INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

KualaReport No.: Lumpur R9317/18-1 Kuala Kepong Lumpur Kepong Berhad Berhad , Batu Lintang Grouping Page 1 of 84 Re-certification (Transfer CB)

RSPO Membership No: 1-0014-04-000-00

PLANTATION MANAGEMENT UNIT Batu Lintang Grouping Serdang, Kedah,

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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RE-CERTIFICATION ASSESSMENT

PUBLIC SUMMARY REPORT

KUALA LUMPUR KEPONG BERHAD

RSPO Membership No: 1-0014-04-000-00

PLANTATION MANAGEMENT UNIT Batu Lintang Grouping Serdang, Kedah, Malaysia

Certificate No: RSPO 931788 Issue Date (Re-Cert): 26 Sep 2018 Expiry date: 25 Sep 2023

Assessment Type Assessment Dates Re-Certification Assessment (Transfer CB) 04–08 Jun 2018 Annual Surveillance Assessment (ASA-01) Annual Surveillance Assessment (ASA-02) Annual Surveillance Assessment (ASA-03) Annual Surveillance Assessment (ASA-04)

Intertek Certification International Sdn Bhd D-28-3, Level 28, Menara Suezcap 1, No. 2, Jalan Kerinchi, Gerbang Kerinchi Lestari, 59200 Kuala Lumpur, Malaysia. Tel: +00 (603) 7931 0032 Fax: +00 (603) 7931 0419 Email: [email protected] Website: www.intertek.com

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TABLE OF CONTENTS

Section Content Page No 1.0 SCOPE OF ASSESSMENT 4 1.1 Introduction 4 1.2 Location (address, GPS and map) mill, estates and hectarage 4 1.3 Description of supply base (fruit sources) 4 1.4 Year of plantings and cycle 5-7 1.5 Summary of Land Use – Conservation and HCV Areas 8 1.6 Other certifications held and Use of RSPO Trademarks 8 1.7 Organizational information/contact person 8 1.8 Tonnages Verified for Certification 9-10 1.9 Time Bound Plan and Multiple Management Units 10-11 1.10 Abbreviations Used 11 2.0 ASSESSMENT PROCESS 12 2.1 Assessment Methodology, Plan & Site Visits 12 2.2 Date of next scheduled visit 12 2.3 Qualifications of the Lead Assessor and Assessment Team 12 2.4 Certification Body 12 2.5 Process of Stakeholder consultation 13-14 3.0 ASSESSMENT FINDINGS 15 3.1 Summary of findings 15-52 3.2 Status of Identified Noncompliance and Corrective Actions, Observations 52-57 and Identified Positive Elements 3.3 Summary of Feedback Received from Stakeholders and Findings 57-58 4.0 ASSESSMENT CONCLUSION AND RECOMMENDATION 59 4.1 Acknowledgement of Internal Responsibility and Confirmation of Assessment 59 Findings

4.2 Intertek RSPO Certification Details for the PMU 60

APPENDICES Appendix A Qualifications of the Lead Assessor and Assessment Team 61 Appendix B Assessment Plan 62-64 Appendix C Maps of location – Mill and Estates 65-74 Appendix D Photographs at the PMU 75-76 Appendix E Time Bound Plan 76-84

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1.0 SCOPE OF ASSESSMENT

1.1 Introduction This Re-certification Assessment was conducted on the Plantation Management Unit (PMU) Batu Lintang Grouping of Kuala Lumpur Kepong Berhad (hereafter abbreviated as KLK), on 04-08 Jun 2018, to assess the organization’s operations of the mill and its supply bases for compliance against the RSPO Principles and Criteria (Apr 2013), Malaysian National Interpretation (MYNI 2014) and the RSPO Supply Chain Certification Standard (Jun 2017) for the Palm Oil Mill.

The plantation management unit (PMU) or management unit is equivalent to a certification unit as defined in the RSPO Certification Systems Document. Each PMU consists of one mill and its supply bases which are made up of estates owned and/or managed by KLK.

1.2 Location (address, GPS and map) of palm oil mill and estates The Batu Lintang Grouping consists of one (1) palm oil mill, namely Batu Lintang Palm Oil Mill and four (4) estates as indicated in Table 1 below, which includes the addresses and GPS locations of the mill and estates. The location maps are provided in Appendix C. Table 1: Address of Palm Oil Mill, Estates and GPS Location

N GPS Reference Name of Mill / Estates Address o. Longitude Latitude Batu Lintang Palm Oil Mill 09800 Serdang, Kedah, Malaysia E 100°37’43.0” N 5°11’37.0” (Capacity: 25 MT/hour) Ladang Batu Lintang, 09800 Serdang, Kedah, 1 Batu Lintang Estate E100°37’44.65’’ N 5°12’16.35” Malaysia 2 Buntar Estate Ladang Buntar, 09800 Serdang, Kedah, Malaysia E100°35’35.37’’ N 5°10’21.35” 3 Pelam Estate Ladang Pelam, 09009 Kulim, Kedah, Malaysia E100°43’74.8’’ N 5°30’26.9” 4 Subur Estate Bt. 23 Batu Kurau, 34520 Taiping, Perak, Malaysia E100°47’43.6’’ N 5°02’53.1”

1.3 Description of supply base (fruit sources)

The supply base i.e. FFB sources to the POM at Batu Lintang Grouping PMU are mainly from the abovementioned estates of this PMU and other certified KLK Groupings estates. The PMU also received FFB from one RSPO certified (IP Model) estate, viz; Selama Estate of Genting Plantations. The FFB from the PMU estates, other certified KLK Groupings estates and Selama Estate are certified FFB. There are no FFB received from other non-certified Outside Crop Producers (OCP). Details of the planted hectarage for the FFB supply to the PMU are as shown in Table 2 below. Table 2: Estate Area Summary

Area Summary (ha) Area Summary (ha) No. Estate (Year 2016) (Jan – Dec 2017) Certified Area Planted Area Certified Area Planted Area 1 Batu Lintang Estate 1,808 1,741 1,808 1,741 2 Buntar Estate 899 816 899 816 3 Pelam Estate 2,960 2,531 2,960 2,531 4 Subur Estate 1,290 1,259 1,290 1,259 Total: 6,957 6,347 6,957 6,347 Note: This Assessment covered the overall land use for oil palm plantation areas, and the identified Conservation / unplantable areas including HCV (if any) marked out at the estates.

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1.4 Summary of plantings and cycle The age profile of the planted oil palms is as shown in Table 3.

Table 3: Age Profile of Planted Oil Palms (Year 2017) Year of Cycle of * Mature OP (ha) Immature OP (ha) Total (ha) Estate Name Planting Planting – Above 3 years – 3 years & below Batu Lintang 94B 1st 11 11 95C 1st 33 33 97D 1st 29 29 98E 1st 47 47 99D 1st 31 31 01A 1st 57 57 03C 1st 44 44 04B 1st 79 79 91A 1st 38 38 94A 1st 44 44 95A 1st 56 56 95B 1st 37 37 96A 1st 70 70 97A 1st 40 40 97B 1st 52 52 98A 1st 62 62 98B 1st 42 42 98C 1st 15 15 99A 1st 67 67 99B 1st 75 75 00A 1st 77 77 03B 1st 72 72 05A 1st 76 76 07A 2nd 97 97 09A 1st 21 21 09B 2nd 46 46 10A 1st 54 54 11A 2nd 53 53 12A 2nd 34 34 12B 2nd 35 35 13A 2nd 69 69 14A 2nd 40 40

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14B 2nd 40 40 18 (replant 1st 98 98

2018)* Total 1,661 80 1,741 Note: * In Batu Lintang Estate, this 98 ha of land had been cleared for replanting in year 2018.

Buntar Estate 1997 1st 115 115 1998 1st 127 127 2000 1st 135 135 2001 1st 108 108 2002 1st 50 50 2003 1st 72 72 2004 2nd 93 93 2010 2nd 55 55 2014 2nd 61 61 Total 755 61 816

Pelam Estate 1994 1st 40 40 1995 1st 164 164 1996 1st 45 45 1997 1st 127 127 1998 1st 228 228 1999 1st 273 273 2000 2nd 226 226 2001 2nd 112 112 2002 2nd 40 40 2003 2nd 33 33 2004 2nd 308 308 2007 2nd 75 75 2008 2nd 171 171 2009 2nd 78 78 2010 2nd 178 178 2011 2nd 91 91 2014 2nd 53 53 2015 2nd 31 31 2016 2nd 67 67 2017 2nd 128 128

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2017C 2nd 53 53 2017D 2nd 10 10 Total 2,189 342 2,531 Note: In Pelam Estate, 70 ha of land previously planted with rubber had been cleared for planting of oil palm in year 2018. This area will be added in year 2018 age profile during next assessment. There is still a balance of 198 ha planted with rubber trees.

Subur 1995A 1st 19 19 1997A 1st 14 14 1998A 1st 81 81 1999B 1st 54 54 2000A 2nd 14 14 2002A 2nd 92 92 2003B 2nd 57 57 2006A 2nd 52 52 2009A 2nd 14 14 2009B 2nd 35 35 2009C 2nd 17 17 2009E 2nd 26 26 2014A 2nd 14 14 2017A 2nd 58 58 1992A 1st 20 20 1996A 1st 23 23 1996B 1st 15 15 1999A 1st 61 61 2003A 2nd 17 17 2008A 2nd 26 26 2011B 2nd 72 72 2012A 2nd 75 75 2015A 2nd 52 52 2018A 2nd 20 20 2009D 2nd 50 50 2010A 2nd 112 112 2011A 2nd 76 76 2013A 2nd 29 29 2016A 2nd 42 42 2016B 2nd 22 22 Total 1,065 194 1,259

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1.5 Summary of Land Use - Conservation and HCV Areas The summary of Conservation and HCV Areas as identified in the PMU during this assessment is as shown in Table 4 below: Table 4: Conservation and HCV Areas

# Statement of Land Use (Ha) Year 2016 Year 2017 Hectarage – Ha Hectarage – Ha 1 Planted Area (ha) – Oil Palm 6,347 6,347 - Mature (Production) 5,679 5,670 - Immature (Non-Production) 668 677 2 Conservation Area (ha) - comprising buffer zones along small streams, hilly areas, 160 160 swampy and unplantable areas 3 HCV Area (ha) - comprising buffer zones near river riparian, forest 0 0 reserves, water catchments, burial & religious sites

1.6 Other certifications held and Use of RSPO Trademarks KLK-Batu Lintang Grouping is also certified to the International Sustainability and Carbon Certification (ISCC). The RSPO’s trademarks and logo are not being used by the PMU audited. Instructions for use were provided and acknowledged by the PMU through a signed Memorandum of commitment agreeing to adhere to the latest “RSPO Rules on Communications & Claims” during the assessment.

1.7 Organizational information / Contact Person

At Head Office: Mr. Sin Chuan Eng Sustainability Head Kuala Lumpur Kepong Berhad Wisma Taiko, 1, Jalan S.P. Seenivasagam, 30000 Ipoh, Perak Darul Ridzuan, Malaysia Tel: +605-240 8000, 241 7844 Fax: +605-240 8114 Email: [email protected]

At KLK Batu Lintang Grouping - PMU: Mr. Yeo Boon Keat Palm Oil Mill Manager Kuala Lumpur Kepong Berhad Tel: +604-407 7316 Email: [email protected]

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1.8 Tonnages Verified for Certification

1.8.1 The breakdown of all the suppliers and their tonnages of FFB supplied to the POM at Batu Lintang Grouping based on the reporting period for current assessment are as shown in Table 5 below:

Table 5: Tonnages Verified for Certification (Jan to Dec 2017) FFB Processed Main Receiving RSPO P&C # Estate /Supplier (MT) Palm Oil Mill Certification By CB A PMU Estate: 1. Batu Lintang Estate 39,449.97 Buntar Estate 2. 16,217.85 KLK Batu Lintang Intertek 3. Pelam Estate 48,207.30 POM 4. Subur Estate 22,197.86 Sub-Total Batu Lintang Grouping 126,072.98 Estates: B Other KLK Certified Estates:

1 Kuala Kangsar Estate (Selinsing) 11,838.21 KLK Changkat Intertek 2 Allagar Estate 774.51 Chermin POM Sub-Total Other KLK Certified 12,612.72 Estates: C Other RSPO Certified Estate: FFB sold to other Selama Estate is POMs near the certified by BSI – 1 Selama Estate (Genting Plantations) 6,038.64 estate as Genting Certificate No. RSPO Plantations has only 652233 expiry on 22 one POM in Sep 2020 Sub-total Other Certified Estates: Total Certified: 144,724.34

1.8.2 Total annual tonnages of FFB supplied from the supply base to Batu Lintang Grouping POM during the previous period, current assessment and projected period are as shown in Table 6 below:

Table 6: Annual Tonnages of FFB FFB Processed in FFB Processed in FFB for Processing Estate / Supplier Year 2016 Year 2017 in Year 2018 - Actual - Actual - Actual + Projected MT % MT % MT % Batu Lintang Grouping 102,230.37 95.49 126,072.98 87.11 144,377 83.8 Certified PMUs under KLK Group 352.37 0.33 12,612,72 8.72 14,443 8.4 Other Certified Estates 4,472.11 4.18 6,038.64 4.17 13,440 7.8 Total 1,07,054.85 100 144,724.34 100 172,260 100 SCCS Model for POM IP IP IP

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1.8.3 The annual certified tonnages of CPO and PK production by the PMU from the supply base/suppliers as assessed and verified during the current assessment are detailed as shown in Table 7 below:

Table 7: Annual Certified Tonnages of CPO and PK

Year 2016 Year 2017 Year 2018 POM - Actual - Actual - Actual + Projected Total Certified FFB 107,054.85 144,724.34 Processed (MT) 172,260

Total Certified CPO OER: OER: OER: 23,594.38 30,258.67 37,897 Production (MT) 22.04% 20.91% 22.00%

Total Certified PK KER: KER: KER: 4,804.18 6,773.08 8,096 Production (MT) 4.49% 4.68% 4.70%

The POM has established and maintained procedures for the book keeping and monitoring requirements for the CPO at the mill. It is verified the POM has procedures for the “Identity Preserved – IP” model in accordance with the RSPO Supply Chain Certification Standards (SCCS) requirements. Verified activities and checked items for the SCCS of the POM are reported in section 3.1.1.

1.9 Time Bound Plan and multiple management units

The Time Bound Plan (TBP) includes the subsidiaries, mills and estates owned by KLK except for the Palm Oil Mill in Johor and Mill 1 in Sabah. These two mills are excluded from the TBP as they are meant for out growers and smallholders. This exclusion has been communicated to RSPO in year 2015.

All the palm oil mills and estates in Malaysia have been certified. The TBP indicated the status and progress of the palm oil mills and estates in Indonesia, which is monitored by Pak Stephen and reviewed every 3 months with the Sustainability Head based in KLK Office in Ipoh, Perak, Malaysia.

The TBP is achievable, unless otherwise, due to unforeseen circumstances. The various risks that may affect the achievement of the TBP include: • Appointment of certification bodies and their availability. • Uncertainties relating to the Laws and Regulations in Indonesia. • In Indonesia, ISPO precedes other certification standards. • In Indonesia, there are difficulties in the mobilizing internal resources due to its geographical locations. Details of the updated TBP as submitted by KLK and reviewed by Intertek are shown in Appendix E.

KLK had conducted an internal audit on the uncertified units or holdings to determine compliance against Clause 4.5 (Minimum requirements for multiple management units) of the RSPO Certifications Systems for Principles & Criteria (Jun 2017). The Internal audit reports had identified the issues involved, on-going corrective actions and monitoring. The Joint Venture in Liberia does not required internal audit by KLK as it is part of Equatorial Palm Oil PLC (EPO), which is a stand-alone entity (KLK owned a 20.1% stake in EPO and a 50% stake in the Joint Venture, Liberian Palm Developments Ltd. The remaining 50% in Liberian Palm Developments is owned by EPO).

Uncertified Units in Indonesia are: Indonesia - Region Name of POM Name of Estate Kaltim Berau Kebun Malindomas Perkebunan, Kebun Hutan Hijau Mas, Kebun Anugrah Surya Mandiri Riau Nilo 2 Kebun Mutiara Belitung Parit Sembada Kebun Alam Karya Sejahtera Kalteng KMA Kebun Karya Makmur Abadi Kalteng MAP Kebun Mulia Agro Permai Kebun Menteng Jaya Sawit Perdana

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The latest TBP dated 06/05/2018 was reviewed and changes were verified during the assessment. In Kaltim region, the Berau POM is targeted to be certified by end 2018. In Riau region, Kebun Mutiara of Nilo 2 POM had been audited in Mar 2018 and awaiting certificate. In Belitung region, Kebun Alam Karya Sejahtera of Parit Sembada POM is targeted to be certified by end 2018. For the Sumatra Utara region, the Gohor Lama and Padang Bharang mills been merged and named as Stabat mill. In Kalteng region, the KMA and MAP mills are targeted to be certified by end 2018.

1.10 Abbreviations Used

CB Certification Body LTA Lost Time Accidents CHRA Chemical Health & Risk Assessment Intertek Intertek Certification International Sdn Bhd CPO Crude Palm Oil KLK Kuala Lumpur Kepong Berhad CSDS Chemical Safety Data Sheets MSDS Material Safety Data Sheets CSPO Certified Sustainable Palm Oil MTCS Malaysia Timber Certification Scheme CSPK Certified Sustainable Palm Kernel NCR Non-Conformance Report EFB Empty Fruit Bunch NGO Non-Government Organization EHS Environmental Health & Safety OER Oil Extraction Rate EIA Environmental Impact Assessment OHS Occupational Health & Safety Programme for the Endorsement of Forest Effluent Treatment Plant ETP PEFC Certification FFB Fresh Fruit Bunch PK Palm Kernel GAP Good Agriculture Practice PMU Plantation Management Unit HCV High Conservation Values POM Palm Oil Mill IPM Integrated Pest Management POME Palm Oil Mill Effluent ISCC International Sustainability & Carbon Certification PPE Personal Protective Equipment IUCN International Union for Conservation of Nature SCCS Supply Chain Certification Standard KER Kernel Extraction Rate SOP Standard Operating Procedures

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2.0 ASSESSMENT PROCESS

2.1 Assessment Methodology, Plan and Site Visits

Since 03 May 2018, Intertek has initiated public communications and notifications and invited the relevant stakeholders before the assessment to provide feedback and comments on their concern (if any) on Batu Lintang Grouping regarding the environmental, biodiversity, community development and other relevant issues.

The Assessment team conducted the current assessment on 04-08 Jun 2018, in which all the 4 estates of Batu Lintang Grouping, namely, Subur Estate, Buntar Estate, Pelam Estate and Batu Lintang Estate as well as the palm oil mill were assessed for compliance against the RSPO requirements. The sampling design applied for the assessment include the mill and a minimum sample of x estates, where x = (0.8√y) x (z), where y is the number of estates and where z is the multiplier defined by the risk assessment. A high risk multiplier of z=1.4 is set for this PMU due to this assessment being a re-certification and transfer from another CB which require a greater focus on potential risks in relation to social, environmental and biodiversity issues.

During the on-site assessment, relevant documents and records, including Standard Operating Procedures (SOP), management plans, hectarage development, FFB, CPO and PK production, oil palm age profile, operational controls and measures, operational data and records, training records, etc. were reviewed and verified for compliance. The Assessment team using the process approach auditing technique covered the palm oil mill and estate operations, agricultural practices, pest management, pesticide and fertilizer application, occupational health and safety, social accountability, environment and other requirements. Stakeholders’ interviews were conducted during the assessment and feedback obtained as part of information and evidence gathering. (See section 2.5 Process of stakeholder consultation).

The PMU was also assessed against the requirements of RSPO Supply Chain Certification Standard for CPO mill. This part of the assessment covered the verification of implementation of documented procedures and availability of records to demonstrate compliance against all the elements for the “Identity Preserved – IP” Model requirements. These include documented procedure, purchasing and goods in, record keeping, sales and goods out, processing, monitoring and traceability of the CSPO and CSPK quantities, training for staff and claims.

The details of the Assessment Plan (actual on-site) are provided in Appendix B.

After completion of the on-site field assessment, Intertek also performed the evaluation of conformity against the RSPO Certification System requirements for CB. The assessment report, findings and associated documents were evaluated through an independent review by the Intertek Internal Technical Reviewer/Panel (and an External Peer Review in the case of an Initial Assessment or Re-certification Assessment) prior to the approval of this report and decision on continued certification by Intertek.

2.2 Date of next scheduled visit

The next scheduled visit will be the Annual Surveillance Assessment to be carried out within a 12-month period prior to the annual certificate anniversary date.

2.3 Qualifications of the Lead Assessor and Assessment Team

Competency details of the Lead Assessor and Assessment Team are given in Appendix A.

2.4 Certification Body

Intertek Certification International Sdn Bhd is part of the Intertek Group, which is a worldwide technical services organization dedicated to reducing clients' risks by providing technical inspection services, management system certification in quality, environmental, occupational safety & health and product certification, RSPO SCC, ISCC, Marine Sustainability Chain-of-Custody, MTCS and PEFC Chain-of Custody certification in applicable industry sectors including the agricultural and forestry sectors. Intertek operates globally providing clients with a wide-ranging technical inspection expertise and access to thousands of skilled specialists worldwide. Intertek Group’s certification business is ranked in the top 10 worldwide, and is available globally offering certification across a wide range of industries.

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2.5 Process of stakeholder consultation

Stakeholder consultations began with notification of the upcoming assessment through the websites of RSPO, KLK and Intertek. E-mails were sent to applicable stakeholders including government agencies, NGOs and local communities. E-mails and telephone enquiries were made prior to the actual assessment and stakeholder’s response and feedback received were followed up accordingly.

During the assessment, stakeholders were interviewed and their feedbacks were recorded. Among the stakeholders consulted were workers, trade union leaders, women representatives; local community leaders, representatives of government departments / agencies, NGOs, suppliers and contractors.

Details on stakeholders’ feedback, PMU response and Intertek verification / comments are provided in section 3.3.

Among the list of key stakeholders consulted was the following:

Government Agencies (by emails) 1. Land and Mines Office, Perak 2. Land and Mines Office, Kedah 3. Department of Environment, Perak 4. Department of Environment, Kedah 5. Department of Forestry, Perak 6. Department of Forestry, Kedah 7. Department of Immigration, Perak 8. Department of Immigration, Kedah 9. Department of Irrigation & Drainage, Perak 10. Department of Irrigation & Drainage, Kedah 11. Department of Labour, Perak 12. Department of Labour, Kedah 13. Department of Occupational Safety & Health, Perak and Kedah 14. Department of Occupational Safety & Health, Perak and Kedah 15. Department of Wildlife & National Parks, Perak 16. Department of Wildlife & National Parks, Kedah 17. Pertubuhan Keselamatan Sosial (SOCSO), Perak 18. Pertubuhan Keselamatan Sosial (SOCSO), Kedah

Statutory Bodies (by emails) 19. Malaysian Palm Oil Board (MPOB) 20. Malaysian Palm Oil Board (MPOB) - Northern Region 21. Malaysia Palm Oil Association (MPOA) 22. Malaysia Palm Oil Association Kuala Lumpur (MPOA)

NGOs (by emails) 23. All Women’s Action Society (AWAM) 24. BCSDM - Business Council for Sustainable Development in Malaysia 25. Center for Orang Asli Concerns COAC 26. Centre for Environment, Technology and Development, Malaysia - CETDEM 27. Eco Knights 28. ENO Asia Environment 29. Environmental Management and Research Association of Malaysia (ENSEARCH) 30. Environmental Protection Society Malaysia (EPSM) 31. Friends of the Earth, Malaysia 32. Future in Our Hands Society, Malaysia 33. Global Environment Centre 34. Institute of Foresters, Malaysia (IRIM) 35. JUST - International Movement for a Just World 36. Malaysian CropLife & Public Health Association (MCPA) 37. Malaysian Environmental NGOs – MENGO 38. Malaysian National Animal Welfare Foundation – MNAWF 39. Malaysia Nature Society, Perak 40. Malaysian Plant Protection Society (MAPPS) 41. National Council of Welfare & Social Development Malaysia - NCWSDM 42. National Union of Plantation Workers (NUPW)

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43. Partners of Community Organisations (PACOS) 44. Pesticide Action Network Asia and the Pacific (PAN AP) 45. Proforest - South East Asia Regional Office 46. R.E.A.C.H. - Regional Environmental Awareness Cameron Highlands 47. SUARAM - Suara Rakyat Malaysia 48. SUHAKAM - National Human Rights Society - Persatuan Kebangsaan Hak Asasi Manusia 49. Sustainable Development Network Malaysia (SUSDEN) 50. Tenaganita Sdn Bhd 51. The Malaysian Forum of Environmental Journalist (MFEJ) 52. TRAFFIC Southeast Asia - Wildlife trade & trafficking monitoring programme 53. Transparency International - Malaysian Chapter 54. Treat Every Environment Special Sdn Bhd. (TrEES) 55. United Nations Development Programme - UNDP Malaysia 56. Wetlands International (Malaysia) 57. Wild Asia Sdn Bhd 58. World Wide Fund for Nature (WWF) Malaysia

Local community (On-site interviews) 59. Consultative Committee & Gender representatives 60. Workers & Workers representatives 61. Village Heads & representatives 62. Suppliers & Contractors representatives

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3.0 ASSESSMENT FINDINGS

3.1 Summary of findings

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. Indicators Findings and Objective Evidence Compliance 1.1.1 There shall be evidence that The PMU has established and implemented a documented Complied growers and millers provide adequate procedure SOP 1.0 “Stakeholders Engagement/Negotiation” information Issue/Rev 2/1 dated 01/01/2018 that identified the mechanism for upon request for information on Request and Respond, Consultation & Meeting and Complaint & (environmental, social and/or legal) issues relevant to Grievances. RSPO Criteria to relevant Date of public notification of this assessment of the PMU was made stakeholders for effective participation on 03 May 2018. in decision making. There were no further request for information/issues from external Minor Compliance stakeholders. 1.1.2 Records of requests for The PMU had established and maintained an updated site specific Complied information and responses shall be maintained. list of internal stakeholders, external stakeholders, government departments/agencies, consultants, contractors, suppliers, Major Compliance transporters, etc.

The POM and estate have conducted their respective internal and external stakeholders’ consultations. Meeting minutes were adequately maintained. The meetings and consultations were noted to be attended by the various categories of stakeholders. Records of participants and feedback given were maintained and appropriate actions taken. 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. Indicators Findings and Objective Evidence Compliance 1.2.1 Management documents Management documents relating to environmental, social and legal Complied that are made available to the issues were verified to be maintained and available to the public. public shall include, but are not necessarily limited to: The following types of mandatory documents are available to the public upon request: Major Compliance  land titles/user rights,

 occupational health and safety plan,  plans and impact assessments relating to environment and social impacts,  pollution prevention plans,  details of complaints & grievances,  negotiation procedures  continuous improvement plan  Public summary of certification assessment report.  Human Rights Policy. These publicly available documents include key indicators of performance like waste management and disposal plans for the mill and estates.

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Also, Continual Improvement Action Plans include targets for waste reduction and pollution prevention.  Land titles/user rights Copies of all land titles were available and have been maintained at Complied (Criterion 2.2); the POM and Estates. HQ kept the original copies.  Occupational health and safety Safety Policy and HIRARC documented for the mill and estates. Complied plans (Criterion 4.7); The HIRARC for the mill and estates were also reviewed annually. Occupational Safety and Health Plans have been established and documented for the POM and estates. The Plans have been reviewed (annually), up-dated and approved by the respective managers for the mill and estates. The OSH Programme 2018 include the following:  Safety & Health Committee meetings were held quarterly.  Annual medical surveillance,  Accident Reporting & Investigation,  Workplace inspection,  CHRA assessment,  Air compressors annual inspection,  Warning signs,  Chemical Register,  SOP for safe work,  PPE usage,  MSDS/CSDS,  JKKP 8 reporting of accidents annually,  Emergency Response Plan (ERP),  Emergency drills,  Inspections (line site, fire extinguisher, first aid box, chemical store, ELCB, PPE checklist, Vehicle daily inspection, gen set maintenance, ramp inspection, bridge and tanks inspection),  Monthly KPI Report on HSE performance,  Monthly Safety inspection & audit by Safety Officer, CHRA report for POM issued on 05/08/2017 is still valid and recommendations were verified to have been adhered on-site. Next CHRA assessment scheduled for year 2022. Programmes for protecting workers’ health and safety were satisfactorily implemented.  Plans and impact assessments Environmental aspect and impact assessment had been conducted Complied relating to environmental and and reviewed for the POM and estates. social impacts (Criteria 5.1, Management Action Plan and Continual Improvement Plan 6.1, 7.1 and 7.8); documented and implemented. Social Impact Assessment was also carried out and suitably reviewed by the KLK Sustainability Team together with the respective Mill and Estate Managers. Positive and negative impacts identified. Action plans were documented and implemented.  HCV documentation summary The Assessment report on ‘Internal HCV and Conservation Areas’ Complied (Criteria 5.2 and 7.3); have been conducted and reviewed. The Management Action Plans were implemented and monitored at the respective estates.  Pollution prevention and Pollution Prevention Management Plans have been conducted and Complied reduction plans (Criterion 5.6); reviewed. Action items include mitigation measures for pollution control (smoke emission, POME / effluent discharge), pesticides reduction, scheduled wastes (chemicals, drums, tyres, used PPE, hydraulic oil) and organic/domestic wastes disposal, reuse and recycling (paper, glass, plastic, scrap iron).

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9317/18-1 Kuala Lumpur Kepong Berhad, Batu Lintang Grouping Page 17 of 84 Re-certification (Transfer CB)

 Details of complaints and The mill and respective estates had maintained the Complaints and Complied grievances (Criterion 6.3); Grievances Logbook. Logbook entries were examined and found to be in order. Employees Consultative Council (ECC) representatives interviewed had confirmed that there were no serious issues.  Negotiation procedures Presently, there is no conflict/dispute requiring negotiation or Complied (Criterion 6.4); compensation pertaining to this criterion at this PMU. Negotiation procedure was maintained The status on the ongoing negotiations on land issues against KLK Group plantations in Indonesia are detailed in Section 1.9: Time Bound Plan.  Continual improvement plans Continual Improvement Plans in key operations for the mill and Complied (Criterion 8.1); estates have been identified, documented and implemented.

 Public summary of certification Public summary of certification assessment reports are available Complied assessment report; from the company upon request.  Human Rights Policy (Criterion The Human Rights Policy was documented and incorporated as Complied 6.13). part of the Sustainability Policy dated 01/12/2014 approved by CEO, Tan Sri Dato’ Seri Lee Oi Hian. Copies of the policy found to be displayed at prominent locations in the POM and estate. Briefing and communication to all levels of the workforce, both administrative and operations departments were provided. Criterion 1.3 Growers and millers commit to ethical conduct in all business operations and transactions. Indicators Findings and Objective Evidence Compliance 1.3.1 There shall be a written policy Code of ethical conduct and integrity for mill and estates Complied committing to a code of ethical incorporated as part of the Sustainability Policy dated 01/12/2014. conduct and integrity in all operations and transactions, which shall be Copies of the policy were found to be displayed at prominent documented and communicated to all locations in the POM and estates. levels of the workforce and operations. Briefing and communication to all levels of the workforce, both Minor Compliance administrative and operations departments were provided and verified to be recorded and understanding by personnel was confirmed via interviews done at POM and estates during current assessment.

Principle 2: Compliance with applicable laws and regulations Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. Indicators Findings and Objective Evidence Compliance 2.1.1 Evidence of compliance with SOP 2.0 “List & Summary of Applicable Laws and Regulation” Complied relevant legal requirements shall be App 1 Issue 1 / Rev. 1 dated 01/06/2015 established for available. identification, implementation & compliance and review of legal Major Compliance requirements applicable to the company. The company has established a common Legal Register for both mill and estate identifying relevant applicable legal requirements, Licenses, Permits, Certificates and compliances status. Example of the legislations and legal requirements identified in the register as follows: • OSHA and Regulations Act 1994 • Factories and Machinery Act 1967, Regulations 1970 • National Land Code 1965

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9317/18-1 Kuala Lumpur Kepong Berhad, Batu Lintang Grouping Page 18 of 84 Re-certification (Transfer CB)

• Environmental Quality Act 1974 • Environmental Quality (Scheduled Wastes) Regulations 2005 • Pesticides Act and Regulations Act 149 • Poison Act Regulations 1952 (Act 356) • Industrial Relations Act and Regulation Act 177 • Workmen’s Compensation Act 1952 • Trade Union Act 1959 • Land Acquisition Act 1960 • Sales Tax Act 1972 • MPOB Licence • Diesel and petrol permits • Road Transport Act 1987 (Act 333) • Weight and Measures Act 1972, regulations 16, 28A, 45) The Legal Register covering the applicable local and international laws and regulations is available at the mill and estates and was verified to be reviewed for any relevant updates. Legal compliance checklists used for monitoring the validity and renewal of permit/licenses: Steam engineers (Grade 1 and 2), boilermen and electricians were noted to be with valid certificates from relevant authorities (DOSH and Energy Commission). The POM has maintained a boiler register that indicate the date of commission, cleaned, inspected, tested or repaired. Valid certificates of fitness for boilers, sterilizers, air receivers, thermal deaerator, steam separator, vacuum oil dryer, etc. issued by DOSH. Valid license for diesel generators issued by Energy Commission (“Suruhanjaya Tenaga”). Valid licenses for authorized gas tester (ACT), authorized entrant and standby by person for confined space activities in POM. Occupational Health and Safety Act 1994 – safety and health meetings to be conducted at quarterly intervals. Noise Monitoring Report is available. Legal documents (work permits, passports) of foreign workers in the estates. Insurance coverage is available for foreign workers in the estates. Based on the site observations, interviews and records checked, there was evidence of compliance with the relevant laws, regulations, local and international laws at the POM and estate. There were no cases of any violation or actions imposed by relevant authorities. Statutory returns to relevant authorities found to be in compliance. For examples, JKKP8 for the reporting of incidences and accidents to DOSH and the Quarterly Return Form as per First Schedule of the Environmental Quality (Prescribed Premises) (Crude Palm-Oil) Regulations, 1977. 2.1.2 A documented system, which The listing of all the relevant laws applicable included the Complied includes written information on legal international laws and conventions ratified by the Malaysian requirements, shall be maintained. government are documented in the Legal Register. Minor Compliance The documented system for identifying, determining, reviewing and updating applicable legal and other requirements has been satisfactorily implemented. 2.1.3 A mechanism for ensuring The mechanism for ensuring compliance involved updating (when Complied compliance shall be implemented. necessary) and an annual review with the compliance status Minor Compliance indicated in the Legal Register was implemented.

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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The PMU had also conducted internal audits on the POM and estates for determining compliance of its operations with legal requirements and records were maintained. 2.1.4 A system for tracking any Changes and amendment in laws and regulations are monitored Complied changes in the law shall be through the following manner. implemented. • Enquiring the laws books publisher. Minor Compliance • Communication with law/enforcement officers.

The PMU subsequently ensured that the changes were adequately updated. Legal Register reviewed on 28/02/2018 included the Animal Welfare Act 2015 (Act 272) effective 18/07/2017. Based on the site observations, interviews and records updated, the system used is appropriate to the operations at the PMU. 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. Indicators Findings and Objective Evidence Compliance 2.2.1 Documents showing legal Copies of the land titles of estate were maintained and noted to Complied ownership or lease, history of land tenure (confirmation from community be legally owned by the KLK Group. leaders based on history of customary The original copies are maintained by the Corporate Head Office. land tenure, recognised Native The legal use of the land confirmed to be for the cultivation of oil Customary Right (NCR) land) and the palms and agricultural use. actual legal use of the land shall be There were no recorded or known disputes over the ownership of available. the land. Major Compliance 2.2.2 There is evidence that physical It was verified that there has been no change to the stated land Complied markers are located and visibly maintained along the legal boundaries titles and designated use for cultivation of oil palm and particularly adjacent to state land, agricultural use. NCR land and reserves. Locations of several boundary stones and pole markers were Minor Compliance visited and verified to be within the boundary perimeter of the estates. On-site verification confirmed that there has been no planting beyond the legal demarcated boundary areas of the mill and estates. 2.2.3 Where there are or have been There has been no dispute on the land rights in this PMU. As Complied disputes, additional proof of legal such, the process of fair compensation and FPIC is currently not acquisition of title and evidence that required to be applied. fair compensation has been made to The company has the SOP 3B “Responsible Development for previous owners and occupants shall New Planting” dated 01/01/2017, which defined the FPIC process be available, and that these have been for acquiring land and disputes management under SOP 3A accepted with free, prior and informed consent (FPIC). “Land Acquisition (For OP Planting)”. Minor Compliance 2.2.4 There shall be an absence of There were no land conflicts in this PMU. Not significant land conflict, unless applicable requirements for acceptable conflict resolution processes (see Criteria 6.3 and 6.4) are implemented and accepted by the parties involved. Major Compliance 2.2.5 For any conflict or dispute over There are no land disputes in the PMU. As such the process of Not the land, the extent of the disputed participatory mapping is not applicable for verification of applicable area shall be mapped out in a implementation. participatory way with involvement of affected parties (including

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9317/18-1 Kuala Lumpur Kepong Berhad, Batu Lintang Grouping Page 20 of 84 Re-certification (Transfer CB) neighbouring communities and relevant authorities where applicable). Minor Compliance 2.2.6 To avoid escalation of conflict, No evidence that the palm oil operations have instigated violence Not there shall be no evidence that palm in maintaining peace and order in their current and planned applicable oil operations have instigated violence operations. in maintaining peace and order in their current and planned operations. Major Compliance Criterion 2.3 Use of the land for oil palm does not diminish the legal, customary or user rights of other users without their free, prior and informed consent. Indicators Findings and Objective Evidence Compliance 2.3.1 Maps of an appropriate scale Appropriate landscape map with latitude and longitudes showing Complied showing the extent of recognised legal, the legal boundary and neighbouring / surrounding areas of the customary or user rights (Criteria 2.2, POM and Estate was available and maintained. 7.5 and 7.6) shall be developed through participatory mapping The lands at the PMU are legally owned by KLK and no other users involving affected parties (including were identified in the land area. neighbouring communities where The existing estates are not encumbered by any customary land applicable, and relevant authorities). rights and therefore the process of participatory mapping is not Major Compliance required. 2.3.2 Copies of negotiated agreements The lands at the PMU are legally owned by KLK. Records are Complied detailing the process of free, prior and available to show such land acquisition complied with legal informed consent (FPIC) (Criteria 2.2, requirements without infringement of any legal rights that require 7.5 and 7.6) shall be available and free, prior and informed consent (FPIC). shall include: a) Evidence that a plan has been developed through consultation and discussion with all affected groups in the communities, and that information has been provided to all affected groups, including information on the steps that shall be taken to involve them in decision making; b) Evidence that the company has respected communities’ decisions to give or withhold their consent to the operation at the time that this decision was taken; c) Evidence that the legal, economic, environmental and social implications for permitting operations on their land have been understood and accepted by affected communities, including the implications for the legal status of their land at the expiry of the company’s title, concession or lease on the land. Minor Compliance 2.3.3 All relevant information shall be No cases of land claims in this PMU. Not available in appropriate forms and As such this process is not applicable for verification. applicable languages, including assessments of impacts, proposed benefit sharing, and legal arrangements. Minor Compliance 2.3.4 Evidence shall be available to This process is not applicable during current assessment. Not show that communities are applicable represented through institutions or representatives of their own choosing, including legal counsel.

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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Major Compliance

Principle 3: Commitment to long-term Economic & Financial Viability Criterion 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability. Indicators Findings and Objective Evidence Compliance 3.1.1 A business or management plan Business Plans for 3 years (FY 2017/2018, FY 2018/2019, FY Complied (minimum three years) shall be 2019/2020) for the PMU have been prepared by the Palm Oil Mill documented that includes, where and estates. appropriate, a business case for scheme smallholders. Details of the Business Plans include the following: Major Compliance (1) Staff and Labour requirements; (2) Crop projection; FFB yield/ha trends; (3) Mill extraction rates; OER & KER trends; (4) Cost of Production; Cost/mt FFB trends; (5) Cost of Production; Cost/MT CPO trends; (6) Financial indicators covering cost of labour, supervision, maintenance, depreciation, etc.). (7) Provisions for sustainability efforts and improvement programmes (environmental, social, Occupational Safety & Health, training, etc.). The Mill and Estate Managers monitor the operational performance against Key Performance Indications and targets (costs, FFB yields, quality, productivity, pesticides usage, fertilizers usage, etc.) There is evidence of monitoring of costs against budget to achieve specified targets. Performances are discussed in the monthly meetings held at the PMU and issues and actions needed are recorded for follow up in the next monthly meeting. The records of these meetings were available and verified during the audit. Monthly, quarterly, half-yearly and yearly reports are submitted to the HQ. 3.1.2 An annual replanting programme Annual replanting program for the estates had been prepared for Complied projected for a minimum of five years five years (FY Oct 2017/Sep 2018 to FY Oct 2021/Sep 2022). (but longer where necessary to reflect The replanting areas (ha) are as follows: the management of fragile soils, see Criterion 4.3), with yearly review, shall Estate 2017/18 2018/19 2019/20 2020/21 2021/22 be available. Subur 55 81 68 23 0 Minor Compliance Buntar 0 58 82 97 85 Pelam 70 204 110 133 99 Batu Lintang 137 79 133 62 70 A replanting cycle of 25 years has been adopted by the group.

Principle 4: Use of appropriate best practices by growers and millers Criteria 4.1 Operating procedures are appropriately documented, consistently implemented and monitored. Indicators Findings and Objective Evidence Compliance 4.1.1 Standard Operating Procedures POM has documented the following procedures: (SOPs) for estates and mills shall be 1. SOPs for Palm Oil Mill operations from reception of FFB, documented. Weighbridge, Loading Ramp, Sterilization, Hoisting & Threshing, Major Compliance Empty Bunch Conveyor, Press & Digester, Clarification, Depericaroer Station, Nut & Kernel, Boiler, Engine Room, Raw Water Treatment Plant, Effluent Treatment Plant, Workshop

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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Practices, etc. for the processing until the delivery of processed oil Complied and POME management. 2. Laboratory and Milling Control Handbook (2nd Revision, 1999), 3. Sustainability Manual & SOPs (01 Jun 2015). 4. Procedures for Safe Work Rev. 1/2017- SOPs for safe working practices for all operations in the POM. 5. Guidelines for Hazard Identification, Risk Assessment and Risk Control (DOSH) – OSH Hazards & Risk Assessment on mill activities and HIRARC.

6. Supply Chain Procedure SOP 18.0 Issue 3 / Rev. 2 dated 05/05/2018.

The estates have the following SOPs: 1. Group SOP for Estate Operations - Good Agricultural Practices (GAP) that incorporated the policy statement, objective and recommended best practices - The GAPs cover harvesting, field upkeep, nutrition, pests and diseases, conservation, by-product, replanting nursery, field identification, roads and drains. 2. Sustainability Manual & Sustainability SOPs (01 Jun 2015). 3. Guidelines for Hazard Identification, Risk Assessment and Risk Control (DOSH) – OSH Hazards & Risk Assessment on estate activities and HIRARC.

Relevant Key Performance Indicators (KPIs) specified for quality, environment, safety and cost control at the POM and estate. 4.1.2 A mechanism to check The implementation of the SOPs was verified to be consistently Complied consistent implementation of procedures shall be in place. performed. Minor Compliance Records of implementation were verified which included system

monitoring via internal audits and monitoring of operational activities at the field.

Internal audit on the POM conducted by the Sustainability Team on 19/04/2018. Internal audits on the Subur, Buntar, Pelam and Batu Lintang Estates conducted by the Sustainability Team on 15/04/2018, 16/04/2018, 17/04/2018 and 18/04/2018 respectively. Corrective actions taken on the non-conformances raised and the non-conformances were closed off. Monitoring (i.e. daily, weekly and monthly) was done by Field Supervisors and Mandores. Records had been kept by the staff concerned for each operation to monitor the procedure and progress of work and these records would be checked by the Assistant Manager and the Manager regularly. On-site assessment confirmed that the records were satisfactorily maintained. 4.1.3 Records of monitoring and any Records of monitoring and actions taken had been maintained for Complied actions taken shall be maintained and available, as appropriate. more than 12 months at the mill and estates. Minor Compliance Daily Muster chits and briefing records were available at POM and at estates. Actual operational and field activities were verified during on-site audit at the POM and estate. Verified that estates monitoring records on spraying, manuring and harvesting operations were maintained and available at the estate. 4.1.4 The mill shall record the origins The mill received FFB from its own estates, diverted FFB from Complied of all third-party sourced Fresh Fruit other KLK certified estates and FFB from out growers. Verified Bunches (FFB). that the records indicated the source origin of FFB. Major Compliance

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Criteria 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. Indicators Findings and Objective Evidence Compliance 4.2.1 There shall be evidence that SOPs for GAP as established are maintained and reviewed by the Complied good agriculture practices, as contained in Standard Operating Estate Management. Procedures (SOPs), are followed to Agronomist reports by the Agronomist from Applied Agricultural manage soil fertility to a level that Resources were available for all the estates (e.g. Agronomist ensures optimal and sustained yield, reports for Subur Estate dated 31/04/2017 and Buntar Estate where possible. dated 25/07/2017. Minor Compliance Annual fertilizer inputs had been reviewed by the Agronomist and monitoring records were also reviewed by the respective Estate management. GAP for minimization of soil erosion and maintenance of soil fertility is also maintained via the frond stacking and selective pesticide weeding activities. Soil sampling and leaf sampling records provided guide for the fertilizer application and all recommendations had been properly followed at estate levels. Pesticides spraying records were available and maintained. Samples checked for usage and inventory records for the months between Oct 2017 and Mar 2018. Evidences provided and field audit verified that good agricultural practices were adhered. 4.2.2 Records of fertiliser inputs shall The fertilizer application records at the estates over the past 12 Complied be maintained. Minor Compliance months were checked. The monthly summary of fertilizer applied per hectarage had been verified to be satisfactorily maintained and updated. 4.2.3 There shall be evidence of Leaf sampling and analysis had been carried out annually for Complied periodic tissue and soil sampling to monitor changes in nutrient status. Subur, Buntar, Pelam and Batu Lintang Estates on 19/11/2016, Minor Compliance 01/01/2017, 15/11/2016, and 16/12/2017 respectively. Soil sampling and analysis (a 5 year cycle) carried out for Subur, Buntar, Pelam and Batu Lintang Estates in Nov-Dec 2016, Feb 2017, Nov-Dec 2016 and Feb-Mar 2018 respectively. Fertilizer recommendations by the Agronomist for identified estate blocks to sustain the long term soil fertility and nutrient efficiency were satisfactorily followed. 4.2.4 A nutrient recycling strategy shall EFB mulching had been carried out at immature palms and for Complied be in place, and may include use of mature areas along the inter-row. EFB were spread in one row Empty Fruit Bunches (EFB), Palm Oil layer. Mill Effluent (POME), and palm Records of the quantities of EFB mulching including locations residues. Minor Compliance applied were maintained at the estates. POME is applied to the field in Batu Lintang Estate, where the POM is located. Criteria 4.3 Practices minimise and control erosion and degradation of soils. Indicators Findings and Objective Evidence Compliance 4.3.1 Maps of any fragile/marginal Based on the soil maps and field visit verification done on-site, Complied soils shall be available. there was no fragile soil or marginal soils on the estates. Major Compliance Soil series were noted as follows: Subur (Home Division) – Chat, Local Alluvium, Batu Lapan, Padang Besar, Tavy, Durian. Subur Estate (Sg. Pulau Division) – Chat, Local Alluvium, Bungor, Batang Merbau, Durian.

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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Subur Estate (Norsemen Division) – Chat, Local Alluvium, Bungor, BatuLlapan, Rasau, Serdang. Buntar (Home Division) – Harimau, Holyrood, Kg. Kubor, Local Alluvium, Rengam, Segari, Serdang. Buntar (Kedah Division) – Briah, Carey, Taulang, Perepat, Sogomana. Pelam Estate (Home Division) – Chat, Local Alluvium, Bungor, Batu Lapan, Durian, Gajah Mati, Yellow, Musang, Rasau, Serdang, Tavy. Pelam Estate (Nagalelai Division) – Kuah, Local Alluvium, Malacca Yellow, Tnau, Tebok. Batu Lintang (Home Division) – Munchong, Lintang, Local Alluvium, Holyrood, Serdang, Kerayong, Rengam, Kemahamg, Chat. Batu Lintang (Ghim Khoon Division) - Bungor, Chat Local Alluvium, Colluvium, Serdang. 4.3.2 A management strategy shall be The PMU has a SOP (Best Management Practices) for erosion Complied in place for plantings on slopes control during replanting or any activities involving earth between 9 and 25 degrees unless disturbance. Steps taken for erosion control are soil stabilization, specified otherwise by the company’s run-off control and sediment trapping to mitigate the disturbed SOP. Minor Compliance earth entering waterways. There was no soil erosion noted during the field visit. No soil erosion encountered at estates audited as leguminous cover crop, macuna bracteata was well established. Planting terraces constructed on land with slope more than 6o. 4.3.3 A road maintenance programme Road maintenance programme and budget allocated for year Complied shall be in place. Minor Compliance 2018 are available at the estate. The programme covers road grading, compacting and patching which were progressively implemented. Estate roads were verified to be in satisfactory condition at the fields visited. 4.3.4 Subsidence of peat soils shall be It was confirmed during on-site assessment that there is no Not minimised and monitored. A Applicable documented water and ground cover presence of any peat soil on the estates. management programme shall be in place. Major Compliance

4.3.5 Drainability assessments where There was no peat soil on the estates as confirmed by auditor’s Not necessary will be conducted prior to Applicable replanting on peat to determine the on-site assessment long-term viability of the necessary drainage for oil palm growing. Minor Compliance

4.3.6 A management strategy shall be Based on the estate soil maps and visit to the estates, there were Complied in place for other fragile and problem soils (e.g. podzols and acid sulphate no other fragile and problematic soils on the estates. soils). Minor Compliance

Criteria 4.4 Practices maintain the quality and availability of surface and ground water. Indicators Findings and Objective Evidence Compliance 4.4.1 An implemented water There is a generic Water Management Plan (SOP 5.0) Complied management plan shall be in place. Minor Compliance documented for the POM and estate that include frequency of sampling for water analysis at river, final discharge point, tube wells, etc. The POM and estates had also establish, document and implement a site specific Water Management Plan that clearly

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identify the water resources (government utility company water supply, rivers, water catchment pond and tube wells). The water for domestic use at Subur estates is treated water from the government utility department, “Lembaga Air Perak (LAP)”. The water for domestic use at the POM and Buntar, Pelam and Batu Lintang Estates is treated water from the government utility department, “SADA”. The treated water supply complies with the Ministry of Health Specification for Drinking Water, which include the requirement of 0 in 100 ml for E.Coli. The water from catchment pond and tube wells is only used for a supplement for washing and not for drinking and cooking. Water samples were taken twice a year and tested for pH, BOD, COD, Suspended Solids, Ammoniacal Nitrogen and Water Quality Index. Results verified to meet the specified requirements. Rainfall data found to be monitored as part of the water management plan. There is no river or waterway passing through Subur Estate and Buntar Estate. There are two rivers (Sungai Malau and Sungai Mempelam) passing through Pelam Estate. At Batu Lintang Estate, there are two river (Sungai Sallah and Sunagi Kerian) passing through the estate. Water samples were taken twice a year at the inlet and outlet of the rivers and tested for pH, BOD, COD, Suspended Solids, Ammoniacal Nitrogen and Water Quality Index. Results verified to meet the specified requirements. 4.4.2 Protection of water courses and Appropriate buffer zones with signages and markings had been Complied wetlands, including maintaining and maintained along rivers passing through the estate. restoring appropriate riparian and other buffer zones (refer to national best practice and national guidelines) shall be demonstrated. Major Compliance

4.4.3 Appropriate treatment of mill POME is applied to the field in Batu Lintang Estate, where the Complied effluent to required levels and regular monitoring of discharge quality, shall POM is located. Effluent water is not discharged into waterway. be in compliance with national Water samples were taken at monthly intervals at the outlet of the regulations (Criteria 2.1 and 5.6). final discharge at the POM effluent pond. Tests conducted for pH, Minor Compliance BOD, COD, Total Solids, Suspended Solids, Oil & Grease, Ammoniacal Nitrogen and Total Nitrogen. Analysis results were noted to be within DOE requirements. (DOE limit of 5,000 ppm max. for land application). Stack emission monitoring by CEMS – Refer to 5.6.3

4.4.4 Mill water use per tonne of Fresh Water usage in the mill from Oct 2016 to Sep 2017 ranged from Complied Fruit Bunches (FFB) (see Criterion 1.01 to 1.46 m3/tonne FFB. The average usage of 1.17 m3/tonne 5.6) shall be monitored. FFB was noted to be at the lower range of the industrial norm of Minor Compliance 1.2 to 1.5 m3/tonne FFB. Criteria 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management techniques. Indicators Findings and Objective Evidence Compliance 4.5.1 Implementation of Integrated IPM Plan for the estates includes the planting of beneficial plants Pest Management (IPM) plans shall and control of damage by pest and plant diseases. be monitored. Major Compliance

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The estates have an IPM programme for the planting of 3 types of beneficial plants for biocontrol, i.e. Cassia cobanensis, Antigonon leptopus and Turnera subulata. Observation: Subur, Buntar and Pelam Estates have IPM programmes and location maps for the planting of beneficial plants (Cassia cobanensis, Antigonon leptopus and Turnera Obs# subulata). However, OCL-01 (1) for Subur Estate and Pelam Estate, currently only Antigonon leptopus planted and the map only show the locations but not the planted area size. Also, there is no indication of the planned area size for the planting of Cassia cobanensis and Turnera subulata.

(2) for Buntar Estate, the map only show the planted locations of beneficial plants but not clear as to the types planted and the planted area size. Barn owl used for the control of rodents (rats). Barn Owl boxes census carried out and location maps available. Rat baiting is appropriately applied according to census results obtained. The pest infestation was minimal on the estate. Verified that presently, there were no cases of infestation by other pests such as bagworms and rhinoceros beetles. 4.5.2 Training of those involved in IPM IPM training conducted by for all those involved in IPM Complied implementation shall be demonstrated. Minor Compliance implementation. Training records for staff and workers on IPM implementation for the past 12 months were available and was verified to be satisfactorily maintained at the estate office. Criteria 4.6 Pesticides are used in ways that do not endanger health or the environment. Indicators Findings and Objective Evidence Compliance 4.6.1 Justification of all pesticides Register of agrochemicals use with written justification is available Complied used shall be demonstrated. The use (SOP 6.0 Appendix 2.0 Issue 1 / Rev 0 dated 01/06/2015). of selective products that are specific Examples of chemicals used are as follows: to the target pest, weed or disease and which have minimal effect on non-  Glyphosate isopropyl amine 41% – Ally target species shall be used where  Indaziflam 45.5% - Alion available. Verified that the specific pesticides had been used to deal with the Major Compliance respective target pest, weed or disease. 4.6.2 Records of pesticides use Records of pesticides and their active ingredients used, LD50, Complied (including active ingredients used and their LD50, area treated, amount of area treated, amount of a.i. applied per ha, and number of active ingredients applied per ha and applications have been maintained. number of applications) shall be provided. Major Compliance

4.6.3 Any use of pesticides shall be The KLK Group Policy for the estate to minimize the use of Complied minimised as part of a plan, and in pesticides in accordance with IPM plan is maintained. accordance with Integrated Pest Management (IPM) plans. There shall The pesticide reduction program is monitored on usage per be no prophylactic use of pesticides, hectare basis. except in specific situations identified There was no prophylactic use of pesticides carried out at the in industry’s Best Practice. estates. Major Compliance

4.6.4 Pesticides that are categorised Since 01/07/2011, no usage of paraquat as stated in KLK Group Complied as World Health Organisation Class Policy. 1A or 1B, or that are listed by the Stockholm or Rotterdam Conventions, and paraquat, are not used, except in

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Report No.: R9317/18-1 Kuala Lumpur Kepong Berhad, Batu Lintang Grouping Page 27 of 84 Re-certification (Transfer CB) specific situations identified in industry’s Best Practice. The use of such pesticides shall be minimised and eliminated as part of a plan, and shall only be used in exceptional circumstances. Pesticides selected for use are those officially registered under the Pesticides Act 1974 (Act 149) and the relevant provision (Section 53A); and in accordance with USECHH Regulations (2000). Minor Compliance

4.6.5 Pesticides shall only be handled, All pesticide operators (there are no contractor’s workers engaged Complied used or applied by persons who have for spraying) have attended training on the safe handling and completed the necessary training and application of pesticides in compliance with Regulation 22 of the shall always be applied in accordance Pesticides Act 1974. with the product label. Appropriate safety and application equipment shall Appropriate safety and application equipment (safety boots, safety be provided and used. helmets, rubber boots, cartridge masks, safety goggles, gloves All precautions attached to the and overalls) have been provided and used by the pesticides products shall be properly observed, operators. applied, and understood by workers (see Criterion 4.7). All precautions attached to the pesticides (MSDS) have been Major Compliance observed, applied and understood by the workers. The estate has adequate facilities for mixing of pesticides and cleaning up after work. There are suitable storage areas for PPE. Programme and training records verified to be satisfactory. The training include spraying technique, precautions and symptoms of toxic reactions such as skin disorders, rashes, mouth and throat pain, breathing difficulties or nail problems. Verified during field inspection and interviews with workers performing spraying and manuring activities at the estate. Portable warning signboards noted to be displayed at areas of spraying activity (5th Schedule). First Aid Kits found to be available (as per 4th Schedule) at the field blocks during pesticides spraying in the fields. The contents and usage were satisfactorily recorded. 4.6.6 Storage of all pesticides shall be Storage of pesticides found to be kept under lock and key and its Complied according to recognised best use in accordance with the Occupational Safety and Health Laws practices. All pesticide containers shall and Regulation 9 of the Pesticides Act 1974. be properly disposed of and not used for other purposes (see Criterion 5.3). Emergency showers and eye wash are available at the mixing Pesticides shall be stored in area and near the pesticides store in case of accidents and tested accordance to the Occupational Safety to be functional. and Material Safety Data Sheets (MSDS) are available in the store. Health Act 1994 (Act 514) and Regulations and Orders, Pesticides The MSDS are in English and Bahasa Malaysia (understood by Act 1974 (Act 149) and Regulations. the workers). Major Compliance Used chemical containers were either reused as containers for spraying solution. For disposal as scheduled waste, empty pesticide containers are triple rinsed and pierced at the bottom. 4.6.7 Application of pesticides shall be Pesticides had been applied using the Best Management Complied by proven methods that minimise risk Practices that minimize risk and impacts. and impacts. Minor Compliance The pesticide operators found to understand the use of the right nozzle, spray drift, spray quality and run-off. Programme and training records verified to be satisfactory. 4.6.8 Pesticides shall be applied The company has a policy not to carry out any aerial application Complied aerially only where there is documented justification. Communities of pesticides. shall be informed of impending aerial This policy is verified to be adhered at the PMU. pesticide applications with all relevant

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4.6.9 Evidence of continual training to The Annual Training Plan includes training on pesticides handling. Complied enhance knowledge and skills of All new pesticides operators were trained before being assigned employees and associated to work with pesticides. In addition, based upon training needs, smallholders on pesticide handling the existing pesticide operators (there are no contractor’s workers shall be demonstrated or made available. (see Criterion 4.8). engaged for spraying) attended continual training to enhance their Minor Compliance knowledge and skills on pesticides handling. Training attendance and records for 2017 for related personnel were verified to be maintained. Information and safety precautions on the pesticides displayed on the notice board and next to the pesticides in the store. 4.6.10 Proper disposal of waste Scheduled waste had been disposed of through licensed Complied material, according to procedures that contractors approved by DOE. are fully understood by workers and managers shall be demonstrated (see Records of scheduled waste collection at 180 days interval Criterion 5.3). verified to be satisfactorily maintained. Minor Compliance 4.6.11 Specific annual medical The CHRA reports for the estates verified to be within the 5 years Complied surveillance for pesticide operators, and documented action to treat related validity period and recommendations have been satisfactorily health conditions, shall be followed: demonstrated. (a) Subur Estate – CHRA report dated Oct 2013. Major Compliance (b) Buntar Estate – CHRA report dated 22/11/2017. (c) Pelam Estate – CHRA report dated 29/02/2018. (d) Batu Lintang Estate – CHRA report dated 24/11/2017. Latest medical surveillance examination carried out for the workers (including sprayers) exposed to chemicals and pesticides on the following dates: (a) Subur Estate – 22/02/2018. (b) Buntar Estate –16/12/2017. (c) Pelam Estate – 12/05/2018. (d) Batu Lintang Estate – 16/12/2017. Samples of the medical surveillance reports were checked and no abnormalities reported by the Medical Doctor. The medical reports showed that there was no case of low blood cholinesterase levels. All the workers declared by the Medical Doctor as fit for work with pesticides. It is confirmed by the Estate Manager that any worker with health condition considered as unfit for work with pesticides shall be re- designated to other types of field work. No such cases are found in the estates as at the date of assessment. Pesticides operators were interviewed during field visits and feedback received that they do not have any symptoms of toxic reactions such as skin disorders, rashes, mouth and throat pain, breathing difficulties or nail problems. Although there were female manurers, all the sprayers are males. The female manurers knew about not being allowed to do work having exposure to chemicals and pesticides during pregnancy and breast-feeding. Besides the annual medical surveillance, monthly clinical checks every 3 months (to check lungs gastro intestinal, urinary system, nails, skin, etc.) also carried out by Health Assistant on sprayers and records maintained indicate no cases of toxic reactions. 4.6.12 No work with pesticides shall Verified from records, field inspections and interviews that no Complied be undertaken by pregnant or breast- feeding women. pregnant or breast-feeding woman had been offered or engaged Major Compliance in work involving pesticides handling.

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Criteria 4.7 An occupational health and safety plan is documented, effectively communicated and implemented. Indicators Findings and Objective Evidence Compliance The occupational health and safety Occupational Safety and Health (OSH) plan in compliance with Complied plan shall cover the following: OSH Act and Factory & Machinery Act 1967 was documented and implemented. 4.7.1 An occupational health and OSH Policy found to be clearly displayed at POM and in the safety policy shall be in place. An occupational health and safety plan estate office. Adequate posters, regulations, newsletters were covering all activities shall be prominently displayed on notice boards. Interviewed workers documented and implemented, and its demonstrated awareness towards occupational safety and health. effectiveness monitored. The Safety & Health Officer is in charge of safety and health Major Compliance planning, operation & coordination. Mill & Assistant Mill Managers and Estate Managers / Assistant Estate Managers are also directly involved. Records on training had been verified at the POM and estates. Analysis on the understanding of training by the workers had been verified. 4.7.2 All operations where health and Risk assessment carried out on operations where health and Complied safety is an issue shall be risk safety is an issue in order to determine the significant hazards. assessed, and procedures and actions Significant hazards determined and documented include noise shall be documented and implemented exposure, pesticides/ chemicals exposure, accident, fire. to address the identified issues. All precautions attached to products shall Procedures and actions implemented to mitigate the hazards. be properly observed and applied to Assessment of noise levels in the POM was done on 02/02/2016 the workers. and Consultant (Procoma Environment Sdn Bhd.) Report is Major Compliance available. Work areas identified with high noise levels are the boiler station and engine room where noise level exceeded 85 db. Mill management have taken steps to reduce the noise levels by construction of a room to isolate the gen sets, reducing the exposure time to high noise and mandatory use of both ear plugs and ear mufflers.

The latest audiogram was carried out for 23 POM employees on 14/03/2018. There were 3 employees whose audiometric reports indicated slight hearing impairment and audiometric re-test carried out within six months. There was no case of worker with a significant threshold shift. The OSHA Doctor submitted the audiometric report and JKKP 7 to JKKP Putrajaya and Kedah. The audiometric re-test report stated that there is no noise induced hearing loss (NIHL) and recommendation to reduce noise exposure for these workers. The Doctor will only refer worker with Induced Hearing Loss to SOCSO for benefits in accordance with the regulations. Baseline audiogram and occupational and medical history records of workers maintained. The employees exposed to high noise levels were interviewed. The workers are aware of the danger of hearing loss due to prolonged exposure to high noise. The workers knew about the complaints process and mechanism available. “Permit to work” system applied at the POM. Staff and workers have been trained and certified by NIOSH for gas entrant and stand-by involving work in confined space. Appropriate PPE (safety boots, safety helmets, rubber boots, cartridge masks, safety goggles, gloves, overalls, ear plugs, ear mufflers) verified to be provided to and being used by the workers. Associated training provided to address safety and health issues. Warning signs sighted at high noise areas and ear plugs and ear mufflers to be worn. There are also warning signs to use other PPE such as helmet and safety boots.

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An audit for determining compliance with the minimum standards had been conducted on all types of PPE used. Adequate fire extinguishers and hose reels found to be located at strategic locations, operational and maintained in good conditions. Location map of fire extinguishers is available. First Aid equipment was available at POM, estates and at worksites. Samples of First Aid box was checked and contents found to be complete and in usable order during field visit. Training for workers in First Aid was carried out in the mill and estates and records maintained. The POM and estates have established their accident reporting KPI and incident monitoring implemented. Yearly reporting of JKKP8 regulations was submitted to JKKP on time, i.e. in January of each year. Supporting documentations and evidences of cases reported are maintained and adequately followed up including status of compensation payments made to victims / workers. The Safety & Health Officer maintains records on the rate of accidents to workmen, trends in rate of accidents, fatalities and non-fatalities captured to prevent mishaps. Verified that additional HIRARC reviews also made by the Safety & Health team upon occurrence of incidences or accidents. 4.7.3 All workers involved in the Training programme planned for year 2018 has included all Complied operation shall be adequately trained in safe working practices (see categories of workers. Criterion 4.8). Adequate and Appropriate trainings on safe working practices are planned for: appropriate protective equipment shall - workers exposed to machinery and high noise levels, be available to all workers at the place - workers working in confined space, of work to cover all potentially - harvesters and loaders, hazardous operations, such as - pesticides operators and manurers . pesticide application, machine operations, and land preparation, Records of the trainings conducted in year 2017 are available and harvesting and, if it is used, burning. trainings held included firefighting, fire drill, first aid training, Major Compliance Emergency Response Team training and SOP training for sprayers, manurers, harvesters, loaders, tractor drivers, contractors and contractors’ workers (for FFB transportation). The above trainings were conducted and records were maintained. Evaluations were carried out on each of the trainings to determine its effectiveness. 4.7.4 The responsible person/persons The responsible person (usually the Mandore or Headperson) had Complied shall be identified. There shall be been identified. Records of regular meetings between the records of regular meetings between responsible person and workers to discuss about health and the responsible person/s and workers. safety had been verified to be satisfactory. Understanding of the Concerns of all parties about health, safety and welfare shall be discussed safety and health requirements was also verified during interviews at these meetings, and any issues at field visit with the respective mandores available on duty. raised shall be recorded. Major Compliance

4.7.5 Accident and emergency Accident and emergency procedures had been written in English Complied procedures shall exist and instructions and Bahasa Malaysia and briefed to staff, workers, contractors shall be clearly understood by all and visitors. workers. Accident procedures shall be Workers trained in First Aid were present in the mill and field available in the appropriate language of the workforce. Assigned operatives operations. First Aid Kits are kept unlocked for emergency use. trained in First Aid should be present First Aid Kits were available at worksites and contents were in both field and other operations, and checked to be sufficient. Records on all accidents had been first aid equipment shall be available verified to be maintained satisfactorily. at worksites. Records of all accidents Quarterly review on accident cases had been carried out during shall be kept and periodically quarterly meeting of Safety, & Health Committee. Records on the reviewed. status of follow up done were updated. Minor Compliance

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4.7.6 All workers shall be provided Medical care had been provided to all the workers. Complied with medical care, and covered by accident insurance. Local workers are covered by SOCSO, whereas foreign workers Minor Compliance are covered by Foreign Workers Compensation Scheme with insurance company. 4.7.7 Occupational injuries shall be Records on Lost Time Accident (LTA) metrics for 2017 was Complied recorded using Lost Time Accident (LTA) metrics. verified to be satisfactorily maintained. Minor Compliance No cases of incidences and accidents for year 2017 as reported in the JKKP8 submitted to DOSH. Criteria 4.8 All staff, workers, smallholders and contract workers are appropriately trained. Indicators Findings and Objective Evidence Compliance 4.8.1 A formal training programme Training on RSPO P&C and RSPO Supply Chain were conducted Complied shall be in place that covers all aspects of the RSPO Principles and on 18/04/2018. Interviews confirmed the satisfactory level of Criteria, and that includes regular understanding on the requirements. assessments of training needs and Training for various categories of operators, including all field and documentation of the programme. office staff, with regards to their duties and training needs had Major Compliance been reviewed on annual basis and appropriate training including

‘on-job’ training / supervision and briefings were satisfactorily documented. This was further confirmed during interviews done with sampled workers at the POM and estate. 4.8.2 Records of training for each Records of training provided for each employee, including new Complied employee shall be maintained. Minor Compliance employees were available and found to be satisfactorily maintained.

Principle 5: Environmental responsibility and conservation of natural resources and biodiversity Criteria 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. Indicators Findings and Objective Evidence Compliance 5.1.1 An environmental impact The Environmental Aspect and Impacts Assessment were Complied assessment (EIA) shall be documented. conducted and well documented. For both the POM and estates, It was reviewed on 18, 19 and 20 Mac 2018. The scope of Major Compliance assessment had included the management of mill effluents, management of pests and disease (IPM), maintenance of roads, drainage system fertilizing, spraying, transportation of FFB, schedule waste and garbage disposal, accordingly to the local requirements. The report had also included the action plans and recommendations to mitigate the negative effects and to promote the positive ones. The assessment had also included the relevant stakeholder to identify impacts and develop the mitigation measures such as relevant conservation activities applicable to the mill and estates. 5.1.2 Where the identification of The mill and all the estates have conducted their Environmental impacts requires changes in current impact assessment (EIA). The EIA is reviewed on annual basis. practices, in order to mitigate negative The findings are recorded in document titled “Environmental effects, a timetable for change shall be Aspect & Impact Assessment (EIA)”. developed and implemented within a comprehensive action plan. The action The environmental management plan is also in place and plan shall identify the responsible documented. This includes the potential impacts and measures to person/persons. mitigate the negative impacts. The identification of responsible

person was also included. Minor Compliance The environmental management plan is being implemented satisfactorily and effectively.

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Nonetheless, it was observed at Batu Lintang Estate that Obs# there is no indicator at site on the location of the water SH-01 sampling point. 5.1.3 This plan shall incorporate a At mill and all the estates, monitoring of the documented monitoring protocol, adaptive to operational changes, which shall be environmental improvement plans is ongoing. implemented to monitor the Implementation and monitoring of the documented environmental effectiveness of the mitigation improvement plans was reviewed on 13 Mac 2018. The review measures. The plan shall be reviewed has taken into consideration the mitigation of negative impacts as a minimum every two years to and promotion of positive ones. reflect the results of monitoring and where there are operational changes At the POM, the POME, ash and EFB is being delivered/recycle to that may have positive and negative the plantation for fertiliser and moisture retention purposes. environmental impacts. Record on the delivery and usage of POME and EFB was made

available during the audit. Minor Compliance At estates visited (Subur estate, Buntar estate, Pelam estate), it

was found that the disposal of plantation waste materials was properly monitored and recorded. The waste materials (mostly fertilizer bags and plastics) were recycled and recorded in a register book. Stacking of fronts was also done effectively.

Monitoring and implementation of the environmental improvement plan were however not adhered to and found to be not conclusively implemented. Location: Batu Lintang Estate, Ghim Khoon Division Minor NC# (Division 4) SH-01 A natural stream running across the estate was without the demarcation of the riparian zone.

In addition, there is no evidence of the water quality being sampled and analysed. Water sampling point was also not indicated on the map and at site. Criteria 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. Indicators Findings and Objective Evidence Compliance 5.2.1 Information shall be collated in a HCV assessment for all estates visited were conducted in house High Conservation Value (HCV) assessment that includes both the by the sustainability team and documented in reports dated 18 Mac 2018 and 20 Mac 2018. There was no HCV present inside planted area itself and relevant wider landscape-level considerations (such the area at both the POM and estates. as wildlife corridors). The exercise has also taken into consideration all aspects of environmentally sensitive areas such as pond that is inside the Major Compliance management areas. Visits to site confirmed that all estates are surrounded by oil palm estates, belonging either to other companies or smallholders.

Perimeter boundaries bordering the estates with other lands were

well demarcated with markers. Trenches were also dug to clearly demarcate the perimeter boundary of the estate. At some instances, estate roads also serve as perimeter boundary. Location: Subur Estate, Norseman Division. It was observed that an area has been identified as a water catchment area, as it served as a water source to the estate. Major NC# Visit to site had established that this area is actually the starting point of a stream that runs across the plantation. SH-01 As it was not correctly identified and assessed, action plans to manage this area has not been planned and implemented. 5.2.2 Where rare, threatened or Record showed no presence of the HCV/RTE within their Complied endangered (RTE) species, or HCVs, plantation boundary. However, occurrence of RTE, if any, will be

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Report No.: R9317/18-1 Kuala Lumpur Kepong Berhad, Batu Lintang Grouping Page 33 of 84 Re-certification (Transfer CB) are present or are affected by recorded. Nevertheless, a monitoring plan is in place and plantation or mill operations, measures being taken to maintain/enhance the surrounding appropriate measures that are management area. The measures were actively implemented and expected to maintain and/or enhance on going monitoring being done. them shall be implemented through an action plan. Regular patrols within the mill and estates were being carried out and findings recorded by the respective Estate executives to Major Compliance monitor the management areas. Monitoring and control of any illegal hunting, fishing or collecting activities was also implemented. Also, signage that prohibit hunting, fishing and water polluting activities were verified on-site, found to have been satisfactorily maintained. Program to educate the workforce about the status of RTE is in Complied 5.2.3 There shall be a programme to place. regularly educate the workforce about The training program on the awareness of this subject matter was the status of these RTE species, and conducted and extended to include officials and workers of the appropriate disciplinary measures shall be instituted in accordance with estates. All estates visited had extended the awareness program. company rules and national law if any Training has been conducted on 13 Feb 2018 and 18 Apr 2018.. individual working for the company is Record on the training program was made available during the found to capture, harm, collect or kill audit. these species. There was also evidence of commitment to discourage any illegal

Minor Compliance or inappropriate hunting, fishing or collecting activities via the signage erected around the affected areas which prohibit such activities. 5.2.4 Where an action plan has been The status of HCV and RTE species that are affected by Complied created there shall be ongoing plantation or mill operations was documented and reported; monitoring: • The status of HCV and RTE species Management plans were established and on-going monitoring that are affected by plantation or mill was done by the Estate managers. operations shall be documented and The overall management and status of HCV/RTE at the estates reported; were reviewed and monitored and is ongoing. • Outcomes of monitoring shall be fed back into the action plan. Verification made during on-site assessment found it to be effectively implemented. Currently, there is no such occurrence of Minor Compliance RTE species in their estates. 5.2.5 Where HCV set-asides with It was verified that there has been no instance of HCV set-aside Complied existing rights of local communities have been identified, there shall be that conflicts with the rights of local communities at the estates and evidence of a negotiated agreement mill. that optimally safeguards both the HCVs and these rights.

Minor Compliance Criteria 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. Indicators Findings and Objective Evidence Compliance 5.3.1 All waste products and sources All waste products and sources of pollution were identified and Complied of pollution shall be identified and documented. Waste generated at both the mill and estates are documented. identified in document “Environmental Aspect and Impact Assessment”. Major Compliance The documentation and identification of all the waste products such as scheduled waste, domestic waste , clinical waste and recyclable waste such as metal, plastic, mill waste and polluting materials e g. EFB, POME, Stack emissions and Boiler ashes were maintained and monitored at the mill. Scheduled Waste identified included spent hydraulic oil (SW 305), spent lubricant oil (SW 306) , used chemical containers/drums (SW 409), used filters (SW 410) , clinical waste (SW 404) and used batteries (SW 102).

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Records on the usage and disposal were well recorded and documented. Segregation of wastes i.e. general wastes and scheduled wastes was verified to be satisfactory carried out in estate and mill. Proper storage areas were identified for the storage of the recyclable wastes at the estate and mill. 5.3.2 All chemicals and their At the mill, the disposal of used chemicals and containers were Complied containers shall be disposed of responsibly. done in accordance with their schedule on waste management as planned.

Major Compliance Stores for scheduled waste were inspected and audited at site i.e. mill, and disposal was done by scheduled waste disposal company authorized and licensed by Department of Environment, TexCycle Sdn Bhd. Latest disposal record was on 3 May 2018. The mill has a proper Scheduled Waste Store for storing scheduled waste until time of disposal by DOE authorized waste disposal contractor. An inventory on all the chemical and containers used was available and up to date. 5.3.3 A waste management and The waste management and disposal plan were in place at both disposal plan to avoid or reduce pollution shall be documented and the mill and estate. It has been documented and implemented as required and is being carried out responsibly. implemented. Segregation of wastes i.e. general wastes and scheduled wastes Minor Compliance was verified to be satisfactory carried out. Proper storage areas were identified for the storage of the recyclable wastes at the estates and mill. Appropriate secondary containment for the diesel skid tanks, chemical and scheduled waste storage areas

was verified to be maintained at the mill.

Scheduled waste disposal at estate was done by appointed contractors (Aliran Segar Sdn Bhd, Kualiti Alam Sdn Bhd and Texcycle Sdn Bhd) that are licensed by the Department of Environment. Latest disposal consignments were on 26 Feb 2018, 01 Jun 2018 and 03 May 2018. Records were made available for audit. The mill effluent was finally discharge for land application, with approval from the Department of Environment. The solid waste management and disposal plan using landfills was available at the estates. The landfill is used mainly for disposal of household/line

site waste. Landfill management is satisfactory.

Recycling of crop residues / biomass i.e. EFB, pressed cake/decanter cake and POME had been implemented and applied to the estates, for the application. Management of EFB application plans and progress reports were verified to be satisfactory.

Recycling bins of three different colour codes for specific recycle waste were available in the mill and estate. Location: (a) Subur Estate, Home and Sungai Pulau Divisions (b) Pelam Estate, Home and Nagalelai Divisions (c) Batu Lintang Estate, Home and Ghim Khoon (Division 4) Divisions. Minor NC# It was observed that unwanted fertiliser bags and other SH-02 plastic waste materials, such as plastic bottles were evidently scattered around the plantation.

Location: Batu Lintang Estate, Home Division

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At Batu Lintang Estate, Home Division, plastic bottles were evidently seen being accumulated at the water gate to the final discharge point.

Observation raised: Landfill Management Obs# At some estates, e.g. Norseman Division of Subur Estate, the SH-02 date of opening and closing of landfill was not indicated. At estates visited (Subur estate, Buntar estate, Pelam estate), it was found that the disposal of plantation waste materials was properly monitored and recorded. The waste materials (mostly fertilizer bags and plastics) were recycled and recorded in a register book. Stacking of fronts was also done effectively. Monitoring and implementation of the environmental improvement plan were adhered to and found to be effectively implemented. Criteria 5.4 Efficiency of fossil fuel use and the use of renewable energy is optimised.

Indicators Findings and Objective Evidence Compliance 5.4.1 A plan for improving efficiency of Monthly record on energy consumption for both renewable and Complied the use of fossil fuels and to optimise renewable energy shall be in place and non-renewable sources were kept and documented. It is monitored to optimise use of renewable energy. Data is being monitored. compiled for comparison and control for future improvement. Minor Compliance Visit to the mill showed evident that they are compiling the data, document it for further action to improve on their efficiency of using the renewable and non-renewable energy. At the mill, the monthly record was tabulated to show/record the amount of FFB processed, CPO produced, palm kernel produced, the usage of water, diesel usage, electrical power usage, fiber & shell usage and also the B.O.D level of the effluent discharge. Apart from using diesel, electricity generation was through steam turbine and boiler where Palm fiber and PK shells were used as renewable energy/fuel. At the estate, diesel consumption was also monitored on a monthly basis. It was verified that energy usage are being monitored especially at the mill for better control and comparison of trends. Criteria 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. Indicators Findings and Objective Evidence Compliance 5.5.1 There shall be no land Estates and mill had observed the policy of ‘Zero open burning’ Complied preparation by burning, other than in specific situations as identified in the for any replanting, if any, at the estate. ‘Guidelines for the Implementation of Field inspections made at the estate, showed no evidence of open the ASEAN Policy on Zero Burning’ burning. 2003, or comparable guidelines in other regions.

Major Compliance 5.5.2 Where fire has been used for The estate adhered to the ‘zero burning ‘policy for replanting at Complied preparing land for replanting, there shall be evidence of prior approval of the estates. The old trees were chopped and left to rot at site. the controlled burning as specified in Also, there was no evidence of any burning of domestic waste at ‘Guidelines for the Implementation of the housing line. the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions.

Minor Compliance

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Criteria 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored. Indicators Findings and Objective Evidence Compliance 5.6.1 An assessment of all polluting Assessment on all polluting activities including gaseous Complied activities shall be conducted, including emissions, particulate and effluent has been made and gaseous emissions, particulate/soot documented. emissions and effluent (see Criterion 4.4). Monitoring of mill gas emissions is being done online using the Continuous Emissions Monitoring System (CEMS). Report Major Compliance showed evident that the emission is within the permissible limits of DOE as verified by documents made available during the on-site visit to the mill. POME treatment, monitoring and land application is monitored, maintained and adhered to DOE regulations. Records were made available at both the POM and estates during the audit. 5.6.2 Significant pollutants and Identification of significant pollutants and greenhouse gas (GHG) Complied greenhouse gas (GHG) emissions shall be identified, and plans to reduce emissions has been done and documented. e.g. POME, diesel / or minimise them implemented. fuel, water, chemical and fertilizer. Their usage have been recorded and documented at both the POM and estates. Fibre Major Compliance and shell is being used as fuel for the boiler, as substitute for energy and as a measure to reduce the use of diesel at the POM. The plan has been implemented but the changes have not been very significant. Also at the estates, the use of chemicals is only done when necessary and when there is no other option available. 5.6.3 A monitoring system shall be in Monitoring and reporting of the significant pollutants to water, Complied place, with regular reporting on progress for these significant gaseous emissions to air and contamination on land are in place. pollutants and emissions from estate Tools and systems used include the DOE online CEMS and mill operations, using appropriate monitoring for air emissions, boiler stack monitoring done once tools. every 3 months (latest report dated 15 Mac 2018). The schedule waste disposal (latest dated 08 Feb 2018) were adhering to DOE Minor Compliance requirements. Water quality at discharge points was also monitored as per Department of Irrigation and Drainage (DID) regulations. Raw/waste water was analysed quarterly while the treated water being analysed twice yearly and found to comply to the requirements. Water samples at the final discharge point were regularly taken and tested by mill environment officer in charge and analysed monthly to ensure compliance to DOE requirements at final discharge point. The water samples were sent for analysis. Records were maintained and verified on-site that the BOD met the permissible regulatory limit. Palm GHG summary report has also been documented for tabulated for financial year period (Oct 2016 – Sep 2017) using RSPO PalmGHG Version 3.0.1.

Principle 6: Responsible consideration of employees, and of individuals and communities affected by growers and mill 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. Indicators Findings and Objective Evidence Compliance

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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6.1.1 A social impact assessment At the PMU, social impact assessment is conducted using various Complied (SIA) including records of meetings methods, i.e. annual internal and external stakeholders meetings, shall be documented. bi-annual generic internal and external surveys as well as topic Major Compliance specific surveys mostly involving the internal stakeholders. Each of this activity is appropriately documented and analysed. Comments were received from the participants and actions taken to address the comments were verified to be satisfactory by the auditor. For example external stakeholder meetings were conducted in Pelam Estate on 11 Mar 2018 and in Subur Estate on 7 Feb 2018. In addition bi-annual generic surveys were conducted at Batu Lintang POM on 12 Apr 2018 involving 89 internal stakeholder, while in Pelam Estate the same activity was conducted on 11 Mar 2018 involving 21 external stakeholders. Surveys to gather opinions of stakeholders on specific issues were also conducted in Buntar Estate on 15 Apr 2018 involving 20 internal stakeholders on issues related to construction of new staff bungalows. 6.1.2 There shall be evidence that the The group has considered issues of social impact to employees Complied assessment has been done with the and communities affected by their activities. Records of meeting participation of affected parties. with stakeholders indicated discussions held were generally on Major Compliance matters pertaining to access roads and use rights, working conditions, cultural/festival activities, health facilities and other community concerns as stated in 6.1.1. In all minutes of stakeholders, women’s committee and trade union representative meetings list of attendance and photos of the session were kept in file showing evidence of participation of affected parties. Through verification of entries made in the stakeholder logbook in POM, the estate and interviews made, it was clear that the workers are well informed of issues related to their rights. 6.1.3 Plans for avoidance or mitigation For each comments received during meetings or surveys Complied of negative impacts and promotion of conducted by the POM and the estate, a time table of activities the positive ones, and monitoring of were developed with time frame on implementation plans and impacts identified, shall be developed persons responsible. Comments received through the meetings, in consultation with the affected stakeholder logbook, etc., were recorded and also indicated with parties, documented and timetabled, status either continuous, completed or pending. For example including responsibilities for during stakeholder meeting, the stakeholders requested implementation. assistance from the estate management to clean up surrounding Major Compliance area of Pusat Anak Permata Negara and Clinic Malau, the estate management was verified to have arranged its general workers to provide assistance during the clean-up programme. 6.1.4 The plans shall be reviewed as a The plans are reviewed annually together with affected parties, minimum once every two years and especially the workers, who were consulted during the internal updated as necessary, in those cases stakeholder and trade union representative meetings. where the review has concluded that However, in Subur Estate 38% of respondents participating in changes should be made to current Minor NC# practices. a survey conducted by Subur Estate management on 06 Feb There shall be evidence that the 2018 stated that they are not satisfied with the facilities JMD-01 review includes the participation of provided at the linesite. However, it was found further affected parties. investigations were not conducted to determine which Minor Compliance facilities that they are not satisfied with and for what reasons. 6.1.5 Particular attention shall be paid There are no smallholder schemes at the PMU. Thus this is not Not to the impacts of smallholder schemes applicable. applicable (where the plantation includes such a scheme). Minor Compliance 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.

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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Indicators Findings and Objective Evidence Compliance 6.2.1 Consultation and communication KLK Grievance Procedure is available via website links provided Complied procedures shall be documented. below; Major Compliance 1. https://www.klk.com.my/corporate-sustainability/wp- content/uploads/2017/12/GrievanceProcedure.pdf 2. https://www.klk.com.my/corporate-sustainability/market- place/sustainability-policy/#grievance 3. https://www.klk.com.my/corporate-sustainability/e-grievance- form/ The PMU has adopted an open and transparent method of communication and consultation when dealing with relevant parties, e.g. its workers, government agencies, contractors, neighbouring plantations by personal invitation to attend the internal and external stakeholders’ meetings as well as surveys on general and specific issues. 6.2.2 A management official Records sighted show evidence of appointed teams headed by Complied responsible for these issues shall be the Managers and assisted by Assistant Managers. e.g. Mr. nominated. Vikhraman Muniandy at Batu Lintang POM, Mr. Fadzil Shah, at Minor Compliance Pelam Estate and Mr. Hoi Kang Kyan at Buntar Estate. 6.2.3 A list of stakeholders, records of The list of stakeholders, communication and actions taken were Complied all communication, including maintained in file. Consultations with various stakeholders held confirmation of receipt and that effort and meeting minutes have been verified to be satisfactory during are made to ensure understanding by the audit. affected parties, and records of actions taken in response to input from stakeholders, shall be maintained. Minor Compliance 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. Indicators Findings and Objective Evidence Compliance 6.3.1 The system, open to all affected Both the POM and estate have established complaints and Complied parties, shall resolve disputes in an grievances procedures and they were all well implemented. effective, timely and appropriate Stakeholder logbooks were sighted in all audited estates and manner, ensuring anonymity of actively used by workers. complainants and whistleblowers, where requested. Timelines for response to complaints and grievances are Major Compliance indicated in the logbook. Generally respond time for minor requests will be within 2-3 days. Stakeholder Logbooks are for complaints which are not private and confidential in nature. For reports which are related to private matters such as sexual harassment reports separate logbooks are prepared. Complainants are given the option whether the make the report personally or through nominated workers’ representatives. It is verified during on-site interviews that there were no incidents of dispute or grievance of a serious nature. 6.3.2 Documentation of both the The PMU have a system for handling compensation claim in an Complied process by which a dispute was effective, timely and appropriate manner. So far there has not resolved and the outcome shall be been any dispute raised which was verified during on-site available. interviews with the workers. Major Compliance Criterion 6.4

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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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. Indicators Findings and Objective Evidence Compliance 6.4.1 A procedure for identifying legal, There are borders of the estates audited adjacent to villages in Complied customary or user rights, and a the area. E.g. Buntar Estate is located very close to Lubok Buntar procedure for identifying people small township and Batu Lintang Estate is neighbouring to a entitled to compensation, shall be in Sungai Salleh small township. However, from the minutes of place. meeting between external stakeholders and the estate Major Compliance managements as well as interviews conducted by the auditors throughout the audit period, it was concluded that there were no issues related to legal, customary or user rights over the land developed by the estate. 6.4.2 A procedure for calculating and The KLK Group has a procedure for calculating and distributing Complied distributing fair compensation compensation which is available for verification. The procedure is (monetary or otherwise) shall be written in Land acquisition (for OP planting) SOP 3A issue/rev 1/0 established and implemented, dated 01/01/2017. It outlines the procedure for identifying legal, monitored and evaluated in a participatory way, and corrective customary or user rights. The procedures stated that the actions taken as a result of this compensation shall take into account issues such as proof of legal evaluation. This procedure shall take versus communal ownership in ethnic group, communities’ period into account: gender differences in the of residing and origins and gender difference in the ability to claim power to claim rights, ownership and rights. access to land; differences of transmigrants and long-established To date, there has been no dispute by any parties reported at the communities; and differences in ethnic PMU. groups’ proof of legal versus communal ownership of land. Minor Compliance 6.4.3 The process and outcome of any To date, there has been no dispute by any parties reported. Complied negotiated agreements and Therefore the process and outcome of compensation could not be compensation claims shall be observed. documented, with evidence of the participation of affected parties, and made publicly available. Major Compliance 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. Indicators Findings and Objective Evidence Compliance 6.5.1 Documentation of pay and Offer letters and work contracts for local staff and foreign workers Complied conditions shall be available. were verified. The contracts met the industry minimum standards, Major Compliance including extra pays under the statutory fringe benefits. The pay slips for workers at the estates and mill were verified to contain all necessary information and can easily be understood by the workers, e.g. type and rate of works completed, days offered, days worked, days absent, total deduction, etc. Review of field workers’ pay slips showed that the calculation of pay is clearly itemised, for example, normal working day rate, normal working day overtime rate, rest day work, rest day work overtime, public holiday work, public holiday work overtime, annual leave pay in December, sick leave pay and deductions. 6.5.2 Labour laws, union agreements All employment contracts are in languages understood by the or direct contracts of employment workers, e.g. in Bahasa Indonesia for Indonesian workers, in detailing payments and conditions of Bengali language for Bangladesh workers and in Tamil language employment (e.g. working hours, for Indian workers. Through interviews it was verified that the deductions, overtime, sickness, contracts were clearly understood by the foreign workers when holiday entitlement, maternity leave, they were able to give correct responds on daily minimum rate,

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9317/18-1 Kuala Lumpur Kepong Berhad, Batu Lintang Grouping Page 40 of 84 Re-certification (Transfer CB) reasons for dismissal, period of notice, medical entitlement, public holiday entitlement and pay for work etc.) shall be available in the during public holiday, etc. Local workers are covered by NUPW- languages understood by the workers MAPA agreement which is written in English. or explained carefully to them by a During the audit, workers found to have received below minimum management official. Major Compliance wages are those worked less than offered working days by the POM or the estate mainly due to absenteeism, but there also cases such as long unpaid holidays. All workers at the POM and at the estate, except harvesters, carriers and loaders, are paid

based on daily rate.

Observation raised:

“External Contractor Agreement Checklist” did not include valid driving license, road tax of the vehicles used, Good OBS# Driving License [GDL], etc. documents to be submitted to the JMD-01 management as part of contractor legal compliance monitoring. 6.5.3 Growers and millers shall The PMU has provided adequate housing, water supplies, provide adequate housing, water medical, educational and welfare amenities in accordance with supplies, medical, educational and Local - Workers’ Minimum Standard of Housing and Amenities Act welfare amenities to national 1990 to the workers. standards or above, where no such public facilities are available or Housing, electricity and water supply accessible. The workers are staying in the housing quarters provided by the Minor Compliance PMU. No rental charges by the PMU. Maintenance of the houses is the responsibility of the PMU as well. Electricity and water are supplied 24-hours. The housing quarters are inspected by the

Medical Assistant once a week. Fogging for anti-malaria purposes are conducted periodically. Schools A primary government schools are located within reach of the POM and estates audited. However, number of students from the POM and estates audited are very low as families of the workers and staff are staying outside.

Sundry shops

Sundry shops are available within the vicinity of the POM and the estates audited located at the neighbouring small townships. Interviews with the workers confirmed that the sundry shops are complete with most household sundries as they are also frequented by the local people. Neighbouring townships to the

POM and the estates includes Malau township near to Pelam Estate, Lubok Buntar township near to Buntar Estate, Sungai Salleh township near the POM. Medical clinics At the POM and estates audited, the clinics available are with minimal services. This is mainly due to availability of government managed clinics at the neighbouring townships. Any major treatment will immediately be sent to the clinics. Medical fees at the government clinics as well as the transport to the clinics are covered by the managements. In any case, the management still provide HAs at the estate clinics to treat minor illnesses, maintain

medical records and assisting in maintenance of the sanitary level at the workers linesite. Visiting Medical Officer [VMO] was verified to have visited the clinics and the linesites at least once in a month if not more frequent. However, in Batu Lintang POM and all estates audited Minor NC# evidence was not provided by managements that foreign workers are able to request amendment on the name of their JMD-02 next-of-kin in the Foreign Workers Compensation Scheme.

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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Futhermore, in Subur Estate and Pelam Estate unused water tanks without proper storage were seen which potentially will be breeding grounds for mosquitoes. 6.5.4 Growers and millers shall make The PMU has ensured that the workers have access to adequate, Complied demonstrable efforts to monitor and sufficient and affordable food by providing the workers with local improve workers’ access to adequate, sundry shops within their compounds. sufficient and affordable food. The POM and estates audited as mentioned above are located Minor Compliance near townships such as Sungai Salleh, Lubok Buntar and Malau. 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. Indicators Findings and Objective Evidence Compliance 6.6.1 A published statement in local The published statements of policy which recognises employee’s Complied languages recognising freedom of freedom of association is established in “KLK Sustainability association shall be available. Policy” dated 01/12/2014. It was noted that the policy is available Major Compliance and widely displayed to the public. Under clause 3.2 (v) of the policy it indicates Freedom of Association and Right to Collective Bargaining where workers are allowed to join collective association. 6.6.2 Minutes of meetings with main The PMU allowed the workers to join trade unions and this Complied trade unions or workers evidence through deduction of their wages directly to pay National representatives shall be documented. Union for Plantation Workers [NUPW] and periodic meetings of Minor Compliance NUPW representatives with the PMU management. For example latest trade union representative meeting with the management at the POM was on 21 Mar 2017 with 8 attendees, in Pelam Estate on 14 May 2018 with 11 attendees NUPW representatives, who received formal invitation to attend NUPW State Committee meeting during working days will be paid at daily rate. Criterion 6.7 Children are not employed or exploited. Indicators Findings and Objective Evidence Compliance 6.7.1 There shall be documentary The published statements of policy which recognises no child Complied evidence that minimum age labour is established in “KLK Sustainability Policy” dated requirements are met. 01/12/2014. Under clause 3.2 (ii) of the policy it indicates that the Major Compliance group and its suppliers/contractors shall not knowingly employ or support the use of child labour. During the audit there was no evidence of any child labor being used at the PMU. Inspection of the employment records including site visit to the estates and interviews confirmed that this criterion has been complied with. 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. Indicators Findings and Objective Evidence Compliance 6.8.1 A publicly available equal The published statements of policy which recognises equal Complied opportunities policy including opportunities is established in “KLK Sustainability Policy” dated identification of relevant/affected 01/12/2014. Under clause 3.2 (ix) of the policy it indicates that the groups in the local environment shall group and its suppliers/contractors shall ensure equal be documented. opportunities in the work place. All decisions shall be made based Major Compliance on business needs, job requirements and individual qualifications

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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and without regard to race, religion or gender. Inspections including interviews in the estate, checking of the employment records including foreign workers, pay slips and deductions of wages (according to law) confirmed that this criterion had been maintained. 6.8.2 Evidence shall be provided that Based on interviews and feedback from the employees, foreign Complied employees and groups including local workers, review of NUPW meeting minutes and Stakeholder communities, women, and migrant Logbooks, it is verified that there has been no issue of workers have not been discriminated discrimination at the PMU. against. Major Compliance 6.8.3 It shall be demonstrated that The PMU demonstrated that staff are hired and promoted based Complied recruitment selection, hiring and on specific criteria. However, promotion to higher position promotion are based on skills, sometime take a longer period mainly due to the position sought capabilities, qualities, and medical is not yet vacant. fitness necessary for the jobs available. For foreign workers, hiring is mainly conducted through Minor Compliance employment agents and handled by the KLK head office in Ipoh. It was verified that there is no discrimination on promotion as both male and female, local and foreign workers have equal opportunity to be promoted. Criterion 6.9 There is no harassment or abuse in the work place, and reproductive rights are protected. Indicators Findings and Objective Evidence Compliance 6.9.1 A policy to prevent sexual and all The published statements of policy which recognises no tolerance Complied other forms of harassment and on sexual harassment and violence is established in “KLK violence shall be implemented and Sustainability Policy” dated 01/12/2014 under clause 3.2 (xi). communicated to all levels of the workforce. There are women committees in both the POM and estate Major Compliance specifically to address areas of concerns to women. These committees headed by the managers and members are representatives from all areas of work. The minutes of meetings were documented and kept. For examples, at the POM, latest women’s committee meeting was conducted on 28 May 2018, in Buntar Estate, the meeting was conducted on 16 Dec 2017. The policy statements on prevention of sexual harassment, protection of gender and women reproductive rights were widely available and displayed in local languages and English. 6.9.2 A policy to protect the The management of the estates audited and the POM are aware Complied reproductive rights of all, especially of that pregnant and breastfeeding women must be exempted from women, shall be implemented and work associated with potentially hazardous chemicals. However, communicated to all levels of the since there were no child bearing women workers within the workforce. group, thus this policy cannot be verified during the audit. Major Compliance 6.9.3 A specific grievance mechanism The grievance process flowchart and procedures are displayed in Complied which respects anonymity and the estates and POM offices. The grievance mechanism protects complainants where established at the PMU has been maintained. There are gender requested shall be established, committees specifically to address areas of concerns to women. implemented, and communicated to all levels of the workforce. These committees headed by the managers and members are representatives from all areas of work. The minutes of meetings Minor Compliance were documented and kept. Criterion 6.10 Growers and millers deal fairly and transparently with smallholders and other local businesses. Indicators Findings and Objective Evidence Compliance

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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6.10.1 Current and past prices paid for FFB prices are publicly displayed at the POM based on current Complied Fresh Fruit Bunches (FFB) shall be prices as determined by MPOB. These prices are available publicly available. publicly access at MPOB website. Minor Compliance 6.10.2 Evidence shall be available that Price mechanism is generally understood by the industry players Complied growers/millers have explained FFB as the POM is using FFB prices set by the MPOB. pricing, and pricing mechanisms for FFB and inputs/services shall be documented (where these are under the control of the mill or plantation). Major Compliance 6.10.3 Evidence shall be available that Based on employee contracts and meeting minutes (between the Complied all parties understand the contractual PMU managements and employees) it is evidenced that all agreements they enter into, and that parties understand the contractual agreements they enter into, contracts are fair, legal and and that contracts are fair, legal and transparent. transparent. Minor Compliance Interviews with parties concerned confirmed that business practices with local businesses are conducted in a fair and transparent manner. Work tenders are open to appropriate parties and reviewed by Tender Committee before approval. The contractors are monitored during work in progress to follow safety requirements. 6.10.4 Agreed payments shall be The PMU has a policy to ensure agreed payments were made in Complied made in a timely manner. a timely manner as per the contracts of agreement made. Minor Compliance Payments are made on time according to common practice of 60- day grace period. Criterion 6.11 Growers and millers contribute to local sustainable development where appropriate. Indicators Findings and Objective Evidence Compliance 6.11.1 Contributions to local Main contribution of the estates to the local development can be Complied development that are based on the demonstrated in the provision of facilities, services and where results of consultation with local feasible, monetary. For examples, in 2017 villagers neighbouring communities shall be demonstrated. with Pelam Estate, i.e. Kg. Banggol Berangan, requested Minor Compliance assistance from the estate management to desilt drains along the village area and contribution for surau repair works. Estate management agreed to conduct an annual drains desilting programme for the village and donated RM500 for the surau repair work. At the same estate, Pusat Anak Permata Negara and Klinik Malau requested assistance from the management to clean up the area and the management arranged general workers to assist with the clean up programme. In Buntar Estate, the headmaster of SK Sungai Salleh requested for donation to conduct sports day at the school and the management agreed with the request. 6.11.2 Where there are scheme Not applicable. No scheme smallholders are associated with KLK Complied smallholders, there shall be evidence Batu Lintang PMU. that efforts and/or resources have been allocated to improve smallholder productivity Minor Compliance Criterion 6.12 No forms of forced or trafficked labour are used. Indicators Findings and Objective Evidence Compliance 6.12.1 There shall be evidence that no Estate workers are sourced by the KLK appointed agents and Complied forms of forced or trafficked labour are handled via KLK Head Office in Ipoh. used.

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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Major Compliance All procedures of bringing in foreign workers are with the approval from the Immigration Office. Based on records verified and interviews with some of the workers, it is confirmed that there has been no occurrence of forced nor trafficked workers in KLK estates or POMs. The PMU had returned the passports to the foreign workers. The workers were reminded that they are responsible if any untoward incidents happened with the passports in their custody. The management on the other hand is still responsible in assisting the workers to monitor the passport and work permit expiry dates, sending them for FOMEMA test until collecting work permit from the Immigration. 6.12.2 Where applicable, it shall be No issue of contract substitution has been found and this was Complied demonstrated that no contract confirmed through interviews mainly with internal stakeholders. substitution has occurred. Minor Compliance 6.12.3 Where temporary or migrant The policy statement established in “KLK Sustainability Policy” Complied workers are employed, a special dated 01/12/2014 under clause 3.2 covers both local and foreign labour policy and procedures shall be workers as its states that “KLK is committed to ensuring that the established and implemented. rights of all employees, including contract, temporary and migrant Major Compliance workers…”. Implementation of this policy is evident as explained above, for example, all decisions related to hiring of new workers shall be made based on business needs, job requirements and individual qualifications and without regard to race, religion or gender. Also mentioned above that the equal opportunity policy was adopted and implemented by the PMU and verified to have covered all necessary aspects of including migrant workers related issues. Freedom of association as earlier mentioned permitted not only to the local workers but also to the foreign workers. This policy is communicated to all workers during annual refresher training and to all new intakes. Criterion 6.13 Growers and millers respect human rights. Indicators Findings and Objective Evidence Compliance 6.13.1 A policy to respect human The published statements of policy which recognises human right Complied rights shall be documented and is established in “KLK Sustainability Policy” dated 01/12/2014. communicated to all levels of the Under clause 3.1 of the policy it indicates that the group workforce and operations (see Criteria recognises the inherent dignity of the individual and supports the 1.2 and 2.1). Universal Declaration of Human Rights by the United Nations. Major Compliance This policy is communicated to all workers during annual refresher training and to all new intakes. Communication of this policy to external stakeholders is conducted during the external stakeholders meeting.

Principle 7: Responsible development of new plantings Todate the PMU has not carried any new plantings after Nov 2005 which may be applicable under requirements of the RSPO New Planting Procedure.

The requirements of Principle 7 were verified to be ‘Not applicable’ to this PMU during this assessment.

It was verified during current on-site assessment that the PMU has declared and submitted its Land Use Change details for analysis for its plantings since Nov 2005 as per the calculations specified in the RSPO PalmGHG Version 3.0.1. The record of submission made to the RSPO Secretariat for the current year was done on 10 Mar 2018.

See Summary of Net GHG Emissions submitted by the POM in the Tables below.

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Based on the details provided in the record of submission, it is also verified that there is no potential liability under the RSPO Remediation and Compensation Procedure at this PMU.

SUMMARY OF NET GHG EMISSIONS

All information and data below as submitted by the POM was verified against the retrieved summary report generated through PalmGHG Calculator Version 3.0.1.

GHG Table 1: Summary of Net GHG Emissions (Oct 2016 - Sep 2017)

Emissions per Product tCO2e/t Product CPO 0.93 PK 0.93

Production t/yr FFB processed 142186.09 CPO Produced 29964.00

Extraction % OER 21.07 KER 4.63

GHG Table 2: Summary of Net GHG Emissions

Land use ha OP planted area 7793.8 OP planted on peat 0 Conservation (forested) 0 Conservation (non-forested) 161 Total

GHG Table 3: Summary of Field Emissions and Sinks

Own Crop Group 3rd Party Total tCO2e tCO2e/ha tCO2e tCO2e tCO2e tCO2e tCO2e tCO2e/ha Emissions Land Conversion 56812.02 9.41 0 0 0 0 0 0 *CO2 Emissions 6688.54 1.13 0 0 0 0 0 0 from Fertiliser **N2O Emissions 4849.64 0.79 0 0 0 0 0 0 Fuel Consumption 646 0.1 0 0 0 0 0 0 Peat Oxidation 0 0 0 0 0 0 0 0 Sinks 0 0 0 0 0 0

Crop -54456.69 -9.12 0 0 0 0 0 0

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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Sequestration Conservation 0 0 0 0 0 0 0 0 Sequestration Total 14539.21 2.32 0 0 0 0 0 0

GHG Table 4a: Summary of Mill Emissions and Credits

tCO2e tCo2e/tFFB Emissions POME 17678.64 0.12 Fuel Consumption 95.94 0 Grid Electricity 336.69 0 Utilisation Credits Export of Grid 0 0 Electricity Sales of PKS 0 0 Sales of EFB 0 0 Total 18111.27 0.13

GHG Table 4b: Palm Oil Mill Effluent (POME) Treatment

Divert to compost 0 Divert to anaerobic digestion 100

GHG Table 4c: POME Diverted to Anaerobic Digestion

Divert to anaerobic pond 100 Divert to methane capture (flaring) 0 Divert to methane capture (electricity generation) 0

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Principle 8: Commitment to continual improvement in key areas of activity

Criteria 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. Indicators Findings and Objective Evidence Compliance 8.1.1 The action plan for continual The POM has identified and implemented the following Complied improvement shall be implemented, Continual Improvement Action Plans for the FY Oct 2017 – Sep based on a consideration of the main 2018: social and environmental impacts and opportunities of the grower/mill, and 1. Environmental: shall include a range of Indicators  Desilting pond using belt press. covered by these Principles and  Final discharge to comply with specification. Criteria.  Waste reduction – briefing on recycling programme. As a minimum, these shall include, but  Scheduled waste disposal – briefing on wastes. are not necessarily be limited to: 2. Social: • Reduction in use of pesticides(Criterion 4.6);  Workers’ quarter – “gotong royong” activity in line-site. • Environmental impacts (Criteria 4.3,  Women’s Committee – annual meeting / activities. 5.1 and 5.2);  Repaint temple at POM. • Waste reduction (Criterion 5.3); • Pollution and greenhouse gas (GHG) emissions (Criteria 5.6 and 7.8); The estates have identified and implemented the following • Social impacts (Criterion 6.1); Continual Improvement Action Plans for the FY Oct 2017 – Sep • Encourage optimising the yield of the 2018: supply base. Major Compliance 1. Environmental - Chemical usage reduction:  Planting of beneficial plant.  Spraying pump calibration and training. 2. GHG Reduction:  Maximize tractor productivity and reduce fuel usage.  Briefing on energy savings. 3. FFB Yield optimization:  Loose fruit collection.  EFB mulching 4. Safety and Health:  Monitoring of non-compliance to OSH.  Continuously conduct training to avoid accidents.  Contributions to local communities. 5. Social:  Continuously upgrade workers’ quarters.  Install individual meters to prevent wastage.  Contributions to local communities. Evidence of results was available for the above continuous improvement action plans.

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3.1.1 Supply Chain Certification Standards Findings - on CPO Mill

The Supply Chain module applied at Batu Lintang Grouping POM during this assessment is Module D – CPO Mills: Identity Preserved (IP).

Details of findings are as follows:

5. General chain of custody requirements for the supply chain Findings and Compliance Objective Evidence 5.1 Applicability of the general chain of custody requirements for the supply chain 5.1.1 Legal ownership and physical handling of RSPO Certified Sustainable oil palm Yes Complied products at a location under the control of the organization including outsourced contractors. 5.1.2 Trader and/or distributor shall pass on the certification number of the product Not applicable Complied manufacturer and the applicable supply chain model. 5.1.3 Member of the RSPO and shall register on the RSPO IT platform. Yes Complied 5.1.4 Processing aids do not need to be included within an organization’s scope of No processing aids Complied certification. 5.2 Supply chain model 5.2.1 Same supply chain model as its supplier Identity Preserved (IP) Complied 5.2.2 Combination of supply chain models Only IP Complied 5.3 Documented procedures 5.3.1 Written procedures and/or work instructions Yes Complied 5.3.2 Internal audit procedure and internal audit conducted to determine compliance. Yes Complied 5.4 Purchasing and goods in 5.4.1 Purchases of RSPO certified oil palm products with all the specified information. Yes Complied 5.4.2 Mechanism for handling non-conforming oil palm products and/or documents. Yes Complied 5.5 Outsourcing activities 5.5.1 Outsourcing of activities Not applicable Complied 5.5.2 Outsourcing within the scope of its RSPO SC certificate Not applicable Complied 5.5.3 Names and contact details of all contractors used for the processing or physical Not applicable Complied handling of RSPO certified oil palm products. 5.5.4 Names and contact details of new contractor used for the processing or physical Not applicable Complied handling of RSPO certified oil palm products. 5.6 Sales and goods out 5.6.1 Sales of RSPO certified oil palm products with all the specified information. Yes Complied 5.7 Registration of transactions 5.7.1 Transaction registered in the RSPO IT platform and confirmed upon receipt. Yes Complied 5.7.2 RSPO IT Platform: Shipping Announcement, Traceability, Confirming Shipping Yes Complied Announcements. 5.8 Training 5.8.1 Training plan on RSPO SC Standards requirements and records of the training. Yes Complied 5.8.2 Appropriate training shall be provided Yes Complied 5.9 Record keeping 5.9.1 Accurate, complete, up-to-date and accessible records and reports maintained. Yes Complied 5.9.2 Retention times for all record and reports. Yes Complied 5.9.3 Volume purchased (input) and claimed (output) over a period of twelve (12) Yes Complied months. 5.10 Conversion factors 5.10.1 Conversion rate shall be applied to provide a reliable estimate for the amount Yes Complied of certified output available from the associated inputs. 5.10.2 Conversion rates shall be periodically updated. Yes Complied 5.11 Claims 5.11.1 Claims shall be in compliance with the RSPO Rules on Market Yes Complied Communications and Claims. 5.12 Complaints 5.12.1. Documented procedures for collecting and resolving stakeholder complaints. Yes Complied 5.13 Management review 5.13.1 Appropriate frequency of management review. Yes Complied

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5.13.2 All the specified inputs for the management review. Yes Complied 5.13.3 All the specified outputs from the management review. Yes Complied

Model D – CPO Mills: Identity Preserved (IP) D.1 Definition Indicators Findings and Objective Evidence Compliance D.1.1 The POM only processed certified FFB from its own supply Complied A mill is deemed to be Identity base (see Section 1.3). Preserved (IP) if the FFB used by the It was verified that there was no sources of FFB from any mill are sourced from its own supply outgrowers or independent suppliers / smallholders except for base certified to the RSPO Principles the RSPO certified FFB (IP Model) from the Selama Estate of and Criteria (RSPO P&C). Genting Plantations and FFB diverted from other certified KLK Certification for CPO mills is Groupings estates. necessary to verify the volumes and The CPO Mill is therefore applying the Identity Preserved (IP) sources of certified FFB entering the model. mill, the implementation of any processing controls (for example, if physical separation is used), and volume sales of RSPO certified products. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. If a mill processes certified and uncertified FFB without physically separating the material then only Module E is applicable. D.2 Explanation Indicators Findings and Objective Evidence Compliance D.2.1 The estimated tonnage of CPO and PK products that could Complied The estimated tonnage of CPO and potentially be produced by the POM is recorded in this PK products that could potentially be Assessment Report. produced by the certified mill must be This figure represents the total volume of certified palm oil recorded by the certification body (CB) product (CPO and PK) that the certified mill is allowed to deliver in the public summary of the P&C in a year. certification report. This figure represents the total volume The actual tonnage produced has been recorded in each of certified palm oil product (CPO and annual assessment report (see Section 1.8.2 Table 6 and PK) that the certified mill is allowed to Section 1.8.3 Table 7). deliver in a year. The actual tonnage produced shall then be recorded in each subsequent annual surveillance report. D.2.2 The POM meets all registration and reporting requirements for Complied The mill must also meet all registration the appropriate supply chain through the RSPO Supply Chain and reporting requirements for the managing organization (RSPO IT platform). appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim). D.3 Documented procedures D.3.1 A documented Supply Chain Procedure SOP 18.0 Issue 3 / Complied The site shall have written procedures Rev. 2 dated 05/05/2018 has been established and and/or work instructions to ensure the implemented. implementation of all the elements The procedure covered the implementation of all elements of IP specified in these requirements. This Model that include Organization Chart, Management Functions shall include at minimum the following: & Job Descriptions, FFB Delivery to mill, CPO/PK Delivery to customer, Record Keeping, Training, Claims. a) Complete and up to date The documented procedure and its implementation confirmed Complied procedures covering the to have complied with all the specified requirements of Identity Preserved (IP) Module D that include controlling the FFB

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Report No.: R9317/18-1 Kuala Lumpur Kepong Berhad, Batu Lintang Grouping Page 50 of 84 Re-certification (Transfer CB) implementation of all the elements in receipt, processing, sales, CPO and PK dispatch, and records these requirements keeping. b) The role of the person having The POM Mill Manager, Mr. Yeo Boon Keat has been Complied overall responsibility for and authority appointed as the person in charge for the overall responsibility over the implementation of these and authority for implementation and compliance with the requirements and compliance with all documented procedure. He is assisted by the Assistant Mill applicable requirements. This person Manager, Mr. Vikhraman Muniandy. shall be able to demonstrate They and other relevant staff under his charge demonstrated awareness of the site’s procedures for competence, skill and knowledge of the RSPO Supply Chain the implementation of this standard. Certification Standard requirements and its implementation. Interviews of the relevant staff confirmed their knowledge of the RSPO Supply Chain Certification requirements for the respective areas of operations. The Palm Oil Mill Organization Chart and job responsibilities of employees (Mill Manager, Assistant Mill Manager, Mill Engineers, Mill Assistant Engineers, Operations Supervisor, Weighbridge Operator, Laboratory Chemist, FFB Grader and clerks) have been suitably defined in the SOP. D.3.2 The SOP covers the receiving of FFB and verification of Complied The facility shall have documented documents (delivery notes) to determine the origin, quantity and procedures for receiving and quality of the FFB. All supplies of FFB were subjected to processing certified and non-certified verification of documents and quality checks by weighbridge FFBs. personnel. The Weighbridge Ticket for FFB indicated the date, vehicle number, estate & field number and weight. For the year 2017, the POM only received and processed certified FFB from the KLK Batu Lintang Grouping estates, FFB diverted from other certified KLK Groupings estates and the RSPO certified FFB (IP Model) from Selama Estate of Genting Plantations. The POM did not receive any non-certified FFB from other sources or suppliers. D.4 Purchasing and goods in Indicators Findings and Objective Evidence Compliance D.4.1 The Mill had maintained record of tonnages and supply source Complied The facility shall verify and document of certified FFB from the respective estates at the weighbridge the tonnages and sources of certified station, in the dispatch chit and weighbridge ticket and these and non-certified FFBs received. entered into the computer system. There were no non-certified FFBs. D.4.2 The documented Supply Chain SOP has specified that the Complied The facility shall inform the CB responsible POM personnel shall check production quantity immediately if there is a projected against the certified amount and notify RSPO, the CB and overproduction of certified tonnage. Sustainability Department of any projected overproduction of certified tonnage. So far, there is no projected overproduction. D.5 Record keeping Indicators Findings and Objective Evidence Compliance D.5.1 The records and reports are available from the computerized Complied The site shall record and balance all system. Also, hard copies of records and reports are properly receipts of RSPO certified FFB and filed and readily accessible. Inspection of records and reports deliveries of RSPO certified CPO and at the Mill confirmed these were accurate, complete and PK on a three-monthly basis. updated daily. As per the SOP, the records and reports are archived and stored in the Mill Office for a minimum period of 5 years. Traceability was verified for the Production Report for Jan – Dec 2017 from the related records (FFB Delivery Note, Weighbridge Ticket, FFB & Truck Daily Summary, Production Report, CPO & PK Storage Report, and CPO & PK Delivery Orders).

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Transaction documents and bookkeeping of CPO and PK are done daily and monthly summary report of FFB receipt, FFB processed, CPO production, PK production and balance stocks submitted to the Head Office. The weighbridges at the Mill are duly calibrated and calibration certificates found to be in order. CPO is delivered to KL-Kepong Oleomas Sdn Bhd at Pulau Indah, Palm Oleomas (Rawang) Sdn Bhd at Rawang, Palm Oleomas (Klang) Sdn Bhd at Klang and external buyers. There is no Palm Kernel mill for production of PKO at the POM. PK sold and delivered to external buyers. Deduction and conversion ratios for the volumes of CPO and PK delivered from the Palm Oil Mill have been appropriately done and recorded. A tonnage balance recording system that shows FFB deliveries, CPO and PK production and dispatch is balanced every 3 months. D.6 Processing Indicators Findings and Objective Evidence Compliance D.6.1 Confirmed from records that Batu Lintang POM only received Complied The site shall assure and verify and processed certified FFB for the last 12 months till audit through documented procedures and time. record keeping that the RSPO certified The processing facility has established and implemented a oil palm product is kept segregated clear procedure and mechanism for the IP module. from non-certified material including Review and on-site verification confirmed that the mechanism during transport and storage. was implemented and in compliance with the module requirements at the mill including transport and storage. D 6.2 Documents and records provided documented evidence for the Complied The objective is for 100 % segregated FFB receipt and processed, CPO and PK produced to be material to be reached. traceable to certified material. The product type and supply chain module indicated as CSPO/IP and CSPK/IP on relevant documents was verified to be correctly stated.

3.1.2 Status on Supply Chain on POM: Based on the documents and records presented during the on-site verifications made, it is concluded that the Batu Lintang POM has been able to comply with the requirements of the RSPO SCCS under the ‘IP’ module and is thus eligible for ‘IP’ trading for its palm products for year 2017 and 2018.

3.1.3 Monitoring of Certified Products traded: Trading of the CSPO and CSPK was performed via RSPO PalmTrace by the KLK Group HQ. Based on the records maintained at the POM, the traded volumes relied on internal communications of the trading done by the KLK Group HQ, on the CSPO and CSPK delivered as verified during assessment for Jan – Dec 2017 are as follows:

Details as per RSPO Certification System Document

CPO (MT) PK (MT) Last year's (Projected) – Certified volume 30,258.67 6,773.08 (RSPO Certified)

(1) Last year's Actual sold volume 26,939.89 5,932.75 (RSPO Certified) (2) Last year's Actual sold volume 3,008.89 0 *(Other Schemes Certified) (3) Last Year's Actual sold volume 0 0 **Conventional

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Total for Last Year’s volume – Actual (1+2+3) 29,948.78 5,932.75

New (Projected) Certified Volume 37,897 8,096 (RSPO Certified) Notes: * The non PalmTrace volumes under ‘Other Schemes certified’ is basically ISCC.

** Remaining volumes traded are not claimed under ‘Certified’ and traded as ‘Conventional’ volume.

3.2 Status of Identified Noncompliance and Corrective Actions, Observations and Positive Elements. The status of the Noncompliances (NCR) and Observations (OBS) identified against the MYNI Compliance Indicators is as per the details below: Assessment Type Year Noncompliance Observations Follow up status (NCR) (OBS) Surveillance Assessment - 04 2017 4 (1 Major, 3 Minor) 2 Corrective action (by Control Union Certifications) verified to be taken and is effective. Re-Certification Assessment 2018 5 (1 Major, 4 Minor) 4 Next assessment (Transfer to Intertek)

3.2.1 Year 2017 Surveillance Assessment - 04: 1 Major NC NC raised under Criterion 4.1 by previous CB: “CHRA report dated on 23/05/2016 conducted by OSH Safety Consultancy (M) Sdn. Bhd. The mill’s processes that significant for chemical hazard identified accordingly. However, seen the assessment conducted does not cover the chemical store that may has potential risks to an employee as a result of exposure to chemicals hazardous to health and to identify the hazards posed by each chemical substance used, stored, handled or transported within the place of work”. Corrective action: The 3rd party assessor was invited on 05/08/17 through an official letter as to perform the assessment for the missed area and to re-validate the existing CHRA for adequacy. Verification (for effectiveness): Corrective action satisfactorily addressed the non-conformance and NC closed off.

3.2.2 Year 2017 Surveillance Assessment - 04: 3 Minor NCs (1) NC raised under Criterion 2.1 by previous CB: “During field visit at Main Division of Subur Estate, interviewed 3 sprayers and a Mandore (all are Malaysian). They were found with sufficient knowledge of GAP and safety at worksite. However, when cross checked of the sprayers medical surveillance report, it was found the sampled sprayers were not sent for medical surveillance for year 2017 as per the schedule. This was also not captured and track in the annual legal compliance monitoring by the estate management”. Verification (for corrective action and effectiveness): Corrective action satisfactorily addressed the non- conformance and NC closed off.

(2) NC raised under Criterion 4.4 by previous CB: “Based on the agronomist report from AAR for 2016/17, the estate requires to maintain water table height. During document verification, seen the estate has established water management plan. However, there is no monitoring results available against the management plan”. Verification (for corrective action and effectiveness): Corrective action satisfactorily addressed the non- conformance and NC closed off.

(3) NC raised under Criterion 5.3 by previous CB: “Based on the site visit to tube well in Subur Estate, workshop in Batu Lintang Estate and scrap iron yard in mill, the audit team observed empty chlorine container, used grease container, and used paint container / a container with petrol at the respective sites. In Batu Lintang Estate, seen traces of fertilizer and oil spilled from the fertilizer vehicle which happened during the unloading of fertilizer from the external supplier’s vehicle”. Verification (for corrective action and effectiveness): Corrective action satisfactorily addressed the non- conformance and NC closed off.

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3.2.3 Year 2017 Surveillance Assessment - 04: 2 Observations (1) Observation raised under Criterion 2.1 by previous CB: “Permit for electrical deduction issued by Jabatan Tenaga Kerja (JTK) is not available in place. Verified letter of ‘Permohonan Permit Untuk Membuat Potongan Bil Electric Dan NUPW Daripada Gaji Pekerja’ dated 22/02/2017 requested by Mr. Chan Yik Loon (Subur Estate Manager) and successfully received by Pejabat Tenaga Kerja Taiping dated 09/03/2017. The first application is granted for union deduction only as verified letter from Mr. Rahmat Ismail (Pengarah Tenaga Kerja Negeri Perak Darul Ridzuan) JTK.PK.(1) PMT(SEK.24)10802 Jld.9(14) dated 09/05/2017 and received by estate management dated 25/05/2017. Management sent the 2nd request for electrical deduction as verified letter of ‘Permohonan Permit Untuk Membuat Potongan Bil Electric Daripada Gaji Pekerja’ dated 27/06/2017 signed by Mr. Chan Yik Loon (Estate Manager).  18 workers from Subur Div.  7 workers from Sungai Pulau Div.  23 workers from Norseman Div. has signed ‘Persetujuan Pekerja Untuk Potongan Gaji Bagi Lain-Lain Jenis Potongan Seperti (Api)’ ”. Verification: Closed as no re-occurrence.

(2) Observation raised under Criterion 4.6 by previous CB: “During visit to Ghim Koon Division, it was told to auditor there was no spraying activities due to manpower switching to other jobs. However, when the audit team visited the “Washing Room”, the PPE attires for sprayers not effectively maintained as seen only 3 suits of apron and a piece of rubber glove available. Based on the sprayer list, there are total 4 sprayers”. Verification: Closed as no re-occurrence.

3.2.4 Year 2018 Re-certification / Transfer CB: 1 Major NCR NCR MYNI Details of NCR Indicator Major 5.2.1 Date issued: 08/06/2018 SH-01 Indicator requirement: Information shall be collated in a High Conservation Value (HCV) assessment that includes both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors). This information will cover: • Presence of protected areas that could be significantly affected by the grower or miller; Nonconformance: Location: Subur Estate, Norseman Division. It was observed that an area has been identified as a water catchment area, as it served as a water source to the estate. Visit to site had established that this area is actually the starting point of a stream that runs across the plantation. As it was not correctly identified and assessed, action plans to manage this area has not been planned and implemented. Root Cause and Corrective Action: Root Cause: The management has conserved the water catchment area. However, the small stream is not conserved.

Corrective Action: Management has declared the area as water catchment area and riparian zone is established (as shown in the attachment 2). Verification (Corrective Action): Off-site verification carried out. The estate submitted photos of demarcation of the riparian zone and the signboard erected. The evidence submitted is sufficient to close the NC. The corrective action satisfactorily addressed the non-conformance. NC status verified by auditor: Closed by OCL Date closed: 25/07/2018

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Verification (for effectiveness): Next assessment.

3.2.5 Year 2018 Re-certification / Transfer CB: 4 Minor NCRs NCR MYNI Details of NCR Indicator Minor 5.1.3 Date issued: 08/06/2018 SH-01 Indicator requirement: This plan shall incorporate a monitoring protocol, adaptive to operational changes, which shall be implemented to monitor the effectiveness of the mitigation measures. The plan shall be reviewed as a minimum every two years to reflect the results of monitoring and where there are operational changes that may have positive and negative environmental impacts. Nonconformance: Location: Batu Lintang Estate, Ghim Khoon Division (Division 4) A natural stream running across the estate was without the demarcation of the riparian zone. In addition, there is no evidence of the water quality being sampled and analysed. Water sampling point was also not indicated on the map and at site. Root Cause and Corrective Action: Root Cause: Management has earlier practiced no spraying and manuring activities along the stream. However, management didn’t aware the stream need to be demarcated as riparian zone.

Corrective Action: Management will demarcate the riparian zone and conduct water quality analysis. Water sampling point map will also be updated. Verification (Corrective Action): Off-site verification carried out: Corrective Action Plan (CAP) shall be verified for closure and effectiveness at the next surveillance assessment. NC status verified by auditor: CAP accepted by Date closed: Next assessment. OCL Verification (for effectiveness): Next assessment.

NCR MYNI Details of NCR Indicator Minor 5.3.3 Date issued: 08/06/2018 SH-02 Indicator requirement: A waste management and disposal plan to avoid or reduce pollution shall be documented and Implemented. Nonconformance: Location: (a) Subur Estate, Home and Sungai Pulau Divisions (b) Pelam Estate, Home and Nagalelai Divisions (c) Batu Lintang Estate, Home and Ghim Khoon (Division 4) Divisions. It was observed that unwanted fertiliser bags and other plastic waste materials, such as plastic bottles were evidently scattered around the plantation. Location: Batu Lintang Estate, Home Division At Batu Lintang Estate, Home Division, plastic bottles were evidently seen being

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accumulated at the water gate to the final discharge point. Root Cause and Corrective Action: Root cause: The empty fertilizer bags are used for loose fruit collection and workers supposedly hang the bags on the palm after used it. The plastic bottles were drinking water bottles thrown by the workers.

Corrective Action: a) Relevant workers have been reminded to hang the empty fertilizer bags on the palms after used for loose fruits collection. b) Refreshed training on reduce, reuse and recycle involving all workers will be conducted to raise the workers’ awareness on proper waste disposal. c) Management has cleaned up the area immediately. Verification (Corrective Action): Off-site verification carried out: Corrective Action Plan (CAP) shall be verified for closure and effectiveness at the next surveillance assessment. NC status verified by auditor: CAP accepted by Date closed: Next assessment. OCL Verification (for effectiveness): Next assessment.

NCR MYNI Details of NCR Indicator Minor 6.1.4 Date issued: 08/06/2018 JMD-01 Indicator requirement: The plans shall be reviewed as a minimum once every two years and updated as necessary, in those cases where the review has concluded that changes should be made to current practices. There shall be evidence that the review includes the participation of affected parties. Nonconformance: Location: Subur Estate 38% of respondents participating in a survey conducted by Subur Estate management on 06 Feb 2018 stated that they are not satisfied with the facilities provided at the linesite. However, it was found further investigations were not conducted to determine which facilities that they are not satisfied with and for what reasons. Root Cause and Corrective Action: Root cause: Further investigation was verbally carried out with the workers but not officially documented by the management.

Corrective Action: Inspection of worker’s quarters will be conducted by management using the weekly linesite checklist. Verification (Corrective Action): Off-site verification carried out: Corrective Action Plan (CAP) shall be verified for closure and effectiveness at the next surveillance assessment. NC status verified by auditor: CAP accepted by Date closed: Next assessment. OCL Verification (for effectiveness): Next assessment.

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NCR MYNI Details of NCR Indicator Minor 6.5.3 Date issued: 08/06/2018 JMD-02 Indicator requirement: Growers and millers shall provide adequate housing, water supplies, medical, educational and welfare amenities to national standards or above, where no such public facilities are available or accessible. Nonconformance: Location: POM and All Estates Evidence was not provided by the POM and Estate managements that foreign workers are able to request amendment on the name of their next-of-kin in the Foreign Workers Compensation Scheme.

Location: Subur Estate and Pelam Estate Unused water tanks without proper storage were seen in Subur Estate and Pelam Estate which potentially will be breeding grounds for mosquitoes. Root Cause and Corrective Action: Root cause: POM and all estates; The management is not aware the request of amendment on the name of workers’ next-of kin in the Foreign Workers Compensation Scheme need to be documented as the name has listed in the scheme.

Subur estate The unused water tanks are temporarily store at that area due to the on-going process of changing of water storage tank at worker’s quarters and conversion of water system from well to tubewell.

Pelam estate Management overlooked of the unused tank.

Corrective Action: All the foreign workers are briefed regarding their right to request the amendment on the name of their next-of kin in the Foreign Workers Compensation Scheme. The unused water tanks have been collected and stored in a proper area. Verification (Corrective Action): Off-site verification carried out: Corrective Action Plan (CAP) shall be verified for closure and effectiveness at the next surveillance assessment. NC status verified by auditor: CAP accepted by Date closed: Next assessment. OCL Verification (for effectiveness): Next assessment.

3.2.5 Year 2018, Re-certification / Transfer CB: 4 Observations Status RSPO Opened Closed Remark, Ref No: P&C Location Details of Observation date date if any Indicator

OBS# 4.5.1 Subur, Subur, Buntar and Pelam Estates 08 Jun Follow up at OCL-01 Buntar and have IPM programmes and location 2018 next Pelam maps for the planting of beneficial assessment Estates plants (Cassia cobanensis, Antigonon leptopus and Turnera subulata). However, (1) for Subur Estate and Pelam Estate, currently only Antigonon

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leptopus planted and the map only show the locations but not the planted area size. Also, there is no indication of the planned area size for the planting of Cassia cobanensis and Turnera subulata. (2) for Buntar Estate, the map only show the planted locations of beneficial plants but not clear as to the types planted and the planted area size. OBS# 5.1.2 Batu There is no indicator at site on the 08 Jun Follow up at SH-01 Lintang water sampling point locations. 2018 next Estate assessment OBS# 5.3.3 Estates Landfill Management. 08 Jun Follow up at SH-02 At some estates, e.g. Norseman 2018 next Division of Subur Estate, the date of assessment opening and closing of landfill was not indicated. OBS# 6.5.2 POM and “External Contractor Agreement 08 Jun Follow up at JMD-01 all Estates Checklist” did not include valid 2018 next driving license, road tax of the assessment vehicles used, Good Driving License [GDL], etc. documents to be submitted to the management as part of contractor legal compliance monitoring.

3.2.6 Identified Positive Elements

1) The PMU ensured implementation of its policies concerning sustainability and environmental requirements in its operation.

2) The PMU has contributed for social and pollution prevention programs and activities.

3) The PMU demonstrated good safety awareness and compliance by its workforce.

3.3 Summary of Feedback Raised by Stakeholders and Findings

Prior to and during the Assessment, written and verbal feedback communicated from the stakeholders on the environmental and social performance of the PMU operations were sourced. All pertinent feedback issues were reviewed and followed up for verification and these had been accordingly incorporated into the report findings. See table below:

3.3.1 Feedback Raised by Stakeholders (Surveillance Assessment ASA-04 – Year 2017) No issues from internal and external stakeholders arising from previous assessment as reported by previous CB.

3.3.2 Feedback Raised by Stakeholders (Re-certification / Transfer CB – Year 2018) Communication done via email on 03 May 2018 to various categories of stakeholders (see list under para 2.5):

Stakeholders’ Feedback PMU Response CB verification / Follow up comments comments (if any) Government Agencies: Ongoing consultations will be Verified during on-site Nil No feedback received. maintained. assessment that no No response needed. response needed.

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Non-Governmental Ongoing consultations will be Verified during on-site Nil Organizations: maintained. assessment that no No feedback received. No response needed. response needed.

Local Communities - Stakeholders’ Consultation: No specific consultation session was conducted due to location of the audited estates and the POM are far apart. Instead a series of interview session with local communities, workers and staff in audited estates and the POM was conducted. Concerns and suggestions received during interviews and stakeholder consultations:

1. Age factor should be taken PMU responded that this To be followed up into consideration in matter will be reviewed by the during the next determining the fee of work management. Assessment. conducted. Local Communities - Interviews: Interviews of sampled staff and workers were also conducted by the auditors during field visits from 04-08 Jun 2018 at the PMU:

Staff/Workers sampling: POM = 17 males, 3 females Estate = 51 males, 11 females

No negative issues raised by the No response needed. No response needed. Nil sampled staff and workers. Other Interested parties: No response needed. No response needed. Nil No feedback received.

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4.0 ASSESSMENT CONCLUSION AND RECOMMENDATION

Based on the findings above, Kuala Lumpur Kepong Berhad Batu Lintang Grouping had been able to demonstrate its compliance with the RSPO Principles and Criteria (April 2013), Malaysian National Interpretation (MYNI 2014) and the RSPO Supply Chain Certification Standard (Jun 2017) for Palm Oil Mill.

Therefore, it is recommended that the certification of Kuala Lumpur Kepong Berhad Batu Lintang Grouping be approved and continued.

Signed for and on behalf of Intertek Certification International Sdn Bhd

Dr. Ooi Cheng Lee Lead Assessor

Date: 19 Sep 2018

4.1 Acknowledgement of Internal Responsibility and Confirmation of Assessment Findings

This is to acknowledge and confirm the assessment visits described in this report and the acceptance of the contents and findings in this assessment report.

Signed for and on behalf of Kuala Lumpur Kepong Berhad

Ms. Lee Kuan Yee Senior Sustainability Manager (Plantations) Kuala Lumpur Kepong Berhad

Date: 19 Sep 2018

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4.2 INTERTEK- RSPO P&C Certificate details for KLK Batu Lintang Grouping

Certificate No: RSPO 931788 New issue date 26 Sep 2018 Expiry date 25 Sep 2023 Organization Kuala Lumpur Kepong Berhad Address of Head Office: Wisma Taiko, 1, Jalan S.P. Seenivasagam, 30000 Ipoh, Perak Darul Ridzuan, Malaysia RSPO Membership No: 1-0014-04-000-00 Plantation Management Unit: Batu Lintang Grouping Address of POM: 09800 Serdang, Kedah, Malaysia Standards: RSPO Principles and Criteria (Apr 2013); Malaysian National Interpretation (2014); RSPO Supply Chain Certification Standard (Jun 2017) for the Palm Oil Mill. Certification scope: Production of Crude Palm Oil and Palm Kernel Supply Chain module for POM Identity Preserved (IP)

Details of the Mill and Supply bases covered by this certificate and the tonnage approved are: GPS Reference Certified Name Address Longitude Latitude Area (ha) Batu Lintang Palm Oil Mill 09800 Serdang, Kedah, Malaysia E 100°37’43.0” N 5°11’37.0” (Capacity: 25 MT/hour) Batu Lintang Ladang Batu Lintang, 09800 E100°37’44.65’’ N 5°12’16.35” Estate Serdang, Kedah, Malaysia

Ladang Buntar, 09800 Serdang, Buntar Estate E100°35’35.37’’ N 5°10’21.35” 6957 Kedah, Malaysia Ladang Pelam, 09009 Kulim, Pelam Estate E100°43’74.8’’ N 5°30’26.9” Kedah, Malaysia Bt. 23 Batu Kurau, 34520 Taiping, Subur Estate E100°47’43.6’’ N 5°02’53.1” Perak, Malaysia

The annual certified tonnages produced at the PMU are detailed as follows:

Batu Lintang POM Annual Tonnages (MT) Certified FFB 172,260 Certified CPO 37,897 Certified PK 8,096 Supply chain module Identity Preserved (IP)

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Appendix A:

Qualifications of Lead Assessor and Assessment Team

Dr. Ooi Cheng Lee (OCL) Lead Assessor / Team Leader / Technical Expert (Palm Oil Mill, Environment, OHSAS, Social, HCV, Land Use and Supply Chain) - PhD in Welding, Cranfield University, UK - M.Sc. (Engineering) in Metallurgy, University of Birmingham, UK - B.App.Sc (Hons), Science University of Malaysia - Diploma in Translation for Science and Technology, Malaysia Translation Society Dr. Ooi Cheng Lee is an IRCA Lead Auditor and Lead Tutor for ISO 9001. He is also involved in auditing in other integrated management systems. He has successfully completed the RSPO Lead Assessor Course for Principles and Criteria (RSPO P&C) and the RSPO Supply Chain Certifications (RSPO SCC). He is currently involved in the management of all types of system and process/product certification in Intertek. He has more than 32 years work experience in product and process specifications, research & development, inspection and testing, quality assurance, engineering development, training, product certification, auditing and quality management system certification. He has conducted assessments of organizations in Malaysia, Singapore, Indonesia, Vietnam, Philippines, China, Myanmar, Cambodia and other regional countries. Assessments include those of rubber and oil palm plantations in Malaysia and Indonesia. His previous position as the General Manager of Lloyd’s Register Quality Assurance (LRQA) Malaysia include the management of all types of systems certification, including that of environmental (ISO 14001), safety & health (OHSAS 18001) and Clean Development Mechanisms (CDM). He is currently the General Manager in Intertek Certification International Sdn. Bhd. He is a member of the Internal Review Panel for RSPO Assessment reports since May 2011. He is part of the RSPO CB Assessment team which audited RSPO certified Plantation Management Units since 2012.

Mr. Sazali Hasni – Assessor / Technical Expert (Environment, Conservation and HCV area) - Bachelor of Science (Forestry) Mr. Sazali Hasni (SH) has over 25 years work experience in the forestry sector. He is an IRCA Auditor for ISO 9001 and auditor for the PEFC Chain-of-Custody Certification. He has successfully completed training in the Intertek In House RSPO P&C, MYNI. He was a member in the stakeholder consultation and development of the Malaysian Criteria & Indicators (MC&I) for Forest management Certification. He has been involved in the auditing of Forest Management Certification for the Perak State Forestry Department and Pahang State Forestry Department. He has also been involved with a German based company in testing their criteria for carbon tracing in an oil palm plantation in 2011. He had also acted as the regional consultant to International Tropical Timber Organization (ITTO) for the Asia Pacific region in the Evaluation and Monitoring of Projects funded by the organization from 1994 to 1998. Projects funded are mainly forestry related such as reforestation, conservation, community forestry apart from other research based projects.

Mr. Jumat Majid – Assessor – Social Responsibility and Workers Welfare – BSc (Social Science) Mr Jumat Majid (JM) has over 13 years work experience in the agriculture sector. He has successfully completed the IRCA accredited Lead Auditor course in ISO 9001:2008 and RSPO P&C MY-NI Lead Assessor course. He has also successfully completed training programs in Organic Agriculture Development and had performed organic agriculture inspections and assessments for more than 6 years. He has been involved in NGO work in the areas of social impact assessments within the South East Asia region. He is part of the RSPO CB Assessment team which audited RSPO certified Plantation Management Units since 2010.

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Appendix B: Assessment Plan (Actual)

Date Time Assessors and Assessment Activity (Note 3) Asssessment Team 4 June 7.30 am – Travel to Subur Estate 2018 10.30 am Monday 10.30 am – Opening Meeting and Briefing 11.00 am (Day 1) OCL SH JMD

Site assessment at Subur Site assessment at Site assessment at Estate Subur Estate Subur Estate 11.00 am –  P1 Transparency  P2 Laws & regulations  P2 Laws & regulations 1.00 pm  P2 Laws & regulations  P5 Environmental,  P6 Employees,  P3 Economic & Financial Conservation & HCV Individuals & Viability  P8 Continual Communities incl.  P4 Best Practices at Estates Improvement Gender Issues  P7 New Plantings  P8 Continual  P8 Continual Improvement Improvement 1.00 pm – Lunch Break 2.00 pm 2.00 pm - Continue site assessment at Subur Estate 5.30 pm 5.30 pm – Travel to Hotel & Break 6.00 pm 6.00 pm – Team Meeting and Discussion 7.00 pm

Date Time Assessors and Assessment Activity 5 June 9.00 am – OCL SH JMD 2018 12.30pm Site assessment at Buntar Site assessment at Site assessment at Buntar Tuesday Estate Buntar Estate Estate  P1 Transparency  P2 Laws &  P2 Laws & regulations (Day 2)  P2 Laws & regulations regulations  P6 Employees, Individuals &  P3 Economic & Financial  P5 Environmental, Communities incl. Gender Viability Conservation & HCV Issues  P4 Best Practices at Estates  P8 Continual  P8 Continual Improvement  P7 New Plantings Improvement  P8 Continual Improvement 12.30 pm Lunch Break – 1.30 pm 1.30 pm - Continue site assessment at Site assessment at Buntar Estate 5.30 pm 5.30 pm – Travel to Hotel & Break 6.30 pm 6.30 pm – Team Meeting and Discussion 7.30 pm

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Date Time Assessors and Assessment Activity 6 June 8.30 am – OCL SH JMD 2018 12.30pm Site assessment at Pelam Estate Site assessment at Site assessment at Wednes  P1 Transparency Pelam Estate Pelam Estate day  P2 Laws & regulations  P2 Laws & regulations  P2 Laws & regulations

 P3 Economic & Financial Viability  P5 Environmental,  P6 Employees, Individuals (Day 3)  P4 Best Practices at Estates Conservation & HCV & Communities incl.  P7 New Plantings  P8 Continual Gender Issues  P8 Continual Improvement Improvement  P8 Continual Improvement 12.30 pm Lunch Break – 1.30 pm 1.30 pm - Continue site assessment at Site assessment at Pelam Estate 5.30 pm 5.30 pm – Travel to Hotel & Break 6.30 pm 6.30 pm – Team Meeting and Discussion 7.30 pm

Date Time Assessors and Assessment Activity 7 June 8.30 am – OCL SH JMD 2018 12.30pm Site assessment at Batu Lintang Site assessment at Site assessment at Batu Thursday Estate Batu Lintang Estate Lintang Estate  P1 Transparency  P2 Laws &  P2 Laws & regulations (Day 4)  P2 Laws & regulations regulations  P6 Employees, Individuals  P3 Economic & Financial Viability  P5 Environmental, & Communities incl.  P4 Best Practices at Estates Conservation & HCV Gender Issues  P7 New Plantings  P8 Continual  P8 Continual Improvement  P8 Continual Improvement Improvement 12.30 pm – 1.30 pm Lunch Break 1.30 pm - Site assessment at Palm Oil Mill Site assessment at Site assessment at Palm 5.00 pm  P1 Transparency Palm Oil Mill Oil Mill  P2 Laws & regulations  P2 Laws &  P2 Laws & regulations  P3 Economic & Financial Viability regulations  P6 Employees,  P4 Best Practices at Mill  P5 Environmental, Individuals &  P8 Continual Improvement Conservation & HCV Communities incl.  SCC for POM  P8 Continual Gender Issues Improvement P8 Continual Improvement 5.00 pm – Travel to Hotel & Break 6.00 pm 6.00 pm – Team Meeting and Discussion 7.00 pm

Date Time Assessors and Assessment Activity 8 June 8.30 am – OCL SH JMD 2018 11.00 am Site assessment at Palm Stakeholders’ Consultation on the following categories Friday Oil Mill (see Notes 1 and 2 below):  P1 Transparency  Contractors (Day 5)  P2 Laws & regulations  Suppliers  P3 Economic & Financial  Transporters Viability  NGOs  P5 Environmental,  Government Department / Agencies Conservation & HCV  Local Community

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 P8 Continual Improvement Notes  SCC for POM 1. It is mandatory for the PMU to inform Intertek and provide the information (as a minimum the no. of stakeholders in each applicable category and contact number) on the stakeholders prior to the assessment. 2. This will facilitate the random and impartial selection of stakeholders (including independent and organized smallholders, where applicable) and to meet the sample size requirement 11.00 am – 12.00 Preparation for Closing Meeting pm 12.00 pm – 12.30 Team Meeting and Discussions with POM Management Representative pm 12.30 pm Closing Meeting & Briefing at Palm Oil Mill Office – 1.00 pm 1.00 pm Travel back to Kuala Lumpur onwards

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Appendix C-1:

Location Map of KLK Batu Lintang Grouping, Kedah, Malaysia

KLK Batu Lintang Grouping

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Appendix C-2-1: Map of Batu Lintang Estate Home Division and POM

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Appendix C-2-2: Map of Batu Lintang Estate – Ghim Khoon Division

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Appendix C-3-1: Map of Buntar Estate – Home Division

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Appendix C-3-2: Map of Buntar Estate – Kedah Division

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Appendix C-4-1: Map of Pelam Estate – Home Division

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Appendix C-4-2: Map of Pelam Estate – Nagalelai Division

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Appendix C-5-1: Map of Subur Estate – Home Division

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Appendix C-5-2: Map of Subur Estate – Norseman Division

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Appendix C-5-3: Map of Subur Estate – Sungai Pulau Division

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Appendix D:

Photographs at KLK Batu Lintang Grouping

Subur Estate: Neatly stacked fertilizer store Buntar Estate: Interviewing harvesters

Buntar Estate: Interviewing sprayers Pelam Estate: Chemicals premix area

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Appendix E:

Time Bound Plan - as submitted by Kuala Lumpur Kepong Berhad (May 2018)

POM Planting No ESTATE Location Licenses Year Area (Ha) RSPO Target

1 Palm Oil Mill is expected to Only planted commission by Butaw Estate Liberia Leasehold 1,418Ha 8,011 BY 2022

Sinoe

County Y2020 since 2012 2 Only planted LIBERIA Palm Bay Estate Liberia Leasehold 6,404 Ha 13,007 BY 2022

County since 2011

Grand Bassa

TOTAL 21,018 1 Berau Kebun Malindomas Berau, KALTIM HGU & IUP 2006 7,971 Perkebunan

2 Kebun Hutan Hijau Mas Berau, KALTIM HGU & IUP 2006 7,317 BY 2018 3 Kebun Anugrah Surya Berau, KALTIM IL & IUP - 2,682 Mandiri

KALTIM 1 Jabontara Kebun Jabontara Eka Berau, KALTIM HGU & IUP 2007 14,086 CERTIFIED IN Karsa NOV Y2017

INDONESIA

1 Mandau Kebun Mandau* Riau, Sumatera HGU & IUP 14,799 CERTIFIED IN

RI

SU

TE

RA

MA AU, OCT Y2012

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2 Nilo 1 Kebun Nilo Timur Riau, Sumatera HGU & IUP 12,860

CERTIFIED IN 3 Nilo 2 Kebun Nilo Barat Riau, Sumatera HGU & IUP MEI Y2014

Kebun Mutiara Riau, Sumatera IL & IUP 2005 1,400 AUDITED IN March Y2018; AWAITING CERTIFICATE 4 Tapung Kanan Kebun Sekarbumi Riau, Sumatera HGU & IUP 6,200 CERTIFIED IN Alamlestari APRIL Y2013

1 Steelindo Wahana Kebun Steelindo Wahana Belitung HGU & IUP 14,065 CERTIFIED IN Perkasa Perkasa JANAURY Y2015

2 Parit Sembada Kebun Parit Sembada Belitung HGU & IUP 3,990 CERTIFIED IN OCTOBER Y2016 Kebun Alam Karya Belitung IL & IUP 2009 2,336 BY 2018

BELITUNG Sejahtera

1 Stabat Kebun Basilam* Langkat, SUMUT IUP & HGU 2001 2,697

Kebun Tanjung Beringin Langkat, SUMUT IUP & HGU 2000 3,936

Kebun Gohor Lama * Langkat, SUMUT IUP & HGU 1992 3,323 CERTIFIED IN NESIA AUGUST Y2017 Kebun Padang Brahrang Langkat, SUMUT IUP & HGU 1979 1,949

INDO

SUMATERA UTARA Kebun Bukit Lawang Langkat, SUMUT IUP & HGU 1995 1,377

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Kebun Tanjung Langkat, SUMUT IUP & HGU 1991 2,407 Keliling*

Kebun Bekiun Langkat, SUMUT IUP & HGU 1984 2,979

Maryke Langkat, SUMUT IUP & HGU 2007 2,704

1 KMA POM Kebun Karya Makmur Mentaya Hulu, IUP & HGU 2008 9397 Abadi KALTENG BY 2018

Kebun Karya Makmur Bukit Santuai IUP & IL 2008 3406 Abadi KALTENG MAP POM Kebun Mulia Agro Baamang, IUP & HGU 2006 9,055 Permai KALTENG

KALTENG Kebun Menteng Jaya Mentaya Hilir Utara, IL & IUP 2009 5,893 Sawit Perdana KALTENG

TOTAL 136,830

POM No ESTATE Location Licenses Area (Ha) RSPO Target 1 Batu Lintang POM Pelam Estate* Kulim, Kedah Land Title 2,960

2 Batu Lintang Estate* Serdang, Kedah Land Title 1,808 CERTIFIED IN SEPT 3 Subur Estate Batu Kurau, Perak Land Title 1,290 Y2013

M’SIA

MALAYSIA 4 Buntar Estate Serdang, Kedah Land Title 899 PENINSULAR PENINSULAR

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5 Changkat Chermin POM Lekir Estate Manjung, Perak Land Title 3,307

6 Changkat Chermin Estate Manjung, Perak Land Title 2,530

7 Raja Hitam Estate Manjung, Perak Land Title 1,497

8 Glenealy Estate* Parit, Perak Land Title 1,059 CERTIFIED IN SEPT Y2013 9 Serapoh Estate* Parit, Perak Land Title 936

10 Kuala Kangsar Estate* Padang Rengas, Perak Land Title 1,340

11 Allagar Estate Trong, Perak Land Title 773

12 Tuan Mee POM Tuan Mee Estate Sg Buloh, Selangor Land Title 2,678 CERTIFIED IN SEPT Y2013

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POM No ESTATE Location Licenses Area (Ha) RSPO Target 13 Tanjong Malim Changkat Asa Estate* Tg Malim, Perak Land Title 1,714 POM 14 Kerling Estate* Kerling, Selangor Land Title 619 CERTIFIED IN NOV Y2013

15 Sg Gapi Estate Serendah, Selangor Land Title 603

16 Jeram Padang POM Estate Bahau, Negeri Sembilan Land Title 2,640

17 Batang Jelai Estate* Rompin, Negeri Sembilan Land Title 2,148

18 Jeram Padang* Bahau, Negeri Sembilan Land Title 2,114

19 Kombok Estate* Rantau, Negeri Sembilan Land Title 2,331 M’SIA 20 Ulu Pedas Estate* Pedas, Negeri Sembilan Land Title 922 CERTIFIED IN SEPT Y2012 21 Gg Pertanian Estate Simpang Durian, Negeri Sembilan Land Title 686

MALAYSIA 22 Sg Kawang Estate* Lanchang, Pahang Land Title 1,889

PENINSULAR PENINSULAR 23 Renjok Estate* Telemong, Pahang Land Title 1,578

24 Tuan Estate* Telemong, Pahang Land Title 1,353

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No POM ESTATE Location Licenses Area (Ha) RSPO Target 25 Kuala Pertang Kerilla Estate* Tanah Merah, Kelantan Land Title 2,176 POM 26 Pasir Gajah Estate Kuala Krai, Kelantan Land Title 2,107 CERTIFIED IN NOV Y2014 27 Sg Sokor Estate* Tanah Merah, Kelantan Land Title 1,603

28 Kekayaan POM Landak Estate Paloh, Johor Land Title 4,451

29 Kekayaan Estate Paloh, Johor Land Title 4,436

30 Voules Estate* Tenang, Johor Land Title 2,969

31 Sg Penggeli Estate , Johor Land Title 942

32 New Pogoh Estate* Tenang, Johor Land Title 1,545

MALAYSIA 33 Fraser Estate , Johor Land Title 1,916 CERTIFIED IN OCT Y2011

PENINSULAR M’SIA PENINSULAR 34 Paloh Estate Paloh, Johor Land Title 2,029

35 Sg Estate Bekok, Johor Land Title 625

36 Ban Heng Estate Pagoh, , Johor Land Title 631

37 See Sun Estate , Johor Land Title 589

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No POM ESTATE Location Licenses Area (Ha) RSPO Target 1 Pinang POM Jatika Estate Tawau, Sabah Land Title 3,508

2 Sigalong Estate Tawau, Sabah Land Title 2,864

CERTIFIED IN MAR Y2009 3 Pangeran Estate Tawau, Sabah Land Title 2,855

4 Pinang Estate Tawau, Sabah Land Title 2,420 5 Mill II Pang Burong Estate Tawau, Sabah Land Title 2,548

6 Sri Kunak Estate Tawau, Sabah Land Title 2,770

CERTIFIED IN MAR Y2009 7 Tundong Estate Tawau, Sabah Land Title 2,155

Ringlet Estate Tawau, Sabah Land Title 1,834

SABAH 8

MALAYSIA 9 Bornion POM Bornion Estate Kinabatangan, Sabah Land Title 3,233

10 Segar Usaha Estate Kinabatangan, Sabah Land Title 2,792

11 Lungmanis POM Tungku Estate Lahad Datu, Sabah Land Title 3,418

CERTIFIED IN JULY Y2010 12 Bukit Tabin Estate Lahad Datu, Sabah Land Title 2,916

13 Lungmanis Estate Lahad Datu, Sabah Land Title 1,656

14 Sg Silabukan Estate Lahad Datu, Sabah Land Title 2,654

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15 Rimmer Estate Lahad Datu, Sabah Land Title 2,730

Above marked * is combination of total rubber and palm oil area within stated plantation where the exact certified or under certification of each plantation will be according to the respective public summary report.

Country Region Area (Ha) P.M’sia 65,693 Malaysia Sabah 40,353 KALTIM 32,056 Riau 35,259 Indonesia Belitung 20,391 Sumatera Utara 21,372 KALTENG 27,751 Palm Bay 13,007 Liberia Butaw 8,011 GRAND TOTAL 263,893

Remarks: 1. KLK has acquired Selinsing division from Agro Harapan Lestari Sdn. Bhd (Formely known as Good Hope) in November 2016. Titled hectarage of Selinsing Division is 497Ha + 843Ha (Kuala Kangsar Home Division) = 1340Ha

2. KLK has sold 1012Ha to Aura Muhibbah Sdn. Bhd.

3. KLK has sold 32Ha from Allagar Estate and 4Ha from Lekir Estate to West Coast Expressway.

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4. Rimmer POM has been closed due to extensive replanting plan at Lahad Datu Complex.

5. Paloh POM has been closed due to low FFB volume.

6. RSPO Compensation Concept Note has been endorsed by RSPO Compensation Panel on 14/2/2018.