RSPO Audit Report

Audit Report

3rd Annual Surveillance Audit Report for

PT. SMART Tbk. Tanah Laut Mill and Its Supply Bases

RSPO20010

RSPO Membership number: 1-0019-05-000-00

Audited Address: Tanah Laut Mill: Kecamatan Kintap, Kabupaten Tanah Laut, South Kalimantan, Indonesia

Its Supply Bases: Tanah Laut Estate Kecamatan Kintap, Kabupaten Tanah Laut, South Kalimantan, Indonesia Kintapura Estate Kecamatan Kintap, Kabupaten Tanah Laut, South Kalimantan, Indonesia

Date of audit: 12 August 2015

COMMERCIAL- IN – CONFIDENCE I The contents of this report must not be disclosed to a third party without the agreement of the SAI Global Client

Audit Report

Table of contents Page Executive Overview 4 Abbreviations Used 5

1.0 SCOPE OF THE ASSESSMENT 7 1.1 Introduction 7 1.2 Audit Objective 7 1.3 Scope of Certification 7 1.4 Location of Mill and Estates 8 1.5 Description of Supply Base 8 1.6 Date of Plantings 10 1.7 Area of Plantation 10 1.8 Approximate tonnage offered for certification (CPO and PK) 11 1.9 Other certificates held 15 1.10 Organizational information/contact person 15 1.11 Timebound plan for other management unis 15 1.12 Partial Certification Requirements 28 1.13 Date of Issue of Certificate dan Date of Previous Assessment 29

2.0 AUDIT PROCESS 29 2.1 Certification Body 29 2.2 Audit Methodology 30 2.3 Qualification of the Lead Auditor and Audit Team Members 31 2.4 Stakeholder Consultation 32 2.5 Date of Next Surveillance Visit 33

3.0 AUDIT FINDINGS 33 3.1 Action taken on previous audit issues 33 3.2 Claim and use of certification mark and or logo 33 3.3 Summary of findings 34 3.3.1 RSPO Principle and Criteria 34 3.3.2 RSPO Supply Chain 144 3.3.2.1 RSPO Supply Chain Standard – Module E Mass Balance 144 3.3.2.2 RSPO Supply Chain System 155 3.4 Recommendation 157 3.5 Environmental and social risk for this scope of certification for planning of the 157 surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of 157 Assessment Findings Page List of Tables 1 Mill and Estates GPS Locations 8 2 Tanah Laut Mill Estimated FFB Production of the Supply Bases 2016 8 3 Tanah Laut and Kintapura Estates Age Profiles of Planted Palms 2015 10 4 Tanah Laut and Kintapura Estates and Area Planted 2015 10 5 Tanah Laut and Kintapura Estates Land Use Summaries 2015 10 6 Tanah Laut Mill FFB Production Trend 2011-2014 11 7 Tanah Laut Mill Total CPO and PK Production 2014 – 2015 and Estimate 11 Production of 2015 – 2016 8 Tanah Laut Mill Actual Production of Certified CPO and PK, Actual volume 13 since date of last reporting period 9 Tanah Laut Mill Estimated Production of Certified CPO and PK 14

Audit Report

Table of contents Page 10 Other Certificates Held by Mill and Estates 15 11 RSPO Certification Time Bound Plan 16 12 List of internal and external stakeholder 32

List of Figures Page 1 Map of Mill and Estates Location 9

List of Appendices Page A Audit Plan 158 B Previous nonconformities, corrective actions and status 161 C Nonconformities, Corrective Actions and Observations Summary 176 D Stakeholder’s issues and comment 185 E Definition of, and action required with respect to audit findings 191

Audit Report

Executive Overview

This is the third (3rd) annual surveillance audit visit on 10 – 12 August 2015 against the Generic RSPO Principles and Criteria for Sustainable Palm Oil Production, May 2013 and RSPO Supply Chain Certification Standard, CPO Mill, Module E Mass Balance, November 2014.

PT. SMART Tbk. Tanah Laut Mill operations comprising one mill, two oil palm estates as supply bases: Tanah Laut Estate and Kintapura Estate of PT. SMART Tbk. There were also supply base from independent third party which excluded from the scope of certification.

Two (2) minor and five (5) major non-conformances were issued during this audit. The organization has followed up by submitting correction and corrective action plan. Follow up audit for verification on the correction and corrective action of the major and minor NCR issued was done on 12 August and 9 September 2015. The 1 (one) minor and 4 (four) majpr non-conformances issued in the 3rd annual surveillance audit has been rectified and considered as closed. One minor non- conformance is still open.

There was land dispute with one of community member regarding closing of Estate access. The Estate suggested to management to take the issue to court. Until the audit completion, there has no respond from the management yet. This will be concern area during next visit.

The audit concluded that PT. SMART Tbk. Tanah Laut Mill and its supply bases operation were found complies with the requirements of the Generic RSPO Principles and Criteria for Sustainable Palm Oil Production, May 2013 and RSPO Supply Chain Certification Standard, CPO Mill: Module E Mass Balance, November 2014. The estimate figures of production offered for certification 2014 are: Estimated tonnage of certified CPO produced : 24,395.55 MT Estimated tonnage of certified PK produced : 6,042.05 MT

Therefore PT. SMART Tbk. Tanah Laut Mill and supply bases can continues to be certified as RSPO Mass Balance Model CPO and PK producer.

Audit Report

Abbreviations Used

AAA Agronomy Advisory Audit ANDAL Environmental Impact Analysis (Analisis Dampak Lingkungan) BHL Daily basis paid workers (Buruh Harian Lepas) BKM Log book of group leader activity (Buku Kegiatan Mandor) BLH Local Agency of Environmental (Badan Lingkungan Hidup) BOD Biological Oxygen Demand BPN National Land Agency (Badan Pertanahan Nasional) CEO Chief Executive Officer COD Chemical Oxygen Demand CPO Crude Palm Oil CSR Corporate Social Responsibility D&L Document and Legal DELH Document of Environmental Evaluation (Dokumen Evaluasi Lingkungan Hidup) EFB Empty fruit bunches FFB Fresh Fruit Bunch GAR Golden Agri-Resources Limited GPS Global Positioning HCV High Conservation Value HGU Land Use Title (Hak Guna Usaha) HPH Forest Authority Concession (Hak Penguasaan Hutan) IMT PT. Ivo Mas Tunggal IPB Bogor Agricultural University (Institut Pertanian Bogor) IPM Integrated Pest Management ISO International Standards Organisation KNTE Kintapura Estate KUD Village Unit Cooperatives (Koperasi Unit Desa) LD Lethal Dosage LOTO Lock out tag out MAA Mill Advisory Audit MCAR Management Committee Agronomy and Research MSDS Material Safety Data Sheet MT Metric Ton NGO Non Government Organisation OHS Occupational Health and Safety OIA Operation Internal Audit P2K3 Safety Commitee PK Palm Kernel PKB Mutual Working Agreement (Perjanjian Kerja Bersama) PKWT Contracted worker (Pekerja Waktu Tertentu) POM Palm Oil Mill POME Palm Oil Mill Effluent PPE Personal Protective Equipment RABQSA Quality Society of Australia RKL Environmental Management Plan (Rencana Pengelolaan Lingkungan) RPL Environmental Monitoring Plan (Rencana Pemantauan Lingkungan) RSPO Roundtable on Sustainable Palm Oil SA Social Accountability SCCS Supply Chain Certification System SHM Land Own Title (Surat Hak Milik)

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SIA Social Impact Assessment SKU Permanent worker (Syarat Kerja Utama) SMD Senior Managing Director SMARTRI SMART Research Institute SOP Standard Operation Procedure SPM Independent Worker Union (Serikat Pekerja Mandiri) SPNA Sungai Panci Plasma SPNE Sungai Panci Estate TLV Threshold Limit Value TLTE Tanah Laut Estate TLTM Tanah Laut Mill TLTT Tanah Laut Transport VPA Vice President of Agronomy

Audit Report

1.0 SCOPE OF THE ASSESSMENT

1.1 Introduction

SAI Global conducted a surveillance audit of PT. SMART Tbk. Tanah Laut Mill and Its Supply Base on 10 – 12 August 2015 and 9 September 2015.

The purpose of this audit report is to summarise the degree of compliance with the relevant criteria, as defined on the cover page of this report, based on the evidence obtained during the audit of your organisation.

SAI Global audits are carried out within the requirements of SAI Global procedures which also reflected the requirements and guidance provided in the international standards relating to audit practice such as ISO/IEC 17021, ISO 19011, RSPO Certification System, relevant RSPO Supply Chain Certification System and other normative criteria. SAI Global Auditors are assigned to audits according to industry, standard or technical competencies appropriate to the organisation being audited. Details of such experience and competency are maintained in our records. The audit team is detailed in the attached audit record.

In addition to the information contained in this audit report, SAI Global maintains files for each client. These files contain details of organisation size and personnel a

Details of your primary contact persons and their contact details and site addresses are also maintained. Please take care to advise us of any change that may s well as evidence collected during preliminary and subsequent audit activities (Documentation Review and Scope) relevant to the application for initial and continuing certification of your organisation. affect the application/certification or may assist us to keep your contact information up to date, as required by SAI Global Terms and Conditions.

Please note that this report is subject to independent review and approval. Should changes to the outcomes of this report be necessary as a result of the review, a revised report will be issued and will supersede this report.

1.2 Audit Objective

This is the 3rd annual surveillance audit. The purpose of this audit was to determine continuing compliance of your organization’s management system with the audit criteria new Generic RSPO Principles and Criteria for Sustainable Palm Oil Production, Mau 2013 and RSPO Supply Chain Certification Standard, CPO Mill, Module E Mass Balance, November 2014 and its effectiveness in achieving continual improvement and system objectives. Also to verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers.

1.3 Scope of certification

The scope of certification is the CPO and PK production from one (1) Palm Oil Mill and FFB supply bases comprising two (2) Estates owned by PT. SMART Tbk. A. Palm Oil Mill Tanah Laut Mill (TLTM), PT. SMART Tbk.

Audit Report

Address : Batu Mulia Village, Kintap District, Tanah Laut Regency, South Kalimantan Province, Indonesia Mill Capacity : 30 MT/hour

B. FFB Suply Bases (1) Tanah Laut Estate (TLTE), PT. SMART Tbk Address : Batu Mulia Village, Kintap District, Tanah Laut Regency, South Kalimantan Province, Indonesia

(2) Kintapura Estate (KNTE), PT. SMART Tbk Address : Batu Mulia Village, Kintap District, Tanah Laut Regency, South Kalimantan Province, Indonesia

1.4 Location of mill and estates

PT. SMART Tbk. mill and estates are located in South Kalimantan Province. The geographical coordinate of the mill and estates are shown on Table 1.

Table 1: Mill and Estates GPS Locations

MILL AND ESTATE EASTING SOUTHING

TLTM 115°16'59" 3°47'25" TLTE 115o17'43'' 3o47'32'' KNTE 115o08'24'' 3o48'15''

1.5 Description of supply base

The FFB sources are two (2) Estates owned by PT. SMART Tbk. and two independent FFB suppliers: Gabungan Kelompok Tani (Gapoktan) Maju Jaya and Koperasi Cahaya based on agreed price. The two independent FFB suppliers are excluded from the scope of certification. The areas and FFB production of the plantations are shown on Table 2.

Table 2: Tanah Laut Mill Estimated FFB Production of the Supply Bases 2016 ESTATE TOTAL AREA (HA) PLANTED AREA (HA) FFB (TON/YEAR)

TLTE 3,454.00 2,925.55 69,837.97

KNTE 1,443.53 1,371.67 35,241.68

Independent FFB 5,667.00 Suppliers:

- Gapoktan Maju Jaya NA NA - Koperasi Cahaya NA NA

Source: PT. SMART Tbk., August 2015

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Figure 1 Map of Mill and Estates Location

Source: PT. SMART Tbk., October 2014

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1.6 Date of plantings

Table 3: Tanah Laut and Kintapura Estates Age Profiles of Planted Palms 2015

YEAR TLTE (HA) KNTE (HA) SUM (HA) % OF PLANTED AREA 1995 115.78 0 115.78 2,19 1996 1,483.56 0 1,729.04 37.17 1997 278.97 0 110.03 2.37 1998 709.36 721.64 1,462 31.43 1999 90.05 587.93 723.99 15.56 2004 247.83 49.60 425.03 9.14 2005 12.50 86.45 1.86 Total 2,925.55 1,371.67 4,652.32 100,00 Planted Area

Source: PT. SMART Tbk., August 2015

1.7 Area of plantation

The areas details for organisation owned estates are shown on Table 4 and 5.

Table 4: Tanah Laut and Kintapura Estates and Area Planted 2015

ESTATE MATURE (HA) IMMATURE (HA)

TLTE 2,925.55 0

KNTE 1,371.67 0

Source: PT. SMART Tbk., August 2015

Table 5: Tanah Laut and Kintapura Estates Land Use Summaries 2015

HECTARES AREA TLTE KNTE TOTAL Mature area 2,925.55 1,371.67 4,297.22 Immature area 0 0 0 Total area planted 2,925.55 1,371.67 4,297.22 Emplacement and Mill 36.28 5.76 42.04 Nursery 0 0 0 HCV 119,51 17.35 136.86 Road 123.45 46.67 170.12 Runway 7.82 0 7.82

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HECTARES AREA TLTE KNTE TOTAL Others 241.39*) 2.08**) 243.47 HCV area (HCV area is located inside area 106.63 106.63 planted) Total leased area 3,454.00 1,443.53 4,897.53 Source: PT. SMART Tbk., August 2015 *) non productive area **) rocky area

1.8 Approximate tonnages offered for certification (CPO and PK)

Approximate tonnages offered for certification is estimated based on the organisation last three years actual FFB production from Tanah Laut and Kintapura Estate; also last year CPO and PK, OER and KER of Tanah Laut Mill. Taken into consideration also that for year 2015, Tanah Laut Mill also processed FFB from independent FFB suppliers.

Table 6: Tanah Laut Mill FFB Production Trend 2011-2014

Actual FFB Production Estate Year (MT) 2011 58.223 2012 72.740 TLTE 2013 67.501 2014 63,126 2011 41.351 2012 51.472 KNTE 2013 45.482 2014 47,411 Source: PT. SMART Tbk., August 2015

Table 7: Tanah Laut Mill Total CPO and PK Production 2014-2015 and Estimate Production of 2015-2016

FFB CPO PK Supply Processed Production OER (%) Production KER (%) Bases (MT) (MT) (MT)

Actual production Aug 2014 - Jul 2015 TLTE 62,579.50 14,239.41 22.75 3,582.20 5.72 KNTE 46,876.19 10,672.64 22.77 2,680.10 5.72 Sub Total 109,455.69 24,912.05 22.76 6,262.30 5.72 Other FFB 4,891.74 1,105.81 22.61 280.29 5.73 Supplier

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TOTAL 114,347.43 26,017.86 22.75 6,542.59 5.72

Estimated production Aug 2015 - Jul 2016 TLTE 69,837.97 16,209.89 23.21 4,015.67 5.75 KNTE 35.241,68 8.185,66 23.23 2.026,38 5.75 Sub Total 105.079,65 24.395,55 23.22 6.042,05 5.75 Other FFB 14,595.00 3,412.35 23.38 839.20 5.75 Supplier

TOTAL 119.674,65 27.807,90 23.24 6.881,25 5.75

Source: PT. SMART Tbk., August 2015

Audit Report

Table 8: Tanah Laut Mill Actual Production of Certified CPO and PK, Actual volume since date of last reporting period

Total FFB (Ton) CPO Produced (Ton) PK Produced (Ton)

Month Other Other Own Estate Own Estate Own Estate Other Supply Supply Supply Bases Bases Bases TLTE KNTE Total TLTE KNTE Total TLTE KNTE Total 2014

August 5,385.72 4,266.62 9,652.34 1,229.24 973.89 2,203.13 81.25 311.13 246.56 557.69 20.64 355.60

September 4,517.82 2,790.57 7,308.39 1,115.19 688.97 1,804.16 108.95 300.34 185.39 485.73 29.05 440.36

October 5,274.67 3,330.35 8,605.02 1,249.48 787.69 2,037.17 132.14 304.28 192.12 496.40 32.70 566.79

November 5,936.51 4,396.02 10,332.53 1,346.40 997.28 2,343.68 176.54 339.96 251.77 591.73 44.52 776.61

December 5,668.30 3,469.57 9,137.87 1,242.81 767.21 2,010.02 142.18 282.91 174.64 457.55 32.36 642.97 2015

January 3,782.63 4,045.89 7,828.52 878.81 939.97 1,818.78 57.49 195.75 209.38 405.13 12.81 247.47

February 4,084.60 2,834.66 6,919.26 945.45 656.13 1,601.58 29.91 209.22 145.17 354.39 6.59 129.23

March 5,080.79 4,082.98 9,163.77 1,162.00 933.79 2,095.79 82.49 295.01 237.08 532.09 20.95 360.69

April 4,746.07 3,979.26 8,725.33 1,059.18 888.05 1,947.23 89.89 317.94 266.57 584.51 26.98 402.79

May 6,223.63 4,973.90 11,197.53 1,384.58 1,106.55 2,491.13 100.11 333.45 266.49 599.94 24.11 462.41

June 6,320.63 3,819.34 10,139.97 1,334.77 806.56 2,141.33 18.66 368.88 222.90 591.78 8.00 88.37

July 5,558.13 4,887.03 10,445.16 1,291.50 1,126.55 2,418.05 86.20 323.33 282.03 605.36 21.58 418.45 Total 62,579.50 46,876.19 109,455.69 4,891.74 14,239.41 10,672.64 24,912.05 1,105.81 3,582.20 2,680.10 6,262.30 280.29

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Table 9: Tanah Laut Mill Estimated Production of Certified CPO and PK

Total FFB (Ton) CPO Produced (Ton) PK Produced (Ton) Month Other Other Own Estate Other Supply Own Estate Own Estate Supply Supply Bases TLTE KNTE Total TLTE KNTE Total Bases TLTE KNTE Total Bases 2015 August 4,904.60 2,848.39 7,752.99 2,219.00 1,152.58 669.37 1,821.95 521.47 282.01 163.78 445.79 127.59 September 5,605.27 3,204.44 8,809.71 2,219.00 1,317.24 753.04 2,070.28 521.47 322.30 184.25 506.55 127.59 October 5,605.27 3,382.46 8,987.73 2,219.00 1,317.24 794.88 2,112.12 521.47 322.30 194.49 516.79 127.59 November 6,305.92 3,560.48 9,866.40 2,219.00 1,481.89 836.71 2,318.60 521.47 362.59 204.73 567.32 127.59 December 7,006.58 3,026.42 10,033.00 2,219.00 1,646.55 711.21 2,357.76 521.47 402.88 174.02 576.90 127.59 2016 January 4,794.44 2,446.12 7,240.56 500.00 1,102.72 562.60 1,665.32 115.00 275.68 140.65 416.33 28.75 February 4,794.44 2,446.12 7,240.56 500.00 1,102.72 562.60 1,665.32 115.00 275.68 140.65 416.33 28.75 March 5,479.37 2,788.57 8,267.94 500.00 1,260.26 641.37 1,901.63 115.00 315.06 160.34 475.40 28.75 April 5,479.37 2,802.55 8,281.92 500.00 1,260.26 644.58 1,904.84 115.00 315.06 161.14 476.20 28.75 May 6,849.21 3,145.01 9,994.22 500.00 1,575.32 723.35 2,298.67 115.00 393.83 180.84 574.67 28.75 June 6,849.21 2,970.28 9,819.49 500.00 1,575.32 683.16 2,258.48 115.00 393.83 170.79 564.62 28.75 July 6,164.29 2,620.84 8,785.13 500.00 1,417.79 602.79 2,020.58 115.00 354.45 150.70 505.15 28.75 Total 69,837.97 35,241.68 105,079.65 14,595.00 16,209.89 8,185.66 24,395.55 3,412.35 4,015.67 2,026.38 6,042.05 839.20

Estimated tonnage of CPO produced : 27,809.90 MT Estimated tonnage of PK produced : 6,881.25 MT

Based on the above figures, the estimated of certified CPO and PK offered for certification are: Estimated tonnage of certified CPO produced : 24,395.55 MT Estimated tonnage of certified PK produced : 6,042.05 MT

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1.9 Other certificates held

Table 10: Certificates Held by Mill and Estates

MILL/ESTATE OTHER CERTIFICATION HELD

TLTM Green Level of PROPER (Compliance assessment from Ministry of Environment), period 2013 – 2014 ISCC (International Sustainability and Carbon Certification) by GUTcert, Certificate Number EU-ISCC-Cert-DE104-07781352, valid from 5 August 2013 to 4 August 2014. Source: PT. SMART Tbk., October 2014

1.10 Organizational information/contact person

PT. SMART Tbk Sinar Mas Land, Tower 2, 4th floor Jl. MH. Thamrin No. 51 Kav. 22, Jakarta 10350 Phone :(+62-21) 50338899 Ext. 1184 Fax : (62-21) 50389999 CP: Mr. Ismu Zulfikar Head of Environmental Department Email: [email protected]

1.11 Time bound plan for other management units

PT. SMART Tbk is committed to RSPO certification of all its Management Units located in North Sumatera, Jambi, Bangka, South Kalimantan, Central Kalimantan, and East Kalimantan. Time bound plan has been developed to achieve the RSPO certification for all its Management Units by 2015. The time bound plan is realistic and challenging. The plan is detailed on Table 5.

Time Bound Plan for several Management Units was revised in January 2015:  Several mill and it supply bases has been audited for stage 2 audit in year 2014 however until 31 December 2014 they has not been certified yet.  There are mills which have not had time bound plan due only received FFB from a scheme- smallholder that decline to join RSPO and not operated any longer since March 2015.

SAI Global accepted the reason of the revision.

Audit Report

Table 11: RSPO Certification Time Bound Plan

Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Padang Halaban Kecamatan Aek Kuo, Kabupaten Labuan Batu Utara, Sumatera Utara, Indonesia

Desa Padang Halaban, Kecamatan Aek Kuo, Pernantian Kecamatan Merbau, Kabupaten Labuan Batu Utara, Sumatera Utara, Indonesia Padang Halaban 2011 Certified 21455 Kabupaten Labura, Sumatera Utara Adi Pati Kecamatan Merbau, Kabupaten Labuan Batu Utara, Sumatera Utara, Indonesia Kanopan Ulu Kecamatan Kualuh Hulu, Kabupaten Labuan Batu Utara, Sumatera Utara, Indonesia

Langga Payung Huta Baru Nangka Village, Halongonan, Padang Lawas Utara, Sumatra Utara Desa Huta Baru Nangka, Kecamatan Paya Baung Huta Baringin Village, Simangambat, Padang Lawas Utara, Sumatra Utara Langga Payung Halongonan, 22753 Kabupaten Padang Lawas 2012 Certified Utara, Sumatera Utara Normark Normark Village, Kota Pinang, Labuhanbatu Selatan, Sumatra Utara Pernantian Kecamatan Merbau, Kabupaten Labuan Batu, Sumatera Utara, Indonesia

Bangko Desa Langling, Kecamatan Bangko, Kabupaten Merangin, Provinsi Jambi, Indonesia

Tiga Serumpun KKPA Desa Tanjung, Kecamatan Bathin VIII, Kabupaten Sarolangun, Provinsi Jambi, Indonesia

Batang Gading KKPA Desa Tanjung, Kecamatan Bathin VIII, Kabupaten Sarolangun, Provinsi Jambi, Indonesia Bangko Plasma Desa Langling, Kecamatan Bangko, Kabupaten Merangin, Provinsi Jambi, Indonesia Desa Jelatang; Kecamatan Pamenang Jelatang Desa Bukit Bungkul, Kecamatan Renah Pamenang, Kabupaten Merangin, Provinsi 2014 Certified Kabupaten Merangin; Jambi 37352 ; Indonesia Pamenang Plasma Jambi, Indonesia

Kubang Ujo Plasma Desa Tanjung, Kecamatan Bathin VIII, Kabupaten Sarolangun, Provinsi Jambi, Indonesia

Desa Bukit Bungkul, Kecamatan Renah Pamenang, Kabupaten Merangin, Provinsi Bukit Bungkul KKPA Jambi, Indonesia

Langling Desa Langling; Kecamatan Bangko Kabupaten Bangko Desa Langling, Kecamatan Bangko, Kabupaten Merangin, Provinsi Jambi, Indonesia 2014 Certified

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Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Merangin; Jambi 37351 ; Indonesia Bangko Plasma Desa Langling, Kecamatan Bangko, Kabupaten Merangin, Provinsi Jambi, Indonesia

Desa Bukit Bungkul, Kecamatan Renah Pamenang, Kabupaten Merangin, Provinsi Bukit Bungkul KKPA Jambi, Indonesia

Desa Bukit Kemang, Kecamatan Tanah Tumbuh, Kabupaten Muara Bungo, Provinsi Batang Gading Estate Jambi, Indonesia

Desa Bukit Kemang, Kecamatan Tanah Tumbuh, Kabupaten Muara Bungo, Provinsi Batang Gading KKPA Jambi, Indonesia

Plakar Estate Desa Tanjung, Kecamatan Bathin VIII, Kabupaten Sarolangun, Provinsi Jambi, Indonesia

Tiga Serumpun KKPA Desa Tanjung, Kecamatan Bathin VIII, Kabupaten Sarolangun, Provinsi Jambi, Indonesia

Desa Tanjung; Kecamatan Bathin VIII Planned Audited on Pelakar Kabupaten Sarolangun; Jambi 37481; Batang Merangin Estate Desa Lidung, Kecamatan Sarolangun, Kabupaten Sarolangun, Provinsi Jambi, Indonesia 2015 July 2015 Indonesia Desa Kasang Melintang, Kecamatan Pauh, Kabupaten Sarolangun, Provinsi Jambi, Batang Tembesi Estate Indonesia

Kubang Ujo Plasma Desa Tanjung, Kecamatan Bathin VIII, Kabupaten Sarolangun, Provinsi Jambi, Indonesia

Sungai Bengkal Estate Kecamatan Tebo Ilir, Kabupaten Tebo, Propinsi Jambi Desa Betung Berdarah Barat ; Kecamatan Tebo Sungai Bengkal Muara Kilis Estate Kecamatan Tebo Tengah, Kabupaten Tebo, Propinsi Jambi 2014 Certified Ilir Kabupaten Tebo ; Jambi 37572; Indonesia Sungai Bengkal KKPA Kecamatan Tebo Ilir, Kabupaten Tebo, Propinsi Jambi

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Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Kembiri Village, Membalong Sub District, Belitung District, Bangka Belitung Province, Tanjung Kembiri Indonesia Desa Kembiri, Kecamatan Membalong 33452 Kembiri Village, Membalong Sub District, Belitung District, Bangka Belitung Province, Tanjung Kembiri Kabupaten Belitung, Provinsi Kepulauan Tanjung Rusa 2014 Certified Indonesia Bangka Belitung Kembiri Village, Membalong Sub District, Belitung District, Bangka Belitung Province, Tanjung Rusa KKPA Indonesia

Leidong West Utara Kelapa Sub-district, Bangka Barat Regency, Bangka Belitung Province.

Kecamatan Kelapa, Kabupaten Bangka Barat Leidong West Selatan Kelapa Sub-district, Bangka Barat Regency, Bangka Belitung Province. Leidong West 2014 Certified Kepulauan Bangka Belitung 33364 Bukit Intan Kelapa Sub-district, Bangka Barat Regency, Bangka Belitung Province Bukit Mas Kelapa Sub-district, Bangka Barat Regency, Bangka Belitung Province.

Bukit Perak Estate Kecamatan Kelapa, Kabupatan Bangka Barat, Bangka Belitung, Indonesia Main Audit, Waiting Kecamatan Kacung, Kabupaten Bangka Barat, Bukit Permata Estate Kecamatan Kelapa, Kabupatan Bangka Barat, Bangka Belitung, Indonesia Bukit Perak 2015 for audit report Kepulauan Bangka Belitung 33364 Bukit Permai Sungai Selan Sub-district, Bangka Tengah Regency, Bangka Belitung Province. finalization Bukit Lestari Sungai Selan Sub-district, Bangka Tengah Regency, Bangka Belitung Province.

Sungai Buaya Desa Talang Batu, Kecamatan Mesuji Timur, Kabupaten Mesuji – Lampung Kampung Talang Batu, Kecamatan Mesuji Sungai Buaya Mesuji KKPA Desa Brabasan, Kecamatan Tanjung Raya, Kabupaten Mesuji – Lampung 2014 Certified Timur, Kabupaten Mesuji 34697 Lampung Gedung Aji Lama KKPA Desa Paduan Rajawali, Kecamatan Meraksa Aji, Kabupaten Tulang Bawang – Lampung

Sungai Merah Desa Sidang Gunung Tiga, Kecamatan Rawa Jitu Utara, Kabupaten Mesuji – Lampung Kampung Sidomukti, Kecamatan Gedung Aji, Sungai Merah Kabupaten Tulang Bawang 34595 Kampung Gedung Aji Baru KKPA Desa Sidoharjo, Kecamatan Penawartama, Kabupaten Tulang Bawang – Lampung 2014 Certified Sidomukti Gedung Aji Lama KKPA Desa Paduan Rajawali, Kecamatan Meraksa Aji, Kabupaten Tulang Bawang – Lampung

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Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Cendrawasih Estate Lapua village, Kaureh Sub-district, Jayapura District, Papua Province

Desa Lapua, Distrik Kaureh. Kabupaten Nuri Estate Lapua village, Kaureh Sub-district, Jayapura District, Papua Province Kasuari 2015 Pre Audit Jayapura. Provinsi Papua Rajawali Estate Lapua village, Kaureh Sub-district, Jayapura District, Papua Province Mambruk Estate Lapua village, Kaureh Sub-district, Jayapura District, Papua Province

Desa Pangkalan Panji, Kecamatan Banyuasin Main Audit, Waiting Pangkalan Panji and Langkan Village, Banyuasin III District, Banyuasin Regency, South Pangkalan Panji III, Kabupaten Banyuasin, Sumatera Selatan Sawit Mas Estate 2015 for audit report Sumatera, Indonesia 30954, Indonesia finalization

Pangkalan Panji and Langkan Village, Banyuasin III District, Banyuasin Regency, South Sawit Mas Estate Desa Tanjung Miring, Kecamatan Rambang Sumatera, Indonesia Main Audit, Waiting Bumi Sawit Buang, Kabupaten Ogan Ilir, Sumatera Selatan, 2015 for audit report 30869, Indonesia Tanjung Miring Village, Rambang Kuang District, Ogan Ilir Regency, South Sumatera, finalization Bumi Sawit Estate Indonesia

Karya Sakti village, Muara Lakitan Sub-district, Musi Rawas District, South Sumatera Muara Kandis Estate Province

Karya Mukti village, Muara Kelingi Sub-district, Musi Rawas District, South Sumatera Muara Tawas Estate Desa Lubuk Pandan, Kecamatan Muara Lakitan Province Main Audit, Waiting Muara Kandis Kabupaten Muara Rawas, Sumatera Selatan, 2015 for audit report 31666, Indonesia Beliti Jaya village, Muara Kelingi Sub-district, Musi Rawas District, Sumatera Selatan finalization Pandawa KKPA Province

Karya Sakti village, Muara Kelingi Sub-district, Musi Rawas District, Sumatera Selatan Pandawa Plasma Province

Audit Report

Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Batu Ampar Kelumpang Hilir Subdistrict, Kotabaru Regency, South Kalimantan, Indonesia Desa Serongga, Kecamatan Kelumpang Hilir, Batu Mulia Kelumpang Hilir Subdistrict, Kotabaru Regency, South Kalimantan, Indonesia Batu Ampar Kabupaten Kotabaru Kalimantan Selatan 2012 Certified 72161 Sungai Panci Kelumpang Hilir Subdistrict, Kotabaru Regency, South Kalimantan, Indonesia Sungai Panci Plasma Kelumpang Hilir Subdistrict, Kotabaru Regency, South Kalimantan, Indonesia

Desa Serongga, Kecamatan Kelumpang Hilir, Tanah Laut Kecamatan Kintap, Kabupaten Tanah Laut, South Kalimantan, Indonesia Tanah Laut Kabupaten Kotabaru Kalimantan Selatan 2012 Certified 70883 Kintapura Kecamatan Kintap, Kabupaten Tanah Laut, South Kalimantan, Indonesia

Sungai Kupang Estate Desa Sangking Baru, Kecamatan Kelumpang Selatan , Kab. Kota Baru

Kecamatan Kelumpang Hilir, Kabupaten Sungai Kupang KKPA Desa Sangking Baru, Kecamatan Kelumpang Selatan , Kab. Kota Baru Main Audit, 25-29 Sei Kupang 2015 Kotabaru Kalimantan Selatan 72161 Sungai Panci Estate Desa Pulau Panci, Kecamatan Kelumpang Hilir May 2015 Sungai Panci KKPA Desa Pulau Panci Kecamatan Kelumpang Hilir

Manunggul Lama KM 6 Village, Sungai Durian Sub Distric, Kotabaru Distric, South Sawita Estate Kalimantan Province

Rantau Buda Village, Sungai Durian Sub Distric, Kotabaru Distric, South Kalimantan Sawita Kabupaten Kotabaru Kalimantan Selatan Sawita KKPA 2015 Pre Audit Province

Manunggul Baru Village, Sungai Durian Sub Distric, Kotabaru Distric, South Kalimantan Pamukan Estate Province

Desa Sangsang, Kecamatan Kelumpang SNKM Will stop Sang - Sang Village, Kelumpang Tengah sub distric, Kotabaru distric, South Kalimantan Senakin Tengah, Kabupaten Kotabaru Kalimantan Senakin Estate - operating on March Province Selatan 2015

Audit Report

Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Karang Liwar Village, Kelumpang Hulu sub distric, Kotabaru District, South Kalimantan Bukit Kapur Estate Desa Bangkalaan Melayu, Kecamatan Province Bukit Kapur KelumpangHulu, Kabupaten Kotabaru 2015 Pre Audit Kalimantan Selatan Bangkalaan Melayu Village, Kelumpang Hulu sub distric, Kotabaru District, South Sungai Cantung Estate Kalimantan Province

Makmur Jaya Village, Kongbeng Sub District, Kutai Timur District, East Kalimantan Muara Wahau Province

Desa Sukamaju, Kecamatan Kongbeng, Muara Wahau Kabupaten Kutai Timur Propinsi Kalimantan Gunung Kombeng Sukamaju Village, Kongbeng Sub District, Kutai Timur District, East Kalimantan Province 2014 Certified Timur 75666 Pantun Mas Desa Karya Bakti Kecamatan Muara Wahau Pantun Mas KKPA Desa Jak luay Kecamatan Muara Wahau

Jak Luay Estate Desa Jak Luay Kecamatan Muara Wahau Kabupaten Kutai Timur Bukit Subur Estate Desa Juk Ayak Kecamatan Telen Kabupaten Kutai Timur Pantun Mas Desa Karya Bakti Kecamatan Muara Wahau Desa Jakluay, Kecamatan Muara Wahau, Jak Luay Kabupaten Kutai Timur Propinsi Kalimantan Long Buluh Estate Desa Jak Luay Kecamatan Muara Wahau Kabupaten Kutai Timur 2015 Certified Timur 75655 Jak Luay KKPA Desa Jak Luay Kecamatan Muara Wahau Kabupaten Kutai Timur Bukit Subur KKPA Desa Juk Ayak Kecamatan Telen Kabupaten Kutai Timur Pantun Mas KKPA Desa Jak Luay Kecamatan Muara Wahau Kabupaten Kutai Timur

Desa Sukamaju, Kecamatan Kongbeng, Kabupaten Kutai Timur Propinsi Kalimantan Gunung Kombeng KKPA Desa Sukamaju, Kecamatan Kongbeng, Timur 75666 GKMM currently Gunung Kombeng Kabupaten Kutai Timur Propinsi Kalimantan - only supplied by non Timur 75666 Desa Sukamaju, Kecamatan Kongbeng, Kabupaten Kutai Timur Propinsi Kalimantan certified estate Gunung Kombeng Timur 75666

Audit Report

Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Bumi Palma Estate Bagan Jaya village, sub district of Tempuling, district of Indragiri Hilir, Riau Province Desa Bagan Jaya, Kecamatan Tempuling, Bumi Palma Bumi Sentosa Estate Suhada village, sub district of Enok, district of Indragiri Hilir, Riau province 2014 Certified 29261 Kabupaten Indragiri Hilir, Provinsi Riau Bumi Lestari Estate Pebenaan village, sub dictrict of Kritang, district of Indragiri Hilir, Riau province

Indrasakti Village Of Sungai Limau Sub District Of Rakit Kulim District Of Indragiri Hulu

Desa Talang Sukamaju, Kecamatan Rakit Indrasakti KKPA Village Of. Sungai Limau, Sub District Of Rakit Kulim, District Of Indragiri Hulu Indra Sakti 2013 Certified Kulim, Kabupaten Indragiri Hulu, Provinsi Riau Indralestari KKPA Village Of Kuala Gading, Sub District Of Batang Cenaku, District Of Indragiri Hulu Indragiri KKPA Village Of Talang Bersemi, Sub District Of Batang Cenaku, District Of Indragiri Hulu

Desa Kijang Makmur, Kecamatan Tapung Hilir , Kijang Mas Desa Sekijang, Kecamatan Tapung Hilir, Kabupaten Kampar, Riau Kijang 2012 Certified 28464 Kabupaten Kampar, Provinsi Riau Kijang Kencana Plasma Desa Kijang Jaya, Kecamatan Tapung Hilir, Kabupaten Kampar, Riau

Nagamas Desa Sekijang, Kecamatan Tapung Hilir, Kabupaten Kampar, Riau

Desa Sekijang, Kecamatan Tapung Hilir 28464 Nagasakti Desa Sekijang, Kecamatan Tapung Hilir, Kabupaten Kampar, Riau Naga Sakti 2012 Certified Kabupaten Kampar, Provinsi Riau Ramabakti Desa Beringin Lestari, Kecamatan Tapung Hilir, Kabupaten Kampar, Riau Kijang Mas Desa Sekijang, Kecamatan Tapung Hilir, Kabupaten Kampar, Riau

Ramarama Petapahan Village , Tapung Sub District, Kampar District, Riau Province Desa Petapahan, Kecamatan Tapung 28464 Rama Rama Amarta Jaya Plasma Petapahan Village , Tapung Sub District, Kampar District, Riau Province 2012 Certified Kabupaten Kampar, Provinsi Riau Sungai Tapung Plasma Petapahan Village , Tapung Sub District, Kampar District, Riau Province

Desa Sam-Sam, Kecamatan Kandis 28686 Libo Village of Samsam, Sub-district of Kandis, District of Siak, Riau Province, Indonesia Libo 2012 Certified Kabupaten Siak, Provinsi Riau Nenggala Village of Samsam, Sub-district of Kandis, District of Siak, Riau Province, Indonesia

Audit Report

Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Sungai Rokan Village of Samsam, Sub-district of Kandis, District of Siak, Riau Province, Indonesia Ramabakti Village of Petapahan, Sub-district of Kampar, District of Siak, Riau Province, Indonesia

Samsam Village of Bekalar, Sub-district of Kandis, District of Siak, Riau Province, Indonesia

Desa Bekalar, Kecamatan Kandis 28686 Kandista Village of Belutu, Sub-district of Kandis, Riau Province, Indonesia Sam Sam 2012 Certified Kabupaten Siak, Provinsi Riau Palapa Village of Bekalar, Sub-district of Kandis, Riau Province, Indonesia Ujung Tanjung Sub-district of Kandis, District of Siak, Riau Province, Indonesia

Desa Kandis, Kecamatan Kandis Kota 28686 Sungai Tapung Plasma Petapahan Village , Tapung Sub District, Kampar District, Riau Province Ujung Tanjung 2012 Certified Kabupaten Siak, Provinsi Riau Ujung Tanjung Sub-district of Kandis, District of Siak, Riau Province, Indonesia

Hanau Kecamatan Hanau, Kabupaten Seruyan, Kalimantan Tengah, Indonesia

Kecamatan Hanau, Kabupaten Seruyan, 74271 Tasik Mas Kecamatan Hanau, Kabupaten Seruyan, Kalimantan Tengah, Indonesia Hanau 2013 Certified Desa Derangga Tanjung Paring Kecamatan Batu Ampar, Kabupaten Seruyan, Kalimantan Tengah, Indonesia Langadang Kecamatan Batu Ampar, Kabupaten Seruyan, Kalimantan Tengah, Indonesia

Rungau Raya Village, Sub District of Danau Seluluk, District of Seruyan, Province of Semilar Central Kalimantan

Tangar Village, Sub District of Mentaya, District of Kotawaringin Timur, Province of Sei Rindu Central Kalimantan Desa Rungau Raya, Kecamatan Danau Seluluk, Semilar 2013 Certified 74271 Kabupaten Seruyan Kalimantan Tengah Rungau Raya Village, Sub District of Danau Seluluk, District of Seruyan, Province of Mandang Central Kalimantan

Biru Maju Village, Sub District of Telawang, District of Kotawaringin Timur, Province of Puri Central Kalimantan

Audit Report

Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Rungau Raya Village, Danau Seluluk Sub district, Seruyan District, Kalimantan Tengah Sungai Rungau Province

Rungau Raya Village, Danau Seluluk Sub district, Seruyan District, Kalimantan Tengah Sungai Seruyan Province Desa Rungau Raya, Kecamatan Danau Seluluk, Sungai Rungau Terawan Selunuk Village, Seruyan Raya, Seruyan Sub district, Kalimantan Tengah Province 2013 Certified 74271 Kabupaten Seruyan Kalimantan Tengah Rungau Raya Village, Danau Seluluk Sub district, Seruyan District, Kalimantan Tengah Tangar Province

Rungau Raya Village, Danau Seluluk Sub district, Seruyan District, Kalimantan Tengah Bukit Tiga Province

Perdana Estate Desa Terawan, Kec. Danau Sembuluh, Kab. Seruyan, Propinsi Kalimantan Tengah Lenggana Estate Desa Terawan, Kec. Danau Sembuluh, Kab. Seruyan, Propinsi Kalimantan Tengah Desa Terawan, Kec. Seruyan Raya, Kab. Perdana Semandau Estate Desa Terawan, Kec. Danau Sembuluh, Kab. Seruyan, Propinsi Kalimantan Tengah 2015 Pre Audit Seruyan, Propinsi Kalimantan Tengah Muara Dua Estate Desa Terawan, Kec. Danau Sembuluh, Kab. Seruyan, Propinsi Kalimantan Tengah Sungai Rungau Desa Terawan, Kec. Danau Sembuluh, Kab. Seruyan, Propinsi Kalimantan Tengah

Sungai Ayawan Village, Seruyan Tengah Sub District, Seruyan District, Kalimantan Mentaya Estate Tengah Province Jalan Ex PT.Sarpatim KM 21 Desa Tumbang Keminting Village, Bukit Santuai Sub District, Kotawaringin Timur District, Kuayan Keminting,Kec Bukit Santuhai Kab.Kotim Kuayan Estate 2015 Pre Audit Kalimantan Tengah Province Kalimantan Tengah Tumbang Keminting Village, Bukit Santuai Sub District, Kotawaringin Timur District, Bukit Santuhai Estate Kalimantan Tengah Province

Audit Report

Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Pemantang Village , Mentaya Hulu Sub District, Kotawaringin Timur District, Tajur Beras Estate Kalimantan Tengah Province

Sapiri Village, Mentaya Hulu Sub District, Kotawaringin Timur District, Kalimantan Seranau Estate Tengah Province

Tukang Langit Village, Metaya Hulu Sub District, Kotawaringin Timur District, Sapiri Estate Kalimantan Tengah Province

Katayang Estate Sahabu Village, Batu Ampar Sub District, Seruyan District, Kalimantan Tengah Province

Nahiyang Estate Seibabi Village, Batu Ampar Sub District, Seruyan District, Kalimantan Tengah Province

Wanatirta Village, Batu Ampar Sub District, Seruyan District, Kalimantan Tengah Sulin Estate Province Desa Rungau Raya, Kecamatan Danau Seluluk, Tangar Gantung Pengayuh Village, Seruyan Tengah Sub District, Seruyan District, Kalimantan 2015 Pre Audit 74271 Kabupaten Seruyan Kalimantan Tengah Sungai Nusa Estate Tengah Province

Wanatirta Village, Batu Ampar Sub District, Seruyan District, Kalimantan Tengah Sulin KKPA Province

Suka Mandang Village, Seruyan Tengah Sub District, Seruyan District, Kalimantan Sungai Ayawan Estate Tengah Province

Desa Sungai Kelik, Kecamatan Nanga Tayap, Kabupaten Ketapang, Kalimantan Barat, Kayung Estate Indonesia Kecamatan nanga Tayap,Kabupaten Ketapang Pekawai 2015 Pre Audit Kalimantan barat Desa Sungai Kelik, Kecamatan Nanga Tayap, Kabupaten Ketapang, Kalimantan Barat, Pekawai Estate Indonesia

Audit Report

Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Desa Lembah Hijau 1, Kecamatan Nanga Tayap, Kabupaten Ketapang, Kalimantan Kayung KKPA Barat, Indonesia

Desa Nanga Tayap, Kecamatan Nanga Tayap, Kabupaten Ketapang, Kalimantan Barat, Nanga Tayap Estate Indonesia

Desa Siantau Raya, Kecamatan Nanga Tayap, Kabupaten Ketapang, Kalimantan Barat, Sungai Kelik Estate Indonesia

Kenanga Kemitraan Desa Randai, Kecamatan Marau, Kabupaten Ketapang, Kalimantan Barat, Indonesia Kenanga Estate Desa Randai, Kecamatan Marau, Kabupaten Ketapang, Kalimantan Barat, Indonesia Cendana Estate Desa Belaban, Kecamatan Marau, Kabupaten Ketapang, Kalimantan Barat, Indonesia Delima Estate Desa Randai, Kecamatan Marau, Kabupaten Ketapang, Kalimantan Barat, Indonesia Kencana Kemitraan Desa Rangkung, Kecamatan Marau, Kabupaten Ketapang, Kalimantan Barat, Indonesia Kencana Estate Desa Randai, Kecamatan Marau, Kabupaten Ketapang, Kalimantan Barat, Indonesia Dusun Bakung, Desa Randai, Kecamatan Main Audit, Waiting Desa Periangan, Kecamatan Jelai Hulu, Kabupaten Ketapang, Kalimantan Barat, Kenanga Marau, Kabupaten Ketapang, Kalimantan Gaharu Kemitraan 2015 for audit report Indonesia Barat finalization

Desa Merabong, Kecamatan Manis Mata, Kabupaten Ketapang, Kalimantan Barat, Kenanga Kemitraan Indonesia

Desa Biku Sarana, Kecamatan Jelai Hulu, Kabupaten Ketapang, Kalimantan Barat, Kenari Estate Indonesia

Desa Periangan, Kecamatan Jelai Hulu, Kabupaten Ketapang, Kalimantan Barat, Gaharu Estate Indonesia

Desa Nanga Seberuang Kecamatan Semitau Muara Tawang Kec. Semitau, Suhaid dan Selimbau, Kab. Kapuas Hulu, Kalimantan Barat Belian Mill 2015 Pre Audit 78771 Kab. Kapuas Hulu Kalimantan Barat Muara Tawang KKPA Kec. Semitau, Suhaid dan Selimbau, Kab. Kapuas Hulu, Kalimantan Barat

Audit Report

Time Bound for Mill Name Mill Address Estate Name Estate Address Progress Certification

Kapuas Hulu Estate Desa Sentabai Kecamatan Silat Hilir Kapuas Hulu KKPA Desa Sentabai Kecamatan Silat Hilir

Desa Baru (Kec. Silat Hilir), Desa Nanga Seberuang dan Desa Komplek Kenepai (Kec. Belian Estate Semitau), Kab. Kapuas Hulu, Kalimantan Barat

Desa Baru (Kec. Silat Hilir), Desa Nanga Seberuang dan Desa Komplek Kenepai (Kec. Belian Kemitraan Semitau), Kab. Kapuas Hulu, Kalimantan Barat

Desa Baru (Kec. Silat Hilir), Desa Nanga Seberuang dan Desa Komplek Kenepai (Kec. Tengkawang Estate Semitau), Kab. Kapuas Hulu, Kalimantan Barat

Source: PT SMART Tbk, Sustainability Division, August 2015

Audit Report

1.12 Partial Certification Requirements

In general there were no new issues regarding partial certification requirements in management units which have not been certified since last SAI Global audit. One issue regarding report “Mitigation Plan and Mitigation Action on Oil Palm Plantation in Peat Lands of Central and West Kalimantan” is still in process for RSPO approval.

The British Standards Institution (BSI) has been engaged to verify the SOP and implementation against the National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production, Republic of Indonesia, May 2008 across all of SMART operation, i.e. PT. SMART Tbk. in South Kalimantan (15-16 June 2012), PT. Leidong West Indonesia in Bangka (3-6 May 2011), PT. Tapian Nadenggan in Central and East Kalimantan (19-23 December 2011), PT. Kresna Duta Agroindo in East Kalimantan and Jambi (8-12 August 2011 and 19-21 July 2011) and PT. Satya Kisma Usaha in Jambi (28 March – 1 April 2011). The verification was conducted in 2011. The assessment team were among other: Technical Expert of Ecology and Wildlife Management, Technical Expert of Social Aspects and Technical Expert of Environmental Management System. SOP and documents verified were among others: AMDAL (Environmental and Social Impact Analysis), report of RKL RPL implementation, SOP of HCV Assessment, SOP of Peat Conservation, SOP of Community Engagement, SOP of New Planting Procedure. Some of the verification reports were issued in February and March 2012. According to verification report:  No replacement of primary forest or any area identified as containing HCVs or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3. There were new planting in several areas and new planting procedure has been implemented.  Land disputes were found in PT. Tapian Nadenggan and PT. Kresna Duta Agroindo. These cases have been followed up and closed out.  No labour dispute.  Minor nonconformities were found in legal compliance, e.g. environmental monitoring was not conducted inline with RKL RPL document in PT. Tapian Nadenggan and PT. Kresna Duta Agroindo. Action plan has been established and action taken is verified during internal audit. Action plan to all nonconformities has been established and communicated to each organisation. Nonconformities have been corrected and its correction was verified during Environment Department visit to each Unit Management.

Tanjung Pura University (UNTAN), Faculty of Agriculture, West Kalimantan and Palangka Raya University, Faculty of Agriculture, has been engaged to conduct the social research. The research study was conducted in 2011 to 8 organisations across of GAR and SMART operation. Report of research study was finished on June 28, 2011. The report concluded that:  Criterion 2.3: Land acquisition did not diminish the legal rights or customary rights of other users without their free, prior and informed consent. However, the negotiation process was not well recorded in writing.  Criterion 7.3: Land preparation for plantation development was not carried out in primary forest but in secondary forest, degraded land, shrub land, former logging sites or forest concessions, land previously cleared by natural fire and land left by shifting cultivators.  Criterion 7.5: New plantings were conducted with prior approval from the local people.  Criterion 7.6: Identification and evaluation of land ownership based on legal and traditional land rights were already conducted. Compensation payment was discussed in negotiations between the organization and traditional land owners witnessed by local government representatives. The presence of the organization in the rural area creates positive impacts on surrounding areas, such as creating new jobs for the local community, increasing the

Audit Report

local community’s income, increasing the circulation of cash in the rural market and stimulating the growth of businesses.  CSR: The organization had conducted various activities with their CSR projects in the sectors of infrastructure, health, education, disaster relief and local economy empowerment. The report of research study is published in GAR website.

GAR and PT. SMART Tbk. established Social and Community Engagement Policy on November 10, 2011. The policy was established to ensure that operations of palm oil can improve the living of the communities in its operational area. The policy covers commitment from FPIC to indigenous and local communities, responsible for complaints handling, to attain a responsible resolution of any conflicts, an open and constructive role of local, national and international stakeholders, empowerment of the community development program, respect for human rights, recognize, respect and strengthen worker’s rights, comply with all relevant laws and regulations and principles and criteria of international recognise certification. The organisation committed to use multi- stakeholder approach in developing and in the implementation of Social and Community Engagement Policy.

Unit managements of SMART operation have been audited for RSPO with status among others: Unit Management Mill Status PT. SMART Tbk, South Kalimantan Bukit Kapur Mill Stage-1 audit PT. MP Leidong West Indonesia Leidong West Mill Certified PT. Kresna Duta Agroindo Muara Wahau Mill Certified PT. Kresna Duta Agroindo Jelatang Mill Certified PT. Kresna Duta Agroindo Langling Mill Certified PT. Satya Kisma Usaha Sungai Bengkal Mill Progress final report

1.13 Date of issue of certificate and date of previous assessment

Date of issue of certificate: 26 November 2012 Date of previous audit: 13 – 15 October 2014

2.0 AUDIT PROCESS

2.1 Certification body

PT. SAI Global Indonesia Graha Iskandarsyah, 4th floor Jl. Iskandarsyah Raya No. 66 C Kebayoran Baru, Jakarta 12160, Indonesia Phone : +62 21 720 6186, 720 6460 Fax : +62 21 720 6207 Contact person : Ms. Inge Triwulandari Technical Manager Email : [email protected]

SAI Global is one of the world’s leading business providers of independent assurance. SAI Global

Audit Report

provides organisations around the world with information services and solutions for managing risk, achieving compliance and driving business improvement.

We provide aggregated access services to Standards, Handbooks, Legislative and Property publications; we audit, certify and register your product, system or supply chain; we facilitate good governance and awareness of compliance, ethics and policy issues and provide training and improvement solutions to help individuals and organisations succeed.

The SAI Global business is driven by two equally important client needs - the mandated need for organisations to conform to regulations, standards and legislation in all their locations, and the operational need for organisations to improve business processes and procedures as well as corporate culture. As we are a global company, we can meet these needs for any client - those operating within one country's borders and in one language or those operating across borders and in many languages.

There are three business units/divisions within SAI Global namely the Information Services Division, the Compliance Division, and the Assurance Division. The Assurance Division helps organisations manage risk, achieve process or product certification and drive improvement by providing training, registration audits and supplier management programs that can improve business performance. We provide independent audits, assessments and certification of your products or business processes to ensure they comply with industry standards or customer specific requirements. We understand how compliance with those standards can improve the efficiency, economy and profitability of your operation. With auditing and assessment staff located around the world, our clients include large global corporations as well as single site organisations.

2.2 Audit methodology

The Surveillance Audit was performed on 10 – 12 August 2015. The audit programme was included in the body of report. The audit methodology for collection of objective evidences is site inspection, documentation and record review and interview with staffs, workers, and other stakeholders. Objective evidences from documentation/record review in one area may also be cross checked with other objective evidences in other areas and with the evidence of implementation on site during the audit.

During the audit, particular attention has been paid to previous non-conformities. The previous minor non-conformities were checked for being closed. Assessments plan has included but not be limited to areas of potential environmental and social risk. Considering previous audit findings, the mill and all supply bases were audited during this surveillance audit. Audit has paid special attention on some potential risks in the following areas: - All environment aspects of P&C including reporting of environmental management, waste handling (TLTM, TLTE and KNTE) - All social aspects of P&C including land conflict issue (if any), customary right, labour issue, organization contribution (CSR program, empowerment of local community) (TLTM, TLTE and KNTE) - All HCV aspects of P&C including identification, management and monitoring HCV (TLTM, TLTE and KNTE)

Audit Report

2.3 Qualification of the lead auditor and audit team member

Ria Gloria – Lead Auditor and audited estate operation and legal aspect

Ria Gloria graduated with Bachelor of Chemical Engineering from Bandung Institute of Technology in 1994. She has working experience as Environmental Consultant for many years. She has completed ISO 14001 (1995), ISO 9001 (2004), RSPO P&C (2009) lead auditor training courses, RSPO SCCS (2010) and ISPO (2012) lead auditor training courses. For the last 9 years she has been involved in quality (ISO 9001) and environmental (ISO 14001) management system audits for very broad industrial and in the palm oil sector since 2003 for several plantations and mills. She has received training for good agricultural practices including integrated pest management and high conservation value (2008-2009).

Mujinius Jalaraya – Audit Team Member and audited HCV and Environment aspect

Mujinius Jalaraya, Bachelor from Faculty of Forestry, Bogor Agricultural University (IPB) in 2008, Majoring in Forest Resources Conservation. He has a working experience in palm oil plantations as SHE Assistant at PT. Astra Agro Lestari Tbk in 2008 - 2012 and as Supervisor Sustainability at Teladan Prima Group in 2012 – 2014. He joined the SAI Global since April 2014 as Auditor ISO 9001: 2008, ISPO and RSPO. Various training has followed, such as : Lead Auditor ISO 9001: 2008 Training (2014), Auditor ISPO Training (2014), Lead Auditor RSPO Training (2014), HCV Assessor Training (2013), Internal Auditor ISO 14001: 2004 Training (2013 ), Training for Trainers (2013), Training OHS Expert/Ahli K3 Umum (2010), etc. He has much experience in application of quality management system, environmental and OHS management system in the company and much involved in audit of the management system. During work at SAI Global he has had experience for audit ISO 9001: 2008 in various industries and services, RSPO and ISPO audit for several oil palm plantation companies.

Edy Widodo – Audit Team Member and audited social aspect

Edy Widodo graduated with bachelor of the Faculty of Agriculture, Department of Agricultural Technology, University of Padjadjaran, Bandung. Earlier he worked as an Assistant Estates Manager in PT SMART Tbk. (1999 to 2005). He joined SAI Global in 2013 as a Lead Auditor for ISO 9001: 2008. He has working experiences in the industrial sector and audit Plantation, and also the processing industry and agricultural mechanization. He was also the ISPO auditor who has obtained a certificate from the ISPO Commission, Ministry of Agriculture of Indonesia, in February 2013. He has gotten a certificate of training Understanding ISO 14001: 2004 & Auditing ISO 14001: 2004 in 2013. He has followed RSPO P&C training (2013).

Eko Purwanto – Audit Team Member and audited Mill Supply Chain Eko Purwanto graduated as Bachelor of Forestry from Forest Conservation Department, Faculty of Forestry, Bogor Institute of Agriculture (IPB) in 2001. He owned working experience at Oil Palm Plantation in East Kalimantan since 2003 to 2012; the last position was Estate Manager. He has implementing good agricultural practice including integrated pest management and limited pesticides uses. He has completed lead auditor training courses for RSPO P & C (2013), ISO 9001:2008 (2012), ISO 14001:2004 (2013), ISPO (2012) and RSPO SCC (2012). He has also completed training course of ISO 14001 (2012), Minaut Indonesia (2011) and Introduction to HCV Toolkit HCV (2011). For the last 2 year he has been involved in quality (ISO 9001) management system audits for very broad industrial and involved in Indonesia Sustainable Palm Oil (ISPO) audit for several plantations and mills since October 2012.

Audit Report

Daniel Sitompul - Audit Team Member and audited OHS aspect Daniel graduated with Bachelor of Chemical Engineering degree from Indonesia Institute of Technology in 1995. He has working experience as Quality, Environment and Safety Consultant for many years. She has completed ISO 14001 (2007), OHSAS 18001 (2010), Ahli K3 Umum (2007), ISO 9001 (2009), RSPO PC Training (2013), Auditor SMK3 (2013) dan ISPO Auditor Training (2013). He has also completed the training form government regarding to Safety Management System (SMK3), PROPER and AMDAL (environment). For the last 5 years she has been involved in quality (ISO 9001), Safety (OHSAS 18001) and environmental (ISO 14001) management system consultancy and audits for very broad industrial and in the palm oil sector since 2013 for several plantations and mills.

2.4 Stakeholder consultation

Stakeholder consultation was performed into internal and external stakeholders. Internal stakeholders included staffs and workers. External stakeholders were selected by considering that they have an interest in the organisation activities, directly border with organisation area where the workers live. External stakeholders included NGO, governments and civil societies.

Letters were also sent to external stakeholders to invite for comment or individual / group discussions. Group and Individual discussions with stakeholders were conducted during the audit, to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. Surrounding Village of estate and mill has been chosen to represent societies. Group and individual discussion were conducted for two sessions. First session was conducted especially for surrounding stakeholders directly affected on estate and mill, i.e. Head of village, farmers. Second session was conducted especially for labour union, gender committee and selected workers.

Group interview was conducted for workers with similar job while others were interviewed individually in the scope to verify compliance against relevant criteria and indicator related to infrastructure facility, labour, social aspect (discrimination and sexual harassment), environment and HCV. The result of stakeholder consultation used to justify fulfilment of some indicators, e.g. criterion 2.2 indicator major 3, minor 1 and minor 2, criterion 2.3 indicator major 1, criterion 6.5 indicator minor 1, criterion 6.6 indicator minor 1, criterion 6.7 indicator minor 1, criterion 6.8 indicator minor 1, criterion 6.9 indicator minor 1, 2 and 3, criterion 6.10 indicator minor 1 and 2, criterion 6.11 indicator minor 1, etc.

The result of these consultations was provided in Appendix “D” on page 185.

Table 12: List of internal and external stakeholder

STAKEHOLDERS METHODS OF CONSULTATION

Internal stakeholders ( mill and estates ) Head of SPSI Group discussion Head of Gender Committee Group discussion Workers Group discussion for workers with similar role, otherwise individually interviewed

Audit Report

STAKEHOLDERS METHODS OF CONSULTATION

External Stakeholders ( mill & estates ) Head of Villages : Kintapura, Salaman, Bukit Group discussion Mulia, Pasir Putih, Sei Cuka, Sumber Jaya, Bukit Muria, Pasir Putih Village Farmer groups – independent FFB suppliers: Individual discussion - Gapoktan Maju Jaya - Koperasi Cahaya Social and Labour Agency of Tanah Laut An invitation letter to comment was sent Regency (Dinas Sosial dan Tenaga Kerja Kabupaten Tanah Laut) Forestry and Plantation Agency of Tanah Laut An invitation letter to comment was sent Regency (Dinas Kehutanan dan Perkebunan Kabupaten Tanah Laut) Environment Agency of Tanah Laut Regency An invitation letter to comment was sent (BLHD Kabupaten Tanah Laut) National Land Agency (Badan Pertanahan An invitation letter to comment was sent Nasional (BPN) Kabupaten Tanah Laut) BPJS Ketenagakerjaan An invitation letter to comment was sent District Police (Kepolisian Sektor Kintap) An invitation letter to comment was sent District Head of Kintap (Camat Kintap) An invitation letter to comment was sent NGOs: Link-AR Kalimantan, WWF, Sawit An invitation letter to comment was sent Watch, GAPKI, AMAN

2.5 Date of next surveillance visit

The next surveillance visit will be conducted around August 2016 three months before datum month of the certification period.

3.0 AUDIT FINDINGS

3.1 Action taken on previous audits findings

All Non-conformances (Major and Minor) from the previous audits have been followed up by taking corrective actions. Corrective actions have been implemented and verified. All corrective actions were considered as closed satisfactorily. There was no recurrence of NC.

3.2 Claim and use of certification mark and or logo

No claim and used of certification mark and or logo. So far no RSPO certified CPO and PK has been sold, although there were claimed in other sustainability standard scheme.

Audit Report

3.3 Description of audit findings

3.3.1 RSPO PRINCIPLE AND CRITERIA

PRINCIPLES 1: COMMITMENT TO TRANSPARENCY

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 1.1 Growers and millers provide adequate information to relevant stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making. 1.1.1 There shall be evidence that growers and millers provide adequate information on (environmental, social and/or legal) issues relevant to RSPO Criteria to relevant stakeholders for effective participation in decision making.

Specific Guidance: For 1.1.1: Evidence should be provided that information is received in appropriate form(s) and language(s) by relevant stakeholders. Information will include information on the RSPO mechanisms for stakeholder involvement, including information on their rights and responsibilities.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Does the company maintain a list of . Procedure Communication procedure was established and implemented by the organisation. YES stakeholders? (E.g. listed by category No.SOP/SMART/UMUM/SADV/I/0 Communication procedure describes the method to follow up the information and stakeholders listed should be site 04, dated 1 July 2014 : Prosedur request from interested party. All information requests from stakeholder were listed specific) Komunikasi dan Konsultasi. and recorded by Mill and Estate on logbook “Record of information request and b. What is the frequency of updating the . Logbook Daftar Informasi untuk responses (Daftar Informasi untuk Stakeholder dan Tanggapannya), The Stakeholder dan Tanggapannya information includes the problem of social, legal and environmental. stakeholder list? c. Is there evidence of stakeholder List of stakeholder and types of information are updated every 6 months or if there verification? are changes, SPO Officer responsible for updating the data. The latest update of List Stakeholders and Types of Information, performed in June 2015. With the use d. What type of information is provided? of the log book "Daftar Informasi untuk Stakeholder dan Tanggapannya", the (E.g. Environmental, social and legal) organization (Estate and Mill) can monitor all of the information that is e. What is the frequency and level of access communicated to stakeholders. to this information? Stakeholders List and Related Information has been compiled in Form no. f. How and where is the information F/SMART/UMUM/SADV/004/003 (Jenis informasi dan stakeholder terkait), dated 4 disseminated? August 2014, defines the type of document that is available for each stakeholder and also includes the type of report must be sent to the relevant agencies that g. Who is responsible for providing & need. Based on the 'list of information' above, some of the information that can be updating information? accessed by stakeholders are included: legal, social, environmental, production, h. Is there an SOP available to describe the and others, all the information is accessible must be approved by management process (of information (Regional Controller / RC). sharing/dissemination)? All information provided in several stakeholders is in accordance with the terms i. Are stakeholders aware of the type of and language used, for example in the form of reports and the contents of the information available and the procedures report. Delivery of Information is delivered in Bahasa Indonesian so it can be for accessing the information? understood by employees and stakeholders. .

1.1.2 (M) Records of requests for information and responses shall be maintained.

Guidance: Growers and millers should have a Standard Operating Procedure (SOP) to respond constructively to stakeholders, including a specific timeframe to respond to requests for information. Growers and millers should respond constructively and promptly to requests for information from stakeholders. Growers and millers should ensure that sufficient objective evidence exists to demonstrate that the response is timely and appropriate. See Criterion 1.2 for requirements relating to publicly available documentation.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) See Criterion 6.2 on consultation. See Criterion 4.1 on SOPs. a. Does the company have an SOP to . Procedure Organization has established a mechanism for receiving and providing information YES ensure constructive response to No.SOP/SMART/UMUM/SADV/I in the No.SOP/SMART/UMUM/SADV/I/004, dated 1 July 2014 Prosedur stakeholders? /004, dated 1 July 2014 Komunikasi dan Konsultasi. The response to requests for information by the . Prosedur Komunikasi dan above procedure is at least 30 days or 4 weeks. b. Who is the personnel in charge (PIC)? Konsultasi. Provision of information to be known by Estte Manager and approved by the c. Does the SOP cover the elements under . Logbook Daftar Informasi untuk Regional Controller (RC). If the information is confidential trade must go through 1.1.1? Stakeholder dan the approval of Head Office. Provision of information to the relevant agencies Tanggapannya. d. Is there a clear time frame for response recorded in the logbook "Daftar Informasi untuk Stakeholder" form no. to request for information? . Social Impact Assessment (SIA) F/SMART/UMUM/SADV/004/003. Report Juni – July 2010 e. Are records of requests for information A list of the information available to the public include: and responses maintained? . Monitoring and Review of SIA period June 2012 – December - Social and employment, including: employment list, a list of facilities and f. Are responses to requests for information 2014 infrastructure / facilities of the company, reports the Social Impact Assessment timely and appropriate? . Report of retributions / Local (SIA) and its realization CSR program, list of participants and evidence Tax pembayarannnya worker. . Report of the environment, - Report of retributions / Local Tax including: EIA, RKL / RPL report RKL / RPL - Report of the environment, including: EIA, RKL / RPL report RKL / RPL . P2K3 reports implementation, execution reports LA, B3 Reports, Reports Identification of high conservation value areas (HCVF) Health and Safety (K3), includes: List of heavy equipment, P2K3 reports, program management and implementation K3. 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes. 1.2.1 (M) Publicly available documents shall include, but are not necessarily limited to: • Land titles/user rights (Criterion 2.2); • Occupational health and safety plans (Criterion 4.7); • Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8); • HCV documentation (Criteria 5.2 and 7.3); • Pollution prevention and reduction plans (Criterion 5.6); • Details of complaints and grievances (Criterion 6.3);

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) • Negotiation procedures (Criterion 6.4); • Continual improvement plans (Criterion 8.1); • Public summary of certification assessment report; • Human Rights Policy (Criterion 6.13).

Guidance: This concerns management documents relating to environmental, social and legal issues that are relevant to compliance with RSPO Criteria. Management documents will include monitoring reports. The auditors will comment on the adequacy of each of the documents listed in the public summary of the assessment report. Examples of commercially confidential information include financial data such as costs and income, and details relating to customers and/or suppliers. Data that affects personal privacy should also be confidential. Ongoing disputes (within or outside of a legal mechanism) can be considered as confidential information where disclosure could result in potential negative outcomes for all parties involved. However, affected stakeholders and those seeking resolution to conflict should have access to relevant information. Examples of information where disclosure could result in potential negative environmental or social outcomes include information on sites of rare species where disclosure could increase the risk of hunting or capture for trade, or sacred sites which a community wishes to maintain as private. Growers and millers should ensure that sufficient objective evidence exists to demonstrate that the level of measuring and monitoring of the management plan, and information, is appropriate and made available. For National Interpretation: Specific approaches to personal privacy safeguards, including any legal requirements, will be considered. a. How are the management documents Document related: Organisation documents that is generally available by the organisation. List of YES listed in (c) below made publicly available? . Social Impact Assessment (SIA) management documents are publicly available such as: Site Permit (Izin Lokasi), Land Use Title (HGU), Plantation Operation Permit (IUP), Environmental and b. Where are the documents placed? Report Juni – July 2010 Environment Impact Analysis document (AMDAL), environmental management . Monitoring and Review of SIA c. Is the information provided adequate? and monitoring report (RKL and RPL implementation reports), HCV Assessment period June 2012 – December Note: At minimum, an information report, Social Impact Assessment (SIA) Report, Occupational Health and Safety 2014 summary of the document listed below Management Plan, Corporate Social Responsibility (CSR) and Continuous should be made available. . AMDAL Improvement Plan Those documents were accessible and shown during this audit.  Land titles/user rights (Criterion 2.2) . Site Permit (Izin Lokasi), - Legal boundaries ,land use, . Land Use Title (HGU) The documented procedure was established, it’s mentioning the process and classification, total area, grant . Report (RKL and RPL responsibilities and authorities in regards responding the request on information title, permit validity , NCR rights, implementation reports), from the public. The coverage of request on information as stated in the procedure including information on legal documents, environmental documents, social  Occupational health and safety plans . HCV Assessment report (Criterion 4.7); activities documents, occupational health and safety programme documents and - risk assessment and mitigation, continual improvement documents. emergency response plan,

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) training, accident records  Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8); - main social and environmental impacts and mitigation measures,  HCV documentation (Criteria 5.2 and 7.3); - identification on HCV areas, maps, management and monitoring HCV  Pollution prevention and reduction plans (Criterion 5.6); - identification of pollutants, management and reduction measures  Details of complaints and grievances (Criterion 6.3); - nature of complaints, parties involved, status of case  Negotiation procedures (Criterion 6.4); - SOP, consultative, neutral, inclusiveness, timeframe, responsibility  Continual improvement plans (Criterion 8.1); - for all elements under 8.1,  Public summary of certification assessment report; - follow RSPO format  Human Rights Policy (Criterion 6.13). - policy statement should comply

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) to the requirements of 6.13 d. Do the management documents contain monitoring plans and reports? e. Are all monitoring reports publicly available? 1.31 Growers and millers commit to ethical conduct in all business operations and transactions. *1 New Criteria - Growers and millers commit to ethical conduct in all business operations and transactions. 1.3.1 There shall be a written policy committing to a code of ethical conduct and integrity in all operations and transactions, which shall be documented and communicated to all levels of the workforce and operations.

Guidance: All levels of the operations will include contracted third parties (e.g those involved in security). The policy should include as a minimum: • A respect for fair conduct of business; • A prohibition of all forms of corruption, bribery and fraudulent use of funds and resources; • A proper disclosure of information in accordance with applicable regulations and accepted industry practices.

The policy should be set within the framework of the UN Convention Against Corruption, in particular Article 12. a. Is there a written policy committing to a . Policy "Principles of Business PT. SMART Tbk has established the policy "Principles of Business Ethics" signed YES code of ethical conduct and integrity in all Ethics" signed by Vice President by VPA on 1 August 2014. committed to continue practicing responsible business operations and transactions? of Agriculture (VPA), August ethics referring to the shared values of Companies namely integrity, positive 2014 attitude, commitment, continuous improvement, innovation and loyalty as well as in b. Does the policy include as a minimum: . Attendance list regarding accordance with the rules, SPO principles and criteria. It consists of five policy  A respect for fair conduct of dissemination of ethical conduct which can be summarized in: business? and integrity policy - Corporate practice and disseminating the shared values to all employees  A prohibition of all forms of in all business activities corruption, bribery and fraudulent use - Support the implementation of the 10 principles of UNGC in which there of funds and resources? was core value of devices that is human rights, labour, environment and  A proper disclosure of information in anti-corruption accordance with applicable - Company not provide for any tolerance of corruption in business regulations and accepted industry practices that performed by employees practices? - Company committed to the ethical standards of behaviour in the c. Is the policy documented and management of all activities of business practices communicated to all levels of the - Company implement good corporate governance

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) workforce and operations, including contracted third parties? How is it This policy has been disseminated to all employees and contractors corporate communicated? partners. Evidence of dissemination in the form of attendance list and minutes of socialization were available. The policy has been disseminated to all employees d. Are the documentation and communication done in the appropriate on 11 May 2015 and on contactor (TBS contracting transport etc.) on 8 June 2015.

languages?

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

PRINCIPLES 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. 2.1.1 (M) Evidence of compliance with relevant legal requirements shall be available.

Guidance: Implementing all legal requirements is an essential baseline requirement for all growers whatever their location or size. Relevant legislation includes, but is not limited to: regulations governing land tenure and land-use rights, labour, agricultural practices (e.g. chemical use), environment (e.g. wildlife laws, pollution, environmental management and forestry laws), storage, transportation and processing practices. It also includes laws made pursuant to a country’s obligations under international laws or conventions (e.g. the Convention on Biological Diversity (CBD), ILO core Conventions, UN Guiding Principles on Business and Human Rights). Furthermore, where countries have provisions to respect customary law, these will be taken into account. Key international laws and conventions are set out in Annex 1 Contradictions and inconsistencies should be identified and solutions suggested. For National Interpretation: All relevant legislation will be identified, and any particularly important requirements identified. a. Is the complete list of legal requirements List and Evaluation of Regulation The relevant legal requirement or regulations for mill and estates have been YES available? (Refer to relevant NIs or LIs for and Legal Requirement established and identified. Copies of the legal requirements were shown and (Major NCR list of legal requirements) maintained properly. The regulations were regarding to: 2015-01 closed) Records of Implementation: b. Does the company have copies of the  OHS Legal requirement: lifting equipment, permits of machinery, safety  Notes of Meeting Safety

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) legal requirements? Committee committee, safety officer, medical insurance, monitoring of working  Quarterly Safety Performance environment, paramedic and first aid officer, clinic for workers, handling of hazardous materials including pesticides, firefighting team and equipment Note to auditor: A due diligence on the Report etc. company/area or management unit on legal  Measurement Report of OHS compliance should be conducted prior to field Parameters  Enviromental legal requirements: waste water discharge permit, river water audit. Any non-compliance should be verified  Valid permit of lifting equipment, and ground water abstraction permits, hazardous waste storage permit, during the field audit. machinery etc. provision of required infrastructure waste water treatment ponds, handling of Relevant legislation includes, but is not limited  Valid permit of boiler operator hazardous waste. to: regulations governing land tenure and land- and lifting equipment operator,  Social legal requirements: minimum wage, labour law, occupational safety, use rights, labour, agricultural practices (e.g. etc. employee social benefit. chemical use), environment (e.g. wildlife laws,  Medical Surveillance Reports Status of compliance with the applicable OHS, environment laws and regulations pollution, environmental management and  Slip of Incident Insurance were evaluated, and evaluation of compliance result indicated that compliance forestry laws), storage, transportation and Payment status was justified with reference to the objective evidence of compliance. processing practices. It also includes laws  Result of analysis of waste Example: made pursuant to a country’s obligations under water discharge quality, international laws or conventions (e.g. the stationaly emission, ambient air,  PROPER evaluation by Ministry of Environment has concluded that Convention on Biological Diversity (CBD), ILO moving source emission Tanah Laut Mill granted for BLUE award which indicated status of their core Conventions and UN Guiding Principles on  Hazardous waste manifests environmental legal compliance for period 2014 – 2015. Business and Human Rights.  Provision of valid permits: hazardous waste temporary storage and land application permit; boiler, sterilizer, pressurized vessel permits, lifting equipment, personnel who conduct lifting equipment operation and clinic permit  Provision of required infrastructure for environmental management: waste water treatment ponds, hazardous waste storage  Availability of several MSDS.  periodic environmental parameter monitoring (stationary emission, ambient emission and ambient noise, moving source emission, waste water discharge quality, and ground water quality)  system of plant cultivation, oil palm plantation,  list of protected flora and fauna,  management of protected area,  paramedic and company doctor, medical check-up, safety committee,

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Minimum wage, labour law, occupational safety, employee social benefit.  Transport and lifting equipment certification by regulatory body. Major Non-conformance 2015-01:  Monthly report of surface water usage has not been reported to government institution as required by permit of surface water abstraction Keputusan Bupati Tanah Laut No 1 Year 2014 regarding surface water abstraction (TLTM).  There was no evidence for testing result for lifting equipment Wheel Loader (45/DTKT/PK/2007) in TLTM and grader (175/DTKTS/HIPK/2010) in KNTE. The target testing date for the equipment was on 28 May 2015 as stated in the “List Permit” 2015 of TLTM and KNTE and related regulations.  There was no evidence for inspection for emergency response equipment as required by relevant regulation, such as hydrant and eye washer at Tanah Laut Mill. The last inspection was on September 2014.  Can not be proven that the employee status PKWT and BHB was registered as a participant BPJS health. KNTE employee list is: SKUB: 27 SKUH: 281 BHL: 98 BHB: 66 A total staff of about 472 people Based on the dues payments BPJS in the period July 2015, employees 300 people KNTE (SKU), while employees with the status BHL and BHB many as 164 people and 8 SKU is not yet registered as a participant BPJS- Kesehatan. 2.1.2 A documented system, which includes written information on legal requirements, shall be maintained.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a document system which includes  SOP/SMART/UMUM/SADV/I/002 Procedure Identification and evaluation compliance against laws and regulations YES the following?  List and Evaluation of Regulation was available. The PIC to manage the compliance was Safety Officer, - Personnel in charge to manage and Legal Requirement Environmental Officer, and SPO Officer. List of applicable law and regulations - Set of legal documents  F/SMART/UMUM/SADV/002/001 included the resume of requirements were available and maintained. The copies - Comprehensive list of international, – List of regulation of the regulations were distributed to related section according to their evaluation. national, sub-national and provincial laws which details the requirements of specific to the mill and estate operations. - Relevant sections within the law that is identified and linked to activities b. Are the documents available to all levels of management? 2.1.3 A mechanism for ensuring compliance shall be implemented.

a. Is an internal audit for legal compliance  SOP/SMART/UMUM/SADV/I/002 Mechanism for ensuring compliance with all applicable local, national and ratified YES conducted annually and documented?  OHS Internal audit report 13-15 international laws and regulations was described in April 2015 for TLTE, KNTE and SOP/SMART/UMUM/SADV/I/002. TLTM. For OHS law and regulations, internal audit were planned annually. The last audit  List and Evaluation of Regulation was on 16 April 2015 conducted by approved OHS auditor by authority. The audit and Legal Requirement checklist covered the implementation of the all applied regulations. For the other law and regulations internal audit for legal compliance was conducted during RSPO internal audit which conducted by Sustainability Department Head Office. Last of evaluation of legal compliance was conducted in January 2015 and April 2015. 2.1.4 A system for tracking any changes in the law shall be implemented.

Specific Guidance: For 2.1.4: The systems used for tracking any changes in laws and regulations should be appropriate to the scale of the organisation. a. Is there a documented methodology (e.g.:  SOP/SMART/UMUM/SADV/I/002 Documented procedure exists and implemented for accessing and identifying YES personnel in charge (PIC), source of info,  F/SMART/UMUM/SADV/002/003 changes in the regulations. The system established to ensure: frequency of update) for tracking changes – Contact list for updating of - Collecting related legislation and communication of changes to regulation - Determination of regulations referred

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) relevant sections of the legislation?  F/SMART/UMUM/SADV/002/004 - Distribution of regulations to relevant authorities regarding – Monitoring of regulation - Implementation of regulations and requirements updating - Maintaining the of renewal regulations Records and implementation observed during audit shown that changes were well identified, and the latest legal requirements were well documented in the list of legal requirements. Contacts with regulatory body for updating legal requirements were well documented. SPO Officer has responsibility to update the change of law and regulations.Last updating of the regulations requirements was conducted in February 2015. Updating law and regulations changes were well documented. There were several new regulations: Permen LH 5/2014, PP 101/2014, Peraturan Gubernur Kalimantan Selatan 05/2007. The changes of applicable legal and other requirements have been reviewed and socialized to workers. 2.2 The right to use the land is demonstrated, and is not legitimately contested by local people who can demonstrate that they have legal, customary or user rights. 2.2.1 (M) Documents showing legal ownership or lease, history of land tenure and the actual legal use of the land shall be available.

Guidance Where there is a conflict on the condition of land use as per land title, growers should show evidence that necessary action has been taken to resolve the conflict with relevant parties. A mechanism should be in place to resolve any conflict (Criteria 6.3 and 6.4). Where operations overlap with other rights holders, companies should resolve the issue with the appropriate authorities, consistent with Criteria 6.3 and 6.4. For National Interpretation: Any legal, customary or user rights to land, or disputes, which are likely to be relevant, will be identified. a. Are there documents showing legal - Location Permit This surveillance audit was conducted to TLTE, KNTE and TLTM. Documents that YES ownership or lease of the land available? - Plantation Permit showing legal ownership of land tenure and the actual legal use of the land was (e.g. land titles, lease documents) - Documents of land use tittle available in the form of concession and HGU license document. Document and License Department of PT. SMART Tbk keeps the original HGU documents, while b. Are there documents showing history of (HGU certificate). Estates keep the copies of HGU certificate. Licenses document were available at land tenure available? (e.g. legal documents showing land status change, Estates audited. Following are Plantation Operation Permit and HGU reviewed during this audit: SIA and EIA reports, HCV assessment reports) TLTE and KNTE: c. Are there documents showing the actual  Location Permit 11,700 Ha from Tanah Laut Regency Land legal use of the land available? Agency #460.3/12/KPT-08, dated 30 August 1994. d. Are the documents complete?  Plantation Permit 11,700 Ha from Regent of Tanah Laut Decree

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) #13/2003 dated 30 January 2003.

TLTE  Decree of Ministry of Agrarian/Head of BPN (National Land Agency) #25/HGU/BPN/2003 on 3 April 2003 at Kec. Kintap, Kab. Tanah Laut Area: 3,454 Ha HGU (Land use tittle) #22 dated 01 October 2003 for 3,454 Ha at Desa Sungai Cuka, Sumber Jaya, Bukit Mulia, Pasir Putih dan Kintap Kecil, Kec. Kintap, Kab. Tanah Laut.

KNTE  Decree of Ministry of Agrarian/Head of BPN (National Land Agency) #75/HGU/BPN/2004 on 06 October 2004 at Kab. Tanah Laut Area: 1,443.53 Ha HGU (Land use tittle) #23 dated 17 January 2004 for 1,443.53 Ha at Desa Kintapura and Salaman, Kec. Kintap, Kab. Tanah Laut.

TLTM  Building use title issued by BPN #03 dated 17 October 2005, area: 60.070 m2 2.2.2 Legal boundaries shall be clearly demarcated and visibly maintained.

Specific Guidance: For 2.2.2: Plantation operations should cease on land planted beyond the legally determined area and there should be specific plans in place to address such issues for associated smallholders. a. Is there a legal map showing location of - SOP/SMART/CERS- Legal map showing location of boundary markers is documented in “Map of YES boundary markers? EHSD/SADV/I/004 – boundary pegs”. The map described pegs number and GPS location. (Minor NCR Maintenance of Boundary Pegs 2015-02 closed) b. Is there physical presence of boundary - Logbook of activity (Buku HGU pegs observed were: markers? Kegiatan Mandor – BKM). TLTE: c. Is there an SOP for boundary demarcation - Map of legal boundary - #001 (03º46’22.6” S and 115º15’41.7” E) and maintenance? - Program of boundary pegs - #006 (03º46’22.4” S and 115º17’51.1” E) maintenance 2015 - #020 (03º48’35.2” S and 115º17’05.5” E) - Field Observation to HGU pegs - #039 (03º46’32.2” S and 115º15’28.1” E)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Note to auditor: Ground verification of boundary markers using GPS should be conducted. KNTE: Priority should be on boundaries with other - #043 (03º47’25.0” S and 115º07’23.4” E) estates, community areas, protected area and - #014 (03º47’36.0” S and 115º09’28.4” E) rivers - #016 (03º47’59.1” S and 115º09’02.5” E) - #007 (03º46’39.4” S and 115º08’34.5” E) In the case of Associated Smallholders: d. Are there documents showing that the TLTM: boundaries of associated smallholders - #026 (03º47’28.0” S and 115º17’00.5” E) have been recorded and verified by the - #015 (03º47’38.6” S and 115º17’05.3” E) mill? e. In case of boundary breach, is there proof Legal boundaries are clearly demarcated and maintained. All pegs were in good of a mitigation plan being implemented? condition and maintained in TLTE. Plantation activity such as upkeep and harvesting were conducted inside the border.

Procedure of boundary pegs maintenance was described in SOP/SMART/CERS- EHSD/SADV/I/004 – Maintenance of Boundary Pegs. Estates has program to maintenance boundary pegs such as cleaning of pegs circle three times a year, pegs repainting twice a year and pegs repairing twice a year. Field observation to a number of legal boundaries demonstrated that the legal boundaries were well maintained by TLTE. Report of boundary pegs condition was recorded in their log book (Buku Kegiatan Mandor – BKM).

Minor Non-conformance 2015-02  There was no evident that several legal boundaries observed were maintained, e.g. #07, #16 and #43 in KNTE. 2.2.3 Where there are or have been disputes, additional proof of legal acquisition of title and evidence that fair compensation has been made to previous owners and occupants shall be available, and that these have been accepted with free, prior and informed consent (FPIC).

a. Are there, or have there been any land . Document of the compensation Based on review of land compensation records and also result of interview with YES disputes? report, including: Minutes of stakeholders, there was problem of land disputes identified in regard to PT Acceptance, receipt / kuitansi, SMART Tbk., Tanah Laut Estate, Kintapura Estate and Tanah Laut Mill. Note to auditor: Due diligence should be letter from the head of the village. conducted on the management to provide At the time of the audit, there is a dispute lane (road closures) location in Tanah

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) evidence that there has been no historical or . Information gathered from public Laut Estate, so sending TBS interrupted and had to be diverted. Location disputed current land dispute consultation is in Sumber Jaya Village is the entrance to the estate and TLTM TLTE between the provincial roads leading Batu Licin - Banjarmasin. b. If there are or have been disputes, are Chronology are: there: 1. On May 25, 2015, there have been road closure carried out by local - Documents to proof legal acquisition? people (on behalf of Bpk. Supeno), but reopened to the agreement - Records of FPIC process? according to the direction of Muspika; held a meeting with the mediation by the Camat Kintap. c. If there has been acquisition involving 2. On May 27, 2015; the first mediation meeting at Camat office Kintap compensation, are there: attended by: Kapolsek, Kasat Intel Polres, Danramil, and Estate - Records that Fair compensation has Manager TLTE. Results of the meeting: there is no agreement and will been provided and accepted by meeting again and a time to be determined later. parties involved? 3. On June 16, 2015; carried 2nd meeting at the district office Kintap, - Records that all affected parties are attended by Camat Kintap, Kapolasek Kintap, Danramil Kintap, Bpk. consulted and represented? Supeno and representatives of PT SMART Tbk. (Estate Manager - Documents of negotiations/discussion TLTE). Results of the meeting: Bpk. Supeno asks for compensation of 1 available? billion. The company did not agree, so Muspika suggest the legal lines.

4. On June 24 2015; Bpk. Supeno closed the roads again, the company Note to auditor: There should be direct send a report to the police on June 24, 2015. verification of above with the affected parties 5. Police have been investigating the case and have examined the site by taking the coordinates of that location. The police has responded in a letter dated June 29 2015 no. Crime / 117 / VI / 2015 propose to take the legal path.

Until the audit is done the case status is the road was still closed by Bpk. Supeno. The Estate suggested to management to take the issue to court. Howver until now, there has no respond from the management

2.2.4 (M) There shall be an absence of significant land conflict, unless requirements for acceptable conflict resolution processes (see Criteria 6.3 and 6.4) are implemented and accepted by the parties involved.

a. Does the company have cases of . Public Consultation with Village Based on review of land compensation records and also result of interview with YES significant land conflict? (i.e. preventing Head and community leader stakeholders, there was problem of land disputes identified in regard to PT the company from operating normally) around BAME, SPNE and BAMM SMART Tbk., Tanah Laut Estate, Kintapura Estate and Tanah Laut Mill. on 4 nad 6 August 2015 and

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) information from Estate and Mill Chronology are: b. If the company has cases of conflict, are records of the following available? Manager 1. On May 25, 2015, there have been road closure carried out by local people (on behalf of Bpk. Supeno), but reopened to the agreement - Status of conflict . Procedure SOP/SMART/SENS- according to the direction of Muspika; held a meeting with the mediation - SOP/ mechanism for conflict CSRD/SADV/I/002, 1 July 2010; by the Camat Kintap. resolution Land of Conflict Resolution. 2. On May 27, 2015; the first mediation meeting at Camat office Kintap - Implementation of SOP/mechanism . Procedures of Processes land attended by: Kapolsek, Kasat Intel Polres, Danramil, and Estate - Acceptance of the procedures by all compensation described in the Manager TLTE. Results of the meeting: there is no agreement and will parties SOP/NP/SMART/VII/D&L 002, meeting again and a time to be determined later. - Records of conflict resolution date of 1 July 2010. 3. On June 16, 2015; carried 2nd meeting at the district office Kintap,

attended by Camat Kintap, Kapolasek Kintap, Danramil Kintap, Bpk. Supeno and representatives of PT SMART Tbk. (Estate Manager TLTE). Results of the meeting: Bpk. Supeno asks for compensation of 1 billion. The company did not agree, so Muspika suggest the legal lines. 4. On June 24 2015; Bpk. Supeno closed the roads again, the company send a report to the police on June 24, 2015. 5. Police have been investigating the case and have examined the site by taking the coordinates of that location. The police has responded in a letter dated June 29 2015 no. Crime / 117 / VI / 2015 propose to take the legal path.

Land dispute resolution mechanism described in the procedure SOP/SMART/SENS-CSRD/SADV/I/002, 1 July 2010; Land of Conflict Resolution. Processes and procedures of land compensation described in the SOP/SMART/SENS-CSRD/SADV/I/002, 1 July 2010 2.2.5 For any conflict or dispute over the land, the extent of the disputed area shall be mapped out in a participatory way with involvement of affected parties (including neighbouring communities where applicable).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there an SOP for participatory mapping . Procedure SOP/SMART/SENS- Land claims settlement begins by verifying the validity of the land claim YES of disputed area? CSRD/SADV/I/002, 1 July 2010; documents (map location). Then the field of physical examination, involving village Land of Conflict Resolution. officials and community leaders. b. Is a dispute map available?

. Procedures of Processes land c. Is there documented evidence of The physical examination included also with the Berita Acara Pemeriksaan compensation described in the involvement and acceptance by the Lapangan including maps the location in question. Then the verification is done SOP/NP/SMART/VII/D&L 002, affected parties? with the land claim documents HGU permits. If the problem can not be resolved date of 1 July 2010. land claims in the Estate level, the land issues will be coordinated with the Legal Note to auditor: Actual ground verification Head Office team. Steps to resolve land claims with the the public that are set by showing the accuracy of the dispute map consensus and if the settlement agreement is not found, then it and settled based should be conducted on the laws in force.

2.2.6 (M) To avoid escalation of conflict, there shall be no evidence that palm oil operations have instigated violence in maintaining peace and order in their current and planned operations.

Specific Guidance: For 2.2.6: Company policy should prohibit the use of mercenaries and para-militaries in their operations. Company policy should prohibit extra-judicial intimidation and harassment by contracted security forces (see Criterion 6.13). a. Does the company have a policy to . HGU Map Estate has been developed more than 15 years. Based on Public Consultation YES circumvent instigated violence to maintain with Village Head and community leader around Tanah Laut and Kintapura Estate . Public Consultation with Village peace and order in current and planned on 10 and 11 August 2015 there was no evidence that palm oil operations have Head and community leader operations? instigated violence in maintaining peace and order in their current and planned around Tanah Laut and Kintapura operations. b. Is there any evidence of: Estate on 10 and 11 August

- The use of confrontation and 2015 intimidation by the company to maintain peace and order? - Use of para-militaries and mercenaries in the plantation?

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

2.3.1 (M) Maps of an appropriate scale showing the extent of recognised legal, customary or user rights (Criteria 2.2, 7.5 and 7.6) shall be developed through participatory mapping involving affected parties (including neighbouring communities where applicable, and relevant authorities).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Guidance: All indicators will apply to current operations, but there are exceptions for long-established plantations which may not have records dating back to the time of the decision making, in particular for compliance with Indicators 2.3.1 and 2.3.2. Where there are legal or customary rights over land, the grower should demonstrate that these rights are understood and are not being threatened or reduced. This Criterion should be considered in conjunction with Criteria 6.4, 7.5 and 7.6. Where customary rights areas are unclear these should be established through participatory mapping exercises involving affected parties (including neighbouring communities and local authorities). This Criterion allows for sales and negotiated agreements to compensate other users for lost benefits and/or relinquished rights. Negotiated agreements should be non-coercive and entered into voluntarily, carried out prior to new investments or operations, and based on an open sharing of all relevant information. The representation of communities should be transparent and in open communication with other community members. Adequate time should be given for customary decision making and iterative negotiations allowed for, where requested. Negotiated agreements should be binding on all parties and enforceable in the courts. Establishing certainty in land negotiations is of long-term benefit for all parties. Companies should be especially careful where they are offered lands acquired from the State by its invoking the national interest (also known as ‘eminent domain’). Growers and millers should refer to the RSPO approved FPIC guidance (‘FPIC and the RSPO: A Guide for Companies’, October 2008)

For National Interpretation: Any commonly encountered situations should be identified. a. Does the company have an SOP on FPIC? . Site Permit (Izin Lokasi), Maps have been developed for each estate indicating Legal demarcation and YES . Land Use Title (HGU) planted areas. Planted areas of the Estate are wholly on Government land, leased b. Is there evidence that the identification of legal, customary or user rights has been under HGU. done through FPIC process? c. Is there evidence that the FPIC process has been implemented in accordance to the company SOP? Where is this evidence recorded? (E.g.: Documents, Minutes of meeting, Records, Agreements, Maps etc.) d. Is there a map of the extent of legal, customary or user rights? Is this map of appropriate scale (1: 10,000)? e. Was the map produced through participatory mapping with reference to SIA and HCV assessment? f. Does the map have a title, legend, source, scale and projections/georeference?

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) g. Are the maps accepted by the relevant communities?

2.3.2 Copies of negotiated agreements detailing the process of free, prior and informed consent (FPIC) (Criteria 2.2, 7.5 and 7.6) shall be available and shall include: a) Evidence that a plan has been developed through consultation and discussion with all affected groups in the communities, and that information has been provided to all affected groups, including information on the steps that shall be taken to involve them in decision making; b) Evidence that the company has respected communities’ decisions to give or withhold their consent to the operation at the time that this decision was taken; c) Evidence that the legal, economic, environmental and social implications for permitting operations on their land have been understood and accepted by affected communities, including the implications for the legal status of their land at the expiry of the company’s title, concession or lease on the land. a. Are copies of negotiated agreements with . Procedure SOP/SMART/SENS- It was confirmed during group discussion that no land within mill and estates are YES affected parties available? CSRD/SADV/I/002, 1 July 2010; encumbered by legal or customary rights. Land compensation had been made Land of Conflict Resolution. before the land use concession (HGU) processing. Maps have been owned b. Is there evidence that the agreement is indicating legal demarcation and planted areas according by HGU. prepared through proper FPIC process? . Procedures of Processes land

compensation described in the c. Does the agreement contain the following: Procedure for FPIC process was available, and during public consultation with SOP/NP/SMART/VII/D&L 002, - An action plan developed through Villages Heads (Bukit Mulya village, Kintap Kecil village, Sumber Jaya village, date of 1 July 2010. consultation with affected parties, is Sungai Cuka village, Pasir Putih village, etc.) it was confirmed that the procedure inclusive and evidence that members . Public Consultation with Village was made in consultation and discussion with them. of affected parties are well informed Head and community leader and involved in the decision making around BAME, SPNE and BAMM The procedure was consulted with surrounding communities around the area of process on 10 and 11 August 2015 PT SMART (Tanah Laut Estate, Kintapura Estate dan Tanah Laut Mill) on - Evidence of options to give or September 16, 2010. withhold consent for development . The presence or absence of - Evidence that members of the socialization / consultation with affected communities understand and community leaders on 14 accept the implication involved in September 2010 permitting/rejecting oil palm development on their land (E.g.: legal status, social, environmental, economic) - Evidence that the negotiated agreement was entered voluntarily without coercion by all parties - Evidence that adequate time was given for customary decision making

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and iterative negotiations - Clause which states that the negotiated agreement is legally binding

2.3.3 All relevant information shall be available in appropriate forms and languages, including assessments of impacts, proposed benefit sharing, and legal arrangements.

a. Is there evidence that all the information Procedure of Land of Conflict All information related to village communities around the plantations, including YES (maps, agreement, records, impact Resolution No. stakeholdes and smallholders, in the delivery of information, including assessment, benefit sharing and legal SOP/SPO/SMART/LH-04, 1 July assessments of impacts, proposed benefit sharing and legal arrangements are arrangements) is available in appropriate 2010 presented in Indonesian language and grammar that is simple and easy to forms and languages, understood and understand. accessible to affected parties?

Note to auditor: this should be cross checked to a sample of the affected parties 2.3.4 (M) Evidence shall be available to show that communities are represented through institutions or representatives of their own choosing, including legal counsel.

Specific Guidance: For 2.3.4: Evidence should be available from the companies, communities or other relevant stakeholders. a. Who is the representative of the Document of the compensation Based on the attendance list at the time of dissemination to the public, seen some YES community in the negotiation process? report, including: Minutes of village chief and the local village. Evidence shows that people have determined Acceptance, receipt / kuitansi, letter their representatives through the local village chief. Based on the proof of delivery b. Is the representative accepted by the community? from the head of the village. of compensation is also visible signature of the head of the village which is also accompanied by current photo handover compensation.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) c. Is the record of appointment to represent the community available and shared with other parties?

PRINCIPLES 3: COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability. 3.1.1 (M) A business or management plan (minimum three years) shall be documented that includes, where appropriate, a business case for scheme smallholders. Specific Guidance: For 3.1.1: The business or management plan should contain: • Attention to quality of planting materials; • Crop projection = Fresh Fruit Bunches (FFB) yield trends; • Mill extraction rates = Oil Extraction Rate (OER) trends; • Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends; • Forecast prices; • Financial indicators.

Suggested calculation: trends in 3-year running mean over the last decade (FFB trends may need to allow for low yield during major replanting programmes).

Guidance: Whilst it is recognised that long-term profitability is also affected by factors outside their direct control, top management should be able to demonstrate attention to economic and financial viability through long-term management planning. There should be longer term planning for plantations on peat, particularly in regards to subsidence and flooding issues (see Indicator 4.3.5). Consideration of smallholders should be inherent in all management planning where applicable (see also Criteria 6.10 and 6.11). For scheme smallholders the content will vary from that suggested (refer to RSPO Guidance On Scheme Smallholders, July 2009). Growers should have a system to improve practices in line with new information and techniques. For smallholder schemes, the scheme management should be expected to provide their members with information on significant improvements. This Criterion is not applicable to independent smallholders (refer to RSPO Guidance for Independent Smallholders under Group Certification, June 2010)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Does the company have a documented Business management plan for the The company has set up a business management plan for the next 5 years and YES business or management plan with a next 5 years and the forecast in the forecast have been well documented in the document management plan of minimum planning period of 3 years? document “Profitability PT. SMART PT. SMART Tbk. – Tanah Laut Mill 2015 – 2020. Management plan was set up Tbk. – Tanah Laut Mill 2015 – including independent FFB suppliers. Its management plan include: b. Does it include the following: 2020” including independent FFB - FFB Production actual 2013 and 2014 and projection 2015 – 2020 - Land area statement (planting suppliers - CPO, PK, PKO, PKM production actual 2013 and 2014 and projection 2015 – years, non-planted areas, i.e. HCV, 2020 conservation areas, fragile soils, - CPO, PK, PKO, PKM Revenue actual 2013 and 2014 and projection 2015 – enclaves) with updated location 2020 maps. Maps should have title, - Estate Cost, Mill Cost, KCP Cost, Selling cost, Bulking cost and Tax portion legend, source, scale and actual 2013 and 2014 and projection 2015 – 2020 projections/georeferenced - Nett Profit/Loss - Plan for management of scheme

smallholders (where appropriate) With general assumption including : - Quality of planting materials - CPO, PK, PKO, PKM selling price actual 2013 and 2014 and forecast 2015 – - Crop projection = Fresh Fruit 2020 Bunches (FFB) yield trends - Inflation rate - Mill extraction rates = Oil Extraction - Exchange rate Rate (OER) trends - Disc Rate - Cost of Production = cost per tonne - Management fee, toll fee of Crude Palm Oil (CPO) trends The management plan is reviewed annually and revised as appropriate; based on - Forecast prices the achievement against the plan and other parameters may change. Financial indicators – profitability - forecast (income vs cost) Based on Semi detail Soil Map and field observation at Tanah Laut and Kintapura Projected expansion (area, mill - Estate there are no peat soils in the plantation. capacity, infrastructure, social

amenities) The organisation has a system to improve practices in line with new information General strategy and allocation for - and techniques through innovation project which presented during annual environmental and social meeting. All staffs can propose innovation. Innovation approved by management management (refer to P5, P6 and was communicated to all unit management. P8) c. Is this management document subjected to an annual review? d. For plantations on peat, is there a long term viability plan – e.g. flooding,

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) drainability assessments and subsidence issues? (see 4.3.5) e. Does the grower have a system to improve practices in line with new information and techniques? - Has the personnel in charge (PIC) been identified? - How is the information updated? - Is there a documented SOP which requires monitoring and updating information to improve practices? - Is new information communicated to workers and scheme smallholders (where appropriate)? How is it communicated? 3.1.2 An annual replanting programme projected for a minimum of five years (but longer where necessary to reflect the management of fragile soils, see Criterion 4.3), with yearly review, shall be available. a. Is there an annual replanting programme Management plan PT. SMART Tbk The oldest oil palm was planted in 1995 which the age is now around 20 years, YES projected for a minimum of five years? Tanah Laut Mill for year 2014 – normally replanting is necessary for the age around 25 years. So, replanting 2020. programme is not available yet, but this is acceptable. b. Has it been documented? c. Is the progress of implementation documented? d. How does the programme take into consideration fragile soils such as peat? Is there a longer projection period (see C4.3)? e. Is there evidence of a yearly review of the replanting programme?

Audit Report

PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 4.1 Operating procedures are appropriately documented, consistently implemented and monitored. (M) Standard Operating Procedures (SOPs) for estates and mills shall be documented.

Specific Guidance: For 4.1.1 and 4.1.4: 4.1.1 SOP and documentation for mills should include relevant supply chain requirements (see RSPO Supply Chain Certification Standard, Nov 2011).

For National Interpretation: National codes of practice or Best Management Practices (BMPs) will be referenced. a. Have the SOPs for mills and plantation - SOP for agronomy best YES Standard Operating Procedures for Estates were developed and documented in been documented? practises MCAR and its Work SOP (Standard Operating Procedure) MCAR which revised on 1 September Instruction b. Does the SOP cover key processes, 2012. Consist of procedure for new area and replanting planning, nursery, land - Form harvesting, transportation, manuring, clearing, preparation before planting, fertilising, upkeep, pest management, road F/SMART/UMUM/SADV/001/ IPM, GAP, Supply Chain requirements for maintenance, peat land management, drainage system, mature and immature 002 (document distribution the mill, etc.? upkeep, integrated pest management and harvesting. Also there were procedures register). for several processes including riparian zone management, application of c. Is a copy of the SOP available on site and - SOP for Mill best practises in agrochemical. Procedure also described required PPE and other safe working is it documented in an appropriate document of MCMD-2013 practices. Hardcopy of procedure are available and controlled. Interviews with the language? - Work Instructions of Palm Oil employees indicate satisfactory level of understanding and implementation in Process PT SMART d. Is there evidence that SOPs are relation to their respective job function. implemented and understood by - Recapitulation Report of FFB workers? Received on 20/06/2015 Procedure of best practice operation of Tanah Laut Mill was available and - Tank Maintenance Records documented in document of MCMD-2013, Standard Operational Procedure of e. Are the SOPs appropriate and adequately - Station Operational Records Palm Oil Process PT SMART Tbk revision 6 issued by Head Office. The cover all estate and mill processes and sheet procedure describes operation instruction from FFB receiving through production, activities? - Lab Inspection Report of CPO processing (grading, sterilization, threshing, pressing, clarification, nut and kernel f. How are the SOPs made available at the Product on 18 July 2015 processing) and dispatch of CPO and PK. Quality control check, sampling point of use? methods including its reporting from reception of FFB up to dispatch of CPO and PK was mentioned in the Laboratory procedure.

Hardcopy of procedure are available and controlled. Copy of the procedure was available on site and is it documented in indonesian language. SOP distribution to all section and division was well documented in the Form

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) F/SMART/UMUM/SADV/001/002 (document distribution register). Work Instructions has been developed and posted at work stations within the mill. Records of receiving FFB, sterilization, pressing, clarification and delivery (January – August 2015) were evident. Procedure has been disseminated to all related employee (harvest, brondol and upkeep employee and operator). Interviews with the employees indicate satisfactory level of understanding and implementation in relation to their respective job function. Sample of estate operational implementation were taken in harvesting process in Block D18 Division I Tanah Laut Estate and Block I10/I11 Division II Kintapura Estate and pesticide spraying in Block C18 Division I Tanah Laut Estate and Block G5 Division I Kintapura Estate. The results were shown and it was observed that all of the activity was met with the procedure and well implemented. Procedure (SOP) were appropriate and adequately cover all estate processes and activities includes new area and replanting planning, nursery, land clearing, preparation before planting, manuring, upkeep, pest management, road maintenance, peat land management, drainage system, mature and immature upkeep, integrated pest management, harvesting and transportation. SOPs made were available at the point of use (in all section and division of estate). A mechanism to check consistent implementation of procedures shall be in place.

4.1.2 Guidance: Mechanisms to check implementations could include documentation management systems and internal control procedures. a. Is there a master list of all SOPs? - Harvesting Audit Report Tanah Masterlist of all SOPs document and its revision history were available and well YES Laut Estate & KintapuraEstate documented. Organization keeps track of revision of the SOPs in revision history b. How does the company keep track of revisions? which conducted on May – in the cover of SOPs. Organization has defined the Controled document June 2015 procedure wich was explain the translation of SOP into work instructions in

c. Is there mechanism for: - Audit OIA Report Mill and appropriate languages (Indonesian language) and its document controll. SOPs - Translation of SOP into work Estate which conducted on training and dissemination to all of employee has been conducted, the evidence instructions in appropriate March - April 2015. was sighted and well documented. languages? - RSPO internal audit report The organization has well implemented internal control and monitoring processes

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) - Records of training for all levels? which conducted on 14 - 16 that check and report on the implementation of the Management Guidelines. - Internal control (e.g. audit and April 2015. These include independent checks of the Mill and Estates by the corporate review, field inspection) procedure internal audit. in place to monitor consistent These include independent checks of the Mill and Estates by the corporate implementation of SOPs? internal audit, which is : - Trained and competent personnel - OIA (Operation Internal Audit), programmed twice a year. Operational Internal assigned to carry out internal control Audit has been performed to check consistent implementation of the activities? procedures and work instructions. Internal audit covering operational activities - Implementation audits to be carried of plantations and mill include the maintenance of palm oil crop out regularly covering (maintenance, fertilization, and pesticide use), harvesting and other implementation of all the SOPs? supporting activities such as administration, road infrastructure, and FFB - Procedure to address non- transport and mill process. The last audit for both mill and estates was compliance and corrective action for performed within 17 – 24 March 2015 in TLTE and 25 March – 1 April 2015 in continuous improvement? KNTE. Trained and competent personnel were assigned to carry out OIA (Head Office Internal audit department). Audit report and its follow up were well done and documented. - Harvesting Audit programmed yearly. Its covering operational harvesting checks began from standard crop harvest, lose and harvest discipline. Last audit performed in 22 June 2015 in TLTE and 29 May – 1 June 2015 in KNTE. Audit report and its action plan were documented. Trained and competent personnel were assigned to carry out OIA (Head Office Internal audit department). - Internal audit RSPO. Covering audits of sustainability in all parts of plantation and mill operational. Last audit eprformed in 14 – 16 April 2015 both in TLTE and KNTE. Audit report and its finding followed up and action plan was well documented. Management review to discuss the RSPO audit result and its follow up was performed in May 11th 2015. Trained and competent personnel were assigned to carry out OIA (Head Office Sustainablility department). - GKM (Gugus Kendali Mutu) : discuss the issue in operation activity and review the SOPs implementation in field and dissemination the organization policy. Each estate manegers and Division Assistant was assigned to carry out this control. Organization has defined the procedure to address non-compliance and corrective action for continuous improvement in Correction and Corrective Action Procedure.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 4.1.3 Records of monitoring and any actions taken shall be maintained and available, as appropriate. a. Have the records been maintained on the - BKM (Buku Kegiatan Mandor - YES Record of monitoring and any action taken were maintained and available for following? Log book of group leader Tanah Laut Estate and KIntapura Estate, e.g. : - Measurements or results of internal activity). BKM of several control and monitoring activities activities was reviewed, e.g. - BKM (Buku Kegiatan Mandor - Log book of group leader activity). BKM of (refer 4.1.2) manuring, manual road several activities was reviewed, e.g. manuring, manual road maintenance, - Records of corrective actions and maintenance, manual weeds manual weeds control, census of diseases, circle and path spraying. Untuk improvement undertaken control, census of diseases, mengecek kehadiran karyawan dan hasil kerja karyawan. circle and path spraying. - BPtB (Buku Potong Buah – Logbook of harvesting activity), verification of its - BPtB (Buku Potong Buah – document was done in Division 1 – 3 TLTE date August 7th 2015 and August Logbook of harvesting activity) 7th 2015 in Division 1 – 3 KNTE. - BKtB (Buku Kutip Brondolan – - BKtB (Buku Kutip Brondolan – Logbook of loose fruit collecting activity). Logbook of loose fruit collecting Record kutip brondol work result activity. Verification of its document was activity) done in Division 1 – 3 TLTE dates August 7th 2015 and August 7th 2015 in - “Inspeksi panen detail” Division 1 – 3 KNTE. period August 2015 in TLTE - “Inspeksi panen detail” to check the consistency of harvesting activity based and KNTE on the procedure and work instruction. The item which was check covering : - Operation Internal Audit number of palm oil harvested, number of FFB harvested, FFB lagged, Reports on April 2015 brondol lagged, midrib set out, abnormal harvested, etc. One supervision at least one harvested employee was check every day. Verification of its document was done in Division 1 – 3 TLTE date August 7th 2015 and August 7th 2015 in Division 1 – 3 KNTE. - Shift Report book to control and monitor daily work activity of mill, record number of attendance employee, starting hour, throughput, oil and kernel production, issue/trouble in process activity. - Logsheet every station from loading ramp, sterilizer, threshing, press, clarification, boiler and effluent. Record daily activity of processs in each station and process performance in each station. - Breakdown report and repair request Logbook, supervisor check the machine condition and report to maintenance section to repair if there was a breakdown condition. - Control of Process work program and routin maintenance and equipment repair. Records of corrective actions and improvement undertaken for all of the control

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and monitoring activity above has been maintained by the organization.

4.1.4 (M) The mill shall record the origins of all third-party sourced Fresh Fruit Bunches (FFB). a. Is there an SOP for third-party FFB Document “Rekap TBS Kebun Luar Organization has defined the procedure for third-party FFB sourcing. YES sourcing? Tahun 2015” which contained the Record of TBS received from external sources was stated on form Recapitulation FFB tonnage delivery from third of FFB Received Report. There were a list of approved third-party FFB suppliers, b. Is there a list of approved third-party FFB party from Januari – July 2015. such as : suppliers? - Gapoktan (Farmers Group) Maju Jaya c. Is there proof of observed implementation - Koperasi (Cooperation) Cahaya of SOP? There were evidence of SOP implementation such as: FFB grading process 100% d. Is there daily and summary records of in accordance with grading criteria which has been agreed in SPK, price of FFB volume and origins of third-party FFB was agreen in SPK based on price fixing from Disbun Central Kalimantan received? Province, payment carry out after FFB received and invoice receive by finance (average one month payment after FFB and invoice received by mill). For

e. Have these records been verified against example payment invoices No. 006/GMJX/VIII/2015 date August 7th 2015 for the available document? Gapoktan (Farmers Group) Maju Jaya. It was observed that the payment and price was met with SPK and procedure. Organization only received legal FFB; in SPK article 5 was describe that “FFB sourcing from the third party is FFB originating from land that has been obtain permission of land acquisition and plantation business from the relevant authorities and cultivated in accordance with the terms and conditions in applicable laws and regulations and is not obtained illegally. Tanah Laut mill record the origins of all third-party sourced Fresh Fruit Bunches. FFB tonnage delivery from the third party was well documented daily and monthly in the document “Rekap Penerimaan TBS Luar Tahun 2015” 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. There shall be evidence that good agriculture practices, as contained in Standard Operating Procedures (SOPs), are followed to manage soil fertility to a level that ensures optimal and sustained yield, where possible.

Guidance: 4.2.1 Long-term fertility depends on maintaining the structure, organic matter content, nutrient status and microbiological health of the soil. Nutrient efficiency should take account of the age of plantations and soil conditions.

For National Interpretation:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) The range of appropriate techniques will be identified. a. Are there SOPs for Good Agricultural - SOP/SMART/MCAR/IX/TA- Organization has been defined the SOPs for Good Agricultural Practices in YES Practices in managing soil fertility? PPK (Manuring – Pemupukan) managing soil fertility which documented in SOP/SMART/MCAR/IX/TA-PPK - Observations in Tanah Laut (Manuring – Pemupukan). Manuring was performed manual and mechanic with b. Is there evidence that the SOPs have been implemented and monitored? Estate in Block C18 and C19 EMDEK. Manual manuring performed by spreading the fertilizer by person Division I manually and uniformly in each palm oil trees in accordance with dose which has - Observation in Kintapura Estate defined by Smartri. Organization also defined SOP fertilizer application with conducted in Block G5 Division Spreader (Emdek). Fertilizer application with Emdek conducted in mineral soil and I flat area. Fertilizer time application considering the conditions of rainfall and crop needs based fertilizer recommendation. Estates activities are carried out based on Division Work Program which generated from annual budget. Activities program are such as manuring and other operation activity. Site observation was performed during audit to some activities: spraying and manuring. Interview with employees working in those activities showed that procedures were implemented. Activities have been performed at defined interval. 4.2.2 Records of fertiliser inputs shall be maintained. a. Is records of fertiliser inputs maintained? - Manuring recommendation year Records of fertiliser inputs are well maintained in document “Rencana dan YES 2015 Tanah Laut Estate and Realisasi Pemupukan” (Plan and Realisation of Manuring). Fertiliser inputs b. Is there records to proof that the fertiliser Kintapura Estate recorded each semester. Manuring recommendation in 2015 for TLTE and KNTE program is linked to the agronomic report? - Document of “Rencana dan has been defined based leaf sampling unit (LSU) and soil sampling unit (SSU). Realisasi Pemupukan Semester Record of manuring realisation in first semester of 2015 shows that the c. Is there records of fertilizer usage per 1 2015 Tanah Laut Estate realisations are in accordance with the plan/recomendation. tonne of FFB production (>in Summary - Document of “Rencana dan Annual fertilizer recommendation has been implemented and monitored. Table, specific types of fertilizers)? Realisasi Pemupukan Semester Fertilizer/manuring programme was developed by SMARTRI for all Division. 1 2015 Kintapura Estate Manuring recommendation in LNGE consist of 3 section such as: - Manual manuring recommendation 2015 - Mechanical manuring recommendation 2015 - Aerialy manuring recommendation 2015

Bellow are the records of fertilizer usage per tonne of FFB production in 1st semester 2015 :

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Tanah Laut Estate Kintapura Estate Fertilizer Total Type of Fertilizer Total usage Fertilizer Fertilizer usage per Fertilizer per usage tonne FFB usage tonne (tonne) FFB FFB production 35.837,02 23.736,030 Urea 346,35 0.0097 358,10 0,0151 DAP 272,80 0.0076 277,25 0,0117 TSP 23,05 0.0006 45,45 0,0019 CIRP - - - - MOP 781,80 0.0218 620,95 0,0262 Super Dolomite 30,60 0.0009 42,65 0,0018 Kieserite 44,90 - - Powder 0.0013 Kieserite 135,40 231,80 0,0098 Granular 0.0038 Borate 31,75 0.0009 21,89 0,0009 NH4Cl 42,15 0.0012 Total 1.708,802 0,0477 1.708,802 0,0720

4.2.3 There shall be evidence of periodic tissue and soil sampling to monitor changes in nutrient status. a. Is there SOPs for tissue and soil - Document of “ Memorandum YES Soil and leaf sampling was analysed regularly by SMARTRI to determine the sampling? Hasil Analisa Laboratorium” nutritional status of soil, to assist and to be guided in the preparation of annual Lab SMARTRI, for soil sample b. Is there evidence of implementation of the fertilising programme recommendation. Soil is analysed when the age of the plant analysis and leaf sample SOPs, including availability of records? is 3, 5, 8 years and continued with age of the plant is added by 5 years and 1 year analysis in Tanah Laut Estate before replanting. Leaf was analysed annually. Soil and leaf sampling was taken c. Is there records of tissue and soil year 2013, 2014 and 2015 from each division. Organization has been defined work instruction for LSU (Leaf analysis? - Document of “ Memorandum sampling unit) IK/SMART/MCAR/IX/TA-PPK/05-Pengambilan LSU and for SSU Hasil Analisa Laboratorium” d. Is the results of the study incorporated (Soil Sampling Unit) IK/SMART/MCAR/IX/TA-PPK/06-Pengambilan SSU. into the fertilizer program? Lab SMARTRI, for soil sample analysis and leaf sample Evidence of periodic leaf sample analysis in LNGE are available on Lab Analysis analysis in Kintapura Estate Result Ref#374/DAUN/LAB-SMARTRI/VII/2014 dated 18 July 2014 with total

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) year 2013, 2014 and 2015 number of 94 sample analysed (N, P, K, Mg, Ca, B, Cl). While for KNTE are available on Lab Analysis Result Ref# 375/DAUN/LAB-SMARTRI/VII/2014 dated 19 July 2014 with total number of 42 sample analysed (N, P, K, Mg, Ca, B, Cl). Last LSU taken in May – June 2015 in TLTE and KNTE by SMARTRI; however the analysis result was in progress and has not been issued. Soil sampling unit in TLTE was analyzed in June 2013, analysis Result Ref# 112/TANAH/LAB-SMARTRI/XI/2013 and Ref# 114/TANAH/LAB- SMARTRI/XI/2013 with total sample 477 or 6 sample per block (C.Org, H-Al Tkr, N, N-KTK, pH). While soil analysis in Kintapura Estate was performed in October 2013 with Laboratory Analysis Result Ref# 039/TANAH/LAB-SMARTRI/II/2013 and Ref# 048/TANAH/LAB-SMARTRI/II/2013 with total sample 168 samples. A nutrient recycling strategy shall be in place, and may include use of Empty Fruit Bunches (EFB), Palm Oil Mill Effluent (POME), and palm residues after replanting.

4.2.4 Guidance: The nutrient recycling strategy should include any use of biomass for by-products or energy production. a. Is there a nutrient recycling strategy in - Document of “Rekap bulanan There was the Nutrient recycling strategy performed by company such as land YES place? aplikasi janjang kosong 2015” application from POME (Palm Oil Mill Effluent) and Empty fruit bunch (EFB) Tasik Mas Estate. b. Does the strategy include the following? application. POME or liquid waste from mill used as Land application, it give - Document of “Data Aplikasi  Clear objectives and time-bound nutrient for palm oil plantation. POME is applied using piping system and flat bed. Land Application 2015” Tasik targets Land application was applied in Tanah Laut Estate. Liquid waste (POME) applied Mas Estate.  Inventory of dosage was 375 m3 /ha/year with 3 times rotation and BOD 2,500 – 4,000 mg/L.

- EFB POME and EFB were not applied nearby housing and water spring. There was 85.2 ha area (5 block) applied with POME in Tanah Laut Estate division I, from - POME - Fibre January to July 2015 total POME applied was 26,015 m3. EFB were applied in Tanah Laut Estate by manually and mechanical using tractor. - Boiler ash - Kernel shell EFB were applied based on the recommendation from SMARTRI in terms of - Palm residues from replanting dosage per ha and location. Empty fruit bunch application was performed as  Biomass recycling program mulch ground cover and added of organic material.  Implementation and monitoring Total Applications of Empty fruit bunch in Tanah Laut Estate was 3,703.8 tons records from January - July 2015 and 28 block with total area 219.07 ha. POME and EFB were not applied in Kintapura estate due to the distance was far Note to auditor: Ground verification required enough from Tanah Laut mill.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 4.3 Practices minimise and control erosion and degradation of soils. (M) Maps of any fragile soils shall be available.

Guidance: Plantations on peat should be managed at least to the standard set out in the ‘RSPO Manual on Best Management Practices (BMPs) for existing oil palm cultivation on peat’, June 2012 (especially water management, fire avoidance, fertiliser use, subsidence and vegetation cover). 4.3.1 Techniques that minimise soil erosion are well known and should be adopted, where appropriate. These should include practices such as ground cover management, biomass recycling, terracing, and natural regeneration or restoration instead of replanting.

For National Interpretation: National Interpretation (or an RSPO recognised parallel means) will refer to national guidance, and identify the best management practices and appropriate techniques for maintaining soil quality in local conditions, including guidance on soil types, and any appropriate performance thresholds such as maximum acceptable slope gradient for planting. a. Is there soil maps showing presence of - Maps of soil type in Tanah Laut Maps of soils survey from Plantation Monitoring and Planning Division were YES fragile soils and problem soils (refer to Estate were available in scale 1 : available for TLTE and KNTE. The maps included maps of fragile soils. Based on 4.3.6)? 50,000 maps of soils type, there are no fragile soils present in Tanah Laut and Kintapura - Maps of soil type in Kintapura Estate. b. Are maps georeferenced and of Estate were available in scale 1 : appropriate scale (1:50,000)? Soil characteristic is presented in table below: 50,000 - Field observation in Tanah Laut Tanah Laut Estate: Estate and Kintapura Estate Classification Topography Ha Typic Hapludults 0 – 8 % 341.94 Aquic Hapludults 0 – 8 %

Typic Hapludults 8 – 15 % 1,129.45 Typic Hapludults 15 – 30 % 1,630.27 Typic Hapludults > 30 % 352.31 Aquic Hapludults > 30 % Total Area 3,453.97

Kintapura Estate: Classification Topography Ha Typic Hapludults 0 – 8 % 946.95

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Aquic Hapludults 0 – 8 % Typic Hapludults 8 – 15 % 355.20 Typic Hapludults 15 – 30 % 19.36 Typic Hapludults 0 – 8 % 121.99 Total Area 2.079,86

Maps georeferenced was available in appropriate scale 1:50,000.

4.3.2 A management strategy shall be in place for plantings on slopes above a certain limit (this needs to be soil and climate specific).

a. Is there a management strategy in place - Maps of Soil and Topography in YES Based on maps of soil unit, there are slopes above 30% in Tanah Laut Estate with for plantings on slopes? Tanah Laut Estate and area 352.31 ha while in Kintapura estate maximum slopes was 15 - 30% with area Kintapura Estate in scale 1 : b. Does the management strategy include 19.36 ha. 50,000 the following? - Preparation of new area Organization has been defined the strategy for planting on slopes area in the - Identification of steep areas not planting procedure suitable for planting procedure SOP/SMART/MCAR/I/TA-PPA “Preparation of new area planting” SOP/SMART/MCAR/I/TA-PPA describes procedure for minimising and controlling erosion, and peat land - Policy of planting on slopes - Procedure 03/VPA- management. The organization does not recommend plantings on slopes >40% - SOPs to minimise soil erosion RSPO/03/2010 “Management based on local soil and climate or >22º. When the slope area was planted, system for planting on slopes area of Riparian Area” conditions, e.g. ground cover was provided by considering soil and climate specific through terracing, - Field observation in Tanah Laut management, biomass recycling, determining of base line, levelling of terrace, and determining of planting space. Estate and Kintapura Estate terracing, and natural regeneration To minimise and control erosion in slope area, several practices have been

or restoration instead of replanting implemented such as terracing, growing of legume cover crops (LCC). Procedure 03/VPA-RSPO/03/2010 “Management of Riparian Area” has been established to c. Is there proof of records of field control area around riparian. Planting of “vetiver” grass and natural riparian plant inspection on SOP implementation? have been performed to minimize stream and river bank erosion. It was evidenced that organization has implement the procedure in the field as defined in SOP. Organization also has performed the erosion monitoring periodically (once a month) by placing erosion stakes in Block B17 Tanah Laut Estate and Block G5 Kintapura Estate. Erosion stakes was put in slopes position in the middle, top and bottom as high as 120 cm of stakes. Erosion value measured during the 1st half

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) period was 0 mm, its mean that there was no erosion in the slope area within 1st semester 2015 both in TLTE and KNTE.

4.3.3 A road maintenance programme shall be in place.

a. Is there a road maintenance programme - Document of “Program dan YES Procedure for road maintenance has been established. Tanah Laut estate and in place with supporting budget and realisasi pengerasan jalan Kintapura Estate have established road maintenance programme for main road, resources? tahun 2015” in Tanah Laut collection road and access road by manual and mechanical maintenance. Road Estate b. Is there road maintenance records? maintenance includes manual, grading and compacting and road hardening. Road - Document of “Program dan hardening budget for 2015 has been observed including the realisation. Manual realisasi pengerasan jalan road maintenance programme was provided in Division Work Programme. Manual tahun 2015” in Kintapura road maintenance was implemented based on Division Work Programme or road Estate condition. Mechanical road maintenance use heavy equipment – motor grader - At the observation can be and compactor. The mechanical road maintenance programme was provided for proven that all the main road all division and detailed in Blocks. Manual and mechanical road maintenance and collection road was in good realisation was recorded including complex area maintained, distance of road condition and well maintained. maintained, diesel fuel consumption and quantity of gravel. During audit it was observed that road passed was in good condition. Total laterit and split stone which applied for road hardening in 1st semester was 8,350.99 m3 in TLTE and 12,135.08 m3 in KNTE. There are actual work hardening road map, from the map is seen that all the way main road and collection road already hardened by hoarding the laterite. (M) Subsidence of peat soils shall be minimised and monitored. A documented water and ground cover management programme shall be in place.

Specific Guidance: 4.3.4 For 4.3.4: For existing plantings on peat, the water table should be maintained at an average of 50cm (between 40 - 60cm) below ground surface measured with groundwater piezometer readings, or an average of 60cm (between 50 - 70cm) below ground surface as measured in water collection drains, through a network of appropriate water control structures e.g. weirs, sandbags, etc. in fields, and watergates at the discharge points of main drains (Criteria 4.4 and 7.4).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there an SOP to provide guidance on - Maps of Soil and Topography in Based on Semi detail Soil Map and field observation at Tanah Laut and Kintapura N/A subsidence management? Tanah Laut Estate and Estate there are no peat soils in the plantation. Kintapura Estate in scale 1 : b. Does the SOP make reference to the 50,000 RSPO BMPs on peat? - Soil Survey Report Semi Details c. How is subsidence being monitored? d. Are there records of subsidence monitoring? e. How is subsidence being minimised? f. Is there a water management programme and evidence of implementation? For existing plantings on peat, the water table should be maintained at an average of 50cm (between 40 - 60cm) below ground surface measured with groundwater piezometer readings, or an average of 60cm (between 50 - 70cm) below ground surface as measured in water collection drains, through a network of appropriate water control structures e.g. weirs, sandbags, etc. in fields, and watergates at the discharge points of main drains (Criteria 4.4 and 7.4). g. Is there a ground cover management programme and is there evidence of implementation? Drainability assessments shall be required prior to replanting on peat to determine the long-term viability of the necessary drainage for oil palm growing.

Specific Guidance: 4.3.5 For 4.3.5: Where drainability assessments have identified areas unsuitable for oil palm replanting, plans should be in place for appropriate rehabilitation or alternative use of such areas. If the assessment indicates high risk of serious flooding and/or salt water intrusion within two crop cycles, growers and planters should consider ceasing replanting and implementing rehabilitation.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Was a drainability assessment conducted YES - Drainability assessment in 2006 Drainability assessment has been carried out in 2006, the data results have been before replanting on peat? at Tanah Laut Estate and documented in the Soil Survey Report Semi Details in Tanah Laut Estate and b. Was a flood risk map provided as a result Kintapura Estate Land Survey Report Details in Kintapura Estate 2006. of the drainability assessment? - Data results documented in the Soil Survey Report Semi Flood risk map provided as a result of the drainability assessment. Organization c. If the drainability assessment shows that Details in Tanah Laut Estate has performed the water management to avoid and prevent the flood risk by an area is unsuitable for replanting, are and Land Survey Report create waterways in each block and create the watergate to manage the water there alternative plans in place for Details in Kintapura Estate level. rehabilitation and alternative use in 2006. accordance to the RSPO BMPs? Based on the ”Soil survey semi detail” document, there were no unsuitable area - Document of ”Soil survey semi for oil palm replanting in Tanah Laut Estate and Kintapura Estate. detail”

4.3.6 A management strategy shall be in place for other fragile and problem soils (e.g. sandy, low organic matter, acid sulphate soils).

a. Is there a management strategy in place YES - Drainability assessment in 2006 During the audit it’s observed that there was no fragile soil was identified in Tanah for other fragile and problem soils? at Tanah Laut Estate and Laut Estate and Kintapura Estate. Company has established the procedure to b. Does the management strategy include Kintapura Estate maintain the fragile soil if any. Fragile soil maintenance such as: Land cover crop SOPs for the management of other fragile - Data results documented in the planted, Dolomite usage for acid sulphate soil, EFB usage and organic matter and problem soils? Soil Survey Report Semi added for poor organic matter soil, and etc. The dosage, frequency and quantity Details in Tanah Laut Estate of fertiliser were recommended by SMARTRI. c. Is inspection and implementation records and Land Survey Report available? Details in Kintapura Estate 2006. 4.4 Practices maintain the quality and availability of surface and ground water. An implemented water management plan shall be in place.

Specific Guidance: For 4.4.1: The water management plan will: • Take account of the efficiency of use and renewability of sources; 4.4.1 • Ensure that the use and management of water by the operation does not result in adverse impacts on other users within the catchment area, including local communities and customary water users; • Aim to ensure local communities, workers and their families have access to adequate, clean water for drinking, cooking, bathing and cleaning purposes; • Avoid contamination of surface and ground water through run-off of soil, nutrients or chemicals, or as a result of inadequate disposal of waste including Palm Oil Mill Effluent (POME).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Guidance: Growers and millers should address the effects of their use of water and the effects of their activities on local water resources. a. Is there a water management plan in  Program of water usage Water supplies for Tanah Laut Mill were from rain water reservoir and river water, YES place for mill and plantation with identified efficiency while estate was using ground water. Permit of surface water abstraction has actions?  Quantity of water use January – been provided. b. Does the plan include the following? June 2015 Mill and Estates has developed water management plan. Program of water  Identification of water sources  Attendance list of dissemination management plan are:  Permit of surface water  Efficient use of water  Efficiency of water from optimalisation of pesticides usage  Renewability of water source abstraction: Keputusan Bupati Tanah Laut #1 year 2014 dated  Dissemination of domestic water use efficiency  Impacts on catchment area and 18 March 2014 valid through 3  Monitor water use in Estates and Mill local stakeholders years.  Maintain water piping from leakage  Access of clean drinking water all  SOP/SMART/MCMD/I/TM-PKS  Monitor community ground water regulary year round for stakeholders – Flow chart of water treatment  Monitor river water and monitoring well water  Avoidance of surface and ground plan  Water efficiency in mill and laboratorium operation, e.g. reuse water contamination condensate water/ reduce water dilution, recycle cooling water turbine, c. Have the identified actions in the plan recycle sochlet water, reuse RO reject water for cleaning and domestic been implemented? water, etc

Dissemination of domestic water use was conducted during moring circle on 5 May 2015 (TLTE), 17 March 2015 (KNTE) and 18 April 2015 (TLTM). Quantity of water use January – June 2015: Mill/Estate Budget (m3) Realisation (m3) % Efficiency TLTE 14,335 13,466 6.06 KNTE 46,121.40 30,138.00 53.03 Quantity of water use in mill: Activity 2013 (m3) 2014 (m3) January – July 2015 (m3) Mill 67,293.21 91,216.49 51,547.14 Quantity of water use in 2014 was increased compered with 2013. There was process change in water treatment. RO was implemented causing 70% water was rejected.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Mill and estate has conducted analysis and measurement of surface water, ground water, monitoring well water related to land application and consumed water (consumed by employees and local people) periodically (every semester and annually). (M) Protection of water courses and wetlands, including maintaining and restoring appropriate riparian and other buffer zones (refer to national best practice and national guidelines) shall be demonstrated.

Specific Guidance: 4.4.2 For 4.4.2: Refer to the ‘RSPO Manual On Best Management Practices (BMP) for management and rehabilitation of natural vegetation associated with oil palm cultivation on peat’, July 2012.

For National Interpretation: National Interpretation will refer to national guidelines or best practice and where appropriate include performance thresholds for requirements such as the size and location and methods of restoration of riparian strips or acceptable maximum run-off levels. a. Is there a map identifying water courses - Riparian zone management YES Organization has been identifying water courses and wetland in the plantation and wetlands? plan in Tanah Laut Estate and area. There were identified water courses and wetland in Tanah Laut Estate and Kintapura Estate 2015. b. Are the water courses and wetlands Kintapura Estate ie: Tanah Laut river and its riparian area with area 119.51 Ha, - Plan and realization for riparian protected? Salaman River in Kintapura Estate and its riparian zone with area 191.8 ha and rehabilitation PT Tapian freshwater swamp as a catchment area in Kintapura estate 4.36 ha. It has been c. Are the riparian and buffer zones Nadenggan 2015 mapping by organization and documented in map with scale 1 : 50,000. maintained and restored in existing - Field observation and site visit plantation and replanting areas? in Tanah Laut Estate and Protection of waterways and wetlands have been made by the company with the d. Is there SOP for riparian and buffer zone KIntapura Estate following way : protection? - Protection of riparian areas with no chemical crops care activities both e. Has the SOP been implemented? fertilizer and herbicide spraying - Conduct rehabilitation of riparian - Performs a of water level in the peatlands area by maintaining surface water height between 40-60 cm, this can be proved by the routine piezometers monitoring on peatland. Riparian zone were well maintain, the following was activity to maintain riparian zone such as : - Boundary markers placement in 5 rows of palm trees (50 m) related restrictions spraying of chemicals and chemical fertilizers in the area of 50 m

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) side of the river. There was the evidence during the audit, riparian zone was well maintain and no contamination of chemical usage and fertilizer - Warning boards placement which contain information restrictions the pesticide usage and chemical fertilizers in the riparian area. - Riparian rehabilitation by planting vetiver grass, a shade trees and barriers to erosion trees (Angsana, Sungkai, etc.). There was the evidence of plan and realization for riparian rehabilitation, its observed Angsana trees and Sungkai was planted and grow well in both side of the river. Organization also has been establish the procedure for riparian and buffer zone protectionwhich documented in SOP/SPO/SMART/LH-06 and SOP/SPO/SMART/LH-07. During field audit, it was observed that the procedure has been implemented well and it evidenced.

Appropriate treatment of mill effluent to required levels and regular monitoring of discharge quality, especially Biochemical Oxygen Demand (BOD), shall be in compliance with national 4.4.3 regulations (Criteria 2.1 and 5.6).

a. Is the mill effluent treatment process in  Analysis of result of Quality Tanah Laut Mill waste water was processed through a multifeedings waste water YES place? waste water effluent period 2nd treatment ponds: four (4) active ponds with methods of anaerobic ponds. Palm Oil st Mill Effluent (POME) is monitored monthly as required by regulation. b. Is there a process in place for checking semester 2014 and 1 Quality of waste water effluent is monitored monthly in line with the requirements and monitoring water discharge quality, semester 2015 particularly BOD?  Permit of land application was of regulation Kep Men LH No.29/2003. The result of POME monitoring was still in process reviewed including measurement of BOD for 2nd Semester of 2014 and 1st c. Is the water discharge quality in  Mill site visit (include WWTP semester 2015. The Ministry of Environment Decree #29/2003 and permit of land compliance with national regulations? ponds) application required that BOD of POME flowed to land application is less than d. Does the mill have a license for 5,000 mg/litre and pH 6 - 9.The result of POME quality during this period was treatment, discharge or land application BOD less than 5,000 mg/litre and pH between 6 and 9. of mill effluent, and is the mill in compliant It was noted that extension of permit of land application has not been finished. with the requirements of the license? The organisation was applied on 28 January 2014 through letter #020/TLTM- ET/01/2014 and technical verification was conducted on 18 March 2014. Recommendation from technical verification result was followed up on 3 April 2014. Corespondency between government and organisation was still conducted. Last communication was conducted on 3 August 2015 regarding submission of land application assessment report.

Audit Report

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

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

a. Are there procedures to measure mill  MCMD #1/2010” – Processing Procedure to measure mill water usage was described in MCMD #1/2010” – YES water usage, and are the procedures  Mill water usage monthly Processing. Mill water use per tonne of FFB is monitored monthly as well as raw implemented? monitoring records water and domestic water supply. Actual mill water use was well recorded. Result b. Are there records of mill water use per of monitoring of mill water use per tonne of FFB was sighted. Record of mill water use per tonne of FFB tonne of Fresh Fruit Bunches (FFB)? 2013 2014 January – June 2015 Realisation 2.89 4.22 4.30 To reduce water use for process organisation has programmed to reuse RO reject water for processing.

4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management techniques.

(M) Implementation of Integrated Pest Management (IPM) plans shall be monitored.

4.5.1 Guidance: Growers should apply recognised IPM techniques, incorporating cultural, biological, mechanical and physical methods to minimise the use of chemicals. Native species should be used in biological control where possible. - IPM Plan program in the Work YES a. Is there a documented IPM plan? IPM Plan program was documented in the Work program Division LNGE and program Division TLTE and TMSE 2015. Tanah Laut and Kintapura Estate have established Division Work b. Does the IPM plan include the following? KNTE 2015 Program annually for IPM for each division. IPM programme includes detection  Identification of potential pests and - Procedures Integrated Pest and census of pest and diseases, weeds controlling, planting and upkeep of thresholds Management (IPM) beneficial plant, use of pesticide and herbicide.  What are the techniques used SOP/SMART/MCAR/VII/TA- (cultural, biological, mechanical and HPT and SOP/SMART/MCAR/ IPM plan include the following :

physical methods)? VIII/TA-PGM  What are the native species used as - Record of Sensus Oryctes • Identification of potential pests and thresholds part of the biological control performed monthly, observed • The techniques used (cultural, biological, mechanical and physical methods) method? records for period January to  Does it help in reducing the use of August 2015 • The native species used as part of the biological control method chemicals over a period of time? - Record of Sensus rats • Reducing the use of chemicals over a period of time  Prophylactic use of pesticides performed every 3 month,

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Minimization of pesticide use observed records for period • Prophylactic use of pesticides January to August 2015  Review on the plans to suit the • Minimization of pesticide use present condition such as - Summary data UPDKS (Ulat replanting? Pemakan Daun Kelapa Sawit), • Review on the plans to suit the present condition such as replanting consist of sensus result (every 2 c. Is there an SOP to implement the plan month) and control apps such Procedures SOP/SMART/MCAR/VII/TA-HPT and SOP/SMART/MCAR/ VIII/TA- and monitor its effectiveness? as Cordyceps, quoted and use PGM have been established to confirm that Integrated Pest Management (IPM) to d. Is there records of pest occurrence and of light traps. control pests, diseases, weeds and invasive introduced species. The procedures control? include setting out of technique to be implemented, chemical to be used, locations to be applied, and time frame for implementation.

Plans and realization of early detection of pests and diseases, pest occurrence and control was well documented. Several records of pest occurrence and control verified ie : - Rat census conducted every 3 months, the results of the census in July 2015 in TLTE known the average level of rat attacks was less than 5% (1- 3%) and in KNTE average of 2.98% so that there is no chemical control using pesticides Tikumin. - Detection of leaf-eating caterpillar pests (UPDKS) was performed by rotation 6 times a year or every two months on the same block. Last early detection of the rotation 1-3 period January - July 2015 in TLTE and KNTE there were no UPDKS pests detected. Plans and realization of early detection of pests and diseases was well documented. - IPM training to IPM workers has been performed in January 2015 by SMARTRI. Records of training were evidenced. - Monitoring Gufon (Tyto Alba) is performed every month to monitor the activity of owls as predators of rats. Last observation conducted in July 2015 there were 8 Gufon with active gufon 6 (75% active Gufon) in TLTE and in KNTE there were 27 Gufon which not active yet. - Planted the beneficial plant as the host/nest for natural enemies UPDKS (Eucanticona purcelata, cycanus sp). The beneficial plant such as: Turnera subulata planted in the collection and the main road, Antigonon leptopus planted in every corner of the main road intersections and road collection, Casia cobanensis planted alternately with Turnera in Collection Road and Main Road. Evidence of planting and upkeep in LNGE and TMSE was

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) sighted and the field observations were also observed well maintained.

4.5.2 Training of those involved in IPM implementation shall be demonstrated. a. Is there records of training provided to - Document of IPM training The latest training of IPM performed to Tanah Laut and Kintapura Estate YES those involved in the implementation of record in TLTE and KNTE employees (assistant, group leader and worker who conduct IPM) on 27 Januari IPM? 2015 by SMARTRI. List of participant attendance was sighted. Training material

was also observed covered IPM technique and implementation. Personnel interviewed during field observation were verified has received training of IPM.

4.6 Pesticides are used in ways that do not endanger health or the environment.

(M) Justification of all pesticides used shall be demonstrated. The use of selective products that are specific to the target pest, weed or disease and which have minimal effect on non-target species shall be used where available.

Specific Guidance: For 4.6.1: Measures to avoid the development of resistance (such as pesticide rotations) should be applied. The justification should consider less harmful alternatives and IPM. 4.6.1 Guidance: The RSPO has identified some examples of alternatives to pesticide use, which include those listed in the ‘Research project on Integrated Weed Management Strategies for Oil Palm; CABI, April 2011’. Due to problems in the accuracy of measurement, monitoring of pesticide toxicity is not applicable to independent smallholders (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010). a. Does the organization have a policy on - Policy for use of imited YES Organization has made policy for use of imited pesticides dated August 1 2014 by safe use of chemicals? pesticides dated August 1 2014 VPA, Organozation is responsible for the use of limited pesticides in accordance by VPA b. Does the organization have SOPs for use with the principles of sustainable palm oil management. The use of pesticides - SOP / SMART / CAR / VIII / of selective products that are specific to Type 1A, 1B and Paraquat in accordance with prevailing law, best practices TA-PGM, weed control target pests, weeds, or diseases and plantations, sustainable reduction and efforts to increase knowledge, awareness - List of Agrochemicals used by which have minimal effect on non-target of employees in the use of chemicals categorized as 1A or 1B by WHO and TLTE and KNTE 2015 which species? Paraquat to create a safe working environment. approved and registered by i. Measures to avoid the development of resistance (such Agriculture Department Organization has established procedure weed control SOP No. SOP / SMART / - Register number refer to

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) as pesticide rotation) should be Pesticide Commission Book CAR / VIII / TA-PGM. Each type of pesticide used have been defined specific applied. “Buku Komisi Pestisida” year target of pest, types of weeds, application doses per hectare which have minimal ii. Is there a list of all pesticide with 2014. effect on non-target species and a broad plan of applications and specified in the target species and justification of - Record of Implementation of annual budget and annual work plan of the organization. use? pesticides rotation usage Measures to avoid development of resistance have been implemented by iii. The justification should consider between glifosat and paraquat. pesticides rotation between glifosat and paraquat. less harmful alternatives and IPM. - Record of Plan and realization for developing Beneficial plants c. Is there evidence of implementation of List of all pesticide with target species and justification of use was well 2015 SOP on the ground? documented. - IPM technique implemented such as : Beneficial plant Justification has been consider less harmful alternatives and integrated pest usage, Handpicking for management. Less harmful alternatives been applied by developing : controlling ulat api, Applied - beneficial plants for inang predator ulat api Cordyceps fungi, Light trap usage - Handpicking for ontrolling ulat api - Applied Cordyceps fungi - Light trap usage During audit document and field audit, its evidenced that the procedure was well implemented. Agrochemicals used by Tanah Laut Estate and Kintapura Estate plantation has been approved and registered by Agriculture Department, e.g. - Rolixone 276 SL – license RI.0112011984666 expired date 23 June 2016, - Erkafuron 20 WG (Metsulfuron methyl), License RI .2405/6-2011/T expired date 23 June 2016 - Roll up 480 SL (Isopropil Amina Glifosat 480 g/l), License RI.01030120042133, Expired date 31 December 2018 - Starane 290 EC (Fluroxipir Methylepthyl ester 30%), License RI.0103011988854 expired date 15 April 2019, - Garlon 670 EC (Triklopir 480 g/lt) – license RI 01030120062405 expired on 23 June 2016. It was noted that there were no agrochemicals being used which were not

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) registered during this audit. Agrochemicals use and their register number refer to Pesticide Commission Book “Buku Komisi Pestisida” year 2014.

4.6.2 (M) Records of pesticides use (including active ingredients used and their LD50, area treated, amount of active ingredients applied per ha and number of applications) shall be provided.

a. Does the company have a pesticide - Records of pesticide use in YES Organization has defined a pestice application program in the annual budget and application program? document “Recapitulation of annual work plan in each division. b. Is records of pesticides use available? agrochemical use” in Tanah Laut Estate and Kintapura Appropriate dose of herbicide use and the type of job rotations per year has been c. Do the records detail the active Estate at 2015 defined by organization in work program : ingredients used and their LD50, area - Budget Agrochemical and treated, amount of active ingredients realization in Tanah Laut Estate - Spraying circle and path three times a year using Rolixone + Erkafuron and Roll up + starane, applied per ha and number of and Kintapura Estate at 2015 applications? - Pesticides toxicity unit/ton FFB - Spray a bush two times a year using Rolixone + erkafuron, 2015 in Tanah Laut Estate and KIntapura Estate (Jan – July - Spray a fern two times a year using Rolixone + Erkafuron 2015) - Spray Asplenium two times a year using Rolixone + Erkafuron - Spray woody weeds two times a year using Garlon + Agristik Agrochemicals use was well recorded in “Recapitulation of agrochemical use” including active ingredients used and their LD50, area treated, amount applied per ha and number of applications. The documents were also recorded dosage of agrochemical use, target species. The records were sighted in Tanah Laut Estate and Kintapura Estate. It was noted that dosage applied and application rotation was in accordance to budget. (M) Any use of pesticides shall be minimised as part of a plan, and in accordance with Integrated Pest Management (IPM) plans. There shall be no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines.

4.6.3 Specific guidance for 4.6.3: Justification of the use of such pesticides will be included in the public summary report.

For National Interpretation: National Interpretation will consider: statutory requirements concerning pesticide use, lists of legally prohibited pesticides, pesticide residues that should be tested for and the appropriate levels

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) of residues, and best management practices for pesticide use or sources of information on these. National Interpretation will develop best practice guidelines on the exceptional circumstances that would allow the use of pesticides categorised as World Health Organisation Class 1A or 1B, or those listed by the Stockholm or Rotterdam Conventions, and paraquat as well as how they will be used in ways that do not endanger health or the environment. a. Does the company have an IPM plan? - Document “Plan and realization YES Organizations have implemented IPM 2015 work program include: budget agrochemical” year b. Has that plan been implemented? 2013, 2014 and 2015 Tanah - Early detection of pests and plant diseases (EWS) c. Is the effectiveness of the IPM plan Laut Estate and Kintapura monitored? Estate - Development of natural enemies of pests and plant diseases with planting Turnera subulata Cassia cobanensis Antigonon - Document report “BKM 2015” beneficial plant such as , and d. Are there records showing that the use of leptopus, the development of an owl as a natural enemy of rat. pesticides have been minimised in Tanah Laut Estate and accordance with Integrated Pest Kintapura Estate - Chemicals usage as a last alternative in the control of pests and diseases Management (IPM) plan? - Site visit and field observation in Tanah Laut Estate and Early detection UPDKS (ulat pemakan daun kelapa sawit) performed every 2 e. Has there been prophylactic use of Kintapura Estate months, it documented in BKM (buku kegiatan mandor). Beneficial plant Turnera pesticides? If so, justification must be subulata, Cassia cobanensis and Antigonon leptopus already planted almost in provided in accordance to National Best every block along the main road and collection road. Owl introduction was in Practices. progress with the implementation of owl nest (Gufon) and the introduction of an owl from Hanau Estate. Monitoring the implementation of the IPM was documented in “plan and realization Work Program IPM 2015” in each division (detection of plant diseases and pests census (UPDKS, rats, Oryctes), spraying ferns, path and circle weeding spraying and beneficial plant upkeep. The use of pesticides has been minimised as part of a plan, and in accordance with Integrated Pest Management (IPM) plans, e.g. in Tanah Laut Estate :

Material 2013 2014 2015 Rollup (L) 1,620 1,549 782.11 Rolixone (L) 1,959 1,561.50 736.61 Erkafuron (L) 113.82 76.86 37.77

E.g in Kintapura Estate :

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Material 2013 2014 2015 Rollup 1,014.65 456.06 356.06 Rolixone 933.35 761.81 661.81 Erkafuron 44.55 41.16 31.16 Starane 206.63 69.85 59.85

Use of pesticides in the field was always lower than the planned budget. It also shows the company's commitment to always reduce pesticide usage and give priority to the prevention of mechanical, biological and integrated pest management. There was no prophylactic use of pesticides, its evident by site visit and field observation in Tanah Laut Estate and Kintapura Estate. Pesticide only used and apply for weeds and pest. Pesticides that are categorised as World Health Organisation Class 1A or 1B, or that are listed by the Stockholm or Rotterdam Conventions, and paraquat, are not used, except in specific 4.6.4 situations identified in national Best Practice guidelines. The use of such pesticides shall be minimised and eliminated as part of a plan, and shall only be used in exceptional circumstances. a. Does the company have a complete - Listing of WHO class 1A, class YES Organization already has a list of pesticides that are included in WHO Class 1a listing of WHO class 1A, class 1B, and 1B, and Stockholm or (extremely hazardous) 28 types, class 1B (highly hazardous) 56 types and Stockholm or Rotterdam Conventions Rotterdam Conventions Stockholm Rotterdam convention pesticide. In Langadang Estate and Tasik Mas pesticide? pesticide Estate there were no uses of 1A and 1B class pesticides. Paraquat which was - Policy of Paraquat uses from b. Is there a policy, procedure or used by organization included in the class class II (Moderately hazardous). management plan committing to minimise Vice President Agronomy (VPA) and eliminate use of these pesticides and dated 1 March 2010. Organization has defined a policy, documented in “Memorandum Presiden paraquat? - Memorandum from Regional Direktur No. 044/PD/IX/2014 dated 21 November 2014” organization commited to Controller (RC) Kalimantan reduce the use of Paraquat as much as 30% in 2015 and in 2018 will no longer c. Are there records of minimisation of Selatan 1 dated 21 July 2014 used/eliminate. During this time the use of paraquat only to eradicate the weeds pesticides and paraquat use? - Memorandum Presiden Direktur of Pakisan (Noxious Ferns). No. 044/PD/IX/2014 dated 21 d. Where there is the use of the above The use of pesticides and paraquat has been minimised as part of a plan. The November 2014 pesticides or paraquat, has justification in records of minimisation was available, e.g in Tanah Laut Estate : line with national best practice guidelines - Document “Plan and realization been documented? budget agrochemical” year Material 2013 2014 2015 2013, 2014 and 2015 e. Does physical verification of inventory in Langadang Estate and Rollup (L) 1,620 1,549 782.11

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) the chemical store agree back to the Kintapura Rolixone (L) 1,959 1,561.50 736.61 inventory records? Erkafuron (L) 113.82 76.86 37.77

E.g in Kintapura Estate :

Material 2013 2014 2015 Rollup 1,014.65 456.06 356.06 Rolixone 933.35 761.81 661.81 Erkafuron 44.55 41.16 31.16 Starane 206.63 69.85 59.85

To reduce paraquat use, Estates implement S4 (Selective Spraying and Site Specific) which agrochemical is only used in targeted weeds, no spraying in riparian buffer zones. There was a Policy of paraquat use, PT SMART are committed to always control aspects of the environment and prevent environmental impacts and create a safe working environment for all employees with respect to the use of paraquat. Regional Control (RC) of Kalimantan Selatan 1 also established Memorandum regarding Paraquat uses: - Paraquat is only use to control ferns (Stenochlaena, Lycopodiophyta, etc) - Rotation weeding circle and path spraying which were using Paraquat lowered at least 3% from the previous year and wherever possible be replaced with a systemic herbicide based on weed vegetation in the field besides ferns. - Applications of Paraquat performed by trained and certified personnel under direct supervision by the foreman who was also certified (M) Pesticides shall only be handled, used or applied by persons who have completed the necessary training and shall always be applied in accordance with the product label. Appropriate 4.6.5 safety and application equipment shall be provided and used. All precautions attached to the products shall be properly observed, applied, and understood by workers (see Criterion 4.7). - Training record and certificates YES a. Is there SOP for chemicals/pesticides Pesticide use and handling was documented in the procedure on behalf on behalf Dadah R, handling? SOP/SMART/MCAR/VIII/TA-PGM and work instruction IK/SMART/MCAR/VIII/TA- Salamah, Ratiyem, Inayah with

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) b. Is there a training plan and training certificate no. PGM/03-Weeds control. General instructions of security in working with pesticides records for workers who apply or handle 03/KP3/KS/IV/2013 in TLTE described in procedure includes the selection of kinds of pesticides, pesticide pesticides? - Training record and certificates storage, pesticide use, addressing pesticide contamination, first aid instructions, on behalf Badriyah, Siti medical assistance. c. Is there evidence that training has been Khotijah, Royati, Emi with conducted in an appropriate language Agrochemicals have been applied and handled by trained spraying workers who certificate understood by the workers? have received usage of limited pesticide training. Training was delivered by no.03/KP3/KS/IV/2014 in KNTE Pesticide Commission of Agriculture Department District Tanah Laut, South d. Are pesticides handled, used or applied - Field observations to spray Kalimantan Province on April 2014 in TLTE and 25 March 2014 in KNTE. Training only by persons who have completed the activities (pesticide/herbiside record and certificates were sighted for all sprayers in KNTE and KNTE such as: necessary training? usage) in Tanah Laut Estate at on behalf Dadah R, Salamah, Ratiyem, Inayah with certificate no. Block C18 division I and e. Are the workers involved in chemical 03/KP3/KS/IV/2013 (TLTE) and on behalf Badriyah, Siti Khotijah, Royati, Emi with Kintapura Estate at Block G7 handling or application able to certificate no.03/KP3/KS/IV/2014 (KNTE). Training covered handling of division I demonstrate understanding of the concentrate agrochemical and spraying method including pesticide hazard. hazards and risks related to chemicals - MSDS of All type Agrochemical used when interviewed? Personnel interviewed (sprayer workers) can clearly explain the type of work including work methods and goals, materials used (pesticides) including the f. Are pesticides always applied in dosage and hazards and risks, personal protective equipment and first aid. accordance with the product label? Pesticides always applied in accordance with the product label and storage g. Are MSDS for pesticides used readily instruction , such as : available for easy reference? - Erkafuron: 148.48 kg h. Is appropriate safety and application equipment provided and used? - Rolixone: 1,378.10 L i. Is PPE used appropriate according to - Roll Up: 1,002.57 L recommendations in any risk assessments done? - Starane: 120.6 L j. Is appropriate PPE provided and used, Agrochemicals storage was locked areas with limited access. The storage was and can it be easily replaced if damaged? ventilated. MSDS and hazard symbol label were provided nearby of agrochemicals. Emergency shower and eyewash were also provided to anticipate k. Does the management checked the in case of an emergency of agrochemical handling. The possible spill was workers usage of appropriate PPEs? managed. Secondary containment was provided around the chemical storage area. Spill kit was also provided in the area. PPE for handling of chemicals were provided including boots, apron, safety glass, respiratory mask and hand gloves. PPE used was appropriate according to recommendations in any risk

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) assessments. PPE provided and used can be easily replaced if damaged.. Site visit in Tanah Laut Estate at Block C18 division I and Kintapura Estate at Block G7 division I has been done to observe the spraying and pesticide application in field. Interview with spraying workers were evident that all of them has a good knowledge regarding the pesticide usage and its material usage and toxicity. All the workers has used the personal protective equipment meet with the safety rules and work instruction such as : Appron, safety goggles, chemical masker, hand gloves (2 type : cotton inside and rubber outside) and safety shoes. All precautions attached to the products properly observed, applied, and understood by workers. Mandor as person in charge to check the workers usage of appropriate PPEs was well monitored in each spraying job. (M) Storage of all pesticides shall be according to recognised best practices. All pesticide containers shall be properly disposed of and not used for other purposes (see Criterion 5.3).

4.6.6 Specific guidance for 4.6.6: Recognised best practice includes: Storage of all pesticides as prescribed in the FAO International Code of Conduct on the distribution and use of pesticides and its guidelines, and supplemented by relevant industry guidelines in support of the International Code (see Annex 1). a. Has the SOP for pesticide storage been  IK/SKIP/GDG/01 – Pesticide SOP for pesticide storage was documented in IK/SKIP/GDG/01 – Pesticide YES documented and implemented? warehouse warehouse. Pesticides are stored in the determined area separated from fertiliser (Major NCR and other chemicals. Pesticides storage is provided in Divisions as well as in 2015-03 closed) b. Are all pesticides stored according to  Receipt note returning of empty recognised best practices? pesticides containers to PT. central storage. Agrochemicals storage is locked areas with limited access. The Rolimex Kimia Nusamas storage is ventilated. MSDS and hazard symbol label are provided nearby of c. Is there evidence that empty pesticide  Contract Agreement between pesticides. Emergency shower and eyewash are also provided to anticipate in containers are properly stored and PT. Maju Asri Jaya Utama and case of an emergency of agrochemical handling. PPE for handling of pesticides disposed off and not used for other PT. Waste International (SPK are provided including boots, apron, safety glass, respiratory mask and hand purposes? #002/WI/SPKLB3-P/I/2015) gloves. The possible spill is managed. Secondary containment is provided around d. Is there evidence observed in the field  Report of pesticide use the pesticides storage area. Spill kit is also provided in the area. that pesticide containers are optimalisation activity January – indiscriminately disposed (in dump site) June 2015 All empty pesticides containers were triple rinsed and stored in the temporary or used for other purposes, .e.g. as waste  Field observation to Division storage of hazardous wastes. The jerrycans were reused to spraying activities, containers, flower pots? warehouse, central warehouse, while bottles containers were returned to suppliers (PT Rolimex Kimia Nusamas) pesticedes containers cleaning and managed by licensed transporter PT Maju Jaya Asri Utama and processor PT area, temporary storage of Wastec International. Hazardous waste manifests were sighted for March and hazardous waste June 2015. Return of empty pesticides containers to PT. Rolimex Kimia Nusamas was conducted in December 2014.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Major Non-conformance 2015-03 KNTE  Inventory of pesticide containers waste has not been updated.  Empty pesticide containers were not stored in the permitted temporary storage of hazardous waste 4.6.7 Application of pesticides shall be by proven methods that minimise risk and impacts. a. Is there work instruction for pesticide - SOP/SMART/MCAR/VIII/TA- YES Pesticide use and handling was documented in the procedure application? PGM Pesticide use and SOP/SMART/MCAR/VIII/TA-PGM and work instruction IK/SMART/MCAR/VIII/TA- handling and work instruction b. Is there training provided on work PGM/03-Weeds control. IK/SMART/MCAR/VIII/TA- instruction including risk and impacts of PGM/03-Weeds control pesticide applications? Training and dissemination on work instruction including risk and impacts of - Training and dissemination pesticide applications (Material safety data sheet) has been performed by records for sprayers worker 9 organozation on 9 April 2015 in TLTE and 19 Mei 2015 in KNTE to all sprayers April 2015 in TLTE and 19 Mei and chemical workers. Training and dissemination records were sighted. 2015 in KNTE

- Field observations to spray Personnel interviewed can clearly explain the type of work including work methods and goals, materials used (pesticides) including the dosage and danger, activities (pesticide/herbiside usage) in Tanah Laut Estate personal protective equipment and first aid. Several BKM of circle weeding spray at Block C18 division I and using agrochemicals was sighted. It was noted that agrochemicals (roll up, rolixon and erkafuron) use were approved and registered agrochemical. Dosage of Kintapura Estate at Block G7 division I agrochemical use, target species was in line with the procedure (SOP/SMART/MCAR/ XII/TA-PTM “Mature Upkeep” and SOP/SMART/MCAR/VIII/TA-PGM “Control of Weeds”). BKM recorded target species, dosage and trained spraying officer. (M) Pesticides shall be applied aerially only where there is documented justification. Communities shall be informed of impending aerial pesticide applications with all relevant information 4.6.8 within reasonable time prior to application. a. Has aerial spray been applied? If yes, is - Pesticide application area YES Pesticide application performed with strict supervision of the field supervisors and there documented justification? warning signs, installed for 2 assistants. Application of pesticides based on plant maintenance work program weeks in area applied b. Is the impact and risk associated with that has been scheduled. Application of pesticides considers various factors such - Warning boards of pesticide aerial application documented and made as the environment, safety and weather. In the area of pesticide applied there was applied and warning for not to available? warning boards installed for 2 weeks. Socialization is also performed to the local graze cattle in the area of people not to graze cattle in the area of pesticides applied to avoid the toxicity and c. Are the identified affected communities pesticides applied

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) informed of impending aerial pesticide - Field observations to spray hazards of toxic pesticides. applications with all relevant information activities (pesticide/herbiside within reasonable time prior to usage) in Tanah Laut Estate at application? Block C18 division I and Kintapura Estate at Block G7 division I Maintenance of employee and associated smallholder knowledge and skills on pesticide handling shall be demonstrated; including provision of appropriate information materials (see Criterion 4.6.9 4.8). a. Has the company provided information - Record of Pesticide training to YES There was no smallholder associated with estate. materials on pesticide handling to all workers in Tanah Laut Estate employees and associated smallholders and Kintapura Estate Company has provided information materials on pesticide handling to all (if any) (see Criterion 4.8)? - Field observations to spray employees. Training and dissemination on work instruction including risk and activities (pesticide/herbiside b. Is there evidence of periodic training (in impacts of pesticide applications (Material safety data sheet) has been performed appropriate language) of employees and usage) in Tanah Laut Estate at by organozation on February 2015 to all sprayers and chemical workers. Training Block C18 division I and associated smallholders on pesticide and dissemination records were sighted. Kintapura Estate at Block G7 handling? Agrochemicals have been applied and handled by trained spraying workers who division I have received usage of limited pesticide training. Training was delivered by Note: Interview with workers and smallholders Pesticide Commission of Agriculture Department District Tanah Laut, South on their knowledge and skills in pesticides Kalimantan Province on April 2014 in TLTE and 25 March 2014 in KNTE. Training handling. record and certificates were sighted for all sprayers in KNTE and KNTE.

4.6.10 Proper disposal of waste material, according to procedures that are fully understood by workers and managers shall be demonstrated (see Criterion 5.3).

a. Is there an SOP for proper disposal of  SOP/SPO/SMART-18 – YES SOP for proper disposal of waste material was described in SOP/SPO/SMART-18 waste material? Waste handling and SOP/SMART/LEMS-EHSD/SADV/I/002 – Waste handling. Waste material b. Is there training provided to workers and  SOP/SMART/LEMS- were disposed in the designated area and separated between organic and managers on proper waste disposal? EHSD/SADV/I/002 – Waste inorganic waste landfill and not being burned. handling c. Is there evidence of implementation of  Field observation to spraying Training of proper waste disposal was conducted on 5 May 2015 (TLTE) and 17 proper ways for waste disposal by the and harvesting activities March and 5 April 2015 (KNTE). company?  Attendance list of training Interview with spraying worker and harvester during audit, there was good level of understanding among workers regarding how to separate between inorganic and

Audit Report

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

4.6.11 (M) Specific annual medical surveillance for pesticide operators, and documented action to treat related health conditions, shall be demonstrated.

a. Is there an updated list of pesticide  List Of Pesticides Operator 2015 List of pesticides operator was shown and updated periodically. Specific health YES operators?  Diagnoses Card and Report from surveillance has been performed for all pesticide operators included cholinesterase, spirometry and audiometry. The surveillance was planned to be b. Is there records of annual medical recommended hospital and local conducted once in a year. Medical treatments records as Reports of the health surveillance of pesticide operators? polyclinic  MCU Recapitulation Report surveillance for all workers were available. The recommended actions were c. Is there medical and treatment records of 26/05/2015 for operator name recorded and reported to estate manager. Base on recommendation from all pesticide operators? Tusidah. manager the actions were executed and the results were reports from the recommended hospital. All results raised from actions taken were maintained properly. Diagnoses Card Covered the diagnoses and treatment applied to the workers. Several records were available for all estates audited. Socialization of health surveillance results have been conducted to the workers.

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

a. Is there a policy statement preventing - Medical Check Up (MCU) Policies related to pregnant and breastfeeding is ccording to a circular from the YES pregnant and breast-feeding women from Recapitulation Report 2015. CEO-PSM3 dated 12 January 2010:" Workers Pregnant - Breastfeeding and handling pesticides? - Field observation Inspection Sprayer "no. 001 / SE-ADH3 / BNJO / 01/2010: Interview with women workers b. Is there a lists of female workers handling - - Do not allow pregnant and nursing women workers working as sprayers

pesticides available? - Special for sprayers that use agrochemical, shall conduct regular c. Does the company have a system to checks every four (4) months. identify pregnant and breast-feeding women? Health checks of the sprayer including pregnancy tests on female workers have d. Is there evidence showing that pregnant always done every four months last performed on 9 May 2015 for TLTE and on 20

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and breast-feeding women are not May 2015 for KNTE recorded in the medical checks sprayers in the clinic. allowed to handle pesticides? So for workers who are pregnant and breastfeeding is not employed for activities related to chemicals, it is sign when field observations and conducted checks on power sprayers, there are no labor who are pregnant and breast-feeding as the list of checks in the clinic. General medical examination (MCU) employees of PT SMART Tbk. (TLTE, KNTE and TLTM) conducted in 10 February 2015 and recorded in the “Laporan hasil Pemeriksaan Kolinesterase periode February 2015”.

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

(M) A health and safety policy shall be in place. A health and safety plan covering all activities shall be documented and implemented, and its effectiveness monitored.

Guidance: 4.7.1 Growers and millers should ensure that the workplace, machinery, equipment, transport and processes under their control are safe and without undue risk to health. Growers and millers should ensure that the chemical, physical and biological substances and agents under their control are without undue risk to health when appropriate measures are taken. All indicators apply to all workers regardless of status. The health and safety plan should also reflect guidance in ILO Convention 184 (see Annex 1). a. Is there a health and safety policy in  Health and Safety Policy Occupational health and safety policy is remained unchanged. The policy was YES place?  OHS Target and Plan 2015 displayed at strategic locations of estate and mill and communicated to (Major NCR  Is it written in an appropriate  Notes of Meeting Safety employees including contractor workers. The Health and safety policy was signed 2015-04 closed) language? Committee January-July 2015 by organization director on 1 November 2013. The mitigation of risks to workers  Has the policy been approved by an  Risk Assessment register 2015 health and safety was included in point 4 in the policy. Health and safety plan and authorized personnel and dated?  OHS Training Records 2015 target for all estates and mill were evident and included guidance provided in ILO  Does the policy cover mitigation of  Safety Performance Report Convention 184. The evidences of the implementation were shown such as

risks to workers health and safety at 2015 Health Surveillance Reports, OHS Performance Reports, OHS Training all workplace activities?  Evaluation Records of attendance, etc. Monitoring of the safety plan was conducted by regular safety  Are the workers aware of and Emergency Simulation meeting once in a month. Several actions were issued for the unachieved safety targets and plans. The safety target and plan was also publicly available via understand the policy?  Measurement Report of OHS company website. b. Is there a health and safety plan in Parameters place?  Valid permit of lifting equipment, Safety Programs/Plans has been defined such as: safety trainings, safety  Does the plan include targets for machinery etc. inspection, safety parameters monitoring, MCU, Review of Risk Assessment,

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) improving occupational health and  Safety Working Permit Records Handling of incidents, ERP simulation, safety reporting to authority, safety safety?  Etc. committee meeting etc. The implementations of the programs were evident such  Does the plan reflect guidance  Observations of OHS as: provided in the ILO Convention 184 implementation on:  Safety Committee meeting during January – July 2015 (see Annex 1)? - TLTE: spraying activities  Safety Performance Report to local authority period Apr-June 2015 c. Is there evidence of implementation of and harvesting activities,  Emergency procedure testing/simulation on Feb-March 2015 the plan? warehouse and workshop.  etc. - KNTE: spraying activities d. Is the effectiveness of the health and and harvesting activities, Monitoring of physical chemistry factors has been conducted such as noise, safety plan monitored? warehouse and workshop. vibration, air quality, etc. Several factors were found exceeded than regulation - TLTM: loading/unloading, such as noise. Follow up regarding to this condition has been conducted and e. Is the health and safety plan made evaluated. Documented procedure was available to handle this activity publicly available? production process including utilities, (SOP/SMART/HESS-EHSD/SADV/I/016). f. Is there an action plan if targets are not workshop, storage and OHS induction was performed by Safety Officer at mill and estates. With this achieved? laboratory. induction, auditor team was made aware on the situation of mill and estates, the risk may be existed, the basic OHS rules at mill and estate and emergency preparedness and response procedure, etc. Utility equipment were available and installed such as boilers, sterilised, steam vessel, compressors, generator, heavy equipment, lifting equipment. This equipment has been inspected by local authority and the records were evident. Periodic monitoring was also performed internally such as boiler parameter monitoring (pressure, temperature, water quality, water level, etc. Operators who operate utility and vehicles were trained by authorised body and equipped by valid licensee. Certificate of training was also evident. Moving parts of machine/equipment generally has been covered or guarded. Safety sign was provided to make workers aware on this hazard and risk. Electrical hazard symbol was provided at electrical panel. Inspection regarding to electrical installation has been made. Access for workers to workplace in general also good e.g. stair was provided with hand rail and platform at height was provided with border to prevent fall risk. There was also detailed working instruction which described process for conducting activities including requirement concerning to OHS aspects such as requirement of PPE. Working instructions were sighted such as spraying, harvesting, pesticide preparation, etc. The procedure for controlling the critical activities was established, SOP/SMART/HESS-EHSD/SADV/I/015. The procedure was covering OHS

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) control for working in confined space (e.g. cleaning of storage tank), working at height and welding. Work permit system was implemented for these works. It was noted that measurement of adequacy of oxygen and availability of dangerous gas were required before entering confined space and it was mentioned in the work permit; the portable gas detector was sighted during this audit. It was also noted that working at more than 2 meters from land or platform has been classified as working at height; this was mentioned in the procedure. Lock out tag out (LOTO) procedure (SOP/SMART/HESS-EHSD/SADV/I/009) has also been established and implemented especially intended for risk control of maintenance activities. The procedure for management of PPE has been established (SOP/SMART/HESS-EHSD/SADV/I/010). The PPE for each activity has been established, e.g. working at mill, working at generator set, welder, working at laboratory, harvester, sprayer, fertilizer storage, chemical storage, etc. Observation during this audit generally concluded that PPE has been well provided and implemented. Workers were interview during this audit and generally they understood the risk of their work and the purpose of using PPE. Emergency Response Team has been defined and the emergency flow charts have been established for any kind of emergency situation such as earthquake, fire, flood etc. The awareness of employee was gained with the simulation of emergency response conducted on 9 February 2015 for mill and March 2015 for estates. The evacuation routes and emergency flowcharts have been socialized during simulation. Emergency signs and boards were provided in several areas. The muster points for each area such as workshop, warehouse, office etc. were sighted.

Major Non-conformance 2015-04 There was an unsafe act (carrying egrek without cover) by harvester during moving harvester equipment (egrek) from block E27 to E29 in TLTE.

(M) All operations where health and safety is an issue shall be risk assessed, and procedures and actions shall be documented and implemented to address the identified issues. All 4.7.2 precautions attached to products shall be properly observed and applied to the workers.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Have risk assessments been conducted  Risk Assessment (ISBPR) and a. Risk Assessment (ISBPR) for all operations was available and reviewed in YES for all operations where health and safety review for TLTM, TLTE and July 2015. is an issue? KNTE. b. The risk assessments cover all the organization’s processes and activities  Procedure such as: spraying, fertilizing, weeding, road maintenance, harvesting, b. Does the risk assessment cover all the SOP/SMART/HESS- transportation, warehouse, workshop, infrastructure, policlinic, office etc. organization’s processes and activities? EHSD/SADV/I/02 c. Related risk assessments were reviewed if any accident has occurred. c. If any accidents had occurred, were these d. Several procedures related to issues raised have been documented such as included in the risk assessments with procedure for using hydrant and FE, safety working permit, lock out tag out, action plans to prevent further first aid to workers, material processing and transportation, etc. recurrence? e. All precautions attached to products been properly observed and applied to the workers. Several controls such as providing PPE and administration Have the procedures and action plans d. control were applied to workers in some activities such as: mill maintenance been documented and implemented to process, spraying activities, handling of pesticides etc. address the identified issues?

e. Have all precautions attached to products been properly observed and applied to the workers?

(M) All workers involved in the operation shall be adequately trained in safe working practices (see Criterion 4.8). Adequate and appropriate protective equipment shall be available to all 4.7.3 workers at the place of work to cover all potentially hazardous operations, such as pesticide application, machine operations, and land preparation, harvesting and, if it is used, burning.

a. Are all workers involved in the operation  List Attendance of Risk Risk assessment and Work Instruction socializations have been performed both YES appropriately trained in safe working Assessment and Work Instruction for mill and estates. Samples were taken for Risk Assessment and Work practices (see Criterion 4.8)? socialization for mill and estates. Instruction socialization for: harvesting, spraying and chemical warehouse workers. The socializations were conducted by Safety Officer who has been b. Are OSH training programs and training  SOP/SMART/HESS- qualified as Safety Officer by the government. records available and conducted by EHSD/SADV/I/010 qualified persons?  PPE Checklist Maintenance The procedure for management of PPE (SOP/SMART/HESS-EHSD/SADV/I/010) has been established. The PPE for each activity has been established, e.g. c. Is adequate and appropriate protective  PPE Distribution Records equipment available to all workers at the working at Mill, working at generator set, welder, working at laboratory, harvester, place of work to cover all potentially sprayer, fertilizer storage, chemical storage, etc. Observation during this audit hazardous operations, such as pesticide generally concluded that PPE has been well provided and implemented. Workers application, machine operations, and land were interview during this audit and generally they were understood the risk of preparation, harvesting and, if it is used, their work and the purpose of using PPE. List of PPE was evident included: ear burning? plug, helmet, ear muff, safety shoes, gloves, googles, mask, gas mask, apron etc. The records of PPE distribution when it was damaged were evident such as for:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Is PPE provided to workers and replaced Tanah Laut Estate on 7-22 April 2015 to harvesting workers and pesticides when damaged? operator.  Does the organization maintain a list It was observed that workers were wearing appropriate PPE such as gloves, of PPE distribution? goggles, shoes and chemical mask for pesticides operators.  Are workers observed wearing appropriate PPE?

(M) The responsible person/persons shall be identified. There shall be records of regular meetings between the responsible person/s and workers. Concerns of all parties about health, safety 4.7.4 and welfare shall be discussed at these meetings, and any issues raised shall be recorded.

a. Has the company identified the - Approval Letter of Safety The responsible person was identified as Chief of P2K3 (estate or mill manager) YES responsible person/persons to implement Committee from local and P2K3 secretary (Safety Officer). The safety committee (P2K3) structure was OSH? government Pemkab evident and been approved by local authority Pemkab Tanah Laut for mill and all Tanah Laut, South estates. Notes of Regular Meeting of Safety Committee with workers were b. Are meetings between the responsible Borneo. evident. Samples were reviewed for April - June 2015. The meeting was planned persons and workers conducted on a - Notes of Meeting Safety once in a month as required by Permenaker 04/1987. regular basis, or as required by law, if Committee (P2K3) from Several concerns were discussed such as: request for PPE, request of fire any? April – June 2015 for all extinguisher, and safety inspection. The actions were monitored for realisation c. Are minutes of meeting recording estates and mill. and reported to management and local authority. attendees and issues discussed available? d. Are concerns of all parties about health, safety and welfare discussed at these meetings?

Note to Auditor: Interviews with workers reflect compliance to a-d above. Accident and emergency procedures shall exist and instructions shall be clearly understood by all workers. Accident procedures shall be available in the appropriate language of the workforce. 4.7.5 Assigned operatives trained in First Aid should be present in both field and other operations, and first aid equipment shall be available at worksites. Records of all accidents shall be kept and periodically reviewed.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Are there SOPs for accidents and - Emergency respond Emergency respond procedure written in Bahasa Indonesia was described by YES emergencies? procedure SOP/SMART/UMUM/SADV/I/005 and was covered reporting, responsibility of all  Do these cover all major potential SOP/SMART/UMUM/SAD members of ERP Team, handling of ERP situation, mitigating of ERP situation, emergencies, such as, but not V/I/005 etc. Some situations were identified such as earthquake, flooding, fire, hazardous limited to fire, chemical spillage, and - Accident procedure spillage, explosion etc. potential natural disasters specific SOP/SMART/HESS- Accident procedure written in Bahasa Indonesia was described by: for the region, e.g. earthquakes, EHSD/SADV/I/005 SOP/SMART/HESS-EHSD/SADV/I/005. Accidents happened were investigated volcanoes, etc.? - Training Certificate of First such as last accident on 2 July 2015. The accident has been reported to Aid Officer  Are accidents investigated and Dinsosnakertrans on 5 July 2015. The record of accident investigation was - List Attendance for ERP action taken to prevent recurrence? evident and maintained properly.  Are accident records provided to the socialization and local authority in accordance with emergency simulation on:9 Emergency respond procedure has been socialized to workers during the local legal requirements, if any? February 2015 for TLTM simulation of emergency situation and attended by all workers. The list of  Available in the appropriate and 7 March 2015 for attendance was available. From workers interview in the field it was observed that language of the workforce? TLTE and KNTE. the workers were clearly understood of what is required in the procedure. - Accident Reports and b. Are the instructions on emergency Investigation Form 2 July Trained First Aid operators were provided in the field area. They were trained as procedures clearly understood by all First Aid Officer from Dinsosnakertrans on 13 March 2014 for all estates and mill. 2015 workers? - List attendance of First Aid There were also First Aid trainings from local paramedic during February-July 2015. The First Aid equipment were available at worksites such as harvesting c. Are assigned operators trained in First Training on 13 March 2014 area, spraying area etc. and were checked in accordance with local regulation Aid present in both field and other - List attendance of Internal Permenaker 15/2008. operations? First Aid Training on 3 February 2015 d. Is there records of training of the first aiders? e. Is first aid equipment available at worksites? Is the equipment available during conduct of field manual work? e. Are first aid kits adequately stocked and regularly checked in accordance with local legal requirements? f. Are records of all accidents kept and periodically reviewed for continuous improvement?

Audit Report

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

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

a. Is there evidence that all workers are Slip payment of medical care and All workers (permanent and contract) were covered by accident and medical care YES provided with medical care (refer to accident insurance July 2015 for insurance including contract workers. Slip payment dated July 2015 for the Criterion 6.5.3), and covered by 1083 workers in TLTM, TLTE and insurance were available for June 2015. accident insurance by the company? KNTE. The insurances were still valid as seen by most recent slip payment for in July For contract workers, the contract 2015 for all estates and mill. between the company and the contractor shall be in compliance. b. For accidents that have occurred, is there evidence that the affected workers received appropriate medical treatment, and was able to claim and receive compensation under the insurance policy (if relevant)? c. Is there evidence that the insurance policies are valid? Occupational injuries shall be recorded using Lost Time Accident (LTA) metrics.

Specific Guidance for 4.7.7: The National Interpretation will define the metrics for LTA. For countries where there are no national interpretations, the growers will determine their own metrics. 4.7.7 For National Interpretation: National Interpretation will define the metrics for LTA. All legal requirements together with any local or national guidance on safe working practice in agriculture will be identified and used. It will also be important to identify what constitutes a ‘hazardous’ operation in the local context. a. Are occupational injuries recorded - Accident Reports and YES using Lost Time Accident (LTA) Investigation Safety performance for both mill and estates was calculated using frequency rate metrics? - Frequency Rate and Severity and severity rate. During 2015 the value for FR and SR was stated as below:: Rate Calculation Table • TLTM: FR=8.80; SR=20.53 • TLTE: FR=7.05; SR=7.05 • KNTE: FR=30.60; SR=68.84

Audit Report

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

4.8 All staff, workers, smallholders and contract workers are appropriately trained.

(M) A formal training programme shall be in place that covers all aspects of the RSPO Principles and Criteria, and that includes regular assessments of training needs and documentation of the programme.

Guidance: Workers should be adequately trained on: the health and environmental risks of pesticide exposure; recognition of acute and long-term exposure symptoms including the most vulnerable groups (e.g. young workers, pregnant women); ways to minimise exposure to workers and their families; and international and national instruments or regulations that protect workers’ health. The training programme should include productivity and best management practice, and be appropriate to the scale of the organisation. Training should be given to all staff and workers by growers and millers to enable them to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of these Principles, Criteria, Indicators and Guidance. Contract workers should be selected for their ability to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of the RSPO 4.8.1 Principles, Criteria, Indicators and Guidance. Growers and millers should demonstrate training activities for schemes smallholders who provide Fresh Fruit Bunches (FFB) on a contracted basis. Workers on smallholder plots also need adequate training and skills, and this can be achieved through extension activities of growers or millers that purchase fruit from them, by smallholders’ organisations, or through collaboration with other institutions and organisations (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009) For individual smallholder operations, training records should not be required for their workers, but anyone working on the farm should be adequately trained for the job they are doing (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009).

For National Interpretation: Appropriate occupational training qualifications will be identified. a. Does the company maintain a list of staff, • Training Identification Matrix YES Training need identification matrix 2015 was evident and covered staff, workers, workers, smallholders and contract • Training Programme 2015 smallholders, and contract worker. Training programme 2015 were sighted and workers whom training must be provided • Training Records established based on the training needs identification and covered all aspects of to? (List Attendance, evaluation etc.) the RSPO criteria such as safety, environment, social, best practice, human b. Is there a formal training programme in rights, management program, HCV and ethical. place that covers all aspects of the RSPO Principles and Criteria? Does the formal The list of attendance and the training handout were evident such as for TLTM, training program include: TLTE and KNTE:  Regular assessment of training • Internal First Aid training on 3 February 2015 needs of all staff, workers, smallholders and contract workers; • First aid officer on 13 March 2014

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Training for workers on smallholder • Socialization For Prohibition for Pregnant Women as Sprayer on 18 plots; June 2015  Documentation of all the training assessment needs, formal training • Use of pesticides (Kompes) on 25-26 March 2014 conducted and the list of • Training RSPO, ISCC and ISPO on 23 March 2015 participants attending these formal training; • Risk Assessment Training in April 2015  Does the training for workers cover, • Fire Fighting on 7 March 2015 at minimum, to the following: o The health and • MSDS Socialization on 9 April 2015 environmental risks of • Sexual Harassment on 1 May 2015 pesticide exposure; o recognition of acute and • HCV Training on 6 May 2015 long-term exposure • Waste and Hazardous waste management on 5 May 2015 symptoms including the most vulnerable groups • Energy Efficiency Training on 3 May 2015 (e.g. young workers, pregnant women); o ways to minimise exposure to workers and their families; o International and national instruments or regulations that protect workers’ health; and o Productivity and best management practice.

Note to auditor: To interview staff, workers, smallholders and contract workers to verify that the training has been conducted effectively.

Audit Report

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

4.8.2 Records of training for each employee shall be maintained.

a. Are training records maintained for each Personal Training Records of Evidence of training for key persons were verified and sighted and the records YES employee? managers and SPO Officers for were maintained for each employee such as for SPO officer. The system to record TLTM, TLTE and KNTE. personal training was established-in this record; the training which has been

completed by each person was recorded. Training realisation records are sighted such as hazardous substance handling training, boiler training, safety officer, pesticides training, etc.

PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are 5.1 made, implemented and monitored, to demonstrate continual improvement. (M) An environmental impact assessment (EIA) shall be documented.

Guidance: The EIA should cover the following activities, where they are undertaken: • Building new roads, processing mills or other infrastructure; • Putting in drainage or irrigation systems; • Replanting and/or expansion of planting areas; • Management of mill effluents (Criterion 4.4); 5.1.1 • Clearing of remaining natural vegetation; • Management of pests and diseased palms by controlled burning (Criteria 5.5 and 7.7).

Impact assessment can be a non-restrictive format e.g. ISO 14001 EMS and/or EIA report incorporating elements spelt out in this Criterion and raised through stakeholder consultation. Environmental impacts should be identified on soil and water resources (Criteria 4.3 and 4.4), air quality, greenhouse gases (Criterion 5.6), biodiversity and ecosystems, and people’s amenity (Criterion 6.1), both on and off-site. Stakeholder consultation has a key role in identifying environmental impacts. The inclusion of consultation should result in improved processes to identify impacts and to develop any required mitigation measures. For smallholder schemes, the scheme management has the responsibility to undertake impact assessment and to plan and operate in accordance with the results (refer to ‘Guidance for

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009).

For National Interpretation: National Interpretation will consider any national legal requirements together with any other issues that are not required by law but are nevertheless important, e.g. independent social and environmental impact assessment (SEIA) for replanting may be desirable under specific situations. a. Has an EIA been conducted according to  Documented ANDAL, RKL and Environmental impact analysis documents were provided, such as Documented YES the scope of operation covering at RPL approved by Indonesian ANDAL, RKL and RPL approved by Indonesian Ministry of Agriculture (Approval minimum the following: Ministry of Agriculture (Approval AMDAL No. 14/ANDAL/RKL-RPL/BA/IV/1998) on 30 April 1998 for TLTE, KNTE  Building new roads, processing mills AMDAL No. 14/ANDAL/RKL- and TLTM. or other infrastructure; RPL/BA/IV/1998) on 30 April Mill and Estates implemented procedure for identifying environmental aspect and 1998 for TLTE, KNTE and  Putting in drainage or irrigation evaluating its impact. The result of environmental aspect and impact identification TLTM systems; and evaluation was documented. As required by the procedure, the information of  Replanting and/or expansion of  List of environmental aspect environmental is reviewed and updated regularly. Last review and update of planting areas; and impact identification and environmental aspect and impact register was performed in August 2015.  Management of mill effluents evaluation (Criterion 4.4);  Report of RKL RPL The environmental impact analysis documented in ANDAL, RKL RPL included  Clearing of remaining natural implementation 2nd semester consultation with relevant stakeholders to identify impacts and to develop any vegetation; 2014 and 1st semester 2015 mitigation measures.  Management of pests and diseased Impact assessment covered in ANDAL, RKL RPL document and environmental palms by controlled burning (Criteria aspect and impact, e.g.: 5.5 and 7.7).  Building new roads, processing mills or other infrastructure; b. Has the EIA been conducted and documented according to local  Putting in drainage or irrigation systems; requirements?  Replanting and/or expansion of planting areas;  Management of mill effluents; c. Does the assessment include consultation with relevant stakeholders to identify  Clearing of remaining natural vegetation; impacts and to develop any mitigation  Management of pests and diseases palms by controlled burning measures? Environmental impact assessment was conducted through regular environmental monitoring, e.g. river water quality, mill effluent quality, air emission, economical, social and culture of community and wildlife. Implementation of RKL RPL is reported six monthly. Report for 2nd semester of 2014 and 1st semester 2015 for PT. SMART Tbk. Tanah Laut Mill (reporting of TLTE, KNTE and TLTM) was sighted and sent to Tanah Laut District

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Environmental Agency and Estate Agency, South Kalimantan District Environmental Agency and Ministerial Office Environment. Receipt note was also sighted. Where the identification of impacts requires changes in current practices, in order to mitigate negative effects, a timetable for change shall be developed and implemented within a 5.1.2 comprehensive management plan. The management plan shall identify the responsible person/persons. a. Is there an environmental management This criterion was not applicable Defined within the procedure (SOP/SPO/SMART/LH-11) that whenever there is a N/A plan in place? since there is no change occurred material change, changes in operations and regulatory changes must precede within the organization. environment aspect and impact assessment. This identification was updated b. Is the environmental management plan annually. documented to include the following:

 Identification of responsible person(s);  Potential impacts from current practices;  Measures to mitigate negative impacts;  Timetable for change (where changes in current practices are required). c. Has the environmental management plan been implemented?

This plan shall incorporate a monitoring protocol, adaptive to operational changes, which shall be implemented to monitor the effectiveness of the mitigation measures. The plan shall be 5.1.3 reviewed as a minimum every two years to reflect the results of monitoring and where there are operational changes that may have positive and negative environmental impacts. a. Does the plan incorporate a monitoring This criterion was not applicable Defined within the procedure (SOP/SPO/SMART/LH-11) that whenever there is a N/A protocol? since there is no change occurred material change, changes in operations and regulatory changes must precede b. Is the monitoring protocol adaptive to within the organization. environment aspect and impact assessment. This identification was updated annually. operational changes? c. Is the monitoring protocol implemented to monitor the effectiveness of the mitigation measures? d. Is the plan reviewed at a minimum every two years to reflect the results of monitoring and where there are

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) operational changes that may have positive and negative environmental impacts? The status of rare, threatened or endangered species and other High Conservation Value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, 5.2 shall be identified and operations managed to best ensure that they are maintained and/or enhanced. (M) Information shall be collated in a High Conservation Value (HCV) assessment that includes both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors).

Specific Guidance: This information will cover: • Presence of protected areas that could be significantly affected by the grower or miller; • Conservation status (e.g. IUCN status), legal protection, population status and habitat requirements of rare, threatened, or endangered (RTE) species that could be significantly affected by the grower or miller; • Identification of HCV habitats, such as rare and threatened ecosystems, that could be significantly affected by the grower or miller;

Guidance: 5.2.1 This information gathering should include checking available biological records and consultation with relevant government departments, research institutes and interested NGOs if appropriate. Depending on the biodiversity values that are present, and the level of available information, some additional field survey work may be required. Wherever HCV benefits can be realised outside of the management unit, collaboration and cooperation between other growers, governments and organisations should be considered.

For National Interpretation: Appropriate sources of information can include government or international lists of threatened species (‘red data lists’), national wildlife protection legislation, authorities responsible for protected areas and species, or relevant NGOs. Note: Operators need to consider a variety of land management and tenure options to secure HCV management areas in ways that also secure local peoples’ rights and livelihoods. Some areas are best allocated to community management and secured through customary or legal tenures, in other cases co-management options can be considered. Where communities are asked to relinquish rights so that HCVs can be maintained or enhanced by the companies or State agencies, then great care needs to be taken to ensure that communities retain access to adequate land and resources to secure their basic needs; all such relinquishment of rights must be subjected to their free, prior, and informed consent (see Criteria 2.2 and 2.3). a. Has a High Conservation Value (HCV) - Document Report of YES HCV Assessment has been conducted by Biodiversity and Conservation Section assessment been conducted and cover the Identification and Asessment of Sustainability Division SMART group on June 2009 (TLTE and KNTE). The following: HCV in Tanah Laut Estate team comprises: staffs of ecological habitat, socioeconomic, wildlife ecology and  Presence of protected areas that and Kintapura Estate 2010 environment services. could be significantly affected by the - Site visit/Field visit at Tanah grower or miller; Laut Estate and Kintapura Assessment has been conducted and cover the following:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Conservation status (e.g. IUCN Estate • Presence of protected areas that could be significantly affected by the grower status), legal protection, population or miller; status and habitat requirements of • Conservation status (e.g. IUCN status), legal protection, population status rare, threatened, or endangered and habitat requirements of rare, threatened, or endangered (RTE) species (RTE) species that could be that could be significantly affected by the grower or miller. significantly affected by the grower or miller. • Identification of HCV habitats, such as rare and threatened ecosystems, that  Identification of HCV habitats, such as could be significantly affected by the grower or miller; rare and threatened ecosystems, that HCV assessment performed by a qualified HCV assessor i.e: could be significantly affected by the grower or miller; - Norman Faried (Team cordinator – Ecology and mapping) b. Was the HCV assessment performed by a - Kusuma Widya (wildlife ecology) qualified HCV assessor? - Bambang Setiaji (flora/plant ecology and environmental services) c. Was the HCV assessment performed in consultation with relevant stakeholders? - Agus Budianto (GIS) d. Does the HCV assessment include - Yosaphat AR (social) checking of available biological records? HCV assessment performed in consultation with relevant stakeholders as e. Does the HCV assessment include both described above. Public consultation conducted on October 5th, 2011 with the the planted area itself and relevant wider community leaders and figures around the estate and government agencies landscape-level considerations (such as (Village Head/Kepala Desa, his officials and community leaders in the village wildlife corridors)? Sumber Jaya, Bukit Mulia and Pasir Putih, District Kintap, Korem Kintap). f. Was the HCV assessment performed in HCV assessment also includes checking of available biological records and accordance to the latest methodology includes both the planted area itself and relevant wider landscape-level available at global and national level? considerations (such as wildlife corridors). g. Are identified HCVs mapped? Methodology of assessment using a toolkit of HCV 2008, implementation of the assessment consists of: Secondary data collection, field survey, mapping and landscape, Assessment of fauna aspect with a rapid assessment (direct observation, interviews with the parties), asessment of flora aspects (direct survey and interview) , assessment of socio-economic and cultural aspects (interviews and direct observation at selected sites), analysis and mapping. All HCV identified was mapped with scale 1 : 35.000 in TLTE and KNTE.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) (M) Where rare, threatened or endangered (RTE) species, or HCVs, are present or are affected by plantation or mill operations, appropriate measures that are expected to maintain and/or enhance them shall be implemented through a management plan.

Specific Guidance: 5.2.2 These measures will include: • Ensuring that any legal requirements relating to the protection of the species or habitat are met; • Avoiding damage to and deterioration of HCV habitats such as by ensuring that HCV areas are connected, corridors are conserved, and buffer zones around HCV areas are created; • Controlling any illegal or inappropriate hunting, fishing or collecting activities, and developing responsible measures to resolve human-wildlife conflicts (e.g. incursions by elephants). a. Are HCVs and/or RTEs present? - Document Report of YES HCV assessment results showed that in the plantation area of TLTE and KNTE Identification and Asessment b. If HCVs and/or RTEs are present, has a were identified several areas of HCV. HCV in Tanah Laut Estate management plan containing appropriate and Kintapura Estate 2010 measures that are expected to maintain In Tanah Laut Estate there were identified 119.51 Ha as HCV area, the following and/or enhance them been prepared? The - Management plan “Rencana were type of HCV : Pengelolaan Kawasan HCV measures should include the following: dan Rencana Pemantauan - HCV 1.1 Areas that Contain or Provide Biodiversity Support Function to  Ensuring that any legal requirements Kawasan HCV” 2015 TLTE Protection or Conservation Areas. There were local protected areas such as relating to the protection of the and KNTE rivers and its riparian zone with area 119.51 Ha. species or habitat are met; - Record document of - HCV 1.2 Critically endangered species. There were identified an protected  Avoiding damage to and deterioration management plan program species such as Bucheros rhinoceros, Bustatur levanter, Octinaetus of HCV habitats such as by ensuring realization 2015 malayensis, Tordirhampus chloris, Nasalis larvatus and Felis bengalensis that HCV areas are connected, - HCV Patrol Schedule - HCV 4.1 Areas or Ecosystems Important for the Provision of Water and corridors are conserved, and buffer Prevention of Floods for Downstream communities. There were identified a (Schedule team to monitor the zones around HCV areas are created; condition and attributes HCV) Riparian area with area 119.51 Ha.  Controlling any illegal or inappropriate - HCV Management and In Kintapura Estate there were identified 217.95 Ha as HCV area, the following hunting, fishing or collecting activities, monitoring report semester II were type of HCV : and developing responsible measures 2014 to resolve human-wildlife conflicts - Field visit at Tanah Laut - HCV 1.3 Areas that Contain Habitat for Viable Populations of Endangered, (e.g. incursions by elephants). Estate and Kintapura Estate Restricted Range or Protected Species. There was Proboscis habitat in c. Are the measures contained in the Riparian zone (Salaman River) with area 21.79 Ha. management plan actively implemented to - HCV 1.1 and 4.1 Salaman River and its riparian zone with area 191.8 ha maintain and/or enhance HCV values? - HCV 4.1 and 4.3 Areas that Function as Natural Barriers to the Spread of Forest or Ground Fire freshwater swamp as a catchment area of 4.36 ha. d. Are the HCV values and the presence of RTEs periodically monitored? Estate has established the management plan to maintain and/or enhance High conservation value area. HCV management and monitoring plan described e. Are the field inspections conducted measures taken for each HCV and its monitoring. Relevant laws were taken into

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) regularly to ensure implementation of account for determining appropriate measure including UU #5/1990 about Natural mitigation plan (especially along areas resources conservation, PP#7/1999 about List of protected plan and wildlife, bordering natural area)? Kepres #32/1990, and PP26/2008 Management plan consist of : Management plan HCV consist of : • Placement, maintenance and monitoring of warning boards and boundary markers • Planting of Vetiver grass and Angsana (Pterocarpus indicus) at Riparian zone • Dissemination of information on how to manage HCV area to employees, contractors and the public/local community • Placement for HCV sign board, protected species information and posters • Management and monitoring all riparian condition (HCV area utilization, management activities, rehabilitation, HCV conditions, the effectiveness of management activities, the level of threat and the condition of land cover) • Management and monitoring of springs / water source • Management and monitoring of peat swamp forest • Management and Monitoring of protected wildlife/animal • Management and monitoring local cultural area such as Cemetry/shrine graves • Planting, maintenance and monitoring of plant barriers to erosion (vetiver grass & woody plants) • Patrol and monitoring HCV area The measures contained in the management plan actively implemented to maintain and/or enhance HCV values. During audit, record of HCV management implementation was sighted. Monitoring activities was well conducted. Its records was documented and sighted. HCV management and monitoring report was indicated that management implementation was effective. During field observation to HCV area in Tanah Laut and Kintapura Estate, it was confirmed that

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Managemet Plan was performed, e.g. warning and HCV signboard are well sight and maintained, vetiver grass are well grown, no damage to HCV areas occurred, etc. There shall be a programme to regularly educate the workforce about the status of these RTE species, and appropriate disciplinary measures shall be instigated in accordance with company 5.2.3 rules and national law if any individual working for the company is found to capture, harm, collect or kill these species. a. Does the company have policies or rules - Report of dissemination YES Organization has a policies or rules to protect RTE species based on UU No.5 / to protect RTE species? program both internal to 1990. Penalties under the UU No.5 / 1990 "person who deliberately capture, employee on April 13th 2015 b. Is there a programme to regularly injure, kill, keep, possess, maintain, transport, and trade in protected animals alive and external to local community educate the workforce about the status of or dead can shall be punished with imprisonment of 5 years and a maximum fine on 14th January 2015 in TLTE the RTE species? 100.000.000, - (one hundred million). - Report of dissemination c. Is there evidence or action taken to program both internal to Penalties were communicated directly to all employees and the local community implement the rules and programs? E.g. employee 21 January and 17-18 during HCV socialization and through the HCV sing borads and warnings board. Inspections conducted to check no March 2015 and external to Organization also establishes the programme to regularly educate the workforce traps/snares put up within or nearby local community on 27th January areas. 2015 in KNTE about the status of the RTE species. The program has been implemented, the - Company policy and rules about evidence of socialization invitation, list of attendance and photographs, minutes of d. Have appropriate disciplinary measures socialization was proved. HCV protection and wildlife protection dissemination been imposed in accordance with protection to biodiversity (flora fauna) and high conservation conducted twice a year internally to employee and once a year externally to company rules and national law, should surrounding community. Dissemination to employee TLTE has been conducted on value area. any individual working for the company is April 13th 2015 and in KNTE has been conducted on 21st January and 17-18th found to have captured, harmed, - Posters and sign boards concerning HCV areas and March 2015, dissemination to surrounding community has been done on 14th collected or killed any RTE species? January and 27th January 2015. protected species were available in the necessary places Organization has been appointed HCV Officer (SK #001/RC/PTTN/SK/VI/2013 for - Field visit at Tanah Laut Estate Langadang Estate and SK #264/EM/TMSE/SK/VI/2013 for Tasik Mas Estate). The and Kintapura Estate responsibility of HCV area management is part of the job description of the HCV Officer. These”HCV Officers” have no particular background for HCV management, however they has been trained in regard identification, management and monitoring of HCV on 2 April 2013. Relevant laws were taken into account for determining appropriate measure including UU #5/1990 about Natural resources conservation, PP#7/1999 about List of protected plan and wildlife, Kepres #32/1990, and PP26/2008.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Where a management plan has been created there shall be ongoing monitoring: 5.2.4 • The status of HCV and RTE species that are affected by plantation or mill operations shall be documented and reported; • Outcomes of monitoring shall be fed back into the management plan. a. Does the management plan contain - Document of “ Rencana YES Monitoring of HCV was conducted once a week, such as : ongoing monitoring of status of HCV and pemantauan kawasan HCV” RTE species that are affected by TLTE and KNTE 2015 - Monitoring of HCV attributes (Sign Boards Conditions) plantation or mill operations? - Document of Monitoring report of HCV attributes 2015 in TLTE - Monitoring of HCV conditions from any disturbance both internal and external b. Is the status documented and reported? and KNTE factor (HCV area conditions) c. Are the outcomes of monitoring fed back - Document of Monitoring report - Monitoring of Animals and protected animals (recapitulation encounter animals into the management plan? of HCV conditions 2015 in in 1 month) TLTE and KNTE - Document of Monitoring report - HCV Patrol Schedule (Schedule team to monitor the condition and attributes Animals and protected animals HCV) 2015 in TLTE and KNTE The status of HCV and RTE species that are affected by plantation or mill - Document of HCV Patrol operations was well monitored, documented and reported routinely. Schedule and result of HCV Result of monitoring gives the feedback into the management plan improvement. patrol 2015 in TLTE and The results from monitoring of wildlife, environmental,and socio-cultural services KNTE gives feedback advice and recommendations to the management plan, ie: - Document Report “Summary of Monitoring Results of Animals - Should be made the point coordinates of boundary markers to ease the 2015” (recapitulation of wildlife monitoring of HCV boundary markers encounters in 1 month) - Set up the spray boundary marks in the riparian area on palm oil plant (50 m - HCV Management and both side the river) monitoring report semester II 2014 - Improve the HCV sign boards in necessary place - Field visit at Tanah Laut Estate - Improve the socialization to the employees and local comunity and Kintapura Estate Where HCV set-asides with existing rights of local communities have been identified, there shall be evidence of a negotiated agreement that optimally safeguards both the HCVs and these rights.

5.2.5 Specific Guidance: For 5.2.5: If a negotiated agreement cannot be reached, there should be evidence of sustained efforts to achieve such an agreement. These could include third party arbitration (see Criteria 2.3, 6.3 and 6.4).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there HCV set-asides with existing - Document “Minutes of Public YES There was no HCV area with existing rights of local communities based on public rights of local communities? Consultation for Results consultation result and interview with local community leaders. During HCV Identification and assessment b. Who are the affected communities? assessment, PT Smart TLTE and KNTE conduct the public consultation to local of HCV area, 17 April 2013 PT communities on October 5th, 2011 with the community leaders and figures around c. Is the identified HCV areas mapped? Tapian Nadenggan (minutes the estate and government agencies (Village Head/Kepala Desa, his officials and of meeting, list of attendance, d. Is there evidence of stakeholder community leaders in the village Sumber Jaya, Bukit Mulia and Pasir Putih, summary, inputs and consultation and negotiated agreement, District Kintap, Korem Kintap), NGOs. feedback from public/local in accordance to FPIC principles, with local community to optimally safeguard communities) In public consultation discussed the findings identification of HCV areas and the both the HCVs and rights of local - Field visit at Tanah Laut response from public and relevant government agencies. The public consultation communities? Estate and Kintapura Estate also summarizes a number of inputs/feedback from local communities, leaders communities, NGOs and related agencies in the management plan of HCV areas. e. If a negotiated agreement cannot be reached, is there evidence of sustained efforts to achieve an agreement? Refer to specific guidance for 5.2.5.

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

5.3.1 (M) All waste products and sources of pollution shall be identified and documented.

a. Is there a registry/list of waste products - SOP/SPO/SMART-18 – Waste Identification of waste and pollution sources from Batu Ampar Mill and its supply YES produced? handling bases activities was evident. The source of pollution, type and control method of b. Is there a registry/list of pollution - SOP/SMART/LEMS- waste was documented on procedure SOP/SMART/LEMS-EHSD/SADV/I/002 – Waste handling. sources? EHSD/SADV/I/002 – Waste handling - List of environmental aspect The waste products were defined as follows: and evaluation year 2015 1. Mill waste, such as: fibre, shell, empty bunch, waste water and gaseous (TLTE, KNTE, TLTM) emissions 2. Estate waste, such as: pesticides, chemicals rinsed waters discharge and land application flatbed. 3. Medical waste, such as: expired drugs, contaminated cottons

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 4. Solids organics and inorganics waste 5. Domestics waste water

In addition, sources of pollution and waste were also documented in the list of environmental aspects and environmental impacts evaluation year 2015. The document described the sources of waste and pollution and the control techniques for significant impacts on important environmental aspects.

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

a. Is there an inventory of chemicals and  SOP/SPO/SMART-18 – Waste The disposal methods of chemicals and their containers were described on YES their containers that are used and kept on handling documented procedure SOP/SPO/SMART-18 and SOP/SMART/LEMS- (Major NCR site?  SOP/SMART/LEMS- EHSD/SADV/I/002 – Waste handling. Detailed disposed methods as follows: 2015-05 closed) b. How are chemicals and their containers EHSD/SADV/I/002 – Waste  Storing Disposed to Temporary Hazardous Waste Storage managed by stored and disposed off? Is it in handling licensed vendors accordance to best practices? (as  Kartu gudang (Card of  Reuse the chemical containers prescribed by manufacturers’ labels, local warehouse)  Return the containers to supplier/vendors requirement, national or international best  Permit of temporary storage of  Zero buring practice) hazardous waste: Keputusan Chemicals are stored in central warehouse and division warehouse. Quantity of Bupati Tanah Laut #188.45/627- chemical was monitored and recorded in “Kartu Gudang”. The chemical c. Are collection and disposal records of KUM/2011 dated 5 October containers were triple rinsed and stored in the temporary storage of hazardous chemicals and their containers 2010 to PT. SMART Tbk. wastes. The jerrycans were reused to spraying activities, while bottles containers

maintained? (TLTE, KNTE and TLTM) were returned to suppliers (PT Rolimex Kimia Nusamas) and managed by  Permit of hazardous waste licensed transporter PT Maju Jaya Asri Utama and processor PT Wastec collection PT. Maju Asri Jaya International.The transportation and processing of chemical containers were Utama: Keputusan Menteri according to manufacturers’ labels and regulation of Environmental Ministry. Negara Lingkungan Hidup Records of pesticides containers quantity returning to supplier and transported #37/2011 dated 21 February and processed by licensed vendor were evident. Liquid waste from pesticides 2011 was reused for the next spraying application. Chemical containers from mill  Contract agreement between activities were returned to supplier, e.g. Nalco chemical was returned on 18 July PT. SMART Tbk., PT. SKIP, PT. 2015. Tapian Nadenggan, PT. Purimas Sasmita with PT. Maju While the ex-fertilizer sacks was also rinsed and reuse for collection brondolan Jaya Asri Utama on 01 April

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 2013 regarding collector and (lose fruit of FFB). processing of hazardous wastes Chemicals materials containers that use at mills operations such as lubricants,  Contract Agreement between workshop materials, laboratory chemical, used oil, used battery, contaminated PT. Maju Asri Jaya Utama and rags, were categorized as hazardous wastes that stored at temporary storage of PT. Waste International (SPK hazardous waste. The hazardous wastes were managed by licensed transporter #002/WI/SPKLB3-P/I/2015) PT Maju Jaya Asri Utama and processor PT Wastec International. Disposal of  Field observation to Division hazardous waste was completed with manifest. Manifest of disposal were sighted warehouse, central warehouse, for December 2014, January, April and June 2015. pesticedes containers cleaning area, temporary storage of Others records sighted, such as Laporan pengelolaan LB3 (report of hazardous hazardous waste waste management) Period October – December 2014, January – March and  Log book of empty pesticides April – June 2015. and chemical containers period October – December 2014, Major Non-conformance 2015-05 January – March 2015 and April  Several activities have not been implemented as required by procedure – June 2015 (TLTM): o Chemical containers waste was not reused for similar activity, e.g. hexane drum, soda ash sack, etc. o No logbook of chemical containers waste. A waste management and disposal plan to avoid or reduce pollution shall be documented and implemented.

Guidance: The waste management and disposal plan should include measures for: • Identifying and monitoring sources of waste and pollution. • Improving the efficiency of resource utilisation and recycling potential wastes as nutrients or converting them into value-added products (e.g. through animal feeding programmes). • Appropriate management and disposal of hazardous chemicals and their containers. Surplus chemical containers should be reused, recycled or disposed of in an environmentally and 5.3.3 socially responsible way using best available practices (e.g. returned to the vendor or cleaned using a triple rinse method), such that there is no risk of contamination of water sources or risk to human health. The disposal instructions on the manufacturers’ labels should be adhered to. Use of open fire for waste disposal should be avoided.

For National Interpretation: National Interpretation (or an RSPO recognised parallel means) should include, as appropriate: details of relevant national laws or policies, a list of waste types (hazardous, non-hazardous, domestic, etc.) which must be considered, any types of disposal which are not acceptable (e.g. untreated waste water may not be discharged directly into streams or rivers (see Criterion 4.4),

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) existing best practice guidelines on recycling and re-use of nutrients, managing effluent ponds, increasing mill extraction efficiency and appropriate disposal of wastes.

a. Is there a documented waste management - SOP/SPO/SMART-18 – Waste The source of pollution, type and control method of waste was documented on YES and disposal plan to avoid or reduce handling procedure SOP/SPO/SMART-18 and SOP/SMART/LEMS-EHSD/SADV/I/002 – pollution? - SOP/SMART/LEMS- Waste handling b. Does the waste management and disposal EHSD/SADV/I/002 – Waste handling Implementation of waste management were evident during site observation: plan, at minimum, include measures for: - Permit of temporary storage of - Several reuse activities were implemented:  Identifying and monitoring sources of hazardous waste: Keputusan o All empty pesticides containers were triple rinsed, the jerrycans were waste and pollution? Bupati Tanah Laut reused to spraying activities  Improving the efficiency of resource #188.45/627-KUM/2011 dated o ex-fertilizer sacks was also rinsed and for collection brondolan (lose utilisation and recycling potential of 5 October 2010 to PT. SMART fruit of FFB) wastes as nutrients or converting Tbk. (TLTE, KNTE and TLTM) o Liquid waste from pesticides containers cleaning was reused for the them into value-added products (e.g. - Permit of hazardous waste next spraying application through animal feeding collection PT. Maju Asri Jaya o EFB and POME was applied at TLTE programmes)? Utama: Keputusan Menteri o Fibre and Shell from Batu Ampar Mill was used for boiler feed  Appropriate management and Negara Lingkungan Hidup - Segregation of organic and inorganic waste since generation up to disposal disposal of hazardous chemicals and #37/2011 dated 21 February on landfill. Mill and Estate including housing has provided different waste bin their containers? 2011 for each type of waste. Organic and inorganic wastes from Mill and Estate  Reduction, re-use and recycle of - Contract agreement between including housing were disposed to landfill in the Estate area. Areas of waste? PT. SMART Tbk., PT. SKIP, organic and inorganic wastes disposal was far from housing, in the flood- c. Is there evidence that the plan has been PT. Tapian Nadenggan, PT. free area and not in swamp area and completed with warning sign not implemented? Purimas Sasmita with PT. Maju burning wastes. Jaya Asri Utama on 01 April - Chemicals materials containers that use at mills operations such as boiler d. Is there evidence that waste has not been 2013 regarding collector and additive liquids, lubricants, workshop materials, laboratory chemical, etc disposed off using open fire? processing of hazardous were categorized as hazardous wastes that stored at hazardous waste wastes temporary warehouse. The the chemical material container were manage by - Contract Agreement between licensed transporter PT Maju Jaya Asri Utama and processor PT Wastec PT. Maju Asri Jaya Utama and International. PT. Waste International (SPK - Medical waste was sent to RS Ulin Banjarmasin for burning in their #002/WI/SPKLB3-P/I/2015) incinerator. Record of medical waste sending was in December 2014, March - Manifest of disposal hazardous and May 2015. waste for period January, April - It was observed that there was no waste burning

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and June 2015. - Disposal of hazardous waste was completed with manifest. Manifest of - Log book of hazardous waste disposal were sighted for January, April and June 2015. January, April and - Establishment of quarterly hazardous waste management report as required - Site visit to estate divisions by legal requirements, e.g. Period October – December 2014, January – offices and mill operations March and April – June 2015.to BLH Tanah Laut Regency, BLH South Kalimantan Province and cc to Ministry of Environmental (KLH). Receipt note was also sighted.

5.4 Efficiency of fossil fuel use and the use of renewable energy is optimised.

A plan for improving efficiency of the use of fossil fuels and to optimise renewable energy shall be in place and monitored.

Guidance: Renewable energy use per tonne of Crude Palm Oil (CPO) or palm product in the mill should be monitored. 5.4.1 Direct fossil fuel use per tonne of CPO or Fresh Fruit Bunches (FFB) should be monitored. Energy efficiency should be taken into account in the construction or upgrading of all operations. Growers and millers should assess the direct energy use of their operations, including fuel and electricity, and energy efficiency of their operations. This should include estimation of fuel use by on-site contract workers, including all transport and machinery operations. The feasibility of collecting and using biogas should be studied if possible. a. Is there a plan for improving efficiency of  Program for improving Plan for improving efficiency of the use of fossil fuels and to optimise renewable YES the use of fossil fuels and to optimise efficiency of the use of fossil energy are: renewable energy? fuels  Repair broken road and maintenance the road to get best time for FFB b. Has the plan been implemented and is it  Data of shell and fiber use transporation monitored?  Monitoring of fossil fuel use  Repair and maintenance the vehicle and heavy equipment to get best  Report of environmental condition for fossil fuel saving. c. Does the monitoring system encompass monitoring implementation the following : Use of renewable energy  Renewable energy use/tCPO or palm Year Kcal/ton CPO product; 2013 1,520,703  Direct fossil fuel use/tCPO or tFFB; 2014 1,476,156  Estimated fuel use by on-site contract 2015 1,509,828 workers and transport and machinery operations; The use of fossil fuels (litre) are  Electricity use in operations.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Was energy efficiency taken into account Mill/Estates 2013 2014 January – June during the construction or upgrading of all 2015 operations? TLTE 145,977 131,528 83,662 e. Has studies on the feasibility of collecting KNTE 171,926 173,788 112,652 and using biogas been carried out? TLTM 209,166 193,488 106,979 Use of fossil fuels in KNTE was increased in 2014 compared with 2013 due to increase of electricity generator load, increase of FFB production. There was no construction or upgrading of all operation. The organisation has not carried out studies on the feasibility of collecting and using biogas.

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

(M) There shall be no land preparation by burning, other than in specific situations as identified in the ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions.

Guidance: 5.5.1 Fire should be used only where an assessment has demonstrated that it is the most effective and least environmentally damaging option for minimising the risk of severe pest and disease outbreaks, and exceptional levels of caution should be required for use of fire on peat. This should be subject to regulatory provisions under respective national environmental legislation.

Extension/training programmes for associated smallholders may be necessary. a. Does the company have a zero burning • Procedure Zero burning policy was described in Procedure of Replanting YES policy or any statement on zero burning? SOP/SMART/MCAR/VI/TA-RPL (SOP/SMART/MCAR/VI/TA-RPL). It described that land preparation of replanting (Replanting) is conducted by cutting and chipping. b. Does the company have SOPs for land

preparation which mentions zero burning? c. Was land prepared using the burn method? If yes, was it based on the specific situations identified in the ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions?

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Has the policy been implemented throughout the operations? e. Is there training programmes for associated smallholders on zero burning where appropriate? Where fire has been used for preparing land for replanting, there shall be evidence of prior approval of the controlled burning as specified in ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions.

5.5.2 For National Interpretation: National Interpretation will identify any specific situations where such use of fire may be acceptable, for example through reference to ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions. a. Where fire has been used for preparing NA No replanting has conducted in TLTE and KNTE. Not Applicable land for replanting, is there evidence of prior approval of the controlled burning as specified in ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions? b. What was the justification for using fire? Preamble

Growers and millers commit to reporting on operational greenhouse gas emissions. However, it is recognised that these significant emissions cannot be monitored completely or measured 5.6 accurately with current knowledge and methodology. It is also recognised that it is not always feasible or practical to reduce or minimise these emissions. Growers and millers commit to an implementation period until the end of December 2016 for promoting best practices in reporting to the RSPO, and thereafter to public reporting. Growers and millers make this commitment with the support of all other stakeholder groups of the RSPO.

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

(M) An assessment of all polluting activities shall be conducted, including gaseous emissions, particulate/soot emissions and effluent (see Criterion 4.4).

5.6.1 Specific Guidance: Where practically feasible, operations should follow best management practices to measure and reduce emissions. Advice on this is available from the RSPO.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Has an assessment of all polluting - Documented procedure Identification of pollution and emission sources at Mill and Estates activities was YES activities been conducted including (SOP/SPO/SMART/LH-09). evident. The source of pollution, type of pollution and its control was documented (Major NCR gaseous emissions, particulate/soot - Documented List of in List of environmental aspect and impact evaluation: 2015-06 closed) emissions and effluent (see Criterion environmental aspect and - boiler stack emission including particulate and soot 4.4)? impact evaluation year 2015 - diesel electric generator emission (TLTM, TLTE, KNTE) - POME methane emission b. Is there a documented list of all identified polluting activities? - Use of fertiliser - vehicleand heave equipment emission

Monitoring and measurement results for 2nd semester of 2014 and 1st semester of 2015 were sighted for boiler emission against Environment Ministry Regulation #07/2007, diesel electricity generator against Environment Ministry Regulation #21/2008, vehicle and heavy equipment emission against Environment Ministry Regulation #05/2006, odour emission against Environment Ministry Decree #50/Menlh/11/96, ambient noise against Environment Ministry Decree #48/Menlh/11/96, also ambient air quality against Government Regulation #41/1999.

Major Non-conformance 2015-06 TLTE and KNTE  Emission of several vehicle and heavy equipment have not been measured, e.g. excavator, trimotor cycle, patrol vehicle, etc. (M) Significant pollutants and greenhouse gas (GHG) emissions shall be identified, and plans to reduce or minimise them implemented.

5.6.2 Specific Guidance: For 5.6.2: Plans will include objectives, targets and timelines. These should be responsive to context and any changes should be justified. For 5.6.2 and 5.6.3: The treatment methodology for POME will be recorded. a. Is there a documented list of all identified  Program to reduce GHG Identification of greenhouse gas (GHG) emissions sources at Batu Ampar Mill and YES significant pollutants and GHG emission estates activities were evident. The information of GHG sources at Batu Ampar emissions?  Recommendation and Mill and estate was reviewed including :

b. Are there plans to reduce or minimise the realisation of manuring activities Estate identified pollutants and GHG emissions?  Record of land application  Monitoring records of Utilization

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) c. Do the plans include objectives, targets of waste fibre and shell as boiler 1. Fertilisers usage and timelines for reduction that are fuel and electricity 2. Pesticides usage responsive to context? d. Are the plans being implemented? Was 3. Fossil fuels usage there any changes? Is it justified? Mill e. Is the treatment methodology for POME 1. POME recorded? (refer to C 4.4.3) 2. Fossil fuel 3. Chemical materials usage

Plans to reduce or minimise the identified pollutans and GHG emission are:  Use of renewable energy in Mill  Manuring application according to manuring recommendation from SMARTRI efficient and right on target  Use organic fertiliser – land application  Implement Integrated Pest Management (IPM) to control pest and disease  Use registered pesticides  Control of chemical use in Mill  Use pesticide for prevention according to procedure  Disseminate efficiency of electricity use  Use enery saving lamp All the plans are being implemented as described in the body of report. So far the plans remained the same with previous year. Tanah Laut Mill waste water was processed through a multi feedings waste water treatment ponds. There are six anaerobic ponds. Process parameter monitoring and maintenance of the ponds were sighted.

The results of monitoring of waste water effluent were reviewed including measurement of BOD for July – December 2014 and January – June 2015. The

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) result of discharge effluent that use as land application conforms to the limits for parameters of the government regulation Kep.MenLH #29/2003 for pH (6 – 9) and BOD (< 5,000 ppm). It was noted that extension of permit of land application has not been finished. The organisation was applied on 28 January 2014 through letter #020/TLTM- ET/01/2014 and technical verification was conducted on 18 March 2014. Recommendation from technical verification result was followed up on 3 April 2014. Corespondency between government and organisation was still conducted. Last communication was conducted on 3 August 2015 regarding submission of land application assessment report. A monitoring system shall be in place, with regular reporting on progress for these significant pollutants and emissions from estate and mill operations, using appropriate tools.

Specific Guidance: For 5.6.3 (GHG): For the implementation period until December 31st 2016, an RSPO-endorsed modified version of PalmGHG which only includes emissions from operations (including land use practices) can be used as a monitoring tool.

5.6.3 For 5.6.3: In addition, during the implementation period, growers will start to assess, monitor and report emissions arising from changes in carbon stocks within their operations, using the land use in November 2005 as the baseline. The implementation period for Indicator 5.6.3 is the same implementation period for Criterion 7.8. During the implementation period, reporting on GHG will be to a relevant RSPO working group (composed of all membership categories) which will use the information reported to review and fine tune the tools, emission factors and methodologies, and provide additional guidance for the process. Public reporting is desirable, but remains voluntary until the end of the implementation period. During the implementation period the RSPO working group will seek to continually improve PalmGHG, recognising the challenges associated with measuring GHG and carbon stock. PalmGHG or RSPO-endorsed equivalent will be used to assess, monitor and report GHG emissions. Parties seeking to use an alternative to PalmGHG will have to demonstrate its equivalence to the RSPO for endorsement. a. Is there a system in place to monitor  GHG Calculation and report Monitoring of emission of pollutans including green house gases was conducted YES emission of pollutants including period January – December through measurement of boiler, genset, operational vehicle and heavy equipment greenhouse gases from estate (plantation) 2014 emission and recording of diesel fuel, fiber and shell use quantity. Monitoring of and mill operations?  Letter of reporting of GHG fertiliser, pesticide and chemical use was conducted through recording of fertiliser, pesticide and chemical use quantity. b. Is there regular reporting of the monitoring Calculation to RSPO Palm GHG calculator version 2.1.1 was used to monitor the emission sources. outcomes? How often and to whom is #165/EL/SMART- reporting done? RSPO/VIII/2015 The record of calculation from Palm GHG calculator was available. The amount of GHG emissions was documented and reported annually to RSPO Secretariat. c. Is the monitoring and reporting conducted Last reporting was conducted on 4 August 2015. using appropriate tools? What tool is being used to assess, monitor and report on Total GHG emission of Tanah Laut Mill and its supply bases period January –

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) GHG emissions? December 2014 was 1.09 tCO2e/tCPO and 1.09 tCO2e/tPK.

Please refer to specific guidance for GHG requirements.

PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Aspects of plantation and mill management that have social impacts, including replanting, are identified in a participatory way, and plans to mitigate the negative impacts and promote the 6.1 positive ones are made, implemented and monitored, to demonstrate continual improvement. (M) A social impact assessment (SIA) including records of meetings shall be documented.

Guidance: Identification of social impacts should be carried out by the grower with the participation of affected parties, including women and migrant workers as appropriate to the situation. The involvement of independent experts should be sought where this is considered necessary to ensure that all impacts (both positive and negative) are identified. Participation in this context means that affected parties are able to express their views through their own representative institutions, or freely chosen spokespersons, during the identification of impacts, reviewing findings and plans for mitigation, and monitoring the success of implemented plans. Potential social impacts may result from activities such as: building new roads, processing mills or other infrastructure; replanting with different crops or expansion of planting area; disposal of mill effluents; clearing of remaining natural vegetation; changes in employee numbers or employment terms; smallholder schemes. Plantation and mill management may have social impacts (positive or negative) on factors such as: 6.1.1 • Access and use rights; • Economic livelihoods (e.g. paid employment) and working conditions; • Subsistence activities; • Cultural and religious values; • Health and education facilities; • Other community values, resulting from changes such as improved transport /communication or arrival of substantial migrant labour force. The review can be done (once every two years) internally or externally.

For National Interpretation: As social impacts are particularly dependent on local social conditions, National Interpretation will identify the important issues, and methodologies for collecting data and using the results. This should include adequate consideration of the impacts on the customary or traditional rights of local communities and indigenous people, where these exist (Criteria 2.3 and 6.4).

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Has an SIA been conducted? When . Social Impact Assessment (SIA) PT SMART (TLTE, KNTE, and TLTM) has conducted a survey and Social YES was the last SIA conducted? Report Juni – July 2010 Impact Assasment (SIA) on period June - July 2010 and recorded in Report SIA - “Laporan Study Identifikasi Dampak Social Perkebunan Kelapa Sawit ”, by b. Is the process in conducting the SIA . Monitoring and Review of SIA SMART Research Institute Jakarta. After the identification in 2010, then every and the findings documented? period June 2012 – December year provides supervision and evaluation of social impact, and then 2 years once 2014 c. Does the SIA cover all of the potential to be reviewed by management. impact factors, including:  Access and use rights; Monitoring the social impact of last performed and also reviews by management in the period January 2012 - December 2014. Planing for next monitoring and  Economic livelihoods (e.g. paid evaluation of the social impact will performs on 14 to 18 September 2015. employment) and working conditions;  Subsistence activities;  Cultural and religious values;  Health and education facilities;  Other community values, resulting from changes such as improved transport /communication or arrival of substantial migrant labour force. 6.1.2 (M) There shall be evidence that the assessment has been done with the participation of affected parties. a. Does the assessment involve . Social Impact Assasment (SIA), Based on the results of the Social Impact Assessment, monitoring and YES consultation with the affected parties? July- August 2010 evaluation report period January 2012 to December 2014, it appears that the Who are the affected parties? . Monitoring and Evaluation report assessment also includes stakeholders, community leaders figure, and related government agencies etc. through a public consultation which visible on b. Is there record of how the participatory period January 2012 to assessment has been conducted? December 2014 participant attendance at SIA report. . Konsultasi public: Risalah Were the affected parties able to SIA carried out involving several participants from community leaders and village consultation public monitoring express their views through their own government, as seen in the list of public consultation. Consultation with social impact assessment, on 14 representative institutions, or freely communities around the area of plantation (Tanah Laut Estate/TLTE, Kintapura April 2015. chosen spokespersons, during the Estate/KNTE and Tanah Laut Mill/TLTM) on the monitoring SIA activities was . Konsultasi public: Risalah identification of impacts, review of conducted on April 2014. findings and planning for mitigation? consultation public social impact assessment (SIA), no. Based on the SIA report period from July to August 2010, there are some RSPO/KS1/09, date 18 positive and negative findings, that is:

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) September 2010 Positive findings: - Local people obtain employment opportunities, - The road condition is maintained, the procurement and maintenance of facilities and infrastructure around the village always getting maintenance - Increased cooperation between government, the village community and companies - Improving the quality of education

Negative findings: - Recruitment does not reach all the villages around the plantation, thus becoming a social jealousy - There is uneven distribution of the company's CSR, resulting in social unrest in society - There is the issue of river water pollution due to runoff residual water CPO production from waste ponds. (M) Plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts identified, shall be developed in consultation with the affected 6.1.3 parties, documented and timetabled, including responsibilities for implementation. a. Is there any documented record to . Social Impact Assasment (SIA), Monitoring the social impact of last performed and also reviews by management YES outline the plan on mitigation, July- August 2010 in the period January 2012 - December 2014. Planing for next monitoring and implementation and monitoring . Monitoring the social impact evaluation of the social impact will performs on September 2015. according to the SIA report? Perkebunan Kelapa Sawit, period Document of Social Impact Identification has included action plan for avoidance January 2012 – Desember 2014. b. Have plans for avoidance or mitigation or mitigation of negative impacts and promotion of the positive ones and plan to . Konsultasi public: Risalah of negative impacts and promotion of monitor the impact identified. Those actions and monitoring plan were developed consultation public monitoring the positive ones, and monitoring of in consultation with the affected parties (surrounding communities). social impact assessment, date impacts been developed? 14 April 2015 Reduction or mitigation plan for negative impact is monitoring the social impact c. Have these plans been documented, . Konsultation public at audit once a year. Lastly done is for the period January 2012 - December 2014 and with clear timetables? Is the timeline conduct dated 10 and 11 August recorded in the agenda of monitoring social impact TLTE, KNTE and TLTM date reasonable? 2015. 14 to 17 April 2015, the method used is the verification of secondary data, d. Have the persons responsible for observation and interviews with affected communities. implementation of the plans been Some of action for reduce the negative impact, including: identified? - Making information using recruitment poster and given to each village

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) head's office - Approach and socialize with stakeholders, especially in the village of Salaman for a discussion CSR program - Improvement of CSR programs in health, education and religion. - To monitor the building construction waste ponds in accordance with the proportion of CPO processing. Based on public consultation at the time the audit was conducted on 7 August 2015, which the social impact had been anticipated. Unless there is a negative impact which can even lead to negative social impacts of the new, that is the recruitment of workers from outside the village The plans shall be reviewed as a minimum once every two years and updated as necessary, in those cases where the review has concluded that changes should be made to current 6.1.4 practices. There shall be evidence that the review includes the participation of affected parties. a. Is the plan reviewed every two years? . Social Impact Assasment (SIA), SIA activities conducted from July - August 2010 and carried out a public YES b. Has the plan been updated as July- August 2010 consultation in September 2010. The last monitoring and evaluation the social . Monitoring the social impact impact performed and also reviews by management in the period January 2012 - necessary (i.e. in cases where the Perkebunan Kelapa Sawit, period December 2014. review has concluded that changes January 2012 – Desember 2014. should be made to current practices)? It appears that the review also includes stakeholders and smallholder, . Konsultasi public: Risalah community leaders figure, and related government agencies etc. through a c. Have the changes to the plan been consultation public monitoring public consultation dated 14 April 2015 at Serongga Village. Attendance records implemented? social impact assessment, date were shown. d. Is there evidence that the review has 14 April 2015 been done with the participation of the The participation of affected parties was confirmed during group discussion with affected parties? Village Head (Bukit Mulya village, Kintap Kecil village, Sumber Jaya village, Sungai Cuka village, Pasir Putih village, etc.). e. Has the process been recorded/documented? 6.1.5 Particular attention shall be paid to the impacts of smallholder schemes (where the plantation includes such a scheme). a. Are there schemed smallholders . Social Impact Assasment (SIA), There is no smallholder scheme in PT. SMART Tbk – Tanah Laut Mill. Third N/A involved? July- August 2010 party FFB source was only from independent smallholders. This criterion is not b. Have they been considered and . Monitoring the social impact applicable. Perkebunan Kelapa Sawit, period involved in the whole process of the January 2012 – Desember 2014.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) SIA? . Konsultasi public: Risalah c. What are the main impacts affecting consultation public monitoring social impact assessment, date these smallholders? 14 April 2015

6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties. (M) Consultation and communication procedures shall be documented.

Guidance: Decisions that the growers or mills are planning to make should be made clear, so that local communities and other interested parties understand the purpose of the communication and/or consultation. Communication and consultation mechanisms should be designed in collaboration with local communities and other affected or interested parties. These should consider the use of 6.2.1 appropriate existing local mechanisms and languages. Consideration should be given to the existence/formation of a multi-stakeholder forum. Communications should take into account differential access to information by women as compared to men, village leaders as compared to day labourers, new versus established community groups, and different ethnic groups. Consideration should be given to involving third parties, such as disinterested community groups, NGOs, or government (or a combination of these), to facilitate smallholder schemes and communities, and others as appropriate, in these communications.

For National Interpretation: National Interpretation will consider issues such as appropriate levels of consultation and the types of organisation or individuals that should be included. a. Does the company maintain a list of Procedure SOC/PSM/9.01– Social Documented procedure for communication and consultation with public was YES local communities and other affected communication, Rev 1 date 01 established (Procedure SOC/PSM/9.01– Social communication). Stage of or interested parties? January 2013 communication and consultation with public was described in the procedure and b. Is there SOP being developed by the it has been communicated to stakeholder on January 2013. Communication and consultation has considered differential access to information for male/ female, company for communication and workers, villagers representative both old and new villagers including ethnics. consultation between the company and the local communities and other The procedure designed in collaboration with local communities and other affected or interested parties? affected or interested parties, and also designed with consideration to the use of c. Is the FPIC approach incorporated in appropriate existing local mechanisms and languages. The procedure was in the SOP for communication and Bahasa Indonesia that understood by all surrounding communities. consultation with the local Communication and consultation has considered differential access to communities and other affected or information for male/ female, workers, villagers representative both old and new interested parties? villagers including ethnics.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Has the SOP been developed together Communication and consultation can be done using verbal or using letter. with the local communities and other Result of communication and consultation was recorded in the ‘log logbook e.g. affected or interested parties using road maintenance, donation, facilities support, invitation for memorial, etc. Most appropriate existing local mechanisms of requests were an invitation to follow the event held by the stakeholders, for and in languages understood by these example: invitation for memorial of religious holidays, invitation for area meeting parties? from local labour department, etc. e. Has the SOP been socialized with the local communities and other affected or interested parties taking into account the differential access to information by women as compared to men, village leaders as compared to day labourers, new versus established community groups, and different ethnic groups? f. Have interviews with affected parties been carried out to verify that the SOPs are effective?

6.2.2 A management official responsible for these issues shall be nominated. a. Who in the company is appointed to Letter # UM/X/Bi/2765/10, date 15 Based on decision letter from Top Management, Manager was responsible to YES be responsible for communication November 2010 (ISO Secretariat) coordinate communication and consultation with stakeholder and consultation with the affected parties? b. Has the position been made official with clear and proper job description? c. Have the affected parties been made aware and have access to the person in charge?

A list of stakeholders, records of all communication, including confirmation of receipt and that efforts are made to ensure understanding by affected parties, and records of actions taken in 6.2.3 response to input from stakeholders, shall be maintained.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is the following maintained? List of stakeholder Tanah Laut Mill & Stakeholder list was made and mentioned interested party. Stakeholder list YES  List of stakeholders (local Estate, Kintapura Estate (Form no. covered District Head, Forestry and Plantation Department, Environmental communities and other affected F/SMART/UMUM/SADV/004/003, 12 Agency, Labour, transmigration and social Department, National Land Agencies, or interested parties etc.); February 2015 Camat, Village Head around estate and mill, FFB supplier, Police of district,  Records of all communication, Worker union and gender committee. Stake holder list was made detail, address including confirmation of receipt and phone numbers were mentioned in the list. Update the list was performed or endorsement; twice per year by Estate Manager and SPO Officer. It was update on 12  Evidence that efforts have been February 2015 and recorded on form no. F/SMART/UMUM/SADV/004/003. made to ensure understanding by Community aspirations were kept and recorded by the Head of Administration on

affected parties; logbook “stakeholder aspiration” e.g. road maintenance, donation, scholarship,  Record of actions taken in invitation for memorial, etc. response to input from stakeholders. Interview result with farmer group was concluded that the prices paid for FFB was transparent and complied with agreement. Determination of FFB’s price was conducted through the pricing mechanism of government. In general, interview result indicated that the communication between local society and Estate was evident where some agreements were made to improve social relationship.

6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all affected parties. (M) The system, open to all affected parties, shall resolve disputes in an effective, timely and appropriate manner, ensuring anonymity of complainants and whistleblowers, where requested.

Specific Guidance: For 6.3.1: The system should aim to reduce the risks of reprisal.

Guidance: 6.3.1 See also to Criterion 1.2. Dispute resolution mechanisms should be established through open and consensual agreements with relevant affected parties. Complaints should be dealt with by mechanisms such as Joint Consultative Committees (JCC), with gender representation as necessary. Grievances may be internal (employees) or external. For scheme and independent smallholders, refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009. Where a resolution is not found mutually, complaints can be brought to the attention of the RSPO Complaints System. Refer to helpful texts for guidance, such as the Human Rights Commission (HRC) endorsed ‘Guiding Principles on Business and Human Rights: Implementing the UN "Protect, Respect and

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Remedy" Framework’, 2011.

a. Is there an system in place to deal with . Procedure No. PPNM/SOP/21, The organisasion has set a delivery mechanism for complaints of workers in the YES complaints and grievances for all dated 1 June 2012; mechanism PT SMART Procedure No. PPNM/SOP/21, dated June 1, 2012 on grievance and affected parties? for complaints dissatisfaction. . Procedure and Consultation b. Who in the company is responsible to Complaint follow up was carried out in accordance with the grievance procedure Communication receive complaints and grievances? and Consultation Communication No. SOP / SPO / SMART / LH-19. No.SOP/SPO/SMART/LH-19. c. Is the existence of the system been . Logbook; “Buku Monitoring Receipt and handling of complaint from internal stakeholder (worker) was made known and communicated to all Penanganan Keluh Kesah” recorded appropriate with established procedure. It was registered in the parties? form/complaint logbook “Buku Monitoring Penanganan Keluh Kesah”. Up to the d. Is there evidence that the system is audit is performed (the period January - December 2015) there is no record of understood by all parties? complaints from workers. e. Is training provided to the workers on The grievance procedure and Consultation Communication No. the procedures/systems? SOP/SPO/SMART/LH-19 has ensured that the complainant regarding the complaint will be protected in accordance with their rights. f. Is the system effective to ensure that complaints or grievances are In the complaint handling mechanism and “musyawarah” complaint was made to

addressed or resolved in an effective, reduce the risk of disputes. timely and appropriate manner? Receipt and handling of complaint from internal (worker) was not recorded g. Does the mechanism or procedure appropriate with established procedure. Based on its procedure, complaint provide a way for workers to report a should be registered in the form/complaint logbook “Buku Monitoring grievance against a supervisor to Penanganan Keluh Kesah”, however form/logbook of complaint was not someone other than the supervisor? available. h. How is a complaint or grievance The grievance procedure and Consultation Communication No. investigated, addressed and resolved? SOP/SPO/SMART/LH-19, has ensured that the complainant regarding the Are complaints dealt with by complaint will be protected in accordance with their rights. mechanisms such as JCC? In the complaint handling mechanism and “musyawarah” complaint was made to i. Is there a non-retaliation or non- reduce the risk of disputes. reprisal policy that protects complainants or whistle-blowers? j. Is the privacy of parties protected?

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) k. Where a resolution is not found mutually, is there a process for complaints to be brought to the RSPO Complaints System?

6.3.2 (M) Documentation of both the process by which a dispute was resolved and the outcome shall be available.

a. Is the complaints or grievance Logbook; “Buku Monitoring Up to now there are no complaints or grievance. YES resolution process documented? Penanganan Keluh Kesah. b. Are outcomes or decisions reported to the parties? c. Who has access to the documentation of the process and/or outcomes?

Any negotiations concerning compensation for loss of legal, customary or user rights are dealt with through a documented system that enables indigenous peoples, local communities and 6.4 other stakeholders to express their views through their own representative institutions. (M) A procedure for identifying legal, customary or user rights, and a procedure for identifying people entitled to compensation, shall be in place.

6.4.1 Guidance: This criterion should be considered in conjunction with Criteria 2.2 and 2.3, and the associated Guidance. a. Are procedures for identifying legal, - Procedure of Land Compensation The procedure SOP/NP/SMART/VII/D&L002 described the mechanism for YES customary or user rights in place? SOP/NP/SMART/VII/D&L002, identifying legal, customary or user rights and also for identifying people entitled dated 1 July 2010 to compensation and determines calculation method to provide fair b. Are procedures for identifying people entitled to compensation in place? - Attendance list of procedure compensation. Evidence of Procedure Awareness was documented. It was awareness session, June 2014 communicated to related parties (community leaders, and religious figures and c. Are those procedures jointly youth leaders). Last awareness session for procedure was conducted on June developed, agreed and accepted by 2014. local communities?

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) A procedure for calculating and distributing fair compensation (monetary or otherwise) shall be established and implemented, monitored and evaluated in a participatory way, and corrective actions taken as a result of this evaluation. This procedure shall take into account: gender differences in the power to claim rights, ownership and access to land; differences of 6.4.2 transmigrants and long-established communities; and differences in ethnic groups’ proof of legal versus communal ownership of land. Specific Guidance: For 6.4.2: Companies should make best efforts to ensure that equal opportunities have been provided to both female and male heads of households to hold land titles in smallholder schemes. a. Has a procedure for calculating and - Procedure of Land Compensation Procedures related to giving and determining the amount of compensation in YES distributing fair compensation SOP/NP/SMART/VII/D&L002, land acquisition described in Procedure of Land Compensation (monetary or otherwise) been dated 1 July 2010 SOP/NP/SMART/VII/D&L002, dated 1 July 2010 established and implemented? - Attendance list of procedure Procedure monitored and evaluated in a participatory way, and corrective awareness session, June 2014 b. Are the procedures jointly developed, actions taken as a result of this evaluation. It’s evident through public agreed, accepted and clearly consultation with stakeholder. Equal opportunities have been provided to both understood by affected parties? female and male heads of households to hold land titles c. Is the procedure monitored and The procedures explained that: Once a company knows the extent of land to be evaluated in a participatory way? Have compensable, the company in consultation and coordination regarding the corrective actions been taken as a payment of team the village community / districts to get a benchmark price that result of this evaluation? will be used. After the benchmark price of the compensation obtained, the d. Does this procedure take into account company will disseminate to the public landowner. the following: Some records in the compensation process are:  Gender differences in the power to claim rights; - Minutes of Data Collection (land area)  Ownership and access to land; - Minutes of Delivery of Land and Compensation Provision (witnessed  Differences of transmigrants and by the Village Head and Head) long-established communities; - Submission of Statement of Land - Statement letter  Differences in ethnic groups’ - Map Details Land proof of legal versus communal - List of attendance of measurement land, which was witnessed by the ownership of land. local government. e. Where there are schemed smallholders, is there effort to ensure equal opportunity has been provided It was noted that there was no ongoing progress of new land acquisition during to. interview with sampled villager’s representative, all previous land acquisition was solved before Land Use Title-Hak Guna Usaha (HGU).

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

(M) The process and outcome of any negotiated agreements and compensation claims shall be documented, with evidence of the participation of affected parties, and made publicly 6.4.3 available. a. Is the process and outcome of - Procedure of Land Compensation During this audit it was noted that there was no ongoing progress of new land YES negotiated agreements and SOP/NP/SMART/VII/D&L002, acquisition during interview with sampled villager’s representative, all previous compensation claims documented? dated 1 July 2010 land acquisition was solved before Land Use Title-Hak Guna Usaha (HGU). b. Does this documentation include - Public consultation with stakeholder evidence of the participation of affected parties? Is there any approval/signed by effected parties? c. Was consent obtained from all parties to make the documents publicly available?

6.5 Pay and conditions for employees and for contract workers always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

(M) Documentation of pay and conditions shall be available.

6.5.1 For National Interpretation: National Interpretation will define a Decent Living Wage. Where there is no National Interpretation, the legal minimum wage will be used. a. What types of employment . Document of Payroll periode June Wages and calculations performed using Payroll Application and recorded in the YES arrangements are there in the 2015 computer system each month. Based on the payroll period in June 2015, it company? (E.g. contractual, . South Kalimantan Governor appears that the payment of wages in accordance with the minimum wage set by outsourced, apprenticeships, direct Decree No. 2015 188.44 / 0632 / the government. hires, piecemeal basis, etc.) KUM / 2014; about the b. Is there documentation of pay and determination of Sectoral Minimum PT SMART Tbk. has implemented a national minimum wage standard in 2015, Wage South Kalimantan 2014. based in South Kalimantan Governor Regulations in 2014 No. 188.44 / 0632 / conditions for each employee? . PKB (Perjanjian Kerja Bersama KUM / 2014; regarding the determination of Sectoral Minimum Wage South c. Is there a definition for living wage in 2014-2016. Kalimantan Province 2014 and management decision letter issued by the CEO3- the country? If not, how was the . SE VPA-PSM 3 no. 003 / SE-ADH3 PSM 3, that is: decision on wage for employees and / BNJO / 04 / 15; premi panen. - Decree no. 106 / 24 / CEO3 / HR.PSM3 / 03/15; About wages SKUB,

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) contract workers made? . SE CEO-PSM 3 no. 01 / SE /CEO- - Decree no. 105 / 23 / CEO3 / HR.PSM3 / 03/15; about wages SKUH, ADH3 / BNJO / KSL / 04 / 2015; - Decree no. 104 / 22 / CEO3 / HR.PSM3 / 03/15; about wages BHL / premi non panen. PKWT Wages are also based on the the PKB (Perjanjian Kerja Bersama) period 2014- 2016, Chapter IV Working Days and Hours of Work, Article 19 Overtime, overtime calculation is based on the calculation of overtime pay in Kepmenakertrans regulation 102/MEN/VI/2004. In the PKB wage system described in Article 21. While the wage premium for “premi panen” on Circular Letter of VPA-PSM 3 on 28 April 2015, no. 003 / SE-ADH3 / BNJO / 04/15, concerning “Premi Panen TBS” and Picking Berondol, and also for “Premi non Panen” based on Circular Letter of the CEO-PSM 3, no. 01 / SE / CEO-ADH3 / BNJO / KSL / 04/2015. (M) Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday 6.5.2 entitlement, maternity leave, reasons for dismissal, period of notice, etc.) shall be available in the languages understood by the workers or explained carefully to them by a management official. a. Is the pay and conditions of . South Kalimantan Governor Agreement / contract of employment for workers, has been included in the PKB YES employment clearly detailed in the Decree No. 2015 188.44 / 0632 / (Perjanjian Kerja Bersama) period 2014-2016. PKB has been endorsed by employment or service contracts? KUM / 2014; about the Disnakertrans Kota Baru South of Kalimantan, in which explains: (E.g. working hours, deductions, determination of Sectoral Minimum - The provisions concerning wages overtime, sickness, holiday Wage South Kalimantan 2014. - Wages follow government regulations, the UMP / UMSK entitlement, maternity leave, reasons . PKB (Perjanjian Kerja Bersama - Provision and the amount of overtime pay for dismissal, period of notice, etc.) 2014-2016. - Provisions to leave work including annual leave, maternity leave and . SE VPA-PSM 3 no. 003 / SE-ADH3 leave to marry well menstruation leave. b. Is the contract prepared in languages / BNJO / 04 / 15; premi panen. - Participation of Social Security and social assistance. understood by the workers, explained . SE CEO-PSM 3 no. 01 / SE /CEO- - Etc. carefully to workers by management officials, and signed by both the ADH3 / BNJO / KSL / 04 / 2015; All information provided in several stakeholders is in accordance with the terms premi non panen. authorised signatory of the company and language used, for example in the form of reports and the contents of the . Interview with the chairman of report. Delivery of Information is delivered in Bahasa Indonesian so it can be and employee? union worker understood by employees and stakeholders. c. Does the pay and conditions . Interview with worker provided in labour laws, union representative agreements or direct contracts of employment comply with:

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  The decent living wage as provided in the National Interpretation for the country; or  The local legal requirements in meeting the minimum wage; or  The industry minimum standard for a similar position or work responsibilities d. Is the pay received by the employee consistent with the terms of the contract and the law (relates to P2)? e. Have there been any cases recorded of breach by the company, or complaint made by employees against the company on unjust pay and conditions?

Growers and millers shall provide adequate housing, water supplies, medical, educational and welfare amenities to national standards or above, where no such public facilities are available 6.5.3 or accessible.

a. Have growers and millers provided . List of Public facility in 2015 Facilities and infrastructure provided by the company is housing (type G2, G1 No adequate housing and other basic . Kepesertaan BPJS Kesehatan and G10 for employee), housing for staff (Manager, Askep and Assitance (Minor NCR necessities such as that listed below to agronomi), clinics, Child Care Centres, Education Place Koran, mosques, 2015-07) national standards or above, where no houses of Christian worship, TK (TK Harapan Bunda), Koperasi karyawan, such public facilities are available or Sekolah Dasar (3 Serongga SDN), sport (football field, volleyball, badminton and accessible? tennis).  adequate housing; In addition to supporting school activities the company provides 3 units transpot  adequate electricity; school (school shuttle bus).  clean water supplies (availability of clear water all year round); The company also provide health facilities in the form of clinic / P3K space and  medical services (distance to one ambulance unit as part of emergency response employee health services. health care facility i.e. clinic, Pelayanan kesehatan karyawan is to use the facilities of membership in BPJS- hospital); Kesehatan.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  children education (distance to Provision of clean water for employees through two sources of water, pondok 1 school and schooling attendance using boreholes and pondok 2 sourced from the River Kintap. Laboratory (%) of children under 12) analysis conducted on water sources in pondok 1 KNTE (cottage community  welfare amenities. wells 1 and house staff cottage 1) by PT Mutu Agung Lestari dated checks 2 - 30/10/2015, while laporatorium analysis for clean water in the pondok 2 KNTE

has not been done (the source Kintap river water).. Water quality testing has been carried out based on Permenkes no. 416 / Menkes / PER / IX / 1990, by the Laboratory PT Mutu Agung Lestari. Electricity supply provided to employees through provision of electricity generator.

Minor Non Conformance 2015-07 Theres was no evident that test of clean water have been done on pondok 2 KNTE

6.5.4 Growers and millers shall make demonstrable efforts to monitor and improve workers’ access to adequate, sufficient and affordable food.

a. Have growers and millers made Interviews with employees and Tanah Laut Mill, Tanah Laut Estate and Kintapura Estate has made a real effort YES demonstrable efforts to monitor and assistant division to monitor and improve workers' access to adequate food, it is seen to provide improve workers’ access to adequate, transportation to the nearest market every week.

sufficient and affordable food? The employees also have rice “catu beras” 15 kg for the employee, 9 kg for the spouse and 7.5 kg for each child, up to 3 children.

The employer respects the rights of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining 6.6 are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel. (M) A published statement in local languages recognising freedom of association shall be available.

6.6.1 Guidance: The right of employees, including migrant and transmigrant workers and contract workers, to form associations and bargain collectively with their employer should be respected, in accordance with Conventions 87 and 98 of the International Labour Organisation (ILO).

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Labour laws and union agreements, or in their absence direct contracts of employment detailing payments and other conditions, should be available in the languages understood by the workers or explained carefully to them by a management official.

For National Interpretation: National Interpretation will define migrant and transmigrant workers. ILO definitions and other international protocols, instruments and explanations should be used throughout. a. Has the company published a . Perjanjian Kerja Bersama (PKB) Memorandum stated that the organisation respect to comply with regulation YES statement in local languages period 2014-2016. pertinent to freedom of association. Also PKB stated that freedom of association recognising the rights of employees to . SK Dewan Pengurus Cabang can be conducted by the worker through Labour Union. freedom of association? Federasi Serikat Pekerja b. Are the employees, including migrant Pertanian & Perkebunan SPSI There is an active worker union (SPSI), whose member consists of Mill and Kabupaten Kota Baru, no. Estate employees. The worker union organization was Indonesian Independent and transmigrant workers and contract KEP/16/Men/2001, dated Workers Union (SPSI-SPM) based SK Dewan Pengurus Cabang Federasi workers, allowed to form associations and bargain collectively with their September 14, 2013. Serikat Pekerja Pertanian & Perkebunan SPSI Kota Baru District, no. . List of union members per month KEP/16/Men/2001, dated 14 September 2013 and has been registered in employer? of June 2015, Kotabaru Regency worker agency (Disnakertransos) with registration no. c. Was the outcome, if any, from the 102/Penc/SPM/IX/Disnakertransos, dated 10 September 2013. collective bargaining process between the company and the association Worker Union membership is voluntary. Based on a list of member per month of respected, implemented and adopted September 2014, Tanah Laut and Kintapura Estate have 722 members and in full or partially by the company? Tanah Laut Mill has 150 members. d. Are there Labour laws and union agreements, or in their absence direct contracts of employment detailing payments and other conditions, made available in the languages understood by the workers or explained carefully to them by a management official?

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

a. Are there documented minutes of . List attend meetings (SPSI-SPM) Based on the information the chairman of the union, the union meeting YES meetings between the company and . Minutes of meetings (SPSI-SPM) conducted in accordance with the requirements of temporary and existing main trade unions or workers issues, the recording of this meeting with the unions, among others: the

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) representatives? attendance list and note taker. b. Are the minutes made readily available Several meetings were conducted with the unions, among others: . 3 July 2013, regarding salary adjustment to employees upon request? . 10 May 2014, regarding the preparation of the final draft of labour agreement (PKB). . 9 August 2014, regarding plans of Indonesia’s 69th Independence Day. . February 20, 2014; annual bonuses, wage increases and discussion PKB . 18 April 2015 the implementation of new PKB period 2014 – 2016. . May 30, 2015; meeting to discuss the terms of wages and determination of premi non panen.

6.7 Children are not employed or exploited.

(M) There shall be documentary evidence that minimum age requirements are met.

Guidance: Growers and millers should clearly define the minimum working age, together with working hours. Only workers above the minimum school leaving age in the country or who are at least 15 6.7.1 years old may be employed. The minimum age of workers will not be less than stated under national regulations. Any hazardous work should not be done by those under 18, as per International Labour Organisation (ILO) Convention 138.

Please refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009for additional guidance on family farms. a. Is the minimum working age for . Circular from HRD No.002/SE- HRD Circular letter No.002 / SE-HRDV / 03/09, the date March 31, 2009 YES workers together with working hours HRDV/03/09, date 31 March concerning the minimum age limit of 18 years recruitment. clearly defined in the company’s 2009 Based on a list of labor period July 2015 in Tanah Laut and Kintapura Estate and recruitment policy? . List of employee in TLTM, TLTE Tanah Laut Mill, no employee under the age of 18 years. During field and KNTE b. Are workers employed above the observation and interview with worker representative, it was verified that no . Field observation minimum school leaving age of the employee under the age of 18 years old and no children found following their . Interview with worker country or who are at least 15 years of parent to the workplace. representative age? c. Is there evidence that the nature of work for workers under 18 is in accordance with International Labour

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Organisation (ILO) Convention 138? d. Does ground verification show evidence of employment of workers below the minimum working age?

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

(M) A publicly available equal opportunities policy including identification of relevant/affected groups in the local environment shall be documented.

Guidance: Examples of compliance can be appropriate documentation (e.g. job advertisements, job descriptions, appraisals, etc.), and/or information obtained via interviews with relevant stakeholders 6.8.1 such as affected groups which may include women, local communities, foreign workers, and migrant workers, etc.

Notwithstanding national legislation and regulation, medical conditions should not be used in a discriminatory way.

The grievance procedures detailed in Criterion 6.3 apply. Positive discrimination to provide employment and benefits to specific communities is acceptable as part of negotiated agreements. a. Is there a company policy on non- . Circular No.096/CEO2- Policy for discrimination was determined by the organisation, and all YES discrimination and equal opportunities? SE/12/2010, 14 December 2010 discrimination is prohibited for all area in the Mill and Estates as regulated in Does it at least cover the items . Stakeholder consultation Social policy of company. ‘Circular Letter/Surat Edaran No. 146/CE01- mentioned in the criteria (6.8)? SE/04/2010’ dated December 14th 2010. Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union b. Is the policy made publicly available for membership, political affiliation, or age, is prohibited. The policy was publicly the relevant stakeholders? available and has been communicated to all workers and surrounding c. Is there evidence that the policy has communities. been implemented? The policy describe that the organization identify relevant/ affected groups in the local environment, e.g. surrounding villages, Moslems, Christian, Banjar tribe, Melayu tribe, Javanese tribe, Flores tribe, etc.

6.8.2 (M) Evidence shall be provided that employees and groups including local communities, women, and migrant workers have not been discriminated against.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there evidence that employees and - Worker list of mill and each estate Worker list of Mill and Estates mentioned that all workers came from different YES groups including local communities, period June 2015. back grounds (race, religion, gender, etc). Ethnic diversity of worker and also women, and migrant workers have not - Interview with worker union during interview with workers, no discrimination was identified based on religion, been discriminated against? - Interview with representative ethnic, gender. No evidence of discrimination found during the audit. b. Are the employees and groups worker including local communities, women, and migrant workers happy with the way the company is treating them?

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

6.8.3 It shall be demonstrated that recruitment selection, hiring and promotion are based on skills, capabilities, qualities, and medical fitness necessary for the jobs available.

a. Does the company keep and maintain . Worker list of mill and each All discrimination was prohibited for all area in estate and mill. PKB also YES a record of their employees’ work estate period June 2015 mentioned ban of discrimination for all workers in the organization. Procedure for credentials and medical history? . Organizational structure 2015 worker recruitment (SDM-A-001-00) and procedure for employee assessment b. Does the company explicitly state the (Tanah Laut Estate, Kintapura (HRD C-002-00) was available and mentioned there was no discrimination indiscriminatory policy during the Estate & Tanah Laut Mill) treatment during recruitment and promotion process. Promotion of worker will be recruitment selection, hiring and . Job Description 2015 (Tanah done base on work period, annual evaluation result, and availability of position Laut Estate, Kintapura Estate & promotion process? In the recruitment process, the company has set the standard of competence Tanah Laut Mill) that inferred in the Position Description and Job Profile. Recruitment selection, c. Is the company’s indiscriminatory policy reviewed regularly? hiring and promotion are based on skills, capabilities, qualities, and medical fitness. d. Are the company’s employees recruited and promoted based on skills, Job opportunities were communicated and given to surrounding villagers at first capabilities, qualities, and medical priority where no discrimination found observed during interview and related

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) fitness necessary for the job? How is records of workers being employed. All workers are treated equally in this evidenced? accordance with company regulation including rights of worker as well. The compliance in accordance with national laws has been evaluated by the

organisation as described in criterion 2.1. Annuals performance evaluation result of worker was shown. It is indicated the hiring and promotion are based on skills, capabilities, qualities. 6.9 There is no harassment or abuse in the work place, and reproductive rights are protected. (M) A policy to prevent sexual and all other forms of harassment and violence shall be implemented and communicated to all levels of the workforce.

Specific Guidance: For 6.9.1 and 6.9.2: These policies should include education for women and awareness of the workforce. There should be programmes provided for particular issues faced by women, such as violence and sexual harassment in the workplace. A gender committee specifically to address areas of concern to women will be used to comply with this Criterion. This committee, which should include representatives from all areas of work, will consider matters such as: training on women’s rights; counselling for women affected by violence; child care facilities to be provided by the growers and millers; women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks; and women to be given specific break times 6.9.1 to enable effective breastfeeding. For 6.9.2: see Indicator 4.6.12.

Guidance: There should be a clear policy developed in consultation with employees, contract workers and other relevant stakeholders, and the policy should be publicly available. Progress in implementing the policy should be regularly monitored, and the results of monitoring activities should be recorded.

Notwithstanding national legislation and regulation, reproductive rights are respected. a. Does the company have the policy to . Circular Letter/Surat Edaran Policies on equal opportunities and treatment to get the job described in the YES prohibit any form of sexual and all No.096/CEO1-SE/09/2014” Circular No.096/CEO6-SE/12/2010, 14 December 2010, on the implementation other forms of harassment and . Circular Letter/Surat Edaran No. in relation industrial Unit. Industrial relations without distinction of race, religion, violence? 145/CEO1-SE/04/2010. race and gender in all types of field work. b. Has this policy been documented, . Gender committee program Based on workers interview and group discussion, it was concluded that there . Interview with gender committee implemented and communicated was no sexual harassment and violence within the organisation. clearly to all levels of the workforce? . Interview with representative worker Gender committee was established by the organisation. Each estate and mill has c. Is there a clear protocol for the appointed representative for gender committee. The committee consider matters company to deal/handle such such as; socialization on women’s rights, child care facilities to be provided by issues/complaints received from the the growers and millers, women to be allowed to breastfeed up to nine months workforce? before resuming chemical spraying or usage tasks, and women to be given

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Is there a list of awareness programs specific break times to enable effective breastfeeding. Organization has also or training provided to the workforce in setting several signboards about breastfeed up to nine months before resuming relation to these issues? chemical spraying or usage tasks. It was observed that has been assembled on main access road and crowd locations such as: division office and housing area. e. Has the company formed a Gender Committee to address areas of concern to women? Is there a list of the members sitting in the committee? What are the Terms of Reference of the committee? Does it include the handling of issues such as:  training on women’s rights;  counselling for women affected by violence;  child care facilities to be provided by the growers and millers;  women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks; and  women to be given specific break times to enable effective breastfeeding. f. Is the policy regularly reviewed?

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

a. Is there a policy to protect the . Circular Letter/Surat Edaran no. Policy to protect women reproduction rights has been also stated in “Circular YES reproductive rights of all, especially of 266/HR-OPS/08/2010. Letter/Surat Edaran” (SE #.266/HR-OPS/08/2010). Menstruation leave are given women? . Kebijakan perusahaan oleh RC- to female worker for 2 days-off without any salary deduction. Also policy of RC- b. Has this policy been documented, PSM3 tanggal 12 Januari 2010, PSM3 dated 12 January 2010, no. 001 / SE-ADH3 / BNJO / 01/2010; the implemented and communicated no. 001/SE- sprayers’ pregnancy examination which is conducted every 3 months. clearly to all levels of the workforce? ADH3/BNJO/01/2010. . PKB 2014 -2016 The latest pregnancy tests for sprayers performed in a clinic for central TLTE is:

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) c. How is this policy communicated to all . Attendance list of committee TLTE on 9 May 2015 and KNTE on 10 February 2015. levels of the workforce? gender meeting Gender committee was established by the organisation since 2010. The . Minutes of muster morning committee has representatives from all areas of work. The committee consider . Interview with head of gender matters such as; trainings on women’s rights, counselling for women affected by committee violence, women to be allowed to breastfeed up to nine months before resuming . Interview with women worker chemical spraying or usage tasks, and women to be given specific break times . Gender committee structure to enable effective breastfeeding. . Interview with head of gender committee Communication to all workers pertinent to prevent sexual harassment and . Interview with women worker protect women reproduction was conducted by the gender committee team and attended by the organisation. Complaint handling procedure for sexual harassment was determined. All complaints can be issued verbal and or written and informed to all administrator, gender committee and Mill/Estate Manager.

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

a. Does the company have a mechanism . SOP/SPO/SMART/LH-19, The grievance procedure and Consultation Communication No. YES to handle employment grievances, that Consultation Communication SOP/SPO/SMART/LH-19, has ensured that the complainant regarding the respects anonymity and protects procedure complaint will be protected in accordance with their rights. complainants where requested? . SOP/NP/SMART/XII/MCAR001, Procedure documented SOP/NP/SMART/XII/MCAR001 was established. A b. Does the mechanism provide a way for complaint mechanism for sexual flowchart of complaint mechanism for sexual harassment was also determined. workers to report a grievance against a harassment All complaints can be issued verbal and or written and informed to all supervisor to someone other than that . Interview with chairman of administrator, gender committee and Mill/Estate Manager. During interview with supervisor? gender committee female workers and gender committee, no sexual harassment and violence case was identified. c. Is the mechanism documented, implemented and communicated Based on workers interview and group discussion with gender committee and clearly to all levels of the workforce? workers representative, it was concluded that there was no grievance, sexual harassment and violence within the organisation. d. Has the company identified personnel who will be responsible to receive and manage complaints received from the

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) workforce? e. Has the company received any reports or complaints of harassment or abuse? How was it addressed or resolved? f. Is the policy reviewed regularly?

6.10 Growers and millers deal fairly and transparently with smallholders and other local businesses.

Current and past prices paid for Fresh Fruit Bunches (FFB) shall be publicly available.

Guidance: Transactions with smallholders should consider issues such as the role of middle men, transport and storage of FFB, quality and grading. The need to recycle the nutrients in FFB (see Criterion 4.2) should also be considered; where it is not practicable to recycle wastes to smallholders, compensation for the value of the nutrients exported can be made through the FFB 6.10.1 price.

Smallholders should have access to the grievance procedure under Criterion 6.3 if they consider that they are not receiving a fair price for FFB, whether or not middle men are involved. The need for a fair and transparent pricing mechanism is particularly important for outgrowers who are contractually obliged to sell all FFB to a particular mill. If mills require smallholders to change practices to meet the RSPO Principles and Criteria, consideration should be given to the costs of such changes, and the possibility of advance payments for FFB can be considered. a. How is the price of FFB determined? - FFB purchase procedure YES Pricing mechanisms for FFB was described in FFB purchase procedure. Price b. Is current and past prices paid for - FFB pricing determination mechanism of FFB, CPO and palm kernel was determined by province Fresh Fruit Bunches (FFB) publicly from province government government and reviewed in monthly basis. The price was applied for all growers available? How? - FFB Purchase Agreement in the province. The company updates the information on the FFB pricing with FFB Suppliers c. Was there any complaints on FFB formula that includes details of transport, milling and shipping costs, each month and provides it to out growers. Annual contract are made between FFB suppliers pricing? and mill, describing FFB specification required, contract period, determination of d. How was the complaint handled? FFB pricing, and term of payment. Information of FFB set was available to the e. What was the solution? FFB suppliers and the commitment was stated in the procedure. Current and past prices paid for Fresh Fruit Bunches (FFB) from province government period July 2015 was publicly available. Signboard of FFB price was placed in front of the Mill office; everyone can clearly see the price of FFB in that

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) information board. During audit it was observed that tere was no complaints on FFB pricing from FFB suppliers.

(M) Evidence shall be available that growers/millers have explained FFB pricing, and pricing mechanisms for FFB and inputs/services shall be documented (where these are under the 6.10.2 control of the mill or plantation). a. What is the mode of - FFB purchase procedure YES Recording/documenting transactions between millers with middlemen and/or recording/documenting transactions - FFB pricing determination smallholders were documented in Invoice and “Bukti Pembayaran” FFB which between millers with middlemen and/or from province government issued monthly after mill receive FFB from suppliers. smallholders? - FFB Purchase Agreement b. Is there evidence that growers/millers with FFB Suppliers Growers/millers have explained FFB pricing and pricing mechanisms for FFB in have explained FFB pricing and pricing SPK or annual contract between FFB suppliers and mill which describing FFB mechanisms for FFB? specification required, contract period, determination of FFB pricing, and term of payment. The contract was understood, sign and agreed together. c. Are there any inputs/services rendered by the millers to smallholders/middle Inputs/services rendered by the millers to FFB suppliers was FFB pricing men? Are these inputs/services having determination from province government which reviewed and update in any influence to the pricing and pricing monthly basis. mechanisms for FFB? Specification of inputs and or services required was communicated to the d. Have inputs/services been supplier/vendor through tender document or request for quotation. documented (where these are under

the control of the mill or plantation)? e. Where it is not practicable to smallholders to recycle waste (i.e. EFB), is there compensation for the value of the nutrients of EFB given to the smallholders? Is this translated into the pricing factors of FFB?

6.10.3 Evidence shall be available that all parties understand the contractual agreements they enter into, and that contracts are fair, legal and transparent.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a contractual agreement - FFB purchase procedure YES Annual contract were made between FFB suppliers and mill, describing FFB between the miller and smallholders/ - FFB pricing determination specification required, contract period, determination of FFB pricing, and term of middle men? from province government payment. Information of FFB set was available to the FFB suppliers and the b. Do all parties understand the - FFB Purchase Agreement commitment was stated in the procedure. The selection and evaluation of contractual agreements they have with FFB Suppliers supplier/vendor was based on capability of supplier and vendor to supply entered into? required inputs and or services. Specification of inputs and or services required c. Are all contractual agreements fair, was communicated to the supplier/vendor through tender document or request legal and transparent? for quotation. d. Who keeps the contractual The contract was understood, sign and agreed together between grower and agreements? FFB suppliers. All contractual agreements was fair, legal and transparent. All contract documents were found valid during audit.

6.10.4 Agreed payments shall be made in a timely manner.

a. How are all payments made to the YES FFB purchase records (January to A review to the current FFB purchase records (January to July 2015) shows that smallholders/middle men? July 2015) the price set was consistently used as recorded in the record of FFB receiving. b. What is the mode of The payment of FFB received were planned and executed in timely manner in recording/documenting transactions line with term of payment agreed within the contract between millers with middlemen and/or smallholders? c. Have agreed payments been made in a timely manner?

6.11 Growers and millers contribute to local sustainable development where appropriate.

Contributions to local development that are based on the results of consultation with local communities shall be demonstrated.

6.11.1 Guidance: Contributions to local development should be based on the results of consultation with local communities. See also Criterion 6.2. Such consultation should be based on the principles of

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) transparency, openness and participation, and should encourage communities to identify their own priorities and needs, including the different needs of men and women. Where candidates for employment are of equal merit, preference should always be given to members of local communities. Positive discrimination should not be recognised as conflicting with Criterion 6.8. Efforts should be made to identify independent smallholders in the supply base. Where sourcing of fruit is from identified independent smallholders, efforts should be made to contribute to the improvement of their farming practices.

For National Interpretation: National Interpretation will consider specific parameters or thresholds such as use of local and national goods and services where possible, whether a certain percentage of the plantation’s profit/turnover should be used for social development projects, and minimum quotas for local employment. a. Have the local development needs and . List of contractor Records of organization contribution to regional development were evident, YES priorities been identified in consultation . Work agreement with contractor among either: agreement contract, and social assistance list. with local communities? (refer also to C . CSR program 2015 CSR program was provided by the organization and deployed in to CSR 6.2) . Logbook of “Communication and program. Activity of CSR was identified by the estate/mills (Rekapitulasi Laporan b. What are the contributions made to Consultation” Kegiatan CSR), including: repairs the village road, low-cost market, mosques local development? Are they in . Record of organization renovation in surrounding villages, checks and medical for free, etc. accordance with the results of contribution to community around Implemented document was recorded within photo and minutes of aid delivery. consultation? estate . Group discussion with Another local business was supported for growers and mills, main supports were c. Are there efforts to improve or surrounding communities. pertinent to procurement spare parts and vehicle maintenance. The local maximise employment opportunities at business is assigned and controlled by central purchasing in Head Office. the company for local communities? Contribution has been made to local development, such as using local contractors for transportation and civil work (building repair, constructing bridge and harvesting bridge). Moreover, the company has established CSR Program (includes plan and realisation). CSR program consists of internal and external activities. Internal activities consist of: providing scholarships to outstanding students, national independence day, fogging etc. External activities include: improvement of village roads around the plantation, maintenance of flood control, providing clean water for community activities, building renovation of Elementary School, renovations to the village mosque around the plantation. CSR Program 2015 made based on the results of consultation with local communities, several records were evident, such as: letter from the head surrounding villages, regarding request for borrowing heavy equipment (excavator, grader and compactor).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) During consultation with village head, community leader and young leader around estate, it was verified that the organization providing jobs for villagers around mill and estate. Preference has been given to member of local communities if candidates for employment are of equal merit. The role and commitment of the company as a social responsibility for community development is given in accordance with the existing proposals. Some social activities such as: . February 2015; Assistance to the teachers' room ceiling fan SDN Bukit Mulia 3 . March 2015; Fuel Assistance for vocational Kintap . March 27, 2015; Assistance road grader for road maintenance in Sei Cuka. . 18 April 2015; Assistance road grader for road maintenance in Sumber Jaya . April 2015; support for activities MTQ in District Kintap. . July 2015; Funds for pesantren Nur Hidayat.

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

a. Is there a complete registry of . Recapitulation Report of FFB There are no scheme smallholders in PT. SMART Tbk - Tanah Laut. Efforts YES independent smallholders in the supply Received have been made to identify independent smallholders in the supply base The base? . FFB purchase agreement with third party FFB supplier was came from independent smallholders, which are b. Have efforts been made to improve the Gapoktan (Farmer group) Maju Gapoktan (Farmer group) Maju Jaya and Koperasi (Cooperation) Cahaya. Jaya and Koperasi (Cooperation) farming practices of independent Cahaya To improve independent smallholder farming practice, organization has been smallholders? . Record of training of harvesting taken training of harvesting technic and PPE usage on 12 June 2014. Training c. Where there are schemed practice and PPE usage was conducted by the company. The trainer is Estate Manager and assisted by smallholders, have efforts and/or (attendance list and module) Askep and Division Assistant. resources been allocated to improve smallholder productivity?

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) No forms of forced or trafficked labour are used. 6.121 *1 New Criteria - No forms of forced or trafficked labour are used. (M) There shall be evidence that no forms of forced or trafficked labour are used.

Specific Guidance: For 6.12.1: Workers should enter into employment voluntarily and freely, without the threat of a penalty, and should have the freedom to terminate employment without penalty given reasonable notice or as per agreement.

Guidance Migrant workers should be legalised, and a separate employment agreement should be drawn up to meet immigration requirements for foreign workers and international standards. Any 6.12.1 deductions made should not jeopardise a decent living wage. Passports should only be voluntarily surrendered. There should be evidence of due diligence in applying this to all sub-contract workers and suppliers. National guidance should be used on contract substitution.

For National Interpretation: National Interpretation will define the following: temporary workers; migrant workers; special labour policy; contract substitution; and decent living wage. International Labour Organisation (ILO) definitions (ILO Convention 29 and 105) and other international protocols, instruments and explanations should be used throughout. See Criterion 6.5 for further guidance. a. What is the company’s policy on forced . PKB 2014 – 2016 Based on interview with worker representative and worker union, there are no YES or trafficked labour? . Interview with worker form of forced or trafficked labour in Tanah Laut Mill, Tanah Laut Estate and representative Kintapura Estate. Workers are entering into employment voluntary and freely, b. How does the company define forced or trafficked labour? . Interview with chairman of worker without the threat of a penalty, they have the freedom to terminate employment union without penalty given reasonable notice or as per agreement. c. What is the process of recruiting . List of worker foreign/ migrant workers directly and/or . Personal file of worker through licenced outsourcing agencies/ labour suppliers? d. Who is the person responsible for selecting/ screening labour suppliers/ outsourcing agents? e. Do the foreign workers have to pay a fee to the employment recruitment

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) agency or labour suppliers in the workers’ countries of origin? If yes, does it jeopardise decent living wage? f. Are there restrictions on workers from leaving the mill or estate or their housing facilities outside working hours? g. What is the process if a worker wants to terminate their employment before their contract expires? In this case, who pays for the return transportation? h. What are the penalties imposed if the workers were terminated or fired before their contract expires? i. Who keeps the workers passports or identity documents? j. If workers do not keep their passports or identity documents, is this legally allowed? k. What is the process for workers’ to hand over their passports or identity documents to the company? l. Do workers have unrestricted access to their passports or identity documents? Describe how workers are able to access their documents?

6.12.2 Where applicable, it shall be demonstrated that no contract substitution has occurred.

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there evidence of contract . Interview with worker There was no substitution contract occurred. Workers get the job and contract N/A substitution occurring? representative conforms to agreement between company and its workers . Interview with chairman of worker b. Are foreign workers asked to sign a union contract upon arriving in the receiving country? If yes, is that contract . List of worker

identical to the one signed in the country of origin? c. Are workers given a copy of their employment contracts? If yes, is the contract identical to the one signed at the time of recruitment? (M) Where temporary or migrant workers are employed, a special labour policy and procedures shall be established and implemented.

Specific Guidance: For 6.12.3: The special labour policy should include: 6.12.3 • Statement of the non-discriminatory practices; • No contract substitution; • Post-arrival orientation programme to focus especially on language, safety, labour laws, cultural practices etc.; • Decent living conditions to be provided. a. What is the company’s policy and . Interview with worker PT SMART Tbk – Tanah Laut Mill, Tanah Laut Estate and Kintapura Estate did N/A procedures for temporary or representative not employ any migrant workers. foreign/migrant workers? Does the . Interview with chairman of worker special labour policy include: union  Statement of the non-discriminatory . List of worker practices?  No contract substitution?  Post-arrival orientation programme with emphasis on language, safety, labour laws, cultural practices etc.?  The provision of decent living conditions? b. Have the policies and procedures been

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

Growers and millers respect human rights. 6.132 *2 New Criteria - Growers and millers respect human rights. (M) A policy to respect human rights shall be documented and communicated to all levels of the workforce and operations (see Criteria 1.2 and 2.1).

Guidance: See also Criterion 6.3. All levels of operations will include contracted third parties (e.g those involved in security).

6.13.1 Note: From the UN Guiding Principles on Business and Human Rights: “The responsibility of business enterprises to respect human rights refers to internationally recognised human rights – understood, at a minimum, as those expressed in the International Bill of Human Rights and the principles concerning fundamental rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work” (“The corporate responsibility to respect human rights” in Guiding Principles on Business and Human Rights). The RSPO WG on Human Rights will provide a mechanism to identify, prevent, mitigate and address human rights issues and impacts. The resulting Guidance will identify the relevant issues on human rights to all RSPO Members. a. Is there a company policy on human . Social policy and roles the Company has a social policy and roles the community as a manifestation the YES rights? community which was signed by respect of Companies to human rights, the rights of local communities and as a b. How is this communicated to all the President Director on commitment to comply with the rules and regulations. This commitment is November 10th 2011. outlined in the policy, which was signed by the President Director on November employees, including outsourced . List of attendance and minute of 10th 2011. The policy contains such as : workers, customers and suppliers? If by training, how often is the training dissemination to all employee - Respect for human rights and local community of TLTE, - Empowerment of local community development programs conducted? KNTE and TLTM 2015 - recognizes, respect and reinforce the rights of workers c. Who has the task of communicating - Compliance with all applicable laws and regulations the policy internally and externally? - FPIC to indigenous and local communities d. Does the company have any outstanding cases of human rights This policy has been disseminated to all employees and the community around violations? the plantation. Evidence of dissemination, list of attendance of all employees and the community was sighted.

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PRINCIPLES 7: RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS

No land bank remains in the concession area. Plantation in Tanah Laut and Kintapura Estate was performed in 1995, 1996, 1997, 1998, 1999, 2004 and 2005. All area has been covered in existing HGU and AMDAL. Based on HCV assessment report, there was no HCV area or forests present in the 2005 Plantation.

PRINCIPLES 8: COMMITMENT TO CONTINUOUS IMPROVEMENT IN KEY AREAS OF ACTIVITY

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 8.1 Growers and millers regularly monitor and review their activities, and develop and implement action plans that allow demonstrable continual improvement in key operations. (M) The action plan for continual improvement shall be implemented, based on a consideration of the main social and environmental impacts and opportunities of the grower/mill, and shall include a range of Indicators covered by these Principles and Criteria. As a minimum, these shall include, but are not necessarily be limited to: • Reduction in use of pesticides(Criterion 4.6); • Environmental impacts (Criteria 4.3, 5.1 and 5.2); • Waste reduction (Criterion 5.3); • Pollution and greenhouse gas (GHG) emissions (Criteria 5.6 and 7.8); • Social impacts (Criterion 6.1); 8.1.1 • Optimising the yield of the supply base.

Guidance: Growers should have a system to improve practices in line with new information and techniques, and a mechanism for disseminating this information throughout the workforce. For smallholders, there should be systematic guidance and training for continual improvement.

For National Interpretation: National Interpretation will include specific minimum performance thresholds for key indicators (Criteria 4.2, 4.3, 4.4, and 4.5). . List Attendance of OHS Several audits were conducted which covered all operation areas including YES a. Is there an action plan for continual Management Review Meeting operation (Operation Internal Audit – OIA). Findings identified during those audits improvement? . Notes OHS management have been followed up, verified and monitored by Region Controller, Production b. Describe the main components of the plan. Review Meeting Controller and Vice President Agronomy and Vice President Manufacturing. c. Has the action plan been implemented? . OHS internal audit report Continual improvement plans have been raised as corrective actions plan from . Social Impact Assessment internal audit of OHS and RSPO and Management Review Plan. d. Provide examples of continual (SIA) Report Juni – July 2010 The most recent OHS Internal Audit was performed on 13- 17 April 2015 for mill

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) improvements that have been . Monitoring and Review of SIA and all estates. All findings have been closed. implemented. period June 2012 – December OHS Management Review Meeting has also been performed during May – July 2014 2015 for estates and mill. The records were sighted. Several action plans for e. Are history records available to develop the . OIA Report improvement have been raised such as: providing of safety signs, health action plan? . RSPO internal audit resul surveillance, fire prevention equipment, first aid equipment, safety f. Are records of implementation of the action . Environmental management recommendation box etc. plan available? program The Mill and Estate is certified to ISCC continually set management objective and g. Does the action plan include strategies for: target which were supported by environment program especially for carbon • Reduction in use of pesticides reduction. Regular internal and external audit was held to evaluate the adequacy (Criterion 4.6)? Is IPM widely and effectiveness of the system. implemented? Regular internal audit RSPO and ISPO and management review meeting which • Environmental impacts (Criteria 4.3, covered all operation areas including operation was held to evaluate the adequacy 5.1 and 5.2)? and effectiveness of the management system. Records were sighted regarding • Waste reduction (Criterion 5.3)? RSPO & ISPO Internal Audit that conducted on 14-16 April 2015. Management • Pollution and greenhouse gas (GHG) review was conducted on 30 April 2015. emissions (Criteria 5.6 and 7.8)? Several improvement programmes for mill and estate was already established for • Social impacts (Criterion 6.1)? year period 2015. Evidence of several improvements was shown, e.g. • Optimising the yield of the supply  Environmental impacts: base? o Land application from the liquid wastes, o Handling of domestic waste water by construct and maintenance septic h. Do growers have a system to improve tank, practices in line with new information and o Application of empty bunch techniques, and a mechanism for o Manual manuring at 50 m on riparian buffer zones disseminating this information throughout o Recycle turbine cooling water and vacuum dryer the workforce? o Reuse condensate steriliser for water dilution o Recycle soclet cooling water  Waste reduction: o Efficiency of paper use o Reduce use oil and used oil filter  Pollution and GHG emission o Use of fibre and shells for boiler fuel o Operate turbine during non processing hour o Reduce operational hour of genset by adding turbine operation non processing

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CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Social: Monitoring the social impact of last performed and also reviews by management in the period January 2012 - December 2014. Planning for next monitoring and evaluation of the social impact will performs on 14 to 18 September 2015. Reduction or mitigation plan for negative impact is monitoring the social impact once a year. Lastly done is for the period January 2012 - December 2014 and recorded in the agenda of monitoring social impact TLTM. TLTE amd KNTE date 14 to 17 April 2015, the method used is the verification of secondary data, observation and interviews with affected communities.

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3.3.2 RSPO SUPPLY CHAIN

3.3.2.1 Supply Chain Certification Standard – Module E Mass Balance

PART A COMPANY DETAIL

Company Name (covered by certification): PT. SMART Tbk

RSPO member name: PT. SMART Tbk RSPO member number: 1-0019-05-000-00

RSPO IT Platform Registration number: RSPO_PO1000001152 Site Address: Kecamatan Kintap, Kabupaten Tanah Laut, South Kalimantan, Indonesia Management Representative: Ismu Zulfikar Site type: CPO Mill Site capacity: 30 MT FFB/hour Certified palm product sold: Null. There is no RSPO certified CPO and PK sold since the site certified. Certified palm product used: 109,456 MT FFB App/Cert No: RSPO20010 Audit Type: ASA3 SAI Global Auditor/Team: Eko Purwanto Audit Date: 10/08/2015 Activity/Audit No: AS-408477 Audit objectives To verify the volume of certified and uncertified FFB entering the mill and sold volume of RSPO certified producers. Supply Chain Model: Module E - CPO Mills (MB) Mass Balance

Pertinent record period: August 2014 – July 2015 Estimated tonnage of certified palm product produced: CPO: 28,130 MT and PK: 6,966 MT

Audit Report

Estimated of tonnage of non certified palm product produced CPO: 3,412 MT and PK: 839 MT String description: CPO Mill Outsource activity(ies) (if any): CPO and PK transport Independent third party(ies) performing outsource activity(ies): name, address and 1. PT. Sarana Lintas Bersama Capability Address: Jl. Plaju, Gg. Anda No. 186 Batu Licin, Kabupaten Tanah Bumbu, Provinsi Kalimantan Selatan Capacity: 30 tank trucks (@8.5 MT) and 4 trucks (@8 MT)

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

CPO MILLS (MB) MASS BALANCE SUPPLY CHAIN MODELS – MODULAR REQUIREMENTS

E.1 Definition

E.1.1. Certification for CPO mills is necessary to verify the volumes of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. In that scenario, the mill can claim only the volume of oil palm products produced from processing of the certified FFB as MB.

E.2 Explanation

E.2.1. The estimated tonnage of CPO and PK products that could potentially be produced by the certified mill must be recorded by the CB in the public summary of the P&C certification report. This figure represents the total volume of certified palm oil product (CPO and PK) that the certified mill is allowed to deliver in a year. The actual tonnage produced should then be recorded in each subsequent annual surveillance report. The estimated tonnage of CPO and PK products has been recorded by SAI C Global, i.e.: Certification audit: Estimated CPO : 29,219 MT Estimated PK : 276 MT a. Has the estimated tonnage of CPO and PK products (that could potentially be produced by the certified mill) been ASA1: recorded by the certification body (CB) in the public Estimated CPO : 30,755 MT summary of the P&C certification report ? Estimated PK : 7,145 MT

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

ASA2: Estimated CPO : 29,174 MT Estimated PK : 7,081 MT C b. Does the figure represent the total volume of certified palm The figure represented the total volume of certified palm oil product (CPO oil product (CPO and PK) that the certified mill is allowed to and PK) that the certified mill is allowed to deliver in a year. deliver in a year ?

The actual tonnage produced has been recorded in each subsequent annual C surveillance report, i.e: ASA1: Actual CPO : 29,194 MT Actual PK : 6,950 MT

ASA2: Actual CPO : 25,760 MT c. Does the actual tonnage produced have to then be recorded Actual PK : 6,124 MT in each subsequent annual surveillance report ?

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

a. The mill must also meet all registration requirements for the PT. SMART Tbk. – Tanah Laut Mill has meet all registration requirements for C appropriate supply chain through the RSPO supply chain the appropriate supply chain through the RSPO supply chain managing managing organization (RSPO IT platform or book and organization (RSPO IT platform), with register number claim)? RSPO_PO1000001152.

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

b. The mill must also meet all reporting requirements for the C appropriate supply chain through the RSPO supply chain The mill also has met all reporting requirements for the appropriate supply managing organization (RSPO IT platform or book and chain through the RSPO supply chain managing organization (RSPO IT claim)? platform).

E.3 Documented Procedure

E.3.1. The site shall have written procedures and/or work instructions to ensure the implementation of all the elements specified in these requirements. This shall include at minimum the following: a. Complete and up to date procedures covering the implementation of all the elements in these requirements; b. The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. This person shall be able to demonstrate awareness of the site procedures for the implementation of this standard.

a. Does the site have written procedures and/or work The mill have written procedure and work instruction in place to ensure the C instructions in place to ensure the implementation of all implementation of all elements specified in these requirement, i.e.: elements specified in these requirements? - SOP/TLTM/SC – RSPO Supply Chain, revision dated 02 February 2015, covers Receiving of Raw Material, Weighing (weighbridge ticket printing, quality checking, processing), Monitoring of Product (quality, quantity, validation of report), Mass Balance counting, Delivery of Product and Documentation. - SOP/SMART/CERS-EHSD/SADV/I/001 - Identification and Traceability of Certified Product - SOP/SMART/MCMD/I/TM-PKS - Palm Oil Mill Process, covers FFB receiving, Sterilisation, Threshing, Pressing, Clarification, Nut and Kernel, Boiler and Engine Room.

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) - SOP/SMART/RCP - FFB Receiving - SOP/SMART/TH – Threshing Station - SOP/SMART/PE – Pressing Station - SOP/SMART/CL – Clarification Station - SOP/SMART/NK – Nut and Kernel Station - SOP/SMART/BO – Boiler Station - SOP/SMART/PS – Engine Room Station - SOP/SMART/LAB – Laboratory - SOP/SMART/DO – Despatch CPO - SOP/SMART/DK – Despatch Kernel

Work Instruction: - IK/TLTM/RCP/WB/01 – WI FFB Weighing - IK/TLTM/RCP/GD/01 – WI Grading - IK/TLTM/RCP/LR/01 – WI Loading Ramp - IK/TLTM/STR/01 – WI Sterilizer Station - IK/TLTM/DO/01 – WI Despatch CPO - IK/TLTM/DK/01 – WI Despatch PK - IK/TLTM/LAB/09 – WI General Laboratory

b. Are procedures / work instructions completely covering the C Procedure and work instruction completely covering the implementation of all implementation of all the elements in these requirements? elements in these requirements as mention above.

c. Have the site had the role of the person having overall The person having overall responsibility for and authority over the C responsibility for and authority over the implementation of implementation of these requirements and compliance with all applicable these requirements and compliance with all applicable requirements is Mill KTU (Head of Administration) Mr. Lariston Siburian requirements ? based on Tanah Laut Mill Manager Decree Letter #01.INT-TLTM/02/15 dated February 2nd 2015.

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) d. Is the person able to demonstrate awareness of the site’s The person having awareness and knowledge for the procedure and C procedures for the implementation of this standard? implementation of RSPO SCC standard since he already have trained twice on February 4th and April 16th, 2015.

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

a. Has the site had documented procedures for receiving The site has documented procedure for receiving certified and non-certified C certified FFBs ? FFB, i.e. - SOP/TLTM/SC and SOP/SMART/RCP - FFB Receiving

b. Has the site had documented procedures for receiving non- The site has documented procedure for receiving certified and non-certified C certified FFBs? FFB, i.e. - SOP/TLTM/SC and SOP/SMART/RCP - FFB Receiving

The site has documented procedure for processing certified and non-certified C FFB, i.e.: - SOP/TLTM/SC – RSPO Supply Chain - SOP/SMART/TH – Threshing Station - SOP/SMART/PE – Pressing Station c. Has the site had documented procedures for processing - SOP/SMART/CL – Clarification Station certified FFBs? - SOP/SMART/NK – Nut and Kernel Station - SOP/SMART/BO – Boiler Station The site has documented procedure for processing certified and non-certified C FFB, i.e.: - SOP/TLTM/SC – RSPO Supply Chain - SOP/SMART/TH – Threshing Station - SOP/SMART/PE – Pressing Station d. Has the site had documented procedures for processing - SOP/SMART/CL – Clarification Station non-certified FFBs? - SOP/SMART/NK – Nut and Kernel Station - SOP/SMART/BO – Boiler Station

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

E.4 Purchasing and Goods In

E.4.1. The site shall verify and document the volumes of certified and non-certified FFBs received.

a. Does the site verify and document the volumes of certified The site verified and documented the volume of certified FFB received. The C FFBs received ? activity conducted by weighing clerk and recorded in Recapitulation of FFB Receiving. b. Does the site shall verify and document the volumes of non- The site verified and documented the volume of non-certified FFB received. C certified FFBs received ? The activity conducted by weighing clerk and recorded in Recapitulation of FFB Receiving.

E.4.2. The site shall inform the CB immediately if there is a projected overproduction of certified tonnage.

a. Does the site inform the CB immediately if there is a Yes, procedure SOP/TLTM/SC – RSPO Supply Chain mentioned that the C projected overproduction of certified tonnage ? site will inform Certification Body immediately if there is a projected overproduction of certified tonnage. The communication will be assisted by Certification Section, EHS Department. Until this ASA3, there is no overproduction since the site certified.

E.5 Records Keeping

E.5.1. The site shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO and PK on a three-monthly basis. All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system according to conversion ratios stated by RSPO. The site can only deliver Mass Balance sales from a positive stock. Positive stock can include product ordered for delivery within three months. However, a site is allowed to sell short.(ie product can be sold before it

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) is in stock.) For further details refer to Module C.

a. Does the site record and balance all receipts of RSPO The site recorded and balanced all receipts of RSPO certified FFB on C certified FFB on a three-monthly basis ? monthly basis then recapitulated it in three-monthly basis in document Mass Balance Report for SCCS. b. The site shall record and balance all deliveries of RSPO The site has clear system to record and balance all deliveries of RSPO C certified CPO and PK on a three-monthly basis ? certified CPO and PK on three-monthly basis, i.e. document Mass Balance Report for SCCS, however there is no delivery of RSPO certified CPO and PK since the site certified. c. Are all volumes of palm oil and palm kernel oil that are The site has clear system to implement the requirement that all volumes of C delivered being deducted from the material accounting palm oil and palm kernel oil that are delivered to be deducted from the system according to conversion ratios stated by RSPO ? material accounting system according to conversion ratios stated by RSPO, i.e. document Mass Balance Report for SCCS, however there is no delivery of RSPO certified CPO and PK since the site certified. d. Is the site only able to deliver Mass Balance sales from a C positive stock ? The site has clear system to implement the requirement that only able to

deliver Mass Balance sales from a positive stock, i.e. document Mass Positive stock can include product ordered for delivery within Balance Report for SCCS, however there is no delivery of RSPO certified three months. However, a site is allowed to sell short.(ie CPO and PK since the site certified. product can be sold before it is in stock.)

E.5.2. In cases where a mill outsources activities to an independent (not owned by the same organization) palm kernel crush, the crush still falls under the responsibility of the mill and does not need to be separately certified. The mill has to ensure that the crush is covered through a signed and enforceable agreement. a. Does the mill outsource activities to an independent (not The mill delivered palm kernel to palm kernel crusher which has been C owned by the same organization) palm kernel crush, the separately certified by SGS, which is PT. SMART Tbk – Tarjun Refinery, with crush still falls under the responsibility of the mill and does certified ID: SGS-RSPO/SC-MY14/01549 and SCC Model: Segregation and not need to be separately certified ? Mass Balance. The certificate valid from 18 September 2014 until 17

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) September 2019. b. Does the mill have to ensure that the crush is covered C through a signed and enforceable agreement ? The Mill does not have to ensure that the crush is covered through a signed and enforceable agreement, the crush has been separately certified.

3.3.2.2 Supply Chain Certification System

Supply Chain Certification System Status ( Yes / No )

5.3.1 Has the client been made aware with necessary information concerning the RSPO Supply Chain Certification and the RSPO Rules on Communication and Claims Has the client been made aware with necessary information concerning the RSPO Supply Chain Certification and the RSPO Rules on Communication and Claims? Yes If potential clients have any further questions concerning the RSPO these shall be directed to the RSPO secretariat.

5.3.2 Has the client been made aware of the contractual agreement for certification services against the RSPO Supply Chain Standard and maintain a Yes record of any agreement? 5.3.6 Has the organization been informed about the following items? a. Certification process Yes b. Agree logistics for the assessment and time of exit (closing) meeting. Yes c. Confirm acess to all relevant documents, field sites and personnel Yes d. Explain confidentiality and conflict of interest Yes

Audit Report

Supply Chain Certification System Status ( Yes / No )

5.3.7 Have the management documentation of the organization fully met to the requirements of the RSPO Supply Chain Certification Standard? Yes 5.3.7 Have any issues or areas of concern been clarified to the organization? N/A 5.3.7 Have the internal audits against RSPO supply chain standard been fully planned and underway before certification is awarded ? Yes 5.3.8 Have the organization sufficiently and adequately implemented the organizational systems, the management systems and the operational systems, Yes including any documented policies and procedures, to meet the intent and requirements of the RSPO Supply Chain Certification Standard? 5.3.8 Have the client made aware that when there is outsourcing process to the third party after certification is granted therefor SAI Global shall be Yes informed and SAI Global decides whether an interim visit is required for the next audit ? 5.3.9 Has certification audit reviewed pertinent RSPO Supply Chain records relating to the receipt, processing and supply of certified oil palm products? Yes 5.3.10 Have all activities conducted by subcontractors complied with the intent and requirements of the RSPO Supply Chain Certification Standard Yes 5.3.11 Have the client made aware that until they receive written confirmation of their RSPO Supply Chain certification registration and its expiry date that Yes they are not certified and can not make any claims concerning registration? 5.3.11 Have a detail records have been compiled of the entry (opening) meeting including a list of the participants in the meeting? Yes 5.3.11 Have the client made aware of the findings of the audit team including any deficiencies which may result in a negative certification decisions or Yes which may require further actions to be completed before a certification decision can be taken? 5.3.11 Have the client made aware that the findings of the audit team are tentative pending review and decision making by the duly designated Yes representatives of the certification body?

Audit Report

3.4 Recommendation

The audit indicated that PT. SMART Tbk. – Tanah Laut Mill and it’s supply base has complied with Generic RSPO Principle and Criteria 2013 and RSPO Supply Chain Certification Standard Module E – Mass Balance. Therefore the recommendation from this audit is PT. SMART Tbk – Tanah Laut Mill continue as a producer of RSPO Certified Sustainable Palm Oil and Palm Kernel – Mass Balance Model.

Audit recommendations are always subject to ratification by RSPO.

This report was prepared by: Ria Gloria, Eko Purwanto, Daniel Sitompul, Edy Widodo and Mujinius Jalaraya.

3.5 Environmental and social risk for this scope of certification for planning of the surveillance audit

 Environmental risk: compliance with regulations, hazardous waste management, RKL RPL reporting  Social risk: compliance with regulations, land dispute with one of community member regarding closing of Estate access  OHS: prevention of hazard and risk

3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of Assessment Findings

Please sign below to acknowledge receipt of the assessment visit described in this report and confirm the acceptance of the assessment report contents including assessment findings.

Signed for and on behalf of PT. SMART Tbk – Tanah Laut Mill

Ismu Zulfikar Head of Environmental and Sustainability Date 25 January 2016

Signed for and on behalf of PT. SAI Global Indonesia

Inge Triwulandari Technical Manager Date 25 January 2016

Audit Report

Appendice A – Audit Plan

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

09/08/2015 Day 1

Ria, Daniel, Edy, Muji, Travelling to Tanah Laut Pm Eko

10/08/2015 Day 2

Ria, Daniel, Edy, Muji, Opening meeting 08.00 Eko

Tanah Laut Estate Document review and site visit: Criteria: 2.1 all indicators for environmental aspects Criteria: 2.2.1 and 2.2.2 Ria 09.00-17.00 Criterion: 4.4.1 Criteria: 4.6.6, 4.6.10 Criteria: 5.1, 5.2, 5.3, 5.4, 5.6 all indicators Criterion: 8.1 Document review and site visit: Criteria: 1.1; 1.2; 1.3 all indicators Criteria: 2.1.1 for social aspect Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator Edy Criteria: 4.6.12 09.00-17.00 Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13 Criterion: 8.1

Interview with employees, labour union and committee gender Interview with Kepala Desa, Tokoh Edy 14.00 – 15.30 Masyarakat Document review and site visit: Criteria: 4.1.1, 4.1.2, 4.1.3 Criteria: 4.2. 4.3, 4.5 all indicators Criterion: 4.4.2 Criteria: 4.6.1, 4.6.2, 4.6.3, 4.6.4, 4.6.5, 4.6.7, Muji 09.00-17.00 4.6.8, 4.6.9 Criterion: 5.2 all indicators Criteria: 6.10 Criterion: 7.3 if applicable Criterion: 8.1 Document review and site visit: Criteria: 2.1 all indicators for OHS aspects Daniel Criterion: 4.6.11 09.00-17.00 Criteria: 4.7 all indicators Criterion: 4.8 all indicators

Audit Report

Criterion: 5.5 all indicators Criterion: 8.1 Tanah Laut Mill

Eko Supply chain 09.00-17.00

Ria, Daniel, Edy, Muji, Break 12.30 – 14.00 Eko

Eko Travelling to Banjarmasin

11/08/2015 Day 3

Kintapura Estate Document review and site visit: Criteria: 2.1 all indicators for environmental aspects Criteria: 2.2.1 and 2.2.2 Ria 08.00 – 17.00 Criterion: 4.4.1 Criteria: 4.6.6, 4.6.10 Criteria: 5.1, 5.2, 5.3, 5.4, 5.6 all indicators Criterion: 8.1 Document review and site visit: Criteria: 1.1; 1.2; 1.3 all indicators Criteria: 2.1.1 for social aspect Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator Edy Criteria: 4.6.12 08.00 – 17.00 Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13 Criterion: 8.1

Interview with employees, labour union and committee gender Interview with Kepala Desa, Tokoh Edy 14.00 – 15.30 Masyarakat Document review and site visit: Criteria: 4.1.1, 4.1.2, 4.1.3 Criteria: 4.2. 4.3, 4.5 all indicators Criterion: 4.4.2 Criteria: 4.6.1, 4.6.2, 4.6.3, 4.6.4, 4.6.5, 4.6.7, Muji 08.00 – 17.00 4.6.8, 4.6.9 Criterion: 5.2 all indicators Criteria: 6.10 Criterion: 7.3 if applicable Criterion: 8.1 Document review and site visit: Criteria: 2.1 all indicators for OHS aspects Criterion: 4.6.11 Daniel Criteria: 4.7 all indicators 08.00 – 17.00 Criterion: 4.8 all indicators Criterion: 5.5 all indicators Criterion: 8.1 12/08/2015 Day 4

Audit Report

Tanah Laut Mill Site visit and document review: Criterion: 2.2.1 Ria Criteria: 4.4.1, 4.4.3, 4.4.4 08.00 – 12.30 Criteria: 5.1, 5.3, 5.4, 5.6 all indicators Criterion: 8.1 Ria Criterion: 3.1 14.00 Time bound plan and partial certification Ria 15.00 requirements Document review and site visit: Criteria: 1.1; 1.2; 1.3 all indicators Criteria: 2.1.1 for social aspect Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator Edy Criteria: 6.1, 6.2, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 08.00 – 11.00 6.12, 6.13 Criterion: 8.1

Interview with employees, labour union and committee gender Edy Interview with FFB supplier 11.00 Clarification regarding issues found during Edy 14.00 public consultation Criteria: 4.1.1, 4.1.2, 4.1.3, 4.1.4 Muji Criterion: 4.8 all indicators 08.00 – 15.00 Criterion: 6.10 all indicators Site visit and document review: Daniel Criterion: 4.7 all indicators 08.00 – 15.00 Criterion: 8.1 Ria, Daniel, Break 12.30 – 14.00 Edy, Muji

Ria, Daniel, Discussion 15.00 Edy, Muji

Ria, Daniel, Closing meeting 16.00 Edy, Muji

Audit Report

Appendice B – Previous Nonconformities and Opportunity for Improvement Summary

RSPO Principle and Criteria, Indonesian National Interpretation

Nonconformities

No RSPO Criterion Details Corrective Action Completion Date PIC Status Initial Certification 1 1.1 indicator major 1 KNTE RSPO awareness to all subcontractors was given at 18 January 2012 SPO Officer Closed RSPO awareness was not given yet region office on 1 November 2011. Moreover, KNTE, UH to a subcontractor (CV. Ermas organization was especially conducted RSPO KNTE Mulyo ). awareness to CV. Emas Mulia pada tanggal 7 November 2012. Evidences of socialization implementation was sighted and well documented, such as: list of attachment, minutes of meeting and photo.

2 2.1 indicator major 1 TLTE Organization has been identified that these employee 31 January 2012 KTU TLTE, Closed Status of one of the workers since is a kindergarten teachers. She has been appointed as UH KNTE 2005 was contract workers a a permanent worker on Mei 2012 (Decision letter # certain time (PKWT) but until now 004/ADH3-INT/BNJO/05/2012). Worker status his status has not been updated chronologies among others: becomes permanent employees 1. On the 2005, as a worker contract for certain (SKU). Employment agreement and period, Number of contract # related documents from 2005 to TLTE/LKL/II/2005/2006-Kindergarten teachers. 2009 have not yet been shown that Contract period up to 31 October 2016. the chronological status of workers 2. On the 2006, as a worker contract for certain cannot be traced. period, Number of contract # TLTE/LKL/II/2006/2007-Kindergarten teachers. Contract period up to 30 April 2007. 3. On the 2007, as a worker contract for certain period, Number of contract # TLTE/LKL/06/2007/2008-Kindergarten teachers. Contract period up to 31 May 2008. 4. On the 2008, as a worker contract for certain

No RSPO Criterion Details Corrective Action Completion Date PIC Status period, Number of contract # TLTE/LKL/010/2008/2009-Kindergarten teachers. Contract period up to 31 July 2009. 5. On the 2009, as a worker contract for certain period, Number of contract # TLTE/LKL/01/2009/2010-Kindergarten teachers. Contract period up to 31 December 2010. 6. On the 20010, as a worker contract for certain period, Number of contract # TLTE/LKL/01/2009/2010-Kindergarten teachers. Contract period up to 30 June 2011.

3 2.1 indicator major 1 TLTM Compliance with Kep. Bapedal 5/1995 and PP 15 March 2012 Environment Closed Several inconsistencies were found 41/1999 was re-evaluated Officer TLTM, in the evidence of compliance with UH TLTM relevant legal requirements, e.g. no evidence of compliance with Kep. Bapedal 5/1995, evidence of compliance with PP 41/1999 with regards to threshold limit of vehicle noise was not relevant.

4 2.1 indicator major 1 KNTE Label and hazard symbol has been completed in each 31 January 2012 Environment Closed Several activities have not been diesel fuel containers. Label and hazard symbol is Officer KNTE, inline with regulation, e.g. Container monitored monthly using checklist. UH KNTE of diesel fuel in diesel generator set room in housing #1 has not been completed with label and hazard symbol.

5 2.1 indicator major 1 There was no evidence of efforts Communication to government agency is continually 18 April 2012 D&L Closed made to comply with changes in the performed, the letter from the Head of Planning and regulations (SK. 435/Menhut- Development Agency of South Kalimantan dated 10 II/2009). April 2012 explained that Governor of South No evidence was found that the Kalimantan has sent letter to the Central Government organization is in compliance with of Indonesia regarding the policy and guidelines of

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status relevant requirements/regulation of status “enclave/holding zone/pending zone” that Forestry Minister Decree SK. affected to the status of some forest area in South 435/Menhut-II/2009. During audit it Kalimantan Province. This situation leads to uncertainty was also found that some plantation for South Kalimantan Government to put the status of areas (as recorded in GPS this forest area into local regulation. On these matters equipment of auditors) are in forest South Kalimantan Government is still waiting for area with status of “Production decision from Central Government. Through Forest” as per SK. 435/Menhut- Association of Indonesian oil palm growers (GAPKI) II/2009, but this has not been branch of South Kalimantan has sent letter dated 1 identified by the organization and May 2013 to Head of South Kalimantan Parliament and no corrective action was defined. the Head of Special Committee “RAPERDA RTRWP” South Kalimantan regarding inputs to “RAPERDA RTRWP”.

6 4.1 indicator minor 2 TLTM  Laboratory balance and oven (Memmert) has  5 February  Assistant of Closed  Calibration of laboratory been calibrated internally with calibrated master 2012 Laboratory, balance was not done using equipment  24 January UH TLTM calibrated weight scale. Oven  Training regarding consistency of filling the form to 2012  Assistant of (Memmert) used for moisture employee was conducted 15 April 2012  25 January process, analysis has not been  Updating of quality data of CPO has been 2012 UH TLTM calibrated. conducted during each delivery since 25 January  Assistant of  Backwash of sand filter was 2012 Laboratory, done every running 8 hours (or KTU TLTM, when differential temperature UH TLTM between in and out of sand filter is 0.5 bar); however it was no recorded on dedicated form.  It was found that quality results (FFA, moisture and dirt) of delivery CPO on 11 and 12 January 2012 use quality analysis from 10 January 2012 whist actually the analysis result 11 and 12 January 2012 has already available on that

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status day.

7 4.2 indicator minor 2 TLTE The record of EFB volume applied at TLTE was sight in 31 January 2012 Environment Closed Record of quantity of EFB “Laporan Kegiatan Land Aplikasi Janjang Kosong Officer TLTE, application was not similar in Mill (JJK)”, volume applied was in accordance between UH TLTE and TLTE. TLTM and TLTE.

8 4.3 indicator minor 3 KNTE Road maintenance of KNTE has been realized, record 25 January 2012 All Division Closed Road maintenance has been of realisation was observed. The record covering Assistant realized. However record of location (Block, Main Road, Collection Road, Access KNTE, UH realization could not be traced to Road, etc), length of the road, volume of gravel and KNTE blocks maintained and date of date of maintenance. maintenance.

9 4.4 indicator major 1 KNTE It was verified through BKM that weeding activities in 24 January 2012 Environment Closed There was no evidence that riparian buffer zone, e.g. block I12 and J10 was Officer KNTE, pesticides were not applied in performed manually, then no pesticides applied in that UH KNTE riparian buffer zone, e.g. block I12 area. and J10.

10 4.5 indicator minor 2 KNTE Record of monitoring of pesticides toxicity units has 18 January 2012 Environment Closed Record of monitoring of pesticides been provided for methyl metsulfuron, triklopir Officer KNTE, toxicity units was not provided for butioksietil ester and floroksipir. UH KNTE several active ingredients, e.g. methyl metsulfuron, triklopir butioksietil ester and floroksipir.

11 4.6 indicator minor 2 TLTE & KNTE Medical check up for employees exposed to chemical 18 January 2012 Doctor of Closed In general, medical check up has hazards (e.g. sprayer, chemical mixer and ware house South been performed. However, several operator, fertilizer warehouse and also evaluation of Kalimantan key parameters were not performed musculoskeletal disorders (MSDs) have been Region 1, during medical check up e.g. performed on first May 2013. Safety Officer rontgen and spyrometry test for employees exposed to chemical All Estate hazards (e.g. sprayer, chemical mixer and warehouse operator,

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status fertilizer warehouse operator) and evaluation of musculoskeletal disorders (MSDs) to the employees with ergonomic exposed to ergonomic hazard (e.g. fertilizer warehouse operator). Noted: a programme to cover these parameters has been established and the results will be verified during next SAI Global audit.

12 4.7 indicator major 1 TLTE & KNTE  Follow up action have been taken to socialize PPE  31 January  Safety Closed  As required by the SOP-PPE Management, and updated activity on risk 2012 Officer management, safety glass was assessment analysis.  18 January TLTE & required for harvester and  New emergency shower and eye washer have 2012 KNTE short safety boot was required been made, near the location  Safety for harvesting helper; however Officer it was observed during the TLTE & audit that harvester did not KNTE wear safety glass and the harvesting helper was wearing sneakers instead of half safety boot. Furthermore at the fertilizer warehouse, operator was wearing dust must instead of chemical mask.  The location of emergency shower/eyewash for storage of KNTE and TLTE was too far.

13 4.7 indicator major 1 KNTE  Railing at second floor to prevent fall have been  18 January  Safety Closed  2nd floor of storage was not made. 2012 Officer provided with railing to prevent  Measurement for resistance of grouding cable has  18 January KNTE, UH fall hazard and risk (KNTE). been taken. 2012 KNTE  From permit of general set,  Coliform content measurement has been  18 January there was a requirement to performed on 10 April 2012 by University of 2012

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status measure the resistance of Mulawarman with Zero result of coliform.  31 January grounding cable. This has not  The analysis of medical result have been 2012 been performed (KNTE). established especially for the employee that  Result of checking for fresh having suspected health problems. water issued by UNMUL Laboratory was out of requirement in regard coliform content, KNTE.  The structure of follow up to the results of medical check up has not been established, e.g. statistical analysis, health promotion, preventive action and curative action to the employees having suspected health problem, e.g. some urine test indicated over calcium oxalate, KNTE.

14 4.7 indicator major 1 TLTM The measurement of chemical factors has been  15 March 2012  Environme Closed The measurement of chemical performed on 2 November 2013 by PPLH University of nt staff of factors at TLTM has been Mulawarman TLTM, performed however the location of Environme measurement was outside of the nt Officer & factory, not at workplace. While for Uh All Unit all estates, the measurement of Mill & chemical factors at workplace has Estate not been performed, e.g. fertilizer warehouse, chemical warehouse.

15 4.7 indicator minor 1 TLTE 9 evidences related of their social benefit/insurance  18 January  KTU TLTE, Closed 19 samples of employees were was found 2012 UH TLTE sampled for evidence of their social benefit/insurance. 9 evidences were found and the rest could not found,

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status TLTE.

16 4.8 indicator major 2 Even though the evidences of The evidence of updating personal file related training  18 January  Safety Closed training of employees were record could be demonstrated. 2011 Officer All evidence but the up dating of Unit Mill & personal training records still Estate inconsistent, e.g. many trainings have been performed in 2011 but the personal training records have not been updated.

17 5.2 indicator major 2 All Estates Organization has been setting signboards of prohibition 28 February 2012  Environme Closed  HCV management plan has illegal logging on the river border of Salaman (KNTE). nt Dept. been established however the And also it was conducted routine patrol to protect HCV JKTO plan has not address the area from destruction activities. Record of routine patrol Section issues (threats) present and was sighted and was indicate the HCV area is in well HCV, SPO not considered sufficient to condition. There is no found illegal logging in protected Officer conserve the HCV within the area PSM 3 concession area.  Besides the erection of sign To minimize conflict between humans with wildlife, boards and the production of organization has been also setting posters, no evidence was protection/information signboard regarding appeal the found of commitment existence of trajectory of bear. Photo documentation of to discourage any illegal or signboard was sighted. Organization was conducted inappropriate hunting, fishing routine patrol to minimize conflict at throughout or logging activities, or to trajectory of bear. Record of routine patrol was sighted develop responsible and was indicated there are no conflict with bear. Filed measures to resolve human implementation would be audited for next surveillance wildlife conflicts. Illegal audit. logging activities still continue in an HCV area (along the Salaman River, KNTE) and potential conflicts in relation to the presence of Sunbear (TLTE) is not being fully anticipated. Solid HCV

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status Management Plan has not been prepared.

18 5.3 indicator major 2 KNTE  “List of environmental aspect identification and  31 January  Environme Closed Several inconsistencies were found evaluation” has been revised 2012 nt Officer during hazardous and non-  TL lamp was sent to TLTM on 18 January 2012,  27 January KNTE, UH hazardous waste management: 28 February 2012, 17 March 2012 and 11 April 2012 KNTE  Result of wastes and 2013. Used battery was sent to TLTM on 18  18 January pollutions sources January 12 2012 identification recorded in “List  Log book has been updated  18 January of environmental aspect  Improvement and modification to oil trap in pump 2012 identification and evaluation” room has been conducted therefore there was no  18 January mentioned that waste of contaminated water from oil trap to drainage 2012 pesticide containers was  Medical waste is sent to BAMM regularly 3 cleaned and land-filled. monthly. Destroying of pesticide  Proper hazard symbol has been provided containers was not mentioned  Control pit at emergency shower area has been in the list although in practice completed with cover pesticide containers were  Scattered inorganic waste has been cleaned and destroyed prior to be land- disposed to final inorganic disposal area. filled.  Several hazardous waste handling was not inline with permit of temporary storage of hazardous waste, e.g. used battery has not been sent to TLTM since 6 September 2010, used lamp has not been sent since 15 July 2011.  Several inconsistencies were found in record of waste monitoring, e.g. logbook of contaminated rags have not been updated since 13 July 2011, sending of used filter

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status on 30 December 2011 was not recorded in the logbook.  Contaminated water from pump room was collect in oil trap however oil trap was not effective operated therefore the water was still contaminated with oil.  Medical wastes were kept more than 90 days. Last sending of medical waste to central clinic in BAMM was conducted on 19 July 2011.  Hazard symbol provided in area to clean fertilizer sack and pesticide containers was not proper. Hazard symbol provided was for hazardous material.  Contaminated water from emergency shower and eyes wash has been collected to pit however pit was filled with water and overflowed to open drainage.  Non organic wastes were scattered nearby pump room and final non organic waste land-fill.

19 5.3 indicator major 2 TLTM Gutter was cleaned on 17 January 2012. Program of  18 January  Environme Closed Gutter to sedimentation pond was cleaning has been established. 2012 nt Officer blocked as the direction to the pond TLTM, UH was sloped upward. It was seen TLTM that the water was almost overflowed.

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status

20 5.3 indicator minor 1 TLTE  SOP to handle expired chemical and  18 January  SPO Closed  Method to manage expired agrochemical has been provided in 2012 Officer chemical and pesticide has not SOP/SPO/SMART/LH-08  31 January Kalsel 1, been determined in the  Label and hazard symbol has been provided and 2012 Environme documented system. monitored regularly nt Officer  Plastic containers contained TLTE, UH contaminated water from TLTE fertilizer sack cleaning and  Environme pesticide container cleaning nt Officer were located in the similar TLTE, UH area without clear identification TLTE in Division 4 Office.

21 5.5 indicator major 3  Not all scenarios of land fire  Fire simulation will be conducted in farthest area  28 January  Safety Closed emergency preparedness and in block C3 division 3 on 28 January 2012. 2012 Officer response plans have been Regular simulation program is established TLTE, UH exercised e.g. the capability to TLTE localize the fire at land and the capability of mobile water tank to reach the longest distance from station of mobile water tank.

22 5.6 indicator major 2 TLTM  Measurement program of vehicle emission is  31 January  Staff LH Closed  Vehicle emission was established by environmental staff. Inform the 2012 BAME, measured in March and program to all unit head. Assign PIC to ensure that  15 February Environme September 2011. Emission of all vehicle is tested its emission 2012 nt Officer & dump truck DA 9698 PA was  Communicate with independent laboratory to UH TLTM only measured in March 2011. measure methane gas and develop regular  SPO It was not measured in program Officer September 2011 due during PSM 3, measurement the vehicle was  UH TLTM, being used. Coordination Staff LH between Environment  TLTM Department and Estate was

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status needed to arrange arrival of external laboratory.  Documented improvement program for reduction of green house gases has not been provided.

23 6.1 indicator minor 1 TLTE Effectiveness of social impact management program  15 February  UH TLTM Closed There is no periodic evaluation has been evaluated 2012 report to measure effectiveness of social impact management program, especially for 2011 period.

24 6.10 indicator minor 2 TLTM The established procedure (SOP/TLTM/SC) clearly  15 March 2012  UH TLTM Closed In the prepared procedure has not defined the system of agreed payment when mill been clearly defined the system of purchase FFB from out growers and local business. agreed payment when mill Payment mechanism is also described in MOU purchase FFB from out growers between TLTM and out growers. and local business.

1st Annual Surveillance Audit 1 4.4 indicator minor 1 Record of efficiency result of water Make a log sheet to monitor water usage at water On going UH Closed consumption for dilution water and dilution and water cooling turbine cooling turbine was not evident.

2 4.6 indicator minor 3 TLTE Checks pregnancy once in 4 months using direct On going Region doctor Closed Worker data on January-Mei 2013, inspection methods to women workers It was observed that overall sprayer is female. Based on Circulation letter-Surat Edaran #001/SE- ADH3/BNJO/01/2010 (Pekerja wanita hamil dan menyusui serta pemeriksaan tenaga kerja), pregnancy tests should be carried out for every 4 months. However, it was not done. Currently,

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status pregnancy analyses based on monthly menstruation leave records was conducted by organization to ensure that there are no pregnancy sprayers. However, it was observed that menstruation leave was only taken by several sprayers. Analyses method was not covered female sprayer which does no taken menstruation leave. So, they was no known whether pregnancy or not.

3 5.3 indicator minor 1 TLTM and TLTE Report hazardous waste quarterly to PPLH Kalimantan August 2013 EHSD staff Closed Result of hazardous waste handling has not been reported to Kepala Pusat Pengelolaan Lingkungan Hidup Regional Kalimantan as required by permit of hazardous waste temporary storage.

TLTM and TLTE Coordinate with the hazardous waste collector about July 2013 EHSD Staff Closed Copy #7 of hazardous waste copy #7of manifest for used batteries that has not been manifest for disposal in January returned 2013 has not been provided.

4 5.4 indicator minor 1 TLTM and TLTE Rewrite of internal or external diesel fuel use (L/Ton July 2013 Environment Closed and 2 Record of monitoring of fossil fuel TBS) during 2011, 2012, 2013 and then analyze trend Officer & use for operational reason did not use UH cover estimation of fuel used by contractor of FFB transporting. Moreover efficiency of renewable and fossil fuel use for operational reason has not been analysed.

11 6.5 indicator minor 2 TLTM add clause at SPK to next job by contractor On going KTU Closed

Audit Report

No RSPO Criterion Details Corrective Action Completion Date PIC Status There are several contrasts with local contractor, however it has not requires contractor compliance with applicable laws and regulations related labor. Example: SPK No.004/TLTM-LKL/04/2013, type of work is a coating on the Boiler Chimney.

Opportunities for improvement

No RSPO Criterion Locations Details RSPO Principles and Criteria 1 Criterion 2.1 TLTM and TLTE It could be considered to review evaluation result of compliance with regulation by not mentioning irrelevant regulation to avoid the writing mistake evaluation result of compliance. TLTE It could suggested to conducting and describe worker appointment mechanism available with related law and regulations since starting work as a BHL/PKWT to be SKU (permanent employee). TLTM Although thickness testing have been performed for two sterilizer and one boiler internally, its highly recommended to re check / another testing from government which is an authorized institution within the test.

Criterion 4.1 TLTE  It could be considered to maintain block at the boundary more frequent, e.g. F26 which the condition of circle, path and trunk is shrubbery, and even found oil palm seed with more than 2 m tall.  It could be considered if all spraying worker and supervisor at TLTE to be retrained about the best technique of spraying circle and path, e.g. at flat area the sprayer must walk around counter clockwise for the tree at the left of the path and walk around clockwise for the tree at the right of the path. TLTM  It could be considered to review pressure standard of screw press mentioned in the documented procedure. It was observed that MCMD mentioned that pressure standard of screw press is 30-50 bar. CB screw press and digester operation manual mentioned that pressure standard of screw press is 50-70 bar. Actual pressure of screw press was 60 bar.  It could be considered to improve performance of boiler water, e.g. by consultation with external laboratory as supplier of boiler chemical, arrange dosage of chemical dosing, etc. Since 31 May 2013, pH of boiler water was > 11.5 (standard) and no action taken.

Audit Report

No RSPO Criterion Locations Details  It could be considered to improve chemical handling, e.g. mentioning date of first chemical use, monitoring expire date of chemical, etc.  It could be considered to improve moisture analysis, e.g. provide analysis result of moisture conducted by both equipment (oven memert and oven microwave), define tolerance standard of analysis result between the equipment. Criterion 4.6 TLTE The organization has measured quality of used water from cleaning of Rolixone and Roll up packaging. It could be considered to measure quality of used water from cleaning of several packaging, e.g. Erkafuron. Criterion 4.7 TLTM and TLTE It is recommended the documentation of first aid kit, not only first aid box but other first aid equipment, such as stretchers, splints, oxygen tubes and ambulance. Criterion 5.1 TLTE and KNTE It could be considered to merge result of erosion rate of Estates within implementation report of RKL RPL. It could be considered to review applied environmental regulation mentioned in the “List and Evaluation of Environmental Aspect” Criterion 5.2 TLTE and KNTE  Consistency of HCV management implementation could be increased. At the field observation, it was found several condition, such as :  There were 1 from total sampling ( 6 units) of boundary page condition of Kintap River buffer zone were less well maintained.  Marking program of buffer zone boundary of Kintap River with red paint has completed, During audit, it was observed there were ± 150 m of mark are less obvious.  Time plan of planting program in prone erosion areas to river bank and planting program of native species was postponed. Bamboo is one of species has been planted in prone erosion areas. HCV Officer information, seedlings was not yet available. However, observed the riverbank condition have started overgrown native species.  It highly recommended to:  Clarify program objectives and implementation status of HCV management as part of analyses of HCV management effectiveness, Especial for management of HCV 4.1 (Kintap River). Example: Number total of native species to be planted, identification of river bank erosion and plan of its planted, number and fixing of HCV boundary procedure and buffer zone marking procedure.  Carrying out effectiveness HCV management analyses against overall program which was established. Currently, it was only conducted for covering list species monitoring data. Criterion 5.3 ALL  It could be considered to improve waste management, e.g. making clear handling of used plastic in boiler, measuring quality of water from open drainage to ensure that the water is still inline with the regulation, cleaning gutter around EFB area and monitoring its cleanliness.  It could be considered to improve monitoring of environmental condition, e.g. conducting environmental patrol.

Audit Report

No RSPO Criterion Locations Details  It could be considered to improve housekeeping of EFB and shell area.

Criterion 5.4 ALL It could be considered to analyse efficiency of fossil fuel use by comparing with budget not only year by year.

Criterion 5.6 TLTM Gate to arrange waste water from pond #3 to final pond prior being transferred to LA was leak. It caused waste water from pond #2 to final pond was blocked. Criterion 6.2 ALL It could be to review stakeholders list and information list. Revenue Department of Kota Baru District and report of Constructor committee of Occupational Health and Safety-Panitia Pembina Kesehatan dan Keselamatan Kerja (P2K3) to local Manpower Department was not recorded on list of information. Criterion 6.5 TLTE It highly recommended to establish minimum age standard on child care- Balai Penitipan Anak (BPA), Currently, It was observed, child age on BPA is averages between 5 months to 5 years. Criterion 4.7 Estate and Mill  Consider to include details of accidents and results of OHS inspection in the report of safety committee to local authority  Consider to include the mechanism of safety working permit process in the related procedure RSPO Supply Chain RSPO SC Standard TLTM There has been no trading claim of RSPO certified palm oil (CSPO) or palm kernel from TLTM, it is recommended the Mill to be registered at RSPO e-Trace to make claim of RSPO certified CPO or Kernel

Audit Report

Appendix C – Nonconformities, Corrective Actions and Observations Summary

Generic RSPO Principle and Criteria

Organisation Name: PT. SMART Tbk. – Tanah Laut Mill Location: Kab. Tanah Laut Date: 12 August 2015 Audit team leader: Ria Gloria Activity/Report ID: AS-408477 License/Certificate No.: RSPO20010 Organisation’s acknowledgement of receipt of NCR Employee Name: Date NCR Accepted: 12 August 2015

Section 1 Section 2 Section 3 Section 4 Section 5

Details of non-conforming situation: SAI Verification Organisation’s Response/Action SAI Global SAI Global Verification of SAI Global NCR

(how and when) Taken: Response Corrective Action for Closure: Review: Effectiveness:

Name Date

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2015- RSPO Major Non-conforming situation: Due Date: Root cause : Response TLTM: Ria Gloria 9.9.15 01 Criterion There was no evidence that several 12 November (how / why did it happen) Acceptable Monthly report of surface water Edy 2.1 regulation or permit has been complied. 2015 TLTM (please see usage (period April 2014 – July Widodo indicator section 4 for  Lack of reporting to details) 2015) has been reported to Badan major 1 Pelayanan Perizinan Terpadu government. Requirement: SAI Kab. Tanah Laut RSPO Criterion 2.1 indicator major 1 Follow up  The request has been issued Reviewer: Method: on 4 April 2015, however it Ria Gloria Evident has not been approved till Objective evidence: submitted Edy Widodo now. TLTM  Lack of monitoring for  Monthly report of surface water usage has emergency equipment Date: not been reported to government 9 September institution as required by permit of surface 2015

water abstraction Keputusan Bupati Tanah Laut No 1 Year 2014 regarding surface water abstraction.

Audit Report

Section 1 Section 2 Section 3 Section 4 Section 5

Details of non-conforming situation: SAI Verification Organisation’s Response/Action SAI Global SAI Global Verification of SAI Global NCR

(how and when) Taken: Response Corrective Action for Closure: Review: Effectiveness:

Name Date

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

 There was no evidence for testing result Correction : Company has conducted the for lifting equipment Wheel Loader (immediate fix) testing (wheel loader and grader) (45/DTKT/PK/2007) in TLTM and grader TLTM with government institution (Dinsosnakertrans) on: (175/DTKTS/HIPK/2010) in KNTE. The  Report surface water usage to 28 August 2015 for KNTE, target testing date for the equipment was Badan Pelayanan Perizinan on 28 May 2015 as stated in the “List Terpadu Kab. Tanah Laut. 29 August 2015 for TLTE Permit” 2015 of TLTM and KNTE and  Asking PJK3 to conduct the 30 August 2015 for TLTM related regulations. testing immediately  There was no evidence for inspection for  To replace connector and Company has replaced hydrant emergency response equipment as nozzle at hydrant and eye connector and nozzle and also has required by relevant regulation, such as washer equipment conducted simulation with hydrant hydrant and eye washer at Tanah Laut and eye washer Mill. The last inspection was on September 2014. Corrective Action : (action to prevent recurrence)

TLTM  Report surface water usage to Badan Pelayanan Perizinan Terpadu Kab. Tanah Laut monthly.  To monitor machineries permit and issue the request before the due time  Conducting emergency simulation using hydrant and to monitor emergency equipment

Audit Report

Section 1 Section 2 Section 3 Section 4 Section 5

Details of non-conforming situation: SAI Verification Organisation’s Response/Action SAI Global SAI Global Verification of SAI Global NCR

(how and when) Taken: Response Corrective Action for Closure: Review: Effectiveness:

Name Date

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

 Can not be proven that the employee Root cause : KNTE status PKWT and BHB was registered (how / why did it happen) BHL and BHB employees have as a participant BPJS-Kesehatan. BHL employees have not been done registration to BPJS health KNTE employee list is: registered collectively to BPJS- based on the letter of KTU KNTE Kesehatan and to BPJS Head of Health on 11 SKUB: 27 Ketenagakerjaan, because not August 2015, no. 0812 / KNTE- collect files as participant BPJS KES / VIII / 15 about the SKUH: 281 registration completeness. registration of membership BPJS BHL: 98 Kesehatan BHL and BHB Correction : Employees. BHB: 66 (immediate fix) A total staff of about 472 people Asked employees for Based on surat pendaftaran completeness and register Based on the dues payments BPJS in karyawan BHL dan BHB as much employees BHL to BPJS Health the period July 2015, employees 300 172 employees (include 164 and Employment. people KNTE (SKU), while employees employess of BHB + BHL and 8 with the status BHL and BHB many as employees SKUwas not registerd). 164 people and 8 SKU is not yet Corrective Action : registered as a participant BPJS- (action to prevent recurrence) NCR 2015-01 closed Kesehatan. Will always be updated data Related regulations are: employee inclufing BHL and BHB, if there is the addition of  Peraturan Presiden No. 12 Tahun new employees who will soon 2013 dan Perpres no.111 Tahun complete the files to be 2013 registered to BPJS Health  Peraturan BPJS no. 1 tahun 2014

Audit Report

Section 1 Section 2 Section 3 Section 4 Section 5

Details of non-conforming situation: SAI Verification Organisation’s Response/Action SAI Global SAI Global Verification of SAI Global NCR

(how and when) Taken: Response Corrective Action for Closure: Review: Effectiveness:

Name Date

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2015- RSPO Minor Non-conforming situation: Due Date: Root cause : Response Legal boundaries have been Ria Gloria 12.08. 02 Criterion There was no evident that several legal Next (how / why did it happen) Acceptable cleaned from weeds, repaired, 2015 2.2 boundaries observed were maintained. surveillance Legal boundaries were broken (please see repainted and reidentified. section 4 for indicator audit and not maintained. minor 2 details)

Requirement: NCR 2015 – 02 closed Correction : RSPO Criterion 2.2 indicator minor 2 SAI Reviewer: Follow up (immediate fix) Ria Gloria Method: Repaint and reidentify for #07

Objective evidence: on site Clean from weeds for #14 Date: There was no evident that several legal Repair and repaint for #43 boundaries observed were maintained, e.g. 12 August 2014 #07, #16 and #43 in KNTE. Corrective Action : (action to prevent recurrence) Monitor maintenance activity of legal boundary as per schedule.

Audit Report

Section 1 Section 2 Section 3 Section 4 Section 5

Details of non-conforming situation: SAI Verification Organisation’s Response/Action SAI Global SAI Global Verification of SAI Global NCR

(how and when) Taken: Response Corrective Action for Closure: Review: Effectiveness:

Name Date

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2015- RSPO Major Non-conforming situation: Due Date: Root cause : Response Logbook of pesticide containers Ria Gloria 12.08. 03 Criterion Several inconsistencies were found in 12 November (how / why did it happen) Acceptable has been updated for pesticides 2015 4.6 pesticide containers handling. 2015  Logbood was not updated (please see erkafuron, garlon, rolixone, roll up indicator sectioln 4 for and starane. until audit conduct details) major 6 Requirement: SAI  Pesticide containers were stored in division warehouse. NCR 2015-03 closed RSPO Criterion 4.6 indicator major 6 Follow up Reviewer: Method: Evident Ria Gloria Objective evidence: submitted Correction : (immediate fix) KNTE Date:  Complete logbook with  Inventory of pesticide containers waste updated time, type and 12 August 2014 has not been updated. quantity of pesticed  Pesticide containers were not stored in containers the permitted temporary storage of  Move waste of pesticide hazardous waste containers to temporary storage of hazardous waste.

Corrective Action : (action to prevent recurrence)  Record pesticide containers received  Store pesticide containers in the determined location.

Audit Report

Section 1 Section 2 Section 3 Section 4 Section 5

Details of non-conforming situation: SAI Verification Organisation’s Response/Action SAI Global SAI Global Verification of SAI Global NCR

(how and when) Taken: Response Corrective Action for Closure: Review: Effectiveness:

Name Date

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2015- RSPO Major Non-conforming situation: Due Date: Root cause : Response Company has made the Daniel 12 04 Criterion There was an unsafe act by harvester during 12 November (how / why did it happen) Acceptable socialization to all workers for that Sitompul Augus 4.7 moving harvester equipment (egrek) from 2015 Egrek cover was left in Blok E27 (please see matter and re-explained the t 2015 section 4 for indicator block E27 to E29 at Tanah Laut Estate importance of egrek cover to details) prevent incident. major 1 SAI Correction : Requirement: Follow up (immediate fix) Reviewer: NCR 2015-04 closed RSPO Criterion 4.7 indicator major 1 Method: Conducted briefing and letter to Daniel Sitompul Evident prevent the recurrence submitted

Objective evidence: Date: 12 August Tanah Laut Estate Corrective Action : 2015 (action to prevent recurrence) There was an unsafe act by harvester during moving from block E27 to E29 Tanah Laut Conducting socialization to the Estate. The worker was carrying the harvester regarding to related equipment egrek without its cover. risk assessment and work instruction

Audit Report

Section 1 Section 2 Section 3 Section 4 Section 5

Details of non-conforming situation: SAI Verification Organisation’s Response/Action SAI Global SAI Global Verification of SAI Global NCR

(how and when) Taken: Response Corrective Action for Closure: Review: Effectiveness:

Name Date

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2015- RSPO Major Non-conforming situation: Due Date: Root cause : Response Drum of hexane was sent to Ria Gloria 9.9.15 05 Criterion Several chemical containers waste have not 12 November (how / why did it happen) Acceptable temporary storage of hazardous 5.3 been managed as required by procedure. 2015  Lack of chemical container (please see waste. PAC sack was reused. section 4 for indicator waste handling. details) Logbook of chemical containers major 2  Recording of container was waste has been provided in Requirement: SAI focused to pesticide “Pencatatan Limbah Kemasan RSPO Criterion 5.3 indicator major 2 Follow up container Reviewer: Bahan Kimia” for Hexane drum, Method: IK/SMART/LEMS-EHSD/SADV/002/001 Ria Gloria Nalco container, PAC sack, soda Evident ash sack. submitted Correction : (immediate fix) According to logbook, PAC, sack Objective evidence: Date: has not been sent since February TLTM  Send hexane drum to 9 September – August 2015, CaCO3 sack since temproray storage 2015 June – July 2015.  Several activities have not been hazardous waste. Reuse implemented as required by procedure: soda ash sack o Chemical containers waste was not  Made logbook for chemical NCR 2015-05 closed reused for similar activity, e.g. hexane container waste drum, soda ash sack, etc. o No logbook of chemical containers Corrective Action : waste. (action to prevent recurrence) Implement procedure consistently

Audit Report

Section 1 Section 2 Section 3 Section 4 Section 5

Details of non-conforming situation: SAI Verification Organisation’s Response/Action SAI Global SAI Global Verification of SAI Global NCR

(how and when) Taken: Response Corrective Action for Closure: Review: Effectiveness:

Name Date

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2015- RSPO Major Non-conforming situation: Due Date: Root cause : Response List of vehicle and heavy Ria Gloria 12.08. 06 Criterion Several emission sources have not been 12 November (how / why did it happen) Acceptable equipment which require emission 2015 5.6 measured. 2015  No list of vehicle and heavy (please see test has been made. section 4 for indicator equipment which require All vehicle and heavy equipment major 1 details) emission test. has been planned to be measured Requirement: SAI in 2nd semester 2015. RSPO Criterion 5.6 indicator major 1 Follow up Reviewer: Method: Correction : Ria Gloria Evident (immediate fix) NCR 2015-06 closed Objective evidence: submitted  Plan measurement to all TLTE and KNTE Date: vehicles and heavy equipemtn  Emission of several vehicle and heavy in 2nd semester 2015 12 August 2014 equipment have not been measured, e.g.

excavator, trimotor cycle, patrol vehicle, etc. Corrective Action : (action to prevent recurrence)  Make a list of vehicle and heavy equipment which require emission test.

Audit Report

Section 1 Section 2 Section 3 Section 4 Section 5

Details of non-conforming situation: SAI Verification Organisation’s Response/Action SAI Global SAI Global Verification of SAI Global NCR

(how and when) Taken: Response Corrective Action for Closure: Review: Effectiveness:

Name Date

NCR Nr. NCR

clause(s)

Classification Standard(s) & & Standard(s)

2015- RSPO minor Non-conforming situation: Due Date: Root cause : Response 07 Criterion Theres was no evident that test of clean Next (how / why did it happen) Acceptable 6.5 water have been done on pondok 2 KNTE surveillance Lack of point of water (please see indicator monitoring section 4 for audit details) minor 3 Requirement: Correction : SAI RSPO Criterion 6.5 indicator minor 3 (immediate fix) Reviewer: Follow up Method: Measure clean water from Edy Widodo Objective evidence: on site pondok 2 KNTE Provision of clean water for employees Date: through two sources of water, pondok 1 Corrective Action : 12 August 2014 using wells and pondok 2 comes from the (action to prevent recurrence) great times / river Kintap. The new Measure clean water periodically laboratory analysis conducted on water sources in cottage 1 KNTE (pondok community wells 1 and house staff cottage 1) by PT Mutu Agung Lestari dated checks 2 -30/10/2015, while laporatorium analysis for clean water in the pondok 2 KNTE not been made (Kintap river water source).

Audit Report

Appendix D – Stakeholder’s issues and comment

Date Stakeholder Observation Feedback / Comment . PT SMART Tbk. has implemented a national minimum wage standard in 2015, based in South Kalimantan Governor Regulations in 2014 No. 188.44/0632/KUM/2014; regarding the determination of Sectoral Minimum Wage South Kalimantan Province 2014 and management decision letter issued by the CEO3-PSM 3, that is: - Decree no. 106/24/CEO3/ HR.PSM3/03/15; About wages SKUB, - Decree no. 105/23/CEO3/ HR.PSM3/03/15; about wages SKUH, - Decree no. 104/22/CEO3/ HR.PSM3/03/15; about wages BHL / PKWT . While the wage premium for “premi panen” on Circular Letter of VPA-PSM 3 on 28 April 11/08/ Union Leader 2015, no. 003 / SE-ADH3 / BNJO / 04/15, 2015 SPSI-SPM concerning “Premi Panen TBS” and Picking Estate and Mill Berondol, and also for “Premi non Panen”. . The meeting SPSI committee held at least once a year to review the issue of worker / employee, who subsequently met with management will be held if there are problems associated with employees (meetings with the management carried out), a meeting to discuss the PKB (Perjanjian Kerja Bersama) is always carried out every 2 years . Tanah Laut Estate has facilities such as a meeting room for (office Estate), while for the SPSI-SPM internal meeting held in a separate room (the organization's workspace SPSI-SPM) which is also a facility provided by the company.

- Organisation provided training for Occupational Health and Safety, personnel protective equipment were provided by Workers organisation. 11/08/2 (fertilizing, - Clean water was supplied from mill and 015 spraying, mill several workers using wells water. processing, - Calculation of wage was determined by workshop) management in accordance with national regulation. - No discrimination.

Date Stakeholder Observation Feedback / Comment - Other than salary, employees get a ration of rice. The proportion of rice among others: 15 kg/month for workers, 11 kg/month for worker's wife and 7 kg/month for child of workers. - There was several worker housing condition has been damaged including: roof leak and damage floor, however renovation was observed during field observation, renovation program was also available and the progress is monitored by Division assistant. - Over all medical expense is covered by the company. - There was no sexual harassment cause - Pregnant test for women sprayer was conducted for ensuring that there was no pregnant worker. - There were no sprayers that they are breastfeeding. - The Company has given personal protective equipment to do the job, such as: helmets, gloves, masks and safety shoes.

- Villagers around ethnically, Batak, Javanese, Sundanese and Banjar.

- Routinely companies provide assistance through CSR programs in the form of borrowing heavy equipment (excavators, Society/commu graders and compactors), scholarships,

nity leaders and assistance to the poor, religious facilities, village heads: etc. - Access roads surrounding villages are Kintap Kecil always maintained by the company. Village, Bukit - Bukit Mulya Village: There are blocking the 11/08/2 Mulya Village, access road to the mill (Tanah Laut Mill) or 015 Salaman precisely: of the causeway (Banjarmasin - Village, Pasir Batulicin) to the Tanah Laut Estate / Mill, Putih Village, with details as follows: o Based on interviews with Tanah Bukit Mulya o Dated 25 May 2015: blocking the road by Laut Estate Manager, that: Village and Br. "Spn", then the way is opened to an Sungai Cuka agreement: a meeting on Kintap Sub- On 24 June 2015 Management had Village. district Office (the direction of Muspika). made a report to Police o 27 May 2015: The first mediation (Bareskrim). meeting between Mr. " Spn " with PT The Police (Bareskrim) has been SMART in the Sub-district office Kintap. investigating the case and had Conclusion: there is no decision and a checked into the scene (the scene)

Audit Report

Date Stakeholder Observation Feedback / Comment meeting will be held back and time to be by taking the coordinates of the determined. land. Dated 29 June 2015 the o 16 June 2015: Meeting 2nd Sub-district Criminal Investigation responded Office Kintap witnessed by Kapolres by letter no. Kintap, Danramil Kintap and village Bareskrim/117/VI/2015, that the officials. Conclusion: There is no report is in the process continued agreement, because Mr. "Spn" at the Criminal Investigation and demanding compensation of 1 billion will be a meeting between the two rupiahs. Muspika suggested that be sides at a time to be determined taken legal avenues. later. o 24 June 2015: Mr. "Spn" to block the

road again.

- Employees Tanah Laut Estate had a - Base on interview with Tanah meeting in the framework of the Laut Estate Manager: the establishment of the Cooperative on April 5, cooperative has not been made, Head of 2014, the results of the meeting was: because there is no candidate Independent "employees are not willing to set up a for chairman of the cooperative Employee cooperative. that is credible, so that Cooperative employees Tanah Laut Estate 12/08/2 - Kintapura Estate Management has Koperasi agreed not to establish 015 socialized the formation of cooperative Mutiara Sawit cooperative employees. employees on 6 and 19 April 2014, with the Borneo Tanah - While for employees Kintapura result: "employee objected and asked for Laut Mill Estate will hold a meeting with time to meet again all employees to discuss all employees and will be the establishment of cooperative employees. decided based on the opinion / conclusion of the meeting.

- Organisation structure of gender committee has been revised on July 2014. - Gender committee was routinely conducted dissemination to worker regarding sexual harassment handling, protection

reproduction right, occupational health and Gender safety, etc. The latest dissemination was 12/08/2 committee held in September 2014. 015 - There was no sexual harassment occurred.

- No breastfeeding mother conducted work with chemical - Menstruation leave is allowed on condition should take a rest in the clinic. - In the month September 2014 was held socialization of sexual abuse by the Commission of Gender with the participants

Audit Report

Date Stakeholder Observation Feedback / Comment are female employees of Tanah Laut Estate and Mill and Kintapura Estate.

- There were complaints of sexual harassment that occurred in Tanah Laut Mill on 5 July - Manager Land Sea Mill has called 2015 in the name of "NT" by the perpetrators perpetrators on 7 July 2015 and of the truck TBS driver on behalf of "Ryd". given the form of the dismissal of Gender Commission has made a report to the action to the driver “Ryd” and the Mill Management (Mill Manager) on 7 has been replaced by another July 2015. driver. - Will be given the socialization of sexual harassment in the Land of the Sea Mill back specifically to all driver including a driver's TBS and CPO. - All employees have been registered on BPJS BPJS Tanah 07/08/ Laut – Keternagakerjaan 2015 Letter #B/167/082015 - Not registered / recorded Labour Agreement - Agreement / contract of “Perjanjian Kerja Waktu Tertentu” (PKWT) to employment for workers, has the Department of Manpower, Transmigration been included in the PKB (Perjanjian Kerja Bersama) and Social Affairs (Disnakertransos) Tanah period 2014-2016. PKB has been Laut District, especially for Labour “Harian endorsed by Disnakertrans Kota Lepas” (BHL). Baru South of Kalimantan. As for the employees of the BHL / PKWT, Tanah Laut Estate has made a contract of employment, eg: Employment Agreement PKWT / BHL dated 25 February Department of 2015, no. 026 / SK-BHL / II / Manpower, 2015, the validity period of 26 Transmigration February 2015 until 25 February and Social 2016, on behalf of Mr. Majid 06/08/ Mudim and has been registered 2015 Affairs (Disnakertranso with the Disnakertransos. s) Tanah Laut - Doctor as PIC of company clinic is required to - Doctor has Hiperker training. A District, South have SKP (Surat Keputusan Penunjukan) sign of register (Surat Tanda of Kalimantan Register) was evident from Ministry of Workforce - Will be reported - The organisation is required to report implementation of occupational health service to Disnakertransos - Paramedic is required training from Hiperkes - Paramedic has Hiperker training - Paramedic is registered in Disnakertransos - A sign of register (Surat Tanda Register) was evident - The organisation has not provided first aid - First aid officer has been assigned. Training has been officer conducted on 13 March 2014 - The organisation is required to prevent - Training and dissemination HIV/AIDS regarding preventing HIV/AIDS

Audit Report

Date Stakeholder Observation Feedback / Comment has been conducted - The organisation has not established - The organisation has established competence team of fire fighting competence team of fire fighting

- The organisation has AMDAL, RKL RPL - Implementation of RKL RPL report has been reported quarterly and every 6 months - The organisation was applied on - Permit of land application was expired on 17 28 January 2014 through letter March 2014 #020/TLTM-ET/01/2014 and technical verification was conducted on 18 March 2014. Recommendation from technical Environmental verification result was followed up Agency of on 3 April 2014. Corespondency between government and Tanah Laut 05/08/ District organisation was still conducted. Last communication was 2015 Letter conducted on 3 August 2015 #660/437- regarding submission of land Wasdal/BLH/VII application assessment report. I/2015 - - The organisation has permit of temporary storage of hazardous waste. Hazardous waste management has been implemented according to the permit - The organisation has monitored and measurement regarding air pollution - All environmental monitoring and measurement were inline with regulation

Audit Report

Appendix E – Definition of, and action required with respect to audit findings:

RSPO Principle and Criteria:

Major Nonconformities occur when system is failing to meet a relevant compulsory indicator.

Action required: This category of findings requires SAI Global to issue a formal NCR; to receive and approve client’s proposed correction and corrective action plans; and formally verify the effective implementation of planned corrections and corrective action. Correction and corrective action plan must be submitted to SAI Global for approval within 14 days of the audit. Follow-up action by SAI Global must ‘close out’ the NCR or reduce it to a lesser category within 90 days or less where specified. Certificate of conformance to the RSPO Criteria cannot be issued while any major nonconformity is outstanding. Major nonconformities raised during surveillance audit shall be addressed within 60 days, or the certificate will be suspended. Major nonconformities not addressed within a further 60 days will result in the certificate being withdrawn.

Minor Nonconformities occur when system is failing to meet other indicators.

Action required: This category of findings requires SAI Global to issue a formal NCR; to receive and approve client’s proposed correction and corrective action plans; and formally verify the effective implementation of planned corrections and corrective action. In this instance, a certificate may still be awarded providing the root cause of the problem is identified and an acceptable plan is put in place to achieve the outstanding requirements in an agreed time frame. Verification will be made at subsequent surveillance audits. Minor nonconformities will be raised to major if they are not addressed by the following surveillance audit.

Opportunity for Improvement is a documented statement, which may identify areas for improvement, but shall not make specific recommendation(s). Client may develop and implement solutions in order to add value to operations and management systems. SAI Global is not required to follow-up on this category of audit finding.

RSPO Supply Chain Certification System:

Major Nonconformities occur when system is failing to implement and/or maintain requirements of Supply Chain Certification System.

When non-conformances rose after the certification, RSPO shall be informed of these non-conformances within 7 days since non- conformance rose. A maximum of one month is given to the certified client to satisfactorily address the non-conformances. The effectiveness of the action taken for the non-conformances shall be assessed before closing out the non-conformances. Should the non-conformances not be addressed within the one month maximum time frame, a suspension or withdrawal of the certificate and a full re-audit may be necessary.

Where objective evidence indicates that there has been a demonstrable breakdown in the supply chain caused by the certified client’s action or inactions, and that palm oil product that has been or is about to be shipped is falsely identified as RSPO certified product, immediate action needs to be taken by SAI Global, and the RSPO Supply Chain certification shall be suspended until such time that it has been addressed. The RSPO shall be notified within 24 hours of this occurrence and further impacts on relevant supply chain certifications.

Area of concern issued when there is an area of the system for which the client is required to investigate potential non-conformity.

Action required: SAI Global may require client to formulate preventive action plan for approval prior to next planned audit/certification decision or alternatively may follow up client’s preventive action at the next planned audit. Lack of client attention to such issues implies that a preventive action system is not working effectively.