IOI CORPORATION BERHAD

RSPO Membership No: 2-0002-04-000-00

PLANTATION MANAGEMENT UNIT Ladang Sabah Grouping Sandakan, Sabah, Malaysia

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 2 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03)

ANNUAL SURVEILLANCE ASSESSMENT ON RSPO CERTIFICATION

ASSESSMENT REPORT

IOI CORPORATION BERHAD

RSPO Membership No: 2-0002-04-000-00

PLANTATION MANAGEMENT UNIT Ladang Sabah Grouping Sandakan, Sabah, Malaysia

Certificate No: RSPO 928488 Issued date: 3 Apr 2013 Expiry date: 2 Apr 2018

Assessment Type Assessment Dates Initial Certification (Main Assessment) 15-19 Oct 2012 Annual Surveillance Assessment (ASA-01) 11-14 Mar 2014 Annual Surveillance Assessment (ASA-02) 09-12 Feb 2015 Annual Surveillance Assessment (ASA-03) 15-18 Feb 2016 Annual Surveillance Assessment (ASA-04) Re-Certification

Intertek Certification International Sdn Bhd [formerly known as Moody International Certification (Malaysia) Sdn Bhd] 6-L12-01, Level 12, Tower 2, Menara PGRM No. 6 & 8 Jalan Pudu Ulu, Cheras, 56100 Kuala Lumpur, Malaysia. Tel: +00 (603) 9283 9881 Fax: +00 (603) 9284 8187 Email: [email protected] Website: www.intertek.com

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

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TABLE OF CONTENTS

Section Content Page No 1.0 SCOPE OF ASSESSMENT 1.1 Introduction 4 1.2 Location (address, GPS and map) mill, estates and hectarage 4 1.3 Description of supply base (fruit sources) 5 1.4 Year of plantings and cycle 6 1.5 Summary of Land Use – Conservation and HCV Areas 6 1.6 Other certifications held and Use of RSPO Trademarks 7 1.7 Organizational information/contact person 7 1.8 Tonnages Verified for Certification 8 1.9 Time Bound Plan 9 1.10 Abbreviations Used 11 2.0 ASSESSMENT PROCESS 2.1 Assessment Methodology, Plan & Site Visits 12 2.2 Date of next scheduled visit 12 2.3 Qualifications of the Lead Assessor and Assessment Team 12 2.4 Certification Body 12 2.5 Process of Stakeholder consultation 13 3.0 ASSESSMENT FINDINGS 3.1 Summary of findings 14-45 3.2 Status of Identified Noncompliance and Corrective Actions, Observations and 46-48 Identified Positive Elements 3.3 Summary of Feedback Received from Stakeholders and Findings 48-51 4.0 ASSESSMENT CONCLUSION AND RECOMMENDATION 4.1 Acknowledgement of Internal Responsibility and Confirmation of Assessment 51 Findings 4.2 Intertek RSPO Certification Details for Ladang Sabah Grouping 52

APPENDICES Appendix A Qualifications of the Lead Assessor and Assessment Team 54 Appendix B Assessment Plan 55 Appendix C Maps of location – Mill, Estates, Conservation and HCV areas 57 Appendix D Photographs of Assessment findings at Ladang Sabah Grouping 61 Appendix E Time Bound Plan for Other Plantation Management Units 62-63

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1.0 SCOPE OF ASSESSMENT

1.1 Introduction This Annual Surveillance Assessment (ASA-03) was conducted on the Plantation Management Unit (PMU) Ladang Sabah Grouping of IOI Corporation Berhad (hereafter abbreviated as IOI), from 15 to 18 February 2016, to assess the organization’s operations of the mill and its supply bases compliance against the RSPO Principles and Criteria (Apr 2013), Malaysian National Local Indicators (2014) and the RSPO Supply Chain Certification Standard (2014) for Palm Oil Mill.

The plantation management unit (PMU) or management unit is equivalent to a certification unit as defined in the RSPO Certification Systems Document. Each PMU consists of one mill and its supply bases which are made up of estates owned by IOI Corporation Berhad (IOI)

1.2 Location (address, GPS and map) of palm oil mill and estates Ladang Sabah Grouping consists of one (1) palm oil mill, namely Ladang Sabah Palm Oil Mill and eight (8) own supplying estates as indicated in Table 1 below, which includes the addresses and GPS locations of the mill and estates. The location maps are provided in Appendix C.

Table 1: Address of Palm Oil Mill, Estates and GPS Location

GPS Reference Name Address Latitude Longitude Ladang Sabah Palm Oil Mill, 05o 44.449’ N 117o 36.623’ E Ladang Sabah Palm Oil Mill Mile 45, Sandakan/Telupid Road, (Mill Capacity: 90mt/hr) WDT 164, 90009 Sandakan, Sabah. 1. Moynod estate Moynod Estate, 05o 44.449’ N 117o 36.623’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. 2. Luangmanis estate Luangmanis Estate, 05o 45.800’ N 117o 36.382’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. 3. Laukin estate Laukin Estate, 05o 46.708’ N 117o 31.946’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. 4. Sg. Sapi estate Sungai Sapi Estate, 05o 48.452’ N 117o 31.020’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah.

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5. Labuk estate Labuk Estate, 05o 42.785’ N 117o 29.769’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. 6. Terusan Baru estate Terusan Baru Estate, 05o 45.853’ N 117o 36.623’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. 7. Bimbingan 1 estate Bimbingan 1 Estate, 05o 37.276’ N 117o 26.755’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. 8. Bimbingan 2 estate Bimbingan 2 Estate, 05o 37.177’ N 117o 25.376’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah.

1.3 Description of supply base (fruit sources)

The supply base i.e. FFB sources to the POM at Ladang Sabah Grouping PMU are from the abovementioned 8 estates only. Verification done on site during this Assessment confirmed that there was no outgrower / independent supplier / smallholder involved in the supply of FFB to the said PMU.

Details of the planted hectarage for the FFB supply for Ladang Sabah Grouping are as shown in Table 2 below.

Table 2: Estate Area Summary and FFB Production

Area Summary (ha) Area Summary (ha) Estate – FY Jul 2013/ Jun 2014 – FY Jul 2014 / Jun 2015 Certified Area Planted Area Certified Area Planted Area

1. Moynod estate 3,044 2,800 3,042.86 2,781

2. Luangmanis estate 2,713 2,504 2,713.29 2,500 3. Laukin estate 2,128 1,998 2,128.00 1,998 4. Sg. Sapi estate 1,299 1,220 1,299.30 1,220 5. Labuk estate 2,669 2,367 2,668.50 2,367 6. Terusan Baru estate 2,504 2,269 2,503.52 2,266 7. Bimbingan 1 estate 1,974 1,795 1,974.20 1,795 8. Bimbingan 2 estate 1,919 1,735 1,918.80 1,735 Total: 18,250 16,688 18,248.47 16,662 Percentage: 100 % 91.44% 100 % 91.31%

Notes: 1. This Assessment covered the overall land use for oil palm plantation areas, and the identified Conservation areas including HCV areas marked out at the estates. 2. The estates sampled for this Assessment have been selected based on their potential risks on social, environmental and biodiversity issues such as their proximity to forest reserves, hill sides, riparian zones and high conservation value areas.

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1.4 Summary of plantings and cycle The 8 estates had been developed since 1991. 6 estates are still in the 1st cycle of planting, whilst 2 estates i.e. Labuk estate is in the 2nd cycle and Terusan Baru estate have commenced replanting in 2014 (2nd cycle). The age profile is as shown in Table 3.

Table 3: Age Profile of Planted Oil Palm

Mature OP (ha) Immature OP Year of Cycle of Estate Name – Above 3 (ha) – 3 years Planting Planting years & below 1. Moynod estate 1991-1998 1st 2,781 Nil 2. Luangmanis estate 1991-1996 1st 2,500 Nil 3. Laukin estate 1995-1997 1st 1,998 Nil 4. Sg. Sapi estate 1995-1998 1st 1,220 Nil 5. Labuk estate 2008-2012 2nd 2,367 Nil 1993-2000 / 1st 6. Terusan Baru estate nd 1,613 653 2014-2015 2 7. Bimbingan 1 estate 1996-1997 1st 1,795 Nil 8. Bimbingan 2 estate 1996-1997 1st 1,735 Nil Total 16,009 653

1.5 Summary of Conservation and HCV Areas The summary of Conservation and HCV Areas as identified in Ladang Sabah Grouping during this assessment is shown in Table 4 below:

Table 4: Conservation and HCV Areas

# Statement of Land Use (Ha) 2015 (ASA-02) 2016 (ASA-03) Hectarage – Ha Hectarage – Ha 1 Planted Area (ha) – Oil Palm - Mature 16,253 16,009 - Immature 422 653 2 Conservation Area (ha) - comprising buffer zones along small streams, hilly areas, swampy and 155 162.45 unplantable areas 3 HCV Area (ha) - comprising buffer zones near forest reserves, water catchments, burial & 8.2 172.29* religious sites

Remark*: significant increase of hectarage of HCV was due to recent review & re-classification of steep hill at Terusan Baru estates.

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1.6 Other certifications held and Use of RSPO Trademarks Currently, the other certification held by IOI-Ladang Sabah Grouping PMU is the ISCC-EU certification.

1.6.1 The RSPO’s trademarks and logo are not being used by the PMU audited. Instructions for use were provided and acknowledged by the PMU through a signed Memorandum during the assessment.

1.7 Organizational information / Contact Person

At Head Office: Ms. Yeo Lee Nya Sustainability Manager IOI Corporation Berhad Level 8, Two IOI Square, IOI Resort, 62502, Putrajaya Tel: 603-89478888 Fax: 603-89478988 Email: [email protected]

At Ladang Sabah Grouping - PMU: Mr. N.B. Sudhakaran General Manager (Sandakan Region) IOI Corporation Berhad, Mile 45, Jalan Sandakan/Telupid, W.D.T.No 164, 90009 Sandakan, Sabah, Malaysia Tel: 089 515643 Fax: 089 515636 Email: [email protected] Email: [email protected]

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1.8 Tonnages Verified for Certification

The breakdown of all the suppliers and their tonnages of FFB supplied to the POM at Ladang Sabah Grouping based on the reporting period for July 2014 – June 2015 are as follows:

Table 5: FFB Processed Tonnages

FFB # Estate /Supplier Processed Main Receiving Mill Certified By (MT) 1. Moynod estate 74,879.47 Ladang Sabah Mill Intertek (2013) 2. Luangmanis estate 70,433.51 Ladang Sabah Mill Intertek (2013) 3. Laukin estate 54,271.14 Ladang Sabah Mill Intertek (2013) 4. Sg. Sapi estate 35,462.55 Ladang Sabah Mill Intertek (2013) 5. Labuk estate 59,144.74 Ladang Sabah Mill Intertek (2013) 6. Terusan Baru estate 47,713.74 Ladang Sabah Mill Intertek (2013) 7. Bimbingan 1 estate 40,575.26 Ladang Sabah Mill Intertek (2013) 8. Bimbingan 2 estate 42,403.98 Ladang Sabah Mill Intertek (2013)

Sub-total from Ladang Sabah 424,884.39 PMU own estates 9. Sakilan estate 528.59 Sakilan Mill BSI (2010) 10. Linbar 1 estate 279.53 Sakilan Mill BSI (2010) 11. Linbar 2 estate 415.80 Sakilan Mill BSI (2010) Sub-total from other IOI 1,223.92 certified estates Other Suppliers: NIL Grand total 426,108.31

Total annual tonnages of FFB supplied from the supply base to Ladang Sabah Grouping POM during the previous period, current Assessment period and projected period are as follows:

Table 6: Comparison of Processed Tonnages

FFB Processed in FFB Processed in FFB Processed in Estate / Supplier Jul 2013 / Jun 2014 Jul 2014 / Jun 2015 Jul 2015 / Jun 2016 - Actual - Actual - Actual + Projected MT % MT % MT % Ladang Sabah grouping 438,074.69 97.85 424,884.39 99.71 449,510 100 Other certified IOI estates 9,397.88 2.15 1,223.92 0.29 Nil Nil Certified FFB 447,472.57 100 426,108.31 100 449,510 100 Non-certified FFB from Other 0 0 0 0 0 0 Suppliers and OCP Total 447,472.57 100 426,108.31 100 449,510 100 SCCS Model for POM SG SG/IP IP

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The annual certifiable tonnages of CPO and PK production by Ladang Sabah Grouping from the supply base as assessed and verified during the current Assessment period are detailed as follows:

Table 7: Certified FFB Tonnages

FFB processed FFB processed FFB processed POM FY Jul 2013 – Jun 2014 FY Jul 2014 – Jun 2015 FY Jul 2015 – Jun 2016 - Actual - Actual - Actual + Projected Total certified FFB 447,472.57 426,108.31 449,510.00 Processed (MT) Other Suppliers 0 0 0 (non-certified) Total certified CPO OER: OER: OER: 95,242.39 90,845.86 96,645.00 Production (MT) 21.28% 21.32% 21.50% Total certified PK KER: KER: KER: 25,449.46 23,923.93 25,847.00 Production (MT) 5.69% 5.61% 5.75% SCCS Model for POM SG SG/IP IP

The POM has established and maintained procedures for the book keeping and monitoring requirements for the CPO at the mill. It is verified the POM has procedures for the ‘Identity Preserved – IP” model in accordance with the RSPO Supply Chain Certification Standards (SCCS) requirements. Verified activities and checked items for the SCCS of the POM are reported in section 3.1.1.

1.9 Time Bound Plan for Other Plantation Management Units

The IOI Plantations Group is a member of RSPO since 2004 and has been taking an active role in support of the RSPO certification.

Todate IOI Group manages a total of 19 Plantation Management Units (PMU) which comprise 16 palm oil mills and over 90 oil palm estates throughout Malaysia and Indonesia.

Currently, 12 of its PMU in Malaysia have been certified with another 7 managed units still ‘non-certified’.

IOI Group had reviewed their Time Bound Plan (TBP) from time to time with progressive declarations on new acquisitions of land for oil palm plantations since 2009 and recent years which have encountered operational issues at Sarawak, Malaysia and Kalimantan, Indonesia as stated under the updated Time Bound Plan.

On overall, IOI Group had declared its commitment to complete RSPO certifications on all its ‘non-certified’ units, targeted by 2019.

In addition, IOI Group had also submitted a positive assurance statement to assure its commitment to continued compliance with RSPO requirements for all its certified and non-certified units.

Intertek had also referred to the RSPO’s Complaints website for the tracking of issues and the latest updates available on cases of legitimate complaints which may be filed against the IOI Group and also IOI’s statements of response under the web links below:

1. Complaint titled: PT Sukses Karya Sawit (SKS), PT Berkat Nabati Sawit (PT BNS), PT Bumi Sawit Sejahtera (PT BSS) subsidiary of PT Sawit Nabati Agro (PT SNA), IOI Group http://www.rspo.org/members/complaints/status-of-complaints/view/80

Note: The last update recorded under the above web link was on 26 Oct 2015.

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2. Update on IOI’s statement in response to report and complaint to RSPO by Aidenvironment on PT. SKS, PT. BNS and PT. BSS, Indonesia dated 30 March 2015. http://www.ioigroup.com/Content/NEWS/NewsroomDetails?intNewsID=734

Note: The last update as announced under the above web link was on 10 Jun 2015.

The publicly available updates of announcements on the progress of formal complaints as documented by RSPO and responses made by IOI Group are continually reviewed by Intertek to ensure that all issues as formally lodged and recorded against the IOI Group units are duly considered prior to conducting any new or ongoing certification assessments.

Based on Intertek’s review on the progress made todate, the IOI Group is considered to have positively maintained its commitment under the RSPO requirements for Rules on Partial Certification (Clause 4.2.4) to ensure that there were no significant land conflicts, no replacement of primary forest or any area containing HCVs since Nov 2005, no labour disputes that are not being resolved through an agreed process in any of the certified and non-certified units/holdings.

Details of the updated Time Bound Plan as submitted by IOI and reviewed by Intertek are shown in Appendix E.

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1.10 Abbreviations Used

CB Certification Body IUCN International Union for Conservation of Nature CHRA Chemical Health & Risk Assessment KER Kernel Extraction Rate CPO Crude Palm Oil LTA Lost Time Accidents CSDS Chemical Safety Data Sheets MSDS Material Safety Data Sheets CSPO Certified Sustainable Palm Oil MTCS Malaysia Timber Certification Scheme CSPK Certified Sustainable Palm Kernel NCR Non-Conformance Report EFB Empty Fruit Bunch NGO Non-Government Organization EHS Environmental Health & Safety OER Oil Extraction Rate EIA Environmental Impact Assessment OHS Occupational Health & Safety ETP Effluent Treatment Plant PEFC Programme for the Endorsement of Forest Certification FFB Fresh Fruit Bunch PK Palm Kernel GAP Good Agriculture Practice PMU Plantation Management Unit HCV High Conservation Values POM Palm Oil Mill Intertek Intertek Certification International Sdn Bhd POME Palm Oil Mill Effluent IOI IOI Corporation Berhad PPE Personal Protective Equipment IPM Integrated Pest Management SCCS Supply Chain Certification Standard ISCC International Sustainability & Carbon Certification StOP Standard Operating Procedure

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2.0 ASSESSMENT PROCESS

2.1 Assessment Methodology, Plan and Site Visits

Since 5 Jan 2016, Intertek has initiated public communications and notifications and invited the relevant stakeholders before the assessment to provide feedback and comments on their concern (if any) on the Ladang Sabah Grouping regarding the environmental, biodiversity, community development and other relevant issues.

From 15-18 Feb 2016, the Assessment team of Intertek conducted the Surveillance Assessment in which 3 out of the 8 estates of Ladang Sabah Grouping namely Luangmanis, Terusan Baru and Bimbingan 2 estates as well as the palm oil mill were assessed for compliance against the RSPO requirements. The number of estates sampled was based on a minimum sample of 0.8√y where y is the number of management sub-units and the selection was made based on their potential risks on social, environmental and biodiversity issues such as their proximity to forest reserves, hill sides, riparian zones and high conservation value areas.

During the on-site assessment, relevant documents and records, including Standard Operating Procedures, management plans, hectarage development, FFB, CPO and PK production, oil palm age profile, operational controls and measures, operational data and records, training records, etc. were reviewed and verified for compliance. The Assessment team covered the palm oil mill and estate operations, agricultural practices, pest management, pesticide and fertilizer application, occupational health and safety, social accountability, environment and other requirements. Stakeholders’ interviews were conducted during the assessment and feedback obtained as part of information and evidence gathering. (See section 2.5 Process of stakeholder consultation).

Ladang Sabah Grouping POM was also assessed against the requirements for the Identity Preserved (IP) Module as specified in RSPO Supply Chain Certification Standard for CPO mill. This part of the assessment covered the verification of implementation of documented procedures and availability of records to demonstrate compliance against all the elements for Segregation Module requirements. These include documented procedure, purchasing and goods in, record keeping, sales and goods out, processing, monitoring and traceability of the CSPO and CSPK quantities, training for staff and claims.

After completion of the on-site field assessment, Intertek also performed the evaluation of conformity against the RSPO Certification System requirements for CB. The assessment report, findings and associated documents were evaluated through an independent review by the Intertek Internal Technical Reviewer/Panel prior to the approval of this report and decision on continued certification by Intertek.

The details of the Assessment Plan (actual on-site) are provided in Appendix B.

2.2 Date of next scheduled visit

The next scheduled visit will be the Annual Surveillance Assessment (ASA-04) which will be carried out within a 12-month period based on the annual certification anniversary date.

2.3 Qualifications of the Lead Assessor and Assessment Team

Competency details of the Lead Assessor and Assessment Team are given in Appendix A.

2.4 Certification Body

Intertek Certification International Sdn Bhd [formerly known as Moody International Certification (Malaysia) Sdn Bhd] is part of the Intertek Group, which is a worldwide technical services organization dedicated to reducing clients' risks by providing technical inspection services, management system certification in quality, environmental, occupational safety & health and product certification, RSPO SCC, ISCC, Marine Sustainability Chain-of-Custody, MTCS and PEFC Chain-of Custody certification in applicable industry sectors including the agricultural and forestry sectors. Intertek operates globally providing clients with a wide-ranging technical inspection expertise and access to thousands of skilled specialists worldwide. Intertek Group’s certification business is ranked in the top 10 worldwide, and is available globally offering certification across a wide range of industries.

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2.5 Process of stakeholder consultation

Stakeholder consultations began with notification of the upcoming assessment through the websites of RSPO, IOI and Intertek. E-mails were sent to applicable stakeholders including government agencies, NGOs and local communities. E-mails and telephone enquiries were made prior to the actual assessment and stakeholder’s response and feedback received were followed up accordingly.

During the assessment, stakeholders were interviewed and their feedbacks were recorded. Among the stakeholders consulted were workers, trade union leaders, women representatives; local community leaders, representatives of government departments / agencies and NGOs, fertilizer suppliers and contractors.

Details on stakeholders’ feedback, PMU response and Intertek verification / comments are provided in section 3.3.

Among the list of key stakeholders consulted was the following:

Government Agencies (by emails) 1. Department of Lands And Mines (Kuala Lumpur) 2. Department of Environment (Kuala Lumpur) 3. Department of Forestry Peninsular Malaysia (Kuala Lumpur) 4. Department of Immigration (Kuala Lumpur) 5. Department of Irrigation & Drainage (Kuala Lumpur) 6. Department of Labour (Kuala Lumpur) 7. Department of Occupational Safety & Health (Kuala Lumpur) 8. Department of Orang Asli Affairs (Kuala Lumpur) 9. Department of Wildlife & National Parks (Kuala Lumpur) 10. Environment Protection Department Sabah 11. Department of Forestry Sabah 12. Department of Immigration Sabah 13. Department of Irrigation & Drainage Sabah 14. Department of Labour Sabah 15. Department of Occupational Safety & Health Sabah 16. Department of Wildlife Sabah 17. Land and Mines Office Sabah 18. Department of Environment Sabah

Statutory Bodies (by emails) 19. Malaysian Palm Oil Board (MPOB) - HQ 20. Malaysian Palm Oil Board (MPOB) - Northern Region 21. Malaysian Palm Oil Board (MPOB) - Central Region 22. Malaysian Palm Oil Board (MPOB) - Southern Region 23. Malaysian Palm Oil Board (MPOB) - Eastern Region 24. Malaysian Palm Oil Board (MPOB) - Sarawak Region 25. Malaysian Palm Oil Board (MPOB) - Sabah Region 26. Malaysia Palm Oil Association Kuala Lumpur (MPOA) 27. Malaysia Palm Oil Association Sabah (MPOA) 28. National Union of Plantation Workers (NUPW) 29. UNION – AMESU

NGOs and others (by emails) 30. All Women’s Action Society (AWAM) 31. BCSDM - Business Council for Sustainable Development in Malaysia 32. Borneo Child Aid Society (Humana) 33. Borneo Resources Institute Malaysia (BRIMAS) 34. Borneo Rhino Alliance (BORA) 35. Center for Orang Asli Concerns COAC 36. Centre for Environment, Technology and Development, Malaysia – CETDEM 37. Consumers Association Of Penang – CAP 38. EcoKnights 39. ENO Asia Environment 40. Environmental Protection Society Malaysia (EPSM) 41. Friends of the Earth, Malaysia

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42. Global Environment Centre 43. HUTAN - Kinabatangan Orang-utan Conservation Programme 44. JUST - International Movement for a Just World 45. Malaysian CropLife & Public Health Association (MCPA) 46. Malaysian Environmental NGOs – MENGO 47. Malaysian National Animal Welfare Foundation – MNAWF 48. Malaysian Plant Protection Society (MAPPS) 49. National Council of Welfare & Social Development Malaysia – NCWSDM 50. Partners of Community Organisations (PACOS) 51. Penang Institute previously known as Socio-Economic & Environmental Research Institute (SERI) 52. Pesticide Action Network Asia and the Pacific (PAN AP) 53. Proforest - South East Asia Regional Office 54. R.E.A.C.H. – Regional Enviromnmental Awareness Cameron Highlands 55. Sabah Wetlands Conservation Society (SWCS) 56. SEPA – Sabah Environmental Protection Association 57. SUARAM – Suara Rakyat Malaysia 58. SUHAKAM – National Human rights Society – Persatuan Kebangsaan Hak Asasi Manusia 59. Tenaganita Sdn Bhd 60. TRAFFIC – the wildlife trade monitoring network 61. Transparency International – Malaysian Chapter 62. Treat Every Environment Special Sdn Bhd (TrEES) 63. United Nations Development Programme – UNDP Malaysia 64. Wetlands International (Malaysia) 65. Wild Asia Sdn Bhd 66. World Wide Fund (WWF) - HQ 67. World Wide Fund (WWF) - Sabah

Local community (On-site interviews) 68. Consultative Committee & Gender representatives 69. Workers & Workers representatives 70. Village Heads & representatives 71. Suppliers & Contractors representatives

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3.0 ASSESSMENT FINDINGS

3.1 Summary of findings

Principle 1: Commitment to transparency Criterion 1.1 Growers and millers provide adequate information to relevant stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making. Indicators Findings and Objective Evidence Compliance 1.1.1 There shall be evidence that Information on environmental, social and legal issues Complied growers and millers provide adequate information upon request for relevant to RSPO Criteria was made available to relevant information on (environmental, social stakeholders for effective participation in decision making. and/or legal) issues relevant to RSPO Stakeholder listing has been maintained and updated where Criteria to relevant stakeholders for necessary at the POM and estates. Sustainability team effective participation in decision involved to provide & update information. making. The annual stakeholder consultation was held on 21 Jan Minor Compliance 2016 and records of participants and feedback given were minuted and appropriate actions taken. EIA, Management Plans & Continuous Improvement Plans were also reviewed. Records of participation and decision plans were verified to be maintained. Date of public notification of this assessment of the PMU was made on 5 Jan 2016. As at the period of assessment, there were no additional requests for information from stakeholders for this PMU. 1.1.2 Records of requests for The PMU had established and maintained an updated list of Complied information and responses shall be maintained. internal stakeholders, external stakeholders, government departments/agencies, consultants, contractors, suppliers, Major Compliance transporters, etc. The mill and audited estates have maintained their respective ‘Correspondence & Stakeholders Meeting file’. Correspondences were updated with local officials, local community associations and leaders. Feedbacks and requests were attended to in a timely manner. It was verified that there were no significant negative issues or grievances at the PMU. Records maintained were easily retrievable and made available upon request during the assessment. 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. Indicators Findings and Objective Evidence Compliance 1.2.1 Publicly available documents Management documents’ relating to environmental, social Complied shall include, but are not necessarily and legal issues was verified to be maintained and available limited to: to the public (notices and websites) and updated by IOI, HQ e.g. website link: Major Compliance http://www.ioigroup.com/business/busi_plantoverview.cfm Documents that are available to the public includes: • Land titles/user rights (Criterion 2.2); - land titles/user rights, - occupational health and safety plan,

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Report No.: R9284/12-4 IOI Corporation Berhad Page 16 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03)

- assessments relating to environment and social impacts, - pollution prevention plans, - details of complaints & grievances, - negotiation procedures - continuous improvement plans • Occupational health and safety plans Occupational Safety and Health Plan has been established Complied (Criterion 4.7); and approved by Group Plantation Director on 4/1/2008. The plan was annually reviewed by the Safety Manager for Mill & Estates and additional activities and action items were implemented such as wearing of PPE by external contractors. • Plans and impact assessments SEIA reports were reviewed by the General Manager of Complied relating to environmental and social PMU, Sustainability Manager together with the respective impacts Estate managers which were evidenced in the minutes of (Criteria 5.1, 6.1, 7.1 and 7.8); meeting. Management documents relating to environmental and social issues were verified to be maintained and available to the public (notices and websites) and were updated. • HCV documentation (Criteria 5.2 and The Assessment reports on ‘Internal HCV and Conservation Complied 7.3); Areas’ dated 29 Jan 2016 were available. It is verified that the Management Action Plans for HCV and Conservation areas were being monitored and progressively implemented at the respective Estates and reviewed. See also findings under C5.2 and C7.3. • Pollution prevention and reduction Pollution Prevention Management Plans were reviewed Complied plans (Criterion 5.6); annually i.e. in 1 Feb 2016. Among action items recorded were the mitigation measures for pollution control (smoke emission, POME / effluent discharge), biogas system, pesticides reduction, scheduled wastes (chemicals, hydraulic oil, filters) and domestic wastes disposal, reuse and recycling (paper, glass, plastic). • Details of complaints and grievances The mill and respective estates had maintained the Complied (Criterion 6.3); Complaints and Grievances Logbook. ECC (Employees Consultative Committee) representatives interviewed had confirmed that there were no serious issues which warrant major actions from the PMU Management. Logbook entries were viewed and among the complaints recorded were issues on repairs needed to the workers housing/quarters facilities such as road maintenance, lighting and water supply which had been satisfactorily attended to. Employees Consultative Council (ECC) representatives interviewed had confirmed that there were no serious issues. • Negotiation procedures (Criterion Negotiation procedure and flowchart was maintained since Complied 6.4); Jul 2009 which is also available via website link: http://www.ioigroup.com/business/busi_plantoverview.cfm The sampled PMU estates i.e. Luangmanis, Terusan Baru estates were adjacent to the Luangmanis Forest Reserve, Segaliud Lokan Forest Reserve. There was no dispute from any of the neighbouring plantations. There are no native customary land within or adjacent to the PMU boundaries. IOI had also uploaded the status on the land dispute/claim at the IOI Pelita plantation in Sarawak which is publicly

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 17 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03)

available at website link: http://www.ioigroup.com/default.cfm

• Continual improvement plans Continual Improvements Plans in key operations for the mill Complied (Criterion 8.1); and estates have been developed which were regularly monitored and reviewed. This includes new crèche built, new scheduled waste store, commissioning of biogas plant, new tractors purchased, new fertilizer store built, replacing old machineries in the oil mill. The budget needed for implementation of the improvement plans were submitted to the HQ and made available for verification. • Public summary of certification Public summary of certification assessment reports are Complied assessment report; available from the company upon request. Website link: http://www.ioigroup.com/Content/CI/Corp_Accolades

• Human Rights Policy (Criterion 6.13). The Human Rights Policy had been documented and incorporated as part of the Sustainability Policy Statement issued in 11 May 2015, signed by the CEO. Copies of the policy found to be displayed at prominent locations in the POM and estates. Briefing and communication to all levels of the workforce, both administrative and operations

departments were provided.

OBS: Content inside Human Rights Policy should be further OBS-WN1 elaborated.

Criterion 1.3 Growers and millers commit to ethical conduct in all business operations and transactions. Indicators Findings and Objective Evidence Compliance 1.3.1 There shall be a written policy The IOI Group’s Booklet “Code of Business Conduct and Complied committing to a code of ethical Ethics” & policy (11 May 2015) were documented & signed conduct and integrity by the CEO. The following are included: in all operations and transactions, which shall be documented and - Diversity and Respect in the workplace, communicated to all levels of the - Equal Opportunity Employment, workforce and operations. - Protecting the Environment, Minor Compliance - Safety, Health and Security at Work,

- Managing Documents, - Intellectual Property and Information, - Management and Security in our Computing Environment, - Data Privacy, - Employee Privacy in the Communication and Computing, - Gifts, Benefits or Entertainment, - Bribes and Kickbacks, - Employment of Family Members and Relatives. Whistle blowing policy documented & approved by the Audit and Risk Management Committee of BOD. Weblink stated: http://whistleblowing.ioigroup.com/

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 18 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03)

Principle 2: Compliance with applicable laws and regulations Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. Indicators Findings and Objective Evidence Compliance 2.1.1 Evidence of compliance with The Legal Register covering the applicable local and Complied relevant legal requirements shall be international laws and regulations is available at the mill and available. estates and was verified to be reviewed for any relevant Major Compliance updates in 1 Feb 2016. The relevant legislations identified and listed were among others regarding safety and health, environmental management, pollution management, chemical handling, usage & storage, schedule waste management. Levy and other deductions have been taken with the consent of the workers in accordance with the Sabah Labour Ordinance (Chapter 67). FOMEMA (The Foreign Workers Medical Screening Expert) fees, for the health screening of foreign workers which was borne by the company and carried out as per the Ministry of Health guidelines. Factory and Machinery Act 1967, Regulations 1970: Steam engineers (Grade 1 and 2), boilermen and electricians were noted to be with valid certificates from relevant authorities (DOSH and Energy Commission). The POM has maintained a boiler register that indicated the date of commission, cleaned, inspected, tested or repaired. Valid certificates of fitness for boilers, sterilizers, air receivers, thermal deaerator, steam separator, vacuum oil dryer, including latest commissioning of biogas plant. Licenses and permits (License for Trading, License for Employment of Foreign Workers, Workers Wages Deduction Permit, Domestic and Consumer Permit for Keeping Diesel, Petrol & Fertilizer, MPOB license, DOSH (Department of Occupational Safety and Health) Certificates, DOE (Department of Environment Permit) were renewed and evidenced to be valid. Valid licenses for authorized gas tester (ACT), authorized entrant and standby by person for confined space activities in POM. Occupational Health and Safety Act 1994 – safety and health meetings to be conducted at quarterly intervals. Noise Monitoring Report is available. Legal documents (work permits, passports) of foreign workers in the estates. Insurance coverage is available for foreign workers in the estates. Based on the site observations, interviews and records checked, there was evidence of compliance with the relevant laws, regulations, local and international laws at the POM and estates. There was no incident of violation or penalty imposed by relevant authorities. 2.1.2 The documented system for identifying, determining, Complied A documented system, which includes reviewing and updating applicable legal and other written information on legal requirements has been satisfactorily implemented. requirements, shall be maintained. Listing of laws and regulations monitored for changes Minor Compliance included the Sabah Labour Ordinance (Chapter 67), regulations and circulars received from bodies such as DOE

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 19 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03)

(Department of Environment) and DOSH (Department of Occupational Safety and Health), DID (Dept of Irrigation and

Drainage), Forestry Dept and Wildlife Dept were maintained. 2.1.3 The mechanism for ensuring compliance involved updating Complied A mechanism for ensuring compliance (when necessary) and an annual internal audit, dated 1 Feb shall be implemented. 2016 with the compliance status verified & recorded. Minor Compliance 2.1.4 A system for tracking any The listing of all the relevant laws applicable included the changes in the law shall be international laws and conventions ratified by the Malaysian implemented. government are documented in the Legal register. Tracking Minor Compliance of changes in the relevant laws are communicated and received from the IOI Group HQ. Monitoring of changes to the applicable laws and regulations carried out through periodical review in accordance with the documented

procedure and last performed in 1 Feb 2016. This was evidenced in the review meetings minuted which was noted to be chaired by the GM (Sandakan Region), Sustainability Manager with Mill and Estate Managers in attendance. OBS: Frequency of tracking changes of legislation should be clearly specified. OBS-W2 Valid MPOB (Malaysian Palm Oil Board) license for mill (since 1 July 2015) checked. Based on the site observations, interviews and records updated, the system used is appropriate to the operations at the PMU. Criterion 2.2 The right to use the land is demonstrated, and is not legitimately contested by local people who can demonstrate that they have legal, customary or user rights. Indicators Findings and Objective Evidence Compliance 2.2.1 Documents showing legal Copies of the land titles of all estates were maintained and Complied ownership or lease, history of land tenure (confirmation from community noted to be legally owned by the IOI Group. leaders based on history of customary The original copies are maintained by the Corporate Head land tenure, recognised Native office at KL (Kuala Lumpur). The legal use of the land Customary Right (NCR) land) and the confirmed to be for cultivation of oil palms and agricultural actual legal use of the land shall be use. available. There was no recorded or known dispute over the ownership Major Compliance of the land. No changes to the land ownership or new land acquisition in this PMU since the last audit. The land has been planted with oil palms since 1991. There has been no recorded dispute over the ownership during the tenure of the land. 2.2.2 There is evidence that physical It was verified that there has been no change to the stated Complied markers are located and visibly maintained along the legal boundaries land titles and designated use for cultivation of oil palms and particularly adjacent to state land, agricultural use. NCR land and reserves. Legal boundary markers were sighted and maintained along Minor Compliance the perimeters of estate lands which were mapped with a 1- meter differential Global Positioning System (GPS). Locations of several boundary stones, pegs and markers were visited and found to have pole markers for easier identification and traceability. On-site verification confirmed that there has been no planting beyond the legal demarcated boundary of estates Luangmanis, Terusan Baru and Bimbingan 2. Luangmanis estates had boundaries adjacent to the

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 20 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03)

Luangmanis Forest Reserve; while Terusan Baru estates were adjacent to Segaliuq Lokan Forest Reserve. 2.2.3 Where there are or have been There has been no dispute on the land rights in this PMU. Not disputes, additional proof of legal As such, the process of fair compensation and FPIC is applicable acquisition of title and evidence that currently not required to be applied. fair compensation has been made to previous owners and occupants shall be available, and that these have been accepted with free, prior and informed consent (FPIC). Minor Compliance

2.2.4 There shall be an absence of There were no land conflicts in this PMU. Not significant land conflict, unless The process for conflict resolution verified to be publicly applicable requirements for acceptable conflict available on company website: resolution processes (see Criteria 6.3 http://www.ioigroup.com/Content/S/S_Community and 6.4) are implemented and accepted by the parties involved. Major Compliance

2.2.5 For any conflict or dispute over No land disputes in this PMU. As such the process of Not the land, the extent of the disputed participatory mapping is not applicable for verification of applicable area shall be mapped out in a implementation. participatory way with involvement of affected parties (including neighbouring communities and relevant authorities where applicable). Minor Compliance 2.2.6 To avoid escalation of conflict, No evidence that the palm oil operations have instigated Complied there shall be no evidence that palm violence in maintaining peace and order in their current and oil operations have instigated violence planned operations. in maintaining peace and order in their current and planned operations. Major Compliance

Criterion 2.3 Use of the land for oil palm does not diminish the legal, customary or user rights of other users without their free, prior and informed consent. Indicators Findings and Objective Evidence Compliance 2.3.1 Maps of an appropriate scale The lands at the PMU are legally owned by IOI Plantation Complied showing the extent of recognised Group and it was verified that there was no other user or legal, customary or user rights affected party in the land areas. (Criteria 2.2, 7.5 and 7.6) shall be developed through participatory There is no dispute on the land rights in this PMU. mapping involving affected parties SOP on FPIC established since Jan 2008, & reviewed on 25 (including neighbouring communities Jan 2016. where applicable, and relevant authorities). The lands are not encumbered by any customary lands or Major Compliance user rights and therefore the process of participatory mapping was not required. 2.3.2 Copies of negotiated The lands were acquired in 80’s from private plantation Complied agreements detailing the process of owners. Records are available to show such land free, prior and informed consent acquisition comply with legal requirements and does not (FPIC) (Criteria 2.2, 7.5 and 7.6) shall infringe on any legal rights that require free, prior and be available and shall include: informed consent (FPIC). a) Evidence that a plan has been developed through consultation and discussion with all affected groups in the communities, and that information

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 21 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03) has been provided to all affected groups, including information on the steps that shall be taken to involve them in decision making; b) Evidence that the company has respected communities’ decisions to give or withhold their consent to the operation at the time that this decision was taken; c) Evidence that the legal, economic, environmental and social implications for permitting operations on their land have been understood and accepted by affected communities, including the implications for the legal status of their land at the expiry of the company’s title, concession or lease on the land. Minor Compliance 2.3.3 All relevant information shall be No conflict or dispute over the lands in Ladang Sabah PMU. Not available in appropriate forms and As such this process is not available for verification. applicable languages, including assessments of impacts, proposed benefit sharing, and legal arrangements. Major / Minor (TBF) 2.3.4 Evidence shall be available to No conflict or dispute over the lands in Ladang Sabah PMU. Not show that communities are As such this process is not available for verification. applicable represented through institutions or representatives of their own choosing, including legal counsel. Major Compliance

Principle 3: Commitment to long-term Economic & Financial Viability Criterion 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability. Indicators Findings and Objective Evidence Compliance 3.1.1 A business or management plan The 5-year Business Management Plan (FY 2014/2015 to Complied (minimum three years) shall be FY 2018/2019) for the PMU was documented and documented that includes, where reviewed. appropriate, a business case for scheme smallholders. The Annual Budget for each year include the following: Major Compliance i. Staff and Labour requirements; ii. Crop projection; FFB yield/ha trends; iii. Mill extraction rates; OER trends; iv. Cost of Production; Cost/mt FFB trends; v. Cost of Production; Cost/mt CPO trends; vi. Financial indicators covering cost of labour, supervision, maintenance, depreciation, etc.). vii. Budget for Environmental, Social, Safety & Health, Training and Promotions. The Mill and Estate Managers have monitored the operational performance against Key Performance Indications and targets (costs, FFB yields, quality, productivity, pesticides usage, fertilizers usage). Records of monitoring of costs against budget to achieve specified targets were verified to be available. Performances are discussed in the monthly meetings held

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 22 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03)

at the PMU and issues and actions needed are recorded for follow up in the next monthly meeting. The records of these meetings were available and verified during the audit. Monthly, quarterly, half-yearly and yearly reports are submitted to the Regional GM of Sandakan. 3.1.2 An annual replanting programme A 25 year planting cycle has been adopted by the group. Complied projected for a minimum of five years (but longer where necessary to reflect Scheduled replanting at the respective estates has been the management of fragile soils, see reviewed annually. Criterion 4.3), with yearly review, shall For 2014/2015, replanting programme at Terusan Baru be available. estates had been completed. Replanting programme will Minor Compliance commence soon for Luangmanis estate in year 2016, while Bimbingan 2 planned for replanting in year 2017.

Principle 4: Use of appropriate best practices by growers and millers

Criterion 4.1 Operating procedures are appropriately documented, consistently implemented and monitored. Indicators Findings and Objective Evidence Compliance 4.1.1 Standard Operating Procedures The mill and the estates had maintained their respective Complied (SOPs) for estates and mills shall be documented. copies of their Standard Operating Procedures which were Major Compliance verified to be available and in order.

4.1.2 A mechanism to check consistent Records had been kept by the staff concerned for each Complied implementation of procedures shall be in place. operation to monitor the procedure and progress of work, Minor Compliance and these records would be checked by the Assistant Manager and the Manager regularly. These records had been verified to indicate satisfactory implementation during the visit. 4.1.3 Records of monitoring and any The records of monitoring and the actions taken had been Complied actions taken shall be maintained and available, as appropriate. maintained for more than 12 months on the mill and estates Minor Compliance concerned. These records had been verified.

4.1.4 The mill shall record the origins of The mill did not source any FFB from third-party. The entire Complied all third-party sourced Fresh Fruit Bunches (FFB). crop was supplied by the estates within the company as Major Compliance verified from the records that indicate source origin of FFB.

Criterion 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. Indicators Findings and Objective Evidence Compliance 4.2.1 There shall be evidence that good Fertiliser inputs were based on the recommendations from Complied agriculture practices, as contained in Standard Operating Procedures IOI Research Station. (SOPs), are followed to manage soil fertility to a level that ensures optimal and sustained yield, where possible. Minor Compliance 4.2.2 Records of fertiliser inputs shall Records of fertilizer application were maintained had been Complied be maintained. Minor Compliance verified to be in order.

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 23 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03)

4.2.3 There shall be evidence of Leaf sampling and analysis had been carried out annually. Complied periodic tissue and soil sampling to monitor changes in nutrient status. Soil sampling and analysis had been carried out. Records Minor Compliance of the sampling and analysis had been verified to be satisfactory. 4.2.4 A nutrient recycling strategy shall EFB had been applied to the fields in the group estates. Complied be in place, and may include use of Empty Fruit Bunches (EFB), Palm Oil POME solid obtained through filtration using “Green tube” Mill Effluent (POME), and palm had been filled in raffia bags at 30 kg each and placed residues. around the palms at the rate of 4 bags per palm. Minor Compliance Records of application had been verified to be satisfactorily maintained. Criterion 4.3 Practices minimise and control erosion and degradation of soils. Indicators Findings and Objective Evidence Compliance 4.3.1 Maps of any fragile/marginal soils There was no fragile soil in the Estates based on the soil Complied shall be available. Major Compliance maps and field visits.

4.3.2 A management strategy shall be Planting terraces had been constructed on slopes >10°, as Complied in place for plantings on slopes between 9 and 25 degrees unless per policy stated in SOP. specified otherwise by the company’s Fields were generally covered with soft grasses, ferns, and SOP. herbaceous plants. Minor Compliance 4.3.3 A road maintenance programme Road maintenance programme had been verified to be Complied shall be in place. Minor Compliance implemented on the estates. The estate roads are maintained by the Engineering Department of IOI Group and noted to be in satisfactory condition. 4.3.4 Subsidence of peat soils shall be There was no peat soil from the estates visited. Not applicable minimised and monitored. A documented water and ground cover management programme shall be in place. Major Compliance

4.3.5 Drainability assessments where Not applicable at the PMU. Not applicable necessary will be conducted prior to replanting on peat to determine the long-term viability of the necessary drainage for oil palm growing. Minor Compliance

4.3.6 A management strategy shall be Not applicable at the PMU. Not applicable in place for other fragile and problem soils (e.g. podzols and acid sulphate soils). Minor Compliance Criterion 4.4 Practices maintain the quality and availability of surface and ground water. Indicators Findings and Objective Evidence Compliance 4.4.1 An implemented water Documented water management plan which includes the Complied management plan shall be in place. monitoring of rainfall data, water sampling tests, water Minor Compliance usage and relevant records had been verified to be in order for the Ladang Sabah POM and estates audited. 4.4.2 Protection of water courses and River banks along Loam Pori River running within the Complied wetlands, including maintaining and restoring appropriate riparian and other Bimbingan 2 estate were marked to indicate no application

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 24 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03) buffer zones (refer to national best of fertilisers and pesticides are permissible. practice and national guidelines) shall be demonstrated. There was no construction of bunds/ weirs/dams across the Major Compliance river or waterway passing through the Bimbingan 2 estate. It was observed that natural waterways were free-flowing. 4.4.3 Appropriate treatment of mill In palm oil mill, water samples had been taken at monthly Complied effluent to required levels and regular monitoring of discharge quality, shall be interval at the discharge point of effluent pond. BOD levels in compliance with national regulations that had exceeded the upper limit of 20 ppm as specified by (Criteria 2.1 and 5.6). D.O.E. Sabah, were monitored and retested ensuring that Minor Compliance levels were controlled within the permitted level.

4.4.4 Mill water use per tonne of Fresh Water usage in the mill was verified to be ranging from 1.64 Complied Fruit Bunches (FFB) (see Criterion 5.6) 3 3 shall be monitored. to 2.84 m / tonne FFB with an average of 2.07 m / tonne Minor Compliance FFB over the past 12 month period. The mill had set the water usage baseline of 2 m3 /tonne FFB and was slightly over the baseline limit but within acceptable level. Criterion 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management techniques. Indicators Findings and Objective Evidence Compliance 4.5.1 Implementation of Integrated Pest Records on planting of beneficial plants had been verified Complied Management (IPM) plans shall be monitored. on the estates. Major Compliance Pest infestation was minimal on the estates. Programme for planting of beneficial plants such as Turnera subulata, Cassia cobanensis and Antigonon leptopus implemented. Records of areas planted verified together with the respective maps to be satisfactory. 4.5.2 Training of those involved in IPM Training records for personnel on IPM implementation were Complied implementation shall be demonstrated. Minor Compliance available and was verified on-site to be satisfactory during field assessment at the respective estates. Criterion 4.6 Pesticides are used in ways that do not endanger health or the environment Indicators Findings and Objective Evidence Compliance 4.6.1 Justification of all pesticides used Written justification in Standard Operating Procedures of all Complied shall be demonstrated. The use of selective products that are specific to agrochemicals use had been reviewed and found the target pest, weed or disease and acceptable. which have minimal effect on non-target species shall be used where available.

Major Compliance 4.6.2 Records of pesticides use Records of pesticides and their active ingredients used, Complied (including active ingredients used and LD50, area treated, amount of a.i. applied per ha, and their LD50, area treated, amount of number of applications had been maintained and being active ingredients applied per ha and kept for a minimum of 5 years. number of applications) shall be provided. The monitoring of pesticide usage was summarised. Major Compliance Verified that records of monitoring were satisfactorily.

4.6.3 Any use of pesticides shall be It is the policy of the estates to minimize the use of Complied minimised as part of a plan, and in accordance with Integrated Pest pesticides in accordance with integrated pest management. Management (IPM) plans. There shall No prophylactic use of pesticides had been carried out. be no prophylactic use of pesticides, Rat baiting had been carried out at the Bimbingan 2 and except in specific situations identified in Terusan Baru Estates for the period where rat damage

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 25 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03)

industry’s Best Practice. exceeded 20% on FFB delivered to the mill. Major Compliance

4.6.4 Pesticides that are categorised as Use of paraquat had been eliminated since 31 December Complied World Health Organisation Class 1A or 2013 in the IOI Group Estates. 1B, or that are listed by the Stockholm The Estates now used Glyphosate Isopropylamine, or Rotterdam Conventions, and Metsulfuron Methyl, Floroxyr, and Triclopy Butoxyethyl paraquat, are not used, except in specific situations identified in industry’s Esther. Best Practice. The use of such pesticides shall be minimised and eliminated as part of a plan, and shall only be used in exceptional circumstances. Pesticides selected for use are those officially registered under the Pesticides Act 1974 (Act 149) and the relevant provision (Section 53A); and in accordance with USECHH Regulations (2000). Minor Compliance

4.6.5 Pesticides shall only be handled, All pesticide operators had been given training on the Complied used or applied by persons who have completed the necessary training and handling and application of the pesticides. Appropriate safety and application equipment had been provided and shall always be applied in accordance with the product label. Appropriate used by the operators. Programme and training records safety and application equipment shall verified to be in order. be provided and used. All precautions attached to the products had been All precautions attached to the products observed, applied, and understood by the workers. shall be properly observed, applied,

and understood by workers (see Criterion 4.7). It was noted containers used that contained poisonous Major Compliance chemical were clearly marked indicating the contents were poisonous. Previous 2015 year observation raised (OBS:CBK-01) had been effectively addressed, implemented & status closed.

4.6.6 Storage of all pesticides shall be Storage of pesticides found to be in accordance with the Complied according to recognised best practices. All pesticide containers shall be Occupational Safety and Health Laws and Regulations and properly disposed of and not used for local laws on pesticides control. other purposes (see Criterion 5.3). Used chemical containers were triple-rinsed and punctured. Pesticides shall be stored in accordance to the Occupational Safety and Health Act 1994 (Act 514) and Regulations and Orders, Pesticides Act 1974 (Act 149) and Regulations. Major Compliance

4.6.7 Application of pesticides shall be Pesticides had been applied using the proven methods Complied by proven methods that minimise risk and impacts. (Best Management Practices) that minimize risk and Minor Compliance impacts.

4.6.8 Pesticides shall be applied It is the policy of the company not to carry out any aerial Complied aerially only where there is documented justification. Communities shall be application of pesticides. This policy has been adhered. informed of impending aerial pesticide applications with all relevant information within reasonable time prior to application. Major Compliance

4.6.9 Evidence of continual training to Periodic training on pesticide handling had been carried Complied enhance knowledge and skills of out. Information on the pesticides displayed on the notice

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 26 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03) employees and associated board and next to the pesticides in the store. smallholders on pesticide handling shall be demonstrated or made available. (see Criterion 4.8). Minor Compliance

4.6.10 Proper disposal of waste Scheduled waste had been sent for disposal through Complied material, according to procedures that are fully understood by workers and licensed contractor approved by DOE. managers shall be demonstrated (see Records of scheduled waste involved verified to be in Criterion 5.3). order. See also findings under C5.3. Minor Compliance

4.6.11 Specific annual medical Annual medical surveillance for pesticide operators had Complied surveillance for pesticide operators, and documented action to treat related been carried out as follows: health conditions, shall be POM 61 workers on 11-9-2015 demonstrated. Bimbingan 2 28 workers on 11-6-2015 Major Compliance Terusan Baru 52 workers on 26-1-2016 Luangmanis 23 workers on 26-2-2015 It was verified that the CHRA recommendations has been satisfactorily followed. 4.6.12 No work with pesticides shall be Verified from records, field inspections and interviews that Complied undertaken by pregnant or breast- no pregnant or breast-feeding woman had been offered feeding women. work as pesticide operator. Major Compliance Criterion 4.7 An occupational health and safety plan is documented, effectively communicated and implemented. Indicators Findings and Objective Evidence Compliance The occupational health and safety plan A safety and health policy verified to be documented. Complied shall cover the following: Occupational Safety and Health (OSH) plan in compliance 4.7.1 An occupational health and safety with OSH Act and Factory Machinery Act had been policy shall be in place. An established, documented and implemented. occupational health and safety plan All operation had been risk assessed including noise covering all activities shall be exposure in the mill and health hazards from chemical documented and implemented, and its spray/use in the estate. effectiveness monitored. Yearly reporting of NADOPOD regulations was submitted Major Compliance to JKKP on time i.e. in Jan 2016 POM & its estates established their accident reporting KPI, and incident monitoring implemented. Records on training and analysis on understanding of training by the workers had been maintained and found to be satisfactory. 4.7.2 All operations where health and Risk assessment carried out on all operations where health Complied safety is an issue shall be risk assessed, and procedures and actions and safety is an issue (e.g. noise exposure, pesticides / shall be documented and implemented chemicals exposure, accident, fire). to address the identified issues. All Procedures and actions documented and implemented on precautions attached to products shall the issues concerned. be properly observed and applied to the Annual audiometric tests/ reports conducted for the mill workers. staff and workers were maintained and verified. Major Compliance All precautions according to MSDS attached to the products found to be observed and applied by the workers. Verified that proper PPE was worn by the workers at site.

4.7.3 All workers involved in the Awareness and training programme had been carried out. Complied operation shall be adequately trained in All workers involved had been adequately trained in safe safe working practices (see Criterion working practices. 4.8). Adequate and appropriate Appropriate PPE had been provided to all workers at the protective equipment shall be available

INTERTEK RSPO Report: 15-18 Feb 2016 (ASA-03)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9284/12-4 IOI Corporation Berhad Page 27 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03) to all workers at the place of work to place of work to cover all potentially hazardous operations. cover all potentially hazardous operations, such as pesticide application, machine operations, and land preparation, harvesting and, if it is used, burning. Major Compliance 4.7.4 The responsible person/persons The responsible person had been identified. Records of Complied shall be identified. There shall be regular meetings between the responsible person and records of regular meetings between workers to discuss about health and safety had been the responsible person/s and workers. verified to be satisfactory. Concerns of all parties about health, safety and welfare shall be discussed at these meetings, and any issues raised shall be recorded. Major Compliance

4.7.5 Accident and emergency Accident and emergency procedures had been written and Complied procedures shall exist and instructions briefed to staff, workers, contractors and visitors. shall be clearly understood by all Workers trained in First Aid were present in the mill and workers. Accident procedures shall be field operations. First Aid Kits were available at worksites. available in the appropriate language of the workforce. Assigned operatives Accidents were recorded, with investigations conducted, trained in First Aid should be present in when needed. Follow actions taken included risk both field and other operations, and first assessments and implementing measures to prevent aid equipment shall be available at recurrence. worksites. Records of all accidents shall be kept and periodically reviewed. Records on all accidents had been verified to be Minor Compliance maintained satisfactorily. Quarterly review on accident cases had been carried out during quarterly meeting of Environment, Safety, & Health (ESH). 4.7.6 All workers shall be provided with Medical care had been provided to all the workers. Complied medical care, and covered by accident insurance. Local workers are covered by SOCSO, whereas foreign Minor Compliance workers are covered by Foreign Workers Compensation Scheme. 4.7.7 Occupational injuries shall be Records on Lost Time Accident (LTA) metrics were Complied recorded using Lost Time Accident (LTA) metrics. available and verified to be satisfactorily maintained. Minor Compliance

Criterion 4.8 All staff, workers, smallholders and contract workers are appropriately trained. Indicators Findings and Objective Evidence Compliance 4.8.1 A formal training programme shall A formal training programme on all aspects of RSPO Complied be in place that covers all aspects of the RSPO Principles and Criteria, and Principles and Criteria has been established and that includes regular assessments of implemented. training needs and documentation of Training for various categories of operators, including all the programme. field and office staff, with regards to their duties and training Major Compliance needs had been reviewed and found acceptable.

4.8.2 Records of training for each Records of training for employees were available and Complied employee shall be maintained. Minor Compliance maintained and were verified on a sampling basis at the Mill and respective estates visited.

Principle 5: Environmental responsibility and conservation of natural resources and biodiversity

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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 continual improvement. Indicators Findings and Objective Evidence Compliance 5.1.1 An environmental impact The Environmental Aspect and Impact Assessment of the Complied assessment (EIA) shall be PMU have been documented and updated on an annual documented. basis. Documented aspects and impacts risk assessments Major Compliance including those raised through stake-holders’ consultation were implemented. Management Action Plan and Continual Improvement Plans for the mill and estates have been reviewed. The review for the mill was done on 1 Feb 2016. The reviews by the estate managers at Luangmanis, Terusan Baru, & Bimbingan 2 estates were on 25 Jan 2016, 23 Dec 2015 and 25 Jan 2016 respectively. The revised EIA documents had included the identification aspects that include washing of factory floor, smoke emission, noise pollution, scheduled wastes (spent lubricant & empty chemical containers), diesel, electricity, workshop activities, landfill, generator set, line site, new buildings/drainage, biogas digesters, EFB, fibre/shell/boiler ash, fertilizers, pesticides/herbicides spraying, FFB, domestic & recyclable wastes, road maintenance. 5.1.2 Where the identification of The changes to any current practices and the resulting Complied impacts requires changes in current impacts and mitigation needed were identified. practices, in order to mitigate negative effects, a timetable for change shall be The POM and estates had continued with the developed and implemented within a implementation and monitoring of management action plans comprehensive management plan. for continual improvement. The management plan shall identify The respective POM and Estate managers were identified the responsible person/persons. as being responsible for the management plans. Minor Compliance 5.1.3 This plan shall incorporate a Implementation and monitoring of the documented Complied monitoring protocol, adaptive to environmental improvement plans were reviewed on an operational changes, which shall be annual basis. The reviews by the estate managers at implemented to monitor the Luangmanis, Terusan Baru, & Bimbingan 2 estates were on effectiveness of the mitigation measures. The plan shall be reviewed 25 Jan 2016, 23 Dec 2015 and 25 Jan 2016 respectively. as a minimum every two years to The review had considered the mitigation of negative reflect the results of monitoring and impacts and promotion of positive ones such as the manual where there are operational changes clearing of overgrown natural vegetation and debris along that may have positive and negative the streams and demarcated buffer zones (at estates) and environmental impacts. the proper preservation of water sources such as water Minor Compliance ponds, which were verified on-site during the assessment. Criterion 5.2 The status of rare, threatened or endangered species and other High Conservation Value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and operations managed to best ensure that they are maintained and/or enhanced. Indicators Findings and Objective Evidence Compliance 5.2.1 Information shall be collated in a The Internal ‘HCV & Conservation Areas’ re-assessment Complied High Conservation Value (HCV) report(s) for the IOI Ladang Sabah estates were reviewed assessment that includes both the in 29 Jan 2016 had incorporated feedbacks provided by the planted area itself and relevant wider various governmental agencies. The assessment made landscape-level considerations (such was made in accordance with the recommended RSPO as wildlife corridors). ‘HCVRN Toolkit’, by 4 internal trained assessors.

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Major Compliance The overall landscape surrounding the PMU, that includes wildlife corridors, had been considered in the said assessment reports. Conservation areas are identified such as river, water reservoir, tributaries / riparian buffer zones (HCV 4 & 5), and areas bordering forest reserves (HCV 1) such as Luangmanis Forest Reserve bordering with Luangmanis estates & Segaliuq Lokan Forest Reserve bordering with Terusan Baru estates.

The locations and estimated sizes of conservation areas, steep hill, buffer and riparian zones adjacent said estates were adequately identified and updated in the estate maps. The updates has included compliance to related laws & legislation, signatory e.g. International Convention for Biodiversity 2003, UN Framework Convention for Climate change; Convention on International Trade on Endangered Species. During current assessment, it is verified that monitoring of identified conservation areas at Luangmanis estate which borders with the Luangmanis Forest Reserve and Terusan Baru which borders with Segaliuq Lokan Forest Reserve has been implemented and maintained. Actions and activities for monitoring were listed and recorded in text, photographic and mapped documents. Feedback received from Forestry Dept, Sabah confirmed that in their periodic field visits, there has been no presence of any ERTs detected along the boundary with the IOI estates. 5.2.2 Where rare, threatened or Overall, the recommendations and feedback provided by Complied endangered (RTE) species, or HCVs, the various parties during their internal HCV consultation are present or are affected by had been considered in the ‘HCV & Conservation Areas’ plantation or mill operations, management plans at the respective estates. appropriate measures that are expected to maintain and/or enhance The HCV reports had reviewed the conservation needed for them shall be implemented through an the wildlife identified such as proboscis monkeys, estuarine action plan. crocodiles, pygmy elephants, orang utan, long and short Major Compliance tailed macaque, piped hornbills and other wildlife which are protected under the Protection of Wildlife Act 1972 (Act 76) and Sabah Wildlife Conservation Enactment 1997 and IUCN Red List 2008. Updated notices provided by the Sabah Wildlife Department were noted & displayed at the estates offices and copies pasted in the estate Patrol Log Books. Regular patrols on a weekly basis within the PMU estates had been carried out and recorded by the respective Estate executives to monitor the Conservation and buffer areas. The occasional sightings of various types of wildlife encountered found to have been recorded. Internal HCV assessors identified additional HCV 4 areas within Terusan Baru estates, with steep hill of more than 25 degree. Signboard built up to prohibit planting/replanting, hunting activities at these areas. Forestry officers from Sabah Forestry Department and Ladang Sabah estates personnel conducted their routine inspections and patrols. At present, there is no reported detection of any RTE’s along the boundary with the IOI Ladang Sabah estates.

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5.2.3 There shall be a programme to There was evidence of commitment to discourage any Complied regularly educate the workforce about illegal or inappropriate hunting, fishing or collecting the status of these RTE species, and activities via the signage erected which prohibiting such appropriate disciplinary measures shall activities. be instigated in accordance with company rules and national law if any A programme had been established with ongoing individual working for the company is consultation with the local wildlife authorities, to regularly found to capture, harm, collect or kill educate the plantation workers and other workforce about these species. the status of RTE species and the consequences in Minor Compliance accordance with company rules and national laws of any infringement. Training had been organized & provided to workers, especially at Luangmanis estates, & Terusan Baru estates, and records sighted. 5.2.4 Where an action plan has been The management plans established were updated and Complied created there shall be ongoing monitored at the estates audited. Monitoring of monitoring: conservation areas done on weekly basis and recorded into • The status of HCV and RTE species respective Patrolling book maintained. Field inspections that are affected by plantation or mill confirmed that actions are being implemented to safeguard operations shall be documented and the designated conservation areas. No RTE were reported reported; or seen in those area, including the newly identified HCV 4 • Outcomes of monitoring shall be fed (steep hill). back into the action plan. Improvement had been initiated to replace those faded Minor Compliance signage, marking of red paint on palm trees, & clearing of debris of river tributaries/streams. Signage repaired; red marking at buffer zones visible; debris cleared at river tributaries/stream. Previous 2015 year observation raised (OBS: AL-01) had been effectively addressed, implemented & status closed.

5.2.5 Where HCV set-asides with It was verified that there are no local communities or Not applicable existing rights of local communities villages at the Ladang Sabah PMU. So far, there was no have been identified, there shall be instance of HCV set-aside that conflicts with the rights of evidence of a negotiated agreement local communities. Thus negotiated agreement of such that optimally safeguards both the HCVs and these rights. nature is not applicable. Minor Compliance Criterion 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. Indicators Findings and Objective Evidence Compliance 5.3.1 All waste products and sources of The following waste products and sources of pollution have Complied pollution shall be identified and been identified and documented at the PMU: scheduled documented. waste, domestic waste, clinical waste, recyclable wastes Major Compliance (metal, plastic, paper, glass) and mill wastes (EFB, carp fibre, boiler ash, POME). Segregation of wastes i.e. general wastes and scheduled wastes was verified. Proper areas were identified for the storage of the recyclable wastes at the estates and mill. Mill and estates had proper Scheduled Waste Store for storing scheduled waste until time of disposal by DOE authorized waste disposal contractors. Scheduled Waste such as spent hydraulic oil (SW 305), spent lubricant oil (SW 306), used chemical containers / drums (SW 409), used filters (SW 410), clinical waste (SW 404), used batteries (SW 102) were labeled and stored. Appropriate secondary containment was verified to be maintained at the scheduled waste storage areas. The

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scheduled waste storage area had restricted access to authorized personnel only. MSDS instructions filed & adhered to. 5.3.2 All chemicals and their containers Scheduled wastes had been collected & disposed by Complied shall be disposed of responsibly. licensed contractors within 180 days as stated. Disposal of Major Compliance scheduled wastes verified to be in compliance with EQ (Scheduled Waste) Regulation 2005. The latest disposal of Scheduled wastes was done on 5 Feb 2016 by Legenda Bumimas Sdn Bhd (DOE registered) for SW 305, 306, 409 and 410. Clinical wastes (SW 404) collected and transferred to Hospital Kinabatangan for eventual disposal. SW 102 was disposed by Newgates Industries (Borneo) Sdn Bhd (DOE registered). It was verified on-site that the records i.e. consignment notes and related documentation has been satisfactorily maintained at the mill and respective estates.

5.3.3 A waste management and Waste management and disposal plans were documented Complied disposal plan to avoid or reduce and implemented at the POM and estates. pollution shall be documented and implemented. Sampled landfills physically verified on site at the estates. The designated landfill areas at Terusan Baru and Minor Compliance Luangmanis estates were verified to be at least 50 m away from any streams/water sources and housing/dwelling areas. No visible risk contamination sighted. POME transferred to biogas digester (fully enclosed system), & released gas converted for energy generation. Recycling of crop residues/biomass, i.e. EFB and POME had been implemented. Recycling bins of three different colour codes for specific recycle waste were available in the POM and estates and were used for solid waste segregation and recycling. Solid POME from Geo-tube evacuated to estates as fertilizer every 3 months. Criterion 5.4 Efficiency of fossil fuel use and the use of renewable energy is optimised. Indicators Findings and Objective Evidence Compliance 5.4.1 A plan for improving efficiency of The use of energy in palm oil mill and line site was Complied the use of fossil fuels and to optimise monitored monthly to compare the energy usage against renewable energy shall be in place and the production of CPO. Electricity generation was through monitored. steam turbine and boiler where palm fiber and PK shells Minor Compliance were used as renewable energy/fuel on a 70:30 ratio basis. Since the commissioning of biogas plant, diesel consumption had been reduced. Additional generator built for electricity generation using the gas from biogas digester. Monthly records of energy consumption of non-renewable and renewable fuel per metric tonne of palm product at the POM were available. Consumption levels were noted to be within the baseline levels set by the HQ and consistent with the industry norms for POM of such capacity. Criterion 5.5 Use of fire for preparing land or replanting is avoided, except in specific situations as identified in the ASEAN guidelines or other regional best practice.

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Indicators Findings and Objective Evidence Compliance 5.5.1 There shall be no land No open burning policy has been implemented and Complied preparation by burning, other than in enforced throughout mill and estates within the Ladang specific situations as identified in the Sabah Grouping. ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ Field trips at those selected estates confirmed that no 2003. evidence of open burning sighted or any new land Major Compliance preparations. 5.5.2 Where fire has been used for There was no evidence of any open burning at the estates Complied preparing land for replanting, there shall and line sites during on site field assessment. Fire be evidence of prior approval of the surveillance tower built at Bimbingan 2 estate in order to controlled burning as specified in survey from top hill any hot spot of fire burning from ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ neighbouring estates. 2003. Replanting completed at Terusan Baru estate in 2015, with Minor Compliance no evidence of burning being applied. Criterion 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored. Indicators Findings and Objective Evidence Compliance 5.6.1 An assessment of all polluting Annual review of environmental impact assessment on Complied activities shall be conducted, including potential pollution to water, gaseous emissions to air and gaseous emissions; particulate/soot contamination on land was done in Jan 2016. emissions and effluent (see Criterion 4.4). Mill gas emissions as monitored online by DOE, Sandakan Major Compliance using the Continuous Emissions Monitoring System (CEMS) verified to be within the permissible limits of DOE. POME treatment, biogas operation, monitoring and land application were monitored, maintained and adhered to DOE regulations. 5.6.2 Significant pollutants and The significant pollutants and greenhouse gas (GHG) Complied greenhouse gas (GHG) emissions shall emissions were identified, including POME, diesel / fuel, be identified, and plans to reduce or fertilizer usage, land use change had been documented at minimise them implemented. the PMU. This had been verified on-site. Major Compliance The PMU had been monitoring the GHG emissions under their ISCC EU certification for sustainable biofuels production. Since the commissioning of biogas plant, located at the back of oil mill, significant reduction of GHG emissions had been calculated using PalmGHG (ver 2.1.1). Evidence demonstrated that results of GHG emissions calculated from PalmGHG (ver 2.1.1) had been sent to RSPO for review & approval (dated 15 Feb 2016).

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5.6.3 A monitoring system shall be in Monitoring and reporting of the significant pollutants to Complied place, with regular reporting on water, gaseous emissions to air and contamination on land progress for these significant pollutants were available. and emissions from estate and mill operations, using appropriate tools. Tools and systems used include the DOE online CEMS Minor Compliance. monitoring for air emissions, water quality at discharge points as per DID regulations and SW disposal were adhering to DOE requirements.

Dust, SO2, NO2, dark smoke emission monitoring was done for Boiler 1 & 2 by DOE registered consultant. Satisfactory dust emission concentration level found to meet permissible limits. Water samples were taken monthly and tested by mill environment officer in charge and analyzed to ensure compliance to DOE requirements at final discharge point. The discharged water was 100% used for land application. Water samples were taken monthly and tested by mill environment officer in charge and analyzed to ensure compliance to DOE requirements at final discharge point. Records are maintained and verified on-site to have met the permissible regulatory limits. The average BOD for Jan to Dec 2015 is 17.45 ppm, which is within the DOE permissible limit.

Principle 6: Responsible consideration of employees, and of individuals and communities affected by growers and mills

Criterion 6.1 Aspects of plantation and mill management that have social impacts, including replanting, are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continual improvement. Indicators Findings and Objective Evidence Compliance 6.1.1 A social impact assessment (SIA) At Ladang Sabah PMU, the respective Social Impact Complied including records of meetings shall be Assessment reports and Management plans at all the documented. estates and mill was specific and individually documented Major Compliance by the Sustainability Team of IOI. External stakeholders’ consultation was held on 21 Jan 2016 at Ladang Sabah Training School. Attendance list was verified and 44 external stakeholders attended the consultation which include contractors, suppliers, government agencies, police, villagers, nearby plantations, etc. Muhlis Nursaling, Moynod Estate Manager is the Chair of RSPO Central Working Committee for Ladang Sabah PMU. Internal consultations were held in each estate visited which involved the estate managements and their workers. For examples, these were conducted in Ladang Sabah POM on 26 Jan 2016 with 10 participants and in Terusan Baru estate on 28 Jan 2016. Revision of the SIAs had been made at each estates audited, e.g. in Ladang Sabah POM revision was made by Social Liaison Officer on 2 Feb 2016. While in Luangmanis revision was made by Social Liaison Officer in Feb 2016 and in Terusan Baru Estate on 28 Jan 2016. 6.1.2 There shall be evidence that the The group had considered issues of social impact to Complied assessment has been done with the employees and communities affected by their activities. participation of affected parties. Records of meeting with stakeholders indicated discussions

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Major Compliance held were generally on matters pertaining to access roads and use rights, working conditions, cultural/festival activities, health facilities and other community concerns. In all meeting minutes, e.g. ECC and Gender Committee, list of attendance and photos of the session were kept in file showing evidence of participation of affected parties. Through verification of entries made in the Complaints & Grievance Book in POM and estates and interviews made, it was clear that the workers are well informed of issues related to their rights. 6.1.3 Plans for avoidance or mitigation A time table of activities identified was sighted with time Complied of negative impacts and promotion of frame on implementation plans. Site inspection carried out the positive ones, and monitoring of confirmed that the implementations were in progress. impacts identified, shall be developed in Latest Social Plans sighted are for the period of May 2015- consultation with the affected parties, documented and timetabled, including June 2016 in all estates audited and from January- responsibilities for implementation. December 2016 for Ladang Sabah POM. Major Compliance Poor drainage system at the linesite was brought up during the internal consultation and this was immediately included in 2016 budget proposal for improvement. Social Plan for calendar year 2016 verified. Each complaint through ECC meetings, grievance book received by the management were recorded and also indicated with status either continuous, completed or pending. 6.1.4 The plans shall be reviewed as a The plans are reviewed annually together with affected Complied minimum once every two years and parties as mentioned especially the workers were consulted updated as necessary, in those cases during the ECC meetings, daily morning muster and where the review has concluded that individual reports made in the Grievance Books maintained. changes should be made to current practices. There shall be evidence that the review includes the participation of affected parties. Minor Compliance 6.1.5 Particular attention shall be paid There are no smallholders at the PMU. Thus this is not Not applicable to the impacts of smallholder schemes applicable (where the plantation includes such a scheme). Minor Compliance 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. Indicators Findings and Objective Evidence Compliance 6.2.1 Consultation and communication IOI’s Group consultation and communication procedures Complied procedures shall be documented. were available via website link: Major Compliance http://www.ioigroup.com/Corporateresponsibility/ environment_plantation.cfm The PMU had adopted an open and transparent method of communication and consultation when dealing with relevant parties, e.g. its workers, government agencies, contractors, neighboring plantations by personal invitation to attend the internal and external stakeholders’ consultation meetings. 6.2.2 A management official Nominated respective officers at the operating unit are Complied responsible for these issues shall be responsible to represent the PMU Ladang Sabah PMU nominated. when any relevant issues raised by local communities and Minor Compliance other affected or interested parties.

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For example, in Luangmanis Estate the nominated Social Liaison Officer is Mr. Abdul Karim Pg. Osman, in Terusan Baru Estate, Mr. Raymond Ingkap and for Ladang Sabah POM is Mr. Aaron Stanislaus. 6.2.3 A list of stakeholders, records of List of stakeholders at the IOI Ladang Sabah PMU was Complied all communication, including adequate regularly updated. Noted that there were open confirmation of receipt and that effort and transparent methods for communication and are made to ensure understanding by consultation which has taken into consideration the local affected parties, and records of actions taken in response to input from mechanisms including migrant workers and languages. stakeholders, shall be maintained. The lists of stakeholders were updated on a monthly basis Minor Compliance and records of meetings were maintained. List of stakeholders dated Jan 2016 was sighted in Ladang Sabah POM. Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all affected parties. Indicators Findings and Objective Evidence Compliance 6.3.1 The system, open to all affected All estates in Ladang Sabah PMU had established Complied parties, shall resolve disputes in an complaints and grievances procedures and they were all effective, timely and appropriate well implemented. Complaints and Grievances logbooks manner, ensuring anonymity of were sighted in all audited estates and actively used by complainants and whistleblowers, where requested. workers. Major Compliance Timelines for response to complaints and grievances are either through the logbook or ECC representatives are appropriately established and implemented. Generally respond time for minor requests would be within 2-3 days and up to one month for major requests. Complaints and Grievances Logbooks are for complaints which are not private and confidential in nature. For reports which are related to private matters such as sexual harassment reports separate logbooks are prepared and always kept under lock and key locations. Complainants are given the option whether the make the report personally or through nominated workers’ representatives. It is verified during on-site interviews that there were no incidences of dispute or grievance of a serious nature. Since Feb 2014 IOI PMU had developed “Dasar Pemberi Maklumat (Whistleblowing)” which was approved by Jawatankuasa Audit dan Pengurusan Risiko. 6.3.2 Documentation of both the Other than the Grievance Procedure, there is another Complied process by which a dispute was documented procedure called Stakeholder Request resolved and the outcome shall be Procedure to resolve disputes or provide feedback. available. Corporate level stakeholder could check with the IOI Group Minor Compliance website www.ioigroup.com, careline of IOI Group General 03-89478888 or write to Two IOI Square, IOI Putrajaya to lodge a request/complaint. Other methods verified maintained for expressing grievances to the estates managements were Stakeholder Consultation Meeting, Employee Consultative Committee (ECC) meeting, Gender Consultative Committee (GCC) meeting and request letters received from external parties. Criterion 6.4 Any negotiations concerning compensation for loss of legal, customary or user rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

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Indicators Findings and Objective Evidence Compliance 6.4.1 A procedure for identifying legal, The IOI group procedure for the handling of grievances and Complied customary or user rights, and a compensation which might arise from any party claiming procedure for identifying people legal or customary rights is available at the PMU and is also entitled to compensation, shall be in available at the website link: place. http://www.ioigroup.com/business/busi_millsestates.cfm Major Compliance At the Ladang Sabah PMU, there were borders at Sg. Sapi estates which were adjacent to the neighbors land. Adequate records on the negotiation and communication pertaining to these criteria was observed. Both parties were satisfied with the outcome of the issues.

6.4.2 A procedure for calculating and The IOI group procedure was documented in handling this Complied distributing fair compensation indicator has included the statement of fair and legal (monetary or otherwise) shall be compensation in the event of any such claims being made. established and implemented, monitored and evaluated in a At the Ladang Sabah PMU, action had been taken to solve participatory way, and corrective the borders issue at Sg. Sapi Estate which were adjacent to actions taken as a result of this the neighbors land. To date, there was no dispute by any evaluation. This procedure shall take parties reported at the Ladang Sabah PMU. into account: gender differences in the power to claim rights, ownership and access to land; differences of transmigrants and long-established communities; and differences in ethnic groups’ proof of legal versus communal ownership of land. Minor Compliance 6.4.3 The process and outcome of any The process for documentation and claim compensation is Complied negotiated agreements and available. To date, there had been no issue on this matter as compensation claims shall be interviews conducted to the land owners. documented, with evidence of the participation of affected parties, and made publicly available. Major Compliance Criterion 6.5 Pay and conditions for employees and for contract workers always meet at least legal or industry minimum standards and are sufficient to provide decent living wages. Indicators Findings and Objective Evidence Compliance 6.5.1 Documentation of pay and Offer letters and work contracts for local staff and foreign conditions shall be available. workers are verified. The contracts met the industry Major Compliance minimum standards including included extra pays under the statutory fringe benefits. The pay slips for workers at the estates and mill were verified to contain all necessary information and were made aware to the workers, incl. type and rate of works completed, days offered, days worked, days absent, total

deduction. OBS-JMD-01 OBS: Cases of absconded workers should be reported to Police Department in timely manner.

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6.5.2 Labour laws, union agreements or Since January 2013, the offer letters had been revised to Complied direct contracts of employment detailing reflect the Minimum Wage Order 2012. The employment payments and conditions of contracts used were approved by the Sabah Human employment (e.g. working hours, Resources Department, i.e. Jabatan Tenaga Kerja Sabah. deductions, overtime, sickness, holiday entitlement, maternity leave, reasons The passports, work permits, insurance, permits for for dismissal, period of notice, etc.) allowable deduction and permits for women workers shall be available in the languages working were in proper order in all estates visited. They understood by the workers or explained were two insurance issued for workers for each estate and carefully to them by a management the Ladang Sabah POM, i.e. Foreign Workers official. Compensation Scheme [FWCS] and Workmen’s Minor Compliance Compensation Insurance, both were issued by MSIG and expired on 30 Sep 2016. The document covers all issue such as working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, and reasons for dismissal, period of notice made available in Bahasa Malaysia which was understood by the workers. At the estates audited a number of field workers received less than RM800 as required in Minimum Wages Order. Main reasons provided by the management was either due to absent from work, long holidays or low productivity. 6.5.3 Growers and millers shall provide PMU Ladang Sabah grouping had provided adequate Complied adequate housing, water supplies, housing, water supplies, medical, educational and welfare medical, educational and welfare amenities in accordance with IOI guidelines stated in Group amenities to national standards or SIA, Paragraph 23. This guidelines partly are referring to above, where no such public facilities are available or accessible. the Workers’ Minimum Standard of Housing and Amenities Act 1990 which is only applied in Peninsular Malaysia. Minor Compliance Workers were given a small patch of land to grow vegetables/ fruit trees and keep poultry around their houses

in order to reduce the cost of living. The workers staying in the estate were provided with free electricity and treated pond water 24 hours daily. At the workers linesites visited were construction works replacing wooden quarters with safer and more comfortable brick quarters are sighted.

The migrant workers’ children had received free education in a NGO-managed school, i.e. Humana. Maintenance of the school building, furniture, electric and water supplied were under the purview of the estate management. Furthermore, a number of foreign teachers originally from

Indonesia were paid by the estate management as well. Ladang Sabah PMU was in the process of replacing the old HUMANA buildings with new buildings, some were already completed for example in Luangmanis estate. Community Learning Centre [CLC] also organized by HUMANA was built in Terusan Baru Estate to cater the needs for children who have completed primary school. This school was built by Ladang Sabah PMU for the children of their workers, however, from the interview with HUMANA Coordinator and teacher, CLC also attended by children from nearby plantations not belong to IOI. Sundry shops available outside at each estate audited. From interviews with the workers in PMU it was found that most household sundries, including frozen foodstuffs were available on sale. Workers also went to town once a month after pay day to buy sundries. Creche were available in each estate and they are well maintained. Crèche ayahs were well trained on procedures of using the first aid kits. Depending on the estate

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management, some crèche were provided with biscuits or chocolate drink, whilst in other estate the products supplied would be based on the list prepared by the crèche ayah. New crèche buildings constructed by Ladang Sabah PMU, for example in Bimbingan 2 and Terusan Baru Estates. Clinic in the Ladang Sabah POM linesite was also shared with workers from Moynod Estate as the linesite were located in the same place. The Health Attendance were responsible on monitoring and maintaining acceptable living standard in the workers quarters, e.g. buildings maintenance, rubbish collection, drainage system, children education, this monitoring was conducted through weekly linesite inspection, crèche inspection and VMO visit. The Health or Medical Assistants were well experienced in handling minor health issues. VMO visit which was conducted once a month will also include visits to the linesite and crèche before examining patients referred by the MA. Service and medicines provided by the clinic free of charge and cover the independents of the workers as well. Inspection to linesites carried out & recorded. General housekeeping & proper drainage at line-site observed. Previous 2015 year observation raised (OBS-MNM-01, OBS-MNM-02) had been effectively addressed, implemented & status closed.

6.5.4 Growers and millers shall make Workers were provided with a small patch of land to grow Complied demonstrable efforts to monitor and vegetables/fruit trees and keep poultry around their houses improve workers’ access to adequate, in order to reduce the cost of living. sufficient and affordable food. The availability of sundry shops within the estates helped Minor Compliance the staff and workers get their sundries nearby at a lower cost. It is verified that office staff were provided with transport to go shopping for sundry items in town at the end of each month i.e. after pay day upon specific request. Criterion 6.6 The employer respects the rights of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel. Indicators Findings and Objective Evidence Compliance 6.6.1 A published statement in local The published statements of policy which recognizes Complied languages recognising freedom of association shall be available. employee’s freedom of association, was noted to be available and widely displayed in Bahasa Malaysia and Major Compliance English. Each estates audited in Ladang Sabah PMU had formed the ECC as a mechanism to cater to the collective bargaining needs of the workers. Results of ECC meetings were minuted and available for verification. 6.6.2 Minutes of meetings with main There were the Employee Consultative Committee (ECC) Complied trade unions or workers representatives and a Gender Consultative Committee (GCC) at each shall be documented. estate. The ECC meetings were held once in every three Minor Compliance months and Gender Consultative Committee (GCC) meetings were held at least twice a year. Records of meeting and activities were maintained and verified. Criterion 6.7 Children are not employed or exploited.

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Indicators Findings and Objective Evidence Compliance 6.7.1 There shall be documentary There was no evidence of any child labor being used at the evidence that minimum age estates of Ladang Sabah PMU. requirements are met. Child Labor policy adopted by estate managements had Major Compliance stated that the minimum age of workers is 19 years. Site inspection of the employment records in all estates confirmed that this has been adhered to. HUMANA schools and ‘crèche’ were established to cater to the proper education of the workers children. Children at the appropriate age for secondary school are attending the CLC which is also managed by HUMANA but built with the help of IOI Ladang Sabah PMU. Inspections of the employment records including field trips in the estates of Ladang Sabah PMU confirmed that this criterion has been complied. 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. Indicators Findings and Objective Evidence Compliance 6.8.1 A publicly available equal The policy statements which recognized Equal Job Complied opportunities policy including Opportunity were widely available and displayed in local identification of relevant/affected groups languages and English. Inspections including interviews in in the local environment shall be the estates of Ladang Sabah PMU, checking of the documented. employment records including migrant workers, pay slips Major Compliance and deductions of wages (according to law) confirmed that this criteria has been maintained. 6.8.2 Evidence shall be provided that Based on interviews and feedback from the employees, Complied employees and groups including local migrant workers and review of ECC meeting minutes and communities, women, and migrant Grievance Book, it was verified that there had been no workers have not been discriminated issue of discrimination at the PMU. against. Major Compliance 6.8.3 It shall be demonstrated that Ladang Sabah PMU demonstrated that staff were hired and Complied recruitment selection, hiring and promoted based on specific criteria. However, promotion to promotion are based on skills, higher position sometimes took longer period due to the capabilities, qualities, and medical position sought was yet to be vacant. fitness necessary for the jobs available. Minor Compliance For foreign workers, hiring was based on employment agencies recommendation. However, it was evident that no discrimination on promotion as both men and women, local and foreign workers have equal opportunity to be promoted. Criterion 6.9 There is no harassment or abuse in the work place, and reproductive rights are protected. Indicators Findings and Objective Evidence Compliance 6.9.1 A policy to prevent sexual and all The established social policy had covered aspects on Complied other forms of harassment and violence sexual harassment, gender and women reproductive rights. shall be implemented and communicated to all levels of the There was a documented procedure on the management of workforce. sexual harassment and no one case reported in 2015 in all Major Compliance estates and POM visited. Pregnant and breastfeeding women were exempted from work associated with potentially hazardous chemicals and were given light duties such as work in and around the office and crèche. However, most of the pregnant women workers prefer to a very take a long holiday until they are

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no longer breastfeeding the infant. There were Gender Consultative Committees (GCC) specifically to address areas of concern to women. These committees headed by the managers and members are representatives from all areas of work. The minutes of meetings were documented and kept. For example, in Ladang Sabah POM, latest GCC meeting was conducted on 18 Dec 2015. The policy statements which recognized sexual harassment, gender and women reproductive rights were widely available and displayed in local languages and English. Briefing sessions had been conducted in all estates audited as well at the Ladang Sabah POM for both male and female workers, contractors & other stakeholders during the external stakeholder consultation session. 6.9.2 A policy to protect the The requirements of the policy to protect the reproductive Complied reproductive rights of all, especially of rights of all, especially of women were stated in their women, shall be implemented and employment contract documents which includes the communicated to all levels of the employee handbook for staff. workforce. Major Compliance Interviews with both male/female local / foreign women workers revealed their knowledge of the policy, their rights as a female worker, the understanding and awareness of potential sexual harassment, violence and knowledge of the mechanism to forward a complaint of sexual harassment when or if required. 6.9.3 A specific grievance mechanism The Grievance process flowchart and procedures were Complied which respects anonymity and protects displayed in the estate offices. The grievance mechanism complainants where requested shall be established at the PMU had been maintained. There were established, implemented, and gender committees specifically to address areas of concern communicated to all levels of the workforce. to women. These committees headed by the managers and members were representatives from all areas of work. The Minor Compliance minutes of meetings were documented and kept. Criterion 6.10 Growers and millers deal fairly and transparently with smallholders and other local businesses. Indicators Findings and Objective Evidence Compliance 6.10.1 Current and past prices paid for Estates in the Ladang Sabah PMU did not have any Complied Fresh Fruit Bunches (FFB) shall be dealings with smallholders. There was also no evidence to publicly available. suggest of any unfair business practices with the local Minor Compliance businesses. No change with regards to dealing with smallholders since last year and no evidence to suggest of any unfair business practices with the local businesses. 6.10.2 Evidence shall be available that There was no smallholder supplying FFB to Ladang Complied growers/millers have explained FFB Sabah POM. pricing, and pricing mechanisms for FFB and inputs/services shall be documented Ladang Sabah PMU maintained records on current and (where these are under the control of the past prices paid for FFB. Monthly prices are displayed at mill or plantation). the POM office and FFB price data were available to the Major Compliance public upon request. 6.10.3 Evidence shall be available that Based on employee contracts and meeting minutes Complied all parties understand the contractual (between Ladang Sabah PMU managements and agreements they enter into, and that employees) it was evidenced that all parties understand contracts are fair, legal and transparent. the contractual agreements they enter into, and that Minor Compliance contracts are fair, legal and transparent. Interviews with parties concerned confirmed that business

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practices with local businesses are conducted in a fair and transparent manner. Work tenders were open to appropriate parties and reviewed by Tender Committee before approval. The contractors were monitored during work in progress to follow safety requirements. 6.10.4 Agreed payments shall be made The PMU had policy to ensure agreed payments were Complied in a timely manner. made in a timely manner as per the contracts of Minor Compliance agreement made. Payments were made on time according to common practice of 60-day grace period. Criterion 6.11 Growers and millers contribute to local sustainable development where appropriate. Indicators Findings and Objective Evidence Compliance 6.11.1 Contributions to local Main contribution of the estates to the local development Complied development that are based on the could be demonstrated in the provision of facilities, results of consultation with local services and where feasible, monetary. For example communities shall be demonstrated. based on cooperation with Sabah Immigration Department Minor Compliance and Indonesian consulate, IOI had been assisting and sponsoring its foreign workers and their independents to acquire proper travelling documents if they did not have any. With regards to HUMANA, it was mentioned earlier that Ladang Sabah PMU had been replacing old HUMANA buildings with the new ones for the past few year. In fact Bimbingan 2 Estate will replace its HUMANA building with the new one in the coming financial term. The Community Learning Centre [CLC] was also built by the PMU in collaboration with HUMANA management in order to provide children completing primary school to still acquire necessary education suitable for their age. These HUMANA schools are not only for children within Ladang Sabah PMU but also open for children from surrounding area. Building of new houses were also observed in all estates visited as well as at the Ladang Sabah POM. Currently existing wooden quarters were mainly to accommodate the FFB contractors’ workers who stayed within the estates. In future these will also be replaced with new houses which are safer and more comfortable. Clinics were available in the linesites of several estates. From the interview with the Medical/Health Attendance as well as the teachers from nearby government school, i.e. SK Moynod, the clinics do provide treatment to the school children if it is really necessary especially during emergency. 6.11.2 Where there are scheme No scheme smallholders at Ladang Sabah PMU sighted Not applicable smallholders, there shall be evidence that efforts and/or resources have been allocated to improve smallholder productivity Minor Compliance Criterion 6.12 No forms of forced or trafficked labour are used. 6.12.1 There shall be evidence that no Estate workers were sourced by the IOI appointed agents Complied forms of forced or trafficked labour are and handled via IOI Sandakan Region office [SRO]. used. All procedures of bringing in foreign workers were with the

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Major Compliance approval from the Immigration Office. Based on records verified and interview with some of the workers, it was confirmed that there had been no occurrence of forced nor trafficked workers in IOI estates. 6.12.2 Where applicable, it shall be No incident of contract substitution reported so far. Complied demonstrated that no contract substitution has occurred. Minor Compliance 6.12.3 Where temporary or migrant A policy on Equal Opportunity was adopted and Complied workers are employed, a special labour implemented by Ladang Sabah PMU verified to have policy and procedures shall be covered all necessary aspects of migrant workers related established and implemented. issues. Major Compliance Criterion 6.13 Growers and millers respect human rights. Indicators Findings and Objective Evidence Compliance 6.13.1 A policy to respect human rights The “Sustainability Policy Statement” dated Mar 2014 Complied shall be documented and communicated signed by Dato’ Lee Yeow Chor had been implemented by to all levels of the workforce and the PMU and verified to have covered the necessary operations (see Criteria 1.2 and 2.1). aspects of human rights related issues. Major Compliance 6.13.2 As long as children of plantation The PMU was in collaboration the Yayasan Peduli Complied workers of Sabah and Sarawak are not secured a right to go to government Pendidikan Anak Indonesia (YPPAI), which was an NGO, school, the plantation companies should catering to the primary and secondary education needs of engage in a process to secure the the children of Indonesian foreign workers. children of the plantation workers access It was verified that free transport has been provided for to education as a moral obligation. children of the foreign workers and the PMU has Minor Compliance maintained contribution to the monthly operation of the

primary school. Inspections of the employment records including field visits to the estates of confirmed that this criterion has been complied.

Principle 7: Responsible development of new plantings Ladang Sabah PMU has documented procedures for this development but to date has not carried any new plantings after Nov 2005. Therefore, the requirements of Principle 7 are not applicable during this assessment.

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 continual improvement in key operations. Indicators Findings and Objective Evidence Compliance 8.1.1 The action plan for continual The PMU has identified the social and environmental Complied improvement shall be implemented, impacts in the internal SEIA, which was verified to be based on a consideration of the main implemented and monitored. Amongst the continual social and environmental impacts and improvement activities planned and progressively opportunities of the grower/mill, and shall include a range of Indicators covered by implemented were: these Principles and Criteria. • Commissioning of the Biogas plant for methane capture;

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As a minimum, these shall include, but • Energy saving from the new generator built next to are not necessarily be limited to: biogas plant; • Construction of Forest Fire Surveillance Tower at • Reduction in use of pesticides Bimbingan 2; (Criterion 4.6); • Replacing old FFB cages in the oil mill; • Environmental impacts (Criteria 4.3, 5.1 and 5.2); • Continuously building new workers quarters and • Waste reduction (Criterion 5.3); maintaining the old ones into acceptable living • Pollution and greenhouse gas (GHG) standards as required by the law. emissions (Criteria 5.6 and 7.8); • Built new crèches and HUMANA schools for foreign • Social impacts (Criterion 6.1); workers children. • Encourage optimising the yield of the • Support and assistance to the HUMANA and local supply base. Government schools. Major Compliance • Installation of new scheduled waste store;

• Locating new water treatment plant; • Data gathering on EFB application to their Agronomist for reduction of fertilizer usage.

3.1.1 Supply Chain Certification Standards Findings - on CPO Mill The Supply Chain model applied at Ladang Sabah grouping - POM during this assessment is Module D: Identity Preserved (IP)

Details of findings are as follows:

D.1 Definition Indicators Findings and Objective Evidence Compliance D.1.1 Complied The POM only processed FFB from its own A mill is deemed to be Identity Preserved supply base (see Section 1.3). It was verified that (IP) if the FFB used by the mill are sourced there was no sources of FFB from any from its own supply base certified to the outgrowers or independent suppliers / RSPO Principles and Criteria (RSPO P&C). smallholders. Certification for CPO mills is necessary to The CPO Mill was therefore applying the Identity verify the volumes and sources of certified Preserved (IP) module. FFB entering the mill, the implementation of any processing controls (for example, if physical separation is used), and volume sales of RSPO certified products. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. If a mill processes certified and uncertified FFB without physically separating the material then only Module E is applicable.

D.2 Explanation Indicators Findings and Objective Evidence Compliance

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D.2.1 Complied The estimated tonnage of CPO and PK products The estimated tonnage of CPO and PK that could potentially be produced by the POM is products that could potentially be produced recorded in this Assessment Report. This figure by the certified mill must be recorded by the represents the total volume of certified palm oil certification body (CB) in the public product (CPO and PK) that the certified mill is summary of the P&C certification report. allowed to deliver in a year. The actual tonnage This figure represents the total volume of produced had been recorded in each annual certified palm oil product (CPO and PK) that surveillance report (see Section 1.8.2 Table 6 and the certified mill is allowed to deliver in a Section 1.8.3 Table 7). year. The actual tonnage produced shall then be recorded in each subsequent annual surveillance report.

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

D.3 Documented procedures Indicators Findings and Objective Evidence Compliance D.3.1 The site shall have written procedures Procedure for IP Module ‘RSPOSC/SOP/IP/3 Complied and/or work instructions to ensure the issue 04, dated 2 Jan 2015’ documented. implementation of all the elements specified in these requirements. This shall include at minimum the following: a) Complete and up to date procedures The procedure covered the implementation of all Complied covering the implementation of all the elements of IP Module, including all the elements in these requirements requirements for controlling the FFB receipt, processing, sales, CPO and PK dispatch, training and claims. The documented procedure and its implementation confirmed to have complied with all the specified requirements of Segregation (IP) Module D. b) The role of the person having overall Mill manager, Mr. Kalai had the overall Complied responsibility for and authority over the responsibility and authority for implementation and implementation of these requirements and compliance with the documented procedure. compliance with all applicable He and other relevant staff under his charge requirements. This person shall be able to demonstrated competence, skill and knowledge of demonstrate awareness of the site’s the RSPO Supply Chain Certification Standard procedures for the implementation of this Module D requirements and its implementation. standard. D.3.2 Ref Procedure: RSPOSC/SOP/IP/3 issue 04, 2 Complied The facility shall have documented Jan 2015 - IP Module. procedures for receiving and processing For the period FY 2014/2015, the POM received certified and non-certified FFBs. and processed FFB mainly from the PMU 8 estates and some from IOI’s other certified PMUs. All supplies of FFB were subjected to verification of documents and quality checks by weighbridge personnel. The identification and documentation needed for supply and processing from the other sources or suppliers are adequately addressed under the

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procedure for IP Module. Ladang Sabah POM has 6 CPO storage tanks that stored the IP quantities (4 units: 1,500mt; 2units: 2,500mt capacity). D.4 Purchasing and goods in Indicators Findings and Objective Evidence Compliance D.4.1 Oil mill had maintained record of tonnages and Complied The facility shall verify and document the supply source of FFB from the respective estates tonnages and sources of certified and non- at the weighbridge station, in the dispatch chit and certified FFBs received. weighbridge ticket and these are reported daily to the Sandakan Regional office and weekly to the Head Office at Putrajaya. Noted that the some FFB sources from other IOI PMUs i.e. Sakilan POM was also RSPO-IP certified. These were supplied under special circumstances only e.g. when those mills undergo maintenance. There were no non-certified FFBs. D.4.2 The Mill monitored FFB reception, CPO and PK Complied The facility shall inform the CB immediately production. IOI HQ and POM had internal if there is a projected overproduction of monitoring and reporting mechanism for advising certified tonnage. the CB of production variations such as projected overproduction situation, when such issue arises. So far, there is no projected overproduction. D.5 Record keeping Indicators Findings and Objective Evidence Compliance D.5.1 The records and reports are available from the Complied The site shall record and balance all computerized system. Also, hard copies of receipts of RSPO certified FFB and records and reports are properly filed and readily deliveries of RSPO certified CPO and PK accessible. on a three-monthly basis. Inspection of records and reports at the Mill confirmed these were accurate, complete and

updated daily. As per the SOP, the records and reports are archived and stored in the Mill Office for a minimum period of 5 years. Transaction documents and bookkeeping of FFB, CPO and PK are done daily and monthly summary submitted to Head Office. A volume balance recording system that shows FFB deliveries, CPO and PK production and dispatch is balanced every 3 months. D.6 Processing Indicators Findings and Objective Evidence Compliance D.6.1 Ref Procedure: RSPOSC/SOP/IP/3 issue 04, 2 Complied The site shall assure and verify through Jan 2015 - IP Module. documented procedures and record Confirmed from records that Ladang Sabah POM keeping that the RSPO certified oil palm only received and processed from its own estates product is kept segregated from non- since last RSPO certification in Feb 2015 till the certified material including during transport current audit period. and storage. The processing facility has established and implemented a clear procedure and mechanism for the RSPO CSPO/IP module. Review and on- site verification confirmed that the mechanism was implemented and in compliance with the module requirements at the mill including

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transport and storage. D.6.2 Documents and records provided documented The objective is for 100 % segregated evidence for the FFB receipt and processed, CPO material to be reached. and PK produced to be traceable to certified material. Complied

3.1.2 Status on Supply Chain on POM:

Based on the documents and records presented during the on-site verifications made, it is concluded that the Ladang Sabah POM has been able to comply with the requirements of the RSPO SCCS under the ‘IP’ module and is thus eligible for ‘IP’ trading for its palm products for year FY 2015/2016.

3.1.3 Monitoring of CSPO and CSPK traded:

Trading of the CSPO and CSPK was monitored by the POM via RSPO eTrace including RSPO GreenPalm and ISCC. The records maintained at the POM relied on internal communications of the trading done by the HQ, Kuala Lumpur on the CSPO delivered to IOI Edible Oils Sdn Bhd (Refinery). The volumes of CSPO traded as verified during assessment are as follows:

CSPO - Actual CSPK - Actual CSPO - Actual CSPK - Actual Jul 2014-Jun 2015 Jul 2014-Jun 2015 Jul 2015 till Dec Jul 2015 till Dec 2015 (MT) (MT) 2015 (MT) (MT) RSPO IP E-trace 39,519.10 8,120.00 21,371.98 2,490.00

Book & Claim - - - - (GreenPalm) ISCC 30,516.09 - - -

Total Traded 70,035.19 8,120.00 21,371.98 2,490.00

Actual Produced 90,845.86 23,923.93 48,555.42 13,206.78

Notes: • Based on records maintained at the POM, it was verified that the total tonnage of CSPO traded has not exceeded the annual certified quantity. • The PK is entirely sold to IOI Edible Oil at Sandakan and there is no outsourcing of the PK crush to an independent palm kernel crusher.

3.2 Status of Identified Noncompliance and Corrective Actions, Observations and Positive Elements. The status of the Noncompliances (NCR) and Observations (OBS) identified against the MYNI Compliance Indicators is as per the details below: Assessment Type Year Noncompliance Observations Follow up status (NCR) (OBS) Main Assessment 2012 3 - Minor 3 All NCRs and OBS closed during ASA-01. Annual Surveillance – 01 2014 1 - Major 1 NCR and OBS closed during ASA-02. Annual Surveillance – 02 2015 Nil 4 OBS closed during ASA- 03.

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Annual Surveillance – 03 2016 Nil 3 Next surveillance

Year 2015: ASA-02 No NCR

Year 2016: ASA-03 No NCR

3.2.1 Summary of Observations: The Observations (OBS) identified during current assessment and follow up done on the previous assessment are detailed as per below. Note: The progress made on the observations listed will be reviewed during the subsequent Annual Surveillance Assessment on the action and implementations taken.

Year 2015: ASA-02 (4 Observations) Status MYNI Opened Closed Remark, Ref No: Location Details of Observation Indicator date date if any

CBK-01 4.6.5 Estate - Sg. At Sg Sapi estate, during field visit at Field 12 Feb 16 Feb Used Sapi. no.95 E, where spraying activity was being 2015 2016 containers for conducted along the side road, the 2 re- pesticides were used containers that contain poisonous clearly marked chemical (Glyphosate) was not clearly marked.

AL-01 5.2.4 Estates – Ongoing monitoring of conservation areas 12 Feb 16 Feb Signage Bimbingan 1, can be better implemented and 2015 2016 repaired; red Sg. Sapi and progressively updated in the management marking at Moynod. plans on items such as buffer zones 1) maintenance of faded signages; visible; debris 2) at buffer zones, the markings on palms cleared at river which are not to be sprayed with tributaries/ chemicals; and stream 3) clearing of debris resulting from recent floods to prevent clogging of river tributaries / streams.

MNM-01 6.5.3 Estate - Line-site inspection at Bimbingan 1 should 12 Feb 16 Feb Line-site Bimbingan 1. be consistently conducted at least once a 2015 2016 inspection week and records updated. implemented & recorded MNM-02 6.5.3 Estate – Water flowing out from the kitchen of the 12 Feb 16 Feb General Moynod. workers quarters should be ensured to be 2015 2016 housekeeping connected to the common drain. & proper Overgrown grass found at the line-site drainage at drains should be regularly removed to line-site ensure free flow of the water. observed

Year 2016: ASA-03 (3 Observations) Status MYNI Opened Closed Remark, Ref No: Location Details of Observation Indicator date date if any

OBS- 1.2.1 Mill, estates Content inside Human Rights Policy 18 Feb To follow up WN-01 should be further elaborated. 2016 during ASA- 04

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OBS- 2.1.4 Mill, estates Frequency of tracking changes of 18 Feb To follow up WN-01 legislation should be clearly specified. 2016 during ASA- 04 OBS- 6.5.1 Estates Cases of absconded workers should 18 Feb To follow up JMD-02 be reported to Police Department in 2016 during ASA- timely manner. 04

3.2.2 Identified Positive Elements 1) Commissioning of new biogas plant for treating POME.

2) Significant reduction of diesel consumption at the oil mill.

3) Improved Housing, Crèche and Medical facilities for the workers.

4) Ongoing training & briefing provided to the permanent & contract workers.

5) Work opportunities given to local community and villagers.

3.3 Feedback Raised by Stakeholders and Findings

Prior to and during the Assessment, written and verbal feedback communicated from the stakeholders on the environmental and social performance of Ladang Sabah PMU operations were sourced. All pertinent feedback issues were reviewed and followed up for verification and these had been accordingly incorporated into the report findings. See table below:

3.3.1 Feedback Raised by Stakeholders (Surveillance Assessment ASA-02 (Year 2015)

Stakeholders’ Feedback PMU Response Intertek verification / Further action comment on further from PMU (if any) action (if any) Government Agencies ASA-02: Feedback via letter dated 28 Jan 2015 from Forestry Dept Sabah. Contents include: a) The PMU is bordering with Previous recommendations Verified during on-site Measures taken Luangmanis FR (Class 6) given by Forestry Dept, Sabah assessment that the and monitoring of and Segaliud-Lokan FR has been clarified and adhered PMU has been implementation is (Class 2) Forest Reserve to. implementing the adequate. Areas. Ongoing consultations with the appropriate measures b) Buffer zone of 50m to be Forestry Dept, Sabah will be needed. maintained along boundary held over the forth coming See report details of FR with Ladang Sabah weeks to discuss and consider under P&C 4, 5, 6 & 8. estates. the approprite actions needed c) Riparian of 30m to be regarding addtional preserved along rivers and recommendations given by restoration done by planting them for the riparian of forest pioneer species preservation. e.g. Binuang and Laran d) Illegal hunting is prohibited and to be monitored. e) Open burning is prohibited at boundary near FR areas.

Non-Governmental Organizations ASA-02: No feedback received No response needed. No response needed. Nil

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Local Communities ASA-02: A total of 11 local community stakeholders (comprising 1- government agencies, 6- contractors / traders, 1 – neighbouring smallholders, 2- Govt.school teachers and 1- HUMANA teacher) were interviewed during the on-site assessment period. Concerns and suggestions raised include: • To improve road • Schedule on road Verified during on-site • Ongoing maintenance specifically the maintenance is ongoing assessment that the refurbishment & Labuk – Bimbingan estates and subject to weather PMU has a mid and maintenance of road. permitting periods as year long term management road carried out. • Some stretches of estates end flooding is currently plan for the main roads are narrow and experienced. imporvement of • World fuel prices widening them is proposed i.e infrastructure, social reduced since to allow 2 trucks passing at • Road widening will be and environmental last year. the same time and avoid considered where possible needs of the local Contract rate for potential accidents. at the relevant estate roads. community. transportation is • Contract rate for See report details not significant transportation e.g. Palm • Transport contract rates are under P&C 4, 5, 6 & 8) concern. kernal to refinery, should be subject to negotiation with reviewed and revised in view the HQ at KL. • Ongoing of fuel price and operations construction & cost increases. • Housing improvement for repairing work • Housing provided to some the said contractors carried out to Contractors workers could be workers will be considered. housing area of further improved. workers. • Contractors confirmed that • Ongoing consultations will payments for contracts were be maintained with the done in timely manner and contractors and local need to be continued. community on the socal • Present support for local improvements. Govt. School ie SK Maynod is satisfactory. Other Interested parties ASA-02: No feedback received No response needed. No response needed. Nil

3.3.2 Feedback Raised by Stakeholders (Surveillance Assessment ASA-03 (Year 2016)

Stakeholders’ Feedback PMU Response CB verification / Follow up comments comments (if any) ASA-03: Feedback via letter dated 11 Jan 2016 from Forestry Dept Sabah. Contents include: a.Maintain 50m buffer zone Notification given by Forestry Verified during on-site Measures taken between forest & plantation; Dept, Sabah had been assessment that the and monitoring of restore degraded areas, & clarified and adhered to. PMU had been implementation is ensure signboards maintained; Ongoing consultations with the implementing the adequate. b. Earlier notification before Forestry Dept, Sabah were appropriate measures commencement of planned to consider the needed. development bordering to approprite actions needed to See report details

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Report No.: R9284/12-4 IOI Corporation Berhad Page 50 of 63 (Ladang Sabah Grouping, Annual Surveillance Assessment-03) forest reservces; tighten control as under P&C 4, 5, 6 & c. Maintain 30m riparian buffer recommended. 8. along both sides of rivers; d. Organize environment awareness programme for workers; e. Prior approval required if to use road & river for transportation crossing forest reserves; f. Ensure proper entrance/gate & access control; g. Initiate forest fire unit/crews, & forest fire management plan; h. Practice effective IPM; i. Ensure worker of not hunting & poarching in forest reserves; j. Support long-term conservation programme.

Non-Governmental Organizations: Communication done via email Ongoing consultations will be Verified during on-site Nil on 5 Jan 2016. See list under maintained. assessment that no para 2.5. No response needed. response needed. No feedback received.

Local Communities - Stakeholders’ Consultation: At IOI Ladang Sabah PMU, a total of 8 stakeholders were present at the Stakeholders Consultation (2 agri-supply, 1 transporter, 2 contractors, 2 HUMANA school,1 government school). They were interviewed by the auditors without the presence of any of the PMU staff.

Concerns and suggestions received during interviews and stakeholder consultations: a. Transporter commented The PMU will consider the To be followed up --- long waiting time encountered concerns and suggestions during the next after CPO loading & weighing from the stakeholders briefed Annual Surveillance in order to obtain final by the auditors during the Assessment. despatch document. closing meeting. b. Representative from SK Maynod (school) commented the canteen experiencing dusty condition whenever heavy vehicles passed by the road. c. Other representatives from contractor, agri-supply, HUMANA provided good feedback & thankful for the contributions provided by IOI Ladang Sabah PMU.

Local Communities -

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4.2 INTERTEK- RSPO P&C Certificate details for Ladang Sabah Grouping

Certificate No: RSPO 928488

Original Issue date: 3 Apr 2013

New Issue date (ASA-03): 3 Apr 2016

Certificate Expiry date: 2 Apr 2018

Organization IOI Corporation Berhad

Address of Head Office: Level 8, Two IOI Square, IOI Resort, 62502 Putrajaya, Malaysia

RSPO Membership No: 2-0002-04-000-00

Plantation Management Unit: Ladang Sabah Grouping

Standards: RSPO Principles and Criteria (Apr 2013); Malaysian National Interpretation (MY-NI

2014); RSPO Supply Chain Certification Standards (Nov 2014) for the Palm Oil Mill Certification scope: Production of Crude Palm Oil and Palm Kernels

Supply Chain model for Identity Preserved (IP) CPO & PK:

Details of the Mill and Supply bases covered by this certificate and the tonnage approved are:

GPS Reference Certified Name Address Area (ha) Latitude Longitude o o Ladang Sabah Ladang Sabah Palm Oil Mill, 05 44.449’ N 117 36.623’ E Palm Oil Mill Mile 45, Sandakan/Telupid Road, (Mill Capacity: 90mt/hr) WDT 164, 90009 Sandakan, Sabah.

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Moynod estate Moynod Estate, 05o 44.449’ N 117o 36.623’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. Luangmanis estate Luangmanis Estate, 05o 45.800’ N 117o 36.382’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. Laukin estate Laukin Estate, 05o 46.708’ N 117o 31.946’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. Sg. Sapi estate Sungai Sapi Estate, 05o 48.452’ N 117o 31.020’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. Labuk estate Labuk Estate, 05o 42.785’ N 117o 29.769’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. Terusan Baru Terusan Baru Estate, 05o 45.853’ N 117o 36.623’ E estate Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. Bimbingan 1 estate Bimbingan 1 Estate, 05o 37.276’ N 117o 26.755’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah. Bimbingan 2 estate Bimbingan 2 Estate, 05o 37.177’ N 117o 25.376’ E Mile 45, Sandakan/Telupid Road, WDT 164, 90009 Sandakan, Sabah.

The annual certified tonnages produced at the PMU are detailed as follows:

Ladang Sabah POM Annual Tonnages (MT) Certified FFB 449,510.00 Certified CPO 96,645.00 Certified PK 25,847.00 Supply chain module Identity Preserved (IP)

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Appendix A:

Qualifications of Lead Assessor and Assessment Team

Mr. William Ng Tuck Seong – Lead Assessor / Technical Expert (Palm Oil Mill and Supply Chain) - Bachelor of Science (Biotechnology), Master in Business Administration

Mr. William is an IRCA Third Party Assessment (TPA) Lead Auditor and IRCA Lead Tutor for IRCA ISO 9001 and ISO 22000 Food Safety Management Systems (FSMS) Lead Auditor Courses in Intertek, Malaysia. He has over 15 years of fieldwork and experience in Agricultural and Food related auditing. He has successfully completed the IRCA accredited Lead Auditor course in ISO 9001:2015, ISO 22000, RSPO Principles and Criteria Lead Assessor Course and International Sustainable Carbon Certification (ISCC) Lead Auditor course. He has also completed the RSPO training on RSPO P&C (2013) and RSPO RED requirements. He is currently the Food Safety Manager of Intertek, Malaysia and has performed over 600 auditing days on quality, food safety and hygiene assessments in various sectors including oil palm plantations. He was the RSPO CB Assessment Team Member which audited several RSPO certified Plantation Management Units since in 2012.

Mr. Jumat Majid (JMD) – Assessor / Technical Expert (Social Responsibility, Workers Welfare and GAP) – BSc (Social Science) Mr Jumat Majid (JM) has over 15 years work experience in the agriculture sector. He has successfully completed the IRCA accredited Lead Auditor course in ISO 9001:2008 and RSPO P&C MY-NI Assessor course. He has also successfully completed training programs in Organic Agriculture Development and had performed organic agriculture inspections and assessments for more than 6 years. He has been involved in NGO work in the areas of social impact assessments within the South East Asia region. He is a member of the RSPO Assessment team which audited several RSPO certified Plantation Management Units since 2010.

Mr. Chin Bit Kee (CBK) – Assessor / Technical Expert (Good Agriculture Practice, Integrated Pest Management and Social) – BSc in Food Technology, University of Reading, UK

Mr. Chin Bit Kee has more than 5 years working experience in the oil palm plantation, agriculture & social (worker welfare) related field. He has successfully participated in RSPO training conducted internally by Intertek on 17 April 2014 and completed a supervised period of training in practical auditing in agriculture industry and related field, with more than 15 days audit experience in at least 3 audits at different organizations. He has adequate knowledge on Palm Oil sector such as industry fundamentals sustainability, social and OHS issues (e.g. worker welfare issues and social matters such as employment terms, gender issues, worker welfare etc,) environmental matters (e.g. pollution control , conservation of resources). He is a member of the RSPO CB Assessment team which audited several RSPO certified Plantation Management Units since 2014.

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Appendix B:

Assessment Plan (Actual)

Date Time Assessors and Assessment Activity (Note 3) Asssessment Team 15 Feb 16 8-1 Travel to Ladang Sabah grouping Palm Oil Mill (POM) Office Monday 1-2 Lunch Break 2-2.30 Opening Meeting and Briefing at POM Office (Day 1) (to be attended by representatives from the Estates as well) 2.30-6 Document Review and Assessment by all Assessors on respective RSPO P&C:1 to 8 at POM NTS CBK JMD Site assessment at Palm Oil Site assessment at Palm Site assessment at Palm Oil Mill Oil Mill Mill • P1 Transparency • P2 Laws & regulations • P2 Laws & regulations • P2 Laws & regulations • P4 Best Practices at Mill • P6 Employees, Individuals & • P3 Economic & Financial • P8 Continual Communities incl. Gender Viability Improvement Issues • P5 Environmental, • P8 Continual Improvement Conservation & HCV • P8 Continual Improvement • SCC for POM • Review of changes for compliance to revised RSPO P&C, MYNI and RSPO SCC • Verification of effectiveness of corrective actions for non-conformances • Review of Time Bound Plan • Verification for compliance with rules on partial certification 5.00 pm - Travel to Hotel & Break 6.00 pm 6.00 pm - Team Meeting and Discussion 7.00 pm

Date Time Assessors and Assessment Activity 16 Feb 16 8.30-1 NTS CBK JMD Tuesday Site assessment at Site assessment at Site assessment at Luangmanis Estate Luangmanis Estate Luangmanis Estate (Day 2) • P1 Transparency • P2 Laws & regulations • P2 Laws & regulations • P2 Laws & regulations • P4 Best Practices at • P6 Employees, • P3 Economic & Financial Estates Individuals & Viability • P7 New Planting (if any) Communities incl. • P5 Environmental, • P8 Continual Gender Issues Conservation & HCV Improvement • P8 Continual • P8 Continual Improvement Improvement 1-2 Lunch Break 2-5.30 Continue site assessment at Luangmanis Estate 5.30-6 Travel to Hotel & Break 6-7 Team Meeting and Discussion

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Date Time Assessors and Assessment Activity 17 Feb 16 8.30-1 NTS CBK JMD Wednesday Site assessment at Terusan Site assessment at Site assessment at Baru Estate Terusan Baru Estate Terusan Baru Estate (Day 3) • P1 Transparency • P2 Laws & regulations • P2 Laws & regulations • P2 Laws & regulations • P4 Best Practices at • P6 Employees, • P3 Economic & Financial Estates Individuals & Viability • P7 New Planting (if any) Communities incl. • P5 Environmental, • P8 Continual Gender Issues Conservation & HCV Improvement • P8 Continual • P8 Continual Improvement Improvement 1-2 Lunch Break 2-5.30 Site assessment at Site assessment at Site assessment at Bimbingan 2 Estate Bimbingan 2 Estate Bimbingan 2 Estate • P1 Transparency • P2 Laws & • P2 Laws & regulations • P2 Laws & regulations regulations • P6 Employees, • P3 Economic & Financial • P4 Best Practices at Individuals & Viability Estates Communities incl. • P5 Environmental, • P7 New Planting (if any) Gender Issues Conservation & HCV • P8 Continual • P8 Continual • P8 Continual Improvement Improvement Improvement 5.30-6 Travel to Hotel & Break 6-7 Team Meeting and Discussion

Date Time Assessors and Assessment Activity 18 Feb 16 8.30-11 NTS CBK JMD Thursday Site assessment at Palm Oil Stakeholders’ Consultation on the following categories Mill (see Notes 1 and 2 below): (Day 4) • P1 Transparency • Contractors • P2 Laws & regulations • Suppliers • P3 Economic & Financial • Transporters Viability • NGOs • P8 Continual Improvement • Government Department / Agencies • SCC for POM • Local Community • Settlers, in the case of independent and organized smallholders. Notes 1. It is mandatory for the PMU to inform Intertek and provide the information (as a minimum the no. of stakeholders in each applicable category and contact number) on the stakeholders prior to the assessment. 2. This will facilitate the random and impartial selection of stakeholders (including independent and organized smallholders, where applicable) and to meet the sample size requirement. 11-1 Site assessment at POM or estates to follow up on any specific criteria/areas 1-2 Lunch Break 2-3.30 Preparation for Closing Meeting 3.30-4 Team Meeting and Discussions with PMU Management Representative 4-4.30 Closing Meeting & Briefing at Palm Oil Mill Office

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Appendix C-1:

Location Map of IOI Ladang Sabah, Sandakan, Sabah (Scale 1: 200 km)

IOI Ladang Sabah Grouping

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Appendix C-2-1: Luangmanis estate

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Appendix C-2-2: Terusan Baru estate

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Appendix C-2-3: Bimbingan 2 estate

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Appendix D:

Photographs of Assessment findings at Ladang Sabah PMU, ASA-03

Biogas plant was fully commissioned Newly built scheduled waste store at Luangmanis estate

Boundary site adjacent to Segaliuq Lokan Forest Buffer zone from river at Luangmanis estate. Red Reserve at Bimbingan 2 estate marking on palm tree sighted

Protected steep hill (HCV4) at Terusan Baru estate Oil trap from workshop to prevent spillage at Terusan Baru estate

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Appendix E:

Time Bound Plan as submitted by IOI Corporation Berhad (updated Dec 2015)

No PMU Main Certification Current Status Updated information for Partial Assessment Status Certification, Clause 4.2.4 RSPO Certification Systems for Certified and Uncertified units 1. Pamol POM, May 2008 Re-Certified ASA-01 planned in 2015. No outstanding issues Sabah in Feb 2014 2. Sakilan POM Nov 2008 Certified in Re-Certification planned for 2015 No outstanding issues Mar 2010 3. Pamol Kluang Mar 2009 Certified in Re-Certification planned for 2015 No outstanding issues POM Mar 2010 4. Gomali POM, Aug 2009 Certified in Re-Certification planned for 2015 No outstanding issues Aug 2010 5. Baturong POM Sep 2009 Certified in Re-Certification planned for 2015 No outstanding issues Oct 2010 6. Bukit Leelau Apr 2010 Certified in Re-Certification planned for 2015 No outstanding issues POM Nov 2010 7. Mayvin POM Aug 2010 Certified in Re-Certification planned for 2015 No outstanding issues Dec 2010 8. Pukin POM Dec 2010 Certified in ASA-04 completed for 2015. No outstanding issues Johor Jun 2012 9. Leepang POM Aug 2012 Certified in ASA-02 planned for 2015. No outstanding issues Dec 2013 10. Syarimo POM Sep 2012 Certified in ASA-02 completed for 2015. No outstanding issues Mar 2013 11. Ladang Sabah Oct 2012 Certified in ASA-02 completed for 2015. No outstanding issues POM Apr 2013 12. Morisem POM, Sep 2013 Certified in ASA-02 completed for 2015. No outstanding issues Sabah Dec 2013 13. IOI-Pelita, Planned – Uncertified New certification for IOI-Pelita Settlement Discussion and Sarawak 2019 unit (Sarawak) is pending resolution of resolution with local community is land dispute and RSPO decision. presently still on-ongoing. No POM yet. RSPO has been briefed on the 17 Sept 2015 and 27 Oct 2015 about IOI Pelita’s Mediation Plans.

There has been 2 meetings between IOI Pelita and the LTK community since IOI’s discussion with RSPO - on the 9 Nov 2015 and another on the 1 Dec 2015 - where RSPO had attended the latter as an observer together with local expert from Sarawak (Law Professor specializing in the Rights of Indigenous Community) during the discussions.

Next Meeting dates are planned on 30 Dec 2015 or 12 Jan 2016 subject to receiving confirmation from all Parties.

14. Unico POM-1, Planned – Uncertified Acquired in 2014. Established OP Certification preparations in Sabah 2018 unit plantation (before 2005). progress Supply base do consists of external / independent smallholders. Delay is expected due to further monitoring of implementation of RSPO requirements with regards to the external FFB suppliers.

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Thus readiness for external audit planned in 2018 only.

15. Unico Desa Planned – Uncertified Acquired in 2014. Established OP Certification preparations in POM-2, Sabah Sep 2017 unit plantation (before 2005). progress Supply base comprised of own estates.

16. PT SKS, Planned – Uncertified Acquired in 2009 (new concession Certification preparations in Indonesia 2016 unit land). progress POM was commission in Feb 2015 and Governmental ‘Hak Guna Delays expected on the HGU. Usaha’ application in progress. Note: NPP issue was considered resolved in May 2012 via letter from RSPO.

17. PT BNS, Planned – Uncertified Acquired in 2009 (new concession Certification preparations in Indonesia 2017 unit land). progress. POM was commission in Feb 2015 and Governmental HGU application Pending the issuance of HGU. in the process. Note: NPP issue was considered resolved in May 2012 via letter from RSPO.

18. PT BSS, Planned – Uncertified Acquired in 2009 (new concession Certification preparations in Indonesia 2019 unit land). progress. No POM yet, still in development phase. Governmental ‘Hak Guna Pending the issuance of HGU. Usaha’ application in progress. NPP for on-going planting was completed and posted on RSPO website.

Note: Negotiation regarding compensation on the accidentally cleared HCV is in progress with RSPO.

19. PT KPAM, Planned – Uncertified Acquired in 2010 (new concession HCV assessment completed, Indonesia 2020 unit land). SEIA in progress. No POM planned yet. Re- application of expired ‘Izin Lokasi’ NPP notification will follow once in progress and development the HCV and SEIA assessments planned in 2017. reports are completed and reviewed. Earliest expected in 2017.

-End-

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