CW-11 Controlled Wood Forest Management Master Report Template

Certified by:

RA-Cert Headquarters 65 Millet St. Suite 201 Forest Management Richmond, VT 05477 USA Tel: 802-923-3737 Controlled Wood Fax: 802-434-3116 www.rainforest-alliance.org Assessment Report for: Contact person: Gabriel Bolton [email protected]

PT. Daya Tani Kalbar

Kalimantan Barat, Indonesia

Audit Managed by:

Asia-Pacific Regional Office

Jl. Tantular Barat No. 88 Denpasar, Bali, Indonesia, 80114 Tel: +62 361 472 3499 Fax: +62 361 472 3498 Contact person: Indu Bikal Sapkota Medita Hermawan Auditors: - Indu Bikal Sapkota Email: [email protected] - I Gusti Ngurah Agus Eka [email protected] Putera - Satria Astana - Medita Hermawan

Audit Dates: 6 to 11 November 2017 Report Finalized: 15 Januari 2018

Forest Management Enterprise information:

Primary contact: Broto Sutejo Address: Graha Akasia, Jl Arteri Supadio,

Kabupaten Kubu Raya, Kalimantan Barat

Phone / Fax: (0561) 742752

CW-11 May 2017 Webpage: Contract signer: Tjhai Witjhun

This report is based on following standard(s): FSC-STD-30-010 (version 2-0, approved 4th October, 2006)

TABLE OF CONTENTS

Glossary of terms ...... 3

1. INTRODUCTION ...... 4

2. AUDIT CONCLUSIONS ...... 5 2.1. AUDITOR RECOMMENDATION ...... 5 2.2. NEW NONCONFORMITY REPORTS ISSUED AS A RESULT OF THIS AUDIT ...... 7 2.3. OBSERVATIONS ...... 16 2.4. ACTIONS TAKEN BY COMPANY AFTER THE AUDIT AND PRIOR TO REPORT FINALIZATION ...... 16 3. AUDIT PROCESS ...... 17 3.1. AUDIT SCHEDULE/ITINERARY ...... 17 3.2. AUDIT TEAM AND QUALIFICATIONS ...... 17 3.3. AUDIT DETAIL ...... 19 4. STAKEHOLDER CONSULTATION ...... 20 4.1. STAKEHOLDER CONSULTATION PROCESS ...... 20 4.2. STAKEHOLDER COMMENTS RECEIVED ...... 20

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Glossary of terms

Bahasa term English term AMDAL (Analisa Mengenai Dampak Lingkungan) Environmental impact assessment BKSDA (Balai Konservasi Sumber Daya Alam) Nature Conservation Agency; Indonesia BPJS Kesehatan Mandatory social security program for health BPJS Ketenagakerjaan Mandatory social security program for manpower Desa Village DPSL (Daerah Perlindungan Satwa Liar) Wildlife protection area HTI (Hutan Tanaman Industri) Plantation ISFMP Integrated Sustainable Forest Management Plan IUPHHK Forest Concession License LHC (Laporan Hasil Cruising) Cruising report LHP (Laporan Hasil Produksi) Production report NPWP (Nomor Pokok Wajib Pajak) Valid Tax Identity Number PBB Land and building tax Mandatory national scheme of sustainable forest PHPL certification management PHTPK (Pengelolaah Hutan Tanaman Pola Plantation Forest Management with Partnership Kemitraan) Pattern Joint Work Agreement (between worker union and PKB (Perjanjian Kerja Bersama) the FME) Pos Faktur Log administration Post PSDH Forest product fee RKL (Rencana Pengelolaan Lingkungan) Environment Management Plan RKT (Rencana Kerja Tahunan) Annual working plan RKU (Rencana Kerja Usaha) 10 years working plan RPL (Rencana Pemantauan Lingkungan) Environment Monitoring Plan SIPUHH (Sistem Informasi Penataan Usaha Hasil Hutan) Forest Product Information System SIUP (Surat Ijin Usaha Perdagangan) Trading Business License SKSHHK (Surat Keterangan Sah Hasil Hutan Kayu) Mandatory Log Transport Document SP (Serikat Pekerja) Worker Union Mandatory certification on Timber Legality SVLK Assurance System

Tanaman Kehidupan Livelihood Plantation (Mandatory for every concessions license 20% at minimum of total area) TDP Company Registration Certificate TPK (Tempat Penimbunan Kayu) Log yard TPK Antara Log yard transit TPN (Tempat Penimbunan Sementara) Log landing yard TPS Temporary Hazardous Chemical Waste Storage

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1. INTRODUCTION

As a part of Asia Pulp & Paper Group’s (APP) preparation to meet the Forest Stewardship Council’s (FSC) conditionally approved “Roadmap towards ending the Disassociation from APP1” requirements, APP will undertake assessments on APP’s own and a selection of supplier concessions in Indonesia. This will be one of fifteen assessments that will inform APP where its strengths and weaknesses lie in relation to the FSC Controlled Wood Standard for Forest Management Enterprises (FSC-STD-30-010, version 2) These assessments are not a formal part of the Roadmap. No certificates will be issued as a result of these audits2.

This report presents the findings of an independent evaluation conducted by a team of specialists representing the RA-Cert Program of the Rainforest Alliance. The purpose of the evaluation was to evaluate the FMEs level of conformance to the Forest Stewardship Council (FSC) Controlled Wood requirements as defined in the FSC Controlled Wood Standard for Forest Management Enterprises (FSC-STD-30-010, version 2-0). The intent of this standard is to allow forest management enterprises to supply FSC Controlled Wood to FSC chain-of-custody certified operations for mixing with FSC certified materials in production of FSC mixed products.

Conformance with the specified controlled wood standard allows Forest Management Enterprises (FME) to demonstrate that the wood they supply has been controlled to avoid wood from the five controversial categories defined by FSC. Controversial categories include wood that is: 1) illegally harvested, 2) harvested in violation of traditional and civil rights, 3) harvested in forest management units in which high conservation values are threatened by management activities, 4) harvested in areas in which forests are being converted to plantations or non-forest use or 5) harvested from forests in which genetically modified tress are planted. FSC-STD-30-010 provides the basic requirements at the forest management unit level to demonstrate that wood from the FME’s forest area(s) is controlled. Products from verified controlled sources can be used by manufacturers mixing FSC-certified wood and controlled wood.

The scope of this evaluation is for the FME PT. Daya Tani Kalbar, located in Kalimantan Barat, Indonesia, with a total area of ±56,060 ha (Ministry of Forestry Decree No. 60/Kpts-II/1997).

1Further information about the Roadmap process can be found at https://ic.fsc.org/en/what-is-fsc/what-we-do/dispute- resolution/current-cases/asia-pulp-and-paper-app 2The issuance of FSC certificates will depend on the decision by the FSC Board to end the disassociation from APP and the subsequent demonstration of compliance by APP and its suppliers with the applicable FSC standards as part of a new, formal certification process.

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2. AUDIT CONCLUSIONS

2.1. Auditor Recommendation

Controlled Wood Category Conformance 1. Illegally harvested wood Yes No 2. Wood harvested in violation of traditional and civil rights Yes No 3. Wood harvested from forest areas where high conservation values Yes No are threatened by forest management activities 4. Wood harvested from areas being converted from forests and other Yes No wooded ecosystems to plantations or non- forest uses 5. Wood harvested from genetically modified trees Yes No

Based on Company’s conformance with RA-Cert/FSC requirements, the auditor makes the following recommendation: Level of Conformance to FSC Controlled Wood Requirements: Minor NCRs and Major NCRs issued

FME’s management system, if implemented as described, is capable of ensuring conformance with all the requirements of the FSC Controlled Yes No Wood standard over the whole forest area covered by the scope of the evaluation Comments: The FME has developed 10-year Forest Management Plan (RKU); Annual Work Plan (RKT) of 2017; report of HCV and HCS identification and analysis, and ISFMP (Integrated Sustainable Forest Management Plan) that includes consolidated results of HCV/HCS study. There are other various systems and guidelines in place including Chain of Custody (CoC) and Controlled Wood procedures (SOPs). Overall, the FME has a solid documented management system that covers all of the requirements of the FSC CW standard. If implemented as documented the FME would be in conformance with the requirements of FSC-STD-30- 010 (CW-FM).

The FME has demonstrated, subject to correction of the identified non- conformances, that their management system is being consistently Yes No implemented over the whole forest area covered by the scope of the certificate. Comments: In the assessment process, the audit team has conducted interviews with the FME staff, workers, and local communities and regional stakeholders, as well as visited several sites; and reviewed various documents. Subject to the correction of identified non-

conformances due to the assessment, the FME has demonstrated the implementation of their management systems over the forest area covered by the scope of this evaluation.

Issues have been identified during the evaluation as controversial or hard Yes No

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to evaluate. Comments: Overlapping jurisdictions: DTK (PT Daya Tani Kalbar) obtained a Timber Plantation/Forest Product Utilization Permit (IUPHHK-HTI) on plantations based on the Minister of Forestry (MoF) Decree No. 60 / Kpts-II / 1997 dated January 28, 1997 covering ± 56,060 ha with horizon time of 47 years. Its area is located in Kubu Raya Regency and Ketapang Regency, West Kalimantan Province. Based on its AMDAL (Environmental Impact Analysis) conducted in 2011, DTK forest concession area consists of 8,558 ha of protected area, 2,652 ha of unproductive area, 1,767 ha of social area and 34,600 ha of effective area of production. DTK has selected A. crassicarpa to be planted in its effective production area. A. crassicarpa has been planted since its first RKT (annual work plan) conducted in 2010.

Although forest concession area of DTK was legally given by the government, there were customary areas of three communities: community at Dusun Simpang Aur, community at Kampung Sejenu, and community at Desa Labai Hilir. Dusun Simpang Aur and Kampung Sejenu are part of Desa (village) Tanjung Beringin, Batu Ampar Subdistrict, Kubu Raya Regency, while Desa Labai Hilir is a part of Simpang Hulu subdistrict, Ketapang Regency. These 3 communities have lived in DTK forest concession area before DTK established there. DTK has recognised and respected these communities’ land areas. Thus, there were no land conflicts between DTK and these 3 communities.

Nonetheless, ten years after DTK establishment, a palm oil company of PT Gerbang Benua Raya (GBR), was given permit to operate at a part of DTK forest concession area in 2007. GBR held permit to use its estate land area based on Pontianak Bupati Decree No.323 Year 2007 Concerning Location Permit for Palm Oil Estate of PT. Gerbang Benua Raya, dated November 1, 2007. According to this permit, GBR was given horizon time to set up all stages needed to legally manage and utilize its estate land area of 13,400 ha within 3 years and it will be invalid when its stages have not been completed. The stages include to settle any land conflicts with local people and other parties related to land area planned to be managed. Of 13,400 ha GBR area given by Bupati decree, its overlapping jurisdiction area with DTK was 3,155 ha, located at block 3 area of DTK areas.

According to government regulation, GBR will be eligible to receive HGU (Hak Guna Usaha/Business Use Rights) certificate for all areas intended when all the stages required have been completed. HGU certificate is the main requirement to those involved in estate crop business in order to be able to manage and to utilize its estate crop land. HGU certificate is transferable and bankable. To date, GBR has operated 10 years since its permit has been held. Therefore, it can be assumed that GBR has succeeded to complete all the stages required to legally manage and utilize its estate land area except the stage related to the settlement of its overlapping jurisdiction area with DTK. Under this situation, therefore it is hard to evaluate DTK in certification process since the existence of its overlapping jurisdiction area with GBR is unresolved yet.

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2.2. New nonconformity reports issued as a result of this audit

NCR#: 01/17 NC Classification: Major Minor X Standard & Requirement: FSC Controlled Wood Standard for Forest Management Enterprises FSC-STD-30-010 (Version 2-0) part 1 Report Section: Appendix II 1.3 Description of Nonconformance and Related Evidence: 1.3 All interviewed staff shall be aware of their responsibilities and shall have sufficient overview of the controlled wood requirements to ensure their fulfillment. Findings: According to the PT DTK’s training plan and its realization documents in 2016 and 2017, it was found that the FME had conducted a few trainings in 2016 and 2017. The auditors also interviewed some of the FME staff, including forestry, CoC, HR, and finance and administration. Based on the interviews, the auditors found that some of the interviewed staff lack adequate knowledge on FSC CW-FM requirements in relation to their corresponding areas of responsibilities. Corrective Action Request: Organization shall implement corrective actions to demonstrate conformance with the requirement(s) referenced above. Note: Effective corrective actions focus on addressing the specific occurrence described in evidence above, as well as the root cause to eliminate and prevent recurrence of the nonconformance. Timeline for N/A Conformance: Evidence Provided by PENDING Organization: Findings for Evaluation of PENDING Evidence: NCR Status: OPEN Comments (optional): NCR Evaluation: Evaluation Method: On-site verification Estimated Level of Effort: 1 day Auditor Specialty: Forestry

NCR#: 02/17 NC Classification: Major Minor X Standard & Requirement: FSC Controlled Wood Standard for Forest Management Enterprises FSC-STD-30-010 (Version 2-0) part 1 Report Section: Appendix II 3.5 Description of Nonconformance and Related Evidence: 3.5 FME procedures shall ensure that invoices and shipping documents with claims regarding FSC Controlled Wood a) are issued only to FSC certified chain of custody operations; b) include the claim “FSC Controlled Wood” and the FSC Controlled Wood certificate code when products are sold to FSC certified companies. c) clearly distinguish between controlled and uncontrolled wood when sales and shipping documents cover both types of products. (1.5; Annex 3 points 1.4 and 1.6).

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Findings: The FME has developed two key procedures to meet the requirements in this criterion namely CoC procedure and FSC CW log sales procedure. These SOPs mostly cover requirements regarding FSC CW claims and how they handle their logs as well as its documentation. However, based on document review and interviews conducted, it was confirmed that the FME was unclear about the CW-FM rules and thus could not ensure that FSC controlled wood claim are issued to FSC certified chain of custody operations only. Moreover, the auditors found a space to include FSC CW FM claim in their log shipping document called “log list” (DKB). Although the claim is blank/not filled out, it can lead to the misconception that the FME has already FSC CW FM certification and that the logs included on the shipping document are excluded from FME scope of certificate. “FSC” initials themselves are trademark and they can only be used in sales documents once certificate has been issued, the FSC Trademark License Agreement signed and approval for specific use has been received. The auditors concluded that the FME only partially meets the requirement, thus Minor NCR 02/17 is issued for this criterion.

NCR#: 03/17 NC Classification: Major Minor X Standard & Requirement: FSC Controlled Wood Standard for Forest Management Enterprises FSC-STD-30-010 (Version 2-0) Part 1(1.3 a-d) Report Section: Appendix II 4.1 Description of Nonconformance and Related Evidence: 4.1.FME shall develop and implement procedures for stakeholder consultation as defined in this standard and include at least the following (1.3 a-d): a) key stakeholders shall be identified and invited to participate in the consultation with sufficient prior notice; b) excluded groups shall be given particular attention when identifying interested or affected parties; c) the consultation process shall be opened to parties claiming an interest in or affected by implementation of this standard; d) all identified parties shall be provided with access to sufficient information

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Findings: Based on the documents review and interviews with staff, it was found that the FME had consulted with key stakeholders (customary rights holders and local government) and excluded groups (local tribe representatives). The consultation process has been opened (there was an invitation to stakeholders) with access to sufficient information (there was provision of material discussed). In addition, local tribes at Dusun Simpang Haur and Dusun Kuala Labai interviewed stated that FME consulted with them when its operation located at their administrative village areas. Moreover, the FME has list of stakeholder consultation that is updated every year (Daftar/List of Stakeholders PT. Daya Tani Kalbar Terbaru/Updated version, Oktober/October 2017).

However, the FME documented procedures (SOP) reviewed does not include any information about excluded groups and the particular attention that needs to be given to them when identifying parties. Therefore, minor NCR is issued for this requirement.

Corrective Action Request: Organization shall implement corrective actions to demonstrate conformance with the requirement(s) referenced above. Note: Effective corrective actions focus on addressing the specific occurrence described in evidence above, as well as the root cause to eliminate and prevent recurrence of the nonconformance. Timeline for N/A Conformance: Evidence Provided by During report writing phase, the FME has provided the following Organization: documents as evidence: - Revised SOP on Stakeholder and Community Engagement (Dec 14, 2017) - Revised SOP on Land and non-land conflict resolution (Dec 14, 2017) - Revised SOP on Public Consultation (Dec 14, 2017) - Socialization SOP - Updated stakeholder list

Findings for Evaluation of Based on document provided by the FME above, it was found that Evidence: the FME has made significant improvement regarding the gaps identified above. The FME has recognized excluded group on their procedures and how to deal with them. However, the updated stakeholders list provided by the FME doesn’t have any excluded groups as mentioned in the revised SOP. It is concluded that the implementation has not started yet. NCR remains open.

NCR Status: OPEN Comments (optional): NCR Evaluation: Evaluation Method: Desk review Estimated Level of Effort: ½ day Auditor Specialty: Forestry/social

NCR#: 04/17 NC Classification: Major Minor X Standard & Requirement: FSC Controlled Wood Standard for Forest Management Enterprises FSC-STD-30-010 (Version 2-0) Part 1 (1.3 f)

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Report Section: Appendix II 4.3 Description of Nonconformance and Related Evidence: 4.3. FME shall be responsive to stakeholder questions or concerns (1.3 f).

Findings: The FME has a SOP on Penanganan Keluhan/ Handling grievances (DTK-SOP-VIII-19; 1 Agustus 2016). According to its SOP, Forest Sustainability & Forest Protection staff receives, records and classifies all grievances and expressions of dissatisfaction from communities or interested parties. All grievances and expressions of dissatisfaction were documented. In this regard, the FME provided records on the resolution processes in 2017. Staff interviewed stated that the process to respond all grievances passed through 3 stages review processes: district office to region office and back to district office. Staff interviewed also stated that not all grievances and expressions of dissatisfaction can timely be fulfilled. This was also confirmed with the local peoples interviewed, the FME has not timely responded to their concerns or questions. Accordingly, it can be concluded that the FME is not in conformance with this requirement and minor NCR is issued.

Corrective Action Request: Organization shall implement corrective actions to demonstrate conformance with the requirement(s) referenced above. Note: Effective corrective actions focus on addressing the specific occurrence described in evidence above, as well as the root cause to eliminate and prevent recurrence of the nonconformance. Timeline for N/A Conformance: Evidence Provided by During report writing phase, the FME has provided reports on fund Organization: support distribution to Tanjung Beringin village and Muara Tiga for herbicides and electricity. Findings for Evaluation of Based on the reviewed document auditor found that the the gap was Evidence: a time horizon i.e. not one time needed. The FME needs be responsive to the stakeholder question or concern continuously and consistently. Moreover, gaps identified above need to be verified on site to justify the implementation in the field and verify the feedback from stakeholders.

NCR Status: OPEN Comments (optional): NCR Evaluation: Evaluation Method: On-site verification Estimated Level of Effort: 1 day Auditor Specialty: Social/forestry

MAJORNCR#: 05/17 NC Classification: Major X Minor Standard & Requirement: FSC Controlled Wood Standard for Forest Management Enterprises FSC-STD-30-010 (Version 2-0) Part 2 (Section 3, Table 1a & FSC- ADV-30-010-1: 1. Legal authority to harvest, 1.1, 1.2, & 1.3 and 4. Third parties’ rights 4.1, 4.2 & 4.3) Report Section: Appendix II 5.1.1 Description of Nonconformance and Related Evidence: 5.1.1 FME shall provide evidence of legal authority to harvest. Land tenure and management rights, concession licenses, harvesting permits or other equivalent documents required by

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legislation exists and are approved by the appropriate authority(ies) (Section 3, Table 1a & FSC- ADV-30-010-1: 1. Legal authority to harvest, 1.1, 1.2, & 1.3 and 4. Third parties’ rights 4.1, 4.2 & 4.3).

Findings: The FME has provided various documented evidence in relation to this criterion, and most of them are in line with the conformance of the requirement. However, based on review of working agreement (Surat Perjanjian Kerja) between one of contractor companies and the workers, there is statement in Pasal 3 tentang Pengupahan dan Waktu Kerja, di No. 4 “Mengingat pekerjaan pihak Kedua di lapangan terbuka sulit diadakan pengawasan dan bergantung pada keadaan cuaca serta mengejar target produksi. Oleh karena itu, para pihak sepakat untuk mengesampingkan Surat Keputusan Menteri Tenaga Kerja No. 102/MEN/VI/2004” (considering the various working situations, both parties agree to not implement the manpower minister decree). The Manpower Minister Decree No. 102/MEN/VI/2004 is about overtime and overtime wage. The working agreement is also signed without any stamp (meterai) for its legality.

Findings for Evaluation of Based on the document review provided above, the auditors found Evidence: that statement in Pasal 3 which stated, “considering the various working situations, both parties agree to not implement the manpower minister decree” has been removed. The auditors concluded to closed the NCR NCR Status: CLOSED Comments (optional): NCR Evaluation: Evaluation Method: Desk review Estimated Level of ½ day Effort: Auditor Specialty: Forestry/social

MAJOR NCR#: 06/17 NC Classification: Major X Minor Standard & Requirement: FSC Controlled Wood Standard for Forest Management Enterprises FSC-STD-30-010 (Version 2-0) Part 2, 5.1.11 & FSC-ADV-30-010-1: 3. Timber Harvesting Activities, 3.4 Health & Safety Report Section: Appendix II 5.1.11 Description of Nonconformance and Related Evidence: 5.1.11 FME shall provide evidence that legally required occupational health and safety laws applicable to workers involved in forest operations are considered for the following (FSC-ADV-30- 010-1: 3. Timber Harvesting Activities, 3.4 Health & Safety): a. proper personal protective equipment; b. safe and proper felling and transport practice;

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c. establishment of protections zones around harvest sites; d. safety requirements for machinery used, and e. safety requirements in relation to chemical usage

Finding: Based on document review and workers interview, it is found that for tree planting, maintenance and harvesting activities the FME used workers from contractors or outsourcing companies. During field visit, auditors interviewed several contractors’ workers and found that those workers are still not having BPJS card as required by government regulations (Peraturan Presiden (Perpres) No.12/Tahun 2013 tentang Jaminan Kesehatan and Perpres No.109/tahun 2013 tentang Penahapan Kepersertaan Jaminan Sosial). The FME provided a list of contractor’s workers that have already had BPJS card while some of them are still in the process for registration for BPJS. Moreover, it was also found that not all the contractor’s workers have working agreement in place.

The FME has developed SOP of Harvesting HTI in the Wet Land (DTK-SOP-III-01). It is stated in the SOP that the harvesting team member (chainsaw operators) must use PPEs that consist of safety helmet, ear plug, googles, trousers, boots; and PPEs required for the excavator operator are earplugs, safety helmet, googles, and mask. Based on workers interview, auditors found that the provision of PPEs to the contractor’s workers in the harvesting activity is not consistent with the SOP as some of the workers were only provided with safety helmet and boots, while others were provided with earplugs. The contractor’s workers interviewed also stated that the gloves they use have to be provided by themselves and they are not equipped with safety vest that are commonly used by the FME’s workers in the field. The use of PPEs by the workers during their work is also not supervised properly, as the FME’s Harvesting Supervisor interviewed was not aware about the lack of complete PPEs experienced by the contractor’s workers. Auditors also found that first aid kits and fire extinguishers are not provided in the tent camp where the chainsaw operators stay during their work. During field observation, auditors found that excavator operator did not wear helmet during their work as required in the FME SOP. The FME provided documentation of PPEs distribution to the contractors’ workers (data of July – November 2017), and it is found that not all workers are given the same PPEs although they have the same job title, for example, the chainsaw operators were not at all given the gloves as required in the SOP document.

The FME has built several camp buildings (contractor camp) for contractor’s workers staying during the harvesting work, however, auditors found that the rooms of the building with size of 3 m by 3.5 m are occupied by 7 - 8 workers per room. Auditors found that workers staying in the contractor camp are using water from the canal for bathing and brushing their teeth since they are not provided with clean water, although according to the FME management, the workers staying in the contractor camp are to be provided with clean water for bathing. Moreover, food is stored in the same locations close to chemical material (oil, lubricants, etc.) and combustible material (oil, deiseal, gasoline) and is being stored improperly too. It indicates that the FME is not ensuring full implementation of H&S SOPs and compliance with national regulations related to H&S.

During visits to the temporary hazardous and toxic (B3) waste storage, auditors found that the waste is not identified with label and symbol to inform about the name and the type of waste. In addition, the FME doesn’t submit regular reporting of B3 waste storage implementation as required by government regulation (Peraturan Pemerintah No. 101 Tahun 2014). The B3 waste in the storage, such as herbicides containers, fertilizers sacks, and used ink cartridge were not well organized and auditors found empty fertilizers sacks were scattered in the open area near the temporary B3 waste storage.

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Findings for Evaluation of Based on review on documents provided above, it is found that the Evidence: FME has made progress to improve workers camp facilities in terms of health and safety. However, there are still some issues as described above for which the FME has not provided additional evidence. This NCR remains open.

NCR Status: OPEN Comments (optional): NCR Evaluation: Evaluation Method: On-site Estimated Level of 1 to 2 days (can verification/documents Effort: be combined with review other NCRs verification) Auditor Specialty: Forestry/social

MAJOR NCR#: 07/17 NC Classification: Major X Minor Standard & Requirement: FSC Controlled Wood Standard for Forest Management Enterprises FSC-STD-30-010 (Version 2-0) Part 2, (5.2 c) Report Section: Appendix II 5.3.4 Description of Nonconformance and Related Evidence: 5.3.4 FME shall have a list of the high conservation values identified in the FMUs, together with evidence indicating that precautionary measures have been taken to eliminate potential negative impacts to the high conservation values present (5.2 c).

Finding: PT DTK has identified and listed the areas with high conservation values based on HCVF assessment conducted in collaboration with a consultant company of PT Ekologika Consultants in 2014. Based on documents review and staff interviews, PT DTK has developed HCV Management and Monitoring Plan in 2016, Management and Monitoring Plan of Protected Area of year 2017 that included HCV and HCS area, SOP of Protected Area Management (DTK-SOP-XII-01), SOP of HCV Area Identification (DTK-SOP-XII-17), SOP of Water Resources and Tributaries Protection (DTK-SOP-XII-19), SOP of HCV and Protected Area Border Marking (DTK-SOP-XII-22), SOP of Identification and Management of Protected Fauna (DTK-SOP-XII-29), SOP of Rehabilitation of Protected and HCV-HCS Area (DTK-SOP-XII-32), SOP of Management and Monitoring of HCV- HCS (DTK-SOP-XII-33), SOP of Forest Protection and Security (DTK-SOP-XIII-01), SOP of Fire

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Fighting and Control (DTK-SOP-XIII-02), SOP of Fire Monitoring and Handling (DTK-SOP-XIII-05), established adequate pool of Fire Fighter teams (a total of 45 trained members), provided firefighting equipment, built one fire monitoring tower and is conducting regular patrol to prevent the fire danger. PT DTK also has put signboards in several places near protected area or HCV area to put awareness to protect those areas.

However, during field observation, auditors found at least two locations in riparian zone of Lida river, which is considered as HCV and protected area, that had been damaged (cleared) to some extent. It is not clear how, when, and by whom the land clearing was done since the FME has no information nor record about it from their monitoring activity or forest patrol. The FME assumed that the clearing of the riparian zone vegetation (considered also as HCS by the FME) was done by indigenous people that live around the concession as part of their shifting cultivation practice. Auditors concluded that the FME has not conducted proper monitoring of the HCVs and protected areas as one of the precautionary measures to be taken regularly to eliminate potential negative impacts to those areas.

Findings for Evaluation of Based on provided documents above, found that currently the FME Evidence: has made improvement for their patrol activities especially in the riparian zone that found land clearance during audit. However, the report does not specifically explain the result of the patrol. The cleared area that auditors found during audit was not mentioned either in the report. The auditors concluded that systematic actions are needed to solve this issue. The negative impact was already identified during the audit by the auditors, there is no clarity on how the FME is going to secure the area and eliminate the negative impacts to prevent the same occurrence in the future. The auditors concluded that the NCR remains open

NCR Status: OPEN Comments (optional): NCR Evaluation: Evaluation Method: On-site Estimated Level of 2 days (can be verification/documents Effort: combined with review other NCRs) Auditor Specialty: Forestry/ecology

MAJOR NCR#: 08/17 NC Classification: Major X Minor Standard & Requirement: FSC Controlled Wood Standard for Forest Management Enterprises FSC-STD-30-010 (Version 2-0) Part 2

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Report Section: Appendix II 5.4 Description of Nonconformance and Related Evidence: 5.4.1. No conversion of natural and semi-natural forests and other wooded ecosystems such as woodlands and savannahs to plantations or non-forest uses shall take place. This shall be supported by records or verifiable evidence (e.g. records of forest area within the management of the FME) (6.2).

5.4.2. Absence of conversion shall be supported by records or verifiable evidence (e.g. records of forest area within the management of the FME) (6.2).

5.4.3. If any forest conversion has occurred, it shall be under at least one of the following circumstances (6.3): a) conversion entails a very limited portion of the FMU (< 0,5% per year and < 5% in total in long term). b) conversion shall not occur on high conservation value forest areas c) conversion shall enable clear, substantial, additional, secure long term environmental and social benefits across the FMU.

FME has a commitment of ceasing conversion or clearance of remaining natural forest in their concession area into plantation that started in February 2013 based on APP’s Forest Conservation Policy. Under this policy, APP and its suppliers will only establish plantation in non-forested area, which do not contain HCV/HCS areas. The audit team visited HCV and HCS area, livelihood plantation, conservation areas including buffer zone of rivers and buffer between protected and conservation forest areas and plantation, to determine the presence of active or ongoing conversion.

During field visits made to areas where land use change was indicated; two instances were found where natural forests located in protected/HCV area had been very recently cleared to some extent in riparian zone of Lida river (refer to the picture in finding section).

Based on this evidence, the FME has not effectively prevented communities from converting natural forest into other non-forest uses and the FME is found to be in non-conformance with this criterion.

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verification/documents Effort: combined with review other NCRs) Auditor Specialty: Forestry/ecology

2.3. Observations

Note: Observations are issued for areas that the auditor sees the potential for improvement in implementing standard requirements or in the quality system; observations may lead to direct non-conformances if not addressed.

None

2.4. Actions Taken by Company after the audit and prior to report finalization

The FME has provided some additional documents prior to the finalization of the report as follows: - Revised SOP on Stakeholder and Community Engagement (Dec 14, 2017) - Revised SOP on Land and non-land conflict resolution (Dec 14, 2017) - Revised SOP on Public Consultation (Dec 14, 2017) - Socialization SOP - Updated stakeholder list - Reports on fund support distribution for Tanjung Beringin village and Muara Tiga - Revision for working agreement between contractor companies and the worker - Submission letter to buy more first aid kit for worker camp - Submission letter to buy more fire extinguisher - Submission letter to buy water treatment tool - Report on river patrol in Simpang Aur, Lida, Rumbia, Bulan and Jenuh river

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3. AUDIT PROCESS

3.1. Audit schedule/Itinerary

Location Date(s) Activities Pontianak 30 October Stakeholders consultation (with Government 2017 agencies, Universities, Foundations and NGOs) Pontianak to PT Daya 6 November Travel, audit team preparation, and opening Tani Kalbar, Rumbia meeting at the FME office district PT Daya Tani Kalbar 7 November Documents review, interview with the FME staff and workers, field visit PT Daya Tani Kalbar 8 November Field visit including use of drone, staff/workers interview, consultations with communities/stakeholders PT Daya Tani Kalbar 9 November Field visit including use of drone, staff/workers interview, consultations with communities/stakeholders PT Daya Tani Kalbar 10 November Staff/contractors/workers interview, documents review PT Daya Tani Kalbar, 11 November Closing meeting Rumbia district (morning) Total number of person days used for the audit: 30, of this 1 days for pre-evaluation and preparation 5.5 days for onsite document review and field inspection 1 stakeholder consultation

3.2. Audit team and qualifications

Role / Name Qualifications Audit Focus Indu Bikal Indu Bikal Sapkota has been working as Certification Manager, Asia Audit Team Sapkota Pacific, Rainforest Alliance, and he is responsible for the management Leader of the region including coordinating certification client portfolios and for servicing present and prospective clients in all matters related to FSC certification, SAN certification and other verification programs and services such as carbon. He is a climate and forestry focal person of the Asia Pacific region. Indu holds an international master’s degree (MSc in Tropical Forestry) from Wageningen University, the Netherlands; and has also earned an BSc Forestry degree with a distinction from Tribhuvan University. Prior to joining Rainforest Alliance, Indu spent over 10 years working in forestry and conservation in Asia and Europe. He has received the RA Carbon and Forest Management Assessor Training and Lead Auditor Training. He is an ISO 9001 approved lead auditor, as well as FSC FM lead trainer.

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Moreover, he took part at the lead auditor courses for Sustainable Agriculture Network (SAN) standards (both Farm and CoC), and he has passed both the exams with the very high scores. Recently, he completed the NEPCon LegalSource expert course with the best result in the exam. He has been involved intensively in FSC FM assessment/audit; CoC assessment/audit, and in Carbon projects as an auditor as well as projects manager. Until now, he has taken part over 50 audits/pre-assessments/assessments in Asia Pacific countries; and led the majority of them as a lead auditor. He is an approved witness auditor. He is also an authorized reviewer/decision maker of all types of FSC FM reports and certifications. I Gusti Ngurah graduated from the Forest Conservation Department, Faculty Auditor, Ngurah Agus of Forestry, Bogor Agricultural University (IPB). His work experience Forestry/Eco Eka Putera includes biological studies as part of environmental impact logy assessment, forest dynamics research, forest biomass assessments, ecotourism management, facilitation of community forest groups in achieving FSC certification and risk assessments for palm oil plantations in preparation for RSPO certification. Ngurah completed FSC Lead Auditor Training Course which fulfill ISO training requirement FSC-STD-20-001, Annex 2, 1.2. Satria Astana Satria Astana has been working as forester and researcher at Center Social for Socioeconomic Research and Forestry Policy (CESERF) since Expert 2009. Prior to joining CESERF, Astana spent over 15 years in socioeconomic research in forestry. He has worked for Directorate General of Forestry Utilization and Management as Deputy Director for Forest Products Industry and Marketing. In forest and forest products certification area, he experienced with CIFOR for testing criteria and indicators of sustainable management of plantation forest, and with Indonesian Ecolabel Institute (LEI) for developing criteria and indicators of Sustainable Community-Based Forest Management. He experienced to assess the CoC of PT. Diamond Raya Timber. With INDUFOR, he experienced to conduct a study on Costs and Benefits of Certifications. Astana holds Diploma in Forest Survey, International Institute for Aerospace Survey and Earth Sciences, the Netherland, Master of Science in International Agricultural Marketing, University of Newcastle Upon Tyne, United Kingdom, and Master of Science in Agriculture Economics, Bogor Agricultural University. He has received environment audit training from Univ. of Indonesia, and Expert Panel of Chain of Custody Certification from Gadjah Mada University. He involved in more than 20 audits and assessments across Indonesia. Medita Medita graduated from faculty of forestry, Universitas Gadjah Mada. Support Hermawan He has been working as Forest Management and Verification Service Auditor/ Assistant in Rainforest Alliance that managing clients in Asia Pacific. Translator Previously he worked with PT. Wirakarya Sakti as Operational

Planning & License Staff. His expertise in GIS and using surveying tools since he involved as trainer and surveyor in the GIS and mapping project. He has completed FSC Trademark Training for certification bodies and FSC Chain of Custody lead auditor training which fulfill ISO training requirement FSC-STD-20-001, Annex 2, 1.2.

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3.3. Audit detail

Overview of inspection and The overall auditing approach consisted of a combination sampling method used: of documents review, field visits and interviews (triangulation techniques). The document review took place prior to the field work as well as on-site at the FME office, and the consultation with stakeholders and local community representatives/members took place in a similar fashion throughout the assessment process. The audit team selected a number of sites to cover the different aspects of forest management relevant to the CW Standard, such as on-going planting and harvesting operations, production camp, micro-planning sites, HCV areas, riparian zones, fire tower, concession boundary, water table measurement plot, 2018 harvesting plot, communities, nursery, chemical storage, fire equipment store, log yards, pos faktur (log administration post), and transit (port), etc. The audit team conducted direct interviews with the FME staff, contractors and workers, and communities/stakeholders during the audit. FMUs selected for evaluation The FME is a single FMU. and rationale for selection. Approach to evaluation of The audit team searched for evidence of compliance by management system: examining procedures, reports and other documentation of the FME; interviewing staff, contractor/workers and local people; and carried out field visits in various parts of the forest management unit. In addition to that, many external stakeholders were contacted/consulted for feedback. Additional techniques used for The audit team used maps, collector/GPS device, drone evaluation (e.g. flyover): when conducting field visits.

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4. STAKEHOLDER CONSULTATION

4.1. Stakeholder consultation process

The purpose of the stakeholder consultation for this evaluation was to ensure that the public is aware of and informed about the assessment process and its objectives and to assist the RA-Cert audit team in identifying potential issues in relation to the operations conformance with the Controlled Wood standard.

The table below summarizes the extent of the stakeholder consultation for this Controlled Wood assessment process.

Stakeholder Type Contacted Stakeholders consulted directly or provided input (#) NGOs 7 Local community members/leaders 17 Govt agency/officials 11 Other (such as 17 Foundation/Yayasan/Universities/contract workers/workers union)

Description of the stakeholder consultation activities and methods Stakeholder consultations were conducted through interviews with local communities, indigenous community leaders, and also with the FME management and workers to identify any issues regarding the operation and performance of the FME related to CW categories. Moreover, the audit team conducted provincial level stakeholders’ consultations in Pontianak prior to the start of the field work.

4.2. Stakeholder comments received The stakeholder consultation was organized to give stakeholders opportunity to comment the activities of the FME in relation to the five controlled wood categories. The table below summarizes the issues presented by the stakeholders and the response of the assessment team to each comment.

CW Category Stakeholder comment RA-Cert response The FME is operating This statement is consistent legally. The FME is up to with RA’s finding. 1. Illegally harvested date on payment of wood government relevant fees, royalties, and taxes. There are no agreements This statement is in line with 2. Wood harvested in in place between the RA’s finding. Major NCR 05/17. violation of traditional contractors and workers at and civil rights PT DTK. 3. Wood harvested from PT DTK has involved This statement is in line with forest areas where provincial and local level RA’s finding. high conservation stakeholders in HCV values are threatened assessment and ISFMP

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by forest management processes. activities Generic comment to all APP plantations:

A significant part of APPs The audit evaluated DTK’s plantations occupies compliance with national peat peatlands which are regulations and found that DTK drained for the production has reconfigured their long- of Acacia wood pulp. term forest management plan Drainage of peatlands (RKU) to respond to MOF leads to high GHG mapped peat area definitions. emissions, increases fire Under the new RKU, 92.95% of risk, and drainage leads to the concession is designated peatland subsidence as Peat Ecosystem Protected resulting in serious Area. The audit also confirmed environmental, social and that harvested areas in the peat economic consequences. conservation zones have not Drainage based been replanted as per plantations on peatlands regulations. should be rewetted and used in an environmental Clearly the catastrophic fires of and economic sensible 2015 damaged HCV as well as way involving production forest. The audit communities found that both APP and DTK have made corporate commitments to controlling fire and on the ground have made new investments in fire control equipment, training and staffing to be better prepared for controlling major fires. 4. Wood harvested from No active conversion This statement is in line with areas being converted exists after 2012/13 (FCP RA’s finding. from forests and other implementation) in the wooded ecosystems to FME concession. plantations or non- forest uses 5. Wood harvested from No comments received. No response required. genetically modified trees Stakeholder consultations This statement is in line with are increasingly RA’s finding. 6. FME’s stakeholder recognized in recent years consultation process by the FME/APP, such as HCV assessment and ISFMP processes.

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