SGS RSPO PROGRAM Doc

SGS RSPO PROGRAM Doc. Number: GP 9405A

(Associated Document) Doc. Version date: 6th June 2017 Page: 1 of 76 Issue: 03

RSPO PRINCIPLES & CRITERIA CERTIFICATION REPORT

Public Summary Information

Job Number: 6424-ID

Client: PT. SMART Tbk – Tanah laut Mill RSPO membership # 1-0096-11-000-00

RSPO Registered Parent Golden Agri- Country: Indonesia Company name: Resources Ltd

Production of Certified Sustainable Palm Oil (CSPO) and Certified Sustainable Palm Kernel Scope: (CSPK) at Tanah Laut Palm Oil Mill with a capacity of 30 MT/hour using Module E: Mass Balance (MB) which FFB supplied from Tanah Laut Estate and Kintapura Estate.

Supply Chain Module: Module E: CPO Mills- Mass Balance

Mill Capacity 30 tonne/hour Number of Estate 2 (two) Estates

Start Date: 11 September 2017 End Date: 10 September 2022 Certificate Number: SGS-RSPO/PC17-00012 Date of Certificate issue: 11 December 2017 Date of First Certification 11 September 2012 SGS Accreditation Code ASI-ACC-077 Date of accreditation: 5th July 2016 Contacts Job Description: Head of Environmental Department Name: Mr. Ismu Zulfikar Physical address: Postal address: Address: Mill Site : Kecamatan Kintap, Kabupaten Head office : Sinar Mas Land, Tower 2, 4th Street and number: Tanah Laut, Kalimantan Selatan, Floor Town/City Indonesia Jl. MH Thamrin No. 51 Kav. 22, Jakarta 10350 State/Country Zip/Postal code Estates : Kecamatan Kintap, Kabupaten Country Tanah Laut, Kalimantan Selatan, Indonesia Tel: +62 21 50338899 Ext. 1184 Cell Phone : - Fax: +62 21 50389999 Web Site Address: www.smart-tbk.com Email: [email protected] • Indonesia National Interpretation of RSPO P&C 2013 dated on 30 September 2016 Standard: • RSPO Supply Chain Certification Standard dated on 21 November 2014 Date of last report update 22 September 2017 January 2017: 9,312.27 MT July 2017: 5,926.64 MT February 2017: 6,587.26 MT August 2017: Actual Certified FFB Received by the Mill (2017) March 2017: 4,561.78 MT September 2017: April 2017: 4,792.42 MT October 2017: May 2017: 6,218.80 MT November 2017:

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 76

June 2017: 4,683.66 MT December 2017: Actual Annual CSPO 9,351.67 MT Tonnage produced (2017)

Actual Annual CSPK 2,220.69 MT Tonnage produced (2017)

Actual Annual CSPO 0.00 MT Tonnage Sold (2017)

Actual Annual CSPK 2,393.12 MT Tonnage Sold (2017)

Certified Production versus Sales Palm Oil (mt) PK (mt)

Last year (projected) certified volume (RSPO Certified) in Palm 26063.75 5783.88 trace

Last year’s Actual sold volume (RSPO Certified) in Palm trace 0 3,955.77

Last year’s Actual sold volume (Other schemes certified) 17,885.72 0

Last year’s Actual sold conventional 2,270.05 901.61

New (Projected) 2017 Certified Volume (RSPO Certified) in 21,694.00 5,424.00 Palm Trace

End of Public Summary GP 9405A Page 3 of 76

BASIC EVALUATION INFORMATION RE-CERTIFICATION EVALUATION Evaluation Dates: 28-31 August 2017 Team Leader/Team: Zaenal Abidin (Team Leader) / Taryanto Wijaya and Nurul Qomaria (Team Members) and Dr. Hariyadi (Technical Expert) Affiliate Project Manager: Date: Report approved by: Aryo Gustomo Date: 11 Dec 2017 Certification approved by: Shashibhushan Jogani Date: 11 Dec 2017 Database logged by: Lisda Verawati Date: 11 Dec 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:

SGS RSPO PROGRAM Doc. Number: GP 9405A

(Associated Document) Doc. Version date: 6th June 2017 Page: 4 of 76 Issue: 03

TABLE OF CONTENTS BASIC EVALUATION INFORMATION ...... 3 List of Abbreviation ...... 6 1. Scope of certification assessment ...... 7 1.1 National Interpretation Used ...... 7 1.2 Certification Scope ...... 7 1.3 Location and Maps ...... 7 1.4 Description of Supply Base and Mill Processing Capacity ...... 9 1.5 Area of Plantation ...... 9 1.6 Date of Planting and Cycle ...... 10 1.7 Other Certification Held ...... 10 1.8 Organizational Information and Contact Person ...... 10 1.9 Time-bound Plan for Other Management Units ...... 10 2. Assessment Process ...... 15 2.1 Certification Body ...... 15 2.2 Assessment Methodology, Programme, Site Visits ...... 15 2.3 Qualification of Lead Assessor and Assessment Team...... 16 2.4 Stakeholder Consultation and List of Stakeholders Contacted ...... 17 3. Assessment Findings ...... 17 3.1 Summary of Findings ...... 17 3.2 Corrective Action Request ...... 67 3.3 Noteworthy Positive Components ...... 67 3.4 Status of Non-Conformities Previously Identified ...... 67 3.5 Issues Raised by Stakeholders and Findings ...... 67 4. Acknowledgement of Organization Internal Responsibility ...... 68 4.1 Conclusion ...... 68 4.2 Date of Next Surveillance Visit ...... 68 4.3 Date of Closing Non-Conformities ...... 68 4.4 Acknowledgement of Internal Responsibility and Formal Sign-off Assessment Findings ...... 68 APPENDIX A: CORRECTIVE ACTION REQUEST & OBSERVATION ...... 69 APPENDIX B: NON-CONFORMITIES PREVIOUSLY IDENTIFIED - NONE ...... 71 APPENDIX C: TIMEBOUND PLAN ...... 72 APPENDIX D: LIST OF STAKEHOLDERS CONTACTED...... 75

LIST OF TABLES Table 1: Mill GPS Location ...... 7 Table 2: Budgeted Yield from Supply Base (Financial Year) ...... 9 Table 3: Planting Age Profiles for all Supply Base Estates ...... 10

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 4: Area Statement of the Supplying Estates ...... 9 Table 5: Assessment Program ...... 15 Table 6: Auditors Profile ...... 16

LIST OF FIGURES Figure 1: Estates and Mills Location Map ...... 8

GP 9405A Page 6 of 76

LIST OF ABBREVIATION

Short Form Meanings

AMDAL Analisis Mengenai Dampak Lingkungan (Environmental Impact Assessment-EIA) ASEAN Association of South East Asia Nations B3 Bahan Berbahaya dan Beracun (hazardous material) BOD Biological Oxygen Demand CAR Corrective Action Request CPO Crude Palm Oil CBD Convention on Biodiversity EFB Empty Fruit Bunches EMS Environmental Management System FFA Free Fatty Acids FFB Fresh Fruit Bunches Ha Hectare HCV High Conservation Value HGU Hak Guna Usaha (Land Use Title) IPM Integrated Pest Management INA-NI Indonesian National Interpretation ISO International Organisation for Standardisation IUCN International Union for Conservation of Nature and Natural Resources IUP Izin Usaha Perkebunan (Plantation Operation Licence) K3 Kesehatan dan Keselamatan Kerja (Occupational Health and Safety) KNTE Kintapura Estate kW Kilowatt LC Land Clearing M Meter Mg Magnesium Mm Millimeter MT Metric ton N Nitrogen NGO Non Governmental Organisation OER Oil Extraction Rate OSH Occupational Safety & Health P Phosphate P & C Principles and Criteria PK Palm Kernel POM Palm Oil Mill POME Palm Oil Mill Effluent PPE Personal Protective Equipment RKL/RPL Rencana Kelola Lingkungan/Rencana Pemantauan Lingkungan (Environmental Management Plan/Environmental Monitoring Plan) RSPO Roundtable on Sustainable Palm Oil SOP Standard Operating Procedure TLTE Tanah Laut Estate TLTM Tanah Laut Mill UKL/UPL Upaya Kelola Lingkungan/Upaya Pemantauan Lingkungan (Environmental Management Efforts/Environmental Monitoring Efforts) WHO World Health Organisation Yr Year

GP 9405A Page 7 of 76

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), Indonesia National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production 2013 (approved by RSPO on 30 September 2016).

1.2 Certification Scope The scope of certification includes the production of PT. SMART Tbk – Tanah Laut Mill and its supply base from Tanah Laut Estate and Kintapura Estate according to the RSPO standard requirement of Roundtable on Sustainable Palm Oil (RSPO), Indonesia National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production 2013 (approved by RSPO on 30 September 2016) and RSPO Supply Chain Certification Standard dated 21 November 2014.

1.3 Location and Maps PT. SMART Tbk – Tanah Laut Mill is located in Batu Mulia Village, Kintap District, Tanah Laut Regency, Kalimantan Selatan Province, Indonesia (Figure 1 ). More detailed information on the estates location and layouts is shown in Figures 2, 3 and 4. The GPS locations of the mills are shown in Table 1. Table 1: Mill and Supply Base GPS Location

Mill/Supply Base Longitude Latitude (Estate/smallholder)

Tanah Laut Mill E 115°16'59" S 03°47'25"

Tanah Laut Estate E 115°17'43” S 03°47'32"

Kintapura Estate E 115°08'24” S 03°48'15"

GP 9405A Page 8 of 76

Figure 2: Estates and Mills Location Map

GP 9405A Page 9 of 76

1.4 Description of Supply Base and Mill Processing Capacity The FFB is sourced from 2 estates which is directly managed by PT SMART Tbk. The OER rate is 23.00%. The budgeted crop yields from each estate are listed in Table 2 below. Table 2: Actual and Projected FFB from Supply Base (2017)

FFBs (Tonnage) Estates/Smallholders Estimation (2017) Actual (Jan-Jul 2017) Projection (2018) Tanah Laut Estate (TLTE) 51,521.00 23,258.17 60,903.00 Kintapura Estate (KNTE) 30,571.00 18,824.65 33,421.00 Subtotal (own RSPO certified 82,092.00 42,082.82 94,323.00 supply base) Certified FFB received from 0.00 0.00 0.00 other RSPO certification scope within adjacent estates (if any) Subtotal (other RSPO certified 0.00 0.00 0.00 supply base) Grand Total 82,092.00 42,082.82 94,323.00

PT SMART Tbk - TLTM also receives FFBs from other third parties that are not certified (period Jan-Jul 2017) is 1,925.98 MT.

Table 3: Actual and Projected Mill Processing Data

Mill Production Figures (MT) (Audited Estate)

Mill Name Estimation (2017) Actual (Jan-Jul 2017) Projection (2018)

CPO PK CPO PK CPO PK

Tanah Laut 26063.75 5783.88 9,351.67 2,220.69 21,694.00 5,424.00 POM Extraction Rate OER: 23.00% KER: 5.70% OER: 22.22% KER: 5.28% OER: 23.00% KER: 5.75%

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 the Supplying Estates

Planted Area Total Land Name of Conservation HCV Area Others use Immature Mature Lease Area Estates Area (Ha) (Ha) **) (Ha) Area Area (Ha) (Ha) *) (Ha) TLTE 35.59 2,655.89 0.00 119.51 817.17 3,508.65 KNTE 0.00 1,371.67 0.00 217.95 71.83 1,443.50 Total 35.59 4,027.56 0.00 337.46 889.00 4,952.15 Remarks: *) There is replanted on 2016-2017 in at TLTE (35.59 ha). This area was previously planted with oil palm on 1990 by the company prior then coal mining activities over taken on 2012 and completed on 2016. **) HCV areas inside plantation areas therefore not calculated in the total area There are 636.33 Ha in Salaman and Kintapura Villages still in process in BPN to received HGU certificate. This area is excluded from RSPO certification. National Land Agency (Kanwil BPN) has invited the company since 28 January 2015 regarding meeting of committee B land checking. Kadastral measurement has been done, and now waiting for government decison. GP 9405A Page 10 of 76

1.6 Date of Planting and Cycle The PT SMART Tbk – Tanah Laut Mill own estates were planted between 1995 and 2005.The palms ware considered matured when approaching four years after planting and productive until the age of 25 years. A replanting program for all estates involved are not available because the older planting age is still 19 years. The age profiles for all the estates are simplified in Table 5 below.

Table 5: Planting Age Profiles for all Supply Base Estates

Name of supplying Planting Age (Ha) estate Immature >4 - 14 years >14 - 25 years >25 years Tanah Laut Estate 35.59 275.76 2,380.13 0.00 Kintapura Estate 0.00 62.10 1,309.57 0.00 Total 35.59 337.86 3,689.70 0.00

1.7 Other Certification Held The company has certificates of ISPO (valid until 3 Feb 2021) and ISCC (July 2018)

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

Name: Mr. Ismu Zulfikar

Designation: Head of Environmental Department

Address: Sinar Mas Land, Tower 2, 4th Floor Jl. MH Thamrin No. 51 Kav. 22, Jakarta 10350 Contact No.: +62 21 50338899 Ext. 1184

Email address: [email protected]

1.9 Time-bound Plan for Other Management Units PT SMART Tbk is subsidiary of Golden Agri Resources (GAR) which has majority of shareholder of PT SMART Tbk (92%). GAR and PT SMART Tbk have their own RSPO membership. PT SMART Tbk has a member of RSPO and has been involved in the certification since 2005; the membership number with RSPO is 1-0019-05-000-00. While GAR has a membership number 1-0096-11-000-00 since 2011. GAR owns and operates 45 mills and 169 oil palms estates, together with 45 operating units covering approximately 642,326.00 ha (417,412.00 ha of planted areas and its infrastructures) in Indonesia. PT SMART Tbk owns and operates 16 mills and 49 oil palms estates, together with 16 operating unit covering approximately 117,127 ha in Indonesia. GAR and PT SMART Tbk have developed a time-bound plan ( Appendix C) for the phased implementation of the RSPO P&C, commencing with mills and estates. GP 9405A Page 11 of 76

PT SMART Tbk will use the experience gained from achieving certification of the first few mills and estates to implement the RSPO P&C in parallel with the remainder of its operations. The SGS assessment team considers that PT SMART Tbk 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 against Requirements of Clause 4.2.4 of RSPO Certification System documents.

Time Bound Plan Requirement Findings and any action required Compliance Description of Company’s PT SMART Tbk is subsidiary of Golden Agri Yes Management Structure being audited Resources (GAR) which has majority of in relation to Majority of shareholder shareholder of PT SMART Tbk (92%). GAR and (whom ultimately controlling PT SMART Tbk have their own RSPO shareholder) and its subsidiaries membership. PT SMART Tbk is a member of companies. RSPO and has been involved in the certification since 2005; the membership number with RSPO Guidance for Auditor: is 1-0019-05-000-00. While GAR has a Beside interview with company’s membership number 1-0096-11-000-00 since management representative, these required 2011. information should be supported with browsing through Internet search for the company name such as media coverage, legal registration, and RSPO Annual Communication on Progress (ACOP). As addition, if other Certification Body(s) has performing evaluation to this requirements either in the company being audited and/or at other certified companies under same holding, Auditor may request for the summary report through the company and consider it as part of this audit. The parent organization or one of its majority owned and / or managed subsidiaries are member of RSPO, whether the registered RSPO member is the holding company or one of its subsidiaries; NOTE 1: For groups with complex management structures the following are required: i. A statement of the ultimate controlling shareholders and directors in the managing agency company/companies. ii. Ditto in respect of each of the operating groups. iii. Application for membership by the top asset owning company/companies. iv. Application for membership by the managing agency company/companies NOTE 2 : Majority shareholding: the largest shareholding, where the largest shareholdings are equal (e.g. 50/50) this applies to the organisation that has management control. Does the plan include all subsidiaries, GAR has 29 of 45 management units that have Yes estates and mills? been certified. PT SMART Tbk has 16 management unit have been included into the time bound plan. 12 of 16 management units have been certified. See Appendix C. Have there been any newly acquired Based on ACOP 2016, there are no any newly Yes subsidiaries? acquired subsidiaries. GP 9405A Page 12 of 76

Is the time bound plan challenging? The time bound plan has challenged as follows: Yes • Age of plantations. • Age of plantations. • Location. • Location. • POM development • POM development • Infrastructure. • Infrastructure. • Compliance with applicable law. • Compliance with applicable law. See Appendix C Have there been any changes since See above explanation. The existing 12 Mills Yes the last audit? Are they justified? have been certified. PT SMART Tbk has set up a time bound to achieve RSPO certification for all subsidiary companies. If there have been changes, what See explanation above. Yes circumstances have occurred? PT SMART Tbk has fully committed to achieve RSPO certification for all management units, taking into account that the time bound plan is challenging. Have there been any isolated lapses in There is no isolated laps. The existing 12 Mills Yes implementation of the plan? have been certified. PT SMART Tbk has set up a time bound to achieve RSPO certification for all subsidiary companies. Have there been any stakeholder No stakeholder comment that affect Time bound Yes comments during assessment to the Plan set up by PT SMART Tbk. Company’s Time Bound Plan, or to other certified companies under same holding? Guidance for Auditor: Targeted stakeholder consultation may be carried out by the SGS audit team either contacting them by email, phone call, meeting, or other methods. If this has already been conducted by other certification body(s) either in the company being audited and/or at other certified companies under same holding, Auditor may request for the summary report through the company and consider it as part of this audit. These must be recorded in this audit report i.e. Section 2.4 and Appendix D and should be part of consideration during this verification process. Un-Certified Units or Holdings Note for Auditor : Companies should demonstrate compliance by clear evidences of a self-audit (i.e. an internal audit for all subsidiaries, estates and Palm Oil Mills) against each of the RSPO P&C requirements. Auditor should select sample(s) of un-certified units subsequently review/check the Internal audit results. The minimum sample(s) should follow 0.8 √y where y is number of subsidiaries company. Auditor may increase the number of sample(s) selected if there are some stakeholder inputs received during assessment. The Company responsible for the area being audited and shall ensure that any necessary corrections and corrective actions are taken without undue delay to eliminate detected nonconformities and their causes. If not then Auditor should consider to raise Major or Minor non- compliances. Requirement Findings and any action required Compliance Did the company conduct an internal PT SMART Tbk has conducted internal audit for Yes GP 9405A Page 13 of 76

audit? If so, has a positive assurance un-certified subsidiaries as follows: statement been produced? 1. PT Kresna Duta Agroindo - Pelakar Mill Lestari (1 mill, 3 estates and 1 plasma) has been audited Stage 1 by CB in 2015, Guidance for Auditor: expected Stage 2 conducted by end of 2017. Positive assurance statement, which is Last interna audit was conducted on 24-29 based upon self-assessment (i.e. internal Oct 2016. PT SMART Tbk has stated time audit) by the organisation. This would bound plan in ACOP 2016. require evidence of the self-assessment against each RSPO P&C requirement for all 2. PT SMART Tbk - Bukit Kapur Mill (1 mill and un-certified units. 2 estates) has been audited Stage 1 by CB in 2015. Last internal audit was conducted 15- 19 Feb 2016. Time bound plan is 2020. 3. PT Kresna Duta Agroindo – Rantau Panjang Mill (1 mill, 1 estate and 1 plasma). Interna audit was conducted on 19-24 Des 2016. Time bound plan is 2017. 4. PT Kresna Duta Agroindo – Gunung Kombeng Mill (1 mill and 1 plasma). Interna audit was conducted on 6-10 Feb 2017. Time bound plan is 2018. Are there any stakeholder comments Based on interview result with SPO team and during assessment to the un-certified internet browing stated that there are no any companies under same holding? stakeholder comments to the un-certified companies. Guidance for Auditor: Targeted stakeholder consultation may be carried out by the SGS audit team either contacting them by email, phone call, meeting, or other methods. If this has already been conducted by other certification body(s) either in the company being audited and/or at other certified companies under same holding, Auditor may request for the summary report through the company and consider it as part of this audit. These must be recorded in this audit report i.e. Section 2.4 and Appendix D and should be part of consideration during this verification process. No replacement after dates defined in Based on internal audit for un-certified Yes NIs Criterion 7.3: subsidiaries, PT SMART Tbk was waiting for RaCP approval to continue RSPO certification • Primary forest. process. • Any area identified as containing High Conservation Values (HCVs). • Any area required to maintain or enhance HCVs in accordance with RSPO criterion 7.3.

Guidance for Auditor: If this cases occur in one or more of company’s un-certified units, the following shall be checked and verified: - Action Plan (with details steps and time line to fulfill) - Does company follow the latest requirements of LUCA and RaCP procedures?

Any new plantings since January 1 st See above explanation Yes 2010 must comply with the RSPO New GP 9405A Page 14 of 76

Plantings Procedure. Any Land conflicts are being resolved There is no significant land conflict based on Yes through a mutually agreed process, interviewed with SPO team and browsing e.g. RSPO Grievance procedure or internet. Dispute Settlement Facility, in accordance with RSPO criteria 6.4, 7.5 and 7.6. Guidance for Auditor: To check the as to whether this cases found during Internal audit at company’s uncertified units. Auditor should also checked in RSPO Complaint tracker in RSPO website as one of the following links: http://www.rspo.org/ http://www.rspo.org/members/status-of- complaints/ http://www.rspo.org/members/dispute- settlement-facility http://www.rspo.org/members/dispute- settlement-facility/status-of-disputes As addition to check is to search in the public court documents which available online. Some countries may not available due to restriction rules . Any Labor disputes are being resolved No labour dispute based on internal audit and Yes through a mutually agreed process, in browsing internet. accordance with RSPO criterion 6.3.

Guidance for Auditor: To check the as to whether this cases found during Internal audit at company’s uncertified units. Auditor should also checked in RSPO Complaint tracker in RSPO website as one of the following links: http://www.rspo.org/ http://www.rspo.org/members/status-of- complaints/ http://www.rspo.org/members/dispute- settlement-facility http://www.rspo.org/members/dispute- settlement-facility/status-of-disputes As addition to check is to search in the public court documents which available online. Some countries may not available due to restriction rules. Any Legal non-compliance is being Based on internal audit, browsing internet and Yes resolved in accordance with the legal interview with SPO team, there was not requirements, with reference to RSPO significant issue of legal compliance for un- criteria 2.1 and 2.2. certified subsidiaries. Guidance for Auditor: They have complied with Act # 39/2014 regarding Plantation ( Perkebunan ). To check the as to whether this cases found during Internal audit at company’s uncertified units. Auditor should also checked in RSPO Complaint tracker in RSPO website as one of the following links:

http://www.rspo.org/ GP 9405A Page 15 of 76

http://www.rspo.org/members/status-of- complaints/ http://www.rspo.org/members/dispute- settlement-facility http://www.rspo.org/members/dispute- settlement-facility/status-of-disputes As addition to check is to search in the public court documents which available online. Some countries may not available due to restriction rules.

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 80,000 employees, SGS operates a network of over 1,650 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 oil palm plantation and supply chain certification for global RSPO certification. 2.2 Assessment Methodology, Programme, Site Visits The assessment was conducted in 4 audit days and involving 2 estates of PT SMART Tbk – Tanah Laut Mill. The audit covers documentation review, internal procedures, management system, field inspection as well as identification of any significant issues for both environment or social issues. A sample of stakeholders was consulted during the assessment to get their feedback on the management 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.

Table 6: Assessment Program

Date Time Auditor Organisational and Functional Units/ Processes and Activities 28.08.17 06.00 All Travel from Jakarta to Banjarmasin by Garuda 09.00 All Arrival at Banjarmasin Airport and continue to site by car 12.00 All Arrival at the site and lunch 13.00 All Opening Meeting 13.30 All Documents review (legal, land title, timebound plan, environmental monitoring & measurement, HCV, SOPs for best agriculture practices, health & safety, social aspect, labour and supply chain) 17.00 All End of 1 st day audit 29.08.17 08.00 All Kintapura Estate: Field work inspection: IPM, spraying, fertiliser, harvesting, planting, soil and water conservation, riparian/buffer zone, HCV, boundary, road construction and maintenance, waste GP 9405A Page 16 of 76

Date Time Auditor Organisational and Functional Units/ Processes and Activities disposal, workshop, storage area, line-site, occupational safety and health, interview with workers and stakeholders consultation. 12.00 Break and Lunch 13.00 All Tanah Laut Mill: • Palm Oil Mill Supply Chain (procedures, record keeping, training, FFB receiving, processing, sales of RSPO products, regristration and claims) • Site & facilities visit (water usage, production area, workshop, chemical room, bulky storage, waste water pond, land application, hazardous waste storage, environmental management and monitoring, OSH and interview with workers) 17.00 End of 2 nd day audit 30.08.17 08.00 All Tanah Laut Estate: Field work inspection: IPM, spraying, fertiliser, harvesting, planting, soil and water conservation, riparian/buffer zone, HCV, boundary, road construction and maintenance, waste disposal, workshop, storage area, line-site, occupational safety and health, interview with workers and stakeholders consultation. 12.00 All Break and Lunch 13.00 All Continue morning agenda 17.00 All End of 3 rd day audit 31.08.17 08.00 All Outstanding issues 09.00 All Report preparation and internal meeting 10.00 Closing meeting 11.00 All End of audit and travel to Banjarmasin Airport by car 15.15 All Travel to Jakarta by GA

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. 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 – Zaenal Abidin has a degree in Forestry and CBE Auditor in PT SGS Environmental Indonesia, 22 years national experience in forestry sector in Indonesia. Has and Supply undergone the necessary ISO 14001, ISO 9001, RSPO and ISPO Lead Chain Auditor course and involved in a number audits on oil palm plantations and forest certification. His specific qualification for RSPO audit is Environmental and Supply Chain. Auditor 1 – Nurul Qomaria, a Master of Agriculture Science holder. She has 7 years Plantation working experience in oil palm plantation sector in Indonesia. She has GP 9405A Page 17 of 76

undergone ISO 9001 and ISCC and ISPO Lead Auditor training and involved in a number of audits on oil palm plantations in Indonesia. Her specific qualification for RSPO audit is Good Agriculture Practices and Legal. Auditor 2 – Taryanto Wijaya has a degree on social. More than 18 years experience in Social forestry. He has undergone a number of audits on oil palm plantations in Indonesia. His specific qualification for RSPO audit is social, stakeholder consultation, labour and health and safety.

Technical Expert Dr. Ir. Hariyadi, MS., a lecture of Agronomy and Horticulture Department, Faculty of Agricultural - IPB (S1 and S2 programs)

2.4 Stakeholder Consultation and List of Stakeholders Contacted Public Stakeholder Notification was made on 28 July 2017, 30 days prior to the recertification assessment. There is no written feedback received at the end of the 30 days period. Stakeholder consultation involved internal and external stakeholders. External stakeholders were contacted by telephone and email to arrange meetings at a location convenient to them to discuss PT SMART Tbk Certification Unit’s environmental and social performance. During audit (28-31 August 2017), 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 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 0 (nil) Major Non-conformities and 1 (one) Minor Non-conformities identified during this assessment. Some areas identified with potential areas for improvement has leaded into 8 (eight) Observations raised. Details for each Non-conformities and observations are given in Appendix A. Minor Non-compliances and Observations will be followed up during the next Annual Surveillance Audit which is scheduled to be conducted within the period of twelve months after the Report approval of Main Assessment.

GP 9405A Page 18 of 76

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 List of information related to criterion 1.2 that can be accessed by relevant Minor stakeholders shall be available. Findings In compliance: Yes: X No: Objective The company has established procedure for providing information to stakeholders (transparency), evidence: as per reflected in the SOP document entitled Communication and Consultation Procedure (Prosedur Komunikasi dan Konsultasi ) - SOP/SMART/UMUM/SADV/I/004, date on 1 July 2014. The document specifies the objectives of the document that is to manage, mechanism, communicate, (internal and external), participation, health and safety, and environment (SMK3) so that it can be understood by stakeholders effectively. All information requests from stakeholder were listed and recorded by Mill and Estate on Record of information request and responses ( Daftar Informasi untuk Stakeholder dan Tanggapannya), The information includes the problem of social, legal and environmental. These are including: a) Land titles / user rights (C 2.2) b) Safety and health plan (C 4.7) c) Plans and impact assessment relating to environmental and social impacts (C 5.1, 6.1, 7.1, 7.8) d) HCV documentation (Criteria 5.2 and 7.3) e) Pollution Prevention and Reduction Plans (C 5.6) f) Details of complaints and Grievances (C 6.3) g) Negotiation procedures (C 6.4) h) Continual improvement plans (C 8.1) i) Public summary of certification assessment report j) Human Rights Policy (C 6.13) The company also has listed stakeholders based on the category such as governments, head of village, NGOs, women group, university, public figures etc. The company always submit periodic reports to relevant institutions to inform regarding the company’s performance such as report of implementation of environmental management and monitoring (twice a year), the plantation performance report (twice a year), P2K3 report (quarterly) and hazardous waste management report (quarterly). Based on consultation with stakeholders, they were aware the type of information available the procedure for accessing the information. 1.1.2 Records of requests for information and responses to the information Major requested shall be available. Findings In compliance: Yes: X No: Objective All information can be accessed by interested parties. Provision of information to be known by evidence: Estate Manager and approved by the Regional Controller (RC). If the information is confidential trade must go through the approval of Head Office. Provision of information to the relevant agencies recorded in the Register of Stakeholders Information (Daftar Informasi untuk Stakeholder) form No. F/SMART/UMUM/SADV/004/002. FFB price defined based on meeting in Dinas Perkebunan Provinsi Kalsel twice a month. Communication to KUD by email. Requests from the stakeholders are mainly for donation for the villages, for examples road construction and maintenance, agricultural equipment, book package, etc. in addition, other assistance such as assistance in providing fuel/diesel is also observed to be recorded. 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 (Criterion 2.2) Major

Findings In compliance: Yes: X No: GP 9405A Page 19 of 76

Objective There is a land titles/user rights documents that available for public. There are land titles/user evidence: rights documents listed include authorization who take responsible to giving this documents to the public, when requested. See Indicator 2.1.1. 1.2.1 (b) Occupational health and safety plans (Criterion 4.7); Major

Findings In compliance: Yes: X No: Objective There is Occupational Safety and Health Policy that available for public signed by organisation evidence: dated on 1 November 2013. Occupational Safety and Health documents include authorization who take responsible to giving this documents to the public, upon request. The policy has been displayed at the estate office and communicated to all workers through information board and morning briefing. The policy specifies that the company is committed to comply with all applicable occupational health and safety, process safety, and procedure safety requirements, continually improve performance on criteria relevant to its businesses and operations, and insist that all work, however urgent, be done safely.

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 There is a impact assessment documents that available for public. There are impact assessment evidence: documents include authorization who take responsible to giving this documents to the public, upon request. A documented impact assessment, i.e. Analisis Mengenai Dampak Lingkungan (AMDAL) is available, which consists of the following documents 1. The actual environmental impact assessment report, i.e. Analisis Dampak Lingkungan (ANDAL) 2. Rencana Pengelolaan Lingkungan (environmental management plan) 3. Rencana Pemantauan Lingkungan (environmental monitoring plan) The AMDAL document has been approved by government and the process to get approval has been followed through stakeholders consultation in order to identify impacts and develop any mitigation measures. The AMDAL also cover to both estates and mills. The environmental impacts identified are land erosion, water pollution, wild life disturbance, fire, social economic and culture and health. The regular reports of environmental management and monitoring implementation (RKL/RPL) is remains consistently implemented and reported to government authorities twice a year. Verified during audit the RKL/RPL period report on Semester II year 2016 and Semester I year 2017. 1.2.1(d) HCV documentation (Criteria 5.2 and 7.3); Major

Findings In compliance: Yes: X No: Objective There is a High Conservation Value assessment document that available for public including evidence: authorization who take responsible to giving this documents to the public, upon request. High Conservation Value assessment has been done in Nov 2011 conducted by RSPO-approved HCV assessor. 1.2.1 (e) Pollution prevention and reduction plans (Criterion 5.6); Major

Findings In compliance: Yes: X No: Objective There is pollution prevention and reduction plans documents that available for public. There are evidence: pollution prevention and reduction plans documents include authorization who take responsible to giving this documents to the public, upon request. An assessment of all pollutions and emissions has been conducted periodically through the implementation of the Environmental Management Plan (RKL/RPL) and GHG calculation according to RSPO palm GHG calculator. 1.2.1 (f) Details of complaints and grievances (Criterion 6.3); Major

Findings In compliance: Yes: X No: Objective There are a detail of complaints and grievances documents that available for public, including evidence: authorization who takes responsible to giving these documents to the public, upon request. The organisasion has set a delivery mechanism for complaints of workers in the PT SMART GP 9405A Page 20 of 76

Procedure No. PPNM/SOP/21, on 1 June 2012 on grievance and dissatisfaction . • Log Book of Keluh Kesah • Wistle blowing system 1.2.1 (g) Negotiation procedures (Criterion 6.4); Major

Findings In compliance: Yes: X No: Objective There is a negotiation procedures documents that available for public, including authorization who evidence: take responsible to giving this documents to the public, upon request. The procedure name is procedure of Land Compensation (SOP/NP/SMART/VII/D&L002, on 1 July 2010). 1.2.1 (h) Continual improvement plans (Criterion 8.1); Major

Findings In compliance: Yes: X No: Objective There is a continual improvement plans documents that available for public, including evidence: authorization who take responsible to giving this documents to the public, upon request. The management regularly monitors and reviews their social and environment program to allow for demonstrable continuous improvements. The company captures the performance and expenditure in social and environmental aspects through their budget which is reviewed and adjusted annually to cope with changes in requirement. 1.2.1 (i) Public summary of certification assessment report; Major

Findings In compliance: Yes: X No: Objective There is a public summary of certification assessment report documents that available for public. evidence: The public summary of certification assessment report documents (hard copy) include authorization who takes responsible to provide this document to the public, upon request. The public summary is available in head office. It has also available in website RSPO (www.rspo.org). 1.2.1 (j) Human Rights Policy (Criterion 6.13) Major

Findings In compliance: Yes: X No: Objective The company has a social policy and roles the community as a manifestation the respect of evidence: Companies to human rights, the rights of local communities and as a commitment to comply with the rules and regulations. This commitment is outlined in the policy, which was signed by the President Director on 10 November 2011. The policy contains such as : - Respect for human rights - Empowerment of local community development programs - recognizes, respect and reinforce the rights of workers - Compliance with all applicable laws and regulations - FPIC to indigenous and local communities This policy has been disseminated to all employees and the community around the plantation. Evidence of dissemination, list of attendance on 19 April 2016 and 1 July 2016, and 9 August 2016 all employees and the community was sighted. 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 along with the documentation of socialisation process of the policy to all levels of the workers and operations.

Findings In compliance: Yes: X No: Objective PT. SMART Tbk has established the Policy of Principles of Business Ethics signed by VPA on 1 evidence: August 2014 that the organization commitment to responsible of the continue practicing and business ethics referring to the shared values of company namely integrity, positive attitude, commitment, continuous improvement, innovation and loyalty as well as in accordance with the rules, SPO principles and criteria. It consists of five policies which can be summarized as follows : • Corporate practice and disseminating the shared values to all employees in all business activities • Support the implementation of the 10 principles of UNGC in which there was core value of devices that is human rights, labour, environment and anti-corruption • The company does not provide for any tolerance of corruption in business practices. GP 9405A Page 21 of 76

• The company committed to the ethical standards of behaviour in the management of all activities of business practices • The company implement good corporate governance. This policy has been disseminated to all employees and company around communities. Evidence of dissemination in the form of attendance list and minutes of socialization were available. The policy has been communicated to all employees date on 20 May 2016 at TLTE, 19 April and 1 July 2016 at KNTE, 3 October 2015 at TLTM, and 9 August 2016 for contractors. During interview with them that its policy has been directly communicated and understood

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 The company has a list of law and regulation year 2017 (F/SMART/UMUM/SADV/002/001) and evidence: has maintained a copy of all licenses both in hard and soft files. The company has carried out evaluation of compliance to regulation and law period of 2016 and the result of evaluation has stated on a report (F/SMART/UMUM/SADV/002/002). An overview of evaluation of compliance with laws and regulations is mentioned below: 1. Law no. 5 year 1960 (land legacy) and Governor regulation no.16 year 2004 (land management) with some evidences are the company has land use right. 2. Law no. 25 year 2007 (plantation and mill) with some evidence is the company has plantation business/ operational permit (IUP) no. 13 year 2003 dated on 30 January 2003 issued by Head of Tanah Laut Regency. 3. Ministry of Agriculture decree no.17/Permentan/OT.14/2010 (guidelines for assessment of plantation business) with evidence is penilaian usaha perkebunan (PUP) regarding plantation category on behalf the company is class I valid until December 2018 issued by Head of Tanah Laut Regency on March 2016. 4. Ministry of Agriculture decree no. 35/Permentan/OT.140/7/2008 (Good Agricultural/ Manufacturing Practices) with evidence is the company has Managemen Committee Agriculture and Research (MCAR) and and Management Comittee for Mill Development (MCMD). 5. Law no. 41 year 1999 (forestry) with evidence is management and monitoring of HCV and buffer zone (SOP of management and monitoring HCV and SOP of management and monitoring water resource). 6. Law no.32 year 2009 (fundamental rules on environmental protection) with evidence is the company has EIA, UKL-UPL report, SOP of waste management (SOP/SMART/LEMS- EHSD/SADV/I/002) include LB3 (hazardous) waste, permit of LA, permit of LB3 waste etc. 7. Government regulation no. 27 year 1999 (environmental impact assessment) with evidence is the company has obtained approval of EIA based on the Ministry of Agriculture no. 15/ANDAL/RKL-RPL/BA/IV/1993 dated on 30 April 1998. 8. Law no.17 year 2004 (Kyoto protocol on climate change) with evidence is the company has SOP of GHG calculation (SOP/SMART/CER-EHSD/SADV/I/003) and obtained the ISCC certification with current certificate no.EU-ISCC-Cert-DE101-17200254 validity period 5 August 2017 until 4 August 2018 which relates to monitoring emissions. 9. Government regulation no. 41 year 1999 (emission control) and decree of environmental agency no.KEP-205/BAPEDAL/07/1996 (static emission) with evidence is the company has conducted air pollution control and emission control periodically every six months at the mill. 10. Government regulation no. 74 year 2001 (management of hazardous substance) with evidence is the company has Management Committee Agronomy and Research (MCAR), Management Committee for Mill Development (MCMD) and SOP of Sustainability. 11. Government regulation no.18 year 1999 (hazardous waste management) with evidence is hazardous waste management conducted in collaboration with PT Maju Asri Jaya Utama (third party) with permit from ministry of environmental and forestry no. SK.571/Menlhk/Setjen/PLB.3/7/2016 date on 27 July 2016 validity 5 years. 12. Government regulation no.101 year 2014 (permit for chemical and hazardous substances storage) with evidence is hold hazardous storage permit from Head of Tanah Laut Regency no. 188.45/716-KUM/2016 date on 11 July 2016 validity 5 years (stored for maximum 180 days). Moreover, the company have MoU with hazardous waste collector (PT Maju Asri Jaya Utama) date on 1 April 2013 for used container of pesticide chemicals, expired chemicals, used oil, TL lamp, used battery, kain majun and used filter, valid during mill and estate operation. GP 9405A Page 22 of 76

13. Decree of environmental Ministry no. 28 and 29 year 2003 land application permit of POME with evidence is technical guidelines for assessment and licensing procedure for land application of POME and hold permit of land application from Head of Tanah Laut Regency no. 188.45/449-KUM/2016 date on 18 April 2016 validity 5 years. 14. Presidential decree no. 71 year 2011 (national inventory and mitigation of GHG) with evidence is the company has conducted the inventory and mitigation of GHG year 2016 and available program mitigation of GHG year 2017. 15. Law no. 13 year 2003 (labour) with some evidences are the company has complied regarding minimum wage based on decree of South Kalimantan Governor no. 188.44/0638/KUM/2016 date on 27 December 2016 about minimum wage year 2017, memorandum from HR no. 041/CEO3/PSM3/01/2017 date on 1 January 2017 about minimum wage year 2017, prohibition of employment of children under the age of 18 years through memorandum from HR about guidelines employee acceptance, ban on pregnant and lactating women to perform spraying and employee promotion. 16. Law no.1 year 1970 (occupational of work) with evidence is the company has a safety management system through OHS manual for estate and mill. The company has some permits such as boiler operation license for the staff who works at the boiler was approved and granted by Ministry of labour e.g on behalf of Radiman certificate no. 730/OPK3/B.I/V/2015 date on 22 May 2015, licence no. 8355/OPK3-PUBT-B.I/V/2015 and Sahid Husin certificate no. 486/OPK3/B.I/III/2011 date on 31 March 2011, licence no. 13.P.11.486.OPK3-PUBT-B.I/VII/2013. 17. Law no. 24 year 2011 (labor social insurance) with evidence is the company has joined as member of the social insurance Jamsostek no. 05GR0011 since 4 October 2006. Inspection of payment records at either mill or estates year 2017 was available. 18. Law no. 21 year 2000 (labour union) with evidence is the company has issued memorandum from CEO no. 104/CEO3-SE/07/2010 dated on 16 July 2010. In this memorandum the company allows their employees to perform the labor union. 19. Law no. 2 year 2004 (resolution of labor dispute) with evidence SOP of grievance (SOP/SMART/SIGS-CSRD/sADV/I/003) and memorandum from Head of Upstream No. 047/PD/X/2015 date on 29 October 2015 about GAR Social and Environment Policy (GSEP). 20. Government regulation no. 101 year 2014 apendix 1 (hazardous waste) that the company was compliance with regulation because container of agrochemical used as container of fosil fuel and management of contaminated sands (spill kit sand) has yet to refer to regulation it on house of genzet, warehouse of pesticide, warehouse of washing agrochemical container, central warehouse, warehouse of fosil fuel and warehouse of hazardous waste (TPS LB3). 2.1.2 A documented system, which includes written information on legal Minor requirements, shall be maintained.

Findings In compliance: Yes: X No: Objective The company has a mechanism to ensure compliance with all applicable laws and regulations evidence: through SOP of regulation compliance evaluation (SOP/SMART/UMUM/SADV/I/002). Implementation of this procedure was followed up by providing a List of Applicable Law and Regulations and Report on the Evaluation of Compliance with Laws and Regulations. The PIC to manage the compliance was Safety Officer, Environmental Officer, and SPO Officer. Documented systems to comply with change in related applicable law and regulation and others requirement is available and verified during the audit. Sighted List of Applicable Law and Regulations year 2017 (F/SMART/UMUM/SADV/002/001) and Report on the Evaluation of Compliance with Laws and Regulations year 2017 (F/SMART/UMUM/SADV/002/002). The copies of the regulations were distributed to related section according to their evaluation. 2.1.3 A mechanism for ensuring compliance shall be implemented. Minor

Findings In compliance: Yes: X No: Objective The company has a mechanism to ensure compliance with all applicable laws and regulations evidence: through SOP of regulation compliance evaluation (SOP/SMART/UMUM/SADV/I/002). Implementation of this procedure was followed up by providing a List of Applicable Law and Regulations (F/SMART/UMUM/SADV/002/001) and Report on the Evaluation of Compliance with Laws and Regulations (F/SMART/UMUM/SADV/002/002). Documented systems to comply with change in related applicable law and regulation and others requirement is available and verified during the audit. Last of evaluation of legal compliance was on 5 April 2017 (TLTE), 8 August 2017 (KNTE) and 1 July 2017 (TLTM). Internal audit also verified of legal compliance, such as RSPO internal audit which conducted by Sustainability Department Head Office on 17 – 21 April 2017. 2.1.4 A system for tracking any changes in the law shall be available and Minor implemented. GP 9405A Page 23 of 76

Findings In compliance: Yes: X No: Objective The company has a system for tracking any changes in the law under SOP of regulation evidence: compliance evaluation (SOP/SMART/UMUM/SADV/I/002). Identification of law and regulations applicable in national level by Sustainability Division and Identification of law and regulations applicable in regional level by SPO Officer PSM. SPO Officer has responsibility to update the change of law and regulations. Updating law and regulations changes were well documented. The latest update of the report was on 5 April 2017 (TLTE), 8 August 2017 (KNTE) and 1 July 2017 (TLTM). Documented procedure exists and implemented for accessing and identifying changes in the regulations. The system established to ensure: • Collecting related legislation • Determination of regulations referred • Distribution of regulations to relevant authorities • Implementation of regulations and requirements • Maintaining the of renewal regulations Records and implementation observed during audit shown that changes were well identified, and the latest legal requirements were well documented in the list of legal requirements. Contacts with regulatory body for updating legal requirements were well documented. 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 ownership/control, and the actual legal use of the land shall be available.

Findings In compliance: Yes: X No: Objective The company has Plantation Operation Permit and HGU as follows: evidence: TLTE and KNTE: • Location Permit 11,700 Ha from Tanah Laut Regency Land Agency #460.3/12/KPT-08, dated 30 August 1994. • Plantation Permit 11,700 Ha from Regent of Tanah Laut Decree #13/2003 dated 30 January 2003.

TLTE • Decree of Ministry of Agrarian/Head of BPN (National Land Agency) #25/HGU/BPN/2003 on 9 April 2003 at Kec. Kintap, Kab. Tanah Laut Area: 3,448 Ha • HGU (Land use tittle) #22 dated 01 October 2003 for 3,448 Ha at Desa Sungai Cuka, Sumber Jaya, Bukit Mulia, Pasir Putih dan Kintap Kecil, Kec. Kintap, Kab. Tanah Laut.

KNTE • Decree of Ministry of Agrarian/Head of BPN (National Land Agency) #75/HGU/BPN/2004 on 06 October 2004 at Kab. Tanah Laut Area: 1,443.53 Ha • HGU (Land use title) #23 dated 20 January 2005 for 1,443.53 Ha at Desa Kintapura and Salaman, Kec. Kintap, Kab. Tanah Laut. • HGU on process with area 636.33 Ha in Desa Salaman and Kintapura is still in process. This area is excluded from RSPO certification. National Land Agency (Kanwil BPN) has invited the company on 28 January 2015 regarding meeting of committee B land checking. Kadastral has done.

TLTM • Building use title issued by BPN #01 dated 17 October 2005, area: 6.007 ha issued by BPN/ Land Title Agency of Tanah Laut Regency. • SK IMB No. 648.1/110-KD/KIMPRASDA/2005 dated on 22 Februari 2005 for Mill and other facility issued by Head of Tanah Laut Regency.

2.2.2 Legal boundaries are demonstrated clearly and maintained. Minor

Findings In compliance: Yes: X No: Objective Legal map showing location of boundary markers is documented in “Map of boundary stone”. The evidence: map described boundary stone number and GPS location. HGU boundary stones observed were: Tanah Laut Estate (TLTE): • #20 (X : 309539.40, Y : 9578707.97) • #27 (X : 306477.79, Y : 9577567.24) block A30-31 GP 9405A Page 24 of 76

• #29 (X : 304734.99, Y : 9577462.54) block A36-37

Kintapura Estate (KNTE): • # 18 (X : 294992.98, Y : 9579414.67) • # 37 (X : 291588.84, Y : 9578081.17) • # 40 (X : 291607.23, Y : 9579362.01) Legal boundaries are clearly demarcated and maintained. All boundary stones were in good condition and maintained in Tanah Laut Estate (TLTE) and Kintapura Estate (KNTE). Plantation activity such as upkeep and harvesting were conducted inside the border. Field observation to a number of legal boundaries found that no number of boundary stone at boundary stone number H18 at KNTE. See Observation # 01 Procedure of boundary stone maintenance was described in SOP/SMART/CERS- EHSD/SADV/I/004 – Maintenance of Boundary Stones. Estates have program to maintenance boundary pegs such as cleaning of boundary stone circle three times a year, boundary stone repainting twice a year and boundary stone repairing twice a year. Report of boundary stone condition was recorded in their log book ( Buku Kegiatan Mandor – BKM) and Program and realization of boundary stones maintenance. 2.2.3 In the event that there is a dispute or a dispute has occurred, adequate Minor evidence of legitimate acquisition and compensation or compensation settlement process through conflict resolution which has been received through Free, Prior and Informed Consent by all related parties shall be provided. Findings In compliance: Yes: X No: Objective The organisation did not acquire any new land after 2005. It was noted that there was no ongoing evidence: progress of new land acquisition during interview with sampled villager’s representative, all previous land acquisition was solved before Land Use Title ( Hak Guna Usaha ). 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. Findings In compliance: Yes: X No: Objective During audit, there is no significant land conflict. Based on Log book “Complaint and Grievance”, evidence: there was no complaint or grievance from external stakeholder since last audit. In according to group discussion (public consultation) with village head and community leader, there was not complaint from community around estate. It was verified during group discussion with village head, young leader and community leader that was indicated organization has had relationship with community around estate, moreover no dispute with surrounding communities. 2.2.5 For any conflict or dispute over the land, the evidence of the extent of Minor disputed area is mapped out in a participatory way with involvement of affected parties (including neighboring communities and local government where applicable), shall be available. Findings In compliance: Yes: X No: Objective During audit, there is no significant land conflict. Based on Log book “Complaint and Grievance”, evidence: there was no complaint or grievance from external stakeholder since last audit. In according to group discussion (public consultation) with village head and community leader, there was not complaint from community around estate. It was verified during group discussion with village head, young leader and community leader that was indicated organization has had relationship with community around estate, moreover no dispute with surrounding communities. 2.2.6 To avoid escalation of conflict, there shall be no evidence that palm oil Major operations have instigated violence in maintaining peace and order in their current and/or planned operations. Findings In compliance: Yes: X No: Objective During audit, there is no significant land conflict. Based on Log book “Complaint and Grievance” (, evidence: there was no complaint or grievance from external stakeholder since last audit. In according to group discussion (public consultation) with village head and community leader, there was not complaint from community around estate. It was verified during group discussion with village head, young leader and community leader that was indicated organization has had relationship with community around estate, moreover no dispute with surrounding communities. GP 9405A Page 25 of 76

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 with 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 The company has map of estates scale 1:40,000 (Kintapura Estate) and 1:70,000 (Tanah Laut evidence: Estate). These maps are recognized legal from National Land Agency. These map was developed through participatory mapping involving affected parties (local community, relevant institutions and the company). Based on consultation with local communities at Bukit Raya Village, Bukit Mulia Village and Bukit Pasir Village, the land boundary was clear and no customary right in the estates. 2.3.2 Copies of negotiated agreements including the process of free, prior and Minor informed consent (FPIC) (Criteria 2.2, 7.5 and 7.6) shall be available and these include: a. Evidence of consultation b. Statement of transfer of rights c. Evidence of compensation See specific guidance 2.3.2 Findings In compliance: Yes: X No: Objective The company has maintained records all former land acquisition process including documents of evidence: consultation, official report of compensation and land dispute resolution during 1995 to 2005. Based on the records, the company has done free, prior and informed consent (FPIC) for all former land acquisition process. Some records in the compensation process are: - Minutes of Data Collection (land area) - Minutes of Delivery of Land and Compensation Provision (witnessed by the Village Head and Head) - Submission of Statement of Land - Statement letter - Map of Details Land - List of attendance of measurement land, which was witnessed by the local government. There is no new land acquisition until re-certification audit. 2.3.3 Relevant information shall be available in appropriate forms and languages, Minor including analysis of impacts, proposed benefit sharing, and legal arrangements.

Findings In compliance: Yes: X No: Objective All information related to village communities around the plantations, including stakeholdes and evidence: smallholders, in the delivery of information, including assessments of impacts, proposed benefit sharing and legal arrangements are presented in Indonesian language and grammar that is simple and easy to understand. Based on consultation with local communities at Bukit Raya Village, Bukit Mulia Village and Bukit Pasir Village, they understood forms and languages of negotiated agreements (maps, agreement, records, impact assessment, benefit sharing and legal arrangements). All records of negotiated agreements are presented in Bahasa Indonesia and grammar that is simple and easy to understand. 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 The company has maintained records all former land acquisition process including documents of evidence: consultation, official report of land compensation and land dispute resolution during 1993 to 2005. The company used the land compensation manner to land acquisition. Based on official report of land compensation, local government and land owners involved in the land acquisition. There is no new land acquisition until re-certification audit.

GP 9405A Page 26 of 76

Principle 3: Commitment to Long-Term Economic and Financial Viability Criterion 3.1: There is an implemented management plan that aims to achieve long-term economic and financial viability. 3.1.1 A documented management plan, a minimum of three years shall be Major available, including, where appropriate, plan for scheme smallholders.

Findings In compliance: Yes: X No: Objective The company has set up a business management plan for the next 5 years and the forecast have evidence: been well documented in the document management plan of PT. SMART Tbk. – Tanah Laut Mill 2016 – 2021. Management plan was set up including independent FFB suppliers. Management plan covered: • FFB Production actual 2016 and projection 2017 – 2021 • CPO and PK production actual 2016 and projection 2017 – 2021 • CPO and PK revenue actual 2016 and projection 2017 – 2021 • Estate cost, Mill cost, transport cost, profit/loss and tax portion actual 2016 and projection 2017 – 2021 • Net profit/ loss actual 2016 and projection 2017 – 2021 • An annual replanting programme projected for 2017 – 2021

With general assumption: • CPO and PK selling price actual 2016 and projection 2017 – 2021 • Inflation rate • Exchange rate The management plan is reviewed annually and revised as appropriate; based on the achievement against the plan and other parameters may change. Based on Semi detail Soil Map and field observation at Tanah Laut and Kintapura Estate there are no peat soils in the plantation. The company has a system to improve practices in line with new information and techniques through innovation project which presented during annual meeting (once in every 2 years). All staffs can propose innovation. Innovation approved by management was communicated to all unit management. 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 The management has an annual replanting programme projected for 2017 – 2021 and plan is evidence: reviewed annually and revised as appropriate.

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 (land clearing to Major harvesting) and SOP for mills (reception of FFB to dispatch of CPO and PKO) shall be available.

Findings In compliance: Yes: X No: Objective The company has policy, manual, procedures, work instruction, management plan, internal memo evidence: and records for plantation and mill and it was documented. Documentation system procedure (SOP/SMART/UMUM/SADV/I/001) consist of document approval level, code of department, code of document, identity of document, document control, record control, complete of information on document, numbering system on document, etc. All document system has provided on working areas/keeping areas. The procedures have been covering all main activity such as harvesting, transportation, manuring, IPM, best practice and supply chain. Based on visits to plantation and mill, the location has provided each the procedures. Standard Operating Procedures for Estates were developed and documented in SOP (Standard Operating Procedure) MCAR (Management Committee Agronomy and Research) which revised on 1 September 2012. Consist of procedure for new area and replanting planning, nursery, land GP 9405A Page 27 of 76

clearing, preparation before planting, fertilising, upkeep, pest management, road maintenance, peat land management, drainage system, mature and immature upkeep, integrated pest management and harvesting. Also there were procedures for several processes including riparian zone management, application of agrochemical. Procedure also described required PPE and other safe working practices. Hardcopy of procedure are available and controlled. Interviews with the employees indicate satisfactory level of understanding and implementation in relation to their respective job function. Procedure of best practice operation of Tanah Laut Mill was available and documented in document of MCMD (Management Committee for Mill Development) which revised on 6 December 2013, Standard Operational Procedure of Palm Oil Process PT SMART Tbk revision 6 issued by Head Office. The procedure describes operation instruction from FFB receiving through production, processing (grading, sterilization, threshing, pressing, clarification, nut and kernel processing) and dispatch of CPO and PK. Quality control check, sampling methods including its reporting from reception of FFB up to dispatch of CPO and PK was mentioned in the Laboratory procedure. Hardcopy of procedure are available and controlled. Copy of the procedure was available on site and documented. SOP distribution to all section and division was well documented in the Form F/SMART/UMUM/SADV/001/002 (document distribution register). Work Instructions has been developed and posted at work stations within the mill. Procedure has been disseminated to all related employee (harvest, brondol and upkeep employee and operator). Interviews with the employees indicate satisfactory level of understanding and implementation in relation to their respective job function. Field inspection for sample of estate and mill operational implementation were taken as follow: • Tanah Laut Estate Observation of harvesting activity at Div 1, block C-20, showed that generally FFB well handling. Interviewed with harvesting workers who have worked for more than 5 years and they were using full PPE (boots, helmets, goggles). Harvesting equipment such as egrek, ax and angkong are provided by the company. The harvest base at block C-20 (YOP 1996) is 55 bunches, with the following harvest premium: a) when reaching harvest base, premium base = IDR 700; b) after reaching base, premium more base = IDR 2,100; c) premium for exceed base = IDR 960/ bunch; d) premium of fruit loose ( brondolan ) = IDR 396/ kg. Obersvation of spraying activity at block A-36, using Rolipos 150 SL pesticide (active ingredient: Amonium glyphosinate ) and Erkapuron 80 WG (active ingredient: methyl metsulfuron ). Spraying workers have worked for more than 2 years and spraying with complete PPE such as boots, masks, apron, rubber gloves, helmets and eyeglasses which provided by company. No manuring activity during audit at Tanah Laut Estate. • Kintapura Estate Observation of the harvesting activity at Div 1, Block G-7, showed that FFB generally well handling, but some under ripe FFBs are found. Interviewed harvesting workers who have worked 6 - 9 years and they were using full PPE (boots, helmets, goggles) which provided by company. Harvesting equipment such as egrek, ax and rickshaws are provided by the company. The harvest base at block G-7 (YOP 1998) amounts to 50 bunches, with the following harvest premiums: a) when reaching harvest base, premium base = IDR 700; b) 25 first bunches after lid base, harvest premium = IDR 1,500; c) 25 next bunches harvest premium = IDR 2,500; d) premium for exceed base = IDR 1,070/ bunch; e) premium of fruit loose ( brondolan ) = IDR 396/ kg. Observation of spraying activity at Block H-6 using Rolipos 150 SL pesticide (active ingredient Amonium glyphosinate ) and Erkapuron 80 WG (active ingredient: methyl metsulfuron ). Interviewed spraying workers who have worked for 5 years and spraying with spray base 2 ha per day. Spraying workers use complete PPE such as boots, masks, apron, rubber gloves, helmets, and goggles which provided by company. No manuring activity during audit at Kintapura Estate. • Tanah Laut Mill Sample of mill operation were taken in each station from loading ramp to effluent and laboratory. The results were shown and it was observed that all of the activity was met with the procedure and well implemented. Procedures (SOPs) were appropriate and adequately cover all estate processes and activities includes new area and replanting planning, nursery, land clearing, preparation before planting, manuring, upkeep, pest management, road maintenance, peat land management, drainage system, mature and immature upkeep, integrated pest management, harvesting and transportation. SOPs made were available at the point of use (in all section and division of estate). 4.1.2 Checking or monitoring of operations procedures is conducted at least once Minor GP 9405A Page 28 of 76

a year.

Findings In compliance: Yes: X No: Objective Masterlist of all SOPs document and its revision history were available and well documented. The evidence: company keeps track of revision of the SOPs in revision history in the cover of SOPs. The company has defined the controled document procedure wich was explain the translation of SOP into work instructions in appropriate languages and its document control. SOPs training and dissemination to all of employee has been conducted, the evidence was sighted and well documented. The organization has well implemented internal control and monitoring processes that check and report on the implementation of the Management Guidelines. These include independent checks of the Mill and Estates by the corporate internal audit. These include independent checks of the Mill and Estates by the corporate internal audit as follow: • OIA (Operation Internal Audit), programmed twice a year. Operational Internal Audit has been performed to check consistent implementation of the procedures and work instructions. Internal audit covering operational activities of plantations and mill include the maintenance of palm oil crop (maintenance, fertilization, and pesticide use), harvesting and other supporting activities such as administration, road infrastructure, and FFB transport and mill process. The last audit for Tanah Laut Estate on 14 June 2017 and Kintapura Estate on 13 – 20 April 2016. Trained and competent personnel were assigned to carry out OIA (Head Office Internal audit department). Audit report and its follow up were well done and documented. • Harvesting Audit programmed yearly. Its covering operational harvesting checks began from standard crop harvest, lose and harvest discipline. Last audit performed on Jan – May 2017 at Kintapura Estate and on 8 March 2016 at Tanah Laut Estate. Audit report and its action plan were documented. Trained and competent personnel were assigned to carry out OIA (Head Office Internal audit department). • Internal audit RSPO. Covering audits of sustainability in all parts of plantation and mill operational. Last audit was conducted on 17 – 21 April 2017 at TLTE, TLTM and KNTE. Audit report and finding was followed up and action plan was well documented. Management review to discuss the RSPO audit result and its follow up was on 14 August 2017. Trained and competent personnel were assigned to carry out the internal audit (Head Office Sustainablility department). • Regional conference, PSM conference, Plantation conference: discuss about inovation. Available Implementation of Inovation 2017 – 2018 for TLTE (safety plate at blade road grader and shadow gupon) and KNTE (safety plate at blade road grader, trailer hopper to increase efficiency in fertilizer spreader, etc) • MCAR (Management Committee Agronomy and Research) and MCMD (Management Committee for Mill Development) meeting: revision of SOP

The company has defined the procedure to address non-compliance and corrective action for continuous improvement in Correction and Corrective Action Procedure. 4.1.3 Records of monitoring and any follow-up actions shall be available. Minor

Findings In compliance: Yes: No: X Objective Record of monitoring and any action taken were maintained and available for Tanah Laut Estate evidence: and Kintapura Estate, e.g. : • BKM (Buku Kegiatan Mandor - Log book of group leader activity). BKM of several activities was reviewed, e.g. manuring, manual road maintenance, manual weeds control, census of diseases, circle and path spraying. For checking the employee attendance adn result. • BPtB (Buku Potong Buah – Logbook of harvesting activity), verification of its document was done in Div 3 TLTE date on 24 August 2017 and Div 2 KNTE date on 31 July 2017. • BKtB (Buku Kutip Brondolan – Logbook of loose fruit collecting activity). Record kutip brondol work result activity. • Inspeksi panen detail to check the consistency of harvesting activity based on the procedure and work instruction. The item which was check covering: number of palm oil harvested, number of FFB harvested, FFB lagged, brondol lagged, midrib set out, abnormal harvested, etc. One supervision at least one harvested employee was check every day. Sample verification of recapitulation Inspeksi Panen Detail for KNTE on July 2017 and Inspeksi Panen Detail for TLTE on June 2017. • Shift Report book to control and monitor daily work activity of mill, record number of attendance employee, starting hour, throughput, oil and kernel production, issue/trouble in process activity. • Logsheet every station from loading ramp, sterilizer, threshing, press, clarification, boiler and effluent. Record daily activity of processs in each station and process performance in each station. • Breakdown report and repair request Logbook, supervisor check the machine condition and GP 9405A Page 29 of 76

report to maintenance section to repair if there was a breakdown condition. • Control of Process work program and routine maintenance and equipment repair, including measurement tools calibration and verification. • Quality of CPO and PK analysis, to analyze quality of CPO and PK covered FFA, Dirt and Moisture. Records of corrective actions and improvement undertaken for all of the control and monitoring activity above has been maintained by the company. During field inspection found some oil palm trees with unpick up loose fruit and become seedlings (anakan sawit ) more than 3 months in Division 2 block B20 Tanah Laut Estate. This is not in accordance with the SOP Best practices (SOP/SMART/MCAR/XIII/TA-PNN paragraph 2.2.6.1). Seedlings that grew almost evenly in block B20 until the age of 3 months. Seedlings grew because the loosed fruit did not pick up, even up to 3 months there was no collection / cleaning. According to SOP (SOP / SMART / MCAR / XIII / TA-PNN) stated that after harvesting FFB loosed fruit must be collected as soon as possible. Weeding activities conducted in the area in the form of spraying with herbicides, unpick loosed fruit up or disassembled palm seedlings. See Minor CAR 01 4.1.4 Records of the origins of all third-party FFB sourced (collector, deliver, Major Cooperative, Farmers Association and outgrower) shall be available.

Findings In compliance: Yes: X No: Objective The company has procedure for third-party FFB sourcing documented in Prosedur Administrasi evidence: Pembelian TBS dated on 9 January 2012 ITDV-System Department. Record of TBS received from external sources was stated on form Recapitulation of FFB Received Report. Sighted list of approved third-party FFB suppliers, such as: • Kelompok Tani Mitra, Bukit Mulia Village, Kintap District, Tanah Laut Regency, agreement no. 001/TBS/SMART-KTMX/I/2014 date on 1 January 2014 valid until 31 December 2019. • Koperasi Mutiara Sawit Borneo (Rudy Rudin), Pasir Putih Village, Kintap District, Tanah Laut Regency, agreement no, 001/TBS/SMART-KMSX/VI/2017 date on 1 June 2017 valid until 31 May 2018.

There were evidences of SOP implementation such as: FFB grading process 100% in accordance with grading criteria which has been agreed in SPK, price of FFB was agreen in SPK based on price fixing from Disbun South Kalimantan Province, payment carry out after FFB received and invoice receive by finance (average one month payment after FFB and invoice received by mill). For example payment invoice No. 003/KMSX-SMART/06/2017 date on 19 June 2017 for IDR 167,882,820 (114,206 kg x IDR 1,470). It was observed that the payment and price was met with SPK and procedure. Organization only received legal FFB; in SPK article 4 was describe that FFB sourcing from the third party is FFB originating from land that has been obtain permission of land acquisition and plantation business from the relevant authorities and cultivated in accordance with the terms and conditions in applicable laws and regulations and is not obtained illegally. Tanah Laut Mill has recorded the origins of all third-party FFB source. FFB tonnage delivery from the third party was well documented daily and monthly in the document “Rekap Penerimaan TBS Luar Tahun 2017”. FFB from third party received during January – July 2017: • Kelompok Tani Mitra = 1,434,243 kg • Koperasi Mutiara Sawit Borneo = 1,925,980 kg Tanah Laut Mill has recorded the origins of all third party sourced FFB daily record in the form of FM-ENG-GRD (FFB grading report/ Laporan grading TBS), weighing slip, FFB delivery letter, report of FFB from third party. Sighted FFB grading for Koperasi Mutiara Sawit Borneo period June 2017 as follow: FFB received = 7,918 JJG, grading = 14,227, netto = 114,640 kg, under ripe = 103 bunches (1%), ripe = 13,456, over ripe = 658 bunches (5%), brondolan = 11,664 kg, fine (denda ) = 434 kg, FFB paid = 114,206 kg.

Record of FFB processed period January – July 2017 as table below.

unit Group Non Group Total FFB processed kg 45.226.020 1.925.980 47.152.000 Oil production kg 9.899.717 420.323 10.320.040 OER % 21,89 21,82 21,89 Kernel kg 2.357.597 99.023 2.456.620 production KER % 5,21 Time operation hour 1467.51 Throughput Ton/hour 32,13

Criterion 4.2: Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. GP 9405A Page 30 of 76

4.2.1 A record of SOP implementation to maintain soil fertility that ensures optimal Minor and sustained yield, shall be available Findings In compliance: Yes: X No: Objective The company has been defined the SOPs for Good Agricultural Practices in managing soil fertility evidence: which documented in SOP/SMART/MCAR/IX/TA-PPK (Manuring – Pemupukan). Manuring was performed manual and mechanic with Emdek and Aerialy manuring. Manual manuring performed by spreading the fertilizer by person manually and uniformly in each palm oil trees in accordance with dose which has defined by Smartri. The company also defined SOP fertilizer application with Spreader (Emdek). Fertilizer application with Emdek conducted in mineral soil and flat area. Fertilizer time application considering the conditions of rainfall and crop needs based fertilizer recommendation. Estates activities are carried out based on Division Work Program which generated from annual budget. Activities program are such as manuring and other operation activity. Site observation was performed during audit to some activities: spraying and manuring. Interview with employees working in those activities showed that procedures were implemented. Activities have been performed at defined interval.

Land application Observation from field visit showed that land application applied by flat bed system with size depth 45 cm, width 2.5 cm and long adjusted with the area. At area which land application applied, no manuring an-organic macro fertilizer, but applied an-organik micro HGFB fertilizer with dosage 50 – 75 gram per palm per year. Oil palm trees showed normal growth even according to management information that this area has yield BJR heavier than area with an-organic fertilizer only. Total POME applied by land application period January – July 2017 was 257.99 m 3.

EFB application EFB application has been conducted on area 300 ha at Tanah Laut Estate with dosage 60 ton/ ha every two year. At area which EFB applied, no an-organic fertilizer applied. EFB application period January – July 2017 at Tanah Laut Laut Estate:

Month Plan (ton) Realization (ton) January 43.23 56.06 February 43.57 43.07 March 45.30 53.81 April 49.60 43.08 May 46.26 34.69 June 46.61 35.36 July 54.09 76.06

An-organic fertilizer application During audit no an-organic fertilizer application. Record of some an-organic fertilizer application period January – July 2017:

Tanah Laut Estate

Fertilizer Recommendation (ton) Realization (ton) Urea 245.250 245.250 TSP 91.950 91.950 MOP 621.250 621.250 Kieserite Granule 126.850 126.850

Kintapura Estate Fertilizer Recommendation (ton) Realization (ton) Urea 221.850 221.850 TSP 171.450 171.450 MOP 364.600 364.600 Kieserite Granular 152.350 69.800 Borate 9.833 9.833

4.2.2 Records of fertilizer inputs shall be available. Minor

Findings In compliance: Yes: X No: Objective Records of fertiliser inputs are well maintained in document “Rencana dan Realisasi Pemupukan” GP 9405A Page 31 of 76

evidence: (Plan and Realization of Manuring). Fertilizer inputs recorded each semester. Manuring recommendation in 2017 for TLTE and KNTE has been defined based leaf sampling unit (LSU) and soil sampling unit (SSU). Record of manuring realization in first semester of 2017 shows that the realisations are in accordance with the plan/recomendation. Annual fertilizer recommendation has been implemented and monitored. Fertilizer/ manuring programme was developed by SMARTRI for all Division. Manuring recommendation in TLTE consist of manually, mechanically and aerially. While in KNTE Manuring recommendation performed by manually. Record of fertilizers application descripted on paragraph above. 4.2.3 Records of periodical leaf, soil and visual analysis shall be available. Minor

Findings In compliance: Yes: X No: Objective Soil and leaf sampling was analysed regularly by SMARTRI to determine the nutritional status of evidence: soil, to assist and to be guided in the preparation of annual fertilising programme recommendation. Soil is analysed when the age of the plant is 3, 5, 8 years and continued with age of the plant is added by 5 years and 1 year before replanting. Leaf was analysed annually. Soil and leaf sampling was taken from each division. Organization has been defined work instruction for LSU (Leaf sampling unit) IK/SMART/MCAR/IX/TA-PPK/05-Pengambilan LSU and for SSU (Soil Sampling Unit) IK/SMART/MCAR/IX/TA-PPK/06-Pengambilan SSU. Last LSU and SSU taken in TLTE and KNTE by SMARTRI. Evidence of periodic leaf sample analysis in TLTE are available on Lab Analysis Result Ref#259/DAUN/LAB-SMARTRI/V/2017 dated on 19 May 2017 with total number of 48 sample analyzed (N, P, K, Mg, Ca, B, Cl). While for KNTE are available on Lab Analysis Result Ref# 128/DAUN/LAB-SMARTRI/III/2017 dated on 29 March 2017 with total number of 38 sample analyzed (N, P, K, Mg, Ca, B, Cl). Soil sampling unit in Tanah Laut Estate was on 29 March 2017 ref #098/RFC Kalsel/Lab- T/III/2017. While soil analysis in Kintapura Estate was on 7 April 2016. 4.2.4 A nutrient recycling strategy is recorded, including use of Empty Fruit Minor Bunches (EFB), land application, and palm residues after replanting. Findings In compliance: Yes: X No: Objective There was the Nutrient recycling strategy performed by company such as land application from evidence: POME (Palm Oil Mill Effluent) and Empty fruit bunch (EFB) application. POME or liquid waste from mill used as Land application, it give nutrient for palm oil plantation. POME is applied using piping system and flat bed. Land application was applied in Tanah Laut Estate. Liquid waste (POME) applied dosage was 250 m3 /ha/year with 3 times rotation and BOD 2,500 – 4,000 mg/L. POME and EFB were not applied nearby housing and water spring. Total POME applied by land application period January – July 2017 was 257.99 m3.

EFB were applied in Tanah Laut Estate by manually and mechanical using tractor. EFB were applied based on the recommendation from SMARTRI in terms of dosage per ha and location. Empty fruit bunch application was performed as mulch ground cover and added of organic material. EFB application period January – July 2017 at Tanah Laut Laut Estate: Month Plan (ton) Realization (ton) January 43.23 56.06 February 43.57 43.07 March 45.30 53.81 April 49.60 43.08 May 46.26 34.69 June 46.61 35.36 July 54.09 76.06

POME and EFB were not applied in Kintapura Estate due to the distance was far enough from Tanah Laut mill. 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

of soils type, there are no fragile soils in Tanah Laut and Kintapura Estate.

Soil characteristic: Tanah Laut Estate: Typic Hapludults and Aquic Hapludults. Kintapura Estate: Typic Hapludults and Aquic Hapludults. 4.3.2 A management strategy shall be in place for plantings on slopes above a Minor certain limit (this needs to be soil and climate specific). Findings In compliance: Yes: X No: Objective The company has topography map (Peta Tanah Semidetil) Tanah Laut Estate with scale 1 : evidence: 50,000 (last update June 2017) and Kintapura Estate with scale 1 : 30,000 (last update 2015). The topography of land in general at Tanah Laut Estate was undulatic (9 – 16%) and Kintapura Estate was flat – undulatic (0 – 8%). Based on maps of soil unit, there are slopes above 30% in Tanah Laut Estate with area 352.31 ha while in Kintapura estate maximum slopes was 15 - 30% with area 19.36 ha. Organization has been defined the strategy for planting on slopes area in the procedure SOP/SMART/MCAR/I/TA-PPA “Preparation of new area planting” describes procedure for minimising and controlling erosion, and peat land management. The organization does not recommend plantings on slopes > 40% or > 22º. When the slope area was planted, system for planting on slopes area was provided by considering soil and climate specific through terracing, determining of base line, levelling of terrace, and determining of planting space. To minimise and control erosion in slope area, several practices have been implemented such as terracing, growing of legume cover crops (LCC). Procedure 03/VPA-RSPO/03/2010 “Management of Riparian Area” has been established to control area around riparian. Planting of “vetiver” grass and natural riparian plant have been performed to minimize stream and river bank erosion. It was evidenced that organization has implement the procedure in the field as defined in SOP. The company also has performed the erosion monitoring periodically (once a month) by placing erosion stakes in Block B17 Tanah Laut Estate and Block G5 Kintapura Estate. Erosion stakes was put in slopes position in the middle, top and bottom as high as 120 cm of stakes. 4.3.3 A road maintenance programme shall be in place. Minor

Findings In compliance: Yes: X No: Objective Procedure for road maintenance has been established. Tanah Laut estate and Kintapura Estate evidence: have established road maintenance programme for main road, collection road and access road by manual and mechanical maintenance. Road maintenance includes manual, grading and compacting and road hardening. Road hardening budget for 2017 has been observed including the realization. Manual road maintenance programme was provided in Division Work Programme. Manual road maintenance was implemented based on Division Work Programme or road condition. Mechanical road maintenance use heavy equipment – motor grader and compactor. The mechanical road maintenance programme was provided for all division and detailed in Blocks. Manual and mechanical road maintenance realisation was recorded including complex area maintained, distance of road maintained, diesel fuel consumption and quantity of gravel. Record road hardening for 2017 Estate Budget (m3) Actual (m3) Tanah Laut Estate 6,140.5 1,916.16 Kintapura Estate 8,329.0 3,932.7

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: X No: Objective N/A. No peat soil at PT Smart Tbk – Tanah Laut. evidence: 4.3.5 Drainability assessments shall be required prior to replanting on peat to Minor determine the long-term viability of the necessary drainage for oil palm growing.

Findings In compliance: Yes: X No: Objective N/A. No peat soil at PT Smart Tbk – Tanah Laut. evidence: GP 9405A Page 33 of 76

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

Findings In compliance: Yes: X No: Objective The company has soil map (Peta Tanah Semidetil) Tanah Laut Estate with scale 1 : 50,000 (last evidence: update June 2017) and Kintapura Estate with scale 1 : 30,000 (last update 2015). Based on maps of soils type and during audit, there are no fragile soils in Tanah Laut and Kintapura Estate. Company has established the procedure to maintain the fragile soil if any. Fragile soil maintenance such as: Land cover crop planted, Dolomite usage for acid sulphate soil, EFB usage and organic matter added for poor organic matter soil, and etc. The dosage, frequency and quantity of fertiliser were recommended by SMARTRI.

There are flooded and inadequate oil palm trees conditions of 90.61 ha in blocks A41, A42, B21, B27, C21, C27, D27, E26, E29, F26, and F29 at Tanah Laut Estate. The cause of the flood is due to the narrowing and silting of the river that is in the mining area and the diversion of the river route by the miners. The incident has been reported to the Badan Lingkungan Hidup of Tanah Laut Regency and has been in mediation with PT Arutmin Indonesia (mining company) since July 2014, and until now no decision has been made. 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: X No: Objective N/A no peat land, no water management plan for peat land. evidence: Water supplies for Tanah Laut Mill were from rain water reservoir and river water, while estate was using ground water. Permit of surface water abstraction has been provided. Mill and Estates has developed water management plan. Program of water management plan are: • Efficiency of water from optimisation of pesticides usage • Dissemination of domestic water use efficiency • Monitor water use in Estates and Mill • Maintain water piping from leakage • Monitor community ground water regularly • Monitor river water and monitoring well water • Water efficiency in mill and laboratorium operation, e.g. reuse condensate water/ reduce water dilution, recycle cooling water turbine, recycle sochlet water, reuse RO reject water for cleaning and domestic water, etc.

Record of water usage period January – July 2017: Unit Water usage (m 3) TLTE 67,560.0 KNTE 50,760.0 TLTM 34,689.2

4.4.2 Protection of water courses and wetlands, including securing and Major maintaining appropriate riparian and other buffer zones, at the time of or prior to replanting shall be demonstrated.

Findings In compliance: Yes: X No: Objective The company has been identifying water courses and wetland in the plantation area. There were evidence: identified water courses and wetland in Tanah Laut Estate and Kintapura Estate ie: Tanah Laut river and its riparian area with area 119.51 Ha, Salaman River in Kintapura Estate and its riparian zone with area 191.8 ha and freshwater swamp as a catchment area in Kintapura estate 4.36 ha. It has been mapping by organization and documented in map with scale 1: 50,000. Protection of waterways and wetlands have been made by the company with the following way : • Protection of riparian areas with no chemical crops care activities both fertilizer and herbicide spraying • Conduct rehabilitation of riparian • Riparian zone were well maintain, the following was activity to maintain riparian zone such as : • Boundary markers placement in 5 rows of palm trees (50 m) related restrictions spraying of chemicals and chemical fertilizers in the area of 50 m side of the river. There was the evidence during the audit, riparian zone • Warning boards placement which contain information restrictions the pesticide usage and chemical fertilizers in the riparian area. GP 9405A Page 34 of 76

• Riparian rehabilitation by planting vetiver grass, a shade trees and barriers to erosion trees (Ulin / Eusideroxylon zwagery ). There was the evidence of plan and realization for riparian rehabilitation, it was observed grow well in both side of the river. The company also has been establish the procedure for riparian and buffer zone protectionwhich documented in SOP/SPO/SMART/LH-06 and SOP/SPO/SMART/LH-07 and memorandum for riparian and buffer zone no. 002/SMD OPS/I/2009 date on 6 January 2009. During field audit, it was observed that the procedure has been implemented well. The company has management plan of HCV year 2017: Tanah Laut Estate covering socialization of HCV, maintenance HCV signboards, monitoring HCV, HCV security, maintenance of rehabilitation plants. Kintapura Estate covering buffer zone management (monitoring boundary of HCV, maintenance sign boards, rehabilitation, maintenance of rehabilition plants, HCV security, water course conservation) and wetlands management (monitoring boundary of HCV, maintenance sign boards, rehabilitation, maintenance of rehabilition plants, HCV security). Sighted realization of HCV program Jan – June 2017: Tanah Laut Estate: socialization of HCV, maintenance HCV signboards, monitoring HCV, HCV security, maintenance of rehabilitation plants. Kintapura Estate: planting of conservation plants (vertifer grass, bamboo, ulin/ eusideroxylo n zwageri ), maintenance of conservation plants and conservation (sign of no chemical activity) 4.4.3 Records for monitoring of effluent especially BOD (Biochemical Oxygen Minor Demand ) and efforts to comply with legal requirements, shall be available (see criteria 2.1 and 5.6).

Findings In compliance: Yes: X No: Objective The mill has processed effluent in form of palm oil mill effluent (POME) pond (Instalasi evidence: Pengelolaan Air Limbah (IPAL)). Tanah Laut Mill waste water was processed through a multifeedings waste water treatment ponds: three (3) active ponds with methods of anaerobic ponds. The coordinate outlet of effluent is X 0309528 and Y 9580584. The company has measured quality of effluent or liquid waste every month according regulation (Ministry of Environment decree no.28 year 2003) with some parameters such as pH (6 to 9), BOD (< 5,000 mg/l), COD, Cd, Cu, Pb, Zn, Oil & Fat and volume of effluent or liquid waste. The result of measurement year 2017 period January – July (especially BOD) is compliance with standard or no over standard. Result of BOD analysis period Jan – July 2017 respectively 1,462 mg/l, 1,378 mg/l, 1,322 mg/l, 1,112 mg/l, 938 mg/l, 1,134 mg/l and 1,606.381 mg/ l. BOD was analysis by Balai Pengembangan Teknologi dan Konstruksi, Dinas Pekerjaan Umum dan Penataan Ruang South Kalimantan Province. The company also has monitoring of effluent at Estate especially BOD every month and the record of BOD analysis period January – July 2017 respectively 2,691 ppm, 1461 ppm, 731 ppm, 1,621 ppm, 608 ppm, 811 ppm and 811 ppm. The company has a license for discharge effluent to land application areas from local government and has compliance with the requirement of the license. Permit of land application with decree of environmental Ministry no. 28 and 29 year 2003 land application permit of POME with evidence is technical guidelines for assessment and licensing procedure for land application of POME and hold permit of land application from Head of Tanah Laut Regency no. 188.45/449-KUM/2016 date on 18 April 2016 validity 5 years with area for land application 105 ha. The company has noted volume of effluent or liquid waste discharge to land application and rotation block of land application for discharge effluent. 4.4.4 Monitoring of mill water use per ton of FFB shall be recorded. Minor

Findings In compliance: Yes: X No: Objective The company has monitoring of mill water use per ton FFB in 2017 as follow: evidence: Month Total Input Water (M3) FFB Process (ton) M3/ton FFB January 6,674.20 9,595.85 0.70 February 5,139.70 6,858.54 0.75 March 4,170.40 4,987.05 0.84 April 4,197.60 5,161.27 0.81 May 4,662.50 6,430.55 0.73 June 4,574.40 6,385.91 0.72 July 5,270.40 7,732.83 0.68

GP 9405A Page 35 of 76

Based on monitoring of mill water usage shows that ratio of water usage per ton FFB between 0.68 – 0.84m3/ton FFB below Standard of Ditjen Perkebunan, 1997 : 4, ratio of water usage per ton FFB between 1.2 – 1.5 m 3/ton FFB. Criterion 4.5: Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management techniques. 4.5.1 Monitoring of Integrated Pest Management (IPM) plan implementation shall Major be available.

Findings In compliance: Yes: X No: Objective IPM Plan program was documented in the Work program Division Tanah Laut Estate and evidence: Kintapura Estate 2017. Tanah Laut Estate and Kintapura Estate have established Division Work Program annually for IPM for each division. IPM programme includes detection and census of pest and diseases, weeds controlling, planting and upkeep of beneficial plant, use of pesticide and herbicide. IPM plan include the following : • Identification of potential pests and thresholds • The techniques used (cultural, biological, mechanical and physical methods) • The native species used as part of the biological control method • Reducing the use of chemicals over a period of time • Prophylactic use of pesticides • Minimization of pesticide use • Review on the plans to suit the present condition such as replanting

Procedures SOP/SMART/MCAR/VII/TA-HPT and SOP/SMART/MCAR/VIII/TA-PGM have been established to confirm that Integrated Pest Management (IPM) to control pests, diseases, weeds and invasive introduced species. The procedures include setting out of technique to be implemented, chemical to be used, locations to be applied, and time frame for implementation. Plans and realization of early detection of pests and diseases, pest occurrence and control was well documented. Several records of pest occurrence and control verified e.g : • Detection of leaf-eating caterpillar pests (UPDKS) was performed by rotation 6 times a year or every two months on the same block. Sample record of detection of UPDKS period July 2017 in TLTE and period May – June 2017 in KNTE there were no UPDKS pests detected. Plans and realization of early detection of pests and diseases was well documented. • Field inspection for spraying activity in block A-36 at Tanah Laut Estate with Mandor Mr. Darmabakti, using Rolipos 150 SL pesticide (active ingredient Amonium glyphosinate) and Erkafuron 80 WG (active ingredient Methyl Metsulfuron). Spraying workers (Wati, Hartati, Rosnani, Qoyinem and Mustaqimah) have experienced > 2 years, spraying with complete PPE such as boots, masks, apron, rubber gloves, helmets and eyeglasses. • Field inspection for spraying activity in block H-6 Kintapura Estate with Mandor Mr. Paracin, using Rolipos 150 SL pesticide (active ingredient Amonium glyphosinate) and Erkafuron 80 WG (active ingredient Metsulfuron Methyl). Spraying workers (Ratiyem and Inayah) have worked for 5 years, spraying with spray base 2 ha per day. Spraying workers use the complete PPE such as boots, masks, apron, rubber gloves, helmets, and goggles. • Record of calibration e.g: R ecord of nozzle calibration for Tanah Laut Estate period July 2017, 3 unit CDA and 6 unit RB 15 blue with result nozzles were in good condition and calibration of Manitou MLT-732 on 10 January 2017 with result still in good condition and Kintapura Estate for July 2017 calibration of nozzle VLV 100 with result nozzles were in good condition . • IPM training to IPM workers has been performed in 2016 – 2017. Records of training were evidenced. • Monitoring Gupon ( Tyto Alba ) has been performed every month to monitor the activity of owls as predators of rats. Observation of owl gupon in block C-20, Tanah Laut Estate and block H- 6, Kintapura Estate showed that gupons still active there are bones of rats used bird food and bird feathers. Record of Tyto alba monitoring period Jan – July 2017: Tanah Laut Estate Number of gupon: Div 1 = 14, active 4; Div 2 = 2, active 2; Div 3 = 13, active 11; and Div 4 = 1, active 0. Kintapura Estate Number of gupon: Div 1 = 11, active 5 and Div 2 = 16, active 8. • Planted the beneficial plant as the host/nest for natural enemies UPDKS ( Eucanticona purcelata, cycanus sp ). The beneficial plant such as: Turnera subulata planted in the collection and the main road, Antigonon leptopus planted in every corner of the main road intersections and road collection, Casia cobanensis planted alternately with Turnera in Collection Road and Main Road. Evidence of planting and upkeep in Tanah Laut Estate and Kintapura Estate were sighted and the field observations were also observed well maintained. GP 9405A Page 36 of 76

4.5.2 Training records of Integrated Pest Management (IPM) shall be available. Minor

Findings In compliance: Yes: X No: Objective Records of IPM training e.g: evidence: • Socialization of manuring and spraying activities on 7 June 2017 at Tanah Laut Estate (42 participants). • Socialization of MSDS on 8 June 2016 at Div 1 Kintapura Estate (21 participants). • Socialization of chemical handling on 6 August 2017 by Ichvan Hermawan (47 participants). • Training of chemical handling on 8 June 2016 by Phantom (SPO Officer) at KNTE (21 spraying workers and mandor) • Socialization of WI of spraying and pesticide on 6 February 2017 by Phantom (SPO Officer) at KNTE (22 participants). Criterion 4.6: Pesticides are used in ways that do not endanger health or the environment.

4.6.1 Documented evidence shall be available to show that pesticide used based Major on regulations and the use of pesticide is specific to target species with appropriate dosage which have minimal impact on non-target species. Findings In compliance: Yes: X No: Objective The company has made policy for use of imited pesticides dated August 1 2014 by VPA, The evidence: company is responsible for the use of limited pesticides in accordance with the principles of sustainable palm oil management. The usage of pesticides Type 1A, 1B and Paraquat in accordance with prevailing law, best practices plantations, sustainable reduction and efforts to increase knowledge, awareness of employees in the use of chemicals categorized as 1A or 1B by WHO and Paraquat to create a safe working environment.

The company has established procedure weed control SOP No. SOP/SMART/CAR/VIII/TA-PGM. Each type of pesticide used have been defined specific target of pest, types of weeds, application doses per hectare which have minimal effect on non-target species and a broad plan of applications and specified in the annual budget and annual work plan of the organization. Measures to avoid development of resistance have been implemented by pesticides rotation between glifosat and paraquat. List of all pesticide with target species and justification of use was well documented. Justification has been consider less harmful alternatives and integrated pest management e.g: • Beneficial plants for inang predator ulat api ( Setora nitens ) • Handpicking for ontrolling ulat api • Applied Cordyceps fungi • Light trap usage

Based on document audit and field audit showed that the procedure was well implemented. Agrochemicals used by Tanah Laut Estate and Kintapura Estate has been approved and registered by Agriculture Department, e.g. • Erkafuron 20 WG (Methyl Metsulfuron), License no. RI.01030120134861, expired date on 31 December 2018. • Rolifos 150 SL (Amonium Glufosinat), License no. RI.001030120103683, expired date on 13 May 2020. • Roll up 480 SL (Isopropil Amina Glifosat 480 g/l), License no. RI.01030120042133, expired date on 31 December 2018. • Starane 290 EC (Fluroxipir Methylepthyl ester 30%), License no. RI.0103011988854, expired date on 15 April 2019. • Garlon 670 EC (Triklopir 480 g/lt) – License no. RI 0103011984695, expired date on 25 September 2018.

It was noted that there were no agrochemicals being used which were not registered during this audit. Agrochemicals use and their register number refer to Pesticide Commission Book “Buku Komisi Pestisida” year 2014. 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 available. Findings In compliance: Yes: X No: Objective The company has defined a pestice application program in the annual budget and annual work evidence: plan in each division. Appropriate dose of herbicide usage and the type of job rotations per year has been defined by organization in work program: GP 9405A Page 37 of 76

• Spraying circle and path three times a year using Rolifos + Erkafuron and Roll up + starane, • Spraying a bush two times a year using Roll up + Erkafuron, • Spraying a fern two times a year using Rolifos + Erkafuron • Spraying Asplenium two times a year using Rolifos + Erkafuron • Spraying woody weeds two times a year using Garlon + Agristik Agrochemicals use was well recorded in “Recapitulation of agrochemical use” including active ingredients used and their LD50, area treated, amount applied per ha and number of applications. The documents were also recorded dosage of agrochemical use, target species. The records were sighted in Tanah Laut Estate and Kintapura Estate. It was noted that dosage applied and application rotation was in accordance to budget. 4.6.3 Any use of pesticides shall be minimized 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 Indonesia Best Practice guidelines. Findings In compliance: Yes: X No: Objective There was no prophylactic use of pesticides, its evident by site visit and field observation in Tanah evidence: Laut Estate and Kintapura Estate. Pesticide only used and apply for weeds and pest. The company has implemented IPM 2017 work program include: • Early detection of pests and plant diseases (EWS) • Development of natural enemies of pests and plant diseases with planting beneficial plant such as Turnera subulata , Cassia cobanensis and Antigonon leptopus , the development of an owl as a natural enemy of rat. • Chemicals usage as a last alternative in the control of pests and diseases Early detection UPDKS ( ulat pemakan daun kelapa sawit ) performed every 2 months, it documented in BKM (buku kegiatan mandor). Beneficial plant Turnera subulata , Cassia cobanensis and Antigonon leptopus already planted almost in every block along the main road and collection road. The implementation and monitoring of owl nest (Gupon). Monitoring the implementation of the IPM was documented in “plan and realization Work Program IPM 2017” in each division (detection of plant diseases and pests census (UPDKS, rats, Oryctes), spraying ferns, path and circle weeding spraying and beneficial plant upkeep. Usage of pesticides has been minimized as part of a plan, record of pesticide usage period January – July 2017 e.g. Tanah Laut Estate Pesticide Unit Amount Starane 290 EC Liter 57.54 Roll up 480 SL Liter 1,212.16 Garlon 670 EC Liter 531.20 Rolifos 150 SL Liter 413.15 Erkafuron 20 WG Kg 30.07 Tikumin 0.0375 RB kg 351.53

Kintapura Estate Pesticide Unit Amount Starane 290 EC Liter 117.83 Roll up 480 SL Liter 549.35 Garlon 670 EC Liter 208.64 Rolifos 150 SL Liter 289.12 Erkafuron 20 WG Kg 10.87

Use of pesticides in the field was always lower than the planned budget. It also shows the company's commitment to always reduce pesticide usage and give priority to the prevention of mechanical, biological and integrated pest management. 4.6.4 The evidence shall be available to demonstrate that use of Pesticides, Minor categorized in Class 1A or 1B by World Health Organization, or those are listed in the Stockholm and Rotterdam Conventions, and paraquat are not used, except in specific situations identified in national Best Practice guidelines. The use of such pesticides shall be minimized and eliminated as part of a plan, and shall only be used in exceptional circumstances.

Findings In compliance: Yes: X No: Objective The company already has a list of pesticides that are included in WHO Class 1a (extremely evidence: hazardous) 28 types, class 1B (highly hazardous) 56 types and Stockholm Rotterdam convention pesticide. In Tanah Laut Estate there was usage of 1B class pesticides that was Tikumin for Ratt GP 9405A Page 38 of 76

control. The company has defined a policy, documented in “Memorandum Presiden Direktur No. 044/PD/IX/2014 dated 21 November 2014” organization commited to reduce the use of Paraquat as much as 30% in 2015 and in 2018 will no longer used/eliminate. No paraquat applied at Tanah Laut Estate and Kintapura Estate. 4.6.5 Evidence of pesticide application by trained person and in accordance with Major application guidelines in product label and storage guidelines shall be available. Appropriate safety equipment shall be provided and utilized. 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: Objective Pesticide usage and handling was documented in the procedure SOP/SMART/MCAR/VIII/TA- evidence: PGM and work instruction IK/SMART/MCAR/VIII/TA-PGM/03-Weeds control. General instructions of security in working with pesticides described in procedure includes the selection of kinds of pesticides, pesticide storage, pesticide use, addressing pesticide contamination, first aid instructions, medical assistance. Agrochemicals have been applied and handled by trained spraying workers who have received pesticide training. Agrochemicals storage was locked areas with limited access. The storage was ventilated. MSDS and hazard symbol label were provided nearby of agrochemicals. Emergency shower and eyewash were also provided to anticipate in case of an emergency of agrochemical handling. The possible spill was managed. Secondary containment was provided around the chemical storage area. Spill kit was also provided in the area. PPE for handling of chemicals were provided including boots, apron, safety glass, respiratory mask and hand gloves. PPE used was appropriate according to recommendations in any risk assessments. PPE provided and used can be easily replaced if damaged. Field inspection for spraying activity in block A-36 at Tanah Laut Estate with Mandor Mr. Darmabakti, using Rolipos 150 SL pesticide (active ingredient Amonium glyphosinate) and Erkafuron 80 WG (active ingredient Methyl Metsulfuron). Spraying workers (Wati, Hartati, Rosnani, Qoyinem and Mustaqimah) have experienced > 2 years, spraying with complete PPE such as boots, masks, apron, rubber gloves, helmets and eyeglasses. Field inspection for spraying activity in block H-6 Kintapura Estate with Mandor Mr. Paracin, using Rolipos 150 SL pesticide (active ingredient Amonium glyphosinate) and Erkafuron 80 WG (active ingredient Metsulfuron Methyl). Spraying workers (Ratiyem and Inayah) have worked for 5 years, spraying with spray base 2 ha per day. Spraying workers use the complete PPE such as boots, masks, apron, rubber gloves, helmets, and goggles. All precautions attached to the products properly observed, applied, and understood by workers. Mandor as person in charge to check the workers usage of appropriate PPEs was well monitored in each spraying job. Personnel interviewed (spraying workers) can clearly explain the type of work including work methods and goals, materials used (pesticides) including the dosage and hazards and risks, personal protective equipment and first aid. Based on interview shows that spraying workers received appropriate and utilized safety equipment such as mask, apron, glove, safety shoes from company. 4.6.6 Storage of pesticides shall be according to recognised best practices. All Major pesticides containers shall be properly managed according to the existing regulations and or instructions enclosed on the containers (see criterion 5.3). Findings In compliance: Yes: X No: Objective SOP for pesticide storage was documented in IK/SKIP/GDG/01 – Pesticide warehouse. Pesticides evidence: are stored in the determined area separated from fertiliser and other chemicals. Pesticides storage is provided in Divisions as well as in central storage. Agrochemicals storage is locked areas with limited access. The storage is ventilated. MSDS and hazard symbol label are provided nearby of pesticides. Emergency shower and eyewash are also provided to anticipate in case of an emergency of agrochemical handling. PPE for handling of pesticides are provided including boots, apron, safety glass, respiratory mask and hand gloves. The possible spill is managed. Secondary containment is provided around the pesticides storage area. Spill kit is also provided in the area. All empty pesticides containers were triple rinsed and stored in the temporary storage of hazardous wastes. Sighted stock of agrochemical at agrochemical store: GP 9405A Page 39 of 76

Tanah Laut Estate 28 August 2017 Agrochemical Balance Starane 290 EC (liter) 171.5 Agristik (liter) 130 Garlon 670 EC (liter) 699 Roll up 480 SL (liter) 900 Erkafuron 20 WG (kg) 379.5

Kintapura Estate 28 August 2017 Agrochemical Balance Starane 290 EC (liter) 94 Garlon 670 EC (liter) 887 Roll up 480 SL (liter) 1,020 Erkafuron 20 WG (kg) 266.205

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

Findings In compliance: Yes: X No: Objective All worker who handling pesticides are facilitated with appropriate protective equipment such as evidence: mask, googles, glove, and apron. All workers are tranied and has a good understanding how to used the pesticedes including emergency responds procedure. The application pesticides are based on the target weed and pest controlled with minimum concentration used. Pesticide use and handling was documented in the procedure SOP/SMART/MCAR/VIII/TA-PGM and work instruction IK/SMART/MCAR/VIII/TA-PGM/03 - Weeds control. Training and dissemination on work instruction including risk and impacts of pesticide applications (Material safety data sheet) has been performed by organisation on 8 January 2016 in TLTE and 8 June 2016 in KNTE to all sprayers and chemical workers. Training and dissemination records were sighted. Personnel interviewed can clearly explain the type of work including work methods and goals, materials used (pesticides) including the dosage and danger, personal protective equipment and first aid. Several BKM of circle weeding spray using agrochemicals was sighted. It was noted that agrochemicals (roll up, rolifos and erkafuron) usage were approved and registered agrochemical. Dosage of agrochemical use, target species was in line with the procedure (SOP/SMART/MCAR/ XII/TA-PTM “Mature Upkeep” and SOP/SMART/MCAR/VIII/TA-PGM “Control of Weeds”). BKM recorded target species, dosage and trained spraying officer. 4.6.8 Pesticides may only be applied aerially where there is a documented Major justification. Surrounding 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 N/A. No aerially pesticides applied at Tanah Laut Estate and Kintapura Estate. evidence: Pesticide application performed with strict supervision of the field supervisors and assistants. Application of pesticides based on plant maintenance work program that has been scheduled. Application of pesticides considers various factors such as the environment, safety and weather. In the area of pesticide applied there was warning boards installed for 2 weeks. Socialization is also performed to the local people not to graze cattle in the area of pesticides applied to avoid the toxicity and hazards of toxic pesticides. 4.6.9 Evidence of training on handling pesticide for workers and scheme Minor smallholder (if any) shall be available. Findings In compliance: Yes: X No: Objective There was no smallholder associated with estate. evidence: Company has provided information materials on pesticide handling to all employees. Training and dissemination on work instruction including risk and impacts of pesticide applications (Material safety data sheet) has been performed by organization to all sprayers and chemical workers on January 2016 in TLTE and in June 2016 in KNTE. Training and dissemination records were sighted. Agrochemicals have been applied and handled by trained spraying workers who have received pesticide training. Record of Training for spraying workers, e.g. : GP 9405A Page 40 of 76

• Socialization of manuring and spraying activities on 7 June 2017 at Tanah Laut Estate (42 participants). • Socialization of MSDS on 8 June 2016 at Div 1 Kintapura Estate (21 participants). • Socialization of chemical handling on 6 August 2017 by Ichvan Hermawan (47 participants). • Training of chemical handling on 8 June 2016 by Phantom (SPO Officer) at KNTE (21 spraying workers and mandor) • Socialization of WI of spraying and pesticide on 6 February 2017 by Phantom (SPO Officer) at KNTE (22 participants). 4.6.10 Proof that pesticide waste has been handled as per legal regulations and Minor understood by worker and manager, shall be demonstrated. Findings In compliance: Yes: X No: Objective SOP for proper disposal of waste material was described in SOP/SPO/SMART-18 and evidence: SOP/SMART/LEMS-EHSD/SADV/I/002 – Waste handling. Waste material were disposed in the designated area and separated between organic and inorganic waste landfill and not being burned. Training of proper waste disposal was conducted on 18 March 2016 (TLTE, KNTE and TLTM). Interview with spraying worker and harvester during audit, there was good level of understanding among workers regarding how to separate between inorganic and organic waste. 4.6.11 Annual medical records of pesticide operators, and follow-up treatment of Major medical results, shall be available

Findings In compliance: Yes: X No: Objective List of pesticides operator was shown and updated periodically. Specific health surveillance has evidence: been performed for all pesticide operators included cholinesterase, spirometry and audiometry. The medial examination was planned to be conducted once in a year. Medical treatments records as Reports of the health surveillance for all workers were available. The recommended actions were recorded and reported to estate manager. Base on recommendation from manager the actions were executed and the results were reports from the recommended hospital. All results raised from actions taken were maintained properly. Diagnoses Card Covered the diagnoses and treatment applied to the workers. Several records were available for all estates audited. Socialization of health surveillance results have been conducted to the workers. 4.6.12 Records shall be available to show that spraying is not conducted by Major pregnant or breast-feeding women. Findings In compliance: Yes: X No: Objective Related policy to pregnant and breastfeeding is according to a circular letter No. 001/SE- evidence: ADH3/BNJO/01/2010, on 12 January 2010, from the CEO-PSM3 about Workers Pregnant - Breastfeeding and Inspection Sprayer, that : • Do not allow pregnant and nursing women workers working as sprayers • Special for sprayers that use agrochemical, shall conduct regular checks every 4 (four) months.

Health checks of the sprayer including pregnancy tests on women workers have conducted done every four months and the last performed in August 2017 (TLTE) and on May 2017 (KNTE) recorded in the medical checks sprayers in the clinic. So for workers who are pregnant and breastfeeding not employed for activities related to chemicals, it is sign when field observations and conducted checks on sprayers. There is no labour who pregnant and breast-feeding as the list of checks in the clinic. Criterion 4.7: An occupational health and safety plan is documented, effectively communicated and implemented. 4.7.1 A health and safety policy shall be in place. A health and safety plan shall be Major documented and implemented, and its effectiveness monitored. Findings In compliance: Yes: X No: Objective Occupational health and safety policy is remained no change written in local Bahasa language. evidence: The Health and safety policy was signed by organization director on 2016 with commitment defined includes compliances to regulation, obligation of risk assessment also monitoring and managing health and safety management system performance indicators. The policy was displayed at strategic locations of estate and mill and communicated to employees including contractor workers. OHS Programmes/plans for year period 2016 has been defined for each estates and mill, includes: review and updating risk assessment; periodic medical check-up; safety patrol/inspection; trainings and awareness; emergency drill and OHS committee reporting. Within GP 9405A Page 41 of 76

the Programs/Plans was included the objectives and targets, also time frame and person in charge. The monitoring of each programmes were conducted periodically by the person in charge. At every month were monitored and discussed within OHS committee meeting and developed action plan to follow up if targets are not achieved, the monthly minutes of meetings were evident. For OHS program/plans at mill was also conducted effectiveness monitoring within the management review meeting, records was sighted. The implementations of the programs were evident such as: availability of PPE, knives cover that using by harvester; HIRAC review in January 2016 Inspection and audits during year period 2015- 2016; Medical check-up within year period 2016 (January and June); Emergency simulations during year period 2016; Training programmes within year 2016; OHS committee reporting; programmes and meetings on monthly during year period 2016, etc. During audit were conducted site observation for several activities at estates includes maintaining activities at KNTE and TLTE; also routine activities includes harvesting, pesticides spraying and workshops at all estates. While at mill was also conducted observation regarding CPO processes machineries, workshop and warehouses.

4.7.2 A documented risk assessment shall be available and its implementation Major shall be recorded. Findings In compliance: Yes: X No: Objective The company has established SOP Identifikasi sumber bahaya, penilaian dan pengendalian evidence: resiko nomor SOP/SMART/HESS-EHSD/SADV/I/002. This SOP has described risk assessment for all activities. The quantitative method of risk analysis was conducted for all activities at Mill and Estates that calculate the probability and severity at every risk identified. The risk assessment conducted for risk prior controls and residual risks after controls defined. Low risks categorized as acceptable risks and high/extreme risks categorized as unacceptable risks that needed further control to develop OHS programmes/plans. This risk assessment developed by each estates/mill assistance (Askep) assist by each safety officer in charge and approved by each Managers as the authorized to issue the report of risk assessment. The estates risk analysis were covered activities includes: replanting activities (include chipping and excavation), maintenance (include spraying pesticides and herbicides), fertilizing activities, harvesting, workshop activities and also warehousing. The mill risk analysis activities includes weighbridge activities; FFB grading; loading ramp activities; transfer carriage; Sterilizer; hoisting crane; thresher; pressing (include conveyor and digester); clarification station include CPO tank cleaning; boiler activities; kernel station; engine room activities; water treatment activities; waste effluent station; workshop activities includes welding, cutting and lathe; warehousing activities include fuel storage; laboratory activities; CPO and kernel dispatch. Sample taken for risk control of confined space hazards whil tank cleaning activities, evident sighted regarding documented procedure (IK/SMART/MCMD/TM-PKS/11) regarding tank cleaning includes the safe work permit (No.08/K3/M/12/2015) dated 14 th December 2015 also the calibration of gas detector.

According to the procedure, at least OHS risk assessment document must be reviewed once a year and/or when incident happened will consider as review agenda. OHS risk assessment records 2015-2016 were sighted for all Mill and Estates. Within the risk analysis was also considered the hierarchy of control to take action of risk control such as elimination, substitution, engineering, administrative and PPE. Action plan was developed as followed up the existing high risk in order to reduce to lowest residual risk analysis. 4.7.3 Records of Occupational Health and Safety (OHS) program (see 4.8) and Major Personal Protective Equipment (PPE) training in accordance with the result of hazard identification and risk analysis shall be available to all workers. Findings In compliance: Yes: X No: Objective OHS training has been programmed and provided appear balanced with OHS hazard and risk at evidence: Mill and Estates. Basic OHS training performed internally by safety officer in charge at mill and estate, the training record and programme related to OHS were sighted and verified during this audit, e.g. licenses for boiler operator, licence for operator of generator set, licence of heavy equipment operator, pesticide training for sprayers, etc. The PPE for each activity has been established, e.g. working at mill, working at generator set, welder, working at laboratory, harvester, sprayer, fertilizer storage, chemical storage, etc. The distribution list of PPE was kept by supervisors (“mandor”) Observation during this audit generally concluded that PPE has been well provided and implemented. Workers were interviewed during this audit and generally they understood the risk GP 9405A Page 42 of 76

of their work and the purpose of using PPE. Several mandatory PPE are available by the organization to the employees and visitors such as: helmet, safety shoes, ear plugs, ear muffs and respirators. Also there were deployed several PPE symbols at the at risk areas.

Training for safety working practices have been conducted by the company to the workers in 2016-2017. Records of safety training, e.g. : • First aid training on 19 August 2017 by dr. Edmoson Walanda at KNTE (35 participants) • First aid training on 27 – 29 July 2017 by PT Kautsar Inti Prima, Kotabaru at Batu Ampar Training Center (40 participants, 15 from Tanah Laut) • OHS (K3) training for electrician operator on 22 – 28 April 2017 by PT Kautsar Inti Prima, Kotabaru and Disnaker & Transmigrasi South Kalimantan Province (38 participants, 4 from Tanah Laut) • Refreshment training for ISBPR ( Identifikasi Sumber Bahaya dan Risiko ) on 22 – 23 March 2017 by Maman Surahman at Batu Ampar Training Center (32 participants, 4 from Tanah Laut) • Training of K3 operator pesawat angkat & angkut on 22 – 25 December 2016 by PT Kautsar Inti Prima and Disosnakertrans Kotabaru Regency (48 participants, 3 from Tanah Laut) • Training of chemical handling on 8 June 2016 by Phantom (SPO Officer) at KNTE (21 spraying workers and mandor) • Socialization of WI of spraying and pesticide on 6 February 2017 by Phantom (SPO Officer) at KNTE (22 participants) 4.7.4 The responsible person(s) for occupational health and safety shall be Major identified and there shall be records of periodical meetings on health and safety issues. Findings In compliance: Yes: X No: Objective There are 1 expert of Health and Safety Personel in each estates (KNTE,TLTE) and mill (TLTM) evidence: who has been trained and registered in the East Klimantan Provincial Manpower Agency.

4.7.5 A procedure for emergency and work accident shall be available in Minor Indonesian Language; and the workers, who have attended First Aids training, are available in the working areas. Findings In compliance: Yes: X No: Objective There were established several documented procedures related to emergency response in local evidence: language Bahasa Indonesia. The emergency conditions have been identified including Fire and explosion at buildings; land fire; earthquake; flooding; chemical spill and poisonings also waste water ponds spillage. The procedures described the roles and responsibilities of each emergency response team include the mechanism how to conduct medical evacuation to near hospital/local health centre, the emergency contact number of each internal emergency team and external related parties such as public fire station at local area Kabupaten Labuhan Batu and Public health centre “Puskesmas Labuhan Batu” were also available.The composition of emergency response team was established consist of ERT commander, several fire fighters and first aiders.

Regarding accident reporting and investigation, it was available the documented procedure (SOP/SMART/HESS-EHSD/SADV/I/005) incident and occupational disease handling also Incident investigation reports form (F/SMART/HESS-EHSD/SADV//005/002), which within the forms are described the accident chronology, cause and impact of the accident also to find the root causes of the accident happened and formulized the corrective and preventive action. The incident statistics were reported quarterly within a year to local authority (Tanah Laut Districti) by safety officer obtained from supervisors (mandor) and clinics.

The emergency kits such as first aid box and emergency shower/eyewash were available at mill and several locations at estate. First aid kits were regularly checked as checklist was sighted. Mill and Estate was supported with one clinic centre and first aid room at each division office. The group leader (mandor) was provided with first aid kits. Certified first aiders were also available as part of emergency team structure

4.7.6 All workers shall be provided with medical care, and covered by accident Minor insurance (see criterion 6.5.3).

Findings In compliance: Yes: X No: Objective For permanent employees were covered with national social security insurance (BPJS evidence: Ketenagakerjaan) include the accident compensation 0.54%. The monthly payments were evident. While for temporary/daily labour (BHL/Borongan) were defined within the contractual agreement between management, employees and local government (DISNAKER) that described the accident insurance will be provided by the company refer to national securities (BPJS) scheme. GP 9405A Page 43 of 76

4.7.7 Occupational injuries shall be recorded using Lost Time Accident (LTA) Minor metrics.

Findings In compliance: Yes: X No: Objective The incident statistics include man-hours, lost time accident and Frequency and Severity rate evidence: were reported quarterly within a year to local authority (Tanah Laut Labuhan Batu Utara Regent) by safety officer as presented below for each units: KTNE Estate Zero incident for period 2016 (January-December ); therefore no lost time accident during year 2016, and during January – July 2017 TLTE Estate Zero incident for period 2016 (January-December); therefore no lost time accident during year 2016, during January – July 2017 TLTM Mill Zero incident for period 2016 (January-December); therefore no lost time accident during year 2016, during January – July 2017

Criterion 4.8: All staffs, workers, smallholders and contract workers are appropriately trained. 4.8.1 Records of training program related to the aspects of RSPO Principles and Major Criteria shall be available.

Findings In compliance: Yes: X No: Objective There was established training programme that feedbacks from regulations and basic evidence: competence as training needs identification. All functions and levels included contract employees within the organisation were covered by the training programme. The training needs identified appear sufficient and complete, this including training needs identification to all employees level based on their competence needed related to OHS, environmental, social, training required by regulations, training related to operation of Mill and Estates; such as ISPO, RSPO, GRK, ISO 9001, environment and waste handling, basic electrical, welder, first aid training, emergency response, heavy equipment operators, pesticides handling, HCV; pest and plant disease control, OHS Management system, safety officer certification, sexual harassment, HIPERKES paramedics, social assessment awareness and agronomy practices. Training programme 2016 and 2017 were sighted, the training programme was established based on the training needs identification. Realization of training programme 2017 were sighed for all staff, workers and contract workers, includes as below : TLTE: • OHS socialization to contractor attended by FFB transporter • Land fire simulation • National manpower regulation socialization • First aid socialization • Risk assessment socialization. • PPE socialization. • Pesticides poisonous handling simulation, dated _ KTNE: • MSDS training to warehouse officer . • OHS/SMK3 socialization include policy and procedures attended by all employees,. • Pest and plant disease control “ Pengendalian hama terpadu ” attended by petugas sensus and Estate Assistance. • Hazardous wastes spillage simulation attended by warehouse officer . • HCV (High conservation value) attended by SPO and HCV officer . • RSPO, ISCC and GHG awareness attended by SPO officer and safety officer . GP 9405A Page 44 of 76

• Social policy and GAR environment awareness attended by management and staff dated 26th April 2016 • Land fire simulation attended by emergency response team dated 30th June 2016 TLTM: • GSEP (GAR Social and Environmental policy) training, attended by all staff dated _ • Wheel loader operator license (SIO) training • SMDP Training to all staff • ISO 9001:2008 awareness training • Pest and plant disease control “Pengendalian hama terpadu ” attended by assistance, supervisors and sprayers .Above trainings were also applied not only for permanent employees but also to all contract workers that working under the organisation premises.

Records of training program related to the aspects of RSPO Principles and Criteria e.g: • Socialization of ISPO & RSPO on 7 August 2017 by SPO Officer at Div 2 KNTE • Socialization of ISPO & RSPO on 8 August 2017 by SPO Officer at Div 1 KNTE 4.8.2 Records of training for each employee shall be maintained. Minor

Findings In compliance: Yes: X No: Objective Evidence of training for key persons were verified and sighted and the records were maintained evidence: for each employee such as for SPO officer. The system to record personal training was established-in this record; the training which has been completed by each person was recorded. Record of training and socialization e.g: • Socialization of manuring and spraying activity on 7 June 2017 at TLTE (42 participants) • Socialization of MSDS on 8 June 2016 at Div 1KNTE (21 participants) • Socialization of chemical handling on 6 August 2017 by Ichvan Hermawan (47 participants) • Submit PPE (gloves and safety shoes) to spraying workers on 3 Aug 2017 at Div 1 KNTE (8 spraying workers) • Submit PPE (apron) to spraying workers on 6 March 2017 (8 spraying workers). • Training of Trainers GAR Social & Environmental Policy (GSEP) – Batch 20 on 25 Jan 2017 by Juliati & Imanudin – Sustainability Policy and Compliance Div (PCDV) at Batu Ampar Training Center (92 participants, 17 partipants from Tanah Laut) • Training of operation & maintenance tractor on 2 February 2017 by Sugiarno & Irfan Dedi (PT Altrak 1978) at Batu Ampar Training Center (33 participants, 6 participants from Tanah Laut) • Training of SOP of Human Resource Development on 13 March 2017 by Adi Suryahadikusuma at Batu Ampar Training Center (35 participants, 5 participants from Tanah Laut) • Training of Operational & Maintenace Genset Batch 1 on 31 January 2017 by PT Altrak 1978 at Batu Ampar Training Center (42 participants, 5 participants from Tanah Laut) • Training of Electrician on 26 – 28 April 2017 by Arief Yusman & Herlina (PT Kautsar Inti Prima) at Batu Ampar Training Center (32 participants, 4 participants from Tanah Laut) • First aid training on 19 August 2017 by dr. Edmoson Walanda at KNTE (35 participants) • First aid training on 27 – 29 July 2017 by PT Kautsar Inti Prima, Kotabaru at Batu Ampar Training Center (40 participants, 15 from Tanah Laut) • OHS (K3) training for electrician operator on 22 – 28 April 2017 by PT Kautsar Inti Prima, Kotabaru and Disnaker & Transmigrasi South Kalimantan Province (38 participants, 4 from Tanah Laut) • Refreshment training for ISBPR ( Identifikasi Sumber Bahaya dan Risiko ) on 22 – 23 March 2017 by Maman Surahman at Batu Ampar Training Center (32 participants, 4 from Tanah Laut) • Training of K3 operator pesawat angkat & angkut on 22 – 25 December 2016 by PT Kautsar Inti Prima and Disosnakertrans Kotabaru Regency (48 participants, 3 from Tanah Laut) • Training of chemical handling on 8 June 2016 by Phantom (SPO Officer) at KNTE (21 spraying workers and mandor) • Socialization of WI of spraying and pesticide on 6 February 2017 by Phantom (SPO Officer) at KNTE (22 participants)

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. GP 9405A Page 45 of 76

5.1.1 Environmental impact assessment document(s) shall be available. Major

Findings In compliance: Yes: X No: Objective The company has Environmental Impact Assessment (AMDAL) approved by Indonesian Ministry evidence: of Agriculture (Approval AMDAL No. 14/ANDAL/RKL-RPL/BA/IV/1998) on 30 April 1998 for TLTE, KNTE and TLTM. Aspects of plantation and mill management, that have environmental impacts has been identified.: • Building new roads, processing mills or other infrastructure; • Putting in drainage or irrigation systems; • Replanting and/or expansion of planting areas; • Management of mill effluents; • Clearing of remaining natural vegetation; • Management of pests and diseases palms by controlled burning The assessment has included consultation with relevant stakeholders to identify impacts and to develop any mitigation measures such as head of villages, local government, and NGO. 5.1.2 Environment management plan document to prevent negative impacts, its Minor implementation report and revision (if the identification of impact requires changes in current company’s practices) shall be available. The company’s management shall appoint the responsible person(s) for the implementation of the document. Findings In compliance: Yes: X No: Objective The EIA document as described on 5.1.1 above is also accomplished with the environmental evidence: management plan document ( Rencana Pengelolaan Lingkungan – RKL) where management prescriptions defined to prevent negative environmental impacts of all activities since pre- construction, construction, operations and post operation of the plantation and mills. The RKL document is a document that required under Indonesian regulation and it must be updated should any changes of the scope of operation and activities for instance increasing mill capacity. Based on RKL document, mitigation plan of negative impacts has been established as follows: • Mitigation of soil erosion: terrace building, woody plants, planting of cover crop and vetiver grass. • Mitigation of river water quality degradation: land application, silt trap, planting cover crop and vetiver, rehabilitation of buffer zone, no spraying, selective weeding, buffer zone (50 m), warning signs, border marking and socialization to employees and local communities. • Mitigation of air quality degradation: planting trees surrounding mill and housing, watering the road through the housing area during dry season, preventive and maintenance of machines and using PPEs (earplug or earmuff). • Mitigation of disturbance to protected flora and fauna: buffer zone, warning sign, and consuling. • Mitigation of public unrest: job and business opportunities. • Mitigation of soil fertility degradation: empty bunch and in-organic fertilizer applications, planting Nephrolepsis sp . The Environmental Officer is responsible to control the compliance of the operations to the implementation of the environmental management plan (RKL). The regular report of implementation of environmental management plan (RKL) is remains consistently implemented and reported to relevant institutions for every 6 months. The RKL report for Semester II (Jul-Dec 2016) and Semester I (Jan-Jun 2017) have been verified for examples: • Riparian zone management: no spraying, buffer zone (50 m), warning signs, border marking and socialization to employees and local communities. • Fire protection: drill and procurement of fire fighting equipments, training and drill, warning sign, fire tower and and socialization to employees and local communities. • Hazardous waste management: building of temporary storage of hazardous waste and delivery of hazardous waste to licensed vendor. • Soil erosion: planting and maintenance of plant barriers to erosion (vetiver grass, woody plants and cover crops) GP 9405A Page 46 of 76

5.1.3 Environment monitoring plan document, its implementation report, and the Minor corrective plan (if non-conformance arised from the monitoring result) shall be available. This plan is reviewed on two-yearly basis.

Findings In compliance: Yes: X No: Objective The environmental monitoring plan document (Rencana Pemantauan Lingkungan-RPL) covering evidence: mill and estate is available. The implementation of environmental monitoring plan has been documented on “Laporan Pemantauan Lingkungan”. RPL report Semester II (Jul-Dec 2016) and Semester I (Jan-Jun 2017) have been submitted to relevant institutions for every 6 months. Verified the RPL report for examples: - Monitoring of land application of POME: soil quality and POME quality (all parameters were under treshold values according to permit of land application). - Monitoring of emission: ambient air quality, boiler and genset emission (all parameters were under treshold values according to PerMenLH # 7/2007 and PerMenLH # 21/2008). - Monitoing of riparian zone: flora and fauna monitoring and patrol - Monitoring of fire: patrol and fire tower 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 Record(s) on the results of High Conservation Value (HCV assessment) that Major includes both the planted area and the relevant wider landscape-level considerations (such as wildlife corridors) shall be available.

Findings In compliance: Yes: X No: Objective High Conservation Value areas has been identified and assessed by Biodiversity and evidence: Conservation Section of Sustainability Division SMART group on Nov 2011 (TLTE and KNTE). The assessors are RSPO-approved HCV assessor (Norman Faried M., Kusuma Widya R., and Bambang Setiaji. Based on HCV assessment document showed that in the plantation area of TLTE and KNTE were identified several areas of HCV. 1. Tanah Laut Estate: 119.51 Ha as HCV areas as follows: - HCV 1.1 Areas that Contain or Provide Biodiversity Support Function to Protection or Conservation Areas. There were local protected areas such as rivers and its riparian zone with area 119.51 Ha. - HCV 1.2 Critically endangered species. There were identified the protected species such as Bucheros rhinoceros, Octinaetus malayensis, Tordirhampus chloris, Nasalis larvatus and Felis bengalensis. - HCV 4.1 Areas or Ecosystems Important for the Provision of Water and Prevention of Floods for Downstream communities. There were identified a Riparian area with area 119.51 Ha.

2. Kintapura Estate: 217.95 Ha as HCV area as follows: - HCV 1.3 Areas that Contain Habitat for Viable Populations of Endangered, Restricted Range or Protected Species. There was Proboscis habitat in Riparian zone (Salaman River) with area 21.79 Ha. - HCV 1.1 and 4.1 Salaman River and its riparian zone with area 191.8 ha - HCV 4.1 and 4.3 Areas that Function as Natural Barriers to the Spread of Forest or Ground Fire freshwater swamp as a catchment area of 4.36 ha.

HCV assessment referred to HCV Tookit Indonesia 2008. 5.2.2 Where rare, threatened or endangered (RTE) species and or other HCVs are Major present or affected by the plantation and mill operations, an appropriate measures that are expected to maintain or enhance them shall be implemented through a management plan.

Findings In compliance: Yes: X No: Objective The company has established the management plan to maintain and/or enhance HCV areas. HCV evidence: management plan described measures taken for each HCV and its monitoring. Relevant laws GP 9405A Page 47 of 76

were taken into account for determining appropriate measure including UU # 5/1990 about Natural resources conservation, PP#7/1999 about List of protected plan and wildlife, Kepres #32/1990, and PP26/2008 Management plan consist of : Management plan HCV consist of : 1) HCV 1.1, 1.2 and 1.3: • Placement for HCV sign board, protected species information and posters • Placement, maintenance and monitoring of warning signs and boundary markers • Management and monitoring of protected wildlife/animal • Monitoring of HCV area (monthly, 6 monthly and annualy) • Daily Patrol 2) HCV 4.1 and 4.3: • Planting of Vetiver grass and Angsana (Pterocarpus indicus) at Riparian zone • Dissemination of information on how to manage HCV area to employees, contractors and the public/local community • Management and monitoring all riparian condition (HCV area utilization, management activities, rehabilitation, HCV conditions, the effectiveness of management activities, the level of threat and the condition of land cover) • Management and monitoring of water source • Planting, maintenance and monitoring of plant barriers to erosion (vetiver grass & woody plants) • Monitoring of HCV area (monthly, 6 monthly and annualy) The measures contained in the management plan actively implemented to maintain and/or enhance HCV values. During audit, record of HCV management implementation was sighted. Monitoring activities was well conducted. Its records was documented and sighted. HCV management and monitoring report was indicated that management implementation was effective. During field observation to HCV area in Tanah Laut and Kintapura Estate, it was confirmed that Managemet Plan was performed, e.g. warning and HCV signboard are well sight and maintained, vetiver and guatemala grass were well grown, bamboo and natural vegetation were well grown and no damage to HCV areas occurred, etc. 5.2.3 Program(s) to socialize the status of protected, rare, threatened or Minor endangered (RTE) to all workers shall be available, including records of appropriate sanction disciplinary measures to any individual working for the company who is found to capture, harm, collect or kill these species.

Findings In compliance: Yes: X No: Objective Programs to socialize the status of protected RTE species to all workers is carry out through put evidence: the picture of RTE species in every public areas, HCV areas, security posts. Every morning, the company communicates or briefs the workers (morning briefing) about work plan including health and safety and socialization of the status of protected RTE species The picture is always included the prohibitions of the workers to capture, harm, collect or kill these RTE species. The company is also has a policy to protect RTE species based on UU No.5/1990. Penalties under the UU No.5 / 1990 "person who deliberately capture, injure, kill, keep, possess, maintain, transport, and trade in protected animals alive or dead can shall be punished with imprisonment of 5 years and a maximum fine 100.000.000, - (one hundred million). Penalties were communicated directly to all employees and the local community during HCV socialization and through the HCV sing boards and warnings board. During site examination to TLTE and KNTE, no evidence that workers indiciplinary to the policy, for instance, none any RTE species has been collected at the workers housing. Interview to the workers and his/her family in their housing were also noted that they aware about the prohibition to capture, harm, collect or kill these RTE species. There was not found traps/snares put up within or nearby areas. 5.2.4 Once the management plan is prepared, continuous monitoring Minor documentation and report regarding the status of the RTE and HCVs are affected by the operations of the plantation and palm oil mill shall be available, and the results of monitoring are to be used to follow-up on the improvement of the management plan.

Findings In compliance: Yes: X No: Objective The continuous monitoring document and report regarding the status of the RTE and HCVs is GP 9405A Page 48 of 76

evidence: available. For instance this is documented on the document of Monitoring report of HCV attributes 2017 in TLTE and KNTE. Monitoring of HCV was conducted once a week, such as : - Monitoring of HCV attributes (Sign Boards Conditions) - Monitoring of HCV conditions from any disturbance both internal and external factor (HCV area conditions) - Monitoring of Animals and protected animals (recapitulation encounter animals in 1 month) - HCV Patrol Schedule (Schedule team to monitor the condition and attributes HCV) The status of HCV and RTE species that are affected by plantation or mill operations was well monitored, documented and reported routinely. Wildlife monitoring was conducted the primery and secondery method. Several protected wildlifes were found, such as: Tiger roots ( Felis bengalensis ), Phyton ( Phyton reticulatus ), River Cekakak ( Todirhampus chloris ), King fisher (Alcedo meninting ), Bondol Eagle ( Haliastur indus ), and Bear ( Helarctos malayanus ). Result of monitoring gives the feedback into the management plan improvement. The results from monitoring of wildlife, environmental,and socio-cultural services gives feedback advice and recommendations to the management plan, ie: - Improving the care and maintenance of an information board in all areas of HCV and replace the board that is damaged or not in accordance with SOP - Increase the retaining crop planting activities in the area of river bank erosion - Improve the supporting facilities such as wildlife monitoring binoculars, GPS, guidebooks and wildlife and other tools During visit to TLTE and KNTE, it was observed that some of the HCV areas inspected were maintained properly, for examples: warning sign, border maintenance, monitoring of wild animal and vegetation analysis. Monkeys and birds were still seen in the HCV areas. 5.2.5 Where HCV areas overlapped with an identified local community’s land, there Minor shall be evidence of a negotiated agreement that optimally safeguard their HCVs and the local community’s rights.

Findings In compliance: Yes: X No: Objective There was no HCV area with existing rights of local communities based on public consultation evidence: result and interview with local community leaders. During HCV assessment, PT SMART Tbk, TLTE and KNTE conduct the public consultation to local communities on 5 October 2011 with the community leaders and figures around the estate and government agencies (Village Head/Kepala Desa, his officials and community leaders in the village Sumber Jaya, Bukit Mulia and Pasir Putih, District of Kintap, Korem Kintap) and NGOs. In public consultation discussed the findings identification of HCV areas and the response from public and relevant government agencies. The public consultation also summarizes a number of inputs/feedback from local communities, leader communities, NGOs and related agencies in the management plan of HCV areas. During audit 2017, it was noted that no HCV areas overlapped with local community’s land. The boundary is clear and none conflict between the local community. Criterion 5.3: Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. 5.3.1 A documented identified source of all waste and pollution shall be available. Major

Findings In compliance: Yes: X No: Objective The company has carried out identification of pollution and emission source based on List of evidence: environmental aspect and evaluation year 2017 (TLTE, KNTE, TLTM), for examples: emission from boiler and genset activity/operational. Based on condition it that boiler operation is one of significant aspect which shall be concern in environment management. Waste and emission has producessed from all estate and mill operational activity which re-used and kept is below :

No. Waste name Characteristic Typical of Waste source of waste waste 1 Container of ex- Solid B3 Control of weeds or insect agrochemical 2 Used oil Liquid B3 Maintenance of enginee, equipment, vehicle and heavy vehicle GP 9405A Page 49 of 76

3 Used accu Solid B3 Use of genzet, heavy vehicle and vehicle 5 Used filter oil Solid B3 Use of genzet, heavy vehicle and vehicle 6 Contaminated Solid B3 Maintenance of enginee, rag and glove equipment, vehicle, heavy vehicle and cleaning spill or scattered oil 7 Medical waste Solid B3 Medical operational 8 TL lamp Solid B3 Use of lamp 9 Fiber Solid Non B3 Processing FFB 10 Shell Solid Non B3 Processing FFB 11 Effluent or liquid Liquid Non B3 Processing FFB waste 12 EFB Solid Non B3 Processing FFB 13 Emision Gas Non B3 Boiler operation and genzet, vehicle operational and heavy vehicle.

All waste and pollution sources are remains registered in RKL-RPL document. 5.3.2 There shall be evidence that all chemicals and their empty containers are Major disposed of responsibly. Findings In compliance: Yes: X No: Objective All agrochemicals were kept in warehouse and their used agrochemical containers were kept in evidence: temporary storage of hazardous toxic waste (TPS LB3). It has got approval from local government (decree no.188.45/716-KUM/2016 valid until 11 July 2021 with type of waste allow keeping such as used oil, used accu, used agrochemical container, used filter oil, medical waste, used dust cloth or glove, container or item contaminated, used catridge/toner, electronic waste and use TL lamp. Every 3 months the hazardous waste is collected by the licensed collector (PT Maju Jaya Asri Utama), for example: Manifest document # KQ 0033305 dated on 31 Jan 2017, type of hazardous waste: used oil filter, quantity: 2 drums, vehicle police number: DA 9070 CF, permit of hazardous waste transportation # SK.1693/AJ.309.DJPD/2016/640710253BB0001 valid until 30 Mar 2017. Checked during audit 2017 that all hazardous waste (including chemical and empty containers) has been sent to the licensed collector in every 3 month. Copy 7 th of the manifest of hazardous waste is available. 5.3.3 A waste management and disposal plan to avoid or reduce pollution shall be Minor documented and implemented. Findings In compliance: Yes: X No: Objective The company has established procedures for waste handling (SOP/SPO/SMART-18 and evidence: SOP/SMART/LEMS-EHSD/SADV/I/002). The procedures have described source of pollution, type and control method of waste. Every 3 months the hazardous waste is collected by the licensed collector (PT Maju Jaya Asri Utama), for example: Manifest document # KQ 0033305 dated on 31 Jan 2017, type of hazardous waste: used oil filter, quantity: 2 drums, vehicle police number: DA 9070 CF, permit of hazardous waste transportation # SK.1693/AJ.309.DJPD/2016/640710253 BB0001 valid until 30 Mar 2017. Implementation of waste management were evident during site observation: - Several reuse activities were implemented: • All empty pesticides containers were triple rinsed, the jerrycans were reused to spraying activities • ex-fertilizer sacks was also rinsed and for collection brondolan (lose fruit of FFB) • Liquid waste from pesticides containers cleaning was reused for the next spraying application • EFB and POME was applied at TLTE • Fibre and Shell from Tanah Laut Mill was used for boiler feed - Segregation of organic and inorganic waste since generation up to disposal on landfill. Mill and Estate including housing has provided different waste bin for each type of waste. Organic and inorganic wastes from Mill and Estate including housing were disposed to landfill in the Estate area. Areas of organic and inorganic wastes disposal was far from housing, in the flood-free area and not in swamp area and completed with warning sign not burning wastes. GP 9405A Page 50 of 76

- Chemicals materials containers that use at mills operations such as boiler additive liquids, lubricants, workshop materials, laboratory chemical, etc were categorized as hazardous wastes that stored at hazardous waste temporary warehouse. The chemical material container was managed by licensed transporter PT Maju Jaya Asri Utama. - It was observed that there was no waste burning - Disposal of hazardous waste was completed with manifest document. - Establishment of quarterly hazardous waste management report as required by legal requirements, e.g. Period October – December 2016, January – March and April – June 2017 to BLH Tanah Laut Regency, BLH South Kalimantan Province and cc to Ministry of Enviro nmental (KLH). Receipt note was also sighted . Criterion 5.4: Efficiency of fossil fuel use and the use of renewable energy is optimized. 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 The company has establsihed a plan for improving efficiency of the use of fossil fuels and to evidence: optimise renewable energy as follows: • Road maintenance to get best time for FFB transportation • Preventive maintenance and repair the light vehicle and heavy equipment to get best condition for fossil fuel saving. • Use of renewable energy for boiler: kernel shell = 5.75% per ton FFB and fiber = 12.5% per ton FFB. The company has monitoring of fossil fuel use (litre) as follows: Mill/Estate 2015 2016 Jan-Aug 2017 TLTE 91,562 72,544 42,330 KNTE 171,752 133,216 124,807 TLTM 190,003 187,116 143,265 During Jan-Aug 2017, the company has consumed direct fossil fuel 7.05 litre/ton FFB The company has not been carried out studies on the feasibility of collecting and using biogas. 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 Records of land clearing with zero burning shall be available, referring to the Major ASEAN Policy on Zero Burning (2003) or other recognised techniques based on the existing regulations. Findings In compliance: Yes: X No: Objective The company has developed procedure for replanting (SOP/SMART/MCAR/VI/TA-RPL) regarding evidence: zero burning policy during replanting. The procedure stated that that land preparation of replanting is conducted by cutting and chipping. During audit, no replanting activity. 5.5.2 Where fire has been used for eradication of pest during replanting, the Minor records of the analysis of the use of fire and permit from the authorised agency shall be available. Findings In compliance: Yes: X No: Objective There is no fire has been used for eradication of pest. evidence: No replanting activities to date. Criterion 5.6: Plans to reduce pollution and emissions, including greenhouse gases are developed, implemented and monitored. 5.6.1 Document(s) assessing pollution and emission sources, including gaseous, Major particles, soot emissions and effluent, shall be available (see Criterion 4.4) Findings In compliance: Yes: X No: GP 9405A Page 51 of 76

Objective The company has identified pollution and emission sources at Mill and Estates activities. The evidence: source of pollution, type of pollution and its control was documented in list of environmental aspect and impact evaluation. The following pollution and emission sources at Mill and Estates activities: - Boiler stack emission including particulate and soot - Diesel electric generator emission - POME methane emission - Use of fertiliser - vehicle and heave equipment emission Monitoring and measurement results for semester 2 year 2016 and semester 1 year 2017 were sighted for boiler emission against Environment Ministry Regulation # 07/2007, diesel electricity generator against Environment Ministry Regulation # 21/2008, vehicle and heavy equipment emission against Environment Ministry Regulation # 05/2006, odour emission against Environment Ministry Decree # 50/Menlh/11/96, ambient noise against Environment Ministry Decree # 48/Menlh/11/96, also ambient air quality against Government Regulation # 41/1999. 5.6.2 Significant pollutants and greenhouse gas (GHG) emissions shall be Major identified, and plan to reduce or minimize them implemented. Findings In compliance: Yes: X No: Objective The company has identified greenhouse gas (GHG) emissions sources at Tanah Laut Mill and evidence: supply base activities. The information of GHG sources at Tanah Laut Mill and supply base was reviewed as follows: • Estate: fertilisers usage, pesticides usage and fossil fuels usage • Mill: POME, fossil fuel and chemical materials usage

The company has established plans to reduce or minimise the identified pollutants and GHG emission for year 2017 as follows: • Use of renewable energy in Mill (kernel shell and fiber) • Manuring application according to manuring recommendation from SMARTRI efficient and right on target • Use organic fertiliser (land application from POME, empty bunch) • Implement Integrated Pest Management (IPM) to control pest and disease • Use registered pesticides • Change of demin plant to reverse osmosis in Mill to reduce HCl and NaOH • Use pesticide for prevention according to procedure • Disseminate efficiency of electricity use • Use energy saving lamp

All the plans are being implemented as described in the body of report. So far the plans remained the same with previous year. Tanah Laut Mill waste water was processed through a multi feedings waste water treatment ponds. There are three anaerobic ponds. Process parameter monitoring and maintenance of the ponds were sighted. POME is monitored monthly as required by permit of land application from Bupati Tanah Laut #188/45/449-KUM/2016. The result of POME monitoring were reviewed including measurement of BOD for period 2nd semester of 2016 and January to June 2017. The result of discharge effluent that use as land application conforms to the limits for parameters of the government regulation Kep.MenLH #29/2003 for pH (6 – 9) and BOD (< 5,000 ppm). 5.6.3 A monitoring plan and results of regular reporting on emission and Minor pollutants from estate and mill operations using appropriate methods shall be available. Findings In compliance: Yes: X No: Objective The company has monitored emission of pollutants including greenhouse gases through evidence: measurement of boiler, generators, operational vehicle and heavy equipment emission and recording of diesel fuel, fibre and shell use quantity. Monitoring of fertiliser, pesticide and chemical use was conducted through recording of fertiliser, pesticide and chemical use quantity. GP 9405A Page 52 of 76

Palm GHG calculator version 3.0.1 was used to monitor the emission sources. The record of calculation from Palm GHG calculator has been submitted to RSPO dated on 29 Aug 2017 Total Mill and Estates emissions year 2016 as follows:

• Mill : CPO= 1.18 tCO 2e/ton product and PK= 1.18 tCO 2e/ton product

• TLTE: 0.08 tCO 2e/ton FFB or 1.52 tCO 2e/ha

• KNTE: 0.14 tCO 2e/ton FFB or 4.53 tCO 2e/ha

Principle 6: Responsible consideration of employees and of individuals and communities affected by growers and millers. Criterion 6.1: Aspects of plantation and mill management that have social impacts, including replanting, are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continual improvement. 6.1.1 A social impact assessment (SIA) including records of meetings shall be Major documented. Findings In compliance: Yes: X No: Objective PT SMART Tbk. has conducted a survey and Social Impact Assessment (SIA) in 2009 by SMART evidence: Research Institute and recorded in Report SIA – Study of Social Impact Assessment in Palm Oil Plantation ( Laporan Studi Identifikasi Dampak Social Perkebunan Kelapa Sawit ) by SMART Research Institute Jakarta. Its covered villages around estate refer to Decision letter of BAPEDAL No.299/III/1996 about Technical guide of social aspect within the AMDAL document preparation. Assessment conducted with several method including FGD, interview and survey. The SIA covered several factors, other between : • Demography, education, economic livelihood, income, health, education, subsistence activities, facilities and infrastructure, custom, culture and religious values of the company around communities. • Other community values, resulting from changes such as improved transport/communication or arrival of substantial migrant labour force. • Management effort to social, economic, and culture. • Community perception about company existence and benefit. 6.1.2 There shall be evidence that the assessment has been conducted with the Major participation of affected parties. Findings In compliance: Yes: X No: Objective The SIA involved consultation with the affected parties, such as government agencies, company evidence: around community, cooperative, and marketing institution. The participatory assessment was conducted through discussing of the findings of SIA and the response from public and relevant government agencies. The public consultation also summarizes a number of inputs/feedback from local communities, leaders’ communities, and related agencies in the management plan of social impact. 6.1.3 Plans for management and monitoring of social impacts to avoid or reduce Major negative impacts and promote positive ones, based on social impact assessment, through consultation with the affected parties, shall be available, documented and timetabled, including responsibilities for implementation. Findings In compliance: Yes: X No: Objective There was documented record to outline the plan on mitigation, implementation and monitoring evidence: according to the SIA report. According to group discussion with village head, community leader, religion leader and young leader, they explained that the organisation has carried out some positive and negative actions in regard with SIA result. Evidence of participatory action from local communities was also sighted in related SIA documentation and also management and monitoring social impact report which is verified by head village of around estate and mill. Positive impacts were maintained with organisation and necessary action was planned by the organization such as implementation of CSR program. Moreover, some of negative impacts (i.e. dusty road, inequitable recruitment in villages, etc.) were followed up with corrective action, such as acceptance of job vacancy through a circulars letter to village head around estate, roads watering to the Sialang Taji Village scheduled once a day. GP 9405A Page 53 of 76

The person who responsibility for implementing of the social impact management and monitoring is Unit Head (estate and mill) that supported by SPO Officer. 6.1.4 The documented plan for management and monitoring of social impacts, Minor shall be reviewed at least on two-yearly basis. If necessary, the plan should be updated. There shall be evidence that the review process includes participation of all affected parties. Findings In compliance: Yes: X No: Objective The SIA was reviewed every two years by Upstream Sustainability Implementation Division, PT. evidence: SMART Tbk. The last in 2014-2015 periods. No changes to the plan. Review was conducted with involving to affected parties, such as Sialang Taji Village, Perk. Kanopan Ulu Village, ect. Processing the review its plan was documented at each office (estate and mill). In according interview with unit head during audit and group discussion with village head surrounding estate, there are no smallholder schemes at TLTE, KTNE, and TLTM .

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 In according interview with unit head during audit and group discussion with village head evidence: surrounding estate, there are no smallholder schemes in TLTE, KTNE, and TLTM. 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 Communication and consultation procedures shall be documented. Major

Findings In compliance: Yes: X No: Objective PT. SMART Tbk has maintained the list of local communities and interested parties. The last evidence: updated in June 2016. Documented procedure for communication and consultation with public was established on SOP/SMART/UMUM/SAD/I/004, 1 January 2014. It is revision against SOP/NP/SMART/XIV/MCAR003. There was no significant change of last procedure. Communication and consultation can be done using suggestion box ( kotak saran ), verbal or using letter. Result of communication and consultation was recorded in log book of communication and consultation. Organization has been also consulted the communication and consultation procedure by multi forum between SMART and The Forest Trust (TFT) which was initiated by Lingkar Komunitas Sawit (LINKS) on 15 July 2014. It was attended by AMAN, Greenpeace, Ministry of Agriculture, KOMNAS HAM and Dian Desa Foundation. It was also communicated to village head, community around estate in 2016. It was performed to receipt input from stakeholder to improve these procedure. Communication and consultation procedure was made appropriate existing local mechanisms and languages. During group discussion with village head, young leader and community leader was indicated that the related procedure appropriated with existing local mechanisms.

Related procedure describe that a multi-stakeholder forum shall be established if no settlement agreement of case/disputes/complaint between stakeholders with organization. Communication and consultation has considered differential access to information for male/female, workers, and villagers representative. 6.2.2 The company shall have official(s) who is responsible for consultation and Minor communications with parties.

Findings In compliance: Yes: X No: Objective Unit Head (estate and mill) have the responsibility for response of the communication and evidence: consultation form stakeholders or affected parties that assisted by SPO Officer. The responsibilities includes :Communication and consultation, Grievance and complaints, Response of the request information. During interview with stakeholders that they have understood the mechanism of the communication and consultation.

6.2.3 The company shall have a list of stakeholders, records of communications, Minor 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. Findings In compliance: Yes: X No: GP 9405A Page 54 of 76

Objective Stakeholder list was made and mentioned interested party. Stakeholder list covered District Head, evidence: Forestry and Plantation Department, Environmental Agency, Labour, transmigration and social Department, National Land Agencies, Camat, Village Head around estate and mill, contractor Police of district, Worker union and gender committee. Stake holder list was made detail, address and phone numbers were mentioned in the list. It was updated on June 2016. Communication and consultation with stakeholder can be done using verbal or using letter. During audit, it was observed most of the stakeholder communications are request for assistance, such as: provision of clean water, request boiler ash, etc. All off communication with stakeholder has been response. Result of All communication and consultation with stakeholder was recorded in the ‘log book ’.

In general, group discussion with village head, community leader and young leader around estate result indicated that the communication between local society and estate was evident where some agreements were made to improve social relationship. 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 mechanism, open to all affected parties, shall resolve disputes in an Major effective, timely and appropriate manner, ensuring anonymity of complainants and whistleblowers, where requested, as long as that information is supported with adequate initial evidence. Findings In compliance: Yes: X No: Objective The mechanism of dispute settlement procedures have been defined in SOP/SMART/SIGS- evidence: CSRDSADV/I/003, in January 2014. It is change against SOP/NP/SMART/XII/MCAR001.There was no significant change of last procedure. Problem solving is performed in consultation with affected parties (workers and affected parties). Mechanisms of conflict settlement are conducted by mutual consent and no coercion of any party, and it has been described in the procedure. Complaints and grievances from anonymity of complainants and whistle-blowers will be receipt by organization. Identity of whistle-blowers was protected and will be withheld by organization to reduce the risk of reprisal. Complaint and grievance from stakeholder was recorded in Log book of Complaint and Grievance. All of social complaint from stakeholder shall be responded maximum in one month. Head of administration (KTU) will be informed to manager maximum in one week to discuss handling of complaint. The procedure also has described that Where a resolution is not found mutually, is there a process for complaints to be brought to the RSPO Complaints System This procedure has communicated to village head and community leader around estate on 14 June 2016. Organization has been also consulted the communication and consultation procedure by multi forum between SMART and The Forest Trust (TFT) which was initiated by Lingkar Komunitas Sawit (LINKS) on 15 July 2014. It was attendance by AMAN, Greenpeace, Ministry of Agriculture, KOMNAS HAM and Dian Des Foundation. During interview with stakeholders, that they have understood the mechanism of complaint and grievance to the company.

6.3.2 There shall be records of process and outcome of dispute resolution. Major

Findings In compliance: Yes: X No: Objective Based on Log book “Complaint and Grievance”, there was no complaint or grievance from evidence: external stakeholder since last audit. In according to group discussion (public consultation) with village head and community leader, there was complaint from community around estate. It was verified during group discussion with village head, young leader and community leader that was indicated organization has had relationship with community around estate, moreover no dispute with surrounding communities. Unit Head (estate and mill) have the responsibility for completing of the process and outcomes and assisted by SPO Officer / Head of Administration (KTU). 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 available, referring to decision of the Constitution Court. Findings In compliance: Yes: X No: Objective The procedure was described in the documented procedure (SOP/NP/SMART/VII/D&L002) to evidence: identify land and customary rights and identifying people entitled to compensation. Awareness for GP 9405A Page 55 of 76

procedure was evident and documented. It was communicated to related parties (community leaders, and religious figures and youth leaders). Last awareness of procedure to related parties was conducted on 27 May 2016. 6.4.2 A procedure for calculating and distributing fair compensation shall be Minor established, implemented, monitored and evaluated in a participatory way. Corrective actions are taken as a result of this evaluation. Findings In compliance: Yes: X No: Objective The procedure was described in the documented procedure (SOP/NP/SMART/VII/D&L002) to evidence: identify and determine calculation method to provide fair compensation due to loss of land and customary rights where identified. Related procedure has considered differential access to information for male/ female, workers, villager’s representative including ethnics. Interview with estate manager and group discussion with village head and community leader around estate was informed there were no smallholder schemes in PHLE, ADPE, and KULE. Awareness for procedure was evident and documented. It was communicated to related parties (community leaders, and religious figures and youth leaders). Last awareness of procedure to related parties was conducted on 27 May 2016. Organization has been also consulted the communication and consultation procedure by multi forum between SMART and The Forest Trust (TFT) which was initiated by Lingkar Komunitas Sawit (LINKS) on 15 July 2014. It was attendance by AMAN, Greenpeace, Ministry of Agriculture, KOMNAS HAM and Dian Desa Foundation.

6.4.3 Compensation claims, process and outcome of any negotiated agreements Major shall be documented, with evidence of the participation of affected parties. Findings In compliance: Yes: X No: Objective The organisation did not acquire any new land after 2005. It was noted that there was no ongoing evidence: progress of new land acquisition during interview with sampled villager’s representative, all previous land acquisition was solved before Land Use Title ( Hak Guna Usaha ). 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 for employees based on the existing Major manpower regulations shall be available. Findings In compliance: Yes: X No: Objective Employees’ pay rates was made by the organization and was documented on List of monthly evidence: weight pay include salary, overtime calculated, functional allowance, old age benefits. Workers have received wage according to Minimum wages payment refers to : • Southern Kalimantan Governor Decree No. 188.44/0638/KUM/2016 dated December 27, 2016 on Sectoral Minimum Wage for 2017. Based on interview with representative worker and head of worker union it was noted that there was no worker wage deduction. Worker wage list per June 2016 as indicated that the pay was delivered in according related regulation. Payments for workers were determined according to daily attendance register and over time shit appropriate to related regulation. Daily attendance for workers was recorded and controlled manually by the each Assistant. 6.5.2 Collective Labor Agreement/Company Regulation, in accordance with the Major manpower regulations, shall be available in understandable language; and explained by the management or Labor Union to the workers.

Findings In compliance: Yes: X No: Objective The company and workers have arranged mutual working agreements as described in Mutual evidence: Working Agreement ( Perjanjian Kerja Bersama-PKB ) document (created in 2016) which is expected to be updated every 2 years, its time limit is 2016-2017. PKB document period 2017- 2018 has been designed and is awaiting approval from management and then register to Labour and Transmigration Agency ( Disnakertrans ). Rights and obligation between two parties seems to be implemented accordingly. Some items were regulated in the PKB (2016-2017 version), such as working hours, holiday entitlement, wage, over time, sickness, leave, maternity leave, work accident, etc. PKBonlyapplies to employees SKU. PKWTand PHL have individual agreements that have been registeredin thelocal Manpower Agency. One of individual agreement of PHL such as Work Agreement of PHL No.117/TLTE/V/2017.. Moreover, organization has had company regulation which has been approved by Law and GP 9405A Page 56 of 76

Human Rights Ministry of Indonesia No. Kep 1089/PH/JSK-PKTD/PP/XII/2012, its time limit is 2012-2014. It was developed appropriate to Laws No.13/2003.

6.5.3 Growers and millers shall provide adequate housing, water supplies, Minor medical, educational and welfare amenities to national standards or above, where such public facilities are unavailable or inaccessible

Findings In compliance: Yes: X No: Objective Public facilities were provided by the organisation and covered residential facilities, day care, evidence: kindergarten, building for prayers, sports facility (e.g. volley ball, badminton and tennis), etc. Housing for workers and medical facilities (clinics) were was provided by the organisation with basic facilities. However, during group discussion on July 29, 2017 with employee/sprayer Workers felt no shortage of clean water. A source of clean water for employees is provided in the form of ground water wells ( sumur gali ) and water wells drilled ( sumur bor ). Management has checked the clean water to the laboratory (refer to 4.4.1).

6.5.4 There shall be demonstrable efforts to improve workers’ access to adequate, Minor sufficient and affordable food. Findings In compliance: Yes: X No: Objective There are cooperative of worker each estate. Cooperative of worker provides basic foodstuffs. evidence: Worker also receives rice by organization that was distributed twice a month. This was mentioned in the “Joint Working Agreement” (PKB) year 2014-2016 between employees and the organisation. Moreover, organization has provided especial area in place for local market. Local market provides foodstuffs of worker, the market is usually held at the time of payment of the employee payday. Whereas for the purposes of the market to nearby counties, the management has provides transportation every Sunday. 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 PT. SMART Tbk has published a statement in local languages recognising the human rights to evidence: freedom of association in Circular Letter (Surat Edaran) No. SE no 104/CEO3-SE/07-2010 and approved by Top Management. The letter explained that the organization respect to comply with regulation pertinent to freedom of association includes migrant and transmigrant workers and contract workers. Other than that, stated in PKB that freedom of association can be conducted by the worker through Labour Union. The company also give facilitites and time to the worker union to have their own regular meeting around the company and also to its affilation in Banjarmasin.

6.6.2 Records of meetings with labor unions or workers representatives shall be Minor available. Findings In compliance: Yes: X No: Objective The company has documented the minutes of meeting between the company and labour union. evidence: There are SPSI (Serikat Pekerja Seluruh Indonesia - Indonesian Worker Union) for Mill and Estate. Each estate and mill has PUK ( Pengurus Unit Kerja - Caretaker Unit). Worker representative was elected independently among workers. Worker Union has been registered in Indonesian Worker Union Labuhan Batu District. Conditional meeting was also held to discuss any issues as necessary and recorded in minutes of meeting. Several issues discussed at meetings were labour issues had been done between the management and the worker union from TLTE, KNTE, TLTM who signed the Joint Collaboration Agreement that had valid for period 2014- 2016(October). Both parties has been preparing to sign the new Joint Collaboration Agreement for period 2017-2019 in the end October. While in the transition year, the agreed together to extent the Agreemtn for one year and had been communicated to Tanah Laut District’s Worker Agency. Criterion 6.7: Children are not employed or exploited. 6.7.1 There shall be documented evidence that minimum age requirements are Major met.

Findings In compliance: Yes: X No: GP 9405A Page 57 of 76

Objective The minimum working age at PT. SMART has established in HRD Circular Letter No. 002/SE- evidence: HRDV/03/09, on 31 March 2009 and Memorandum No. 030/SMD OPS/VIII/2013 that concerning the minimum age limit of recruitment are 18 years old Based on a list of labour period June 2016 and 2017 in KTNE, TLTE, TLTM showed that no employees under the age of 18 years. Socialization about minimum working age was conducted by staff to employee on 8 April 2016, and also through GSEP training conducted in several month during 2017. During the public consultation on the field observations on August 28-31, 2017 on some labour, it was verified that no employee under the age of 18 years old and no children found following their parent to workplace, based on employee data in 2016 and 2017 period that the lowest age are 20 years old.

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 company’s policy on equal opportunity and treatment for work shall be Major available and documented. Findings In compliance: Yes: X No: Objective Policy for discrimination was determined by the organisation, and all discrimination is prohibited evidence: for all area in the Mill and Estates as regulated in Social policy of company. Circular Letter ( Surat Edaran ) No. 146/CE03-SE/04/2010 and PKB also mentioned ban of discrimination for all worker in the organisation. This policy has been communicated to worker. These policy describe the organization recognize and respect to the rights of local, migrant or urban worker. During interview with employees that they have known on non-discrimination and equal opportunities. 6.8.2 Evidence shall be provided that employees and groups including local Major communities, women, and migrant workers have not been discriminated. Findings In compliance: Yes: X No: Objective Worker list of Mill and Estates mentioned that all workers came from different back grounds (race, evidence: religion, gender, etc.). Ethnic diversity of worker and also during interview with workers, no discrimination was identified based on religion, ethnic, gender.No evidence of discrimination found during the audit. Based on employee data, each estate and mill in July 2017, employees / workers consisting of several ethnic groups, includes Javanese 54%, Batak 5%, Minang 1 %, Banjar, 25%, and Sunda 10% and Flores.

6.8.3 Records of evidence that equal opportunity and treatment for work shall be Minor available. Findings In compliance: Yes: X No: Objective All discrimination was prohibited for all area in estate and mill. PKB also mentioned ban of evidence: discrimination for all workers in the organization. Procedure for worker recruitment (SDM-A-001- 00) and procedure for employee assessment (HRD C-002-00) was available and mentioned there was no discrimination treatment during recruitment and promotion process.Promotion of worker will be done base on work period, annual evaluation result, and availability of position. There was the recruitment worker at the factory/mill in January 2016. Organization has been distributed job vacancy on 11 January 2016 to around villages. Recruitment for positions Harvester. Requirement of prospective new worker regarding minimum 18 years old, identity card/KTP ( Kartu Tanda Penduduk ), photo, family card ( Kartu Keluarga ) if has married, certificate, medical record and application letter.

During audit it was observed the recruitment process has been done appropriate to related procedure (SDM-A-001-00). Annuals performance evaluation result of worker was shown, the last employee evaluation performed in twice a year in 2016, and 2017. It was indicated the hiring and promotion are based on skills, capabilities, qualities. Since the last audit, no employee promotion. 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 documented, implemented and communicated to all levels of the workforce. Findings In compliance: Yes: X No: Objective Policy for sexual harassment and violence and commitment of organization to educate sexual evidence: harassment to worker was determined in the Circular Letter ( Surat Edaran )No.101/CEO3- GP 9405A Page 58 of 76

SE/01/2010. It describes the organization has had commitment to deliver sexual harassment and violence to women of the workforce. Those policies have been communicated and awareness to worker in the committee gender meeting to worker on 8 April 2016, and also every morning meeting before working (Lingkaran Pagi). Organization collaborates with gender committee has established program regarding monthly posyandu , training three monthly protectionandprevention ofsexual harassment every three month, immunization of child of worker. All programs have been implemented and its record was documented.

6.9.2 A policy to protect the reproductive rights, shall be documented, Major implemented and communicated to all levels of the workforce. Findings In compliance: Yes: X No: Objective Policy for sexual harassment and violence and to protect women reproduction rights was evidence: determined in the Circular Letter (Surat Edaran )No.145/CEO3-SE/04/2010 and PKB as well.The policy has been communicated and awareness to worker in the committee gender meeting on 8 April 2016 to workers. Moreover, these policy has communicated to worker when the muster morning in each division. Gender committee has been founded for each estate and mill. Member of gender committee consist of representatives from all areas of work. During group discussion with head of worker union and gender committee and interview with representative worker was verified the gender committee includes representatives from all areas of work. The company also give 2 days off work for the women worker who has monthly menstruation, and give one glass of milk every working day, the suitable PPE for fertilizing, and spaying women workers who dealth with chemical substancaes daily. The company also change the work for pregnant worker until 3 month before and after her new baby birth 6.9.3 A specific grievance mechanism which respects anonymity of complainants Minor where requested, and as long as they are supported with adequate information, shall be documented, implemented, and communicated to all workforce. Findings In compliance: Yes: X No: Objective Procedures for handling complaints already established all complaints about sexual harassment evidence: and reproductiveright swill be submitted to the GenderCommittee to follow up. Mechanism of complaint handling was described on gender committee procedure SOP/SMARTS/6C. It was started from reporting hercomplaintto theCommitteeRepresentativesat estate, gendergrievanceby theCommittee, reportingto thecompanyand the final decisionof thegendercommitteeandthe company. According interview with gender committed there was no complaint related to sexual harassment. Based on workers interview and group discussion with gender committee and workers representative, it was concluded that there was no sexual harassment and violence within the organisation. 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: X No: Objective Referring to FFB receipts and FFB processing record and has been verified with mill manager it evidence: received FFB from third parties, and their number, volume and origin recorded well in the mill office, and accessible for the supplier and any other parties to access. Price mechanism of FFB, CPO and palm kernel was determined by province government and reviewed in monthly basis. The price was applied for all growers in the province. The company updates the information on the FFB pricing formula that includes details of transport, milling and shipping costs, each month and provides it to out growers. Current and past prices paid for Fresh Fruit Bunches (FFB) from province government period August 2017 was publicly available. Signboard of FFB price was placed in front of the Mill office; everyone can clearly see the price of FFB in that information board. During audit it was observed that tere was no complaints on FFB pricing from FFB suppliers. 6.10.2 Pricing mechanisms for Fresh Fruit Bunches (FFB) and inputs/services shall Major be explained and documented (where these are under the control of the mill or plantation). GP 9405A Page 59 of 76

Findings In compliance: Yes: X No: Objective The company has a representative senior officer in Banjarmasin Office who responsible to attend evidence: the meeting for pricing decision making lead by the Tanah Laut Plantation, Horticulture and Food Security Agency who handle the two monthly stakeholder meeting for it. The meeting also attended by other growers, smallholder, and the association of palm oil companies, meanwhole the decided price then refered and controlled together in transparent manner. Recording/documenting transactions between millers with middlemen and/or smallholders were documented in Invoice and “Bukti Pembayaran” FFB which issued monthly after mill receive FFB from suppliers. Growers/millers have explained FFB pricing and pricing mechanisms for FFB in SPK or annual contract between FFB suppliers and mill which describing FFB specification required, contract period, determination of FFB pricing , and term of payment. The contract was understood, sign and agreed together. 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 Each of contractor working were describe within the contractual agreement (SPK) that defined the evidence: scope of work, timeframe duration, price and term of payment, taxes and employees obligation, work specification and responsibilities, health and safety obligation also sanction, dispute and force majeure issues. Each of interested parties was given approval signature with attached cachet as legal boundaries. The records were sighted regarding the contractual agreements (SPK) kept by Administratio Head (KTU).

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

Findings In compliance: Yes: X No: Objective The payments method was described within contractual agreements (SPK) that describe the unit evidence: price and warranty include the payment duration. An application for funds transfer was evident as proof that payment has been made in accordance with the agreement in the contract. Payment for all staffs and worker also done with bank transfer method directly to the their bank accounts before date 5 every month in Sinamas Bank who open its authomatic teller machine closed to company office area.

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

6.11.1 Records of contributions to local development based on the results of Minor consultation with local communities shall be available. Findings In compliance: Yes: X No: Objective The company has identified the local development needs in accordance with social impact evidence: assessment. Several developments conducted such as planting (transportation, staking, planting) civil works (repair of mill building). During audit shown that the payment has been made appropriate with contract., such as work agreement local contractors. Moreover, organization (TLTE, and TLTM has been established CSR program. CSR program implemented collaborated with Eka Tjipta Foundation and Tzu chi Foundation. Record of its implementation regarding minutes of assistance, Photo and receipt note ( kuitansi ). Some of CSR program has been implemented. Besides the CSR program, social contribution was implemented based on stakeholder aspiration. Records of organization contribution to regional development were evident, among other: minutes of assistance, document photo, and social assistance list. Some request for assistance has been respond, such as: provision of clean water, request boiler ash, etc. mill and estate, so it is reducingunemployment. During group discussion with village head, community leader and young leader around estate was indicated the organization is providing jobs for villagers around the company. 6.11.2 Where there are scheme smallholders, there shall be evidence that efforts Minor and/or resources have been allocated to improve scheme smallholder productivity. Findings In compliance: Yes: X No: Objective During discussion with estate manager and has verified in group discussion with village head and evidence: community leader around estate was indicated that there was no scheme smallholder (include independent smallholder) TLTE, KNTE,TLTM. All fresh fruit bunch come from its own estates. GP 9405A Page 60 of 76

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 labor are used. Major

Findings In compliance: Yes: X No: Objective Every worker has agreement with organization. Worker or unit management of mill and estate can evidence: terminate employment if there is own desire of worker. For example: Daily temporary contract No. 117/ADPE/PKHL/V/2016, on 10 May 2016 and also interview with representative worker as well as head of worker union was indicated the terminate employment without penalty given reasonable notice or as per agreement. To anticipate trafficked labour, organization has been arranged personal file every workers regarding identity card, curriculum vitae, photo, work agreement and receipt working letter, marriage certificate, education certificate, family card, references letter from police. Personal file of worker was shown that no forms of forced or trafficked labour. Interview with representative worker and head of union worker was informed there are no migrant worker in 6.12.2 It shall be demonstrated that no contract substitution has occurred. Minor

Findings In compliance: Yes: X No: Objective All workers and employees under the organization work under contract signed together, either in evidence: estates, mill, and office. The worker come from other districts also work under contract with estate or mill managers. 6.12.3 Where migrant/foreign/honorary workers are employed, a special worker Major policy and procedures and the evidence of implementation shall be available. Findings In compliance: Yes: X No: Objective PT SMART has procedure to deal with workers from other district in Kalimantan and other Island evidence: in Indonesia (Java,Sumatra, Nusa Tenggara, etc) and had been implemented well. The company treat them with no discriminative ways. They are also lieve in the same facilities with no, and have same access to the health and education for their family fairly. 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. Findings In compliance: Yes: X No: Objective The company has a social policy and roles the community as a manifestation the respect of the evidence: company to human rights, the rights of local communities and as a commitment to comply with the rules and regulations. This commitment is outlined in the policy, which was signed by the President Director on 10 November 2011. The policy contains such as : - Respect for human rights - Empowerment of local community development programs - Recognizes, respect and reinforce the rights of workers - Compliance with all applicable laws and regulations - FPIC to indigenous and local communities This policy has been disseminated to all employees and the community around the plantation in April 2017. Evidence of dissemination and list of attendance was sighted. All workers and employees have signed their work contracts, either in estates, mill, and office. The work contract has contained rights and obligation of both parties (worker and company).

Principle 7: Responsible Development of New Plantings 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.

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. GP 9405A Page 61 of 76

Findings In compliance: Yes: No: Objective Not applicable. evidence: Tanah Laut and Kintapura Estates were developed in 1995 to 2005. All area has been covered in existing HGU and AMDAL. Planted area in 2005 (12.5 ha), land clearing conducted in December 2003 and planted in May – June 2005. So, there was no planting at TLTE and KNTE areas after November 2005. 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: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 7.1.3 Where the development includes an outgrower scheme (skema kemitraan), Minor the impacts of the scheme and the implications of the way it is managed shall be given particular attention . Findings In compliance: Yes: No: Objective Not applicable. Tanah Laut and Kintapura Estates were developed in 1995 to 2005 and the evidence: plantation development did not include an outgrower scheme. 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: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 7.2.2 Topographic information adequate to guide the planning of drainage and Minor irrigation systems, roads and other infrastructure shall be available.

Findings In compliance: Yes: o: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 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: Objective Basically, there was no new planting after 2005. As such, Criteria 7.3 is not applicable. evidence: 7.3.2 Reports of comprehensive HCV assessment, which involves stakeholder Major consultation and includes record of land-use change since November 2005, shall be available. This HCV assessment shall be conducted prior to any conversion or new planting. Findings In compliance: Yes: No: Objective Basically, there was no new planting after 2005. As such, Criteria 7.3 is not applicable. evidence: 7.3.3 Records of land preparation and clearing dates shall be available. Minor

Findings In compliance: Yes: No: Objective Basically, there was no new planting after 2005. As such, Criteria 7.3 is not applicable. GP 9405A Page 62 of 76

evidence: 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: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 7.3.5 Evidence of consultation with the affected community shall be available in Minor order to identify the area required by such community to fulfill its basic needs, by considering the positive and negative changes to the livelihood as a result of plantation operations. Such matters shall be included in the HCV analysis and management plan (see Criteria 5.2). Findings In compliance: Yes: No: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. Criterion 7.4: Extensive planting on steep terrain, and/or on marginal and fragile soils, including peat, is avoided.

7.4.1 Indicative maps showing marginal and fragile soils, including excessive Minor gradients and peat soils, shall be available and used to identify areas to be avoided. Findings In compliance: Yes: No: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 7.4.2 Where limited planting on fragile and marginal soils, including peat, is Major proposed, a documented plan shall be developed and implemented to protect them without incurring adverse impacts. Findings In compliance: Yes: No: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. Criterion 7.5: No new plantings are established on local people’s land where it can be demonstrated that there are legal, customary or user rights, without their free, prior and informed consent. This is dealt with through a documented system that enables these and other stakeholders to express their views through their own representative institutions. 7.5.1 Evidence shall be available that affected local peoples understand they have Major the right to say ‘yes’ or ‘no’ to operations planned on their lands before and during initial discussions, during the stage of information gathering and associated consultations, during negotiations, and up until an agreement with the grower/miller is signed and ratified by these local peoples (see Criteria 2.2, 2.3, 6.2, 6.4 and 7.6) Findings In compliance: Yes: No: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 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 Records of identification and assessment of legal, customary and user rights Major shall be available. Findings In compliance: Yes: No: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 7.6.2 A procedure for identifying people entitled to compensation shall be Major available. GP 9405A Page 63 of 76

Findings In compliance: Yes: No: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 7.6.3 Records of calculation system and distribution of fair compensation shall be Major available. Findings In compliance: Yes: No: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 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: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 7.6.5 The process and outcome of any compensation claims shall be documented Minor and made available to the affected communities and their representatives. Findings In compliance: Yes: No: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 7.6.6 Evidence shall be available that the affected communities and rights holders Minor 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: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005.

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 Records of zero burning implementation on land clearing, referring to the Major ASEAN Policy on zero burning (2003) and recognised techniques based on the existing regulations shall be available.

Findings In compliance: Yes: No: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 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 on Zero Burning’ 2003, or comparable guidelines in other regions. Findings In compliance: Yes: No: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 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: Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005. 7.8.2 Records of a plan to minimize net GHG emissions shall be available Minor Findings In compliance: Yes: No: GP 9405A Page 64 of 76

Objective Not applicable. There was no new development of plantation at TLTE and KNTE areas after evidence: November 2005.

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 monitoring shall be available, based on a consideration of Major the social and environmental impacts and routine evaluation of the plantation and mill operations. As a minimum, these shall include, but are not necessarily be limited to: • Reduction in use of certain chemicals (Criterion 4.6); • Environmental impacts (Criteria 4.3, 5.1 and 5.2); • Waste reduction (Criterion 5.3); • Pollution and greenhouse gas (GHG) emissions (Criteria 5.6 and 7.8); • Social impacts (Criterion 6.1); • Optimising the yield of FFB production (Criterion 4.2) Findings In compliance: Yes: X No: Objective The company always regular internal audit which covers all operation areas including operation evidence: (Operation Internal Audit – OIA). Findings identified during those audits have been followed up, verified and monitored by Region Controller, Production Controller and Vice President Agronomy and Vice President Manufacturing. Continual improvement plans have been raised as corrective actions plan from internal audit of OHS and RSPO and Management Review Plan. The Mill and Estates have been certified to ISCC and ISPO continually set management objective and target which were supported by environment program especially for carbon reduction. Regular internal and external audit was held to evaluate the adequacy and effectiveness of the system. Regular internal audit RSPO and ISPO and management review meeting which covered all operation areas including operation was held to evaluate the adequacy and effectiveness of the management system. Records were sighted regarding RSPO & ISPO Internal Audit that conducted on April 2017. Several improvement programmes for mill and estate was already established for year period 2017. Evidence of several improvements was shown, e.g. 1. Environmental impacts: • Land application from the POME, • Handling of domestic waste water by construct and maintenance septic tank, • Application of empty bunch • Manual manuring at 50 m on riparian buffer zones • Recycle turbine cooling water and vacuum dryer • Reuse condensate steriliser for water dilution • Recycle soclet cooling water 2. Waste reduction: • Efficiency of paper use • Reduce use oil and used oil filter 3. Pollution and GHG emission • Use of fibre and shells for boiler fuel • Operate turbine during non processing hour • Reduce operational hour of genset by adding turbine operation non processing 4. Social: Continual improvement for social aspect through review for action plan of management and monitoring social impact. Monitoring of the social impact of last performed and also reviews by management in the period Jan - Dec 2016. Re-assessment at the company was conducted every 5 years for evaluating the social impact assessment document. During audit, the company is conducting the re-assessment Since the last audit, evaluate for negative and positive impact. Positive impacts were maintained with organisation and necessary action was planned by the organization such as implementation of CSR program. Moreover, some of negative impacts (i.e. dusty road, inequitable recruitment in villages, etc.) were followed up with corrective action. GP 9405A Page 65 of 76

3.1.2 Supply Chain For supply chain, the PT SMART Tbk – Tanah Laut Mill has decided to use Module E in this assessment. The findings and objective evidence find during the assessment are outlined in the table below. The results for each indicator from each of the operational areas were evaluated to provide an assessment of conformity. A statement is provided for each of the RSPO indicators in order to support the findings of the assessment team. Module D – CPO Mills: Identity Preserved – Not Applicable Module E – CPO Mills: Mass Balance

Module E – CPO Mills: Mass Balance E.1: Definition E.1.1 Certification for CPO mills is necessary to verify the volumes of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. In that scenario, the mill can claim only the volume of oil palm products produced from processing of the certified FFB as MB. E.2: Explanation

E.2.1 The estimated tonnage of CPO and PK products that could potentially be produced MAJOR by the certified mill must be recorded by the CB in the public summary of the P&C certification report. This figure represents the total volume of certified palm oil product (CPO and PK) that the certified mill is allowed to deliver in a year. The actual tonnage produced should then be recorded in each subsequent annual surveillance report. Findings In compliance: Yes: X No: Objective The actual and projected volume already recorded in the previous audit report and this re- evidence: certification report. The details are presented in Table 2 and Table 3 of this Public Summary Report. The company has projected the estimated of CSPO and CSPK products for period 2017 amounting 18,881 MT (CSPO) and 5,783.88 MT (CSPK). The actual volume sold on 01/01/2017 to 27/08/2017 is CSPO= 0 MT (CSPO sold with ISCC claim) and CSPK= 2,220.69 MT. This was not over than its projected as well as not over than volume quota provided in Palm Trace. The company has projected the estimated tonnage of CSPO and CSPK products for period 2018 (Claimed for Certification) i.e CSPO= 21,694.00 MT and CSPK= 5,424.00 MT

E.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 company has registered on RSPO IT Paltform with member ID is RSPO_PO1000001152. evidence: Mrs. Nasibah (Sales staff – Jakarta Head Office) has responsible for keeping record of transaction in eTrace. During Jan– Aug 2017, the company has reported 13 transactions on RSPO IT platform with total volume CSPO= 0 MT and CSPK= 2,220.69 MT, for examples: • Transaction number: TR-4595a40d-8c91 dated on 01/06/2017, buyer= PT SMART Tbk-Tarjun Refinery, Sales Contract # 1052/KER/1052/17/T007, product= CSPK/MB, Shipping date= 01/06/2017, volume= 198.26 MT, Shipping Confirmed: 07/06/2017. Weighing Bridge Card # A006822 dated on 07/06/2017, vol= 198.26 MT, claim= RSPO-MB, certificate # RSPO20010. • Transaction number: TR-c334a114-e9f4 dated on 21/06/2017, buyer= PT SMART Tbk-Tarjun Refinery, Sales Contract # DIC/1052/310517/0002, product= CSPK/MB, Shipping date= 21/06/2017, volume= 198.86 MT, Shipping Confirmed: 21/06/2017. Weighing Bridge Card # A003094 dated on 21/06/2017, vol= 198.86 MT, claim= RSPO-MB, certificate # RSPO20010 All CSPK products have been sold to PT SMART Tbk – Tarjun Refinery. E.3: Documented Procedures

E.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 GP 9405A Page 66 of 76

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 The company has established procedures to ensure the implementation of all the elements evidence: specified in the RSPO SC requirements as follows: • Procedures for RSPO Supply Chain Product – Mass Balance (PT.SMART Tbk- TLTM/SOP/24), covers receiving of raw material, weighing (weighbridge ticket printing, quality checking, processing), monitoring of product (quality, quantity, validation of report), mass balance counting, delivery of product and documentation. • Procedure for Identification and Traceability of Certified Product (SOP/SMART/CERS- EHSD/SADV/I/001). Mr. Ismu Zulfikar (Head of Environmental Department) is appointed to be the person who is responsible for the supply chain requirements implementation and in charge for the sales and RSPO IT Platform registration.

E.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 Procedure for receiving and processing certified and non-certified FFBs is the same with evidence: procedures as mention above. Through checking to the ticket documents at the weighing bridge, the facility could demonstrate the identification of certified and non-certified FFBs received. The ticket showed the sources of FFB, whether it come from its own estate or the outgrower which indicate the name of the farmer. E.4: Purchasing and goods in

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

Findings In compliance: Yes: X No: Objective The WB operator has responsible to verify and document the tonnage and sources of certified evidence: and non-certified FFBs received. The operator will issue WB card with information as follows: estate source, product name, FFB source, date of FFB receipt, vehicle number, SPB number, estate block, and total bunches. For examples: • Surat Pengantar Buah # 0975 dated 29 Aug 2017, supplier: TLTE (Block E11) and quantity: 200 FFBs. • Surat Pengantar Buah # 01 dated 28 Aug 2017, supplier: Koperasi Mutiara Sawit and quantity: 212 FFBs (non-certified FFB). All input FFBs sourced from their own estates (certified FFBs) and outgrowers (non certified FFB).

E.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 Up to date, there is no overproduction. During Jan-Jul 2017, the company has reported 13 evidence: transactions on RSPO IT platform with volume less than projection. See E.2.1. E.5: Record keeping

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

b. All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system according to conversion ratios stated by RSPO.

c. The site can only deliver Mass Balance sales from a positive stock. Positive GP 9405A Page 67 of 76

stock can include product ordered for delivery within three months. However, a site is allowed to sell short.(ie product can be sold before it is in stock.) For further details refer to Module C.

Findings In compliance: Yes: X No: Objective The records are: evidence: a. Surat Pengantar Buah (FFB delivery note) b. WB Card (in and out) c. Daily Production Report d. Delivery Note of CSPO and CSPK e. DO f. Sales contract g. Invoice h. eTrace transaction report i. Summary Report (3 monthly): opening stock of FFB, FFB input, delivery to production, opening stock of CPO, CPO production, CPO dispatch, and ending stock. The company has recorded and balanced all receipts of sustainable FFB and deliveries of RSPO product for period Jan-Aug 2017 as follows: • Beginning stock of FFB= 872.94 MT • Beginning stock of CSPO= 990.59 MT • Beginning Stock of CSPK= 168.55 • Certified FFB input= 43,828.11 MT • Certified FFB production= 42,955.77 MT • RSPO certified CPO output = 9,351.67 MT • OER= 22.22% • RSPO certified PK output = 2,220.69 MT • KER= 5.28% • Delivery of RSPO certified CPO (no claim)= 10,274.40 MT • Delivery of RSPO certified PK= 2,393,12 MT • Ending Stock of RSPO certified CPO= 67.86 MT • Ending Stock of RSPO certified PK= (3.88) MT E.5.2 In cases where a mill outsources activities to an independent (not owned by the MAJOR same organization) palm kernel crush, the crush still falls under the responsibility of the mill and does not need to be separately certified. The mill has to ensure that the crush is covered through a signed and enforceable agreement.

Findings In compliance: Yes: X No: Objective No outsources activities to an independent so there is no need any agreement applied. evidence:

3.2 Corrective Action Request There are total of 0 (nil) Major and 1 (one) 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 PT. SMART Tbk – Tanah Laut Mill and it’s supply base has complied with INANI of RSPO Principle and Criteria 2013 and RSPO Supply Chain Certification Standard Module E – Mass Balance. Therefore the SGS audit team recommends to be issued the certificate for PT. SMART Tbk – Tanah Laut Mill. 3.4 Status of Non-Conformities Previously Identified 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 C. GP 9405A Page 68 of 76

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 before on 25 August 2018.

4.3 Date of Closing Non-Conformities

Reference Category Issued date Close out date Number (Major/Minor) 4.1.3 Minor 31.08.2017 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 PT. SMART Tbk Signed on behalf of PT SGS Indonesia – Tanah Laut Mill

Mr. Firman Limbong Zaenal Abidin (Production Controller) (Lead Auditor)

GP 9405A Page 69 of 76

APPENDIX A: CORRECTIVE ACTION REQUEST & OBSERVATION

CAR # Indicator CAR Detail

Date 01 4.1.3 31.08.2017 Due Date> 30.08.2018 Date Closed> dd mm yy Minor Recorded> Normative reference and requirements:

Records of monitoring and any follow-up actions shall be available. Statement of Non-Conformance: Monitoring of loose fruit is not effective and corrective action is not available Objective Evidence: During field inspection found some oil palm trees with unpick up loose fruit and become seedlings ( anakan sawit ) more than 3 months in Division 2 block B20 Tanah Laut Estate. This is not in accordance with the SOP Best practices (SOP/SMART/MCAR/XIII/TA-PNN paragraph 2.2.6.1). Seedlings that grew almost evenly in block B20 until the age of 3 months. Seedlings grew because the loosed fruit did not pick up, even up to 3 months there was no collection / cleaning. According to SOP (SOP / SMART / MCAR / XIII / TA- PNN) stated that after harvesting FFB loosed fruit must be collected as soon as possible. Weeding activities conducted in the area in the form of spraying with herbicides, unpick loosed fruit up or disassembled palm seedlings. Root cause analysis to be completed by Organization: Some areas in the Division 2 B20 block are inundated / flooded and complicate the pick up of the loose fruit ( brondolan ), so that the brondolan can not be picked up during harvest.

The company has arranged a seedlings jack program at Division 2 in 2017, in which this activity is programmed in May, June, July, October, November, and December 2017. However, actual this activity was done in January, February, and August 2017 and not done in all areas thoroughly following the program. Corrective Action to be completed by Organization: Assistant of the division 2 assigns the foreman of harvest to assign personnel who pick up brondol dated on 7 September 2017 in division 2 block B20 and documented in BKM document. Assistant of division 2 assigned the forman of maintenance to assign the maintenance persoonel to do weeding program dated on 31 August 2017 in division 2 of block B20 and documented in BKM document. Preventative Action to be completed by Organization: Assistant of Division identifies frequent flooded areas and conducts daily surveillance and monitoring of picking up brondolan in vulnerable areas. Assistant of division continues weeding program refers to weeding program in 2017 and conducts this activity along with harvest inspection activities. Close-out evidence/Planned Actions to be completed by Lead assessor: The action plan has addressed the non conformance. This will be further verified furing next surveillance visit.

OBS # Indicator Observation/Opportunity for Improvement

Date 01 2.2.2 31.08.2017 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details:

Boundary stone should have number and refers to map which enable for monitoring. Example boundary stone number H18 indicated in map but in the field, it has not been indicated a pole number at Kintapura Estate.

Date 02 4.1.3 31.08.2017 Due Date> dd mm yy Date Closed> dd mm yy Recorded> GP 9405A Page 70 of 76

OBS # Indicator Observation/Opportunity for Improvement

Details:

FFB sorting criteria should be more restricted. Field inspection at loading ramp found that FFB sorting from Div-01/TLTE, truck no. KH 9043 PF showed unripe, under ripe, over ripe, empty fruit bunch, abnormal which above standard (IK. Kriteria Kematangan Buah di PKS ).

Date 03 4.3.2 31.08.2017 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details:

Sloping area which does not have terrace, should do terrace when replanting (Tanah Laut Estate).

Date 04 4.3.3 31.08.2017 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details:

During field inspection found that oil palm trees on road side at Div-01 block G7 Kintapura Estate. Oil palm trees should not be planted at road side when replanting.

Date 05 4.3.6 31.08.2017 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details:

Flooded area 90.61 ha at Tanah Laut Estate should be resolved with PT Arutmin Indonesia and that area has been excluded from planted area.

Date 06 4.4.6 31.08.2017 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details:

Exit door from rice storage and pesticide storage should be separated to avoid contamination (Tanah Laut Estate and Kintapura Estate).

Date 07 4.7.2 31.08.2017 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details:

Care should be taken to ensure that the tower of fire monitoring at Block D26 TLTE can be well functioned. During field visit, the tower cannot monitor all areas because it has been constrained by the palm trees.

Date 08 6.9.3 31.08.2017 Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Details:

• The grievances those submitted to their direct superintendent or assistant are not recorded according to the existing SOP, and interviews with staffs showed that there are reluctant among staff to grieve using the existing box grievances. • Gender committee is not showed the common model organization that arranged in a common structure, in which the secretary has same position with other division in KNTE, and the treasurer (bendahara) are under the secretary and coordinate the member directly in TLTE.

GP 9405A Page 71 of 76

APPENDIX B: NON-CONFORMITIES PREVIOUSLY IDENTIFIED - NONE

CAR # Indicator CAR Detail

Date dd mm yy Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Normative reference and requirements:

Statement of Non-Conformance:

Objective Evidence:

Root cause analysis to be completed by Organization:

Corrective Action to be completed by Organization:

Preventative Action to be completed by Organization:

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

Date dd mm yy Due Date> dd mm yy Date Closed> dd mm yy Recorded>

Normative reference and requirements:

Statement of Non-Conformance:

Objective Evidence:

Root cause analysis to be completed by Organization:

Corrective Action to be completed by Organization:

Preventative Action to be completed by Organization:

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

GP 9405A Page 72 of 76

APPENDIX C: TIMEBOUND PLAN

A. PT. SMART Tbk’s existing subsidiary companies:

Management Units Number of Mills and Location Target Date Estates

PT. SMART Tbk – Padang • Padang Halaban Estate North Sumatera, Indonesia Certified 2011 Halaban Mill • Pernantian Estate • Adipati Estate • Kanopan Ulu Estate PT. SMART Tbk – Batu • Batu Ampar Estate South Kalimantan, Indonesia Certified 2012 Ampar Mill • Batu Mulia Estate • Sungai Panci Estate • Sungai Panci KKPA PT. SMART Tbk – Tanah • Tanah Laut Estate South Kalimantan, Indonesia Certified 2012 Laut Mill • Kintapura Estate

PT. SMART Tbk – Bukit • Sungai Cantung Estate South Kalimantan, Indonesia Had gone through Stage-1 Kapur Mill • Bukit Kapur Estate audit on 2015

Expected to be certified by 2020

PT. Tapian Nadenggan – • Langga Payung Estate North Sumatera, Indonesia Certified 2012 Langga Payung Mill • Paya Baung Estate • Normak Estate PT. Tapian Nadenggan – • Hanau Estate Central Kalimantan, Indonesia Certified 2012 Hanau Mill • Tasik Mas Estate • Tanjung Paring Estate • Langadang Estate • Medang Sari Estate PT. Tapian Nadenggan – • Semilar Estate Central Kalimantan, Indonesia Certified 2013 Semilar Mill • Sei Rindu Estate • Mandang Estate • Puri Estate PT. Tapian Nadenggan – Jak • Jak Luay Estate East Kalimantan, Indonesia Certified 2015 Luay Mill • Long Buluh Estate • Bukit Subur Estate

• Bukit Subur KKPA 2019 • Jak Luay KKPA • Pantun Mas KKPA PT. Leidong West Indonesia • Leidong West Utara Bangka, Indonesia Certified 2013 – Leidong West Mill Estate • Leidong West Selatan Estate • Bukit Intan Estate • Bukit Mas Estate PT. Kresna Duta Agroindo – • Gunung Kombeng Estate East Kalimantan, Indonesia Certified 2014 Muara Wahau Mill • Muara Wahau Estate

PT. Kresna Duta Agroindo – • Kubang Ujo Plasma Jambi, Indonesia 2019 Jelatang Mill • Pamenang Plasma

PT. Kresna Duta Agroindo – • Pelakar Estate Jambi, Indonesia Had gone through Stage-1 GP 9405A Page 73 of 76

Pelakar Mill • Tiga Serumpun Plasma audit on 2015 • Batang Merangin Estate Batang Expected to be certified by end of 2017 • Tembesi Estate PT. Kresna Duta Agroindo – • Bangko Inti Estate Jambi, Indonesia • Certified 2014 Langling Mill • Bangko Plasma • 2019 • Batang Gading Estate • Stage 1 audit 2015 • Batang Gading KKPA • 2019 • Bukit Bungkul KKPA • 2019 PT. Kresna Duta Agroindo – • Rantau Panjang Estate East Kalimantan, Indonesia 2017 Rantau Panjang Mill • Rantau Panjang KKPA

PT. Kresna Duta Agroindo – Gunung Kombeng KKPA South Kalimantan, Indonesia 2018 Gunung Kombeng Mill

PT. Satya Kisma Usaha – • Sungai Bengkal Estate Jambi, Indonesia Certified 2015 Sungai Bengkal Mill • Sungai Bengkal KKPA • Kilis Estate • Kilis KKPA

B. Timebound Plan of Golden Agri Resources for period 2016-2020

Management Units Number of Mills and Location Target Date Estates

PT. Sinar Kencana Inti • Sungai Kupang Estate South Kalimantan, Indonesia Main Audit 2015 Perkasa – Sungai Kupang • Sungai Kupang KKPA Mill

PT. Sinar Kencana Inti • Cendrawasih Estate Papua, Indonesia 2018 Perkasa – Kasuari Mill • Nuri Estate • Rajawali Estate • Mambruk Estate (PT Sumber Indah Perkasa) PT. Sinar Kencana Inti • Senakin Estate South Kalimantan, Indonesia 2019 Perkasa – Sungai Magalau Mill

PT. Agrolestari Mandiri – • Kayung Estate West Kalimantan, Indonesia 2018 Pekawai Mill • Pekawai Estate • Sungai Kelik Estate • Nanga Tayap Estate 2019 • Kayung Kemitraan PT Cahaya Nusa Gemilang • Kenanga Estate West Kalimantan, Indonesia 2018 • Delima Estate (PT 2018 Kencana Graha Permai) • Gaharu Estate (PT 2019 Bangun Nusa Mandiri) 2019 • Kenanga Kemitraan 2019 • Kencana Kemitraan 2019 • Gaharu Plasma PT. Paramitra Internusa • Muara Tawang Estate West Kalimantan, Indonesia 2019 (PT. Kartika Prima Cipta) Pratama – Belian Mill 2018 • Belian Estate • Tengkawang Estate 2018 • Kapuas Hulu Estate (PT 2018 Persada Graha Mandiri) GP 9405A Page 74 of 76

• Belian KKPA 2020 • Muara Tawang KKPA 2020 • Kapuas Hulu KKPA 2020

PT. Bina Sawit Abadi • Perdana Estate Central Kalimantan, Indonesia 2020 Pratama – Perdana Mill • Lengana Estate • Semandau Estate • Muara Dua Estate PT. Agrokarya Prima Lestari • Mentaya Estate Central Kalimantan, Indonesia 2020 – Kuayan Mill • Kuayan Estate • Bukit Santuhai Estate • Tajur Beras Estate • Seranau Estate • Sapiri Estate (PT Buana Adhitama) • Bukit Dua Estate (PT Buana Adhitama) • Bukit Tunggal Estate (PT Buana Adhitama) • Sungai Sambon Estate • Sungai Sambon Plasma • Sapiri Plasma • Sako Plasma PT. Agrolestari Sentosa – • Manuhing Estate Central Kalimantan, Indonesia 2020 Jalemo Mill • Kajui Estate • Jalemo Estate • Balasang Estate PT. Mitra Karya Agroindo – • Nahiiyang Estate Central Kalimantan, Indonesia 2020 Tangar Mill • Katayang Estate • Sulin Estate • Sungai Nusa Estate • Sungai Ayawan Estate (PT Aditunggal Mahajaya) • Sulin Plasma PT. Sawit Mas Sejahtera– • Sungai Kikim Estate South Sumatra, Indonesia 2019 Sungai Kikim Mill • Sungai Panci Estate • Sungai Musi Estate • Sungai Saling Estate • Sungai Enim Estate (PT Bumi Sawit Permai) • Sungai Lematang Estate (PT Bumi Sawit Permai) PT. Bangun Nusa Mandiri • Kenari Estate West Kalimantan, Indonesia 2019 • Keranji Estate • Kenari Plasma

GP 9405A Page 75 of 76

APPENDIX D: LIST OF STAKEHOLDERS CONTACTED

Issue raised by Company Response Auditor Findings Stakeholder No Negative Issue Agriculture, Food Security and PT SMART included in the Horticulture Ta nah Laut District Plantation Business Evaluation (Mrs. Dhenok, Member of Agency and in the position of 1 class Annual Evaluation of among the existing palm Plantation Companies) plantation companies in Tanah Laut District. It also involved in the regular meeting for FFB pricing. The less support from the PT SMART facilitates the village The organization support to company to protect village mapping to determine its minimize the impact of illegal from illegal mining activities borderline with the company and mining, does village road help them to monitor the illegal maintenance regularly. Mr. Jumingan (Temporary mining activities in the village Holder of Bukit Mulia Head Village) The weak support for PT SMART received the proposal The rehabilitation of this Bukit improving the hardening of from Head of School, and in the Pasir Viillage Elementary Bukit Pasir Village procecess of calcultation to choose School’s front yard has been Elementary School’s front the cheaper way according to done in collaboration with some yard. company’s budget condition. other companies around the village. The less support for poverty PT SMART received proposal and There is communication alleviation in Bukit Raya has been considering to follow up between the organization with Village by designing the model for poor the village Government and the family house reahabilitation. targeted family to follow up the proposal. Less support for easy PT SMART has been preparing the The organization ready to accessing of The Smart area, management and personel facilitate the local transportation House (Rumah Pintar) for support for operating the Smart from the main road to access public in Tanah Laut House, and its integration the Smart House facilities. District. (Ms. Dahlia Sitorus).

Women group: There was no further comment by Comments has been Company. considered into the auditor Consultation with the findings in the checklist women group focused on sexual harassment, equal opportunity, discrimination, etc. No issue raised by women group.

Harvesters, sprayers, There was no further comment by Comments has been considered manurers, Mandores, staff, Company. into the auditor findings in the etc: checklist

Consultation was focused on employee welfare, worker contract, accommodation, wage, PPE use, etc. No issue raised by harvester, sprayers, manurers, mandores, staff, GP 9405A Page 76 of 76

etc.

Labour Union: There was no further comment by Comments has been considered Company. into the auditor findings in the Consultation was focused checklist on collective labour agreement, employee complaint handling. No issue raised by Labour Union.

Supplier: There was no further comment by Comments has been considered Company. into the auditor findings in the Consultation was focused checklist on transparency and conflict resolution, No issue raised by supplier