Sgs Rspo Program Rspo Principles & Criteria

SGS RSPO PROGRAM Doc. Number: GP 9405A

(Associated Document) Doc. Version date: 7th June 2016 Page: 1 of 106 Issue: 02

RSPO PRINCIPLES & CRITERIA CERTIFICATION REPORT

Public Summary Information

Job Number: MY/KUL-MY04560

Client: Sime Darby Plantation Sdn Bhd Strategic RSPO membership # 1-0008-04-000-00 Operating Unit (SOU) 13 Labu

RSPO Registered Sime Darby Country: Malaysia Parent Company name: Plantation Sdn Bhd

Receiving and processing of RSPO certified Fresh Fruit Bunches (FFB) from its supply Scope: base, production and sales of RSPO certified Crude Palm Oil (CPO) and Palm Kernel (PK) under Module D - CPO Mill: Identity Preserved.

Supply Chain Module: Module D – CPO Mills: Identity Preserved

Mill Capacity 28 tonne/hour Number of Estate 2 Estates

Date of Issue: 30/12/2016 Certificate Number: SGS-RSPO/PC17-00004 Date of Expiry: 29/12/2021 SGS Accreditation Code RSPO-ACC-023 Date of accreditation: 5th July 2016 Contacts Job Description: Head of Sustainability Unit, PSQM Department Name: Shylaja Devi Vasudevan Nair Postal address: as per Head Office address Physical address: Head Office Contact Person: Main Tower, Level 3A, Mdm Shylaja Devi Vasudevan Nair, Plantation Tower No.2, Jalan PJU 1A/7 HEAD OF SUSTAINABILITY UNIT, PSQM Address: Ara Damansara Phone No.: Tel: +603 78484379 47301 Petaling Jaya, Selangor E-mail: [email protected] Street and number: Town/City Malaysia State/Country Tel: +60 3 7848 4000 Zip/Postal code Fax: +60 3 7848 4172 Mill Contact Person: Country Mill Manager : : Denni Anak Pusin Mill Address [email protected] Pusat Teknologi Kilang Kelapa Sawit Labu (POMTEC), P.O.Box 5, KM 16, Jalan Labu, 71900 Tel : +60 6 791 6795 Labu, Negeri Sembilan. Fax : +60 6 791 6796 Tel: +60 3 7848 4000 Cell Phone : - Fax: +60 3 7848 4172 Web Site Address: www.simedarbyplantation.com Email: [email protected]

Standard: Roundtable on Sustainable Palm Oil (RSPO) Malaysian National Interpretation Task Force (MYNI-TF) National Interpretation of RSPO Principles and Criteria for

SGS services are rendered in accordance with the applicable SGS General Conditions of Service accessible at http://www.sgs.com/en/Terms-and-Conditions.aspx

PT SGS Indonesia (RSPO Program) Cilandak Commercial Estate #108C, Jl. Raya Cilandak KKO, Jakarta 12560, INDONESIA Certification & Business Enhancement Division Contact Programme Manager at t. +62 21 781 8111 www.sgs.com GP 9405A Page 2 of 106

Sustainable Palm Oil Production [6 March 2015] RSPO Supply Chain Certification Standard [21 November 2014] Date of last report update 6 April 2017

Certified FFB Received by July ’15 : 13,556.84 MT January ‘16: 7,332.49 MT the Mill [FY 2015/16] August ‘15: 8,159.88 MT February ‘16: 10,127.77 MT September ‘15: 12,460.63 MT March’16: 9,329.75 MT * including from other October ‘15: 10,581.48 MT April ‘16: 9,416.74 MT certified from adjacent November ‘15: 8,605.11 MT May ‘16: 8,656.6 MT estates December ‘15: 7,252.43 MT June ‘16: 8,791.25 MT Actual Annual CSPO Tonnage produced [FY 16,372.08 MT 2015/16] – claimed for certification

Actual Annual CSPK Tonnage produced [FY 4,104.62 MT 2015/16] – claimed for certification

Annual CSPO Tonnage 5,382.41 MT Sold [FY 2015/16]

Annual CSPK Tonnage 5,150 MT Sold [FY 2015/16]

End of Public Summary GP 9405A Page 3 of 106

BASIC EVALUATION INFORMATION MAIN EVALUATION/ RE-CERTIFICATION Evaluation Dates: Nov 2nd – Nov 4th , 2016: Major CAR Closure: 30 January 2017 Team Leader/Team: James S H Ong (Lead auditor); Abdullah Din (Auditor); Dayang Suhanie Khalid (Auditor); Muhammad Shazaley Abdullah (Auditor) Affiliate Project Manager: Date: Report approved by: Aryo Gustomo Date: 10-04-2017 Certification approved by: Shashibhushan Jogani Date: 10-04-2017 Database logged by: Shaziela Othman/Eric Dael Date: 11-04-2017 SURVEILLANCE 1 Evaluation Dates: Team Leader/Team: Affiliate Project Manager: Date:

Report reviewed & approved by: Date: Certification approved by: Date: Database logged by: Date: SURVEILLANCE 2 Evaluation Dates: Team Leader/Team: Affiliate Project Manager: Date:

Report reviewed & approved by: Date: Certification approved by: Date: Database logged by: Date: SURVEILLANCE 3 Evaluation Dates: Team Leader/Team: Affiliate Project Manager: Date:

Report reviewed & approved by: Date:

Certification approved by: Date:

Database logged by: Date:

SURVEILLANCE 4 Evaluation Dates: Team Leader/Team: Affiliate Project Manager: Date:

Report reviewed & approved by: Date:

Certification approved by: Date:

Database logged by: Date:

GP 9405A Page 4 of 106

SUMMARY Sime Darby Plantation Sdn Bhd established in November , 2007 was formed by the merger of Sime Darby Berhad, Golden Hope Plantations Berhad and Kumpulan Guthrie Berhad Upstream operations encompass 254 estates and 71 mills where fresh fruit bunches (FFB) from thier estates are delivered to their mills to be processed into crude palm oil (CPO). The application of RSPO Principles & Criteria ensures that they have adhere to environmental best practices, biodiversity conservation, and social protection in areas of our operation. Sime Darby Plantation Sdn Bhd represents one of the five cores Divisions of Sime Darby Group and is involved in the following:- . Upstream Operations: oil palm cultivation, harvesting and milling . Downstream Operation: refining of Crude Palm Oil (CPO) is undertaken for edible oils and fats products, oleochemicals and biodiesel, as well as its marketing activities, are present in 16 countries. . Research & Development : Yield productivity Improvement, increase revenue streams & sustainable practices

Sime Darby Plantation is the largest division of the Sime Darby Group, a Malaysia-based public listed conglomerate with a business that spans the entire palm oil value chain. As one of the founding members of the Roundtable on Sustainable Palm Oil (RSPO), they are now the largest producer of sustainable palm oil worldwide, a testament to their commitment in embedding sustainability in the core of their operations. They now manage approximately 629,000 ha of planted areas in Malaysia, Indonesia, Liberia, Papua New Guinea (PNG) and the Solomon Islands. Their upstream operation comprises of the following:

 603,254 ha of oil palm, 11,174 ha of rubber, and 5,613 ha of growing cane plantations in Malaysia, Indonesia, Liberia, PNG, and the Solomon Islands  Oil palm, rubber, and growing cane Cultivation  Palm oil milling, rubber factories, and bulking facilities  Composting & biogas

Their current downstream operations comprise production of oils and fats, oleo chemicals, biodiesel, other palm oil derivatives and renewable as well as the sales and marketing of these products in 17 countries. The downstream operation includes:  Oils & fats, kernel crushing, biodiesel, and oleo chemicals production  Sugar processing

Additionally, their Midstream segment is involved in trading, marketing and logistics services. Sime Darby Plantation is backed by a diverse workforce of more than 100,000 people. Their key markets are Malaysia, India, Thailand, Indonesia, United Kingdom, South Africa, Germany, China, Netherlands and Vietnam.

Sime Darby Plantation is one of the world’s largest palm oil producers, producing about 2.4 million tons or 4 per cent of the world’s crude palm oil (CPO) output annually. Based on their website and sustainability report 2016, to date, about 2.2 million tons are CSPO. Its annual output of palm kernel is about 0.57 million tonnes, out of which 0.56 million tons are Certified Sustainable Palm Kernel (CSPK).( ref: http://www.simedarbyplantation.com/our-businesses/overview)

Sime Darby Plantation has a total of 59 Strategic Operating Units (SOUs) out of which 58 are certified. All the Malaysian SOUs are certified whereas in Indonesia 96% of the SOUs are certified .

The Upstream operations include the development of oil palm plantations, cultivation of oil palm, management of estates, milling of fresh fruit bunches (FFB) for CPO and CPKO. Total land-bank currently stands approximately 1 million hectares in the following countries :

a) Malaysia : 349K ha b) Indonesia : 282K ha c) Liberia : 220K ha d) Papua New Guinea & Solomon Islands: 136K ha GP 9405A Page 5 of 106

Out of the land bank, 600,000ha are planted areas.

For more information on their Upstream please log on to: http://www.simedarbyplantation.com/our-businesses/upstream/overview

For Malaysia operation , please log on to: http://www.simedarbyplantation.com/our-businesses/upstream/upstream-malaysia

The sustainability report 2016 can be downloaded on : http://www.simedarbyplantation.com/clients/simedarby_plantation/assets/contentMS/img/template/editor/SR%202016/ SimeDarby%20Plantation_SR2017_dec2016.pdf

The downstream operation can be viewed under the following link: http://www.simedarbyplantation.com/our-businesses/downstream/overview

The plantation management unit to be audited is known as Sime Darby Plantation Sdn Bhd Strategic Operating Unit (SOU) 13 Labu consists of the following: a) Labu Palm Oil Mill, b) Labu Estate c) New Labu Estate.

Labu Estate located in the Malaysian state of Negeri Sembilan in the district of Labu is made up of 2 division a) Labu Division b) Ampar Tenang Division. Established in the 1930s as a rubber and tea plantation, it is now fully planted with oil palm. Due to the country’s infrastructure rapid development, certain tracts of land had been acquired by both the authorities as well as Sime Darby Property. According to information provided by Labu Estate, Ampar Tenang has been criss-crossed with highways and rail-line and about 900 ha has been acquired for phased property development known as Serenia City by Sime Darby Property.

New Labu Estate located in the similar district with Labu Estate is split by the Seremban-Nilai Highway. It is made up of a) New Labu Division and b) Kirby Division. It shares common boundaries with Labu Estate, villages and smallholders. It also has a common boundary with a quarry that is causing siltation on the streams and dust pollution. Certain section of the estate has been demarcated for High Tension Grid power lines. Due to the vicinities with villages, the management faces problems of cattle encroaching into their planted area.

The Labu Palm Oil Mill is located within Labu Estate, addressed at Pusat Teknologi Kilang Sawit (POMTEC) MPOB, 71900 Labu, Negeri Sembilan, Malaysia.

SOU 13 has undergone their 1st cycle of RSPO P& C certification, and this is the audit report for the re-certification of SOU 13 - Labu which was conducted on the 2nd – 4th November 2016

SGS RSPO PROGRAM Doc. Number: GP 9405A

(Associated Document) Doc. Version date: 7th June 2016 Page: 6 of 106 Issue: 02

TABLE OF CONTENTS BASIC EVALUATION INFORMATION ...... 3 SUMMARY ...... 4 List of Abbreviation ...... 8 1. Scope of certification assessment ...... 9 1.1 National Interpretation Used ...... 9 1.2 Certification Scope ...... 9 1.3 Location and Maps ...... 9 1.4 Description of Supply Base and Mill Processing Capacity ...... 16 1.5 Area of Plantation ...... 18 1.6 Date of Planting and Cycle ...... 18 1.7 Other Certification Held ...... 18 1.8 Organizational Information and Contact Person ...... 18 1.9 Time-bound Plan for Other Management Units ...... 19 2. Assessment Process ...... 25 2.1 Certification Body ...... 25 2.2 Assessment Methodology, Programme, Site Visits ...... 25 2.3 Qualification of Lead Assessor and Assessment Team...... 30 2.4 Stakeholder Consultation and List of Stakeholders Contacted ...... 31 3. Assessment Findings ...... 32 3.1 Summary of Findings ...... 32 3.2 Corrective Action Request ...... 91 3.3 Noteworthy Positive Components ...... 91 3.4 Status of Non-Conformities Previously Identified ...... 91 3.5 Issues Raised by Stakeholders and Findings ...... 91 4. Acknowledgement of Organization Internal Responsibility ...... 92 4.1 Conclusion ...... 92 4.2 Date of Next Surveillance Visit ...... 92 4.3 Date of Closing Non-Conformities ...... 92 4.4 Acknowledgement of Internal Responsibility and Formal Sign-off Assessment Findings ...... 92

LIST OF TABLES Table 1: Mill and Supply Base Location GPS ...... 9 Table 2: Actual and Projected FFB from Supply Base and other SOU ( FY 2016/2017) ...... 16 Table 3: Actual and Projected Mill Processing Data...... 17 Table 4: Area Statement of Supply Base Estates ...... 18 Table 5: Planting Age Profile for Supply Base Estates ...... 18 Table 6: Audit Plan ...... 26

SGS services are rendered in accordance with the applicable SGS General Conditions of Service accessible at http://www.sgs.com/en/Terms-and-Conditions.aspx

Table 7: Auditors Profile ...... 30

LIST OF FIGURES Figure 1: Location Map for the Sime Darby Plantations Sdn Bhd Estates and Mills within Peninsular Malaysia.10 Figure 2: Estates and Mills: GPS Location of SOU 13 Labu Palm Oil Mill ( KKS Labu )...... 11 Figure 3: Layout of Labu Estate and its division ...... 12 Figure 4: Layout of New Labu Estate and the division ...... 14

LIST OF APPENDICES APPENDIX A: CORRECTIVE ACTION REQUEST AND OBSERVATIONS ...... 93 APPENDIX B: NON-CONFORMITIES PREVIOUSLY IDENTIFIED ...... 101 APPENDIX C: TIMEBOUND PLAN ...... 102 APPENDIX D: LIST OF STAKEHOLDERS CONTACTED ...... 105

GP 9405A Page 8 of 106

LIST OF ABBREVIATION

Short Form Meanings CAR Corrective Action Request CHRA Chemical Health Risk Assessment CPO Crude Palm Oil DID Department of Drainage and Irrigation, Malaysia DOE Department of Environment, Malaysia EFB Empty Fruit Bunch EIA Environment Impact Assessment EMS Environmental Management System EQA Environmental Quality Act ERT Endangered, Rare and Threatened species ESA Environmentally Sensitive Area FFA Free Fatty Acids FFB Fresh Fruit Bunches FR Forest Reserve FY Financial Year Ha Hectare HA Hospital Assistant HCV High Conservation Value HIRARC Hazard Identification, Risk Assessment and Risk Control IPM Integrated Pest Management ISO International Organisation for Standardisation IUCN International Union for Conservation of Nature and Natural Resources JCC Joint Consultative Committee JUPEM Jabatan Ukur dan Pemetaan Malaysia (Department of Survey and Mapping Malaysia) K Potassium KER Kernel extraction rate KKS Labu Kilang Kelapa Sawit Labu kW Kilowatt LE Labu Estate M Meter Mg Magnesium Mm Millimeter Mt Metric ton MYNI Malaysia National Interpretation N Nitrogen NGO Non Governmental Organisation NLE New Labu Estate OA Orang Asli (Indigenous People) OER Oil Extraction Rate OSH Occupational Safety & Health P Phosphate P & C Principles and Criteria PK Palm Kernel POME Palm Oil Mill Effluent PPE Personal Protective Equipment PT SGS Accredited Certification Body for SGS SOP Standard Operating Procedures Sdn Bhd Sendirian Berhad (Private Limited) SEIA Social and Environment Impact Assessment Sg Sungai SOU 13 Labu Sime Darby Plantation Sdn Bhd Strategic Operating Unit (SOU) 13 Labu SGS Societe Generale de Surveillance SOP Standard Operating Procedures SPC Senior Plantation Controller USECHH Use and Standards of Exposure of Chemicals Hazardous to Health WHO World Health Organisation yr Year GP 9405A Page 9 of 106

1. SCOPE OF CERTIFICATION ASSESSMENT

1.1 National Interpretation Used The operations of the mill and their supply based of FFB were assessed against the Roundtable on Sustainable Palm Oil (RSPO), Malaysian National Interpretation Task Force (MYNI-TF), National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production Endorsed by RSPO Board of Governors on 6 March 2015.

1.2 Certification Scope The scope of certification includes the production of CPO and PK at Labu Palm Oil Mill and its supply base according to the standard of National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production Endorsed by RSPO Board of Governors on 6 March 2015 and RSPO Supply Chain Certification Standard dated 21 November 2014.

1.3 Location and Maps Sime Darby Plantation Sdn Bhd Strategic Operating Unit (SOU) 13 Labu is located in Pusat Teknologi Kilang Sawit (POMTEC) MPOB, 71900 Labu, Negeri Sembilan, Malaysia (Figure 1). More detailed information on the mill location is shown in Figure 2 and the estates layouts are shown in Figure 3 and 4. The GPS locations of the mill and estates are shown in Table 1. Table 1: Mill and Supply Base Location GPS

Mill/Supply Base Latitude Longitude (Estate/smallholder)

Labu Palm Oil Mill N 02° 44’ 56.0” E 101° 48’ 16.2”

Labu Estate N 02° 45' 03.3” E 101° 49' 04.0”

New Labu Estate N 2° 46' 27.4” E 101° 48' 18.0”

GP 9405A Page 10 of 106

Figure 1: Location Map for the Sime Darby Plantations Sdn Bhd Estates and Mills within Peninsular Malaysia.

SOU 13 in Pusat Teknologi Kilang Sawit (POMTEC) MPOB

GP 9405A Page 11 of 106

Figure 2: Estates and Mills: GPS Location of SOU 13 Labu Palm Oil Mill ( KKS Labu )

GP 9405A Page 12 of 106

Figure 3: Layout of Labu Estate and its division

a) Labu Estate – Main Division

GP 9405A Page 13 of 106

b) Labu Estate – Ampar Tenang Division ( Note: Division has been handed to Sime Darby Property for phased property development )

GP 9405A Page 14 of 106

Figure 4: Layout of New Labu Estate and the division

a) New Labu Estate – New Labu Division

GP 9405A Page 15 of 106

b) New Labu Estate – Kirby Division

GP 9405A Page 16 of 106

1.4 Description of Supply Base and Mill Processing Capacity The FFB is sourced from 2 estates (3 Divisions) as well as neighboring Sime Darby Plantation estates (under other certified SOUs) which are directly managed by Sime Darby Plantation Sdn Bhd. The actual crop yield from each estate is listed in Table 2 below. (Note : Communication with PQSM with Labu Estate Management’s Senior Assistance inform Auditor that Ampar Tenang Division is no longer under Sime Darby Plantation and workforce is not part of Labu Estate. FFB from the area is not sent to Labu Mill. The budgeted crop yields from each estate are also listed in Table 2 below. In 2016/17, to achieve the projected Mill processing, SOU 13 Labu Mill receives an estimated of FFB from their other RSPO certified SOU such as SOU 15 Sua Betong.

Table 2: Actual and Projected FFB from Supply Base and other SOU (FY 2016/2017)

FFBs (Tonnage) Estates/Smallholders Budgeted/Estimated Actual Projected (FY 2015/2016) (FY 2015/2016) (FY 2016/2017)

Labu Estate 66,582.59 47,925.39 64,265.63

New Labu Estate 35,890.44 29,374.35 39,890.57

Subtotal of own RSPO certified supply base – Claimed for 102,473.03 77,299.74 103,156.20 Certification

Certified FFB received from other RSPO certified SOU e.g SOU 15 Sua Betong:

1. Salak Estate 20,134.79 34,361.19

2. Tampin Linggi Estate - 1,047.89

3. Sepang Estate - 366.13

4. Sg. Bahru Estate - 233.36

5. Bradwall Estate - 600.78

6. Glengowrie Estate - 19.19

7. Sengkang Estate - 40.79

8. Bukit Pelandok Estate - 111.87

9. Tanah Merah Estate - 13.71

10. Siliau Estate - 176.32 Subtotal (other RSPO certified 20,134.79 36,971.23 supply base)

*Note: Due to the replanting of the 2 supply base estates and especially land acquisition of land by the SIME DARBY Property at New Labu Estate, FFB from neighbouring SOU is received to maintain the mill processing efficiency. GP 9405A Page 17 of 106

For example in 2015/16, Salak Estate (Estate code E019 ) was included in “SOU 13, M252: Labu Palm Oil Mill, Budget Report for Year 2015/2016”. Email sent on Friday, December 04, 2015 10:51AM, subject “Crop Distribution For December” was explained about 100% of Salak Estate crop will be sent to LBM with immediate effect, was sighted as communication evidence. Salak Diversion to Labu Mill was due to insufficient mill utilization. Management has decided to divert certain percentage to optimize the utilization, minimize processing cost and during peak crop. Insufficient mill utilization of Labu Mill depended only on Labu and New Labu Estates due to some area were allocated for property, and some area for replanting and new mature area that have lower yield. The Mill, Labu Palm Oil Mill has a capacity of 28MT/hour. The 2015/16 processing data for the mill processing is tabulated in Table 3. The projected 2016/17 mill processing data is also tabulated in Table 3. The actual OER rate for FY 2015/16 was 21.18% and the KER was at 5.31%.

Table 3: Actual and Projected Mill Processing Data

Mill Production Figures (MT) Claimed for Certification Budgeted/Estimated Mill Name Actual (FY 2015/2016) Projected (FY 2016/2017) (FY 2015/2016) CPO PK CPO PK CPO PK

Labu POM 23,056.43 4,918.71 16,372.08 4,104.62 22,706.05 5,707.76 Extraction OER: 22.50% KER: 4.80% OER: 21.18% KER: 5.31% OER: 21.80% KER: 5.48% Rate

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1.5 Area of Plantation The areas of supplying estates for this operating unit are listed in Table 4. Details of planted area (mature/immature), total land area, conservation, HCV and others are also listed. Table 4: Area Statement of Supply Base Estates

Planted Area (Ha) Total Name of Conservation HCV Infrastructure Titled area Estates (Ha) Area & Others (Ha) Mature Immature (Ha) (Ha) Total (Ha) (Ha)

Labu Estate 2,802.48 171.08 2,973.56 0 4.54 312.39 3,290.49 New 1,673.77 164.45 1,838.22 0 1.83 73.67 1,913.72 Labu Estate Total 4,476.25 335.53 4,811.78 0 6.37 386.06 5,204.21

1.6 Date of Planting and Cycle The palms are considered matured when approaching 3 years after planting and generally will be replanted upon reaching the age of 25 years. Replanting programs for all estates involved are available and being projected for the next five (5) financial years (please refer to Indicator 3.1.2). The age profiles for all the estates are simplified in Table 5 below.

Table 5: Planting Age Profile for Supply Base Estates

Planting Age (Ha)* Name of supplying estate Immature <4 >4 - 14 years >14 - 22 years >22 years years Labu Estate 171.08 2,271.27 385.64 145.57

New Labu Estate 164.45 897.85 665.25 110.67

Total 335.53 3,169.12 1,050.89 256.24

Note: * Based on the amended updated pre-verification data on age grouping for SOU 13 – Labu Most Immature area (<4 years) were part of replanting area programme.

1.7 Other Certification Held SOU 13 Labu is also MSPO certified.

1.8 Organizational Information and Contact Person The company contact person details are as follows: GP 9405A Page 19 of 106

Name: MDM. SHYLAJA DEVI VASUDEVAN NAIR Head of Sustainability Unit, PSQM Designation: Department Main Tower, Level 3A, Plantation Tower No.2, Jalan PJU 1A/7 Address: Ara Damansara 47301 Petaling Jaya, Selangor Malaysia Tel: (603) 7848 4000 Contact No.: Fax: (603) 7848 4172. Email address: [email protected]

1.9 Time-bound Plan for Other Management Units Sime Darby Plantation Sdn. Bhd is a member of RSPO and has been involved in the certification since 7 September 2004; the membership number with RSPO is 1-0008-04-000-00. Sime Darby Plantation Sdn. Bhd owns and operates 70 mills and 250 oil palms estates, together with 59 operating unit covering approximately 1,000,000 ha Malaysia, Indonesia, Liberia, PNG and Solomon Islands. Sime Darby Plantation Sdn. Bhd has developed a timebound plan (Appendix C) for the phased implementation of the RSPO P&C, commencing with mills and estates. Sime Darby Plantation Sdn. Bhd will use the experience gained from achieving certification of the first few mills and estates to implement the RSPO P&C in parallel with the remainder of its operations. The PT SGS assessment team considers that Sime Darby Plantation Sdn. Bhd is on the right track which is reasonable and challenging, given the widespread geographic locations of its properties, the resources required and the numbers of smallholders involved.

Auditor Finding on the Time Bound Plan and Partial Certification

Time Bound Plan Requirement Findings and any action Compliance required Does the plan include all Yes , it includes all the estates Yes subsidiaries, estates and mills? and the mills in Indonesia and Malaysia In Malaysia there are 34 SOUs. The mills of Sg Samak and Jeleta Bumi, Yong Peng, Sepang, Mostyn and Segaliud has closed down. In Indonesia- Effectively 24 SOU within the TBP

For Liberia operations, a new mill is being set up and commissioned. Preparation to undergo the RSPO Certification process is in progress and SDP targets to undergo RSPO GP 9405A Page 20 of 106

Certification by end 2017.

Is the time bound plan Based on the initial Sime Darby Yes challenging? Plantation’s time bound plan for certification within 2008 – 2011,  Age of plantations. SDP has had all its SOUs  Location. (Malaysian & Indonesian)  POM development completing the RSPO Main  Infrastructure. Assessment by end Dec 2011 (  Compliance with applicable with the exception of 2 new oil law. mills commissioned to replace the current oil mills after the initial timebound plan targets). The 2 new mills have been RSPO Certified in Jan and Feb 2014. For Indonesian operations, PT MAS has undergone RSPO MA and is delayed due to some social disputes. The target date of certification by 2017 subject to the progress of the matter being resolved. Smallholders – as of Dec 2016 total of 29,914 ha ( 58%) of the total Ha ( 51,715 ha ) of associated SH certified in Indonesia has been certified. Certification process for the remaining associated SH areas is ongoing. SDP expect to achieve 100% RSPO certification of associated SH and out-growers by end 2020. Liberia – Preparation to undergo RSPO certification process in progress and SDP target RSPO certification end 2017. RSPO NPP process has been completed in 2011

Have there been any changes 97% of Sime Darby Plantation's Yes since the last audit? Are they upstream operations is RSPO justified? certified, one SOU - PT MAS pending certification in Indonesia due to some social disputes . SDP will process with the next step of certification until satisfactory resolution of the matter. A new oil mill in Liberia has been commissioned . SDP’s time bound plan has been revised to take into consideration the social challenges encountered in Indonesia for the remaining SOU (PT MAS) yet to be certified.

Sime Darby Plantation will proceed with the next steps of certification upon satisfactory resolution of the matter. In March 2015, SDP completed GP 9405A Page 21 of 106

acquisition of RSPO-certified NBPOL. NBPOL is managed under separate entity and the TBP will be under NBPOL management. If there have been changes, what Indonesia- PT MAS has Yes circumstances have occurred? undergone RSPO Main Assessment in July 2011. The certification body for PT MAS has considered that Sime Darby Plantation still meets the requirements of the RSPO for Partial Certification and the report has been submitted for EB review. A verification audit was conducted by the Certification Body in early 2013 and Sime Darby Plantation will proceed with the next steps of certification upon satisfactory resolution of the matter. Ongoing and regular (bi-monthly) discussions are ongoing between Sime Darby Plantation and the project affected communities. Reports on the progress update are submitted to RSPO on a regular basis since November 2012. The latest progress report submitted to RPSO dated 30th June 2016. Smallholders – as of Dec 2016 total of 29,914 ha ( 58%) of the total Ha ( 51,715 ha ) of associated SH certified in Indonesia has been certified. Certification process for the remaining associated SH areas is ongoing. SDP expect to achieve 100% RSPO certification of associated SH and out-growers by end 2020. Liberia – Preparation to undergo RSPO certification process in progress and SDP target RSPO certification end 2017. RSPO NPP process has been completed in 2011

Have there been any stakeholder Up to date, there is no comment. Yes comments?

SDP continues to engage all affected parties through regular discussions and progress reporting is being made to the RSPO Secretariat. Have there been any newly In March 2015, Sime Darby Yes acquired subsidiaries? Plantation completed the acquisition of New Britain Palm Oil Limited (NBPOL). NBPOL is managed under a separate entity and the reporting of timebound plan will be under NBPOL’s management. NBPOL is considered as a different GP 9405A Page 22 of 106

entity/member under the RSPO and NBPOL is 100% RSPO Certified. For Liberia operations, a new mill is being set up and commissioned. Preparation to undergo the RSPO Certification process is in progress and SDP targets to undergo RSPO Certification by end 2017.

*RSPO NPP process has been completed in 2011. Internal assessment against the draft Liberia NI has been completed and closing of gaps is in progress.

Have there been any isolated Isolated lapses clarified. Yes lapses in implementation of the plan? As mentioned above , PT MAS has undergone RSPO MA and is delayed due to some social disputes.

Un-Certified Units or Holdings Note: Companies may demonstrate compliance by clear evidence of a self-audit (i.e. an internal audit for all subsidiaries, estates and Palm Oil Mills) Requirement Findings and any action Compliance required Did the company conduct an Reference: RSPO Certification Yes. Company has internal audit? If so, has a positive System : 4.2.3 - All the FFB from conducted verification visits assurance statement been the directly managed lands (or to ensure a positive produced? estates) shall be produced to outcome certifiable standards. The mill will develop and implement a plan to ensure that 100% of associated smallholders and outgrowers are of certifiable standard within 3 years. TBP for associated smallholders changed from 2019 to 2020 as our expected timeline for our directly managed OUs shifted from 2016 to 2017 due to: 1) PT MAS social issues (Details on PT MAS progress is in Attachment (lla under Appendix C) and 2) Newly established mill in Liberia that will undergo certification in 2017. Positive assurance (Internal audit) on un-certified units: PT MAS has undergone RSPO Main Assessment in July 2011. The certification body for PT MAS has considered that Sime Darby Plantation still meets the requirements of the RSPO for Partial Certification and the report GP 9405A Page 23 of 106

has been submitted for EB review. A verification audit was conducted by the Certification Body in early 2013 and Sime Darby Plantation will proceed with the next steps of certification upon satisfactory resolution of the matter. RSPO Certification process for our Liberia Operation is in progress and SDP targets to undergo RSPO Certification by end 2017. RSPO NPP process has been completed in 2011. Internal assessment against the draft Liberia NI has been completed and closing of gaps is in progress. Timeline for certification of our associated smallholders in Indonesia has been planned. Relevant internal assessment is conducted accordingly. In terms of engagement with independent smallholders several initiatives are in progress : a) Since 2016, SDP is part of Wild Asia Group Scheme for Small Producer (WAGS) where our Sandakan bay mill, Malaysia will receive the crops from this group of smallholders. b) As a member of the RSPO and signatory to the SPOM and Responsible Agriculture Charter, Sime Darby Plantation has pledged to no deforestation, protecting peat land and to drive positive socio-economic impact for people and communities in the plantations it owns and manages.SD also launched the Responsible Agriculture Charter in September 2016 which requires all the external supply to comply to the charter by 2020.These commitments extend to smallholders and Outgrowers, whether contracted or independent, from whom the company sources fresh fruit bunches (FFB) and other palm products. c) SDP rolled out the Responsible Sourcing Guidelines in 2016 by conducting Site Verification Visit for OCPs( Outside Crop) and palm oil sourced from external mills to ensure the supply is traceable, legal and not planted in peat or forest post 2010. Sime Darby Plantation’s Responsible Sourcing Guidelines sets out the mandatory GP 9405A Page 24 of 106

requirements and best practices for continuous improvement which leads our decision in sourcing externally. Any current or potential OCPs supply bases that failed to meet requirements set by SDP, they to be discontinued as our SDP Mills FFB suppliers. Further readings, kindly to Sime Darby website under Plantation Division. No replacement after dates All new plantings in SDP Yes defined in NIs Criterion 7.3: operation (including uncertified units in Liberia and Indonesia  Primary forest. operation) were in accordance to  Any area identified as New Planting Procedures (NPP) containing High Conservation and Principle 7.3: Values (HCVs). For Liberia operation, RSPO NPP  Any area required to maintain process has been completed in or enhance HCVs in 2011 which cover the HCV area. accordance with RSPO Internal assessment against the criterion 7.3. generic P&C has been completed and closing of gaps is in progress. For Indonesian operation, HCV assessment completed for all operations (including un-certified units) in 2009. Any affected areas that falls under the RSPO Remediation and Compensation Procedures is being addressed accordingly Any new plantings since January A new mill will be set up in Liberia Yes 1st 2010 must comply with the and planned for commissioning in RSPO New Plantings Procedure. Feb 2016. Preparation to undergo the RSPO Certification process is in progress and SDP targets to undergo RSPO Certification by end 2017.

RSPO NPP process has been completed in 2011. Internal assessment against the draft Liberia NI has been completed and closing of gaps is in progress. *Note: RSPO NPP Announcments for SDP can be found at http://www.rspo.org/certification/n ew-planting-procedures/public- consultations/page/14?

Any Land conflicts are being Sime Darby (Liberia) Plantation Yes resolved through a mutually Inc. agreed process, e.g. RSPO Grievance procedure or Dispute Status: Box G - Close for Settlement Facility, in accordance Monitoring with RSPO criteria 6.4, 7.5 and 7.6. Further details please refer to: http://www.rspo.org/members/com plaints/status-of- GP 9405A Page 25 of 106

complaints/view/46 PT Mitra Austral Sejahtera (Sime Darby Sdn Bhd) Further details please refer to: http://www.rspo.org/members/com plaints/status-of- complaints/view/29

Any Labor disputes are being No stakeholder comments or yes resolved through a mutually complaints received. agreed process, in accordance with RSPO criterion 6.3. Did the company conduct an Internal audit conducted. Yes internal audit? If so, has a positive No stakeholder comments or assurance statement been produced? complaints received.

Any Legal non- compliance is No pending legal non-compliance Yes being resolved in accordance with the legal requirements, with reference to RSPO criteria 2.1 and 2.2.

2. ASSESSMENT PROCESS

2.1 Certification Body SGS is the world’s leading inspection, verification, testing and certification company. SGS is recognized as the global benchmark for quality and integrity. With more than 90,000 employees, SGS operates a network of over 2,000 offices and laboratories around the world. The RSPO Programme is the SGS Group’s RSPO Certification Programme internationally accredited by the ASI to carry out RSPO P&C and supply chain certification worldwide.

2.2 Assessment Methodology, Programme, Site Visits The assessment was conducted in 3 audit days and involving two estates of Sime Darby Plantation Sdn. Bhd, SOU 13 Labu. The audit covers documentation review, internal procedures, management system, field inspection as well as identification of any significant issues for both environment or social issues. A sample of stakeholders was consulted during the assessment to get their feedback on the management practices. The assessment was conducted based on random samples and therefore nonconformities may exist which have not been identified. The methodology for objective evidence collection included physical site inspection, observation of tasks and processes, interview with workers, families and stakeholders, documentation review and monitoring data. The assessment program is included as shown in Table 6 below.

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Table 6: Audit Plan

Date Time Auditor Organisational and Functional Units/ Processes and Key Contact Activities 2/11/16 8:00 a.m JO, AD, DSK & Arrival at Estate SOU Labu MIJ Personnel, PSQM personnel Opening meeting @ New Labu Estate ( NLE ) Office  Introduction to the audit by PT SGS  Briefing by the PT SGS on the auditing approach  Formulation of audit schedule

8:45 a.m NLE Main Estate Mr Aminur Rashid Ahmad, NLE Estate Manager and PSQM personnel e.g Ms Briony JO a) Principle 4: Use of Appropriate Best Practices by Growers and Millers - Field Operation and visit - Field Operations ( Spraying/ Harvesting/, Manuring, IPM ) , Good Agricultural Practices, Safety, replanting (if any ) PPE, Interview field workers As above - Slope management and riparian zone - Boundary ( e.g Boundary with smallholder ) , OSH , Landfill , Line site domestic waste Storage Facilities - Chemical - Fertiliser - Tripled rinsed empty container - Shower area, Eyewash, pre-mix area, PPE drying area - AD a) Principle 1: Commitment to Transparency b) Principle 2: Compliance with Applicable Laws and Regulation c) Environmental Responsibility and Conservation of Natural Resources and Biodiversity

- HCV , Conservation , Bufferzone area - Landfill , Line site domestic waste As above Storage Facilities - POL - Workshop Waste Management ( SW ) , Recycling and Domesitc waste

DSK Principle 6: Responsible Consideration of Employees and of Individuals and Communities

Affected by Growers and Mills

- Interview workers, contractor and their workers - Interview worker representatives As above - Appointment with external stakeholders surrounding NLE - - Canteen GP 9405A Page 27 of 106

- Hospital Assistant

1:00 Lunch All 2:00 All auditors Line-site inspection - Interview As above - Amenities and Utilities ( water , electricity) - Food purchase - Domestic Waste Office documentation

AD Document Review : EIA updates - Legal and Maps - Licences - Records and Monitoring - EIA plan and review , Maps As above - Education of workers on ERT and HCV - Waste management plan - Pollution Plan - Waste records and disposal - Fossil fuel use efficiency - GHG calculation

DSK Interview stakeholders , Representatives , Gender

Document review - SIA Assessment update , plans and records - Records of meetings – worker meeting - Stakeholder meetings and records of As above consultation - Policies, children and discrimination - Union & contract - Pay slip and Deduction - Employment and contract Records - Legalization - Passport - Contractor payment and contractor workers - Minimum wage monitoring - Disputes, Complaints ,Grievances , Resolution and records - Sexual harassment Principle 8: Commitment to Continual Improvement in Key Areas of Activity

JO Document Review - Business management plan and replanting programme

- time-bound plan

- SOP monitoring and implementation mechanism

- Records – soil , fertiliser, water & IPM monitoring

-Records of pesticide and fertiliser usage

- Training records – IPM , Waste chemical handling

- Medical surveillance As above - Safety policy & meetings -Safety training and Health Records -LTA Records and Accident Insurance GP 9405A Page 28 of 106

5:30 Interim Findings of estate Discussion All

6:00 p.m End of Day 1 Audit

3/11/16 8:00 a.m AD , DSK , JO Arrive at Labu POM Mill Manager, Mr Denni ak Pusin & PSQM personnel Ms Legal Briony - Regulatory ( Licences ) - Permits

Confirm only receive from own supply base otherwise interview with FFB Suppliers - Payment - Contract and Pricing

Environment - EFB, POME - GHG - Monitoring Final Discharge - Water Management Plan - Waste water management e.g BOD - Submission to DOE - Waste management - Water Treatment - Electricity

Health & Safety - PPE - Training - Mill records on production - RE usage , water usage, Fossil fuel Monitoring - Audiometric Test

Interview workers - Pay - Housing - Employment contract and agreement - Deduction - Minimum wage management

Site visit – Mill reception , Process etc and Final As above Discharge EFB site 12:30 Lunch 1:30 AD, DSK & JO Mill Document and Production Records review. As above

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3:30 pm AD, DSK & JO If POM complete , travel to Labu Estate Mohd Yusri Mohd Zin, Labu Estate Manager and PSQM personnel e.g Ms Briony Housing inspection Storage sites and Waste Management AD, DSK & JO Document review As above - Records - Policies - Meeting - Plans - Government submission 5:30 Interim Findings of estate All Discussion

6:00 pm End of Day 2 Audit 8:00 am Labu POM MSA ( RSPO Supply Chain Audit Shazaley) - IP - Documented Procedure Mill Manager, Mr - Goods in Goods Out Denni ak Pusin &

- Etrace PSQM personnel Ms - Record Keeping Briony - Processing - Update on records of FFB, CPO and PK - Update on eTrace

4/11/16

AD, DSK & JO Arrive Labu Estate Division Ampar Tenang Mohd Yusri Mohd Zin, Labu Estate Audit arrangement Manager and PSQM personnel e.g Ms Briony AD - Field visit As above - HCV , Conservation , Bufferzone area - Landfill , Line site domestic waste Storage Facilities - POL - Workshop - Waste Management ( SW ) DSK - Interview workers, contractor and their workers

- Interview worker representatives - Appointment with external stakeholders surrounding NLE - As above - Canteen - Hospital Assistant

JO - Field Operation and visit - Field Operations ( Spraying/ Harvesting/, Manuring, IPM ) , Good Agricultural Practices, Safety, replanting (if any ) PPE, Interview field workers

- Slope management and riparian zone - Boundary ( e.g Boundary with smallholder ) , OSH , Landfill , Line site domestic waste GP 9405A Page 30 of 106

Storage Facilities As above - Chemical - Fertiliser - Tripled rinsed empty container - Shower area, Eyewash, pre-mix area, PPE drying area

12:00 Lunch & For Muslim – Prayer day 2:00 All Document review

All Preparation for closing meeting Travel to Labu POM for closing

5:00 p.m All Closing meeting for Labu POM and its supply base Estate and Mill personnel of SOU Presentation of Findings Labu POM and its supply Labu + PSQM base and recommendation personnel - Time-bound Plan - Stakeholder - NPP - Complaints Discussion

All End of audit 6:00 p.m Auditors travel back

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

Table 7: Auditors Profile

Evaluation Team Notes

Team Leader – James S H Ong, a Bachelor of Agriculture Science holder and agronomist in SGS (M) Sdn Bhd. He has many years working experience in agriculture Plantation and sector in Malaysia and has been working in estates as well in the Mill GAP, OSH, agrochemical and fertilizer industry. He is well versed with Good Agricultural Supply Chain practices .He has undergone ISO 14001 and RSPO Lead Auditor and RSPO GP 9405A Page 31 of 106

Supply Chain training and involved in a number of audits on oil palm plantations, supply chains and traders. He is also involved in ISCC audits within SGS.

Auditor 2 – Abdullah Din, SGS ( Malaysia ) Sdn Bhd CoC Program Manager and Lead Environment, Auditor, is a forester by profession and a trained Lead Auditor with more than Legal 8 years experience in forestry Chain of Custody (CoC) certification. He also compliances, has been involved in a number of Forest Management (FM) certification for Occupationally the last 3 years. In addition, he is a Lead Auditor for RSPO ,trained by RSPO Heath & Safety for auditing against RSPO P&C and RSPO Supply Chain and involved in a number of plantation assessments and audit of palm oil mill. He is also involved in ISCC EU certification.

Auditor 3 – Dayang Suhanie Khalid has been graduated from Universiti Putra Malaysia in Social & Bachelor of Forestry Science with major in recreational, social and services. Continuous She also has been involved in a number of Forest Management (FM) Improvement certification for last 3 years. She also has attended training on RSPO P&C Social and Labour Standards and Mechanism of Social Auditing in 2014. She has involved in RSPO assessment since 2013 in Malaysia and Indonesia. She has successfully completed ISO 9001:2008 Lead Auditor Course and RSPO Lead Auditor Course in 2013. She is also involved in COC certification for timber based products.

Auditor 4 - Muhammad Shazaley bin Abdullah has been graduated from Universiti Muhammad Malaysia Sabah in B. Sc. Hons Forestry Science. He has been working in oil palm plantation industries for some time after graduation. Having more than 4 Shazaley years working experience in auditing oil palm plantation (RSPO, ISCC), he Abdullah has involved in RSPO assessment since 2012 in Malaysia and Indonesia. HCV, He has successfully completed ISO 9001:2008 lead auditor course in 2013 Environment, and RSPO Lead Auditor Training in September 2013. GAP, Legal Presently he is in charge of the MSPO program for SGS Malaysia compliance

Observer Muhamad Iqbal bin Jailan, hold Bachelor of Bio-Industry Science from UPM. He is familiar with Good Agricultural Practices (GAP). Has more than 5 years working experience related to the oil palm cultivation and a member of Incorporated Society of Planters. He has passed the RSPO P&C Lead Auditor training.

2.4 Stakeholder Consultation and List of Stakeholders Contacted Public Stakeholder Notification was made on 2nd October 2016, 30 days prior to the recertification assessment. There were no written feedback received at the end of the 30 days period. Stakeholder consultation on-site was carried out on 2 and 4 November 2016 involved internal and external stakeholders. External stakeholders were contacted by telephone and email to arrange meetings at a location convenient to them to discuss Sime Darby Plantation Sdn. Bhd – SOU Labu Certification Unit’s environmental and social performance. Meetings were held with stakeholders to seek their views on the performance of the company with respect to the RSPO requirements and aspects where they considered that improvements could be made; These included environmental interest groups, local government agencies and relevant authorities, social groups, and workers’ unions etc. At the start of each meeting, the interviewer explained the purpose of the audit followed by an evaluation of the relationship between the stakeholder and the company before discussions proceeded. The interviewer recorded comments made by stakeholders and these have been incorporated into the assessment findings. Structured worker interviews with male and female workers and staff were held in private at the workplace in the mill and the estates. Fieldworkers were interviewed informally in small groups GP 9405A Page 32 of 106

in the field. In addition, the wives of workers and staff were interviewed in informal group meetings at their housing. Separate visits were made to each of the local communities to meet with the village head and residents. Company officials were not present at any of the internal or external stakeholder interviews. A list of Stakeholders contacted with detail comments is included as Appendix D.

3. ASSESSMENT FINDINGS 3.1 Summary of Findings 3.1.1 Principles & Criteria As outlined, objective evidence was obtained separately for each of the RSPO Indicators and criterion for the mills and estates. The results for each indicator from each of the operational areas were evaluated to provide an assessment of conformity. A statement is provided for each of the RSPO indicators in order to support the findings of the assessment team. There is 3 (three) Major Non-conformities and 6 (six) Minor Non-conformities identified during this assessment. Some areas identified with potential areas for improvement has leaded into 6 (six) Observations raised. Details for each Non-conformities and observations are given in Appendix C. Major Non-conformities has been closed out within the period of 90 days after the Re-certification assessment. Minor Non-compliances and Observations will be followed up during the next Annual Surveillance Audit which is scheduled to be conducted within the period of twelve months of anniversary of certificate.

Principle 1: Commitment to Transparency Criterion 1.1: Growers and millers provide adequate information to relevant stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making.

1.1.1 There shall be evidence that growers and millers provide adequate Minor information upon request for information on (environmental, social and/or legal) issues relevant to RSPO Criteria to relevant stakeholders for effective participation in decision making. Findings In compliance: Yes: X No:

Objective List of Stakeholders document is maintained at estates and mill visited ( Ref document : List of evidence: Stakeholders). List of stakeholders is update annually by person in charge at both estate and mill. List of stakeholders includes local community heads and other interested parties (government agencies, schools, hospitals etc). Since last audit SOU 13 has not received any request for information on (environmental, social and/or legal) issues from stakeholders relevant to RSPO Criteria. Procedure For External Communication (Appendix 5.5.3.2) of Standard Operation Manual (SOM) & Appendix 5 “Flow Chart and Procedure on Handling Social Issues” described the process of information sharing on estate’s quality, safety & health and environment, social and legal. 1.1.2 Records of requests for information and responses shall be maintained. Major

Findings In compliance: Yes: X No:

Objective Since last audit, there are no requests for information received from stakeholders. evidence: Communication with stakeholders are described in the following procedures: 1. Procedure for External Communication (Appendix 5.5.3.2) of Standard Operation Manual (SOM) – described the communication process on estate’s quality, safety & health information. GP 9405A Page 33 of 106

2. Procedure on Handling Social Issues” described the communication process on estate’s social and legal information. Criterion 1.2: Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes.

1.2.1 (a) Land titles / user rights (C 2.2) Major

Findings In compliance: Yes: X No: Objective Land titles of all estates and mill are available. These documents will be made available to all evidence: interested parties upon request. 1.2.1 (b) Occupational health and safety plans (Criterion 4.7); Major

Findings In compliance: Yes: X No: Objective Occupational Safety & Health Policy updated January 2015 authorized by the Managing Director evidence: is posted in the estates and mill’s office which is publicly available. http://www.simedarbyplantation.com/sustainability/governance/sustainability-policies Estates and mill maintains safety & health documents that includes risk assessment ( Hazard Identification, Risk Assessment & Risk Control (HIRAC) , Emergency Preparedness and Response Plan and Procedure , training plans & training records. All safety & health documents and records maintain will be made publicly available to all interested parties upon request. 1.2.1 (c) Plans and impact assessments relating to environmental and social impacts Major (Criteria 5.1, 6.1, 7.1 and 7.8);

Findings In compliance: Yes: X No: Objective The following documents are available that document plans and impact assessment relating to evidence: environmental and social impacts: 1. Environmental Aspect and Impact Identification Form (SM/5.2/EAI) – plans assessment relating to environmental impacts 2. Social Impact Assessment (SIA) – plans and assessment relating to social impacts Both documents will be made available to all interested parties upon request. 1.2.1(d) HCV documentation summary (Criteria 5.2 and 7.3); Major

Findings In compliance: Yes: x No: Objective The HCV assessment report namely “High Conservation Value (HCV) Re-Assessment For evidence: Strategic Operating Unit (SOU) 13 Labu” dated October 2016 is available. 1.2.1 (e) Pollution prevention and reduction plans (Criterion 5.6); Major

Findings In compliance: Yes: X No: Objective The Pollution Prevention Plan FY2015/2016 document is available at estates and mill. This evidence: document will be made available to all interested parties upon request. The plan contains the following : a) Pollution site b) Specific pollution source c) Means of mitigation d) Baseline required e) Means of Monitoring and Action Plan f) Action by staff responsible 1.2.1 (f) Details of complaints and grievances (Criterion 6.3); Major

Findings In compliance: Yes: X No: GP 9405A Page 34 of 106

Objective Procedure on complaints and grievances is publicly available in the company’s website evidence: http://www.simedarby.com/contact-us/contact-us The flow chart of complaints and grievances is available in Appendix 5: Flowchart and Procedure on Handling Social Issues in the Sustainability Plantation Management System dated 1 November 2008. Details of complaints and grievances are recorded in “Complaint/Grievances Book” kept by estates and mill. The book contain details of the following information: - Date of complaints - Name of complainant - Details of complaints/grievances - Actions taken - Person in-charge - Completion date The Flow Chart and records of complaints/grievances will be made available to all interested parties upon request. 1.2.1 (g) Negotiation procedures (Criterion 6.4); Major

Findings In compliance: Yes: X No: Objective Procedure is available as in Appendix 3 ‘Flowchart and Procedure on Handling Land evidence: Disputes in Sustainability Plantation Management System dated 1 November 2008. The document is kept at estates and mill’s office and will be made available to all interested parties upon request. 1.2.1 (h) Continual improvement plans (Criterion 8.1); Major

Findings In compliance: Yes: X No: Objective Documents established includes the followings: evidence: 1. Environmental Management Plan FY2016/2017 2. Energy Management Plan FY2016/2017 3. Social Impact Assessment Plan FY2016/2017 Details of continuous improvement plans will be made available to all interested parties upon request. 1.2.1 (i) Public summary of certification assessment report; Major

Findings In compliance: Yes: X No: Objective Public summary of last year certification report is available in the RSPO website. Full audit report evidence: is maintained by estates and mill and will be made available to all interested parties upon request. http://www.rspo.org/uploads/default/pnc/Labu_Oil_Mill_SGS_Sime_Darby_SA4_Approved.pdf 1.2.1 (j) Human Rights Policy (Criterion 6.13) Major

Findings In compliance: Yes: X No: Objective The policy entitled “Social & Humanity Management Policy” authorized by the Managing Director evidence: dated January 2015 is posted at Estate and Mill office. Also publicly available on the website. http://www.simedarbyplantation.com/sustainability/governance/sustainability-policies Criterion 1.3: 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 Minor integrity in all operations and transactions, which shall be documented and communicated to all levels of the workforce and operations. Findings In compliance: Yes: X No: GP 9405A Page 35 of 106

Objective A written policy committing to code of ethical conduct and integrity in all operation and evidence: transactions by SOU 13 is clearly described in “Code of Business Conduct (COBC) established by Sime Darby Berhad which was launched on 01st December 2011. The principles of the COBC includes : - Maintains reputation for behaving fairly, honestly and ethically - Shows a collective commitment to uphold integrity throughout the Group COBC handbook is available in Bahasa Malaysia language and available at estates and mill visited. Briefing of COBC is carried out by Human Resource department to all new employees. All employees are required to read and declare compliance with COBC. Principle 2: Compliance with Applicable Laws and Regulation Criterion 2.1: There is compliance with all applicable local, national and ratified international laws and regulations. 2.1.1 Evidence of compliance with relevant legal requirements shall be available. Major

Findings In compliance: Yes: X No: Objective SOU 13 has established a SOP on Legal Compliance to ensure that all regulations are identified evidence: and are met by the estates and mill. Copies of legal documents are available at mill and estate levels. Examples of files/legal documents/licenses evidence in List and Summary of Applicable Laws and Regulations verified during the Audit are as follows: i. MPOB License: 528298004000 (Valid until 31 Mar 2017)

ii. Permit Barang Kawalan Berjadual (Diesel): Serial No. N014364 (Valid until 14 Apr 2017)

iii. Lesen Abrtraktasi Air Permukaan Seksyen 7(4): BKSA-SBN/700-11/2/1-11/2014/0170 commercial, Sg Jijan Mukin Labu. Volume: 216,000m3

iv. Boiler Registration No: NS PMD 869, Make:1847 Boiler Mech Sdn Bhd/ BMWT-0077, Boiler Register /Commission : 11/07/2011, Last Inspected : 07/11/2016

v. Quarterly Return Form as per First Schedule of the Environmental Quality (Prescribed Premises) (Crude Palm-Oil) Regulations, 1977 has been sighted during audit.

vi. Compliance with the requirements of the Factories and Machinery (Noise Exposure) (Regulations)1989 Other permits sighted comply with the ‘The Factories and Machinery Act 1967’. 2.1.2 A documented system, which includes written information on legal Minor requirements, shall be maintained.

Findings In compliance: Yes: X No: Objective Written information on legal requirements is maintained under document “Plantation Quality evidence: Management System (PQSM) Summary of Compliance”. The document “Legal and Requirements Register” (File #: QSHE/04/5.2.4) that listed all applicable legal requirement also maintained at estate and mill. The document contain the followings: 1. Title of Law ( e.g. Occupational Safety and Health Act, 1984) 2. Subject ( e.g. Safety & Health Policy) 3. Reference no. ( e.g. Part IV) 4. Requirements ( e.g. General duties of employers to their employees, duty to formulate safety and health policy (duties of employees , and penalties for the above offence (

2.1.3 A mechanism for ensuring compliance shall be implemented. Minor

Findings In compliance: Yes: X No: Objective A mechanism for ensuring all listed laws are implemented is specified in the SOP of Legal evidence: Compliance. The estates and mill have established and updated Legal Compliance Checklist for 2016/17. The estate will refer to the Sustainability Manual& SOP for ‘Legal Compliance’ procedure. The SOP defines the : a) Flow: Identification, ‘ Implementation and Compliance and Review b) PIC c) Details ( Identify and register all applicable laws & regulation, ensure implementation, and to carry out periodic review ) References As in 2.1.2 , According to the SOP, Under the section ‘ Implementation and Compliance, the manager is responsible to ‘ensure implementation and compliance with all applicable laws and regulations as well as the relevant company circular all the times’ 2.1.4 A system for tracking any changes in the law shall be implemented. Minor

Findings In compliance: Yes: X No: Objective Tracking of changes in the law is carried out by Legal Department and PSQM team. All evidence: information and updates will be notified to the operating unit through letter and email from the PSQM team. Criterion 2.2: The right to use the land is demonstrated, and is not legitimately contested by local people who can demonstrate that they have legal, customary or user rights. 2.2.1 Documents showing legal ownership or lease, history of land tenure Major (confirmation from community leaders based on history of customary land tenure, recognised Native Customary Right (NCR) land) and the actual legal use of the land shall be available.

Findings In compliance: Yes: X No: Objective Legal ownership including history of land tenure is evidence through the presentation of the land evidence: titles and the payment of quit rent. At present , from documented evidence , New Labu Estate has 48 land grants left after giving up 1 grant to the neighboring quarry ( Highway Quarry GM3472, Lot 242 ) , 1 to the government ( Grn 1624 in 1996 ) and 8 to the property arm of Sime Darby. 2.2.2 There is evidence that physical markers are located and visibly maintained Minor along the legal boundaries particularly adjacent to state land, NCR land and reserves. Findings In compliance: Yes: X No: Objective Observed that boundary stones are available and visibility maintained along the legal boundaries. evidence: 2.2.3 Where there are or have been disputes, additional proof of legal acquisition Minor 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).

Findings In compliance: Yes: X No: Objective There is no land issue as this estate. evidence: The procedure for land dispute is available in document : Boundary Disputes, Squatter Disputes and Social Issues” . 2.2.4 There shall be an absence of significant land conflict, unless requirements Major for acceptable conflict resolution processes (see Criteria 6.3 and 6.4) are implemented and accepted by the parties involved.

2.2.5 For any conflict or dispute over the land, the extent of the disputed area shall Minor be mapped out in a participatory way with involvement of affected parties (including neighboring communities and relevant authorities where applicable).

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

Findings In compliance: Yes: X No: Objective There was no land issue since the establishment of these estates. The procedure for land dispute evidence: is clearly documented in document “Boundary Disputes, Squatter Disputes and Social Issues”. Criterion 2.3: Use of the land for oil palm does not diminish the legal, customary or users rights of other users without their free, prior and informed consent.

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

Findings In compliance: Yes: X No: Objective There was no land issue since the establishment of these estates. evidence: Land titles are available for the auditors to show the rights on the area. A map of the boundary stones and land surveyed are available for the auditors during the audit. Area statements are also available at the estates. 2.3.2 Copies of negotiated agreements detailing the process of free, prior and Minor informed consent (FPIC) (Criteria 2.2, 7.5 and 7.6) shall be available.

Findings In compliance: Yes: X No: Objective There are still no land issue reported prior to the audit or disputes since the establishment of evidence: these estates. Land titles are available for the auditors to show the rights on the area. Maps of appropriate scale that show the blocks and the surroundings were available at site. 2.3.3 All relevant information shall be available in appropriate forms and Minor languages, including assessments of impacts, proposed benefit sharing, and legal arrangements.

Findings In compliance: Yes: X No: Objective There was no land issue or disputes since the establishment of these estates. All copies of legal evidence: negotiations are kept by the legal division of Sime Darby Plantation Sdn Bhd The following was some historical issues that we would like to highlight under this indicator as this is still not resolved: Disputes with the long serving workers who have been there since the colonial times are still on-going and are still in the process of being resolved. They are still allowed to stay in their quarters. 2.3.4 Evidence shall be available to show that communities are represented Major through institutions or representatives of their own choosing, including legal counsel.

Findings In compliance: Yes: X No:

Objective Currently, there are no claims on legal or customary rights exist for the estate. evidence: However, for those estates bordering the smallholders and the Gallah Forest Reserve , the company has taken action to properly demarcate the area on maps and on the ground.

GP 9405A Page 38 of 106

Principle 3: Commitment to Long-Term Economic and Financial Viability Criterion 3.1: A business or management plan (minimum three years) shall be documented that includes, where appropriate, a business case for scheme smallholders.

3.1.1 A business or management plan (minimum three years) shall be documented Major that includes, where appropriate, a business case for scheme smallholders.

Findings In compliance: Yes: X No: Objective Annual budget projection for the estates is available for five years period , 2017/18 – 2020/2021. evidence: The budget of Labu Estate , M Plan E_285 FY16/17 takes into account the following: a) Crop Production and Projection b) Direct and Fixed Cost c) Depreciation d) Fertiliser cost e) Cost / Ha f) Cost / MT

Monthly the Business Inter-region ( BI ) report will be submitted to the management to tract the expenditure . It reports: a) Estate Production b) Hectareage and Crop c) Direct and Fixed Cost d) Total Direct and Fixed Cost e) OER and KER Yield and cost f) Replanting Cost

The mill has the projection is till 2018/19 . The mill budget report 2016/17 , M 252 Plan FY 2016/2017 Budget Report was available duing the audit that take into account of : a) Mill capacity b) HR statistics c) Mill cost checkroll and contraxct d) Mill cost maintenance e) Mill cost Maintenance summary- machinery , Electrical , chemical f) Mill cost – consumables g) EVIT ( engine, vehicle , implementation, tractor h) Mill cost – Fixed cost i) Total processing cost j) Total mill cost

The evidence was shown to the auditors through access of soft copy in “BPC-Citrix Computer System” in Sime Darby Plantation Computer System. 3.1.2 An annual replanting programme projected for a minimum of five years (but Minor longer where necessary to reflect the management of fragile soils, see Criterion 4.3), with yearly review, shall be available.

Findings In compliance: Yes: X No: Objective Estates Replanting Programme for five year is available. evidence: Documents available during the audit is: a. Estate Replanting Program FY 2016-2021 b. Five year Replanting Program for Labu and New Labu Estate

Estate 2016/2017 2017/2018 2018/19 2019/2020 2020/2021 New Labu Estate 0 55.98 48.02 104.72 97.34 Labu Estate 0 0 0 93.3 162.55 Total 0 55.98 48.02 197.92 259.89 GP 9405A Page 39 of 106

Ref: pre-verification data

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

Findings In compliance: Yes: X No: Objective evidence: As in the previous audit, there have been no changes in the SOP, Sime Darby Agricultural Reference Manual (ARM) and Quality Systems Manual

Both Labu Estate and New Labu Estate have maintained the Group Standard Operating Procedure as “SOP for Oil Palm Estates” version 1:2008 and issued on 1 November 2008 that describes operations procedures in a) Oil palm nursery practice, b) estate upkeep and cultivation, c) harvesting and collection, d) employee’s welfare e) workshop and maintenance f) Records of amendment

In addition , the ‘Estate Quality Management system/1/11/2008’ that is referred to for the Standard Operation Manual ( SOM ) indicates sectional information of process involved in the Quality Management System, Management Responsibility, Resource Management, Product Realization and Measurement Analysis and Improvement.

The mill is operating as per Documented Standard Operating Procedures such as:

a. Mill Quality Management System : Standard Operating Procedure

b. Quality management Manual (QMM) for Palm Oil Mill

c. Standard Operation Manual (SOM) – Version 1:2008 dated 1st Nov 2008

d. Occupational Safety and Health Manual : Aug 2008

e. Sustainable Plantation management systems – Appendix 16 : Standard Operating procedure ( SOP ) for Traceability and RSPO Supply Chain certification system ( issue date 1/8/12 )

The SOM – Mill has the following sections:

1) QMS

2) Management Responsibility

3) Resource Management

4) Product Realization

5) Measurement, Analysis and Improvement

6) Amendment Records

The Mill Quality Management System: Standard Operating Procedure contains the information on the process involved as follows:

a. Reception Station,

b. Fruit Handling Station, GP 9405A Page 40 of 106

c. Sterilization Station,

d. Threshing Station,

e. Pressing Station,

f. Clarification Station,

g. Depericarping station,

h. Kernel Recovery Station,

i. Boiler Station,

j. Power Generation,

k. Product Storage and Despatch,

l. Laboratory,

m. Oil Recovery Station,

n. Water Treatment Plant,

o. Effluent Treatment Plant, and

p. Workshop and Maintenance

q. Training needs with regard to the operating procedure and safety and health. Some of the procedures available are : 1) SOP effluent reference: EQMS SOP – Station 15 Effluent Treatment Plant Version 1 2008 Issue Date 1/11/2008 2) “permit to work system” and use of PPE’s: OSH Manual – Chapter 10 Permit To Work System 3) Operational Control Procedure SD/SDP/PSQM(ESH)/201-OS16 – Personal Protective Equipment

4.1.2 A mechanism to check consistent implementation of procedures shall be in Minor place.

Findings In compliance: Yes: No: X Objective For the mill, records are kept to check consistent implementation of procedures, some of which evidence: are following. They are monitored daily : a) Boiler Monthly Report of Water Test b) Process Monitoring Check-sheet – Clarification, Kernel Plant, Press Station, Sterilisation, Engine room, Tipping station etc c) Water quality test d) Production report e) Effluent monitoring Report f) Oil / Kernel Loss g) Unstripped Bunch

Every 6 months, the Mill Advisor , Mr Shahar Abd Kadir will inspect and present a report on the mill status. The latest report sighted was for the visit 15th -17th June 2016. The following will be checked: 1) Product Losses GP 9405A Page 41 of 106

2) Product Quality 3) Process Control 4) Production Efficiency 5) Plant Efficiency 6) Maintenance System 7) Mill Upkeep 8) Non-conformance Record 9) Production cost 10) Management & Linesite In the latest report, the Mill Advisor reported that the PQR improved 72.5% from 71%. The Safety indicator improved 70% from 68%

No mechanism or checklist sighted in NLE to check on consistent implementation of procedures. MINOR CAR 01 – see Appendix A

4.1.3 Records of monitoring and any actions taken shall be maintained and Minor available, as appropriate.

Findings In compliance: Yes: X No: Objective As above evidence: The mill maintained the record of monitoring and the action taken are kept for a minimum of 12 Months.

The mill files the following :

a) Steriliser Chart

b) Boiler and Pressure chart

c) i) Process Monitoring Check-sheet at each station ( e.g Clarification , Engine room, Kernel recovery , Tipping (Kadar tuangan) cages, , Sterilisation record, )

d) Monthly report of water test / Water quality test

e) Production report

f) Effluent monitoring Report

g) Oil / Kernel Loss

h) Unstripped Bunch

In the latest report from the mill advisor, the following were commented:

a) PQR

b) Safety Rating

c) Main Issues

d) Management team

e) Mill General Information

f) Recommendation from Previous Report

g) OER

h) Issues and Observation GP 9405A Page 42 of 106

i) Action & Recommendation

j) Throughput

k) Manager /GM comments

l) Product Losses

m) Housekeeping

n) Cost

o) Conclusion

In the conference room the mill has graphs posted on the wall to monitor the following:

a) Mill Advisor (MA ) rating ( 2013 – 2016 )

b) Mill Advisor (MA) Safety Rating (2013-2016)

c) FFB processed (2012/13 – 2015/16 )

d) OER (2012/13 – 2015/16)

e) KER (2012/13 – 2015/16)

f) Throughout (2012/13 – 2015/16 )

g) Utilization (2012/13 – 2015/16)

h) Breakdown (2012/13 – 2015/16)

i) Mill Performance (2012/13 – 2015/16) The bimonthly Workplace Inspection done on the 4/10/16 at Labu Mill was sighted with a score of 87.18

For the estate operation, records of monitoring and any actions taken are sighted and maintained. In Labu Estate, records of weekly ,’ Penilaian Mingguan OJT – Pemangkasan Pelepah dan Pemotong Buah ‘ ( Pruning and Harvesting) were sighted

At the workshop records of inspection as well as maintenance of vehicles are sighted .

4.1.4 The mill shall record the origins of all third-party sourced Fresh Fruit Major Bunches (FFB).

Findings In compliance: Yes: X No: Objective SOU 13 – Labu do not receive FFB from third-party sourced Fresh Fruit Bunches (FFB) as their evidence: mill is Identity Preserved. However they will receive and process FFB from their other Sime Darby certified SOU e.g SOU 15. Monthly during the SOU meeting, the management will decide on the diversion of FFB ( e.g. from Salak Estate ) so as to maintain the mill efficiency/throughput. Criterion 4.2: Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. 4.2.1 There shall be evidence that good agriculture practices, as contained in Minor Standard

Operating Procedures (SOPs), are followed to manage soil fertility to a level that ensures optimal and sustained yield, where possible.

Findings In compliance: Yes: X No: Objective The estate has SOPs for Good Agricultural Practices in managing soil fertility. evidence: GP 9405A Page 43 of 106

Under the ARM, Section 8 : Manuring is referred. It has subsection on : a) Manuring of Immature Oil Palms b) Manuring Immature Oil Palm – Mulched with EFB c) Manuring Mature Oi l Palm d) Guidelines on compost application e) Fertilizer placement f) Focal feeding Fertilizer

Both Labu and New Labu Estate continue to receive the fertilizer recommendations from the agronomist of Sime Darby Research Sdn Bhd.

The fertilizer recommendations provided are based on leaf analysis that are carried out annually. The results obtained are followed by fertilizer recommendations from Sime Darby Plantation R&D for annual manuring program.

The quantity of fertilizer and dosage recommended from the Agronomist can be found in the inter- Office Mail : 2016/17 Agronomic & Fertiliser Recommendation Report by the Principal Agronomist II, Kumaran M Rajagopal , Technology Transfer & Advisory Services ( TTAS ) dated 14 April 2016.

4.2.2 Records of fertiliser inputs shall be maintained. Minor

Findings In compliance: Yes: X No: Objective evidence: Records of fertiliser inputs maintained are maintain in the Manuring Program

Comparison with the agronomic report show that the fertiliser program/application is linked to the agronomic report.

In the Manuring Costing Book the estate will record the following :

a) Planning information : e.g rate, field , bags estimated b) Date of application c) Store Issuance number/ Indent Number d) Field e) Total of Bags f) Total bags applied for the day g) Balance h) No. of workers

The quantity of fertilizer and dosage recommended from the Agronomist can be found in the inter- Office Mail : 2015/16 Agronomic & Fertiliser Recommendation Report by the Principal Agronomist II, Kumaran M Rajagopal , Technology Transfer & Advisory Services ( TTAS ) dated 3/7/15 and filed in Manuring Programme.

Upon comparing the estate application records and the recommended it shows that the estate is applying as per recommmeded

During field visit , it was observed that the estate is applying the amount recommended in the Manuring Program for Estate which evidences the Agronomic & Fertilizer recommendation FY2016/2017. Examples of fertilizer applied: Ref: Oil Palm Manuring Recommendation ( Manual )

a. Estate: New Labu Estate GP 9405A Page 44 of 106

b. Field :2010 c. Quantity Applied by the worker: 1.70 kg AC ( 3 bowls ) d. Application Period: Nov 2016 Recommended in Programme / Month applying: Jul-Sept 2016, quantity 1.68kg ( converted from 2 kg AS ) 4.2.3 There shall be evidence of periodic tissue and soil sampling to monitor Minor changes in nutrient status.

Findings In compliance: Yes: X No: Objective The foliar sampling and analysis in New Labu Estate are conducted by the agronomist annually. evidence: The latest analysis is found in the 2016/17 Agronomic & Fertiliser Recommendation-Oil Palm by the Principal Agronomist II, Kumaran M Rajagopal , Technology Transfer & Advisory Services ( TTAS ) dated 14/4/16 . The report also includes the annual rainfall records, yield, palm nutrition status, fertiliser requirement as well as the manuring history.

The latest soil sample report 13/2/15 for the sampling done is 2015 was sighted , reference - Soil Test Report No. S10/2015.

The estate will conduct the soil analysis every 5 years. 4.2.4 A nutrient recycling strategy shall be in place, and may include use of Empty Minor Fruit Bunches (EFB), Palm Oil Mill Effluent (POME), and palm residues.

Findings In compliance: Yes: X No: Objective evidence: EFB from the mill will be transported to the estate as part of the nutrient recycling strategy for the plantation. The mill will weigh the EFB delivered to each estate.

Estate that receives EFB will monitor and record the area where it is placed. Amount transported and delivered to each field is recorded in each individual field files.

For example, EFB deliveries during the latest month of October 2016 are recorded as below: a. Labu Estate: 867.75 MT

b. New Labu Estate: 1,161.67 MT

c. Salak: 172.86 MT

From the records in the file for F02B, the total EFB distributed in the field was 1,738.60 kg

POME application is also monitored .

 Palm Effluent: Mill also monitors the quantity of POME released to the estate. Samples are taken from the final discharge drain . Daily discharge monitoring records of POME are recorded in the ‘Quarterly Returns Raw Effluent ‘book.

 Labu Estate receives the palm effluent from the Mill through the Furrow Bed Land Application system. This is in Field 03A of Labu Estate . The system has 314 ‘lines ‘ along the frond rows in the field. In 2016, the worker , Mr Chandran, is responsible to control the valve and decide which furrow lines to be open so that no overflow occurs and the worker at the mill will record the flow meter reading . Each ‘line’ has 5 sections and normally the last 3 lines are left empty to prevent overflow during the heavy rain period.

 In 2015, the management after visit by R&D, decided to close Lines 1-10 .

 Visit to the furrow and interview with Mr Chandran reveals that the management is managing the furrows well as there are no incidences of overflow. Mr Chandran has a notepad where he keeps records of the ‘lines ‘ open ’ and the time. Based on the record, GP 9405A Page 45 of 106

on 3/11/16, lines 37-49 were open from time 8a.m to 7 p.m . During the peak production , the time discharge will be extended like in 2013

 Zero-burn policy is still advocated during replanting.

 In the Mill , records of delivery of EFB to the estate are recorded and documented in the ‘Daily EFB Report’.

 .The mill is responsible for monitoring outgoing EFB and POME for land application. The EFB deliveries to estates (Labu and New Labu) are recorded in the document : ‘Misc Outward Summary Report by Customer / Products’. Criterion 4.3: Practices minimize and control erosion and degradation of soils.

4.3.1 Maps of any fragile/marginal soils shall be available. Major

Findings In compliance: Yes: x No: Objective Soil map of scale 1: 17,000 sighted evidence:

The soil map is available and the main type of soils in Labu Estate are Renggam, Bungor, Seremban, Local Aluvium, Durian, Malacca, Serdang and Munchong.

The soil map is available and the main type of soils in New Labu Estate are Renggam, Bungor, Seremban, Rasau, Batu Lapan , Kuala Brang, Gajah Mati Local Aluvium, Chenian and Tawar, Pohoi,Tebok, Kuah, Based on the soil types presented , there are no fragile and problem soils in the estate. 4.3.2 A management strategy shall be in place for plantings on slopes between 9 Minor and 25 degrees unless specified otherwise by the company’s SOP.

For slope protection, the policy states that slopes >25° must be excluded from any new plantation development and replanting programme.

And Planting of Forest tress for enrichment of the species is recommended.  SOP for practices of Soil conservation documented in the QMS : SOP Section B6: Soil and Water Conservation  Road maintenance program for both estates are available during the audit.  Soil and contour map is available to monitor potential erosion area in the estates.  Terraces were constructed on slopes >2° during replanting. For reference SOP: Section B1: Planning for replanting /New planting section 10.0  Spraying along terrace are concentrated along the palm rows and the vegetation along the lips are maintained  In the field , the pruned fronds are stacked and placed between the palm rows along the pruned fronds rows.

Slope % Area NLE ( Main ) 0° - 2° 18.73% 76.33 ha 2° - 6° 62.87% 269.89 ha

6° -12° 17.75% 209.31 ha 12° - 20° 0.64% 128.47 ha 20° - 25° 0.18% 15.36 ha

>25° 0.91 ha

GP 9405A Page 46 of 106

4.3.3 A road maintenance programme shall be in place. Minor

Findings In compliance: Yes: x No: Objective For reference SOP: Section B5a & B5b : Road construction and roads, Bridges and Culverts. evidence: The estate management has allocated budget for road maintenance and upkeep. Road upkeep and maintenance are conducted when necessary .The costing records of roads repaired and machineries for road maintenance are found in the expenditure records.

The objective evidence observed during the audit are as follows: a. Monitoring and Maintenance FY2016/2017 file b. Examples of budget allocated for New Labu Estate sighted by the auditor is: i. Road upkeep: ii. Bridge upkeep : as above iii. Culvert maintenance/construction: The total to-date ( Oct 2016 ) spent : RM 34,115 out of a budget RM 170,651 under the code RB- Road and Bridges

The estate will attend regular budget meeting for review to monitor the amount spent.

4.3.4 Subsidence of peat soils shall be minimised and monitored. A documented Major water and ground cover management programme shall be in place.

Findings In compliance: Yes: No: N/A Objective There is no peat area identified or sighted in both estates. evidence: 4.3.5 Drainability assessments where necessary will be conducted prior to Minor replanting on peat to determine the long-term viability of the necessary drainage for oil palm growing.

Findings In compliance: Yes: No: N/A Objective There are no peat areas identified or sighted in both estates. evidence: 4.3.6 A management strategy shall be in place for other fragile and problem soils Minor (e.g. podzols and acid sulphate soils).

Findings In compliance: Yes: No: N/A Objective There are no peat areas identified or sighted in both estates. evidence:

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

4.4.1 An implemented water management plan shall be in place. Minor

Findings In compliance: Yes: No: Objective Water Management Plan 2016/17 for New Labu Estate prepared on 5/7/16 was sighted during the evidence: audit. The water management plan contains the following items :

a) Water source b) Water requirement during water shortage c) Analysis of water quality for natural waterways d) Control of erosion

In each of the item , the estate has identified the following: Location , Action Plan , PIC and target date . Records of water used recorded at the meters are recorded monthly. The workers are now provided with piped water from the local authorities, Sykt Air Negeri Sembilan ( SAINS ) . Records of water usage as of Sept 2016 are as follows: a) Bulk Meter ( Kirby ) : 2074 m3 GP 9405A Page 47 of 106

b) Estate office: 458 m3 c) Workshop : 409 m3 d) Workers complex : 7003.19 m3 e) Executive bungalow : 450 m3 f) Staff Housing : 971 m3

The mill has established Water Management Plan in order to monitor the water consumption and minimizing water pollution. The plan has been reviewed by Mill Manager 0n 24/7/15 and consists of: a. Water Sources from SAINS b. Water Sources from own Treatment c. Water quality d. Monitoring of POME generation

The mill also has a management plan to monitor the wastewater produced from the following: a) Processing Stations b) Boiler c) Lab d) Process ramp e) Workshop f) FFB ramp g) Line-site and office h) Washroom

In Labu Estate, due to the low water pressure from the authoritiy water , the domestic water is a mixture of the spring water and the authority water . The water is tested for e-coli and coliform at the manager, staff and workers quarters to ensure compliance. Report ML200/2016 of the analysis sighted dated 21/9/16 .

However, the river Sg Jijan water analysis was not sighted during the audit. OBSERVATION 01

4.4.2 Protection of water courses and wetlands, including maintaining and Major restoring appropriate riparian and other buffer zones (refer to national best practice and national guidelines) shall be demonstrated.

Findings In compliance: Yes: X No: Objective Sime Darby Plantation Sdn Bhd has establish a Slope and River Protection Policy / Polisi evidence: Perlindugan Cerun & Sungai , January 2015 to protect rivers and slopes. For the protection of river bufferzone it is stated that buffer zone shall be maintained on both sides of the riverbanks, guided by the table below :

River >3 <5 5 – 10 11 – 20 21 - 40 >40 width ( m) ( Sabah ) Buffer zone (on both 20m 5m 10m 20m 40m 50m river banks)

There are no rivers within NLE , however evidence is found along Sg Jijan in Labu Estate and in some of the streams that flow through the estates that the riparian buffer zone is maintained, marked and protected . The stream that is sighted in NLE at the field neighbouring the private stone quarry only flows GP 9405A Page 48 of 106

when there is a heavy downpour. In Labu Estate , vetiver grass has been planted along erosion-prone embankment to conserve the sides of the riverbank

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

Findings In compliance: Yes: X No: Objective KKS Labu is using the series of ponds to treat the POME discharging through land application. evidence: The mill also keeps a record of outgoing water e.g. effluent quality for discharge which is allowed by Department of Environment, DOE. The BOD allowable at 3 days, 30°C must not be more than 5,000mg/L.

Ref: Layout plan LL/POME/4490/2000 Sheet no. 1/2 and 2/2 Jan 2000.

The records of monthly submission to the DOE about the BOD analysis as well as daily reading of the quantity discharge is available in the DOE Return File.

Results for the latest quarter are as follows:

Labu Oil Mill is monitoring the effluent discharge as required by DOE in license number 002075 ref: ASNS(B) 31/152/000/019 for the period 1/7/16 – 30/6/17

The volume of effluent that is discharge into the land application is recorded in the effluent log book. Based on the latest quarterly DOE A.S.4 submission the following was reported

Month Volume (m3)/ 24 hrs Volume (m3) B.O.D (mg/L) September ‘16 563.72 14092.96 905

August ‘16 522.31 13580 1040

July ‘16 500.72 12017.32 1535

KKS Labu wastewater is treated in a series of ponds with a hydraulic retention time of 66 days with a total capacity of 35,607 m3. The layout and sectional view of effluent treatment was sighted

Name of Pond No. of ponds Buffer /Cooling 1 Acidification Pond 2 Anaerobic Pond 2 Aerobic Pond 1 Maturation Pond 1 The final discharge is from the Maturation Pond At present, the mill is discharging 100% its effluent through Land application ( Atas Tanah ) . a pump is used to discharge the effluent to the field. The methane capture project in collaboration with MPOB has been temporarily been stopped due to some technical problems.

GP 9405A Page 49 of 106

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

Findings In compliance: Yes: X No: Objective The mill is monitoring the water usage in operation and processing. Monitoring of monthly water evidence: usage for FY2016/2017 is sighted

The following were the records for the FY 2016/17

Mill Process M³ / MT 2016/17 Process (include process & FFB Month (MT/FFB) Boiler)M³ Processed Jul-16 12,113.70 8,850.52 1.37 Aug-16 13,675.80 9,606.10 1.49 Sep-16 13,940.20 10,344.33 1.35 Oct-16 15,608.20 10,367.03 1.51

Criterion 4.5: Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management techniques. 4.5.1 Implementation of Integrated Pest Management (IPM) plans shall be Major monitored.

Findings In compliance: Yes: X No: Objective Documented IPM system is available in both estates. IPM system is integrated into the evidence: Agricultural Reference Manual (ARM) which is disseminated to all estates. The latest version of the ARM is available and inspected. Observed that the IPM is incorporated in the ARM in Section 15: Plant Protection Each pest is identified and technical information like the different species and it’s lifecycle is provided. Techniques used to control cultural, biological and chemical methods are also provided . Use of chemical and other physical method are used as the last resort. The monitoring of pest attack in the estate are carried out for: a) Rhinocerous beetle b) Rats c) Ganoderma

Barn owl is used in the estates as a biological control for rats.

In New Labu Estate, a Monitoring File keeps a record of last census of Barn Owl Box. The census conducted in August 2016 :

Main Estate Kirby No. Of Boxes 11 19 Boxes Occupied 9% 55% Ratio 1:27 1:54

The low occupancy may be due to the activity at the Quarry that borders the estate.

Records of pest occurance is recorded in the census book and control is recorded in the Rat Baiting Record file.

Due to low incidence and occurrence of rat attack, the operating unit is just doing what is known as “Campaign Baiting” conducted every six month to ‘control’ the rat population in their estates. GP 9405A Page 50 of 106

Each campaign averages 4-5 rounds where bait will be applied every 4 days. The operating unit is using Warfarin-based rodenticide for the baiting campaign.

A sample application was sighted In the July 2016 campaign and by the 3rd replacement round, the % replacement is <20%, baiting ceases.

Field : 2006 Ha: 67.17 Bait: Ebor Baits ( warfarin )

1st replacement round 23/7/16 69% 2nd replacement round 28/7/16 42% 3rd replacement round 2/8/16 19% ( Baiting ceased )

For Ganoderma monitoring , the estate will conduct the survey once a year. The estate will send a worker to mark the palms with an ‘x’ using red-paint on palms having the fungi-fruiting bodies to indicate infected palms. Record of the census is sighted in the file ,

Based on the Planting Advisor report 2016 01/16/17, in the recent ‘Ganoderma Field Census and the Summary of the Ganoderma Census form’ in the latest census done in June at New Labu Estate , it was reported that 81.12 ha had infection of 5-10% and 1592.65 ha had an infection of < 5%

Beneficial plant new planting and area it is maintained can be found recorded and mapped. The Visiting Agent report (Plantation Advisory Report) will also report the Pest and Disease incidences and provide recommendations if required.

4.5.2 Training of those involved in IPM implementation shall be demonstrated. Minor

Findings In compliance: Yes: No: X Objective evidence: In Labu Estate they conducted a morning briefing/communication on the biological control of IPM on 17/8/16. The Manager and Assistant Mr Saiful attended a Regional P& D road-show on 22/7/16 session on : a) Barn Owl Boxes and census b) Submission of P&D returns - Rat Baiting returns - Annual Ganoderma census - Observation of bagworm / nettle caterpillar attack and census if sighted - Reporting to R&D and Crop protection Unit c) Rat baiting Master plan d) Order for rat bait e) Efficiency of rat Baiting

No training of IPM sighted in their training programme for New Labu Estate. MINOR CAR 02

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

4.6.1 Justification of all pesticides used shall be demonstrated. The use of Major 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. Findings In compliance: Yes: X No: Objective Justification and Usage of agrochemical is described in the Section 15: Pest and Disease and GP 9405A Page 51 of 106

evidence: Section 16 : Weed control of the ARM The procedure describes the function/justification and methods of applying the agrochemical, process monitoring and records that need to be comply with. All the chemicals used in the estates were sighted in the ‘Justification and Usage ‘ table . 4.6.2 Records of pesticides use (including active ingredients used and their LD50, Major area treated, amount of active ingredients applied per ha and number of applications) shall be provided. Findings In compliance: Yes: X No: Objective evidence: The management unit are monitoring the records of chemical application interval and the follow- up spray in the ‘Upkeep’ files. The records of chemical issued and field for application were recorded in the Chemical Stock records issued by the store keeper.

Similarly the field staff will record the usage in their costing book. It includes: a) Date b) Field c) Ha d) Man-day e) Labour Cost & Material Cost f) Transport cost g) Total cost h) Cost per ha

For Labu Estate monitoring is done six monthly kg a.i/ MT FFB FY kg a.i/hectare processed Jan-Jun 2012 16.56 1.843 Jul – Dec 2012 16.004 1.450 Jan-Jun 2013 21.418 3.429 Jul – Dec 2013 16.245 1.443 Jan-Jun 2014 5.243 2.007 Jul – Dec 2014 3.860 1.938 Jan-Jun 2015 2.631 1.013 Jul – Dec 2015 9.274 3.569 Jan-Jun 2016 10.791 4.153 Jul – Dec 2016 ( till Sept ) 10.151 3.907 Note : records from 2014 onwards were obtained from records during audit ASA 04. The increase in the kg a.i / ha and kg a.i / MT FFB is due to the replanting programme which require higher pesticide/weedicide usage and lower production .

Records of pesticides used in estate operation are available. The estates also provide Master Plan for Spraying costing FY 2016/2017 The auditors saw evidence that record of spraying activities are recorded by the staff in the Spraying Costing Book. Examples of the information recorded are as follows:

New Labu Estate a) Date: 25/8/16 b) Chemical Name: Basta c) Field: 15B d) Area: 8.12 ha e) Chemical Quantity: 10 lit f) Labour Cost: RM 115 ( 3 manday ) g) Chemical Cost: RM 396 GP 9405A Page 52 of 106

h) Transportation Cost: RM 120 i) Cost/ha: RM 77.75 j) Circle spray programme

No records of pesticides use (including active ingredients used and their LD50, area treated, amount of active ingredients applied per ha sighted for New Labu Estate MAJOR CAR 03 and has been closed on 30 January 2017 – see Appendix A. 4.6.3 Any use of pesticides shall be minimised as part of a plan, and in accordance Major with Integrated Pest Management (IPM) plans. There shall be no prophylactic use of pesticides, except in specific situations identified in industry’s Best Practice. Findings In compliance: Yes: X No: Objective The estate practices IPM to minimize chemical used to control pest. evidence: The following are the examples implemented sighted :

1) Beneficial plants : The estate has also mapped out the beneficial plants planting that are done annually. 2) Barn owl boxes are established and census periodically to maintain the barn owl population for biological rat control .

For the control of Oryctes beetle in the replanting , prophylactic bi-weekly spray of cypermethrin is generally implemented on the replanting areas till they are about 24 months if there is a pest outbreak.

However the Management will decide when to cease the bi-weekly spay or reduce the interval when the report or census show that the pest is under control.

4.6.4 Pesticides that are categorised as World Health Organisation Class 1A or 1B, Minor or that are listed by the Stockholm or Rotterdam Conventions, and paraquat, are not used, except in specific situations identified in industry’s Best Practice. The use of such pesticides shall be minimised and/or eliminated as part of a plan, and shall only be used in exceptional circumstances. Pesticides selected for use are those officially registered under the Pesticides Act 1974 (Act 149) and the relevant provision (Section 53A); and in accordance with USECHH Regulations (2000). Findings In compliance: Yes: X No: Objective Use of chemical categorized as World Health Organization Type 1A or 1B, or listed by the evidence: Stockholm or Rotterdam Conventions and herbicide like paraquat, are now phased out . No Class 1A or 1B insecticide is used as there are no incidences. The management is aware that authorisation from the authorities is required for the use of monocrotophos or methamidophos used in trunk injection for leaf eating pest control. Presently, SOU 13 Labu is using a Class III chemical , active ingredient acephate , as an alternative to the above chemicals for trunk injection. Pesticide usage is monitored monthly and summarized yearly. 4.6.5 Pesticides shall only be handled, used or applied by persons who have Major completed the necessary training and shall always be applied in accordance with the product label. Appropriate 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). Findings In compliance: Yes: X No: GP 9405A Page 53 of 106

Objective The estate will refer to the SOP: Safe Use & Storage of Agrochemicals for the handling of evidence: chemical /pesticide. Some of the training that they have conducted for workers who apply or handle pesticides are as the table below.

Month/Date Training topic Estate NLE , 6 spray operators + 24/3/16 Pest & Disease Training on PPE and 1 mandore Technique NLE , 37 participants 26/4/16 Chemical handling NLE, 5 spray operators, 2 5/5/16 Interpump Calibration mandore and 5 staff NLE 4 spray operators + 1 18/8/16 Spray Training staff

LE 6 spray operators 14/4/16 PPE, spraying & Buffer zone Labu Estate Manager and 22/7/16 P& D roadshow by Sime Darby Region Assistant Saiful

The training is normally conducted in Bahasa Malaysia which is the appropriate language understood by the workers. They would have a translator to assist understanding for the workers. During field interview with the spray operators, they demonstrate understanding of the hazards and risks related to chemicals used when interviewed. The spray operators were appropriately attired with the PPE provided by the management . During the regular training, use of PPE is emphasized. The spray operators are aware of replacing the filter when due. At Labu Estate, during pre-mixing , the pre-mixers team were provided the respirator and the appropriate PPE. ( however they were placing the filter in the wrong direction in the respirator mask ) Every morning and during work , the staff and mandore will ensure that the PPE are worn and used properly Damaged PPE will be replaced by the management. The management has also provided place for them to wash their PPE after the work. Similarly a shower area is also provided for a ‘wash-down ‘ before the spray operators go back NLE and LE has a place for them to hang their washed PPE . However it was also sighted that in NLE they will be mixing the chemical at the site where the workers store their clothing as well as the place where they hang the PPE.

Pesticide are used accordance to label unless it has been approved by the management due to the pest/weed composition. MSDS is available at the storage site, office as well at the clinic. The equipment used is checked prior to use to ensure no leakages. During the interview with spray operators, they were attired with the appropriately PPE as per HiRARC Spray Workers New Labu Estate Laxman - Mandore Ajibar Mandal Bhulu Mondal GP 9405A Page 54 of 106

Rakhesh Mondal Kalyan Mishra Tapan Khamaru However it was found that competency training programme of the new spray operators , Kalyan and Tapan were not available . Similarly , for Labu Estate trunk injection training conducted for the workers, they were not evaluated for the competency and understanding .

MAJOR CAR 04 and has been closed on 30 January 2017 – see Appendix A

4.6.6 Storage of all pesticides shall be according to recognized best practices. All Major pesticide containers shall be properly disposed of and not used for other purposes (see Criterion 5.3). Pesticides shall be stored in accordance to the Occupational Safety and Health Act 1994 (Act 514) and Regulations and Orders, Pesticides Act 1974 (Act 149) and Regulations. Findings In compliance: Yes: X No: Objective The chemicals was found to be systematically stored in a ventilated store, good roofing , lighting evidence: and its entrance door locked .

They have shelving, barriers as well as trays to separate one chemical form another.

The MSDS for all chemicals stored is found available during the audit.

The MSDS were prepared in English and Bahasa Malaysia to make in understandable to the store staff.

Hazard signs are posted on the entrance of the chemical and fertilizer store The emergency shower, eye wash and tap or water source is within easy reach in case of spillage is sighted at the wash area and premix store . First aid kit was also available. It was also noted that some chemical containers are temporarily stored behind the wash store before storing in the fixed area are exposed to the elements and may be easily accessible to workers /personnel . Emergency Response Plan is available for poisoning , accident as well as for fire in the chemical store however the procedure for chemical spillage was lacking OBSERVATION 02 – see Appendix A

4.6.7 Application of pesticides shall be by proven methods that minimise risk and Minor impacts.

Findings In compliance: Yes: No: X Objective In New Labu Estate conventional knapsack sprayer with nozzle ( chocolate colour ) of spray evidence: volume 195 lit/ ha is used . Calibration is done for the other coloured nozzles however it was noted that the calibration records are done in 2015 . Similarly , in Labu Estate ,no calibration was done for the blue nozzles of spray volume 225 lit / ha used in operation MINOR CAR 05 – see Appendix A 4.6.8 Pesticides shall be applied aerially only where there is documented Major justification. Communities shall be informed of impending aerial pesticide applications with all relevant information within reasonable time prior to application. Findings In compliance: Yes: X No: Objective No aerial sprays were conducted. evidence: GP 9405A Page 55 of 106

4.6.9 Evidence of continual training to enhance knowledge and skills of employees Minor and associated smallholders on pesticide handling shall be demonstrated or made available. (see Criterion 4.8). Findings In compliance: Yes: X No: Objective No associated smallholders . evidence: Yearly , the estates have training to enhance knowledge and skills of employees/workers on pesticide handling.

4.6.10 Proper disposal of waste material, according to procedures that are fully Minor understood by workers and managers shall be demonstrated (see Criterion 5.3). Findings In compliance: Yes: X No: Objective Proper waste disposal methods were sighted. For example, household are provided bins for evidence: domestic waste, Scheduled waste, recyclable waste and empty chemical containers are kept designated storage area at the Estate-cum-oil mill compound prior to its disposal . Annually training are conducted to raised awareness of proper waste disposal to workers as well as to the estate personnel. E.g in their training matrix, for Labu a training was conducted on 7/11/16 on ‘ Scheduled Waste management’ During visit , NLE and LE it was sighted that both domestic waste bins as well as recyclable bins were available at the line-site for household to dispose of their litter and waste. For more info , please refer to Criterion 5.3 4.6.11 Specific annual medical surveillance for pesticide operators, and Major documented action to treat related health conditions, shall be demonstrated.

Findings In compliance: Yes: X No: Objective Medical surveillance was check for the spray operators at New Labu Estate as the Estate have a evidence: submission to DOSH approval to show that they are not involved with Class 1A and 1B chemicals . The sprayers had their annual surveillance done by Dr Zakaria Saad, OHD , Klinik Tengah , Klang and were passed and considered ‘Fit to Work’

The medical check-up included the cholinesterase test and no decrease in the levels Spray Workers NLE Date Ajibar 16/2/16 Bhulu Mondal 16/8/16 Rakhesh Mondal 16/8/16

In Labu Estate the medical surveillance was sighted for the 18 workers .

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

Findings In compliance: Yes: X No: Objective During the visit to New Labu Estate, the estates do not have female sprayers. evidence: The company SOP stated that pregnant and breast feeding women were not allowed to do work with pesticide. Criterion 4.7: An occupational health and safety plan is documented, effectively communicated and implemented 4.7.1 An occupational health and safety policy shall be in place. An occupational Major health and safety plan covering all activities shall be documented and implemented, and its effectiveness monitored. Findings In compliance: Yes: X No: Objective Sime Darby Plantation SOU 13 Labu has updated the documented Occupational Safety and evidence: Health Policy to show commitment to provide and maintain a safe and healthy working GP 9405A Page 56 of 106

environment as well as preventing injury and ill health to its employees, contractors and visitors.

The policy is sighted posted on the office on the wall in both English and in Bahasa Malaysia. The policy has been approved by an authorized personnel, Datuk Franki Anthony Dass , Managing Director and dated Jan 2015.

The policy is also made publicly available at the muster ground.

The policy states that they are committed to :  Complying with statutory requirements, relevant standards, guidelines and code of practice  Formulate , establish , communicating , implementing and maintaining occupational safety and health system  Inculcating the culture of safety and health among employees and stakeholders  Equipping employees with adequate knowledge, training and experience to enhance their alertness and competency in performing their work  Continually improving the management of occupational safety and health related matters  Aligning their food processes and products with new development in technology and compliance

The mill has formulated the ‘OSH Management Action Plan 2016/17 covering all activities documented.

The action plan include: 1) Tool-box briefing ( given during the daily morning briefing for the various stations ) 2) OSH Committee Meeting 3) Safety Inspection 4) Safety campaign 5) Fire Drill and Fire fighting 6) Spillage Drill 7) Search and Rescue Drill 8) Accident Investigation & Reporting

It records the frequency , ‘action-by PIC, participants as well as the month they plan to have the session.

The mill will record the session as well as the training to show its implementation and its monitoring.

4.7.2 All operations where health and safety is an issue shall be risk assessed, and Major procedures and actions shall be documented and implemented to address the identified issues. All precautions attached to products shall be properly observed and applied to the workers. Findings In compliance: Yes: No: X Objective Procedure for Identification of Hazard, Risk Assessment and Risk Control is made available. The evidence: records of Hazard Identification, Risk Assessment and Risk Control are maintained and available that the risks are classified according to the job list and working environment

For the mill, the HiRARC was review/conducted on 1/7/16.

Departments sampled were: a) Boiler b) Clarification c) CPO Storage d) Effluent Plant e) Engine Room f) Kernel Plant g) Kernel Storage h) Lab i) Nut Cracking j) Pressing Station GP 9405A Page 57 of 106

k) Ramp l) Threshing Station m) Weighbridge n) Workshop, etc

The following are samples of operations sighted in the HiRARC for the estates:

a) Replanting b) Emergency Preparedness and Response c) Waste d) Harvesting e) Collection f) Workshop g) Store h) Nursery i) Breaktime j) Transporting Workers

In addition ,the mill the various stations are identified and risk assessed such as:

For each Department , HiRARC form filled would include : a) Step No. b) Job Step c) Hazard d) Effect e) Existing control ( nature of risck control and type ) f) Probability g) Severity h) Risk assessment i) Recommended Risk control

In addition, the procedure also describes the method in calculating the rate of risk i.e. by multiplying the Probability of Risk x Severity . Based on the procedure, the calculated risk is subsequently classified according to the following classification:

 Low – ( 1-3 ) Tolerable risk – No additional risk control measure required  Medium – ( 4 -1 0 ) Moderate risk – Current risk control measure may need to be improved  High – ( 11 – 16 ) Intolerable risk – Immediate action required to control the hazards or stop the operation

It was also sighted that after the accident dated 4/10/16, the HiRARC for the Station : General Cleaning was revised on the 8/10/16

Noise mapping available conducted by Procoma Environmental (M) Sdn Bhd. Based on the report the noise levels at the boiler station and the sterilization unit was 85 to 90 dB . A section in the boiler has also been identified ( near the fans ) as area having noise >90dB.

As per Regulation 28. Of the Factories & Machinery, appropriate warning signs which indicate that the area is a high noise area and that hearing protection devices are to be worn are posted at entrances to or on the periphery of all well-defined work areas in which workers exposed at or above the limits prescribed in regulations 5 and 6

The HiRARC at Labu Estate was reviewed at different times within 2015/16 . for example for harvesting this was reviewed on 15/10/16 . If there is an accident the HiRARC for that Department will be reviewed.

However the HiRARC for Labu Estate the harvesting risk assessment report did not show what PPE is required for the operation. Similarly the harvesting HiRARC for New Labu Estate did not include safety helmet as part of the PPE required. . GP 9405A Page 58 of 106

MAJOR CAR 06 has been closed on 30 January 2017 – see Appendix A 4.7.3 All workers involved in the operation shall be adequately trained in safe Major working practices (see Criterion 4.8). Adequate and appropriate protective equipment shall be available to all 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. Findings In compliance: Yes: X No: Objective Workers have been briefed daily and if necessary trained in safe working practices and PPE are evidence: supplied to all workers, both in the estates and mill. There is a daily briefing by the supervisors during the morning ‘muster’ for workers prior to commencing work, during which workers are reminded of OSH requirements and their PPE checked.

Safety and PPE Records, the PPE matrix records the PPE required for the operation. ‘Permit to work’ form records the type of work as well as the PPE required to be used for the work.

In the file SOP on Environment, Safety and Health , Doc No: SD/SDP/PSQME(ESH)/201-OS16 dated 26/2/15 PPE in Appendix 1 it is recorded the required PPE for each operation is sighted.

Below are some of the OSH training found in the training file of the estate and the mill

Date Training Topic Mill May 2015 OSH Act and Regulations 1994 May 2015 Factory and Machinery Act May 2015, Jan USECHH 2016 May 2015 Notification of Accidents and dangerous occurence May 2015 ESH Committee Functions and Responsibility May 2015 ESH Coordinator Functions and Responsibility May 2015 Accident Investigations Techniques May2015, Aug First Aid Training 2016 Sept 2015 Emergency Respond Plan May 2015 what is MSDS/ CSDS Dec 2015 LO-TO system May 2016 Safe work Procedure May 2016 5S and TPM Labu Estate 1/9/16 Safety for Lorry Driver – Bio-Pride ( 9 participants ) - Asst Saiful & Yusri 8/6/16 Cara-cara betul pengunaan sabit Palm king 20 Harvesters - Supplier 3/6/16 Ripeness and long stalk 30 workers- Mr Michael , PSQM 6/3/16 Ripeness and long stalk ( 10 workers ) - Mr Michael , PSQM 17/5/16 Briefing for drivers on safety during wet season ( 13 workers )- Mr Fakaruddin , Staff 25/3/16 Housing / Linesite- Fire Drill and Use of Fire extinguisher ( 8 Participants ) - Mr Yoges , SQMO 3/2/16 Latihan Penuain ( Use of harvesting pole and handling of long pole while on motorcycle ) ( 20 workers) - Mohd Zakwan , Asst Manager 4/9/15 Electrical Safety Briefing for OHPL Harvester ( near overhead wire ) Staff , assistant and Harvesters ) - TNB 26/9/156 Trunk injection using Acephate 75%- Muhd Najdi , Asst Tanah Merah Estate Similarly at the mill , the annual OSH training plan 2016/17 was sighted . Some of the training conducted are listed above. GP 9405A Page 59 of 106

PPE used in Mill and estate has been checked by both the OSH personnel as well as the HA to ensure they comply

Adequate and appropriate protective equipment were made available to all workers at the place of work to cover all potentially hazardous operations, such as pesticide application, machine operations, workshop , manuring, driving harvesting and land preparation. Field visit and interview with spray operators , harvesters , manurers and workshop workers show that the mandore, drivers , workers as well as staff are aware of the use of PPE and appropriate PPE were worn. This was sighted at both at New Labu and Labu Estate. 4.7.4 The responsible person/persons shall be identified. There shall be records of Major regular meetings between the responsible person/s and workers. Concerns of all parties about health, safety and welfare shall be discussed at these meetings, and any issues raised shall be recorded. Findings In compliance: Yes: X No: Objective At present En Salahuddin Abd Rashid – OSH Eexecutive for the SOU within Region Negeri evidence: Sembilan is the responsible person in charge of safety and health. For New Labu Estate , the OSH safety officer is Mr Mohd Nor Subhi , Asst Manager ( NLE) For Labu Estate , the OSH coordinator is Mr Mohd Zakwan Jamaluddin, Asst Manager For the Mill , the personnel responsible a) Mr Hafiz Shukri – Safety Officer He and another staff En Roslin or En Rahim , Shift Supervisor is responsible for accident investigation

The mill has a Safety , ERT Organization chart chaired by the mill Manager Mr Denni Ak Pusin. They have other organisation chart related to safety such as Accident Statistic and Investigation, Audit and Inspection, HiRARC, Admin and Operation, Communication , Training and Promotion

The following are the OSH Meetings conducted in the various mill / estate: : Records of the minutes are found in the Management Review Meeting

Estate/Mill Date of Meeting NLE No records for the September meeting NLE 20/6/16 NLE 18/3/16 NLE 11/12/15 Labu Mill 31/10/16 Labu Mill 4/8/16 Labu Mill 27/5/16 Labu Mill 29/3/16 Labu Estate 26/9/16 Labu Estate 26/6/16 Labu Estate 20/5/16 Labu Estate 26/2/16

The meetings are normally attended by management staff, OSH officer, supervisor , mandores, workers rep , foreman workshop . In the latest meetings, safety issues like updates on past issues raised , rusty structures at the fibre cyclone and fencing, request for increase of hand railing, labelling of control panels , position of auto-feed switch, presence of wild dogs at the linesite, the use of LED lightings at the line-site GP 9405A Page 60 of 106

for safety, Skor Pemeriksaan tempat kerja, Laporan Pemeriksaan Tempat Kerja, ‘Laporan Kemalangan/ , accident , Laporan Kesihatan, Laporian Keselamatan, , Scheduled Waste report , Laproan alm Sekitar, Laporan HiRARC.

ERP were sighted at the chemical store and first aid kits were found at the work-sites/field operation. The mandores are responsible for the first aid kits.

Due to the ‘missing’ meeting minutes in Sept 2016, an observations raised OBSERAVATION 03 – see Appendix A 4.7.5 Accident and emergency procedures shall exist and instructions shall be clearly Minor understood by all workers. Accident procedures shall be available in the appropriate language of the workforce. 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. Findings In compliance: Yes: X No: Objective First aid kit was available with the mandores with the manuring, spraying and harvesting mandore evidence: at estate. It was also sighted at the workshop Similarly first aid kits are found at the mill office and at lab, workoffice, AP, Crop checker site. Training are provided annually for first-aiders. Date Estate / Mill 14/10/16 First Aid training Labu Estate Mandores and Staff May 2015, Aug 2016 First Aid training Mill

The fist aid kits sighted at the field operating sites were well-stock according to the list provided by the Hospital Assistant. At Labu Estate , the HA provided the record list of a) First Aid location list b) Expiry of the items in the first aidt box c) First aid box site plan d) Item replacement records The Hospital Assistant for Labu Estate and the Palm Oil Mill is Mr Jeyapaskar a/l Narayanan . Mr Mohd Baduzaman is the HA at New Labu Estate. The mill and Estate will refer to the QMS: Level 2 SOM: Subsection - Management responsibility , appendix 5.5.3.3 Emergency Preparedness & Response Procedure ( 1/11/2008 ) . it include the emergency response plan for : a) Fire b) Explosion c) Oil Spillage

In another file , Emergency Preparedness & Response Procedure, it has flowchart for : a) Tanggungjawab pekerja sekira berlaku Kemalangan b) Pelan tindakan kecemasan semasa waktu Malam c) Pelan tindakan kecemasan kebakaran di stor, pejabat, kilang, rumah pekerja d) Pelan tindakan kecemasan tumpahan kimia e) Pelan tindakan kecemasan kemalangan di tempat kerja f) ERP : Effluent , Oil Spillage , Fire The ERP covers most of the cover all major potential emergencies that are likely to occur. GP 9405A Page 61 of 106

Records is kept of all accidents and periodically reviewed at quarterly intervals.

In New Labu Estate, all incidences are filed in the ‘JKKP File 6 and 8’

Accident records are recorded in the official JKKP 6 ( for more than 5 days medical ) . A HIRARC is reviewed after the accident and action will be taken. Annually, the JKKP 8 will be submitted as per regulation. This was sighted at both the estate as well as for the mill. At NLE, this was submitted on 8/1/16

Based on the GSQM ESH Monthly Performance monthly report, for New Labu Estate is available.

The form will record the a) Man-hours and no. of employees b) Occupational Safety ( accidents ) c) Occupational Health and /disease d) Total Incidents e) Non-human sufferings f) Non-occupational g) Legal Non-compliances h) Environments i) Health Promotions j) Controls

The Hospital Assistant NLE also keep a records of all accident and incident reports. All incident are reported in the ‘Incident Detailed Report’ form.

In the latest Sept 2016 reporting, the following were the result: a) No. of fatality: 0 b) No. of LTI Case: 1 c) No. of Non-LTI Case: 1 d) Total no. of incident: 2 e) Total lost days : 1

All accidents records are found to be reviewed on a case by case basis and the findings during the review process are forwarded for further discussion during the OSH Meeting.

As per the JKKP 8 ( Regulation 10 of the OSH , Regulation 2004 ) annual submission to the government , there were 13 accident reported sighted in the submission.

In the LTI performance of NLE, as of Sept 2016, the cumulative man-hours without LTI reported is 0. They had 59,688 man-hours without LTI till 29/9/16 until an LTI case on the 30/9/16. This was reported in the ‘Incident Detailed Report’

At the mill auditor sighted records of all accident are available in Daftar Kemalangan, Kejadian Berbahaya, Keracunan Pekerjaan dan Penyakit (JKKP 8 (I)/ (IV). There is also evidence on the usage of Borang JKKP 8 that need to be submitted to the Department of Occupational Safety and Health (DOSH) on yearly basis. According to the records, the latest submission of Borang JKKP 8 was submitted on 13/1/16 for the year 2015 . In the submission there were 7 incidences that were categorise under JKKP 8 In 2016, records of submission of the one JKKP 6 cases were sighted for Vigyah dated 10/10/16 The accident was recorded in the ‘Incident Detail Report ‘ dated 4/10/16 These accidents are also recorded in their yearly LTI monitoring graph. As of Sept 2016 the following was recorded a) Total LTI Hours : 0 b) Best Man Hours without LTI : 297,735 GP 9405A Page 62 of 106

c) Cumulative man-hours without LTI ( to date ) : 297,735 In Labu Estate, the JKKP 8 was submitted on the 28/1/16. In the submission there were 15 incidences that were categorise under JKKP 8 In 2016, there were 3 records of submission for JKKP 6

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

Findings In compliance: Yes: No: X Objective Records show that workers in New Labu Estate are covered by insurance. There are insurance evidence: policy available to cover the workers (foreign workers) through the FWCS insurance. However during the audit it was shown that the insurance has expired and they are awaiting the renewal of their insurance. In Labu Estate, although they have a list of workers that have been covered, there were some workers like Alam Malik and Alfaz Uddin , do not have evidence /records that they are covered .

MINOR CAR 07 – see Appendix A

At the mill , the annual audiometric test/report for the mill workers was sighted for 2015 and 2016. In 2016, the test was conducted by Specialist Mobile Safety Supplies Sdn Bhd . The assessment was conducted on 9/8/16 for 80 mill workers . The report was received on the 29/9/16. In the report 13 workers were listed under the ‘standard threshold shift’ ( STS) that needed a retest within 3 months.

Evidence is sighted of a letter from the mill dated 28/10/16 to Dr Sivapathan Klinik Port Dickson for a retest for the same 13 employees who have ‘standard threshold shift’ as per Regulation 23 of the Factories Machinery (Noise Exposure) Regulation 1989.

Employees expose to noise levels were sampled and interviewed. There were no complaints , they confirmed participating in the audiometric test

Updated accident insurance cover for the mill workers were sighted . The workers sampled namely Sahri, Syafaat, and Husnul were sighted in the FWCS insurance.

For accident insurance, local workers and staff working with SOU 13 Labu are covered with SOCSO that is paid on monthly basis. In addition, the mill will reimburse RM13 out of the RM20 that NUPW Union workers pay for the insurance (Great Eastern). This was sighted in the payslip of Kamariah Abdul Rahman , General Worker.

The latest claimed was done on 15/9/15 for a NUPW mill worker, Athinaranan who claimed RM20,236.21 from Great Eastern due to kidney failure. 4.7.7 Occupational injuries shall be recorded using Lost Time Accident (LTA) Minor metrics.

Findings In compliance: Yes: X No: Objective Ref : SOP SD/SDP/SQM(ESH) 001-2.9 ( 1/7/12 ) ESH management system Manual : Incident, evidence: Accident and Non- conformance Management

Records is kept of all accidents and periodically reviewed at quarterly intervals.

In New Labu Estate, all incidences are filed in the ‘JKKP File 6 and 8’

Accident records are recorded in the official JKKP 6 ( for more than 5 days medical ) . A HIRARC GP 9405A Page 63 of 106

is reviewed after the accident and action will be taken. Annually, the JKKP 8 will be submitted as per regulation. This was sighted at both the estate as well as for the mill. At NLE, this was submitted on 8/1/16

Based on the GSQM ESH Monthly Performance monthly report, for New Labu Estate is available.

The form will record the k) Man-hours and no. of employees l) Occupational Safety ( accidents ) m) Occupational Health and /disease n) Total Incidents o) Non-human sufferings p) Non-occupational q) Legal Non-compliances r) Environments s) Health Promotions t) Controls

The Hospital Assistant NLE also keep a records of all accident and incident reports. All incident are reported in the ‘Incident Detailed Report’

In the latest Sept 2016 reporting, the following were the result: f) No. of fatality: 0 g) No. of LTI Case: 1 h) No. of Non-LTI Case: 1 i) Total no. of incident: 2 j) Total lost days : 1

All accidents records are found to be reviewed on a case by case basis and the findings during the review process are forwarded for further discussion during the OSH Meeting.

As per the JKKP 8 ( Regulation 10 of the OSH , Regulation 2004 ) annual submission to the government , there were 13 accident reported sighted in the submission.

At the mill auditor sighted records of all accident are available in Daftar Kemalangan, Kejadian Berbahaya, Keracunan Pekerjaan dan Penyakit (JKKP 8 (I)/ (IV). There is also evidence on the usage of Borang JKKP 8 that need to be submitted to the Department of Occupational Safety and Health (DOSH) on yearly basis. According to the records, the latest submission of Borang JKKP 8 was submitted on 13/1/16 for the year 2015. In the submission there were 7 incidences that were categorise under JKKP 8 In 2016, records of submission of the one JKKP 6 cases were sighted for Vigyah dated 10/10/16 The accident was recorded in the ‘Incident Detail Report ‘ dated 4/10/16 These accidents are also recorded in their yearly LTI monitoring graph. As of Sept 2016 the following was recorded a) Total LTI Hours : 0 hrs b) Best Man Hours without LTI : 297,735 hrs c) Cumulative man-hours without LTI ( to date ) : 297,735 hrs

The following are the records of LTI for Labu Estate: a) Total LTI Hours : 24 hrs b) Best Man Hours without LTI : 35,405 hrs GP 9405A Page 64 of 106

c) Cumulative man-hours without LTI ( to date ) : 200,000 hrs

Criterion 4.8: All staffs, workers, smallholders and contract workers are appropriately trained. 4.8.1 A formal training programme shall be in place that covers all aspects of the Major RSPO Principles and Criteria, and that includes regular assessments of training needs and documentation of the programme. Findings In compliance: Yes: X No: Objective The OSH 2016/17 training programme, some of which are related to pesticide handling for the evidence: estate Safety briefing is conducted on daily basis during morning muster for all the work operation and checks to ensure the appropriate PPE are worn. At the mill the 2016/17 OSH training plan and records were sighted. Some of the past training ( FY 15/16 ) conducted are tabulated below: Month / Date Topic Trainer 2/11/16 Refresher training of 3R Asst Mnger , Hafiz 27/10/16 Scheduled Waste Management Mill Manager Mr Denni 26/10/16 PPE Asst Manager , Hafiz 25/10/16 Workshop Maintenance Mill manager Mr Denni 13/09/16 Protection Data Protection Act Syanaz Ambar, Asst Manager 10/9/16 Refresher on Gender Committee on Syanaz Ambar, Asst Manager Reproductive Rights 11/8/16 Traceability Supply Chain Mdm Briony , PSQM 3/8/16 Briefing on Foreign Workers on Syanaz Ambar, Asst Manager Retention Benefit /Bonus 26/7/16 SOP POME application Asst Manager , Hafiz Estates also have a formal training for each financial year and records of training conducted will be filed and documented together with the participants attendance. Some of the training found in the ESH Program and ESH Training Matrix for Labu Estate are:

Date Training topic Participants Estate: Labu Estate 1/9/16 Safety for Lorry Driver – Bio-Pride Asst Saiful & Yusri ( 9 participants )

8/6/16 Cara-cara betul pengunaan sabit Supplier Palm king 20 Harvesters 3/6/16 Ripeness and long stalk Mr Michael , PSQM 30 workers 6/3/16 Ripeness and long stalk Mr Michael , PSQM ( 10 workers ) 17/5/16 Briefing for drivers on safety Mr Fakaruddin , Staff during wet season ( 13 workers ) 25/3/16 Housing / Linesite- Fire Drill and Mr Yoges , SQMO Use of Fire extinguisher ( 8 Participants )

4.8.2 Records of training for each employee shall be maintained. Minor GP 9405A Page 65 of 106

Findings In compliance: Yes: X No: Objective Training records for staff and executives are available and sighted in the ‘ Key Performance evidence: Indicator : Supporting Details Records : Executive Training Hours The mill/estate does not have individual records of each employee however records of participants /worker and staff who attend the training are recorded in the specific training. However some of the training attended by the workers were not recorded in their individual file. Records of the worker competency records were also sighted. Yearly, training conducted for mill workers on high noise is available . Evaluation form is filled by participants after the training to evaluate their understanding The following are the list of names and their valid competency for authorised entrant and standby person for confined space (AESP) , Authorised Gas Tester ( AGT ) and Engine Pembakaran Dalam ( IPD ) as well as other competency requirement Name Type of competency Position Denni Ak Pusin 1st grade Steam Engineer Mill Manager AGT & Authorised entrant & Standby person for confined space Competent person for Scheduled waste Management ( CePSWaM) Competent person for POM Effluent – Pond Processes ( CePPOME)

Hafiz Shukri AGT, AESP Asst Mill manager Hafifi Zahir 2nd grade Steam Engineer Asst Mill manager Authorised entrant & Standby person for confined space Syahnaz Ambar 2nd grade Steam Engineer Asst Mill manager Authorised entrant & Standby person for confined space ( AESP ) Kalaiselvam Charge-man AO , AESP Mat Khir Boiler-man Grade 2 Boiler-man ( 2nd Grade Boiler-man ) AESP Abdul Ghani Boilerman Grade 2 Boiler-man ( 2nd Grade Boiler-man ) Muniandy 1st Grade engine driver & Engine Pembakaran Engine Driver Dalam ( IPD )

Mohd Fuad 1st Grade engine driver & Engine Pembakaran Engine Driver Dalam ( IPD )

Hasmadi AESP Workshop Fitter Nor Hisham AESP Workshop Fitter Mohd Hairil AESP Workshop Fitter Abdul Rahim AESP Process Supervisor

Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity Criterion 5.1: Aspects of plantation and mill management, including replanting, that have environmental impacts are identified and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continual improvement. 5.1.1 An environmental impact assessment (EIA) shall be documented. Major

Findings In compliance: Yes: X No: Objective SOU 13 has established the followings documents namely evidence: 1. Environmental Aspect and Impact Identification Form” (File No: SM/5.2/EAI) GP 9405A Page 66 of 106

2. Environmental Impact Evaluation Form ( File No: SM/5.2/EIE) SOU 13 also has established “Environmental Aspect & Impact (EAI) and Environmental Impact Evaluation (EIE) Review Form. This form is established to indicate that both environmental impact assessment documents i.e. EAI and EIE are reviewed. EAI and EIE Review Form did not contain information reference to EAI and EIE that has been reviewed. OBSERVATION 04 5.1.2 Where the identification of impacts requires changes in current practices, in Minor order to mitigate negative effects, a timetable for change shall be developed and implemented within a comprehensive action plan. The action plan shall identify the responsible person/persons. Findings In compliance: Yes: X No: Objective Identification of the aspects and impacts for all activities in SOU 13’s operation is listed in evidence: document “Environmental Aspect and Impact Identification Form”. The Form indicate list of Environmental Impact and Classification as below: Environmental Impact Classification 1. Ozone Layer Depletion C Create Impact 2. Global Warming 3. Air Pollution R Reduce Impact 4. Water Pollution 5. Land Contamination - Not applicable 6. Unpleasant Working Environment 7. Depletion of Natural Resources 8. Community Impact 9. Business Impact

Example of activities and area/field listed that create impacts to environmental indicates in document at all estates and mill are as below: Area/Field Activity Impacts EFB Application EFB Transport Create Impact for Air Pollution and Land Contamination Store Receiving/Storage/Issuing Create Impact for Air Pollution, Water of Fertilizer /Chemical Pollution and Land Contamination Compound Pesticide Spraying Create Impact for Air Pollution, Water Pollution and Land Contamination Petrol/Diesoline Receiving, Storage & Create Impact for Air Pollution and Land Issuing Fuel Contamination SOU 13 has established Environmental Impact Evaluation Form (EIE Form) to record significant environmental impacts. Details of procedure on measuring environmental impacts are described in Standard Operation Manual (SOM), Sub Section 5.4 (Planning), Appendix 5.4.1b – Environmental Aspect/Impacts Evaluation Procedure.

5.1.3 This plan shall incorporate a monitoring protocol, adaptive to operational Minor changes, which shall be implemented to monitor the effectiveness of the mitigation measures. The plan shall be 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. Findings In compliance: Yes: X No: Objective Observed at all estates and mill visited that no action plan been established as impacts listed evidence: does not have negative effects. GP 9405A Page 67 of 106

SOU 13 has established Environmental Management Program” . The form contains information that includes objective, target, action plan and person incharge. Record for FY2016/2017 signed dated 1 Jul 2016 is seen at Labu Estate. Criterion 5.2: The status of rare, threatened or endangered species and other High Conservation Value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and operations managed to best ensure that they are maintained and/or enhanced. 5.2.1 Information shall be collated in a High Conservation Value (HCV) assessment Major that includes both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors).

Findings In compliance: Yes: X No: Objective evidence: The HCV assessment report namely “High Conservation Value (HCV) Re-Assessment For Strategic Operating Unit (SOU) 13 Labu” dated October 2016 is available. The document includes information of the status of rare, threatened or endangered species and other High Conservation Value habitats ( Ref doc: Part II-Findings and Discussion of HCV assessment report.

5.2.2 Where rare, threatened or endangered (RTE) species, or HCVs, are present or Major are affected by plantation or mill operations, appropriate measures that are expected to maintain and/or enhance them shall be implemented through an action plan. Findings In compliance: Yes: X No: Objective HCV Re- Assessment Report indicated that are HCV 4 (water catchment area or pond )and HCV evidence: 3 & HCV 6 (hot spring) and no RTE species presence ( ref doc: Table 12: Decision on HCV Status and Table 10: Common wildlife found in SOU 13 Labu of HCV re-assessment report). Management of HCV are described under Section 3.1 ‘Managing of HCV Area (HCVA) of the report. HCV Management Plan for year 2016/2017 is available.

5.2.3 There shall be a programme to regularly educate the workforce about the Minor status of these RTE species, and appropriate disciplinary measures shall be instituted in accordance with company rules and national law if any individual working for the company is found to capture, harm, collect or kill these species. Findings In compliance: Yes: X No: Objective No RTE species presence in Labu Estate. evidence: However training has been conducted to regularly educate employees about wildlife exist in Labu Estate. 5.2.4 Where an action plan has been created there shall be ongoing monitoring Minor

Findings In compliance: Yes: X No: Objective Section 3.2 “Monitoring of HCV Area”(HCVA) of the assessment report described the procedure evidence: on monitoring. The form namely “ Monitoring of HCV & Conservation Areas at Labu Estate has been established for ongoing monitoring of action plan created.

5.2.5 Where HCV set-asides with existing rights of local communities have been Minor identified, there shall be evidence of a negotiated agreement that optimally safeguards both the HCVs and these rights. Findings In compliance: Yes: x No: Objective Based on the documents review, interviews and field visits, it was verified that there has been no evidence: instance of HCV set aside that conflicts with cultural identify, basic needs for local communities and critical for water catchments at SOU 13. Criterion 5.3: Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. 5.3.1 All waste products and sources of pollution shall be identified and Major documented. GP 9405A Page 68 of 106

Findings In compliance: Yes: X No: Objective Evidence of documented identification of all waste products and sources of pollution is available in evidence: document “Waste Management Plan FY2015/2016”. The document is sighted at estates and mill.

The document contain information of type of waste , Item description, location, sources of pollution, action to be taken, Person In Charge (PIC), reference/records and time frame.

Wastes products listed in the “Waste Management Plan FY2015/2016” document are as below:

1. Scheduled Wastes a. Used Lubricants ( SW 305) b. Empty Container , Contaminated Container ( SW409) c. Used batteries ( SW 102) d. Contaminated soils/debris ( SW408) e. Contaminated rags, papers or filters ( SW 410) f. Waste of non-halogenated organic solvents ( Spent IPA) ( SW 322)

2. Domestic Wastes a. Recyclable Wastes ( paper, plastic, glass, metal) b. Non-recyclable wastes ( Used napkins or tissues, wet or food stained paper, Fax paper, Wax paper, paper food wrapper, food stained plastic plates or utensils, plastic food wrappers, polystyrene or Styrofoam materials, garbages etc). 3. Others a. tires & tubes

For all above wastes products listed, the sources of pollution identified and documented is land contamination and water contamination.

5.3.2 All chemicals and their containers shall be disposed of responsibly. Major

Findings In compliance: Yes: X No: Objective No disposal of chemicals to date at New Labu Estate. evidence: Inventory of chemical is available in ‘’Bin Card” and Physical Inventory Record ( soft copy). “Bin Card” for chemicals , Kenlly and Glyphosate is seen during the audit. A chemical container are categorised as Scheduled Wastes (Code SW 409). Inventory of chemical container is recorded in document namely “Inventory of Schedule Wastes” record updated monthly. Inventory record for a period from May 2016 to October 2016 updated 31 Oct 2016 is seen and verified during the audit. SOU 13 has appointed licensed scheduled waste contractor ( i.e. Kualiti Kitar Alam Sdn Bhd and its subcontractor ) to carry out disposal of chemical containers at estates and mill. Information of chemical container disposed is recorded in Consignment Notes For Scheduled Wastes as per Sixth Schedule in the Environmental Quality (Scheduled Wastes) Regulations 2005. Based on record, latest disposal of chemical container by New Labu Estate is carried out on April 2016 ( 02 Apr 2016 – 273 units and 30 Apr 2016 – 18 units) by Hiap Huat Chemicals Sdn Bhd ( subcontractor to Kualiti Alam Sdn Bhd) . At Labu POM, latest disposal of empty container is carried out on 01 Oct 2015 ( 0.02MT) At Labu POM, empty chemical container is identified as schedule waste (SW 409) and recorded in “Inventory Schedule Waste” updated monthly. Record for month of October 2016 ( 0.53MT) is seen during the audit. Disposal record – Consignment Note for Schedule Waste – no. 0101329 dated 27.5.2016 was the latest disposal record ( 93kg). Used lubrication oil at the Schedule Waste Store has not been labelled to identify as scheduled waste OBSERVATION 05 – See Appendix A 5.3.3 A waste management and disposal plan to avoid or reduce pollution shall be Minor documented and implemented. Findings In compliance: Yes: No: X Objective A waste management and disposal plan is documented under “Waste Management Plan) which evidence: updated annually. “Waste Management Plan 2016/2017 SOU13 New Labu Estate” document is GP 9405A Page 69 of 106

sighted during the audit. Waste management and disposal is carried out according to the following type of wastes : 1. Scheduled Wastes ( Used Lubricants, Empty Pesticide Containers, Used batteries and Clinical wastes) 2. Domestic Wastes (( rubbish) 3. Recycled Wastes ( re-used empty container) 4. Others ( tyres and tubes) For Scheduled Waste, SOU 13 has appointed the licensed scheduled waste contractor ( i.e. Kualiti Kitar Alam Sdn Bhd and its subcontractor ) to carry out disposal of scheduled wastes at estates and mill. For Domestic Wastes, Recycled Wastes and Others, disposal is carried out by contractor at line sites on weekly basis. However it was found that recycled materials (e.g. paper, plastics ) have not been segregated with other domestic wastes at the linesite

MINOR CAR 08 – see Appendix A

Criterion 5.4: Efficiency of energy use and use of renewable energy is maximized. 5.4.1 A plan for improving efficiency of the use of fossil fuels and to optimize Minor renewable energy shall be in place and monitored. Findings In compliance: Yes: X No: Objective A plan for improving efficiency of the use of fossil fuels and to optimize renewable energy is evidence: available (ref doc: Energy Management Plan 2016/2017). The document contain the following information: 1. Type of Energy Usage ( i.e. Electricity and Diesel) 2. Action Plan ( indicates list of action plans to reduce the usage of electricity and fuel) 3. Person In Charge ( i.e. Assistant Managers and Process Engineer) 4. Time Frame ( all action plans listed are at stage of on-going) SOU 13 has established monitoring records of energy usage that consist the following Renewable energy use/ton CPO – (ref doc: “Renewable Energy Usage for FY 2016/2017).  Jul = 0.69MT/MTCPO, Aug =0.68MT/MTCPO,Sept = 0.68MT/MTCPO, Oct = 0.67MT/MTCPO Record of diesel usage (ref doc: Diesel Consumption For FY2016/2017). This form recorded quantities fuel usage of all operation at the Labu POM. For a period from Jul to Oct 2016 are as below: Jul = 1080 litre, Aug= 1050 litre,Sep = 1030 litre and Oct = 1030 litre Record of electricity usage ( ref doc: Monitoring kW per tonne palm product) Criterion 5.5: Use of fire for preparing land or replanting is avoided, except in specific situations as identified in the ASEAN guidelines or other regional best practice. 5.5.1 There shall be no land preparation by burning, other than in specific Major situations as identified in the ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003. Findings In compliance: Yes: X No: Objective SOU 13 has established the written procedure which mentions zero burning. Details of procedure evidence: is described in Section 2.3 “Environmental Management – Zero Burning Technique” – sub section of Section 2.0 “Felling/Clearing & Land Preparation” in the Standard Operating Procedure dated 01/11/2008 Field inspection observed that no evidence fire has been used for preparing of land for replanting. Techniques applied are according to the procedure that involved felling, shredding & windrowing. GP 9405A Page 70 of 106

5.5.2 Where fire has been used for preparing land for replanting, there shall be Minor evidence of prior approval of the controlled burning as specified in ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003. Findings In compliance: Yes: X No: Objective Field inspection in the replanting area observed that no evidence fire has been used for preparing evidence: of land for replanting. Techniques applied are according to the procedure that involved felling, shredding & windrowing. Criterion 5.6: Plans to reduce pollution and emissions, including greenhouse gases are developed, implemented and monitored. 5.6.1 An assessment of all polluting activities shall be conducted, including Major gaseous emissions, particulate/soot emissions and effluent (see Criterion 4.4). Findings In compliance: Yes: X No: Objective An assessment of all polluting activities is conducted including gaseous emissions, particulate evidence: emissions and effluent. Assessment is done at HQ level using “Sustainability Management System (SMS)”. The SMS system identifies sources of emission of every SOU . The list of identified polluting activities includes: 1. Agricultural Machineries 2. Boilers 3. Effluent Treatment 4. Fertilizers 5. Heavy machineries 6. Other Stationary Machineries 7. Purchased Electricity 8. Purchased steam 9. Transport (Controlled vehicles) Result of emission of every sources are clearly recorded. Based on record, effluent is the highest contributor to GHG emission followed by the boiler operation. 5.6.2 Significant pollutants and greenhouse gas (GHG) emissions shall be Major identified, and plans to reduce or minimize them implemented.

Findings In compliance: Yes: x No: Objective At POM, an identification of significant pollutants and greenhouse gas (GHG) emission has been evidence: done such as POME, diesel/fuel and fertilizer [refer to “Sustainability Management System (SMS)] The EMP is conducted according to Section 5.4.2: QSHE Management Programs/Action Plans of the Standard Operating Manual (SOM) and reviewed on a yearly basis upon achieving the objective highlighted for the particular year 5.6.3 A monitoring system shall be in place, with regular reporting on progress for Minor these significant pollutants and emissions from estate and mill operations, using appropriate tools. Findings In compliance: Yes: X No: Objective SOU 13 is using Palm GHG calculator provided by RSPO for monitoring of pollutants and evidence: emissions.

Observed that latest Palm GHG calculator was submitted to RSPO on 7 Oct 2016.

Principle 6: Responsible Consideration of Employees and of Individuals and Communities Affected by Growers and Mills Criterion 6.1: Aspects of plantation and mill management that have social impacts, including replanting, are identified in a participatory way, and plans to mitigate the negative impacts and GP 9405A Page 71 of 106

promote the positive ones are made, implemented and monitored, to demonstrate continual improvement. 6.1.1 A social impact assessment (SIA) including records of meetings shall be Major documented. Findings In compliance: Yes: X No:

Objective The documented SIA for SOU 13 is available during audit. The SIA has been conducted by PSQM evidence: Department on 9th-12th August 2016 covering all operating Units (Labu POM, Labu Estate and New Labu Estate).

The process in conducting the SIA including samples taken, demographic distribution, job scope, ect and findings has been documented in SIA Report for SOU 13 Labu. The SIA has cover all of the potential impact factors related to the SOU including feedback from internal and external parties (covering at least 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).

Both estates and mill visited have developed a Management Plan on Social Impact Assessment FY2016/2017 as well as Action Plan for Social Assessment FY 2016/2017. Both plans contained details of aspects, impacts identified, and time bound and person in charge for particular issues/monitoring. Others than that, time bound and person in charge for promote the positive and mitigate the negative impacts for each of the aspects & impacts identified are clearly stated in the management plan.

6.1.2 There shall be evidence that the assessment has been done with the Major participation of affected parties. Findings In compliance: Yes: X No: Objective There are evidence that the assessment has been conducted prior to consultation with the evidence: affected parties. The SOU 13 has conducted 2 session of stakeholder meeting covering internal and external stakeholder meeting dated 11 August 2016. Apart from that, phone interview for several external stakeholders (i.e. suppliers and contractors) has been made on the same day of stakeholders meeting. Previous stakeholders meeting also sighted during visit which has been conducted on 10 October 2014 by the SOU 13. Interviewed with internal stakeholders has confirmed that they are able to express their views through their own chosen spokespersons and through NUPW representatives. Interviewed with external stakeholders found that they are able to express their view and raised any related issues freely with the management. 6.1.3 Plans for avoidance or mitigation of negative impacts and promotion of the Major positive ones, and monitoring of impacts identified, shall be developed in consultation with the affected parties, documented and timetabled, including responsibilities for implementation. Findings In compliance: Yes: X No: Objective As reflected earlier, Social Impact Assessment is established by incorporate the /management evidence: plan for each of the identified impacts as well as due date and progress (time bound) together with the person in-charge. SOU 13 has records of monitoring of each impacts with clear timetables (i.e. daily, weekly, monthly or yearly). Reviewed on the management plan and supporting records found the timeline is reasonable.

Please also refer to Indicator 6.1.1 6.1.4 The plans shall be reviewed as a minimum once every two years and updated Minor as necessary, in those cases where the review has concluded that changes should be made to current practices. There shall be evidence that the review includes the participation of affected parties. GP 9405A Page 72 of 106

Findings In compliance: Yes: X No: Objective Both estates and mill has reviewed the management plan on yearly basis. Latest plan evidence: (FY2016/2017) was reviewed based on impacts identified during stakeholder meeting on 2015 and 2016. Latest reviewed were on 27th September 2016. Check on supporting records (i.e. Meeting with cattle owner, interviewed during muster call, etc – records) has confirmed that the plan has been implemented and some of it still in progress status. 6.1.5 Particular attention shall be paid to the impacts of smallholder schemes Minor (where the plantation includes such a scheme) Findings In compliance: Yes: X No: Objective Not applicable. evidence: No smallholder schemes in this assessment. Criterion 6.2: There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties. 6.2.1 Consultation and communication procedures shall be documented. Major

Findings In compliance: Yes: X No: Objective SOU 13 has a list of local communities and other affected /interested parties. evidence: The procedures for handling complaints and grievances are available - Appendix 5 Flowchart and Procedure on Handling Social Issues under Sustainable Plantation Management System. The procedure has been developed with consultation of external stakeholders in 2008. The SOP has incorporated the FPIC approach for communication and consultation with the local communities and other affected/interested parties. The SOP has been developed in Bahasa Malaysia and English languages and was understood by these parties as main language in Malaysia is Bahasa Malaysia language. As to date, there is no dispute being reported by any stakeholders. Meetings with external stakeholders and the grievance resolution books at individual estates is found has been conducted. If there any issues rose by local communities or contract workers, they will inform the head of village or superior and the head/superior will directly inform to management. This is the normal practices that have been used by all stakeholders. Interviewed with the affected parties found that they have no issues in order to voice out their need/ view to the mill/estates managements. Recent meeting with the external stakeholders has been conducted and attended by various stakeholders representing various institutional body covering government agencies, local communities, schools, contractors, suppliers and NUPW. 6.2.2 A management official responsible for these issues shall be nominated. Minor

Findings In compliance: Yes: X No: Objective Social Communication officer for New Labu Estate for FY2016/2017, Mr. Ahmad Amir bin evidence: Aminudin. Social Communication Officer for Palm Oil Mill for FY2016/2017, Mr. Hafiz bin Shukri and Social Communication Officer for Labu Estate is Mr. Saiful Azrul bin. Abdul Halim. All the appointment letter was dated 1 July 2016 available in the file. Job description of social officer clearly stated in the appointment letter. 6.2.3 A list of stakeholders, records of all communication, including confirmation Minor of receipt and that efforts are made to ensure understanding by affected parties, and records of actions taken in response to input from stakeholders, shall be maintained. Findings In compliance: Yes: No: X Objective Folder 11 Stake Holder: evidence: List of stakeholders are updated on for financial year 2015/2016. Relevant stakeholders listed in the stakeholder name-list include: Transporters, Contractors, Suppliers, Government agencies, government schools, neighboring estates, neighboring villages, smallholders, aboriginal people villages, different races representatives (e.g. Bangladesh, India, Indonesian), NUPW representative, workers representatives, temple representatives and etc. Yearly stakeholder meetings will be conducted and impacts identified will be incorporated into the GP 9405A Page 73 of 106

mitigation plan in SIA. -meeting with external stakeholder dated 14 July 2016 (Hari Raya) and 19/07/2016 attended by 22 personnel from various background of stakeholders Other than that, inputs such as enquiries and grievances from stakeholders were also recorded in the enquiries and grievances book. Management response and action taken to attend for the enquiries and grievances from stakeholders also documented in the respective record books. During site visit, audit team has sighted Quarry Company operating nearby the New Labu estate and using the same road outside the estate compound. However, the Quarry Company has not sighted in the list of related stakeholder. MINOR CAR 09 – see Appendix A

Criterion 6.3: There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all affected parties. 6.3.1 The system, open to all affected parties, shall resolve disputes in an Major effective, timely and appropriate manner, ensuring anonymity of complainants and whistleblowers, where requested. Findings In compliance: Yes: X No: Objective External/Internal communication procedures available in Quality Management system manual, evidence: standard operating manual, sub section 5.5. Appendix 5.5.3.2. Issue date 1 November 2008.

The procedures include 5.0 Definition 6.0 External communication 6.1 Receipt of External communication 6.2 Review the communication 6.3 Time frame for external communication And etc.

Communication procedure flow chart also available in the Standard Operation manual.

As of the date of the audit, there are no any major complaints received from outsiders and workers except on certain normal matters pertaining to the broken amenities within the workers line site. Actions taken from the management attending to the house repairing issues are recorded in the Buku Aduan Pekerja.

Interview with workers representatives witnessed that workers are fully aware the grievances/communication procedures practice in the operating units. 6.3.2 Documentation of both the process by which a dispute was resolved and the Major outcome shall be available. Findings In compliance: Yes: X No: Objective Complaints/grievance resolution process has been documented by the management. evidence: Documentation on complaints available in the Buku Aduan Stakeholder for external stakeholders and Buku Aduan Pekerja for internal stakeholders. Observed during audit, the outcomes/decisions has been reported to the parties concern. Documentation of the process/outcome for external stakeholders only can be access by the management and can be requested by the affected parties, meanwhile the internal stakeholders issue can be access by management and workers upon request. Criterion 6.4: Any negotiations concerning compensation for loss of legal, customary or user rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions 6.4.1 A procedure for identifying legal, customary or user rights, and a procedure Major for identifying people entitled to compensation, shall be in place. Findings In compliance: Yes: X No: Objective Not applicable as the neighbouring communities settled in the area after the establishment of the evidence: estates ( in the 1960s) There are no indigenous communities within or surrounding SOU 13 that holds legal or customary rights over the land. Procedure for handling social issues available in Sustainable Plantation management system GP 9405A Page 74 of 106

Appendix 5 Flowchart and procedure on handling social issues

Flow chart for handling social issue attached at Appendix 5 Appendix 3 Flowchart and Procedures on Handling Land Disputes under Sustainable Plantation Management System 6.4.2 A procedure for calculating and distributing fair compensation (monetary or Minor 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 transmigrants and long- established communities; and differences in ethnic groups’ proof of legal versus communal ownership of land. Findings In compliance: Yes: X No: Objective Not applicable as the neighbouring communities settled in the area after the establishment of the evidence: estates ( in the 1960s) There are no indigenous communities within or surrounding SOU 13 that holds legal or customary rights over the land. Any issues will be attended by SDP on a case by case basis.

6.4.3 The process and outcome of any negotiated agreements and compensation Major claims shall be documented, with evidence of the participation of affected parties, and made publicly available. Findings In compliance: Yes: X No: Objective Not applicable as the neighbouring communities settled in the area after the establishment of the evidence: estates ( in the 1960s) There are no indigenous communities within or surrounding SOU 13 that holds legal or customary rights over the land. Any issues will be attended by SDP on a case by case basis.

Criterion 6.5: Pay and conditions for employees and for contract workers always meet at least legal or industry minimum standards and are sufficient to provide decent living wages. 6.5.1 Documentation of pay and conditions shall be available. Major

Findings In compliance: Yes: X No: Objective Based on verification checking on estate workers’ pay slip for year 2016 by random selection - evidence: Sample of pay slip checked (payment on 01 Sept. 2016): Worker serial no. #37,36,32, 30, 28, 26; the audit team noted that worker is paid based on the recently government Minimum Wage Order 2016 and this is well in line with the company’s commitment. The estates also encourage the workers to keep on improving their productivities in order to earn more.

All of the above verified payslips are above the minimum wages requirements set by the government i.e. RM 1000 for Peninsular Malaysia required under the Minimum Wages Order effective July 1, 2016. All the workers are eligible with the minimum wages requirements. As for workers subject to daily minimum wage, it is subject to a maximum of 48 hours per week, which means in the peninsula, for a six-day working week (48 hours), the daily minimum wage rate is RM38.46. Workers not attending to full working days (26 days/month) within respective months, the payout to these workers was found complied to the Minimum Wages Order 2016.

Details of workers’ pay statement as below: a) Workers paid for: i) Daily wages/piece rated and etc. ii) Price Bonus GP 9405A Page 75 of 106

iii) Productivity Incentives iv) Phone allowances v) NUPW/AMESU vi) Insurance subsidy vii) Holiday Pay viii) Sick pay

b) Deduction: i) SOCSO & EPF (Local workers) ii) NUPW union fees iii) Electricity

At Labu POM, contents of pay slip has include: Paid:  Basic pay  Phone allowance  Telephone subsidy  Holiday pay  Price bonus

Deduction:  EPF & SOCSO ( locals)  Electricity usage  NUPW fees  Great Eastern

Verification on workers payslips for month of September 2016 found that workers are earning more than Minimum wages requirement of RM 1000 per month:

Only a few of the workers are unable to achieve RM1000 per month due to their own absenteeism to work without any reasonable justification.

Interview with respective workers proved that the workers are fully aware and agree that their monthly earning were unable to achieve RM 1000 because of their absenteeism in attending to daily works tasks. In Oct 2016, month before the audit the following were the records : Total workers: 306 No. of workers who did not achieve full working days : 80 Reasons: Outpatient/sick-16, Vacation leave – 49, Absent-10, Unpaid Leave - 5 Reason for not achieving RM1000 is also recorded e.g absent without notice, on unpaid leave, vacation leave exceeding the paid leave eligible for payment, sick leave that exceeding the sick leave eligible for payment and sick leave without approved Medical leave from HA, etc, but the workers are paid on daily minimum wage rate at RM38.46.

6.5.2 Labour laws, union agreements or direct contracts of employment detailing Major payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc.) shall be available in the languages understood by the workers or explained carefully to them by a management official. Findings In compliance: Yes: X No: Objective With regard to the term and conditions for employment, the details of term and conditions of evidence: employment are described in their offer letter and contract available. The above document includes contract agreement, wages and other employment benefits, GP 9405A Page 76 of 106

workers’ repatriation, workers’ passport. Employment agreement and related conditions is available. There are terms of reference or signed contracts between employers and employees stipulating the position, working hours, type of work, location of work, workers’ responsibility, wages, allowances, holidays, rest days, annual leave, fringe benefits, levy deductions (for foreign workers), dismissal, etc. Direct contracts of employment are observed to contain sufficient details on rates of wages and conditions of employment written in the language understood by the workers. Procedurally, a management official will also explain the payment rates and terms and conditions of employment to a newly recruited worker. Verification during the audit showed that the contract agreements have been written in the language understood by the workers. (Available in local language: Bahasa Malaysia) Further verification during the interview with the workers confirmed that the contract has been briefed to them during their signing day with the company. Contract agreement include:  Tempoh perkhidmatan pekerjaan  Lokasi Tempat kerja  Pertukaran tempat kerja  Gaji  Waktu bekerja  Perubatan  Kediaman  Pematuhan Undang-undang And etc.

For Indian and Nepal workers, the contract in Malay language but has been translated and briefed carefully by representative/translator. The estate has a training plan for new workers covering briefing on agreement and acceptance signature, briefing and tours in the estate (visit estate operation), Health Examination by medical assistant/ hospital assistant, briefing on SOP (for specific job), On Job Training by Staff and Assistant, Training period and Competency Evaluation by Assistant prior to days of arrival of new workers in the estate.

Estate has maintained records on Competency Training Program and training record. I.e Harvesting Competency Training Program dated 19/5/2016 Contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc.) for workers under Contractor is not available. - Contracts of employment for workers under Yong Siew Tiam & Sons Sdn Bhd have not been reviewed due to document kept by the contractor. OBSERVATION 06

6.5.3 Growers and millers shall provide adequate housing, water supplies, Minor medical, educational and welfare amenities to national standards or above, in accordance with Workers’ Minimum Standard of Housing and Amenities Act 1990 (Act 446) or above, where no such public facilities are available or accessible (not applicable to smallholders). Findings In compliance: Yes: X No: Objective Housing of adequate quality is provided, with workers generally housed with one/two persons to a evidence: room. Houses have electricity, piped water, indoor washrooms, sewerage, waste collection service, etc. Medical facilities ( Hospital Assistant ) and transport during emergency is provided. Education facilities such as government schools available for children from the estate as well as the surrounding area at nearby town. Social, cultural and recreational activities and places of worship are supported. GP 9405A Page 77 of 106

At the line-site for every 2 houses, one fire extinguisher was sighted . Line-site facilities and sporting amenities such as badminton court and football field. SOU 13 Labu provide similar housing for the FFB and EFB transport contractors and they are require to comply with the similar requirement s 6.5.4 Growers and millers shall make demonstrable efforts to monitor and where Minor able, improve workers’ access to adequate, sufficient and affordable food. Findings In compliance: Yes: X No: Objective Workers are easily access to the nearby town for sufficient and affordable sundry goods or food evidence: supply outside the estates compound. Criterion 6.6: The employer respects the rights of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel. 6.6.1 A published statement in local languages recognising freedom of association Major shall be available. Findings In compliance: Yes: X No: Objective There is a published statement in English and Bahasa Malaysia under SOU 13 Social Policy evidence: which recognize freedom of association. The policy was signed by the Managing Director on January 2015. The policy specifies the company’s commitment to full respect and with no intention of obstruction for workers to get involve in workers union as it is stated in the Workers Union Act 1959. Observed during audit has confirmed that employees including migrant workers and contract workers are allowed to form associations and bargain collectively with their employer. As to date, most of the employees are NUPW members. KKS Labu has appointed representatives that will represent their workers‘ nationality such as, Mr. Chandram A/L Ramasamy has been appointed as Malaysian Workers Representative; Mr. Ayat as Indonesian Workers Representative and Mr. Sobug as Bangladeshi Workers Representative. 6.6.2 Minutes of meetings with main trade unions or workers representatives shall Minor be documented. Findings In compliance: Yes: X No: Objective Latest meeting conducted on 09 August 2016 between workers representative and management evidence: regarding: a) Keselamatan pekerja b) Penjelasan mengenai waktu kerja c) Penjelasan tentang cuti sakit d) Isu-isu social dan isu berbangkit e) Perumahan dan keluh kesah Informed by the management that the minutes made readily available to employees upon request. Criterion 6.7: Children are not employed or exploited. 6.7.1 There shall be documentary evidence that minimum age requirements are Major met.

Findings In compliance: Yes: X No: Objective There is documented evidence in the form of individual worker’s particulars and contracts evidence: demonstrating that the minimum age requirement is met. Sime Darby has a policy not to use underage worker and there was no evidence of children working in the field. The policy also clearly defined the minimum working age for workers together with working hours to fullfill. Random verification checking conducted on employees’ employment details showed that no child labour being employ. At New Labu Estate, the Workers Master List has showed that the youngest workers is 21 years GP 9405A Page 78 of 106

old (born on 1995)- Mr. Asroludin. No evident of child labour present in the field during field visit. While at KKS Labu, the youngest workers is 21 years old- Mr. Fendi Sarif Munandar.

Criterion 6.8: Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation or age is prohibited. 6.8.1 A publicly available equal opportunities policy including identification of Major relevant/affected groups in the local environment shall be documented. Findings In compliance: Yes: X No: Objective Equal opportunity statements publicly declared in the company social policy signed by Managing evidence: Director on January 2015. E.g. All employees should be treated fairly in terms of recruitment, progression, terms, and conditions of work and representation regardless of race, caste, nationality, orientation, union membership, political view, religion and/or age 6.8.2 Evidence shall be provided that employees and groups including local Major communities, women, and migrant workers have not been discriminated against. Findings In compliance: Yes: X No: Objective There is no evidence to show the occurrence of any discrimination against foreign workers. Based evidence: on records, the auditing team observed that equal opportunities are demonstrated through the following issues:  Similar daily wages for foreign and local workers for the same job scope  Similar working hours and treatment for foreign and local workers.  Basic amenities and facilities are provided on equal terms to foreign and local workers.  Well balanced representation of foreign and local workers in JCC meetings.  Well balanced representation of foreign and local workers in Gender Committee meetings.  Both the foreign and local workers wages paid based on NUPW/MAPA agreement. Interview with workers (including foreign workers) indicates that there is no such discrimination occurs in the workplace. In addition, the auditing team note that the company is currently implementing the equal opportunities for workers through the following:  Training is given to the workers on a yearly basis covering training relating to their working station, personnel training such as communication skills and safety and health training;  All employees are covered with working insurance; and Termination is conducted based on local laws and is stated in the workers employment agreement.

Social & Humanity management policy signed by Sime Darby Managing Director on January 2015 has clearly stated the elements or statements that fulfilling the social & humanity commitments.

Examples of related policy statements as below: i) Respect & give fair treatment in accordance with the rights of employees for the mutual benefits of the company and employees. ii) Preventing sexual harassment and other forms of violence against woman and protect their reproductive rights and etc. 6.8.3 It shall be demonstrated that recruitment selection, hiring and promotion Minor where relevant are based on skills, capabilities, qualities, and medical fitness necessary for the jobs available. Findings In compliance: Yes: X No: Objective Equal opportunity statements publicly declared in the company social policy. evidence: E.g. All employees should be treated fairly in terms of recruitment, progression, terms, and conditions of work and representation regardless of race, caste, nationality, orientation, union membership, political view, religion and/or age. Interviewed with workers evidence that no discrimination practices implemented on the ground. For example: workers are allowed to shift to any of their preferable jobs when if they apply GP 9405A Page 79 of 106

formally from management, medical check-up showed that they are suitable and fit for that particular job they apply for and also base on job vacancy available. Other than that, wages paid for harvesting jobs based on productivity and very much depend on their skills and capabilities. KKS Labu has keep and maintain a record of their employees’ work credentials and medical history in workers personal folder that include their medical report and audiometric test results Criterion 6.9: There is no harassment or abuse in the work place, and reproductive rights are protected. 6.9.1 A policy to prevent sexual and all other forms of harassment and violence Major shall be implemented and communicated to all levels of the workforce. Findings In compliance: Yes: X No: Objective Gender policy dated January 2015 clearly stated that the company shall comply with all statutory evidence: and regulatory requirements. In line with the policy, they shall  Endeavour to prevent sexual harassment and all other forms of violence against women, workers and community.  Establish a specific complaints and grievances procedure and mechanism, acceptable by all parties, to addressed gender based issues  To establish a Gender Committee to implement and monitor the policy  And etc.

Social and Humanity Management Policy dated January 2015 also available at both estates.

Gender Policy dated January 2015 is available and published by KKS Labu. The policy has been documented, implemented and communicated clearly to all levels of the workforce. Sime Darby has a documented Gender Committee Handbook (2014 Edition) that covered Establishment of Gender Committee, Roles and Responsibilities, Benefit of Gender Committee, Activities, Management of Gender Committee and Types of Gender-Based Violence & Grievance Procedure. Training has been conducted on Introduction to Reproductive Rights dated 12/08/2016 attended by 23 personnel from New Labu, Labu Estate and the mill. The training has covered areas on Gender Discrimination, Sexual harassment, Work Discrimination, disease related to inter-gender relationship, Gender Policy, Women’s Rights, Procedure on Social Issue, Person In charge for Sensitive Issues and Responsibilities.

KKS Labu has established and maintains the Gender Committee for their staff and workers. Puan Noraziah Mohamad Noh has been nominated as chairman for KKS Labu’s Gender Committee for financial year 16/17 with appointment letter dated 29/08/2016. List of committee members is available in the Gender Committee Folder. The Terms of Reference for the committee has include at least 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. 6.9.2 A policy to protect the reproductive rights of all, especially of women, shall Major be implemented and communicated to all levels of the workforce. Findings In compliance: Yes: X No: Objective evidence: Reproductive Rights Policy signed by Sime Darby Managing Director on January 2015 has clearly stated the elements or statements that fulfilling the reproductive rights protection commitments to all levels of the workforce especially for women.

Based on interview to female workers and record review has confirmed that the policy has been documented, implemented and communicated clearly to all levels of workforce. For example, training on “Pengenalan Tentang Polisi Hak Reproduktif di dalam Ladang “ has been conducted on 12/08/2016 by Gender Committee Team.

More than that, Sime Darby also has established and implemented their Gender Policy, Child Policy and Social & Humanity Policy prior to commitment towards social matters. GP 9405A Page 80 of 106

6.9.3 A specific grievance mechanism which respects anonymity and protects Minor complainants where requested shall be established, implemented, and communicated to all levels of the workforce. Findings In compliance: Yes: X No: Objective Procedure for handling social issues available in Sustainable Plantation management system evidence: Appendix 5 Flowchart and procedure on handling social issues

Flow chart for handling social issue also attached as appendix 5 in Sime Darby Plantation Quality Management System

Other than that, External communication procedure also available in the mill/estate quality management system in Standard Operation Manual (SOM), subsection 5.5 Appendix 5.5.3.2, Procedure for external communication. Sime Darby also has established the Whistleblower Policy and hotline for their employees to call at any time. For estates and mill level, all grievance will be handle by Assistant Manager.

Informed by the stakeholder, they are aware on grievance mechanism. Interview with workers also found that workers are aware with the company grievances mechanism.

As to date, no complaints or harassment being addressed to the management. Criterion 6.10: Growers and millers deal fairly and transparently with smallholders and other local businesses. 6.10.1 Current and past prices paid for Fresh Fruit Bunches (FFB) shall be publicly Minor available. Findings In compliance: Yes: No: N/A Objective Not applicable as no outside FFB being procured except from their own Sime Darby Plantation evidence: SOU like SOU 15 6.10.2 Evidence shall be available that growers/millers have explained FFB pricing, Major and pricing mechanisms for FFB and inputs/services shall be documented (where these are under the control of the mill or plantation). Findings In compliance: Yes: No: N/A Objective Not applicable as no outside FFB being procured. FFB pricing were based on MPOB pricing evidence: mechanism. 6.10.3 Evidence shall be available that all parties understand the contractual Minor agreements they enter into, and that contracts are fair, legal and transparent. Findings In compliance: Yes: X No: Objective Based on the verification on contract and agreement, the audit team notes that the contracts have evidence: been established in language - English. Random interview with the representatives from the suppliers and contractors during the audit showed that they are understood with the contractual agreements as well as the terms and conditions stated in the agreement. Both parties have their own copy of contractual agreements.

6.10.4 Agreed payments shall be made in a timely manner. Minor

Findings In compliance: Yes: X No: Objective Interviews with the supplier and contractor revealed that all payments were made in a timely evidence: manner as per agreed timeframe. Payment document are documented in the estate office and showed that payments were made within a month time after delivery of goods and services by the respective supplier and contractor.

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

6.11.1 Contributions to local development that are based on the results of Minor consultation with local communities shall be demonstrated. Findings In compliance: Yes: X No: Objective Review on stakeholder’s consultation minute of meeting (i.e: ‘Mesyuarat Pengurusan Ladang dan evidence: Stakeholder dated 19/07/2016) has confirmed that the management has given space for each GP 9405A Page 81 of 106

stakeholder to voice out their needs and priorities. Several contribution made by the estate and mill management based on request and consultation from stakeholders. Sample of corporate social responsibility made were: - Jamuan Hari Raya bersama Stakeholder Ladang New Labu - Distribution of 5Kg rice and 5 Kg ‘Alif Brand’ Cooking Oil every 2 months for each workers - Futsal Tournament at Batu 8, Kirby - Pemberian Bekalan Air untuk tujuan Perayaan (Request by Ms. Kavitha A/P Sugumaran) - Pemberian penggunaan perkhidmatan traktor dated 3 July 2016 (request by SJK(Tamil) Ladang Kirby, Labu) - Bantuan Upacara Sembahyang Perayaan Tahunan on 19 August 2016

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

Findings In compliance: Yes: No: N/A Objective Not applicable. There was no scheme smallholders involved during this assessment evidence:

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

6.12.1 There shall be evidence that no forms of forced or trafficked labour are used. Major

Findings In compliance: Yes: X No: Objective No force labour in the estate. Document verification on the workers permit and identification evidence: showed that the legal workers are employed for the estate works. Interview with workers also proven that the workers are fully aware on their pay, contract agreement, job function in the estate and they agree with the condition implement by the estates. Other than that, workers are allowed to shift job if they are not suitable/comfortable to work under current job assigned. Visit to Workforce Management Centre has confirmed that the process of recruiting foreign workers was made directly by the company through licensed outsourcing agencies. The agent will prepared all potential employees prior to interview and screening made by the Sime Darby Recruitment Team under Workforce Management Unit before confirmed to be recruited by the company. Interview with workers found that there are no restrictions on workers from leaving the mill or estate outside working hours. However, most of them were only leave the estate’s or mill provided facilities when need to do so such as during Friday prayer, further check up in the hospital, buying groceries and ect. All workers’ passport has been keep by the management due to safety reason. Confirmed by interviewed workers that they willingly to hand over the passport to the management due to safety reason and to avoid any scenarios such as passport got stolen and missing due to negligence. Workers have unrestricted access to their passports. Interview with them has confirmed that they can easily get their own passport when needed at the management office. 6.12.2 Where applicable, it shall be demonstrated that no contract substitution has Minor occurred. Findings In compliance: Yes: X No: Objective Interviews with different workers representatives evidenced that no contract substitution occurred. evidence: Workers are given a copy of their contract agreement signed between workers and management and they fully aware and understand the terms and conditions stated in their contract agreements. 6.12.3 Where temporary or foreign workers are employed, a special labour policy Major and procedures shall be established and implemented. Findings In compliance: Yes: X No: Objective Social & Humanity management policy signed by Sime Darby Managing Director on January 2015 evidence: has clearly stated the elements or statements that fulfilling the social & humanity commitments.

Examples of related policy statements as below: GP 9405A Page 82 of 106

i) Respect & give fair treatment in accordance with the rights of employees for the mutual benefits of the company and employees. ii) Preventing sexual harassment and other forms of violence against woman and protect their reproductive rights and etc.

Checked on post-arrival orientation programme has confirmed that the company has conducted the orientation programme with emphasis on language, safety, labour laws, cultural practices, working condition, wages and etc

Criterion 6.13: Growers and millers respect human rights

6.13.1 A policy to respect human rights shall be documented and communicated to Major all levels of the workforce and operations (see criteria 1.2 and 2.1) Findings In compliance: Yes: X No:

Objective Social & Humanity management policy signed by Sime Darby Managing Director on January 2015 evidence: has clearly stated the elements or statements that fulfilling the social & humanity commitments.

Examples of related policy statements as below:

Social policy updated on January 2015 and signed by Managing Director also captured some of the elements on respect to human rights. E.g. The company shall respect the rights of all personnel to form and join trade unions of their choice and to bargain collectively. Apart from that, Sime Darby also has established the Social Policy in order to fulfilling the social commitments covering child labour issue.

The policy has been communicated to all respective stakeholders during stakeholder consultation. Interview with workers has confirm that they aware on policy to respect human rights established by the company.

6.13.2 As long as children of foreign workers in Sabah and Sawarak are ineligible to Minor attend government school, the plantation companies should engage in a process to secure these children access to education as a moral obligation. Findings In compliance: Yes: X No: Objective Not applicable as the SOU 13 Labu is not located in Sabah or Sarawak . evidence:

Principle 7: Responsible Development of New Plantings Note: This Principles are applicable for new area planted after November 2005 There shall be evidence that no new plantings have replaced primary forest, or any area required to maintain or enhance one or more High Conservation Values (HCVs), since November 2005. Evidence should include historical remote sensing imagery which demonstrates that there has been no conversion of primary forest or any area required to maintain or enhance one or more HCV. Satellite or aerial photographs, land use maps and vegetation maps should be used to inform the HCV assessment. Where land has been cleared since November 2005, and without a prior and adequate HCV assessment, it will be excluded from the RSPO certification programme until an adequate HCV compensation plan has been developed and accepted by the RSPO. Criterion 7.1: A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management and operations. GP 9405A Page 83 of 106

7.1.1 An independent social and environmental impact assessment (SEIA), Major undertaken through a participatory methodology including the relevant affected stakeholders, shall be documented. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.1.2 Appropriate management planning and operational procedures shall be Minor developed and implemented to avoid or mitigate identified potential negative impacts. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.1.3 Where the development includes an outgrower scheme, the impacts of the Minor scheme and the implications of the way it is managed shall be given particular attention. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. Criterion 7.2: Soil surveys and topographic information are used for site planning in the establishment of new plantings, and the results are incorporated into plans and operations.

7.2.1 Soil suitability maps or soil surveys adequate to establish the long-term Major suitability of land for oil palm cultivation shall be available and taken into account in plans and operations. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.2.2 Topographic information adequate to guide the planning of drainage and Minor irrigation systems, roads and other infrastructure shall be available and taken into account in plans and operations. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. Criterion 7.3: New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values.

7.3.1 There shall be evidence that no new plantings have replaced primary forest, Major or any area required to maintain or enhance one or more High Conservation Values (HCVs), since November 2005. New plantings shall be planned and managed to best ensure the HCVs identified are maintained and/or enhanced (see Criterion 5.2). Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.3.2 A comprehensive HCV assessment, including stakeholder consultation, shall Major be conducted prior to any conversion or new planting. This shall include a land use change analysis to determine changes to the vegetation since November 2005. This analysis shall be used, with proxies, to indicate changes to HCV status. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.3.3 Dates of land preparation and commencement shall be recorded. Minor

Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit GP 9405A Page 84 of 106

evidence: assessment. 7.3.4 An action plan shall be developed that describes operational actions Major consequent to the findings of the HCV assessment, and that references the grower’s relevant operational procedures (see Criterion 5.2).

Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.3.5 Areas required by affected communities to meet their basic needs, taking into Minor account potential positive and negative changes in livelihood resulting from proposed operations, shall be identified in consultation with the communities and incorporated into HCV assessments and management plans (see Criterion 5.2). Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. Criterion 7.4: Extensive planting on steep terrain, and/or on marginal and fragile soils, including peat, is avoided.

7.4.1 Maps identifying marginal and fragile soils, including excessive gradients Minor and peat soils, shall be available and used to identify areas to be avoided. All new plantings should not be cultivated on land more than 300m above sea level unless specified by local legislation. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.4.2 Where limited planting on fragile and marginal soils, including peat, is Major proposed, plans shall be developed and implemented to protect them without incurring adverse impacts. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. Criterion 7.6: Where it can be demonstrated that local peoples have legal, customary or user rights, they are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreements. 7.6.1 Documented identification and assessment of demonstrable legal, customary Major and user rights shall be available. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.6.2 A system for identifying people entitled to compensation shall be in place. Major

Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.6.3 A system for calculating and distributing fair compensation (monetary or Major otherwise) shall be in place. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.6.4 Communities that have lost access and rights to land for plantation Minor expansion shall be given opportunities to benefit from plantation development. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit assessment. GP 9405A Page 85 of 106

evidence: 7.6.5 The process and outcome of any compensation claims shall be documented Minor and made publicly available. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.6.6 Evidence shall be available that the company has made adequate efforts to Minor enable affected communities and rights holders to have access to information and advice that is independent of the project proponent, concerning the legal, economic, environmental and social implications of the proposed operations on their lands. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment.

Criterion 7.7: No use of fire in the preparation of new plantings other than in specific situations, as identified in the ASEAN guidelines or other regional best practice. 7.7.1 There shall be no land preparation by burning, other than in specific Major situations, as identified in the ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment.

7.7.2 In exceptional cases where fire has to be used for preparing land for Minor planting, 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 Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment.

Criterion 7.8: New plantation developments are designed to minimize net greenhouse gas emissions.

7.8.1 The carbon stock of the proposed development area and major potential Major sources of emissions that may result directly from the development shall be identified and estimated. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment. 7.8.2 There shall be a plan to minimise net GHG emissions which takes into Minor account avoidance of land areas with high carbon stocks and/or sequestration options. Findings In compliance: Yes: No: N/A Objective No new plantings since November 2005. Therefore, Principle 7 is not applicable during this audit evidence: assessment.

Principle 8: Commitment to Continual Improvement in Key Areas of Activity Criterion 8.1: Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continual improvement in key operations. 8.1.1 The action plan for continual improvement shall be implemented, based on a Major 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. GP 9405A Page 86 of 106

As a minimum, these shall include, but are not necessarily be limited to:

 Reduction in use of pesticides (Criterion 4.6)

 Environmental impacts (Criterion 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)

 Encourage optimizing the yield of the supply base.

Findings In compliance: Yes: x No: Objective Reduction in use of pesticides (Criterion 4.6) evidence: SOU 13 monitors the usage of pesticides as evidence in the records and costing.

As for herbicide usage, the Unit only does spraying within the circles as well as selective weeding to minimise herbicide usage. The use of beneficial plants as well as the establishment of barn owl to minimise the pest population resulting in reduced pesticide usage.

Monitoring of chemical used is evident in “Monitoring Pesticide Usage Per Hectare and Per ton FFB production”. The records include chemical name, active ingredients contents and quantity applied.

Environmental impacts (Criterion 4.3, 5.1 and 5.2) Environmental Impact Evaluation Form, Environmental Management Plan and Pollution Prevention Plan is evident during the audit. This is reviewed and assessed annually.

Waste reduction (Criterion 5.3) Evidence of documented identification of all waste products and sources of pollution is available in document “Waste Management Plan FY2015/2016”. The document is sighted at estates and mill.

The document contain information of type of waste , Item description, location, sources of pollution, action to be taken, Person In Charge (PIC), reference/records and time frame.

The Unit encourages recycling with the establishment of the recycling bins at the office and line site.

During their regular meetings with the workers and representatives, workers and staff reminded on the concept of recycling.

Pollution and greenhouse gas (GHG) emissions (Criteria 5.6 and 7.8)

Similar to the environmental management, improvement and pollution plan, this is reviewed and assessed annually. Identification of pollution sources and mitigation measures are identified at each location and action plans are implemented.

Identification of pollution was sighted at the mill.

Social impacts (Criterion 6.1)

The SIA for the mill as well as the estates are available outlining the methodology approach of the document. All records of meetings, consultation takes place during the SIA is incorporated in the document. List of the stakeholders consulted are also available. There is evidence of action plan incorporated in the SIA. GP 9405A Page 87 of 106

The action plan describes the plan for mitigate the impacts identified in the SIA as well as plan to monitor the impact. There is evidence of Action Plan for Social Impact Assessment that is reviewed annually.

Encourage optimizing the yield of the supply base.

Each estate is monitoring the yield based on individual fields.

Agronomic visits are conducted to ensure fertiliser application are applied according to the programme.

In the estate, the records of the yield are available to monitor the productivity of each field and it’s accumulated.

Past, present and budgeted yield records are posted to remind the estate management on their targets.

Similarly in the mill conference room, graphs of the following are: posted on the wall to monitor:

a) Mill Advisor ( MA ) rating ( 2009 – 2016 )

b) FFB processed ( 2010/11 – 2015/16 )

c) OER (2010/11 – 2015/16)

d) KER (2010/11 – 2015/16)

e) Throughout (2010/11 – 2015/16)

f) Utilization (2010/11 – 2015/16)

g) Breakdown (2010/11 – 2015/16)

h) Mill Performance (2010/11 – 2015/16)

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

Module D – CPO Mills: Identity Preserved

Module D- CPO Mills: Identify Preserved D.1: Definition D.1.1 A mill is deemed to be Identity Preserved (IP) if the FFB used by the mill are sourced from its own supply base certified to the RSPO Principles and Criteria (RSPO P&C). Certification for CPO mills is necessary to verify the volumes and sources of certified FFB entering the mill, the implementation of any processing controls (for example, if physical separation is used), and volume sales of RSPO certified products. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. If a mill processes certified and uncertified FFB without physically separating the material then only Module E is applicable. D.2: Explanation

D.2.1 The estimated tonnage of CPO and PK products that could potentially be produced MAJOR by the certified mill must be recorded by the certification body (CB) in the public summary of the P&C certification report. This figure represents the total volume of GP 9405A Page 88 of 106

certified palm oil product (CPO and PK) that the certified mill is allowed to deliver in a year. The actual tonnage produced shall then be recorded in each subsequent annual surveillance report. Findings In compliance: Yes: x No: Objective Estimated tonnage of CPO and PK products that could potentially be produced by the certified mill evidence: is available in Budget Report for Year 2016/2017 SOU13: Labu For the performance of previous year budget (FY15/16), the actual CPO and PK Produced compared to Budget are also available.

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

Findings In compliance: Yes: x No: Objective The POM has registered to RSPO IT platform for every transaction of RSPO certified materials. evidence: Information of registration are as below: a. E-trace License No.: CB39782 b. Validity: 30th Mar 2016 to 29th Dec 2016 Records of all transaction of RSPO certified materials is evident in E-trace report and traceable to the contract. It was confirmed that all registration and reporting requirements has been met.

D.3: Documented Procedures

D.3.1 The site shall have written procedures and/or work instructions to ensure the MAJOR 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 role 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’s procedures for the implementation of this standard.

Findings In compliance: Yes: x No: Objective evidence: The POM has established written procedures to ensure the implementation of all these elements specified RSPO SC requirements. The procedure is evident in the Sustainable Supply Chain and Traceability (SD/SDP/PSQM/001). The procedure has been updated on 1st Mar 2015. Contents of the SOP are as below: 1.0 Introduction 2.0 Objectives 3.0 Scope 4.0 Responsibilities 5.0 Control of Documents & Records 6.0 Delivery of FFB From the Estate 7.0 Receiving FFB at the Mill 8.0 Process Monitoring 9.0 Critical Control Points 10.0 CPO and PK Despatch 11.0 Non Conforming Materials 12.0 Product Claims 13.0 Outsourced Contractor GP 9405A Page 89 of 106

14.0 Training 15.0 Internal Audit 16.0 Management Review of Audit Results 17.0 Reclassification of Mill’s Supply Chain Traceability Method 18.0 Overproduction The POM has identified Mr. Syahnaz Abdullah Ambar (Assistant Engineer) as the person responsible and authorized for the implementation of RSPO SC requirements and compliances with all applicable requirements. Letter of appointment for the responsible person is evident in Appointment as RSPO/ISCC/MSPO/SCCS/LORR Representative dated 12th Jul 2016. He was found able to demonstrate his awareness on the POM RSPO SC procedures and have attended SCC Training conducted by PSQM Department on 11th Aug 2016.

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

Findings In compliance: Yes: x No: Objective The procedure for receiving and processing of certified and non-certified FFB’s are recorded in evidence: Section 7.0 “Receiving FFB at the Mill” and Section 8.0 “Process Monitoring of the SOP document. Since last audit, the POM has only received sustainable FFB from its own supply base and other SOU which also certified under RSPO.

D.4: Purchasing and goods in

D.4.1 The site shall verify and document the tonnage and sources of certified and the MAJOR tonnage of non-certified FFBs received.

Findings In compliance: Yes: x No: Objective Since last audit, the POM received RSPO certified FFB from the supply base and diversion crop evidence: from other certified SOUs: 1. Labu Estate (SOU13) 2. New Labu Estate (SOU13) 3. Salak Estate (SOU15) 4. Sengkang Estate (SOU15) 5. Bradwall Estate (SOU15) 6. Tampin-Linggi Estate (SOU15) For each delivery of FFB received, verification of the certification status of the FFB is carried out by Weighbridge Clerk through the delivery documents from the estate. The certified FFB received by mill is recorded in FFB Receive Summary Report by Supplier and Monthly Crop Report.

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

Findings In compliance: Yes: x No: Objective The POM understands and is aware on the requirements to inform CB immediately after a evidence: projected overproduction of sustainable materials as sighted in Section 18: Overproduction of the SOP. D.5: Record keeping

D.5.1 The site shall record and balance all receipts of RSPO certified FFB and deliveries MAJOR of RSPO certified CPO and PK on a three-monthly basis.

Findings In compliance: Yes: x No: Objective The POM has recorded all incoming RSPO certified FFB and deliveries of RSPO certified CPO evidence: and PK in the Mass Balancing Records for Oil Mills. GP 9405A Page 90 of 106

Example of the recorded Mass Balance for the period of Jul - Sep 2016 is as below: a. Opening Stock of RSPO Certified CPO: 4925.87MT b. Opening Stock of RSPO Certified PK: 677.95MT c. Incoming RSPO Certified FFB: 28,858.33MT d. Produced RSPO Certified CPO: 6,091.89MT e. Produced RSPO Certified PK: 2013.60MT f. Despatched RSPO Certified CPO: 5965.79MT g. Despatched RSPO Certified PK: 1449.00MT h. Physical Stock of CPO:5051.97MT i. Physical Stock of PK: 1,242.55MT

D.6: Processing

D.6.1 The site shall assure and verify through documented procedures and record MAJOR keeping that the RSPO certified oil palm product is kept segregated from non- certified material including during transport and storage.

Findings In compliance: Yes: x No: Objective The POM only received FFB from its own SOU-RSPO certified supply base. evidence:

D.6.2 The objective is for 100 % segregated material to be reached. MAJOR

Findings In compliance: Yes: x No: Objective The POM only received FFB from its own SOU-RSPO certified supply base. evidence:

GP 9405A Page 91 of 106

3.2 Corrective Action Request There are total of 3 (three) Major and 6 (six) Minor were raised. Please refer to the Appendix A for the details findings and relevant correction actions have been taken. 3.3 Noteworthy Positive Components SOU 13 Labu has maintained their commitment to the RSPO requirement and has shown in their operation and communication that they intend to improve during this recertification. As such, since this was a recertification, PT SGS auditors raised non-conformities on the sampled estate even though the other sampled estate has the compliance evidence / document in place. SOU 13 Labu Management and the PSQM team accepted such NC and were positive in their response resulting in prompt action to identify the root cause. This is to ensure that all the supply base as well as the mill will be on equal standard of compliance. 3.4 Status of Non-Conformities Previously Identified N/A as this was a recertification audit. Please refer to Appendix B for the previous audit. 3.5 Issues Raised by Stakeholders and Findings A list of stakeholders contacted with detail issue raised is included as Appendix D. Stakeholders did not provide any comments in writing regarding the Sime Darby SOU 13 Labu Environmental and Social performance. All interviewed stakeholders had positive comments about SOU 13 Labu.

GP 9405A Page 92 of 106

4. ACKNOWLEDGEMENT OF ORGANIZATION INTERNAL RESPONSIBILITY 4.1 Conclusion The audit team concludes that the organization has has not established and maintained its management system in line with the RSPO P&C and Supply Chain requirements of the standard and demonstrated the ability of the system to systematically achieve agreed criterion & requirements.

4.2 Date of Next Surveillance Visit The next surveillance audit is planned between 9 months and 12 months of its certificate anniversary

4.3 Date of Closing Non-Conformities

Reference Category Issued date Close out date Number (Major/Minor) m01 (4.1.2) Minor 4/11/16 “Open” m02 (4.5.2) Minor 4/11/16 “Open” M03 (4.6.2) Major 4/11/16 30/1/17 M04 (4.6.5) Major 4/11/16 30/1/17 m05 (4.6.7) Minor 4/11/16 “Open” M06 (4.7.2) Major 4/11/16 30/1/17 m07 (4.7.6) Minor 4/11/16 “Open” m09 (6.2.3) Minor 4/11/16 “Open”

4.4 Acknowledgement of Internal Responsibility and Formal Sign-off Assessment Findings PT SGS Indonesia and Client acknowledge and confirms acceptance of the Report contents and including the assessment findings. PT SGS Indonesia and Client accept the responsibility for addressing the opportunities of improvement detailed in this report.

Signed on behalf of Sime Darby Signed on behalf of PT SGS Indonesia Plantation Sdn Bhd Strategic Operating Unit (SOU) 13 Labu

GP 9405A Page 93 of 106

APPENDIX A: CORRECTIVE ACTION REQUEST AND OBSERVATIONS

CAR # Indicator CAR Detail

Date m01 4.1.2 04/11/16 Due Date> Next surv Date Closed> dd mm yy Recorded>

Normative reference and requirements:

A mechanism to check consistent implementation of procedures shall be in place. Statement of Non-Conformance: A mechanism to check consistent implementation of procedures was not in place. Objective Evidence: No mechanism or checklist sighted in NLE to check on consistent implementation of procedures Root cause analysis to be completed by Organization: Implementation of the SOP is ensured through briefings/trainings. Post training evaluation is also conducted to ensure that the briefings/trainings given are understood. However, the present mechanism of tracking whether an evaluation has been done is not effective.

Corrective Action to be completed by Organization: To conduct training evaluation for briefings/trainings that has been completed e.g. Harvesting, Pruning , manuring and spraying.

Preventative Action to be completed by Organization: To establish a logbook that list the trainings/briefings done and include a column to indicate when the evaluation is to be carried out and who the person in charge is e.g.: No. Subject/Topic of Training & Evaluation to Evaluator PIC/Coordinator date of Training be done on : 1 IPM training for workers 27/10/16 Ahmad Amirr Subhi 25/10/16 2 MSPO Training 10/10/16 10/10/16 Masitah ( PSQM) Ahmad Amirr

Close-out evidence/Planned Actions to be completed by Lead assessor:

The above root cause analysis, corrective action and prevention action plan was accepted . This wil be further vierified during next surveillance.

Date m02 4.5.2 04/11/16 Due Date> Next surv Date Closed> dd mm yy Recorded>

Normative reference and requirements:

Training of those involved in IPM implementation shall be demonstrated. Statement of Non-Conformance: Training of those involved in IPM implementation was not demonstrated. Objective Evidence: No training of IPM sighted in their training programme for New Labu Estate.

Root cause analysis to be completed by Organization: GP 9405A Page 94 of 106

CAR # Indicator CAR Detail IPM training was carried out on 9th August 2016. However, the documents were not retrievable during the point of audit as the person in charge of the filing system has left the company on a very short notice and a new PIC has yet to be appointed. The current document management system also needs to be improved as it is heavily dependent on the PIC.

Corrective Action to be completed by Organization:

1. To submit the IPM training records. 2. To appoint and train a new PIC for document management.

Preventative Action to be completed by Organization: To improve the current document management system to ensure that files/documents are retrievable at all times.

Close-out evidence/Planned Actions to be completed by Lead assessor: The above root cause analysis, corrective action and prevention action plan was accepted. This will be further verified during next surveillance.

CAR # Indicator CAR Detail

Date M03 4.6.2 04/11/16 Due Date> 04/02/17 Date Closed> 30/01/ 2017 Recorded>

Normative reference and requirements:

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. Statement of Non-Conformance: Records were not available Objective Evidence: No records sighted for New Labu Estate

Root cause analysis to be completed by Organization: Records are available as these are required to be submitted to HQ every month. However, the documents were not retrievable during the point of audit as the person in charge of the filing system has left the company on a very short notice and a new PIC has yet to be appointed. The current document management system also needs to be improved as it is heavily dependent on the PIC.

Corrective Action to be completed by Organization:

1. To submit the records of pesticide use. 2. To appoint and train a new PIC for document management.

Preventative Action to be completed by Organization: To improve the current document management system to ensure that files/documents are retrievable at all times.

Close-out evidence/Planned Actions to be completed by Lead assessor: GP 9405A Page 95 of 106

CAR # Indicator CAR Detail SOU 13 Labu submitted evidence of: a) Appointment of Nitya Mohan on the 5/11/16 to be responsible for the updating, maintaining and monitoring the records b) Pictorial evidence to improve the filing and ease of access of records c) Records of the pesticide used, area treated , amount of active ingredient applied per ha etc for the FY 2016/17 till October 2016 were sighted.

MAJOR 03 – Closed

Date M04 4.6.5 04/11/16 Due Date> 04/02/17 Date Closed> 30/01/2017 Recorded>

Normative reference and requirements:

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 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). Statement of Non-Conformance: No evidence that evaluation that 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 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). Objective Evidence: The spray operators were appropriately attired with the PPE provided by the management . During the regular training, use of PPE is emphasized. The spray operators are aware of replacing the filter when due. At Labu Estate, during premixing, the pre-mixers team were provided the respirator and the appropriate PPE. ( however they were placing the filter in the wrong direction in the respirator mask ) NLE and LE has a place for them to hang their washed PPE . However it was also sighted that in NLE they will be mixing the chemical at the site where the workers store their clothing as well as the place where they hang the PPE. However it was found that competency training programme of the new spray operators , Kalyan and Tapan were not available . Similarly, for Labu Estate trunk injection training conducted for the workers, they were not evaluated for the competency and understanding .

Root cause analysis to be completed by Organization:

a) There was an insufficient storage area for the clothes and PPE. b) Kalyan and Tapan has been briefed on chemical handling on 18th August 2016. However, the training records were not retrievable during the point of audit as the person in charge of the filing system has left the company on a very short notice and a new PIC has yet to be appointed. The current document management system also needs to be improved as it is heavily dependent on the PIC. c) The present mechanism of tracking whether an evaluation has been done is not effective.

Corrective Action to be completed by Organization: GP 9405A Page 96 of 106

CAR # Indicator CAR Detail

a) Management will transfer the storage of PPE to the new location. b) To submit records on chemical handling training for Kalyan and Tapan. A new PIC for document management will also be appointed. c) To conduct training evaluation for trunk injectors.

Preventative Action to be completed by Organization:

a) To provide new location for clothing and PPE storage which is separate from the chemical mixing area. b) To improve the current document management system to ensure that files/documents are retrievable at all times. c) To establish a logbook that list the trainings/briefings done and include a column to indicate when the evaluation is to be carried out and who the person in charge is

Close-out evidence/Planned Actions to be completed by Lead assessor: Evidence were submitted of the following to ensure that pesticide are only handled, used or applied by persons who have completed the necessary training and shall always be applied in accordance with the product label. Appropriate safety and application equipment shall be provided and used:

a) As in 4.6.2 , Appointment of Nitya Mohan on the 5/11/16 to be responsible for the updating, maintaining and monitoring the records of the issuance of PPE as well as for the record of the workers training b) Photo of new location where the workers change of clothes are kept separately from the premixing area. An area was also provided for them to dry their PPE after use. c) Training records for Kalyan and Tapan (attendance list, training materials, training evaluation form) submitted. On the 5/11/16 , the estate staff , Mr Subhi and Farid conducted a training to the 7 spray operators conducting Pest and disease operation ( including Kalyan and Tapan ) to ensure that the filter in the mask is placed correctly . this was conducted in Field 2015B d) Records of Competency evaluation form for the workers were also submitted to ensure they are competent during the operation. The evaluation is on the the use of PPE, to check on the chemical use, to be aware of the surroundings like wind direction, safety when walking between palms , rest time and discipline . e) Records of the training and competency training for the trunk injector operators , Luxman, Akash and Jamal conducted at the sister estate , Tanah Merah Estate on the 24/9/16 by Mr Najdi Hifni f) Filing system is improved to allow easier access to documentation required as some records of training were not retrievable as evidence during audit .

MAJOR 04 – Closed

Date m05 4.6.7 04/11/16 Due Date> Next surv Date Closed> dd mm yy Recorded>

Normative reference and requirements:

Application of pesticides shall be by proven methods that minimise risk and impacts. Statement of Non-Conformance: Applicators were not calibrated as evidence that application of pesticides are used by proven methods that minimise risk and impacts Objective Evidence: GP 9405A Page 97 of 106

CAR # Indicator CAR Detail In New Labu Estate conventional knapsack sprayer with nozzle ( chocolate colour ) of spray volume 195 lit/ ha is used . Calibration is done for the other coloured nozzles however it was noted that the calibration records are done in 2015 . Similarly no calibration was done for the blue 225 lit / ha nozzles at Labu Estate Root cause analysis to be completed by Organization: The 195L/ha nozzle is supplied by MyCrop Sdn Bhd and the blue 225 lit/ha is supplied by MyCrop Sdn Bhd. Calibration for the nozzles are done by the suppliers when they bring in the supply i.e. on 24th July 2016 for 195L/ha nozzle and on 24th July 2016 for the blue 225 lit/ha. However, the calibration records were not documented by the OUs.

Corrective Action to be completed by Organization:

1. To obtain the calibration methods from the supplier and retrieve the evidence of the supplier visit to the estates.

Preventative Action to be completed by Organization:

1. To do internal calibration as an addition to the supplier calibration and keep records.

Close-out evidence/Planned Actions to be completed by Lead assessor: The above root cause analysis, corrective action and prevention action plan was accepted . This will be further verified during next surveillance.

CAR # Indicator CAR Detail

Date M06 4.7.2 04/11/16 Due Date> 04/02/17 Date Closed> 30/01/2017 Recorded>

Normative reference and requirements:

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 precautions attached to products shall be properly observed and applied to the workers. Statement of Non-Conformance: Not all the operations where health and safety is an issue were properly risk assessed, and procedures and actions shall be documented and implemented to address the identified issues. All precautions attached to products shall be properly observed and applied to the workers Objective Evidence: However the HiRARC for Labu Estate the harvesting risk assessment report did not show what PPE is required for the operation . Similarly the harvesting HiRARC for New Labu Estate did not include safety helmet as part of the PPE required. .

Root cause analysis to be completed by Organization: The present guidelines on doing the HIRARC is not effective. Understanding of the assistant managers on the subject matter also needs to be improved.

Corrective Action to be completed by Organization: GP 9405A Page 98 of 106

CAR # Indicator CAR Detail To review the HIRARC for harvesting.

Preventative Action to be completed by Organization:

To improve the present guideline on doing HIRARC and undergo corresponding training.

Close-out evidence/Planned Actions to be completed by Lead assessor: Evidence submitted of the following to ensure that 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.

1) Memo dated 18 Oct 2016 from the HQ regarding new guidelines on risk assessment (including HIRARC) and the training program to set standards of HIRARC and EAI of the estate and mills, to identify all hazard and aspects at the workplace and to assessed the risk , formulate control measure and to mitigate. 2) Updated HIRARC for Harvesting. Dated 8/11/16 for New labu Estate and 1/12/16 for Labu Estate sighted to include the missing PPE e.g , Safety helmet , googles, Sickle cover and safety boots into the PPE required during the harvesting operation

MAJOR 06 – Closed

Date m07 4.7.6 4/11/16 Due Date> Next surv Date Closed> dd mm yy Recorded>

Normative reference and requirements:

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

Statement of Non-Conformance: No evidence that all workers are provided and covered by accident insurance Objective Evidence: Records show that workers in New Labu Estate are covered by insurance. There are insurance policy available to cover the workers (foreign workers) through the FWCS insurance. However during the audit it was shown that the insurance has expired and they are awaiting the renewal of their insurance. In Labu Estate , although they have a list of workers that have been covered , there were some workers like Alam Malik and Alfaz Uddin , do not have evidence /records that they are covered .

Root cause analysis to be completed by Organization: All workers who arrive at the Operating Units (OUs) for the first time are covered by insurance as the immigration approval (calling visa) will not be issued without the insurance. For the insurance renewal, it is an automated process by Malaysia E- Government Service (MYEG) where the insurance will be renewed together with the permit renewal application. The application is done by the Sime Darby Plantation Head Quarters (HQ). However, the initial mechanism for dissemination of the insurance policy/cover note to the OUs is inefficient where the policy is sent to OUs based on individual requests. Hence, although the insurance has been renewed, the copy of the policy is at the HQ. Realizing this situation, the company has made the effort to rectify it where OUs have now been instructed to request for the policy on a financial year basis.

Corrective Action to be completed by Organization: New Labu and Labu estate to request to HQ for copies of the valid insurance policy.

Preventative Action to be completed by Organization: GP 9405A Page 99 of 106

CAR # Indicator CAR Detail HQ to instruct OUs to request for the insurance policy based on financial year and as per specified format.

CAR # Indicator CAR Detail

Date m08 5.3.3 4 Nov 2016 Due Date> Next surv Date Closed> dd mm yy Recorded>

Normative reference and requirements:

A waste management and disposal plan to avoid or reduce pollution shall be documented and implemented. Statement of Non-Conformance: The documented waste management and disposal plan and its implantation is not sufficient to reduce pollution. Objective Evidence: However it was found that recycled materials (e.g. paper, plastics ) have not been segregated with other domestic wastes at the linesite Root cause analysis to be completed by Organization: 3R bins have been provided to workers. However, the present guidelines on segregation and 3R are not sufficient.

Corrective Action to be completed by Organization: To conduct awareness training on 3R.

Preventative Action to be completed by Organization: To review the guidelines on segregation and 3R and conduct corresponding training.

Close-out evidence/Planned Actions to be completed by Lead assessor: The above root cause analysis, corrective action and prevention action plan was accepted. This wil be further vierified during next surveillance. m09 6.2.3 Date 04 Nov 2016 Due Date> Next surv Date Closed> dd mm yy Recorded>

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

Statement of Non-Conformance: A list of stakeholders is not complete.

Objective Evidence: GP 9405A Page 100 of 106

CAR # Indicator CAR Detail The list of stakeholders in the estate is available and updated. However, observed during site visit evident that there is Quarry Company operated nearby (border) New Labu Estate but the Quarry has not been listed in the stakeholder list of New Labu Estate. Based on interview, this is organising by HQ. Root cause analysis to be completed by Organization: The quarry has already been identified as a stakeholder where it mentioned has also been mentioned in the HCV reports and communication records are available. However, the documents were not retrievable during the point of audit as the person in charge of the filing system has left the company on a very short notice and a new PIC has yet to be appointed. The current document management system also needs to be improved as it is heavily dependent on the PIC.

Corrective Action to be completed by Organization:

1. To submit the samples of communications and latest stakeholder list to PT SGS. 2. To appoint and train a new PIC for document management.

Preventative Action to be completed by Organization: To improve the current document management system to ensure that files/documents are retrievable at all times.

OBSERVATIONS

OBS # Indicator Observation/Opportunity for Improvement

Date OBS1 4.4.1 04/11/16 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details: The river Sg Jijan water analysis was not sighted during the audit.

OBS # Indicator Observation/Opportunity for Improvement

Date OBS2 4.6.6 04/11/16 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details: Emergency Response Plan is available for poisoning , accident as well as for fire in the chemical store however the procedure for chemical spillage was lacking

OBS # Indicator Observation/Opportunity for Improvement

Date OBS3 4.7.4 04/11/16 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details: GP 9405A Page 101 of 106

OBS # Indicator Observation/Opportunity for Improvement

Estate/Mill Date of Meeting NLE No records for the September meeting NLE 20/6/16 NLE 18/3/16 NLE 11/12/15

Due to the ‘missing’ meeting minutes in Sept 2016, an observation is raised

OBS # Indicator Observation/Opportunity for Improvement

Date OBS 4 5.1.1 4 Nov 2016 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details:

EAI and EIE Review Form should contain information reference to EAI and EIE that has been reviewed. Evidence; Review Form signed dated 7 Nov 2016 only includes information of date signed and comments.

Date OBS 5 5.3.2 4 Nov 2016 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details:

Used lubrication oil under storage at Schedule Waste Store is not been labelled to identify as scheduled waste Date OBS 6 6.5.2 4 Nov 2016 Due Date> Date Closed> dd mm yy Recorded>

Details:

Contracts of employment for workers under Yong Siew Tiam & Sons Sdn Bhd have not been reviewed due to document kept by the contractor.

APPENDIX B: NON-CONFORMITIES PREVIOUSLY IDENTIFIED

This is a re-certification audit. No outstanding non-conformities from previous visits

GP 9405A Page 102 of 106

APPENDIX C: TIMEBOUND PLAN

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APPENDIX D: LIST OF STAKEHOLDERS CONTACTED

Date Stakeholder Personnel Category Inform using Comments if any email/fax/intervi ew/ telco 10/5/16 NUPW Chantaku Union email No comments mar [email protected]

12/10/16 Ketua Pengarah Perhutanan Office Govt Fax No comment Negeri Sembilan 07/10/16 DFO En. Govt Telco & Fax No issues Shahril Jabatan Perhutanan Negeri Sembilan Barat 07/10/16 Ketua Balai Polis Nilai Govt Telco & Fax No issues 07/10/16 SRJK (T) Ladang Labu, Pn. Govt Telco & Email School field always be Bahagian 1 Saraswath messed with oil palm cut y A/P fronds during wet seasons Doraisamy especially at the end of every year. 07/10/16 DOE NS - Govt Telco (front Talk to the front desk to get desk) & Email the PIC email address [email protected] 12/10/16 DOE NS Salizawati Govt email No response [email protected] 12/10/16 Yong Siew Tiam & Sons Yong Contractor – Telco, fax fail Estate transfer 9th . Chen Wes Harvesting th NLE Pays workers on the 4-5 12/10/16 Hup Thye Hardware Sdn Bhd Mr Lim Agri Supplier Email No issue, prompt payment [email protected]

12/10/16 Sykt Sin Loong Tembikar Douglas Agri Supplier Email No issue, prompt payment [email protected]

Stakeholder Comments Auditor interviewed Findings during audit Spray operators Pay is on time, Housing is OK, PPE provided No issues at NLE – mandor during operation. Passport allowed Laxman, Ajibar, management to keep. Bhulu, Rakesh, Kalyan, Tapan Manurers at NLE Housing is OK, Mandore does not use force to No issues correct their mistake. Pay is OK . Harvester Labu Pay is OK , PPE provided during operation No issues Estate / Ampar GP 9405A Page 106 of 106

Tennang Hospital assistant Medicine is sufficient and complete. . during No issues Labu and Mill , Mr emergency , transport available. Jeyapaskar Guru Besar During rainy season flooding occurs resulting No issue. SRJK(T) Ladang in the fronds being washed to the school field . Estate has Kirby & Guru cleared the

Besar SRJK(T ) debris caused Ladang Labu by the flood and desilt the drains . confirm by the headmaster of the schools. JKK Kg Labu Hilir, No issues with the SOU 13 Labu No issues Kg JerangkangDarat, Kg Jerankang Baroh, Kg Bukit Buak and Kg Kondok

Issue raised by Company Response Auditor Findings Stakeholder No issues raised during the - - 30 days notification