB, POME and zero-burn replanting is applied is not completely recorded

Objective Evidence: In Air Tawar 4, records of EFB delivery ‘ Penghantaran Tandan Kosong ‘ is available e.g. No. Pass 08014262 dated 15/7/14, 6.01 MT was delivered . From the map, Kawasan Penaburan EFB 2014, it is delivered Block 9 and 13 of Peringkat 1 where it is reported to have sandy soils. No records of EFB application monitoring was done as the EFB is sent to the field by the mill without informing the estate/Semenchu Observation 02

Close-out evidence:

OBS # Indicator Observation Detail 03 4.3.2 Date 25,26/08/1 Due Date

Recorded> 4 Date> Closed> Non-Conformance: Some bare or exposed soil within estates were observed Objective Evidence: GP 7003A Page 62 of 90

OBS # Indicator Observation Detail Although Semenchu and Air Tawar practices operations that avoids or minimize bare or exposed soil within estates however some settlers that take back the land for their own management do not seemed to be practicing as such as some of the settler’s field are bare and prone to erosion.

Similarly in Air Tawar 4, the control of some noxious weeds like Clidemia has resulted in the Blocks looking quite bare .

Observation 03 Close-out evidence:

OBS # Indicator Observation Detail 04 4.5.1 Date 25,26/08/1 Due Date

Recorded> 4 Date> Closed> Non-Conformance:

There was incomplete documented IPM system

Objective Evidence: However the section of management of bagworm outbreak and its control was unable to be extracted from the manuals although they have a SOP on planting of beneficial plant for long term leaf eating caterpillar control ( MLSL ( Ed.2) sec3 ( 11.0) Closed CAR 43 but raised Observation 04

Close-out evidence:

OBS # Indicator Observation Detail 05 4.6.1 Date 25,26/08/1 Due Date

Recorded> 4 Date> Closed> Non-Conformance: Written justification in Standard Operating Procedures (SOP) of all agrochemical use Objective Evidence: The justification is found in the ‘Garis Panduan’ No. Doc: ML-1A/L3-GP1(0) March 2012 : Justification Pengunaan Bahan Kimia. The file 4.6 Agrokimia has the labels of most of the chemical used together with its MSDS however it does not state why is that particular chemical is selected for use. Observation 05

Close-out evidence:

OBS # Indicator Observation Detail 06 4.6.3 Date 25,26/08/1 Due Date

Recorded> 4 Date> Closed> Non-Conformance: GP 7003A Page 63 of 90

OBS # Indicator Observation Detail Pesticides shall be stored in accordance to the Occupational Safety and Health Act 1994 (Act 514) and Regulations and Orders and Pesticides Act 1974 (Act 149) and Regulations Objective Evidence: However although a store for Paraquat / Type 1b just beside the chemical store, newly delivered Paraquat was not stored in the designated store. Observation 06 Close-out evidence:

OBS # Indicator Observation Detail 07 4.6.4 Date 25,26/08/1 Due Date

Recorded> 4 Date> Closed> Non-Conformance: All information regarding the chemicals and its usage, hazards, trade and generic names must be available in language understood by workers or explained carefully to them by a plantation management official at operating unit level Objective Evidence: At Air Tawar 4 agrochemical store , MSDS of chemicals were available for the various active ingredient however the MSDS for the specific brand of agrochemicals being presently used were lacking e.g. Action 13SL, Juru, Challenge and for Garlon Mix. Observation 07

Close-out evidence:

OBS # Indicator Observation Detail 08 4.6.10 Date 25,26/08/1 Due Date

Recorded> 4 Date> Closed> Non-Conformance: Incomplete records of pesticides use (including active ingredients used, area treated, amount applied per hectare and number of applications) are maintained for either minimum of 5 years or starting November 2007 Objective Evidence: However rodenticide was not included in the records Observation 08

Close-out evidence:

GP 7003A Page 64 of 90

SUPPLY CHAIN - OBSERVATIONS

OBS # Indicator Observation Detail 01 E 1.2 Date Due Date 27/08/14 Recorded> Date> Closed> Non-Conformance: The facility was not able to present the documented procedures for receiving and processing certified and non-certified FFBs.

Objective Evidence: Although the previous audit , Semenchu Palm Oil Mill was able to present the documented procedure however in this audit , the procedure was unable to be sighted as the document No: FPI/L2/QOSHE-12.0 presented by the personnel do not have the relevant documented information. The staff has shown during the audit , that the weighbridge system will tick on the system whether the source is from RSPO supply based related to Semenchu ( e.g Semenchu Estate, Air Tawar 4 & 5 ) . Non-certified sources will not be ‘ticked’. This is found in the ‘Fail Pembekal/Pembeli

OBSERVATION 01

Close-out evidence:

02 E 2.2 Date Due Date 27/08/14 Recorded> Date> Closed> Non-Conformance: The new staff was unaware that the facility shall inform the CB immediately if there is a projected overproduction Objective Evidence: The new staff was unable to present evidence that procedure established by Semenchu Palm Oil Mill to inform CB for any projected overproduction is available

Currently, the capacity for production approved by Jabatan Alam Sekitar Negeri Johor is 45 MT/Hour.

OBSERVATION 02

Close-out evidence:

GP 7003A Page 65 of 90

Appendix B : PREVIOUSLY RAISED CORRECTIVE ACTION REQUEST

CAR Indicator CAR Detail # M01 1.1.1 Date Due Date 10 Jun 11 26 Oct 11 1Jul 11 Recorded> Date> Closed> Non-Conformance: Records of requests and responses are not adequately maintained

Objective Evidence: Records of stakeholder’s requests and responses are not adequately addressed. E.g. CHRA consultant had requested officially each scheme management to respond to the DOSH Johor on September 2010 on the action plans of the recommendation made in CHRA report. There are no records of response from the scheme management. There are no documents or procedures with regard to grievances, complaints and requests between scheme management and the foreign workers (cross referred to indicators 6.3.1, 6.3.2. and 6.3.3).

Close-out evidence: FELDA has provided sufficient evidence responding to DOSH on 13/06/2011, document no. (12)88003083/JKKP/DOSH with respect to action plan required for the CHRA recommendations. In view of this development, all actions that have been taken by FELDA, the auditing team is of the view that there is sufficient evidence to address the Major CAR 01. However, the effectiveness of the process is yet to be verified as the management plan only been initiated recently. Hence, instead of closing out the Major CAR, the Major CAR 01 is now being downgraded to Minor CAR 01 pending the verification of the effectiveness of the process established that will be verified during the Surveillance Audit

M02 2.1.1 Date Due Date 10 Jun 11 26 Oct 11 29 Jul 11 Recorded> Date> Closed> Non-Conformance: There are evidences of non-compliance with legal requirements.

Objective Evidence: Most of the results analysed from palm oil mill effluent (POME) released to watercourses showed higher BOD than the DOE permissible level. A worker by name Serun , working for PELADANG is holding an expired visa. In addition, 11 illegal contract immigrant workers who employed by a contractor that is managing on behalf of the independent smallholders from neighbouring estate at Air Tawar 1 are also found working in the scheme. Illegal extension of electrical wirings found in the immigrant hostels at Air Tawar 5, Air Tawar 3 and Air Tawar 4. No valid license for authorised gas tester (AGT) and authorised entrant, and stand by person for confined space activities in the oil mill. Inconsistency in serving safety meeting notices to committee members. In a few instances notices are available however, the notices issued without proper agenda as required by OSH regulation. The notice serving period for safety meeting and also the time taken to release the outcome of the meeting in the minutes form are not in accordance to OSH regulation.(Cross referred to indicators 4.7.1f and 4.7.2)

Close-out evidence: GP 7003A Page 66 of 90

CAR Indicator CAR Detail # FELDA has provided evidences on 1st July 2011 on circulars issued to workers to avoid illegal wiring to the quarters. Letter dated 13th June 2011, reference number (07)88003083, is made available to the auditing team and verified. FELDA has submitted the valid licence of authorised gas tester (AGT) on 29th July 2011 (License validity until authorised entrant and standby till 22/06/2012 and authorised gas tester and entry supervision till 10/10/2012). Action plans have been submitted on 29th July 2011 to reduce BOD level of effluent pond. The worker by name Serun has obtained his work permit with validity till 02nd November 2012. A letter of warning was issued on 13 June 2011 to the contractor reminding them no to engage illegal workers from the neighbouring estates [ref (211)3083/10-2-9]. Safety and health meeting notices issued together with an agenda [e.g. letter dated 8/06/2011 ref (2) JKKP Air Tawar 5 was issued to committee members for the meeting to be held on 23/06/2011]. Taking into consideration all the actions that have been taken by FELDA to address the non- compliances mentioned above with the evidences provided in item (a) to (e) above, the auditing team is of the view that the Major CAR 02 issued can be ratified. However, most of the evidence showed is documented in nature and require field verification for the continuous practice on the ground In the light of this situation, the Major CAR 02 is now being downgrade to Minor CAR 02 where the field verification on the ground practice of all evidences provided by FELDA [item (a) to (e)] shall be conducted during the Surveillance Audit next year. Surveillance 01 Audit: Minor CAR 02 upgraded to Major CAR 45

03 2.1.3 Date Due Date 10 Jun 11 ASA 01 1 Jul 11 Recorded> Date> Closed> Non-Conformance: No mechanism to ensure the compliance with all applicable local, national and ratified international laws and regulations are implemented.

Objective Evidence: Inadequately documented system explaining the legal requirements needed for the operations in the schemes and plantation mill. This includes unavailability of appointed personnel at the oil mill and plantations schemes to monitor the expiry of the legal documents at the plantation mill and estate offices. (Cross referred to 2.1.1).

Close-out evidence: The Minor CAR 03 is closed, as FELDA Semenchu scheme has submitted the list of personnel who will be monitoring the legal requirements and licence renewals.

04 2.1.4 Date Due Date 10 Jun 11 26 Oct 11 1 Jul 11 Recorded> Date> Closed> Non-Conformance: No system for tracking of any changes in the law.

Objective Evidence: There is no documented formal appointment and job description for the scheme / unit responsible/person(s) or system in place to track and update changes.

Close-out evidence: The Minor CAR 4 was closed on 1/7/2011, FELDA as a Group has provided evidence of tracking of law from the Head quarters, transmission of such change of information and the implementation of the instructions with regard to law at the scheme levels.

M05 4.1.1 Date Due Date 10 Jun 11 9 Aug 11 1 Jul 11 Recorded> Date> Closed> GP 7003A Page 67 of 90

CAR Indicator CAR Detail # Non-Conformance:

Documented Standard Operating Procedures (SOPs) are not appropriately documented.

Objective Evidence: Rat Census format is updated, but not formally captured in the Manual Operasi Ladang Sawit Lestari. Documented SOP with regard to RSPO Supply Chain is not established at all. Inadequate or lack of simplified SOP for pre-mixing chemical in the store, water treatment in the oil mill, etc.

Close-out evidence: FELDA has reverted to old format of rat census after further discussion and deliberation within the Group. A documented standard operating procedure has been developed for the supply chain and submitted on 1/7/2011. The simplified form of the standard operating procedure is in progress in the work areas. Considering the present situation, the Major CAR 05 is now being downgraded to Minor CAR 5,. This is to enable the progress of the implementation of the simplified procedures at work area be verified in the surveillance audit for full compliance against the requirement of the standard.

06 4.1.2 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Records of monitoring and the actions taken are inadequate.

Objective Evidence: In Semenchu scheme, the filled census forms were not dated and baits were not applied although the damage has reached above threshold level. In another instance in Air Tawar 5, as per procedure, workers were expected to bait alternate palms in the 2nd round of baiting, but the auditor observed that the application of baits is on every palm base. There is a need to have an adoption of control of documentation as well as a list of documents required for the operation. Records of monitoring actions of SOP in the independent settlers are lacking in most of the schemes.

Close-out evidence: Monthly progress monitoring for all activities were made available during the visit. Records of monitoring for field related activities were also captured in the ‘Programme Sheets’ such as for manuring and spraying programmes, Other records maintained include agrochemicals used, rat census/treatment, application for and issuance of personnel protective equipment (PPE) that were evident in the cost books, store requisition and issue sheets and related files.

07 4.2.1 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: No monitoring of fertilizer inputs through annual fertilizer recommendations.

Objective Evidence: FELDA agronomists do not conduct periodic visit to independent smallholders to monitor the application of fertilizers by the smallholders and hence resulting the independent smallholders to purchase their own fertilizers which causing in uncertainty of the FELDA scheme management on the rates and the type of the fertilizer applied by independent smallholders.

Close-out evidence: GP 7003A Page 68 of 90

CAR Indicator CAR Detail # Agronomic and fertilizer report is prepared by FELDA Agricultural Services Sdn Bhd (FASSB). Annually Fertilizer recommendations made are based on palm nutritional status resulting from foliar analysis. Observed during the audit, the record of agronomic and fertilizer application and recommendation for 2013 were available for Air Tawar 2. Currently the estates were using Compound fertilizer, N:P:K:Mg (8.3, 6.1, 19.5, 2.5*0.5%B). 08 4.3.2 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: No mitigation to minimize bare or exposed soil within estates.

Objective Evidence: There is evidence of blanket chemical spraying by independent settler in their field although the management has instructed not to do so. During Voluntary oil palm seedlings (VOPs) spraying, workers tend to spray more than the targeted weeds as in the young plantings in Air Tawar 5, Pkt 2.

Close-out evidence: FELDA schemes have documented evidences on practices to minimize soil erosion and soil degradation. The soil maps are available in the schemes with slope maps. There is no peat land in the 7 schemes of oil palm cultivation. Contracts are viewed including the work for the construction of terraces at the time of re-planting. Another contract viewed is on the planting of leguminous cover plant and the maintenance of the ground cover for a year in the replanting fields. In general, the smallholder’s scheme managed by FELDA Technoplant Sdn. Bhd. maintained a sufficient mix of ground cover plants in the mature oil palm field. Verification during the field visit evidenced that there is evidence in the fields of young planting where the ground cover of cover crop is maintained to prevent erosion and minimise soil run- off. 09 4.3.3 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed>

Non-Conformance: Insufficient presence of road maintenance programme

Objective Evidence: In Air Tawar 4, Block 3, the plantation road grading is not according to road specification where the surface run off causing gullies erosion on the slope resulting in siltation blocking the culverts at the valleys. In Pasak, waiting for funds from the settlers to do roads may result in extra cost especially if delayed until the rainy season. In Air Tawar 2 Block 9, road erosion and heavy river flow caused the gabions to collapse.

Close-out evidence: Road maintenance program was evidence in Air Tawar 2. However, the work carried out was from the month of June until December 2012. Rain chart recorded high rain precipitation in December 2012. Hence, all the top soil graded being washed off. The road maintenance conducted by contractor did not include road side drains for diversion of water into the field during rainfall as per SOP. Insufficient to mitigate surface erosion of top soil during road maintenance exercise. (Minor CAR 09 raised Minor CAR 45) M10 4.4.1 Date Due Date 10 Jun 11 26 Oct 11 1 Jul 11 Recorded> Date> Closed> Non-Conformance: GP 7003A Page 69 of 90

CAR Indicator CAR Detail # Inadequate protection to water courses, including maintaining and restoring appropriate riparian buffer zones along all natural waterways within the estate.

Objective Evidence: Recent clearance of existing buffer zone of Sg. Seluyut Simpang of Air Tawar 3 and planting of oil palm seedlings (GPS coordination N. 01o42’42.1” and E103o 59’13.1” under WGS system) is a sign of ineffective communication between settlers and the scheme management. T training with regard to the importance of river buffer zone maintenance in the oil palm planted land is observed to be inadequate.

Close-out evidence: Action plan have been submitted on 1st July 2011 with a general letter issued to the smallholders regarding the clearing of the buffer zone and that the management has to demarcate the buffer zone for further restoration. Although the evidence showed has addressed the concern raised within the Major CAR 10, the implementation of the details within the letter i.e. restoration progress has yet to be verified. Therefore, taking into consideration all efforts that has been taken by FELDA to address the Major CAR, the Major CAR 10 is now being downgraded to Minor CAR 10 pending verification of the restoration progress that shall be verified during the Surveillance Audit next year.

11 4.4.3 Date Due Date 10 Jun 11 26 Oct 11 1 Jul 11 Recorded> Date> Closed> Non-Conformance: Insufficient information on the classification of river water quality sampled at incoming and outgoing points of main natural waterways in the schemes and mills activities negative impacts cannot be verified.

Objective Evidence: Lack of interpretation of analytical results of the river water quality and recommendations for further mitigation action plans, if there are any negative outcomes in the result.

Close-out evidence: FELDA Semenchu has produced evidence of reporting system according to Interim National River Water Quality Standards (INRWQS). This method will support the interpretation of river water quality on the pollution status, its classification and necessary action plan required to be taken according to classification. Therefore, the Minor CAR 11 is changed to observation 01

12 4.5.1 Date Due Date 10 Jun 11 ASA 01 1 Jul 11 Recorded> Date> Closed> Non-Conformance: Inadequate documented IPM system.

Objective Evidence: IPM documents only show the types of pest, lifecycle and the threshold level to initiate control. It lacks a flowchart on the procedure of the IPM system. No detection programme to identify the symptom and presence of potential pest. According to the JKKK at Pasak and Air Tawar 3, there are pests such as porcupine, elephant, wild boar and monkey that destroy young immature palms. However, there is no established SOP in the IPM system to manage such incursions.

Close-out evidence: New documents on pests covering porcupine, elephants, monkeys and wild boars has been developed and are verified (Minor CAR 12 is closed). GP 7003A Page 70 of 90

CAR Indicator CAR Detail # 13 4.5.2 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Inadequate monitoring the extent of IPM implementation for major pests.

Objective Evidence: Monitoring programme of major oil palm pest such as bagworms, rhinoceros beetle at immature and mature planted fields is inadequate.

Close-out evidence: There is evidence of IPM Implementation for major pests. For instance, monitoring for rat damage is done for every harvest for the particular field. Record is done by the field staff. In addition, the estates also carry out daily rat damage surveys through the using the specific monitoring forms that record both old and new/fresh rat damage percentages.

14 4.5.3 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: There are no records of area where pesticides have been used.

Objective Evidence: The records of pesticides are not recorded based on active ingredient per hectare basis or per tonne of oil. In addition, independent settlers do not keep the records of pesticides usage for their area.

Close-out evidence: Recording and monitoring of areas where pesticides have been used was evident in the “Bin Card” monitored by the store clerk.

M15 4.6.1 Date Due Date 10 Jun 11 26 Oct 11 11 Aug 11 Recorded> Date> Closed> Non-Conformance: No written justification in Standard Operating Procedures (SOPs) for the use of all agrochemicals used.

Objective Evidence: The Scheme do not have documented or written evidence on why the product /agrochemical are being used. Example, the justification for all agro-chemicals e.g. Chlorophacinone, Rat bait.

Close-out evidence: FELDA has now documented justification for the use of chemicals; hence, the Major CAR 15 is closed.

M16 4.6.2 Date Due Date 10 Jun 11 26 Oct 11 1 Jul 11 Recorded> Date> Closed> Non-Conformance: No list of chemical use.

Objective Evidence: GP 7003A Page 71 of 90

CAR Indicator CAR Detail # No list of chemicals being used by independent settlers.

Close-out evidence: FELDA has submitted the newly initiated documentary evidence of monitoring of chemical usage by the independent smallholders. However, the continuity of monitoring of the chemical usage cannot be verified until the Surveillance Audit conducted next year. In view of these developments, the Major CAR 16 is now downgraded to Minor CAR 16 pending verification of the continuity of the monitoring of the chemical usage to be conducted during the Surveillance Audit next year.

M17 4.6.3 Date Due Date 10 Jun 11 26 Oct 11 14 Sep 11 Recorded> Date> Closed> Non-Conformance: Pesticides are not stored in accordance to the Occupational Safety and Health Act 1994 (Act 514) and Regulations and Orders and Pesticides Act 1974 (Act 149) and Regulations.

Objective Evidence: Observed that pesticides in settlers’ house are not stored properly.

Close-out evidence: Observed that the following are evidenced during the field visit in the chemical storage: i) Personnel Protective Equipments (PPE) as per described in the HIRARC j) Spill kit k) Hazard signs l) Operating Manual m) Material Safety Data Sheet (MSDS) n) Ventilation o) Lighting p) Solid door and god roofing q) Labelling of products r) Emergency phone numbers posted on the chemical store wall

M15 4.6.1 Date Due Date 10 Jun 11 26 Oct 11 11 Aug 11 Recorded> Date> Closed> Non-Conformance: No written justification in Standard Operating Procedures (SOPs) for the use of all agrochemicals used.

Close-out evidence: FELDA has now documented justification for the use of chemicals; hence, the Major CAR 15 is closed.

M16 4.6.2 Date Due Date 10 Jun 11 26 Oct 11 1 Jul 11 Recorded> Date> Closed> Non-Conformance: No list of chemical use. GP 7003A Page 72 of 90

CAR Indicator CAR Detail # Objective Evidence: No list of chemicals being used by independent settlers.

Objective Evidence: Observed that pesticides in settlers’ house are not stored properly.

Close-out evidence: FELDA Semenchu has submitted documented evidence to address Major CAR 17 as follows: Appointment of personnel to co-ordinate the independent smallholder scheme’s chemical management. More meetings and consultation with independent smallholders on safe usage of chemical and its containers. Although evidences mentioned above sufficient to address the Major CAR issued, the effectiveness of the implementation on the ground has yet to be verified. Hence, taking into consideration this development, the Major CAR 17 is downgraded to Minor CAR 17 to enable the verification of the effectiveness to be conducted during the Surveillance Audit next year. Minor CAR 17 upgraded to Major 48

M18 4.6.4 Date Due Date 10 Jun 11 26 Oct 11 29 Jul 11 Recorded> Date> Closed> Non-Conformance: All information regarding the chemicals and its usage, hazards, trade and generic names are not available in the local language understood by workers or explained carefully to them by a plantation management official at the operating unit level.

Objective Evidence: Not all the chemicals Material Safety Data Sheet (MSDS) is translated to the local language which can be understood by the storekeeper or Mandore. E.g. Paraquat and Triclopyr butoxy ethyl ester.

Close-out evidence: The Major CAR 18 is closed as FELDA has produced MSDS evidence for Triclopyr butooxy ethyl ester and Paraquat in local language.

19 4.6.7 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Lack of records/documentary evidences on the usage of chemicals categorised as type 1A or 1B that is reduced and/or eliminated. GP 7003A Page 73 of 90

CAR Indicator CAR Detail # Objective Evidence: Record of paraquat showed an increase in useage. Example, AT1 2008 (280lit), 2009 (300lit) 2010 (520 lit) 2011 till Apr (200 lit). Scheme Independent settler’s usages of paraquat are not captured.

Close-out evidence: Based on records the audit team note that the usage of Paraquat has been gradually decrease since 2010 where in 2010, the usage is 1,680 compare to 2011 and 2012 that recorded 1,244 and 1,000 respectively. 20 4.7.2 Date Due Date 10 Jun 11 ASA 01 29 Jul 11 Recorded> Date> Closed> Non-Conformance: Accidents are not reviewed at quarterly intervals.

Objective Evidence: Most of the quarterly safety meetings have not addressed the incidence. Safety meeting minute lacks such information in general in all schemes.

Close-out evidence: Minor CAR 20 is closed on June 2011 as the agenda of safety and health meeting was sent to the committee prior to the meeting and accident related issues were part of the discussion. The safety meeting minutes dated 13/6/2011 also provides the evidence of discussion on accidents.

M21 4.8.1 Date Due Date 10 Jun 11 26 Oct 11 8 Sep 11 Recorded> Date> Closed> Non-Conformance: Adequate training programme that includes regular assessment of training needs and documentation, including records of training for employees need to be implemented.

Objective Evidence: It is found that the sprayer mandore (Subakri) did not undergo first aid training. Workers applying Butik S rat bait at Air Tawar 5, Block 1, are observed applying baits for every palm when they are expected to apply at alternate palms according to SOP. Lack of training on quantitative measurment of chemicals with appropriate measuring cylinders in the field, handling of PPE (especially removal of gloves) while drinking clean water, understanding of MSDS etc is observed. Not all the training notes are available as document and also lack of a complete list of the participants involved in the training is observed in Semenchu and Air Tawar 2 Schemes.

Close-out evidence: GP 7003A Page 74 of 90

CAR Indicator CAR Detail # FELDA Semenchu has submitted documented evidence to address Major CAR 21 as follows: First aid training certificates of the representatives of each scheme. Scheme management consultation Practical training on chemical spraying and its related equipments and PPE usage. Triple rinsing of empty chemical container and container’s safe storage Training on safe fertilizer application. Training on safe harvesting operations. More safety signs. Training by independent consultant/expertise on safety programmes. Related training notes and participants lists. Although evidences mentioned above sufficient to address the Major CAR issued, the effectiveness of the implementation on the ground has yet to be verified. Hence, taking into consideration this development, the Major CAR 21 is downgraded to Minor CAR 21 to enable the verification of the effectiveness to be conducted during the Surveillance Audit. Surveillance 01 Audit: Training matrix for training needs of workers and staff is available. A training plan is evident for FTPSB Air Tawar 1 is available and conducted accordingly. All training required by staff is identified and recorded in “Penilaian Keperluan Latihan Pekerja (FAS-RSPO L1/K4.8/4.8.1)”. Records of training conducted are evident as below:

Date Training Attendees 18 Jan 2013 Latihan Penuaian Sawit 21 Latihan Mencuci, Merumput dan Pembajaan bagi Pekerja 30 Jan 2013 32 Ladang Pengenalan Nozel Racun dan Penerangan Penggunaan 12 April 2013 25 Alatan Keselamatan dan Cara Penyelenggaraan 15 Mar 2013 First Aid Training 19 10 May 2013 Taklimat Keselamatan dan Kebersihan Pekerja 67 17 Workers + 11 June 2013 Latihan dan Penerangan RSPO 30 Settlers Minor CAR 21 closed

22 5.1.1 Date Due Date 10 Jun 11 ASA 01 29 Jul 11 Recorded> Date> Closed> Non-Conformance: Inadequate documented aspects and impacts risk assessment.

Objective Evidence: Not all the aspects of impacts are assessed in the document. (Cross referred to 5.1.2) e.g. lack of procedure and guidance on fertilizer application close to waterways, action plan for the spillage of fertilizer on the road as dispensed, lack of control of herbicide spraying up to river banks, domestic waste collection, etc.,

Close-out evidence: The Minor CAR 22 is closed on 29/7/2011 as FELDA has submitted the documents on identifying the impacts and aspects of the environmental impact assessment. GP 7003A Page 75 of 90

CAR Indicator CAR Detail # 23 5.1.2 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Inadequate environmental improvement plan to mitigate the negative impacts and to promote the positive aspects.

Objective Evidence: Not all the aspects are adequately addressed. Therefore, the environmental plan to mitigate the negative impacts and to promote the positive aspects developed, implemented and monitored is also found to be incomplete. (Cross referred to indicator 5.1.1.)

Close-out evidence: The auditor note that the plan to improve environmental and promote the positive ones is available within the document entitled “Laporan Aspek Impak Alam Sekitar Melalui Aktiviti Perladangan, Bahan dan Pencemaran” is available dated 01 April 2013 and 22 February 2013 for estates and mill respectively. However, the auditor note that the effectiveness of the plan is not clear whereby there is no action plan for each of the impacts identified highlighted in the plan. Minor CAR 23 upgraded to Major CAR 52

M24 5.3.1. Date Due Date 10 Jun 11 26 Oct 11 8 Sep 11 Recorded> Date> Closed> Non-Conformance: Not all waste products and sources of pollution were identified and documented.

Objective Evidence: Domestic waste landfill behind workers quarters and near to waterways of Air Tawar 2 is not properly identified and documented. The sewage system of workers quarters also need to be properly identified and documented. There is a lack in control of solid waste from the household kitchens of most of the settlers. De-sludging of the septic tanks is done by the same contractor who collects the domestic waste.

Close-out evidence: Documental plans have been developed by both oil mill and schemes management on the identification of waste products and its disposal plan that is to be conducted in a responsible manner. Since the waste products in the operations are identified and documented, the Major CAR 24 is closed.

25 5.3.2 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Since the identified wastes and pollutants are incomplete, an operational plan to avoid or reduce pollution is not fully developed and implemented.

Objective Evidence: Not all waste products and sources of pollution are identified therefore, the operational plans and its implementation are inadequately addressed (Cross reference 5.3.1).

CAR Indicator CAR Detail # 26 5.5.3 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Sufficient evidences of burning waste (including domestic waste).

Objective Evidence: There are evidences of burning domestic waste and tyres.

Close-out evidence: No evidence of burning of waste including domestic waste observed during the surveillance audit. M27 5.6.1 Date Due Date 10 Jun 11 26 Oct 11 8 Sep 11 Recorded> Date> Closed> Non-Conformance: Insufficient documented plans to mitigate all polluting activities.

Objective Evidence: There is evidence that plastic bags are burnt. There are no complete spillage prevention plans of diesel skid tank, empty chemical container storage, lubricants and schedule waste store at the oil mill

Close-out evidence: On 8th September 2011, FELDA has submitted the documented pollution prevention plans with evidence that some of the plans developed are being implemented. Based on this evidence, the Major CAR 27 is closed.

28 5.6.2 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Not all polluting load items are identified and hence plans are not addressed adequately to review it annually.

Objective Evidence: Cross referred to 5.6.1. Implementation part of it needs to be verified fully during surveillance audit.

Close-out evidence: Plans to de-sludge the ponds, dispatch of schedule waste are viewed. Empty fertilizer bags, tyres, glass bottles, plastics, paper and empty chemical containers are identified as pollutants by the FELDA scheme management.

29 6.1.2 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: No evidence that the SIA has been done with the participation of affected parties especially foreign workers.

Objective Evidence: SIA report “Laporan Penilaian Impak Sosial” has not included the foreign workers and other stakeholders as target of impacts from plantation and mill activities.

Close-out evidence: GP 7003A Page 77 of 90

CAR Indicator CAR Detail # The SIA was conducted with the stakeholder participation within and outside the schemes. Record of meeting dated February 2013 is available detailing the records of discussion (in the form of questionnaire) during the assessment covering both negative and positive impacts, the attendance list and relevant pictorial evidence taken during the meeting. Issues raised by the interviewee are documented.

30 6.3.1 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Inadequate documentation of the process by which a dispute is resolved and its outcome.

Objective Evidence: Lack of documentation on the process of resolving dispute of workers (Cross referred to 6.3.2 and 6.3.3). There is no mutually agreed documented system to attend complains and grievances between the scheme management and foreign workers.

Close-out evidence: ‘Prosedur Menangani Aduan dan Rungutan’ (ML-1A/L2-PR4(0)) dated March 2012 is available specifying procedure for handling the grievances and disputes raised by external and internal stakeholders in particular workers. Procedure for consultation and communication is available through document entitled “Komunikasi, Penglibatan dan Rundingan”. (Communication, Involvement and Consultation). In summary the above document specifies the following: 8. Objective; 9. Scope; 10. Responsiblities; 11. Definition; 12. Reference; 13. Procedure; d. Internal Communication; e. External Communication; f. Involvement and Consultation 14. Records

31 6.3.2 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Lack of a system that resolves disputes in an effective, timely and appropriate manner.

Objective Evidence: Lack of the system for resolving any disputes and grievances with the foreign workers.

Close-out evidence: Minor CAR 31 & Minor 32 be combined and classified as Major CAR 42 32 6.3.3 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> GP 7003A Page 78 of 90

CAR Indicator CAR Detail # Non-Conformance: The system is not open to any affected parties.

Objective Evidence: The system to resolve disputes raised is not open to affected parties especially foreign workers.

Close-out evidence: Minor CAR 31 & Minor 32 be combined and classified as Major CAR 42 33 6.5.3 Date 10 Jun 11 Due Date ASA 02 25,26/8/14 Recorded> & ASA 01 Date> Closed> Non-Conformance: Poor housing condition for foreign workers.

Objective Evidence: Poor conditions of hostels are observed at Air Tawar 2, 3 and 4.

Close-out evidence: GP 7003A Page 79 of 90

CAR Indicator CAR Detail # In ASA 01 , Verification during the audit evidenced that the workers’ hostel are still in poor conditions. Nevertheless, further evidenced obtained from the client showed that the company has taken action to transformed all workers hostel into more proper hostel. However, as the transformation process incurs a substantial amount of budget, further discussion at the headquarters shall be made before the budget can be approved. Several meetings has been conducted since the Main Assessment as follows:

Date Details Action

RSPO Budget Meeting for Transformation 01.04.13 Presentation of Budget and Replacement of the Workers Quarters

Decision to Approve the Budget RSPO Budget Meeting for Transformation for Transformation & 11.09.13 and Replacement of the Workers Quarters Replacement of Workers – follow-up meeting Quarters

(Minor CAR 33 is maintained)

In ASA 02 : As a temporary measures to enhance the living condition of the workers hostel, the estates management has initiated the upgrading of the workers hostel whereby each of the hostels to be equipped with one exhaust fan and one wall-fan to mitigate heat within the hostel. Evidence of the upgrading process in the form of pictorial figure as well as official Work Order from the estate management to the sub-contractor (3083/01/RSPO and 3092/01/RSPO dated 26 June 2013) to execute the process is made available to the audit team during the audit. The estates also has reduce number of workers in per cabin from 8 person to 4 person per cabin room. Estate management still waiting the budget allocation in order to reallocate the workers to the permanent housing area. Letter of follow up has made available dated 22 July 2013 (ref no.: (03) 3104/16/3).

There is evidence on site visit from the Jabatan Buruh or Labour Department to the cabin areas and no issues has been raised by the personnel.

Minor CAR 33 closed

34 6.6.1. Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Lack of documented minutes of meetings with main trade unions or workers representatives in schemes.

Objective Evidence: There is no evidence obtained from the schemes with regard to the similar meetings on the employee consultative committee or meeting minutes of foreign worker representatives with their workers and/or FELDA scheme management.

Close-out evidence: GP 7003A Page 80 of 90

CAR Indicator CAR Detail # Workers Union for FELDA workers is available in the meeting on 26 July 2012. Workers Union is well established in Semenchu Oil mill (Kesatuan Pekerja Pekerja FELDA Palm Industries Sdn Bhd Register number 505) with comprising 62 members. Regular meetings are conducted with appropriate agenda and the lists of participant are available. The minutes of the meeting held is viewed. However, there is no evidence obtained from the schemes with regard to the similar meetings on the employee consultative committee or meeting minutes of foreign worker representatives with their workers and / or FELDA scheme management. (Minor CAR 34 upgraded to Major CAR 46) 35 6.6.2 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: No evidence of a published statement in local languages recognizing freedom of association.

Objective Evidence: The management lacks a published statement in local languages recognizing freedom of association. (Cross referred to 6.6.1)

Close-out evidence: The company does not provide restriction for Malaysian workers to form workers union. Foreign workers are subjected terms and conditions of employment which restrict them from having association. In all estates and mill, a published statement in local language recognising freedom of association was placed on the notice board of the management office.

36 8.1.1. Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Incomplete evidence to minimize use of certain pesticide.

Objective Evidence: Inadequate record keeping of chemicals from independent smallholders.

Close-out evidence: A letter is evident dated 13th May 2010 from the Manager of Air Tawar 3 to all smallholders on the safe usage of agrochemical. It was emphasized to reduce the usage of Paraquat. Based on records the audit team note that the usage of Paraquat has been gradually decrease since 2010 where in 2010, the usage is 1,680 compare to 2011 and 2012 that recorded 1,244 and 1,000 respectively.

37 8.1.2 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Environmental impacts are not completely assessed.

Objective Evidence: Improvement is required in identifying the aspects within the environmental impact assessment and improving it further through continuous improvement plan

Close-out evidence: GP 7003A Page 81 of 90

CAR Indicator CAR Detail # The auditor note that the plant to improve environmental and promote the positive ones is available within the document entitled “Laporan Aspek Impak Alam Sekitar Melalui Aktiviti Perladangan, Bahan dan Pencemaran” is available dated 01 April 2013 and 22 February 2013 for estates and mill respectively.FELDA also has updated to include the action plan and mitigation measures for each of the impacts identified highlighted in the plan. Document entitled “Laporan Aspek Impak Alam Sekitar Melalui Aktiviti Perladangan, Bahan dan Pencemaran” has been updated to include the action plan and mitigation measures for each of the impacts identified highlighted in the plan.

38 8.1.4 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Not all pollution sources are identified hence, not all plans are fully developed.

Objective Evidence: Mechanisms for collecting schedule waste from the workshops, landfills of the workers quarters, solid wastes disposed from the kitchen utensil washings, segregation of domestic wastes etc., are not adequately addressed and implemented.

Close-out evidence: FELDA has prepared a documented identification of all waste products and sources of pollution as per reflected in the document entitled ‘Pelan Pengurusan Bahan Buangan (Waste Management Plan)’ that identify waste generated from all identified activities within the management of the estates and mill, the location of source of wastes and prescribed methods for handling and disposal. Plans to de-sludge the ponds, dispatch of schedule waste are viewed. Empty fertilizer bags, tyres, glass bottles, plastics, paper and empty chemical containers are identified as pollutants by the FELDA scheme management. The audit team observed that the plan is reviewed annually with the latest revision was conducted on 14 March 2013.

39 8.1.5 Date Due Date 10 Jun 11 ASA 01 3 Jul 13 Recorded> Date> Closed> Non-Conformance: Incorporating of workers in social impact assessment is lacking and not all components of social impacts were assessed.

Objective Evidence: There is a lack of incorporating foreign workers in social impact assessment.

Close-out evidence: Time plans to mitigate the negative impact and time to review the plans are documented. Observed the latest revision for 2013 is available specifying the following issues of concern and its action plan covering the responsible person, implementation status and commenced date as well as date of completion:  wages paid;  Occupational Safety and Health;  Communication/Dialogue with Management;  Other Facilities such as grocery stores, crèche, recreation facilities, kindergarten and mosque; and  Issues of migrant workers such as wages, renewal of passports and permits as well as their insurance policy. 40 1.2 Date Due Date 3 Jul 13 ASA02 25-27/8/14 Recorded> Date> Closed> GP 7003A Page 82 of 90

CAR Indicator CAR Detail # Non-Conformance: Lack of public information on the management documents relating to the unit, its environmental, social and legal issues demonstrating commitment towards compliance to RSPO criteria.

Objective Evidence: No public information on the Felda and its commitments towards meeting RSPO requirement in its website or annual reports.

Close-out evidence: All management documents are made publicly available through the company’s official letter that was addressed to all stakeholders as per in the company’s stakeholder list.

M41 2.1.1 Date Due Date 3 Jul 13 2 Sep 13 2 Sep 13 Recorded> Date> Closed> Non-Conformance: There is no evidence of compliance with legal requirements for new biomass plant.

Objective Evidence: New biomass plant operated at Semenchu Palm Oil Mill does not have valid permit issued by local authorities. (Minor CAR 02 upgraded to Major CAR 40)

Close-out evidence: FELDA has shown effort to comply with legal requirements. The biomass plant were operated in conjunction between FELDA Palm Industries Sdn Bhd and FNI Biofuel Sdn Bhd as evident in a contract dated 22 March 2010 which indicates that the land for biomass plant were rented to FNI. The operating permit will be handled by FNI Biofules Sdn Bhd. FELDA Semenchu has also submitted a list of personnel who will monitor to comply with legal compliance as evident in “Pematuhan Undang-Undang Setempat, Kebangsaan & Antarabangsa Job Spesifikasi”. (Major CAR 40 Closed)

42 4.3.3 Date Due Date 3 Jul 13 ASA 02 2 Sep 13 Recorded> Date> Closed> Non-Conformance: Insufficient to mitigate surface erosion of top soil during road maintenance exercise. Objective Evidence: GP 7003A Page 83 of 90

CAR Indicator CAR Detail # Road maintenance program was evidence in Air Tawar 2. However, the work carried out was from the month of June until December 2012. Rain chart recoded high rain precipitation in December 2012. Hence, all the top soil graded being washed off. The road maintenance conducted by contractor did not include road side drains for diversion of water into the field during rainfall as per SOP. Insufficient to mitigate surface erosion of top soil during road maintenance exercise. (Minor CAR 42) Close-out evidence: Verification during the closing of the Major CAR audit in particular during the visit to Air Tawar 1 and Air Tawar 2 Estates evidenced that there an improvement made by the company in conducting the road maintenance programme in line with the provision specified in the SOP. Observed that there is no evidence of surface run-off occur and that there is no erosion occur along the road side.

43 4.5.1 Date Due Date 3 Jul 13 ASA 02 25-27/8/14 Recorded> Date> Closed> Non-Conformance: Manual & SOPs did not stipulate the method of control of pest. Objective Evidence: Documented IPM system is available in both Air Tawar 2 & 3 as an integral of the generic Manual and SOP’s which is disseminated to all estates. However, the Manual & SOPs did not stipulate the method of control of pest such as : o Occurrence of Rhino beetle in Young Oil Palm o Chemical Control of Common Oil Palm Pests o Bagworm and Nettle Caterpillar Control o Use of Beneficial Plants for Natural Control of Oil Palm Leaf Pests o Control of Rats in Oil Palm o Barn Owls for biological control of rats in oil palm With the absence of the above documentation, Minor CAR 43 was raised. (Minor CAR 43) Close-out evidence: The IPM systems is documented in different section in thefollowing manuas:l a) Manual Ladang Sawit Lestari Edisi II (2012 ) : Pembangunana Tanam Semula Sawit b) Manual Ladang Sawit Lestari Edisi II(2012 ): Pembajaan c) Manual Ladang Sawit Lestari Edisi II (2012 ): Sawit Matang d) Manual Ladang Sawit Lestari Edisi II (2012 ): Pengurusan Tapak Semaian Sawit

which is the revised edition of the ‘Manual Pengurusan Rancangan’ 2010.

Closed CAR 43 but raised Observation 04

M44 4.7.1 Date Due Date 3 Jul 13 2 Sep 13 2 Sep 13 Recorded> Date> Closed> GP 7003A Page 84 of 90

CAR Indicator CAR Detail # Non-Conformance: Documented emergency rescue procedure for the sprayers is not available.

Objective Evidence: There was also no emergency rescue procedure (ERP) for the sprayers to be evacuated from the field to the office/clinic in event of accident occurred. Hence a Major CAR 44 was raised.

Close-out evidence: The following compliance are available during the closing of Major CAR audit:  Both Air Tawar 2 & 3 has updated their OSH policy. The policy dated 15 March 2011 is found to be available at the estates main office as well as estates notice boards.  Training plan has been updated and found that the training on occupational safety and health has been conducted on 09 July 2013 by the estates management.  PPE are distributed for each of the operations as per in the Hazard Identification, Risk Assessment and Risk Control (HIRARC). Verification during the field audit observed that the workers in particular the sprayers, manuring and harvester are equipped with proper PPEs as per in HIRARC.  Accident and emergency procedures notices are found at the stores i.e. chemical and fertilizer stores as well as at the workshops.  Field verification evidenced that the first aid kit in the chemical store in Air Tawar 1 and Air Tawar 2 Estates are equiprred with adequate items in the first aid kit (including the ey- wash) together with the up-to-date list, details of usage of the items as well as correct contact no. to be contacted as and when emergency occur. Field verification at the store also observed that the storekeeper entering the store with proper PPE i.e. protective boot as well as hand-glove and mask. In addition, verification at the chemical store and premixing area found that both areas equipped with emergency shower complete with emergency eye-wash.

M45 4.7.2 Date Due Date 3 Jul 13 2 Sep 13 2 Sep 13 Recorded> Date> Closed> Non-Conformance: Records of all accidents did not reported on quarterly intervals.

Objective Evidence: Annual accident summary cases will be recorded in JKKP 8 form for submission to DOSH Headquarters, Putrajaya annually. Latest submission of JKKP 8 form is on 22 Jan 2013. However, an accident recorded and reported to JKKP (in JKKP 6 form) involving a worker, Samsul Hadi was not recorded in JKKP 8 form for submission on 22 Jan 2013. A letter from DOSH dated 19 November 2012 requesting action for the accident is not responded. (Major CAR 45) Close-out evidence: The company has updated the risk assessment according to the accident occurred. The updated risk assessment has been made available to the audit team during the closing of Major CAR audit and found to be approved and signed by the estate manager.

M46 5.1.2 Date Due Date 3 Jul 13 2 Sep 13 2 Sep 13 Recorded> Date> Closed> Non-Conformance: Environmental improvement plan to mitigate negative impacts and promote the positive impacts is developed, but not effectively implemented and monitored.

Objective Evidence: GP 7003A Page 85 of 90

CAR Indicator CAR Detail # The auditor note that the plan to improve environmental and promote the positive ones is available within the document entitled “Laporan Aspek Impak Alam Sekitar Melalui Aktiviti Perladangan, Bahan dan Pencemaran” is available dated 01 April 2013 and 22 February 2013 for estates and mill respectively. However, the auditor note that the effectiveness of the plan is not clear whereby there is no action plan for each of the impacts identified highlighted in the plan. Minor CAR 23 upgraded to Major CAR 46

Close-out evidence: Verification during the close CAR audit evidenced that the company has updated to include the action plan and mitigation measures for each of the impacts identified highlighted in the plan.

M47 6.1.1 Date Due Date 3 Jul 13 2 Sep 13 2 Sep 13 Recorded> Date> Closed> Non-Conformance: A documented social impact assessment including records of meetings is not maintained.

Objective Evidence: Social impact assessment (SIA) document for the 7 schemes and oil mill is available dated 15/1/2011. SIA for company is available that includes the following: a. Objective; b. Scope; c. Methodology; - Internal stakeholder consultation; - External stakeholder consultation; and - Focus group discussion d. Result analysis; e. Action plan for social enhancement;

However, the assessment conducted lack of the following: a. Occupational safety; b. New replanting; c. Workers health; d. Workers working condition; e. Workers wages; f. Term of employment; g. Workers living condition; h. Labour contract Major CAR 47 Close-out evidence: Following to the audit, the company has revised the SIA taking into consideration on the above issues. The revised SIA verified during the audit found to be adequately conducted with proper mitigation measures as well as action plan for each of the impacts identified. 48 6.2.3 Date Due Date 3 Jul 13 ASA 02 25,26/8/14 Recorded> Date> Closed> Non-Conformance: List of stakeholders did not include the NGOs covering both social and environmental.

Objective Evidence: GP 7003A Page 86 of 90

CAR Indicator CAR Detail # With regard to the list of stakeholders, FELDA maintained the stakeholders list that includes local banks, contractors, vendors, local community heads, local authority services, government agencies including the list of neighboring mills and estates etc. However, the auditor notes that the list of stakeholders not includes the NGOs covering both social and environmental. Observed that the latest meeting with stakeholders is available in the form of minutes of meeting and record of discussion. The record of meeting dated 06 March 2013 is maintain and made available to the auditor. Similar to the above, the stakeholder meeting is not being conducted with the participation of NGOs. (Minor CAR 48) Close-out evidence: FELDA maintained the stakeholders list that includes local banks, contractors, vendors, local community heads, local authority services, government agencies including the list of neighbouring mills and estates, NGOs etc. Observed that the latest meeting with stakeholders is available in the form of minutes of meeting and record of discussion. The record of meeting dated 24 June 2014 (Bil:04/2014) is maintained and made available to the auditor. Minor CAR 48 Closed

M49 6.3.2 Date Due Date 3 Jul 13 2 Sep 13 2 Sep 13 Recorded> Date> Closed> Non-Conformance: The system resolves disputes in an effective, timely and appropriate manner

Objective Evidence: Verification during interview with foreign workers evidenced that the above procedures as well as their working agreement and contract are not made known to them. They are unaware of the mechanism in place in particular to resolve disputes and grievances that may arise between them and the top management. (Minor CAR 30 and Minor CAR 31 be combined and become Major CAR 49) Close-out evidence: The procedures for resolving dispute of workers including foreign workers has been developed that includes the effectiveness and timeline to solve the issues (in the form of flow chart) Major CAR 49 closed M50 6.6.1 Date Due Date 3 Jul 13 2 Sep 13 2 Sep 13 Recorded> Date> Closed> Non-Conformance: Documented minutes of meetings with main trade unions or workers representatives is incomplete.

Objective Evidence: Workers Union for FELDA workers is available in the meeting on 26 July 2012. Workers Union is well established in Semenchu Oil mill (Kesatuan Pekerja Pekerja FELDA Palm Industries Sdn Bhd Register number 505) with comprising 62 members. Regular meetings are conducted with appropriate agenda and the lists of participant are available. The minutes of the meeting held is viewed. However, there is no evidence obtained from the schemes with regard to the similar meetings on the employee consultative committee or meeting minutes of foreign worker representatives with their workers and / or FELDA scheme management. (Minor CAR 34 upgraded to Major CAR 50) GP 7003A Page 87 of 90

CAR Indicator CAR Detail # Close-out evidence: Employer employee committee meeting has been established and has convened the meeting. The minutes of the Meeting dated 16 August 2013 is available during the audit. 51 6.8.2 Date Due Date 3 Jul 13 ASA02 25,26/8/14 Recorded> Date> Closed> Non-Conformance: Evidence that employees and groups including migrant workers have been discriminated against.

Objective Evidence: There is no evidence which confirmed the discrimination against foreign workers. Based on records, the auditing team observed that equal opportunities are demonstrated through the following issues: c. Similar daily wages for foreign workers and local workers. d. Working hours where similar treatment is given between both the foreign and local workers. However, the auditor note the following incompliance when foreign workers is not well treated in term of: a. On basic amenities whereby there is evidence of foreign workers received poor facilities. (Air Tawar 3 & Air Tawar 1) Minor CAR 51 issued in reference to Minor CAR 33 pending progress on the development of the construction of the new workers housing. (Minor CAR 51) Close-out evidence: There is no evidence which confirmed the discrimination against foreign workers. Based on records, the auditing team observed that equal opportunities are demonstrated through the following issues: a. Similar daily wages for foreign workers and local workers. b. Working hours where similar treatment is given between both the foreign and local workers Minor CAR 51 Closed

GP 7003A Page 88 of 90

SUPPLY CHAIN

NC01 E.3.3 Date Due Date 3 Jul 13 2 Sep 13 2 Sep 13 Recorded> Date> Closed> Non-Conformance: Mass balance table is not adequately capturing balance stock, process figures, OER as well as not in a three monthly bases. Objective Evidence: Semenchu Palm Oil Mil did maintained records and balance of all receipts of RSPO certified and non-certified FFB as well as delivered certified and non-certified CPO in Sustainability Verification Information Spreadsheet (CPO/Kernel). The report contains information of FFB Input & Processed (Certified and Non-certified), CPO Production & Dispatched (Certified and Non-certified), PK Produced & Dispatched (Certified and Non Certified) and Stock Balance. However, the mass balance table is not adequately capturing balance stock, process figures, OER as well as not in a three monthly bases. Non Conformance 01 Close-out evidence: Following to the audit, FELDA has submitted the revised mass balance table indicating correct balance stock, process figures and OER. In addition, the audit team note that the mass balance table submitted is found to be formulated in a three month basis.

NC02 E.3.4 Date Due Date 3 Jul 13 2 Sep 13 2 Sep 13 Recorded> Date> Closed> Non-Conformance: Delivery Order and Weighbridge tickets for certified products delivered to customer did not indicates the *product name*/MB or mass balance as required by the standard. Objective Evidence: Delivery Order and Weighbridge tickets for certified products delivered to customer did not indicates the *product name*/MB or mass balance as required by the standard. Samples of Delivery order reviewed is as below:  Date: 2 July 2013  Product Type: I-Sawit (Kernel)  Delivery Order No: 40500198974-1  Quantity: 41.58MT  Trade name: RSPO PK MB Non Conformance 02 Close-out evidence: FELDA has submitted evidence in the form of sample of delivery order to be provided to their customer that indicates the *product name*/MB or mass balance as required by the standard

GP 7003A Page 89 of 90

Appendix B: TIMEBOUND PLAN

GP 7003A Page 90 of 90

Appendix C: STAKEHOLDERS

Stakeholder Location Comments interviewed Harvesting , Semenchu Estate PPE, Housing, Pay and Spraying and payslip , Complaints and Manuring Request

Mandores Semenchu Management OK, Pay on time Harvesting Air Tawar Correct calculation of workers Bunches Pay on time Workers / Air Tawar Linesite Request and response dependent at prompt Linesite Waiting for new housing Interview ‘Wakil’ Air Tawar No issue, Interview Gender Air Tawar No issues representative