SUSTAINABILITY

Volume 11 - January 2016

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Musim Mas is 100% Training smallholder farmers RSPO-certified (p8-9) (p4) Beyond traceability Musim Mas joins POIG (p5) (p10-11) Landscape Approach and green development (p6-7)

From methane capture to national grid (p2-3) p2

Musim Mas Group Mas Musim Executive Chairman I hopeyou enjoy reading thisissueofourjournal. Policy is100%RSPO-certified", ("Musim Mas p4). all ournewacquisitions too, aspromised inourSustainability We are alsopleasedto announce that we arefor 100%certified ("Musim joinsPOIG", p10-11). formed by weight heavy NGOsandprogressive companies. (POIG), thefirstpalmoilmajor to jointheprestigious coalition On another note, we joined the Innovation Group smallholder farmers", p8-9). with the commencement training. of the farmers' ("Training with the International Finance Corporationhas started (IFC), work Our onindependent smallholders, injoint partnership green development", p6-7). beyond ("Landscapeapproach ourtraceability work. and We are pushing for the landscape approach, step as the next FOREWORDground. ("Beyond traceability", p5). traceability, to initiatives results that willyieldpractical on the We are encouraging ourcustomers to thinkbeyond ("FromIndonesia. methanecapture to national grid", p2-3). national grid, to communities providing in rural electricity We are channellingourbiogas-powered to the electricity into aninteresting modelofsustainabledevelopment. 2016, we are gainingmomentum to transform theindustry would follow Fast actions. from ourpolicy forward to January December 2014,we didnotanticipate thedominoeffectthat When we firstannounced in ourSustainability Policy Reader Dear E product of the anaerobic digestion of palm oil mill mill oil palm of digestion anaerobic the of product by- a is Methane (biogas). fuel of source another as - methane - gas waste the collect to methane facilities capture installing by emissions reduce to further go can mills the investment, capital additional With generate electricity. to fuel as (biomass) by-products their of use the with energy in self-sufficient are in mills oil Palm Kalimantan. and Sumatra of islands the on operates it that mills oil palm energy-positive the of back the on runs power electrical Mas' Musim to infrastructure.develop the mills more for underway are plans and grid the to connected are mills Group's the of Six limited. is infrastructure electrical where and located typically are mills oil palm where areas remote for significant the - producer energy an built Mas electrical Musim making rural network, and the to sponsored connects that Group infrastructure the 2014, In reduce time same increase the greenhouse gasemissions. to at solution and provide electrification rural can mills oil Palm the are generator dominant technology. diesel the as such generators still lives off the grid. In rural areas, stand-alone power one-third of Indonesia's 250 million-strong population However, sustainability. environmental and equality education, health, alleviation, poverty achieving to crucial is energy to Access power. electrical on runs the palmoilindustry. of methane capture facilities in Group withthelargestnumber nine such projects, making itthe date, MusimMashascompleted of close to USD 50 million. To- palm oilmillswithatotalbudget standard feature for allofits13 methane capturefacilitiesasa embarked ontheinstallationof Since 2010, Musim Mas has practically everything in the modern world world modern the life: in everything modern and practically bulbs of light computers, linchpin phones, mobile the is lectricity on diesel. reliance their reduce and benefit to able be will households rural more Indonesia, expanded to the hundreds of mills across be can Mas Musim by endeavor such If households 1,600 directly. some mill, benefiting one by generated be can power electrical excess of megawatt 1 average, On communities. local to surrounding goes the also plantations, families the their in living and workers the all for utilities 24-hour providing besides mills, Mas Musim by generated electricity The completed be nextyear. the within will under now and are construction remaining mills the operating four for facilities methane capture The industry. oil palm the facilities in capture methane largest of the number with Group the it making projects, such nine completed has Mas To-date, million. Musim 50 USD to close its 13 palm oil mills with a total budget of of all for feature standard a as facilities capture methane of installation the on embarked has Mas Musim 2010, Since tons CO2equivalentayear. 250,000 about of total a save to stand per will Group the produced, oil palm of ton CO2 430kg of saving average an With (CO2). dioxide carbon than potent more times 34 is which (POME), effluent to methane capture From national grid households 1,600 rural Benefits more than to thegrid that islinked biogas plant Mills with sanitation and more income-generating income-generating more and as sanitation well as water for pumps clinics, for equipment medical more schools, for computers more population transformational: rural are the electrification, for benefits rural the increased With Produces Biogas Plant 1 mwh 1 P adang 0.156 kw Pe Sumatra h k 2 Based onelectricalapplianceratingfrom Energy usecalculator 1 http://www.energy.gov/energysaver/estimating-appliance-and-home-electronic-energy-use http://energyusecalculator.com/calculate_electrical_usage.htm Sumatra anbaru Total 0.601kwh 0.18 kw h footprint ofpalmoiloperations. carbon the reduce to energy renewable of form another as promoted be should mills oil palm by generated electricity The amongothers. opportunities, 0.225 kw h 0.005 kw h National Grid 0.035 kw h Kalimantan Kalimantan P alangka 1 andEnergy.Gov raya 2 p3 Musim Mas is

100% RSPO-certified ustomers are for local communities with vulnerable concession maps of RSPO members livelihoods. The Group believes that will be publicly available. Besides, usim Mas has always been ways to promote sustainability ecological and social values. starting to realise the best way forward is not just to through the Indonesia Palm Oil Pledge a firm believer in RSPO*. In implementation of the industry. that paying stop purchasing from errant suppliers. (IPOP), the Group has a Memorandum 2009, not only was the Group Globalisation and climate change Musim Mas believes that RSPO standard Mplantation the first in Indonesia to be discussions have arguably established still provides the most effective means to Cattention to the most The optimal approach hinges on of Understanding (MoU) with the World RSPO-certified, it also became the first an economic rationale to sustainable properly evaluate and monitor all palm vulnerable spots in their empowering suppliers and the local Resources Institute to support the Riau major group to attain 100% certification production standards. As the world's oil production and development and supply chain is not good communities through initiatives that OneMap initiative - efforts that will be for all its plantation in 2012. Its scheme most efficient oil crop, palm oil is should be made the universal standards effectively address their unique set favourable for conserving the Tesso smallholder plantations (KKPA) here to stay. Production and use of for the industry. enough; it is about the of challenges. In the Nilo National Park through clarity of were also the first to achieve RSPO sustainable palm oil will enhance actual impact on the region, the Group is implementing ownership and responsibility. certification in 2010. ground. an independent smallholder project, RSPO-Certified Area aimed at improving their livelihoods Notably, there was a debate at the Following the Group Sustainability through a customised curriculum that workshop regarding how realistic it First While traceability as a risk management Policy announced in 2014, Musim Mas Certified Area Company Area Certification will be replicated elsewhere upon its is for the Group to target end 2016 further commits to achieving RSPO (Ha) tool has aided the progress in Date success. for completing its plantation - level certification for all its new acquisition. identifying and sieving out errant Batang Kulim Palm Oil Mill 11,128.30 traceability and indeed the relevance This implies that not only will Musim suppliers, it is but a stop-gap measure 1 Scheme Smallholders (KKPA) 864.00 6 Jan 2009 Along with the industry, Musim of such exercise in the pursuit of Mas not acquire any plantation that in the wider context or at best a basis Village Oil Palm Development (Kas Desa) 12.00 Mas is working to address concerns sustainability. The completion of does not conform to RSPO standard, for pursuing further action on the PT Musim Mas on the issues of transparency and traceability to the plantation would it takes upon itself the mission to Pangkalan Lesung Palm Oil Mill 12,424.12 ground. The industry is recognising accountability. Customers at the ultimately depend on the verification transform its acquisition into a fully 2 Scheme Smallholders (KKPA) 802.00 6 Jan 2009 that real impact involves an entire slew certified plantation within a relatively workshop further raised queries such work undertaken by independent Village Oil Palm Development (Kas Desa) 5.00 of socio-economic endeavours, and is short span of time. A case in point is as the availability of the Group’s verifiers. With the dialogue going Agrowiratama Palm Oil Mill 5,915,29 moving from dialogues on tracing palm PT Guntung Indamannusa (PT GIN), an 3 PT Agrowiratama 17 Jun 2010 concession coordinates. As a beyond traceability, Musim Mas will Scheme Smallholders (KKPA) 1,524.00 oil to focusingEmissions on creating net socio- acquisition at end 2013. In June 2015 committed member of the RSPO, by also be channelling greater efforts on environmental benefits. - well within the deadline - PT GIN Berkat Sawit Sejati Palm Oil Mill 10,818.03 4 PT Berkat Sawit Sejati 8 Apr 2010 extension, Musim Mas’ concession landscape level initiatives where the successfully passed the RSPO audit for (Kas Desa) Village Oil Palm Development 5.00 maps are also made public. RSPO ground work will add substantial value. its 12,128 hectares of planted area out The dialogue on going beyond Maju Aneka Sawit Palm Oil Mill 11,549.80 has recently announced that palm oil of a land bank of 13,681 hectares. 5 PT Maju Aneka Sawit 17 Jun 2011 traceability is one of the main Village Oil Palm Development (Kas Desa) 20.00 takeaways from a recent Musim Mas Sukajadi Sawit Mekar - 1 Palm Oil Mill 11,365.58 reduction With the certification of PT GIN, 6 28 Aug 2010 traceability workshop for customers, the Group now produces more than Village Oil Palm Development (Kas Desa) 10.00 PT Sukajadi Sawit Mekar conducted on the sidelines of the 600,000 tons of Certified Sustainable Sukajadi Sawit Mekar - 2 Palm Oil Mill 13,600.47 7 16 Feb 2012 13th RSPO Roundtable meeting in Palm Oil (CSPO) a year. Village Oil Palm Development (Kas Desa) 10.00 November last year. 8 PT Siringo Ringo Siringo Ringo Palm Oil Mill 568.74 21 Aug 2014 Critics of RSPO often cite the inability Unggul Lestari Palm Oil Mill 17,591.70 Additionally, one of the frequent topics of RSPO to stop 100% deforestation, 9 PT Unggul Lestari 4 Sep 2012 Village Oil Palm Development (Kas Desa) 40.00 was the inclusion of smallholders in the loss of biodiversity, exploitative labour 10 supply chain of Musim Mas and the practices as its systemic weakness. PT Guntung Idamannusa Guntung Idamannusa Palm Oil Mill 12,127.81 1 Jun 2015 implication of legality for smallholders - Despite its shortcomings, voluntary Total 110,381.89 (as at January 2016) sustainability standards like RSPO an increasing concern for development Excludes approximately 20,000 ha of immature plantations (no accompanying mill) which are not remain one of the most effective to be inclusive and equitable, especially eligible for certification. * Roundtable on Sustainable Palm Oil p4 p5 ecosystems in need of conservation muddling through and being flexible and engaging private organisations are enough to adapt to change.” To part of the journey, the real challenge this end, Musim Mas will work with is to devise initiatives that operate other palm oil players to scale-up within the constraints and conservation efforts via the landscape Landscape opportunities of the landscapes. approach and ultimately hope to Moreover, the landscape provide real protection for ecologically approach is still a concept valuable landscapes. and will need to be trialed to find a way for practical Approach & green implementation.

Its abstract nature is also its strength; as the Centre for development International Forestry Research has rightly pointed out: “It is about ustainable landscape management legal land-use systems, cultural beliefs geographical proximity. Furthermore, (Landscape Approach) has been as well as natural resource use and there are actors from other industries a major topic of national and practices. within the same landscape such as Sinternational policy discourse in recent forestry products or mining. Traceability years. In practice, a landscape approach is does not adequately address the Landscape initiatives which Musim Mas is linked up to: a collaborative effort among multiple environmental challenges. A landscape approach is about having parties to implement conservation on Province Region What is at stake here? What is Musim Mas doing for this landscape? stakeholders discuss and agree on land a landscape level. It is usually headed The industry is looking at various and water-use decisions that provide an by a lead organisation or agency, along landscape models for conserving large, Riau Tesso Nilo - Tesso Nilo is a lowland forest and Musim Mas has a partnership to support WWF’s conservation optimal balance between community, with other partners such as NGOs, ecologically valuable landscapes and Bukit Tigahpuluh one of the international NGO, work on Sumatran elephants (Elephas maximus sumatranus). landscape WWF's Global 200 Ecoregions. commercial and conservation interests. private sector players and government the wildlife that depends on these Musim Mas, via the Indonesia Palm Oil Pledge (IPOP), also agencies, working on a common landscapes - a model that will combine has an MoU with the World Resources Institute (WRI) to It is seen by the palm oil industry goal to move forward. With smart private and public resources with kickstart the OneMap Riau initiative. as an efficient way to implement collaborations, groups with different a commercially viable approach to Leuser Ecosystem It is the last great swath of intact Musim Mas is working with other palm oil majors via IPOP to concrete field action and address the perspectives can turn the world’s secure land, restore wildlife and benefit North Sumatra rainforest that hosts many critically coordinate efforts in this landscape. IPOP recently signed an sustainability principles of People, most efficient oil crop into a model of people. and Aceh endangered species. MoU with partners such as USAid and WinRock International Planet and Prosperity. sustainable development. to pledge commitment to conserve this landscape. One example of an industry initiative The landscape approach is gaining The landscape approach represents based on the landscape principle is traction in palm oil industry and is used the next step beyond the existing the Roundtable on Sustainable Palm South Sembilang - The peat swamp forests provides Musim Mas is committed to the South Sumatra Eco-Alliance, Dangku landscape a vital habitat for approximately which is an integrated landscape project overseen by to develop strategies for areas based traceability work, building upon the Oil (RSPO)’s Jurisdictional Approach. Sumatra 15 percent of Indonesia’s surviving international conservation charity, Zoological Society of on green economics and inclusive efforts of the latter. To scale up current certification efforts, Sumatran tigers (Panthera tigris London (ZSL). The provincial government of South Sumatra development. RSPO is looking at certifying palm sumatrae). has also announced its commitment to the RSPO Jurisdictional The Group’s traceability work on oil production based on provincial Approach. What exactly are landscapes? In third-party supply chain has shown landscapes instead of company level, ecology, landscapes mean large areas that verifying third-party compliance emphasising on High Conservation Central Sebangau Peat Kalimantan has one of the highest Musim Mas is working via IPOP to coordinate efforts in this Kalimantan Ecosystem number of hot spots during the landscape. IPOP has an MoU with the non-profit group, Earth of diverse and interacting ecosystems against the Group’s Sustainability Policy Values, High Carbon Stocks and other haze crisis at end-2015. Forest fires Innovation Institute Indonesia, to move the region to a more such as forests and rivers. In the context may not be sufficient. A stop-purchase elements. and peat decomposition are the sustainable development model. The provincial government of Musim Mas, the Group’s concept of will not always yield positive results largest drivers of emissions in the of Central Kalimantan has also announced its commitment to province. the RSPO Jurisdictional Approach. landscapes also includes social system because Fresh Fruit Bunches (FFBs) Nonetheless, the landscape approach patterns such as land tenure system, can be sent to other mills within the has its challenges. While identifying

p6 p7 Corporation (IFC), a member of the curriculum has been designed with a World Bank Group. focus on Good Agricultural Practices to boost yields in a sustainable manner and Rudman is looking forward to his journey. to adopt health and safety practices; After a decade of working in Musim Mas, on improving the independent he now can use his knowledge to help smallholders’ financial literacy and independent small-scale farmers who book-keeping capacity to increase their Training struggle with issues such as poor yields, access to finance; and on improving weak agricultural practices and lack of smallholder access to global markets access to quality planting materials and through obtaining certifications. other inputs. With his experience in oil palm cultivation, Rudman knows he can The training team welcomes the make a difference to the lives of these smallholders as they stream into the Rudman conducting smallholder farmers. The 31-year-old Rudman is now room in eager anticipation. Most of the training. based permanently in Rantau Prapat to them have never had the chance to assist with the IPODS programme. The attend any oil palm related training. fertilisers for different soil types, on project aims to improve the livelihoods Farmers who spend most of their time whether it is good to mix various types of independent smallholders and help on their farms are intrigued by the of fertilisers, and many other issues. them attain certification. opportunity to be students. They are At the end of the training session, the farmers eager to seek knowledge which they smallholders share that the practical Months of farmer engagement, hope will help to improve their farms tips in applying fertiliser and identifying registration, farmer-group strengthening and yields. They collect their training nutrient deficiencies in palm trees will and curriculum planning finally culminate notes and logbooks and flip through immediately serve them well. Also, in the commencement of training. The the materials with furrowed brows. understanding the importance of udman Simanjuntak works as an agronomist The training commences in small-sized fertiliser application as an ongoing in the Musim Mas Research and Development groups to facilitate better learning process is important to get the best out division. He has ten years of experience in and engagement. Future training of their oil palms in the long run. RMusim Mas, having recommended fertilisers to the topics will include herbicides, plantations, provided advice to overcome problems pesticides, land clearing, Rudman said, "We hope to engage such as pests and diseases in the plantations, and nursery management, soil, more independent smallholder farmers. trained new agronomists. pest diseases and field If the project is successful, it can be upkeep for mature and repeated in other places. Our aim is to One morning, he boards a waiting car at Sorek immature areas. For help all smallholder farmers increase Estate, Pekanbaru. His backpack is filled with clothes now, Rudman kick- their income and eventually improve and copies of training materials as he makes himself starts the training by their livelihoods." comfortable for the long ride to Rantau Prapat in sharing his knowledge North Sumatra where he will be working with groups and experience of independent smallholders in his new assignment. on fertilisers. The smallholders listen He has been selected as a trainer for the Indonesia attentively and ask Palm Oil Development for Smallholders (IPODS) Explaining contents in the questions on suitable project, which is starting as a partnership between training textbook to the Musim Mas and the International Finance smallholders

Rudman speaking on the application of Empty Fruit Participants enjoying Bunches (EFB) and the Smallholder asking the training dosage. a question p8 p9 On 16th November 2015, Musim Mas announced its membership entry to the Palm Oil Innovation Group (POIG). It is the first palm oil major to do so, thereby bringing its vast network of Indonesian-based plantations, mills and refineries to POIG’s list of innovation-minded organisations.

usim Mas has always been align with the POIG Charter. Through consider how the positive impacts can a supporter of the RSPO participation in the coalition, Musim be scaled-up by other stakeholders Principles and Criteria (P&Cs) Mas hopes to function as a lead catalyst such as governments. Msince the early days of the Roundtable’s for positive changes on the ground inception. In 2012, the Group became and push forward the sustainable palm Together with the recently announced the first major plantation company to oil agenda by sharing best practices RSPO-Next standards, Musim Mas attain 100% certification, and then with other industry players, and by hopes to play its role in shaping the took a step forward in announcing developing innovative solutions to market transformation by embracing its sustainability policy at end-2014. maximise yields. standards at the forefront of the With the focus on sustainable business industry. The Group is playing an practices gaining momentum, the Having said that, the Group also active role in the Indonesia Palm Oil Group wishes to build further on the recognises that innovation aside, landscape projects and the Indonesia current RSPO standards and leverage the progressive initiatives which may Palm Oil Pledge (IPOP). on its capacity as a major player in the palm oil industry to push the sustainability agenda forward.

On 16th November 2015, Musim Mas announced its membership entry to the Palm Oil Innovation Group (POIG). It is the first palm oil major to do so, thereby bringing its vast network of Indonesian-based plantations, mills and refineries to POIG’s list of innovation- minded organisations. Other members of POIG include Greenpeace, Rainforest Action Network , WWF and palm oil players who are recognized as sustainability leaders and innovators in the industry.

POIG represents a different movement to push for innovation and embrace arise from POIG also need to fulfill standards that can bring novel methods the fundamental objectives of lifting of sustainability implementation to marginalised smallholder farmers out of the industry. As a start to the Group’s poverty, while reducing environmental Musim Mas POIG membership, Musim Mas' impacts such as deforestation. The joins POIG sustainability policy will be updated to innovation agenda needs to further

p10 p11 Sustainability Diary of Events 2015First Quarter Second Quarter

• Traceability Workshop for Musim Mas employees • RSPO 3rd European Roundtable • RSPO FFB Legality and Traceability Task Force • RSPO+ and Growers meeting • RSPO Compensation Task Force • HCV - HCS - FPIC integration technical workshop • RSPO Biodiversity and HCV Working Group • Meeting with ISPO Commission • RSPO Emission Reduction Working Group • World Resources Institute workshop on Land Use • RSPO Board of Governors meeting Change • RSPO Secretariat meeting • Indonesia HCV Network Workshop • ISPO GHG Working Group • Indonesian Growers Caucus meeting • HCS Study - 10th Steering Committee meeting

Third Quarter Fourth Quarter

• Innovation Forum, Singapore: ‘How Business can tackle • 13th RSPO Roundtable & 12th Annual General deforestation' Assembly • PT Musim Mas, Pekanbaru and Batam EPA RFS 2 • 9th CSR Asia Summit Segregation audit • 11th Indonesia International Palm Oil Conference • Stakeholder outreach with the Compensation Task • Musim Mas' suppliers palm oil mill verification Force on Remediation and Compensation procedure assessment with CORE Consortium draft • Traceability workshop for customers • Italian national standards audit briefing and training on • Global Landscapes Forum, Paris double counting for Palm Distillate waste • COP21, Paris (internal) • Innovation Forum, London: ‘How business can tackle • ISCC Technical Committee South East Asia (TC SEA) deforestation - innovation in sustainable forestry’ • ISPO Implementation acceleration in North Sumatra • Neste Oil Workshop on Social and Labour issues Workshop by GAPKI and PPKS • Commencement of IPODS training for smallholders • PT Multipersada Gatramegah Participatory mapping • NGO Zoological Society of London (ZSL) visit to Musim • Remediation and Compensation Procedure Mas estate implementation review • Launch of HCS+ methodology by SPOM

Acronyms CORE Consortium - Consisting of Proforest, Daemeter Consulting and Rainforest Alliance EPA RFS 2 - Environmental Protection Agency Renewable Fuel Standard 2 FFB - Fresh Fruit Bunch FPIC - Free, Prior Informed Consent GAPKI - Indonesian Palm Oil Association (Gabungan Pengusaha Kelapa Sawit Indonesia) GHG - Greenhouse Gas HCS - High Carbon Stock HCV - High Conservation Value IPOP - Indonesia Palm Oil Pledge ISCC - International Sustainability and Carbon Credit ISPO - Indonesian Sustainable Palm Oil IPODS - Indonesia Palm Oil Development for Smallholders NPP - New Planting Procedure POIG - Palm Oil Innovation Group PPKS - Palm Oil Research Centre (Pusat Penelitian Kelapa Sawit) RSPO - Roundtable on Sustainable Palm Oil SPOM - Sustainable Palm Oil Manifesto

Headquartered in Singapore, Musim Mas operates globally across the palm oil spectrum. Its business activities run the gamut of the palm oil supply chain: from managing oil palm plantations to refining crude palm oil and manufacturing value-added products. It also has a fleet of ship tankers and barges that enhances its logistical capability. The Group has operational presence in 13 countries across Asia-Pacific, Europe and the Americas, backed by a multi-national workforce of 28,500 people. Musim Mas, a pioneer member of the Roundtable on Sustainable Palm Oil (RSPO), is committed to doing business in a socially responsible and environmentally friendly manner.

This newsletter is published by Musim Mas. Comments and suggestions are welcomed. Please contact the Sustainability Team at [email protected] or visit our website at www.musimmas.com.