MY01910 Surveillance 02 Evaluation against RSPO MYNI Requirement Page 1 Carotino Production Unit, Carotino Sdn. Bhd.

OILPALM PLANTATION MANAGEMENT SURVEILLANCE REPORT

Certificate Nr: SGS-RSPO/PM-00514 Project Nr: MY01910 Validity Period: 27 April 2010 – 26 April 2015

Report Ref #: MY01910 Surveillance 02 Evaluation

Client: Carotino Sdn Bhd

RSPO membership #: 026-06(0)

Web Page: www.carotino.com Head office: Unit 30-08, Mail Box Contact: 238, Menara Mr Seow Chee Chiang Address: Landmark, No.12, Estate Department/Sustainability Manager Jalan Ngee Heng, Tel: +607-223 1633 80000, Johor Bahru, Email: [email protected] Johor

Country: Malaysia Plantation Unit being Carotino Sdn Bhd Evaluated Total Plantation Area 10,243 ha

Company Contact Person: Mr Seow Chee Chiang Estate Department/Sustainability Manager Head office: Unit 30-08, Mail Box 238, Menara Landmark, Address: No.12, Jalan Ngee Heng, 80000, Johor Bahru, Johor

Tel: 07-2231633

Fax 07-2241546

Email: [email protected]

Evaluation dates:

Pre Assessment 2 – 5 SEPT 2008

Main Evaluation 11 – 15 May 2009

Surveillance 1 14 – 16 March 2011

Surveillance 2 5 – 8 March 2012 MY01910 Surveillance 02 Evaluation for RSPO MYNI Requirement for Page 2 Carotino Production Unit, Carotino Sdn. Bhd.

Table of Contents 1.0 Scope of the surveillance ...... 5 1.1 Certification unit background ...... 5 1.2 Location ...... 6 1.3 Production records ...... 7 1.4 Certification details ...... 12 1.5 Description of fruit supply base ...... 12 1.7 Associated smallholders and outgrowers progress towards compliance with relevant standards ...... 12 1.8 Contact person ...... 12 2.0 Surveillance evaluation process ...... 13 2.1 Team members ...... 13 2.2 Surveillance 02 Evaluation schedule ...... 14 3.0 Surveillance findings ...... 16 3.1 Summary of findings ...... 53 3.2 Maintenance of certification ...... 53 3.3 Status of non-conformities ...... 54 3.4 Supply Chain of Custody for Palm Oil Mill ...... 58 3.5 Certified organisations acknowledgement of internal responsibility ...... 62

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List of Abbreviations

AOPE1 Asia Oil Palm Estate 1 CAR Corrective Action Request CHRA Chemical Health Risk Assessment CHRA Chemical Health Risk Assessment CPO Crude Palm Oil DID Department of Drainage and Irrigation, Malaysia DOE Department of Environment, Malaysia EFB Empty Fruit Bunch EIA Environment Impact Assessment EMS Environmental Management System EPD Environment Protection Department EQA Environmental Quality Act ERT Endangered, Rare and Threatened species ESA Environmentally Sensitive Area FFA Free Fatty Acid FFB Fresh Fruit Bunch FR Forest Reserve GM General Manager ha Hectare HCV High Conservation Value HL 1 Hwa Li 1 Estate HL 2 Hwa Li 2 Estate HDPE High Density Polyethylene IPM Integrated Pest Management ISO International Organisation for Standardisation IUCN International Union for Conservation of Nature and Natural Resources JCC Joint Consultative Committee K Potassium Kg Kampung. Bahasa Malaysia equivalent to Village kW Kilo Watt M Meter ME Maran Estate Mg Magnesium mm Millimeter MSGAP-OP Malaysian Standard Good Agriculture Practices-Oil Palm mt Metric tonne MYNI Malaysia National Interpretation N Nitrogen NGO Non Governmental Organisation OER Oil Extraction Rate OSH Occupational Safety & Health P Phosphate P & C Principles and Criteria PK Palm Kernel

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POME Palm Oil Mill Effluent POPE Pahang Oil Palm Estate PPE Personal Protective Equipment RHB Rashid Hussain Berhad RSPO Roundtable on Sustainable Palm Oil SaOP Safe Operating Procedures Sdn Bhd Sendirian Berhad SEIA Social and Environment Impact Assessment Sg Sungai SGS Societe Generale de Surveillance SOP Standard Operating Procedures SPC Senior Plantation Controller StOP Standard Operating Procedures USECHH Use and Standards of Exposure of Chemicals Hazardous to Health UMS University Malaysia Sabah WHO World Health Organisation yr Year

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Annual Surveillance Report

1.0 Scope of the surveillance

1.1 Certification unit background

The J.C. Chang Group is a Malaysian based and privately-owned business group with a portfolio of businesses in oil palm plantations, palm oil milling and refining, property and development, hotel, insurance, manufacturing and trading.

Oil palm plantations and CPO milling form the core business of the Group. They have one CPO mill and five oil palm plantations in Pahang, and three CPO mills and twelve oil palm estates in Sabah. Their total gross plantation area is about 40,000 hectares, with a total milling capacity of about 200 mt FFB per hour. In addition, a refining and manufacturing plant in Pasir Gudang produces various downstream palm products for exports.

Carotino Sdn Bhd is a member of the vertically integrated J.C. Chang Group of companies and is involved in downstream businesses that enhance the value of crude palm oil. They have commercialized a patented physical refining process for the production of natural carotenes and tocotrienols-rich oils and fats, marketed globally under the brand name Carotino.

The Carotino Palm Oil Mill and its supply base estates consist of 5 estates (i.e. Hwa Li Estate 1, Hwa Li Estate 2, Maran Estate, Asia Oil Palm Estate 1, and Pahang Oil Palm Estate 1) with the following legal ownership:

 Hwa Li Estate 1 – under 13 different PTs which are lands under the ownership of Sharikat Keratong Sdn Bhd, a wholly owned company under JC Chang Group.  Hwa Li Estate 2 – a single title PT 2389 HSD 2850 owned by Carotino Sdn Bhd, which is under JC Chang Group.  Maran Estate – under 6 titles belonging to Richley Corporation Sdn Bhd, which is under JC Chang Group.  Asia Oil Palm Estate 1 – less than 6 land titles owned by Asia Oil Palm Sdn Bhd, a company under JC Chang Group.  Pahang Oil Palm Estate 1 – land belongs to Pahang Enterprise Sdn Bhd, a wholly owned company under JC Chang Group.

A main assessment of the Carotino Production unit was undertaken by SGS between 11 – 15 May 2009 to evaluate field practices and documentation of the unit against the Roundtable on Sustainable Palm Oil (RSPO) Principles and Criteria (P&C) – Malaysia National Interpretation (MYNI). The assessment resulted in the issuance of 8 Corrective Action Requests (CAR), all Minor CARs. However, the RSPO certificate was not awarded until May 2010. A surveillance visit was conducted from 14 - 16 March 2011 to verify actions taken to close out major gaps identified during the main field assessment. During this visit, 7 Minor CARs were closed and 1 Minor CAR remained outstanding. In addition, 2 new Minor CARs were also issued.

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Since there are no Major CARs, the unit was recommended for certification. The report has been reviewed by the RSPO Board which resulted in the issuance of a conditional certificate to Carotino on 27 April 2010. The validity of this certificate is over a period of 5 years and subject to annual surveillance. The second annual surveillance was conducted from 5 – 8 March 2012. During this visit 3 Minor CARs and 1 Observation were closed. In addition 1 new CAR was raised with 4 new Observations. The new CAR was closed when Carotino Sdn Bhd submitted the evidence before the report was prepared. The estimated annual CPO production of the Carotino Palm Oil Mill is 30,300 mt and the estimated annual palm kernel production was at 7,700 mt. The first annual surveillance done March 2011 recorded that the Carotino Mill processed 28,648.62 mt of certified CPO from November 2009 to December 2010. During this second surveillance , Carotino Sdn Bhd reported form their records for the year 2011, the mill processed 118,331 FFB from its own supply based estates and produced 23,994.69 MT certified CPO and 6,483.11 palm kernel.

1.2 Location The Carotino Production Unit is divided into two separate location blocks. The first block consists of the Asia Oil Palm Estate 1, Pahang Oil Palm Estate 1 and Maran estate located north of Sri Jaya town. Other oil palm estates or natural areas such as forest reserves or stateland forests surround this area. Mining companies nearby practice land clearing and mining operations. The second block consists of the Hwa Li Estate 1 and Hwa Li Estate 2 that are located 100 km south of the first block. Hwa Li Estate 2 is located at the tri-state boundary (i.e. Negeri Sembilan, Johor and Pahang), while Hwa Li Estate 1 is further east and borders Hutan Simpan Lesong withing Rompin District.

Map 1 illustrates the land-use pattern surrounding the Carotino Production Unit’s estates in southern Pahang in 2002. The five component estates in this assessment are in two groups. Asia Oil Palm Estate 1 (AOP), Pahang Oil Palm Estate 1 (POP) and Maran Estate (ME) are in the north and Hwa Li Estate 1 (HL1) and Hwa Li Estate 2 (HL2) to the south. The landscape issue of interest for these plantations include various ‘high conservation values’ (HCV): biological diversity (HCV 1, 2 & 3), natural resource quality and availability (HCV4), as well as the use of land for economic benefits (HCV5). Cultural value (HCV6) needs to be viewed at a larger scale. The primary issues of concern include:

 The large contiguous area of oil palm and its effect on ecological imbalance and crop pest management (HCV2, 3 & 5);  ‘biological corridors’ between the forest blocks adjacent to AOP, POP and ME (HCV1,2 & 3);  The isolated lowland forest to east (HCV2 & 3), and rubber areas (HCV5) usually associated with small cultivators to the west of HL2; and  The Lesong Forest Reserve on 3 sides of HL1, which borders with Endau-Rompin National Parks and is recognised as an area of high biodiversity (HCV1, 2, 3 & 4).

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1.3 Production records The total Fresh Fruit Bunch (FFB) production recorded for 2010-2011 for all five estates was118,331 MT. See Table 1 below for FFB production for all estates. Total Crude Palm Oil (CPO) and Palm Kernel (PK) production over the same period are shown in Table 2. The monthly oil extraction rates (OER) fluctuation is presented in Figure 1 and the mean OER recorded for the same period (Jan 2011-December 2011) was 20.09%.

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Map 1: Land use at the landscape level around the Carotino estates. (Source Dept. Agriculture.)

MAP OF CAROTINO MY01910 Surveillance 02 Evaluation against RSPO MYNI Requirement Page 9 Carotino Production Unit, Carotino Sdn. Bhd.

Table 1: Fresh Fruit Bunch Production (MT) from 2003-2011

Estate 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Hwa Li 1 19,530 26,510 32,632 31,551 49,629 50,962 47,746 8,889 Hwa Li 2 46,119 46,022 48,110 44,973 53,555 48,696 42,101 36,001 Asia Oil 19,487 27,640 31,533 25,709 39,157 40,347 38,413 32,898 Palm Pahang 24,334 25,755 29,689 29,531 33,013 32,079 28,054 24,360 Oil Palm

Maran - 21,228 29,103 29,877 26,843 27,282 21,151 16,183 Total 109,478 147,355 171,067 161,641 202,197 199,366 177,465 118,331

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Table 2: Crude Palm Oil and Palm Kernel production and sales (mt) from Jan 2010 to Dec 2011 Crude Palm Oil (CPO) Palm Kernel (PK) Produced Despatched Produced Sold Jan 1,154.46 1,230.07 335.34 366.68 February 1,190.14 1,408.91 363.24 292.33 March 1,845.16 1,770.81 544.5 510.72 April 2,168.67 2,171.05 645.46 707.97 May 2,470.64 2,282.40 642.78 608.26 June 2,204.59 2,169.49 542.3 580.61 July 2,449.14 2,424.13 643.09 623.03 August 2,274.65 2,190.25 588.93 615.53 September 2,395.32 1,680.35 626.87 543.75 October 2,053.95 1,157.02 553.32 581.14 November 1,976.45 1,596.95 499.71 575.83 December 1,811.52 2,715.57 497.57 470.71 Total 23,994.69 22,797.00 6,483.11 6,476.56

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Figure 1: % Oil Extraction Rates from Jan 2011 – December 2011

Jan 19.35

Feb 19.07

Mar 19.00

Apr 19.32

May 20.15

Jun 20.16

Jul 20.40

Aug 21.08

Sept 20.27

Oct 20.45

Nov 21.06

Dec 20.77

Mean % 20.09 %

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1.4 Certification details The Carotino Production Unit has been assessed and certified as meeting the requirements of RSPO Principles and Criteria (2007) for Sustainable Palm Oil Production as specified in the Malaysian National Interpretation (MYNI) (2008). The validity of the certificate (SGS-RSPO/PM- 00514) is from 27 April 2010 to 26 April 2015.

1.5 Description of fruit supply base The Carotino Palm Oil Mill receives FFB from the following estates: Hwa Li Estate 1, Hwa Li Estate 2, Maran Estate, Asia and Pahang estates. For the purposes of surveillance, the production details from November 2009 to December 2010 are presented in Table 1 above.

Table 3: Age Profiles of Each Estate in 2011

Age category AOPE 1 POPE (ha) Maran Hwa Li 1 Hwa Li2 Total (year) (ha) Estate(ha) (ha) (ha) (ha)

6 – 10 0 783.9 0 1,462.0 0 2,245.9

11 – 20 1,690.8 193.5 122.3 171.3 1,528.7 3706.6

21 – 25 0 0 0 0 0 0

> 25 154.5 140.6 912.4 455.4 0 1,662.9

Total cultivated 2,113.3 2,013.6 1,977.1 2,088.6 1,528.7 9,721.3

*Total not cultivated 27.5 127.1 163.7 73.2 130.5 522.1 * Total not cultivated includes areas set aside as nursery, football field, building and others, TNB line and roads.

1.7 Associated smallholders and outgrowers progress towards compliance with relevant standards There are no associated smallholders and outgrowers under this unit.

1.8 Contact person Name Seow Chee Chiang

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Designation Estate Department/Sustainability Manager Unit 30-01, Mail Box 300 Menara Landmark, No 12, Jalan Ngee Heng 80000 Johor Bahru, Johor Malaysia

Contacts Tel: +607 2231633 Fax: +607 2241546 Email [email protected]

2.0 Surveillance evaluation process

2.1 Team members

Evaluation Team Brief CV Main Assessment

Lead Auditor Salahudin Yaacob has post graduate degree in Environment and Natural Resources management currently head Natural Resources certification programme in SGS Malaysia. Trained as a botanist, the team leader has gathered more than 10 years of auditing especially in the forestry sector. As a lead auditor in forest management and chain of custody of forest products, he is well versed in certification process and management of certification scheme. Also trained as lead auditor under EMS and SA8000 system. Has participated in RSPO Lead Auditor Training Course and conducted a number of RSPO audits in Malaysia, Indonesia, Thailand and Colombia. Auditor Tunku Mohammed Nazim Yaacob is a graduate in Ecology with more than 30 years experience in ecology and wildlife management. Tunku is a trained ISO 14000 lead auditor and expert in landuse and management planning. Has gathered many years experience of auditing in forest management and other natural resources sector at national and international levels. Has attended RSPO Lead Auditor Training Course and conducted a number of RSPO audits in Malaysia and Indonesia. Sociologist Lim Hin Fui, PhD. Dr Lim is a sociologist by qualification and has been involved with social work for more than 30 years. He has conducted many anthropological studies on local communities, particularly Orang Asli in Peninsular Malaysia and other local groups in Sabah and Sarawak. Dr Lim is an experienced auditor particularly in forest certification programmes having involved in the certification for the last 7 years. Auditor Norashikin Rasikon, B.Sc. Holds a graduate degree in forestry and has been involved in certification for the last two years. Trained under ISO system, chain of custody evaluation and SA8000. Currently entrusted in preparing documents for certification systems and responsible for maintaining records and reports in compliance to accreditation requirements under various certification schemes. She is responsible for reviewing availability of relevant documentation in compliance to the RSPO requirement as well as gathering information particularly on social aspects. Evaluation Team Brief CV Surveillance 01 Lead Auditor Salahudin Yaacob (see above) Auditor Norashikin Rasikon (see above) Auditor Rick Gregory, M.Sc., has worked in Malaysia for nearly 20 years in the environmental sector. Trained as a forester, he has experience with certification schemes in forestry, including Forest Management Units and chain of custody, and has been involved in several oil palm plantation assessments against RSPO P&C in Malaysia, Thailand and Colombia.

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Evaluation Team Brief CV Surveillance 02 Lead Auditor James S H Ong is an agronomist by training. He has many years experience in the agriculture sector in Malaysia having worked as Assistant Plantation Manager in a number of estates in Malaysia. He is well versed with agro chemical and fertiliser applications. Has undergone ISO and RSPO Lead Auditor training and has been involved in a number of audits on oil palm plantations Auditor Abdullah Din is a forester by profession and a trained Lead Auditor with 4 years experience in forestry Chain of Custody (CoC) certification. He also has been involved in a number of Forest Management (FM) certification for the last 4 years. In addition , he is a Lead Auditor for RSPO ,trained by RSPO for auditing against RSPO P&C and involved in a number of plantation assessments and audit of palm oil mill

Auditor Ahmad Hamdi Bin Mat @ Mat Yusoff is a graduate in Environmental Science from Universiti Putra Malaysia. Prior to joining SGS, he has more than 4 years experience in environmental research and monitoring activities pertaining to EIA studies and Environmental Management Plan. Has undergone the necessary ISO 14000 Lead Auditor course, ISO 9001 Lead Auditor course, RSPO Lead Auditor course and has gathered substantial auditing experience pertaining to forest certification (FSC and PEFC) and in the oil palm auditing certification scheme like RSPO P&C and ISCC.

2.2 Surveillance 02 Evaluation schedule

Date Itinerary Notes 05/03/2012 Travel KL- Sri Jaya Briefing by POM-PMU & Corrective Opening meeting POM Actions

Carotino POM Briefing on Surveillance Visit

POPE Field Scheduling

Document review

Discussion with responsible personnel

Mill Audit for SC

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For Mills : Supply Chain Modular D or E

Estate Doc Review

Line site and Storage facilities, Tractor parking area, recycling bins 06/03/2012

Buffer & riparian zone

Boundary stones

Integrated pest management – Barn owl, Beneficial plants

Harvesting area and worker interview

Landfill

Interview with stakeholder Orang Asli Visit to: settlement . Kg Pasal Hwa Li 2 ( 9.00am ) &

Lunch

Hwa Li 1 ( 2.30 pm ) Field visit to the estates Boundary stones

Buffer zone & Riparian Zone

Elephant fence

Road condition

Oil Palm Nursery

Chemical storage, workshop, scheduled waste area, line site etc

– Document Review

07/03/2012 Visit to: Morning Muster& Mandore first aid Maran ( a.m. ) & Chemical storage, workshop, scheduled AOPE 1 ( p.m ) waste area, OP Nursery - Field visit to the estates Linesite + interview with workers ( eg - Visit to kg orang asli Pakistani worker issue) Flooded area Replanting area Orang Asli settlement Interview orang asli mandore

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Buffer zone At AOP 1 Linesite & Interview with workers Landfill Buffer zone and sprayed area Dispensary & HA Chemical storage, workshop, scheduled waste area, – Document Review – Social : Gender

08/03/2012 Maran Estate Document review at Maran Estate Nasi Lemak Breakfast Preparation for closing Closing Meeting Closing Meeting @ Maran Estate Findings and Recommendations

3.0 Surveillance findings The surveillance findings are presented as an addition to the original assessment findings. This is intentionally done to provide background information for the closure or maintenance of CARs and observations raised in the main assessment and the follow up surveillance visits. New observations and CARs may also be raised at the indicator level and are presented in the same table. It should be noted that similar to the main assessment, while the non conformances raised refer to the MYNI indicators, findings made during surveillance visits are summarized and presented only at criterion level. For further clarity of the findings made and issues raised in this surveillance report, reference to the summary main assessment report may be required.

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Criterion 1.1 Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation on decision making.

MA2009 Carotino Sdn Bhd has a website for promotion of its products. The website also contain brief information about the company’s corporate structure, its policy and management objectives. Summary of management plan available on website that include social and environmental issues “Guidelines on mechanism for information requests by stakeholders” have been documented. Procedures for handling stakeholders are available. The company maintains a file on stakeholder comments/requests and has established a system to record the comments/requests and actions taken to address them.

SA2010 A high commitment from management to be transparent remains. Records of communication with stakeholders were observed and a summary of management plans are available on the website that includes social and environmental issues. A stakeholder list is available that includes relevant authorities such as the Forestry Department and JHEOA. Every estate has mapped the location of all local stakeholders

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including immediate neighbours.

SA2012 In HL3, records of requests and responses were maintained. There were 4 requests in 2012. The latest was dated Feb 22, 2012. The request for road maintenance of Kg Pasal was done on 2-3 march 2012. The meetings with stakeholders were also maintained. The responses are also minuted in the meeting notes. Most of the recent meetings concern the road condition and accessibility which is being affected by the neighbouring mining activity. In 2011, 11 meetings were held. There was a meeting on 20/2/12 also concerning road access. In AOPE1, visits to neighbouring estates like Ladang Felda leper Utara 5 and Ladang Pasfa were recorded. Visit to Kedai Lim Huat , sundry shop is also recorded since 2011. Meetings concerning main road access is also recorded

In HL 1, records of response from stakeholders are maintained. Latest record received from staff dated 14 Feb 2012. Records of visit and meeting with other stakeholders :

1) Suburban Properties dated 22.02.2012. 2) Kampung Cenderawasih & Sekolah Kebangsaan Cenderawasih

Hwa Li 2 Stakeholder meeting was conducted with stakeholders below:

 Ladang Prosper  Kampung Orang Asli – Kampung Pasal on 22 February 2012  Sri Kurnia  Shopkeeper  Local NGOs  Ladang Pertanian

Maran Estate Stakeholder meeting was conducted with stakeholders below:

 Malaco Mining Sdn Bhd  Sri Jaya Lime Stone Quarry  Wong Nyuk Lim  Nik Hassan B. Che Teh  Kampung Orang Asli Che Habuk  Mohd Fikri Al Zaim  Marzuki B. Mapajen  Phoenix Lake Sdn Bhd  Kema Development Sdn Bhd  Bakti Juwita Sdn Bhd  Sri Jaya Town  Kg. Sg. Jeram Orang Asli

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.

MA2009 There is a mechanism to ensure that documents are publicly available, as stipulated in the individual management plans. o Land titles / user rights o Safety and health plan o Plans and impact assessments relating to environmental and social impacts

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o Details of complaints and grievances o Negotiation procedures o Continuous improvement plan Standard operation procedures are also available. Management plan summarizing the company policies and good management practices are now publicly available on the website (www.carotino.com). Policies, SOPs, work instructions are also pasted on notice boards at the estate and mill for workers and public view. SA2012 Management documents are publicly available on the webpage.

In addition , it is also posted on noticeboards at the office of the estate as well a the security gate ( e.g. in HL2)

PPRRIIINNCCIIIPPLLEE 22::: CCoommppllliiiaannccee wwiiittthh aappppllliiiccaabblllee lllaawwss aanndd rrreegguulllaatttiiioonn

Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations.

MA2009 There is a complete register of laws and regulations, available at all estates and mills. The Managers have demonstrated adequate knowledge of the national laws and state ordinances, especially pertaining to OSH and labour related legislation. A mechanism to track changes in legal requirements is in place with personnel responsible for monitoring compliance. All necessary renewable permits pertaining to crop production and milling are in place and displayed in the form of certificates in the group offices and respective mills. Legal requirements for machinery maintenance and power generation have also been complied with. Workers health requirements and pesticide regulations have also been fulfilled.

SA2010 A list and copies of legal documents and international treaties and agreements are available, with changes is tracked through www.lawnet.com.my. The person responsible for monitoring compliance to laws and regulations is formally identified in the guidelines. Current valid licenses and permits are framed and displayed in the mill and estate offices and there is no evidence of non compliance to legal requirement.

SA2012 MPOB Licence: 500356604000 ( 1/11/2011 – 31/10/2012) for 144,000 MT FFB Carotino Sdn Bhd registered No: 69046-T Current valid licenses and permits are framed and displayed in the mill and estate offices and there is no evidence of non compliance to legal requirement.

Criterion 2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights.

MA2009 Current activities on the land complied with legal landownership title where it was specifically spelt out that the land is to be planted with oil palm. The audit team observed adequate physical demarcation on the ground (i.e. boundary markers), however, apart from Hwa Li 2 and Maran Estate, other estates are without boundary stone markers (Minor CAR-01). It was observed that the estate boundaries are clearly marked where drains were dug. Electric fencing was erected along boundaries bordering natural areas such as Forest Reserve. Active communication in the form of letters with the land surveyor and land office were also observed showing commitment of the management to formally survey and demarcate the estate boundaries.

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SA2010 The company has taken actions to locate the boundary stones and has engaged a registered surveyor (Juruukur Lee Swee Siang dan Rakan-Rakan) to conduct a survey of the boundaries. However, progress remains slow due to the procedures of local authorities. (Minor CAR-01 remains outstanding) The landfill in Hwa Li 2 has been relocated to another location and is no longer under the TNB transmission line. There is no evidence of any land claims from local communities on the land occupied/planted by the company.

SA2012 Evidence that boundary stones along the perimeter adjacent to state land and other reserves are being located and visibly maintained.

POPE & HL2 has completed its marking using stone and PVC pipe is within the estate AOPE1, MRE, HL1 surveying is actively in progress (Minor CAR 01 is Closed-out)

Criterion 2.3 Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent.

MA2009 All plantations were established in the 1960s and 1970s and they did not diminish the legal rights, or customary rights, of other users in the vicinity at the time of planting. The lands planted were all alienated lands belonging to a specific owner prior to planting. There were no records to suggest that the use of the land for oil palm planting by Carotino diminished the legal or customary rights of communities living in the vicinity of the estates. Nevertheless, the surrounding communities are allowed access to plantation roads to commute from one village to another or for their daily needs. The following communities are within the vicinity of the Carotino estates:  Orang Asli in Kg Pasal (at the fringe of Hwa Li Estate 2),  Kg Tomsel Anak Sungai Bekapor and Kg Ulu Sungai Bekapor (outside Maran Estate)  Malay community (50 households in Kg. Mengapur at the fringe of Maran Estate) Clear physical boundary demarcation with legal land title was observed during site visits. There were no dispute/claims by the neighbours on the estate’s land.

SA2010 There are no claims on legal or customary rights on the estate land or boundary disputes with neighbouring communities. Orang Asli in Hwa Li Estate 1 residing in HS Lesong have been given employment and business opportunities.

SA2012 As above PPRRIIINNCCIIIPPLLEE 33::: CCoommmmiiitttmmeennttt tttoo llloonngg ttteerrrmm eeccoonnoommiiicc aanndd fffiiinnaanncciiiaalll vviiiaabbiiillliiitttyy

Criterion 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability.

MA2009 Annual budgets for the mill and estate operations are available. Budgets included limited (less than 0.1%) allocations for social & environmental/ biodiversity conservation programme. This relatively low percentage of allocation is due to accounting system used. If budget for other activities (currently placed as other development expenditure) related to social & environmental/biodiversity conservation is taken into consideration, the

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percentage will be higher. The annual plan in the form of annual budget determined by the Headquarters for each estate is available. The budget include allocation for the operation, estimate on expenses for harvesting, social programmes as well as possible environmental safeguards. The annual plan combined with the maps indicating the boundary, planting blocks, topography, drainage, access roads and infrastructures within the estate forms the plantation management plan for the whole certification unit is available. Crop production is monitored on a block by block basis for individual estates and a feedback mechanism is in place to capture the crop production trends and used to support plan for continuous improvement. Through visits by the Plantation Controller and Plantation Adviser, the internal monitoring was carried out where ‘plantation visiting report’ is produced. The report focused on performance of the estate compare to target and make recommendation for improvement. Replanting programme for all the estates is available as follows:

Estate 2007 2008 2009 2010 Maran 0 197.0 186.3 193.4 Asia 0 0 0 0 Hwa Li 1 0 0 0 0 Hwa Li 2 0 0 0 0 Pahang 304.3 191.0 200.00 0 Total 304.3 288.0 386.3 193.4

SA2010 Annual budgets for the mill and estate operations (2 year) are available that include allocations for social and environmental/biodiversity conservation programmes. Currently the estates are conducting replanting programme to replace old palms.

SA2012 In HL 1, the two year annual budget projection were viewed as evidence : Two Year Projection of FFB,OER and Oil Yield for FY 2011/2012 to 2013/14

Target : 2011/2012 FFB : 49,706 MT CPO : 2,982MT TAnnual replanting program of HL 1 was also available

PM 81A: replanting on 2011 PM 78A : replanting 2012/2013 Replanting programme for all the estates is available as follows: ( in Hectares )

Estate 2011 2012 2013 2014 Maran 182 184 205 190 AOPE 0 0 0 0 Hwa Li 1 150 150 0 0 Hwa Li 2 0 0 0 419 POPE 0 Total 332 334 205 609

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Criterion 4.1 Operating procedures are appropriately documented and consistently implemented and monitored MA2009 A set of SOPs have been drafted with copies posted at work stations and muster areas. There is a register of the SOPs and notes on their current status viewed in the “Policy File”. SOPs were viewed in English and Bahasa Malaysia an example of which would be the “Panduan dan Operasi Keselamatan untuk Mencegas Bateri”. It should be noted that the workforce includes nationals from Indonesia, and the Indian sub-continent.

SOPs are not comprehensive enough where the work subject is concerned with the operation of machinery, powered equipment, handling of agro-chemicals, use of PPE, issues concerning OSH, activities regulated by laws, as well as every-day crop handling and estate maintenance.

In addition, documented procedures also include numerous guidelines (see 4.3.1) and works instructions for specific activities. These are considered to be appropriate documentation for the present, with guidelines being sufficient to provide the objectives for work tasks and the flexibility to be adapted for individual field conditions. The current strength is that SOP is in place and being effectively transmitted (see 4.6.4, 4.8.1) and practiced. The weaknesses relevant to operating procedures relates to a lack of a systematic monitoring mechanism that is a part of a system for making continuous improvement. In general, systematic monitoring on the suitability of the SOP or guidelines themselves is not in place to allow further improvements in the documentation system (Minor CAR-02). Work quality itself is monitored within each working circle, with further monitoring through the Agronomic and Plantation reports. These reports generally identify remedial activities, when needed, for the activities observed. SA2010 SOPs, guidelines and works instruction are now in place to guide implementation of best practices in the estates and the mill. The register of the SOPs has been viewed (in policy file) and procedures and documents on systematic monitoring of SOPs is in place (Minor CAR-02 is closed).

SA2012 The SOP and its monitoring records are maintained. Estate Monthly progress, Plantation Advisor report and internal auditor report are documented for any updates.

Criterion 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to a level that ensures optimal and sustained yield. MA2009 The company practiced zero burning and applied EFB, boiler ash and POME into the field and evidence of monitoring where it is applied. At the time of the assessment, the company is putting in place a new treatment plant and piping system to allow POME field application to irrigate wider areas.

Annual fertiliser recommendation is stated in the budget with the appropriate allocation. Application progress is recorded by date and block and mentioned in the half-yearly review Examples include: “Progress Report May 08 – Nov 08”.

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Annual leaf sampling and sampling for soil nutrients have been undertaken with most recent records viewed.

Currently, no POME is being applied to the field while new pipes are being laid to the fields and further investment made to reduce BOD through POME treatment. EFB and ash application are planned by blocks, and monitored by direct supervision of work. Ground cover is established in replanting areas to protect soil nutrients from excessive leaching by rainwater run-off, and soft weeds are tolerated in the fields for the same beneficial effect.

There is Zero-burning policy in place and field observations indicate compliance is consistent. The practice in replanting areas is to chip the palm stems, and bury them in the fields to conserve organic matter and nutrients in situ while reducing risk of breeding rhinoceros beetles. The company applied methods to minimise soil erosion and maintaining soil fertility (e.g. ‘smiling’ terraces and cover crop for replanting). Plantation Visit Report prepared by Plantation Adviser providing recommendation on management improvement is available.

SA2010 Leaf and soil analyses are done to determine soil quality and a Plantation Visit Report provides recommendations for improvement. In addition, records of fertiliser application are available and in replanting areas, the company is applying methods to minimise soil erosion and maintaining soil fertility (e.g. terraces and cover crop for replanting) and application of EFB and POME continues.

SA2012 Fertiliser inputs were applied based on recommendation by the agronomist. Tissue and soil done annually on alternate blocks. The latest analysis was done in Nov 2011. Soil were sampled within the palm circle. Pahang Estate “Foliar and Soil Sampling Work” has been conducted for 20 samples of soil to test parameters below:  Total N  Total P  Available P  Exchangeable K  Ca & Mg  Organic C  pH & C.E.C In Maran Estate, the Organic Carbon monitoring of soil analysis result, are as follows: : 2008 – 1.09% 2009 – Nil 2010 – 1.57% 2011 – 1.34%

In ME, DF B/012-01/2011 ‘Method of Nutrient assessment for OP fertiliser recommendation (2/12/2011) was viewed.

Fertilizer programme : 1st half ( July to Sep) and 2nd half 2011/2012 ( Mar to June 2012) : received 717.4MT of AC/MOP Mix ( 11.4%N:32.6%K2O - 50% granular AC: 50% granular MOP - for the use in fertilizer programme on Mar to June on the following block:

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PM 78A : 299.9 - due replanting in year 2013/2014 PM 81A : 156.2- due replanting in year 2012 PM 98U : 171.3 PM 99U(A) : 135.5 PM 99U(B) : 178.50 PM 00U : 201.50 PM 01U (A): 361.50 PM 01U (B) : 317.4 PM 02A: 267.80

Fertiliser analysis result by Applied Agricultural Resources Sdn Bhd for 1st half of 2011/2012 available.

EFB mulching are monitored. In ME , EFB were applied along the inter row spreading for PR 11A ( 224.96 ha ) on Jan 2012, 252.89 MT was applied. Record of EFB applied at the Hwa Li 2 available since July 2009 to November 2011. Record for Nov 2011 - 206.98ha for 5.91ha. To date : A2: 51.62ha A3: 80.36ha A4: 77.27ha A5: 73.88ha

Criterion 4.3 Practices minimise and control erosion and degradation of soils.

MA2009 Field observations generally indicate that soil mass is being effectively conserved by the current management practices. Currently, blocks scheduled for new planting are surveyed prior to work, slope inclination measured, areas requiring terraces mapped and areas considered too steep for planting identified. SOPs are in place for terracing and other practices to conserve soil mass from erosion. These include ‘smiling terraces’ where run- off from roads is diverted back to the terraces, silt pits, etc. There are steep areas exceeding 25o within the estates where old palms have been felled and the area either been replanted or set aside without being planted. Such areas will probably require management practices beyond those normally employed on less steeper slopes. The company has developed a document ‘Guidelines on Managing Steep Areas Planted with Oil Palms’ to guide management of such areas. These areas of high erosion risk are essentially HCV4 areas and need conservation management. Maps that identify soil management classes – soil types and slope classes were viewed for Hwa Li 1 and are reported for each estate. But these maps have not been revised to identify the locations and measure the extent of fragile soils. To avoid bare ground, field practices include planting ground cover, and encouraging non- competitive soft weeds. An annual road maintenance programme is routinely prepared, and a five-year road resurfacing programme in place that follows the replanting schedules where applicable. There is no peat in any of the Carotino estates. All the estates are on dry undulating lowland area. Among the strengths is that ‘Best Management Practices’ mentioned in RSPO guidance for fragile soils are all consistently applied with one exception – contour stacking. It is practiced, but not for all slopes including slopes at risk of erosion along harvester paths. This inconsistent practice suggest two possible weaknesses: the lack of a systematic and objective approach to monitoring the occurrence and rate of soil erosion’; and a lack of a systematic management decision making process that can evaluates between two

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apparently conflicting objectives of soil conservation and the alignment of harvester paths.

SA2010 Soil erosion in mature palms is controlled through the following methods which observed diligently implemented throughout all estates: - Maintenance of cover on the estate floor between palm rows by practicing only circle spraying of chemical around the palm - Cut fronds were stacked along the contour line to minimise erosion from surface runoffs In replanting areas, cover crop (Muccuna spp.) is planted on exposed soil. Old trunks is chipped and left to rot on the ground. EFB is stacked around the young palm as part of effort to minimise erosion as well as maintaining moisture. SOPs and guidelines for erosion control are well documented and applied through various practices such as terracing and uses of silt traps. Procedures for steep slope management are in place and a road maintenance programme is available. (Observation 01 is closed). The company has obtained the latest soil and terrain map from the land office to facilitate identification of fragile and problematic soil. No peatland observed in any of the estates (Observation 02 is closed).

SA2012 In ME, the ‘ Guidelines on Managing steep areas planted with OP . DR: C/005- 01/2008 was viewed’ The cover crop, Mucuna planting area is also mapped out. Hwa Li 1 – the following are practiced fro amanging steep slope: 1) planting the Mucuna Bracteata, Vertiver Grass and soft grass PM 00A : 201.5ha estimated planted : 80ha ( 39.70%) PM02A : 267.75ha estimated planted : 55ha ( 20.50%) 2) Terracing and Big Hole Planting: PM 98A : Total Ha : 171.3 estimated bug hole : 68.5 (40%) PM 99A : 3) Contour stacking 4.3.2 Hwa Li 1 : - grass maintained -fronds stacking -soft grass

In Hwa Li 1, the Work Schedule for Field Road Upkeep FY 2011/2012 was viewed to justifify work done. Records for upgrading work for a month of Jan to July 2011 are available that showed the length ( chain) of road upgraded and compartment: E.g. in July 2011

Road Grading on a total of 1280.44 chain of road in PM 98A and PM 99A

There are no peat or fragile soils identified both in ME and HL 1. We refered to a document : “ Laporan Siasatan Tanah Separuh Lengkap Ladang Hwa Li Division 1” prepared by M.Azemi b. Mahat from Department of Agriculture , Kuantan dated September 2011.

Land suitability study has been conducted by the Department of Agriculture during 29th Oct 2010 .

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Soil map available were viewed in ME, 54% of soils are from the Batang Merbau Series , followed by Bungor Series ( 13%) Slope analysis also done. More than 70 % of the area has slope 6-12 degree. There are only 0.10% of the land that is >25°. There are found in field PM76A and 74A. Area will not be planted and maintained as conservation area. Planting of cover crop and jungle tree to be completed by June 2012

Sedimentation from neighbouring estate caused the strams within estates to be silted.Evidence of silted drains and clogged culvert.- HL2 ( Observation 04 - raised)

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

MA2009 The major watercourses including the main streams that flow through the estates are managed and monitored for their conservation. A buffer zone on both banks has been identified, mapped and marked in the field prior to replanting. SOPs for the management of these areas prohibit the use of agrochemicals, with field workers trained appropriately. In POPE, the buffer zones have in places been planted with native species including figs- Ficus fistulosa, and Petai Jawa -Ipil-ipil. Areas in ravines with seasonal streams have also been identified for supporting management. However, not all areas waiting replanting have had their permanent streams identified and mapped for riparian conservation nor the smaller streams occur in areas that have been replanted prior to the current SOP, have been considered for remedial attention. (Minor CAR -03) The issue seems to be a lack of clear working definition of a watercourse. Guidelines produced by state authorities are silent on streams less than 3 m width, but smaller streams still need to be protected to support the RSPO standard. Impoundments have been constructed across streams arising within the estate, but there are no dams or weirs across major waterways or waterways that pass through the estates. Water quality sampling is made in major streams that pass through the estate. Daily entries of rainfall are made into the “Rainfall Record” book and the summarised monthly data since 2001 are available. At the mill, water usage is monitored using calibrated meters after filtration. There is no metering of the raw in-coming water. The amount of water consumed at the mill is reported as tonnes per tonnes FFB processed. The mill also supplies the estate and domestic users at the Pahang Oil Palm Estate (POPE).

SA2010 There is evidence that the company has mapped and demarcated buffer zones along main and small streams (Minor CAR-03 is closed). However, in Maran Estate (Sg Bakapor) marking of buffer zones is not easily visible to guide workers to avoid spraying in flooded areas (new Observation). Restoration of river buffers is implemented through planting of native plants (ficus, guatemala grass etc.). Member of Orang Asli community has been engaged to raise seedlings for this purpose. Water sampling is done twice a year along streams within the estates and also for water discharged from the mill. There is also monitoring of water usage in estates and the mill.

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SA2012 Doc Ref : C/001-02-2009 ( 16/2/2009) Guidelines on establishment of Riparian buffer Zone. Riparian areas mapped and identified. At replanting , old OP along buffer zone maintained Planting of ipil-ipil , jungle trees and ara tress are carried out to rehabilitate the riparian in HL 2. In HL 1, Hwa Li 1 : Record of Ara planting : 4469palm planted ( 07 march 2011 to 13 May 2011) Record of Guatemala grass : 5540 palm planted Pahang Palm Oil Mill Water monitoring for Pahang Palm Oil Mill was made in weekly basis for BOD parameter. Water monitoring for in-situ parameters; pH, COD, Total Solids, Suspended Solids, O&G, Ammonical Nitrogen and Total Nitrogen was made in monthly basis and sample of mills’ effluent were sent to Felda Palm Industries Sdn Bhd for testing. Records of POME test made were made available since July 2005. It was observed that the BOD result for the year 2011 does not exceed maximum limit set by the DOE which is 500ppm. The result for BOD is within 5 to 20 mg/L towards the whole 2011 year. All the effluents been discharge on a 20 Ha area so called “Cadangan Tapak Baru Pelupusan Effluen Atas Tanah”, located nearby the mill. Rainfall data from July 2008-December 2011 was also made available. Results are as below:  2007/08 – 3246.7mm  2008/09 – 2629.7mm  2009/10 – 1685.0mm  2010/11 – 2757.0mm  2011/12 (until December 2011) – 1386.9mm For January 2011 until December 2011, average consumption of water per tone of CPO: = 6259.40L/ton of CPO For 2010, average consumption is 6171.67L/ton of CPO Average consumption of water per person in 2011 is 429L/person a day. Average consumption of water per person in 2010 is 614L/person a day. The company has established “Guidelines on Water Management Plan (Mill)”, document reference no: C/017-01/2008 which describe the water management plan that needs to be followed by the mill in order to aim for better water conservation, utilization and control of water pollution in the mill.

Pahang Estate Planting bamboo along river edges. Planting Guatemala grasses at riverside. Water quality sampling been made twice a year. Parameters tested are Ammonical Nitrogen, BOD, COD, DO, pH, SS and calculation of WQI been calculated.

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Rainfall data since July 2001 until January 2012 was made available. Total rainfall data on 2011 is 2479mm/year. Average consumption/person = 620L/person/day. The company has conducted a “Water Saving Campaign”. Latest water analysis test report was observed conducted on 30/06/2011. pH = class I BOD = class I COD = class I DO = class III pH = class I NH3 = class II

Hwa Li 2 Guideline on River Water Sampling Procedure available. Records of water analysis available - latest 02 March 2012. 2 sampling points, upper and lower Twice per year been sending for laboratory test on WQI parameters. Drinking water sample also been sending twice per year for test. Hwa Li 2 Record “Monthly Rainfall(mm) for year 2012” and “Rainfall for the year 2003 to 2011. In summary - in year 2011 total rainfall 2220mm. Average per day 131mm. Rainfall data record was made available for year 2003 until January 2012. 2011 = 2220mm 2010 = 1783mm

Hwa Li 1 2 rivers, Sg. Ketapi (2 sampling points) and Sg. Bakapor (3 sampling points) Monitoring conducted twice a year for both rivers. Parameters tested: in-situ parameters Water Analysis Test Report Date Tested : 08/12/2011 to 27/12/2011 Date issued : 27/12/2011 Comment on the Water Analysis Results -Test Report No. IE 816/2011 Rainfall data since year 2004 until January 2012 were observed to recorded. 2004 – 1540.50mm 2005 – 2091.00mm 2006 – 2320.00mm 2007 – 3087.00mm 2008 – 2820.50mm 2009 – 2456.00mm

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2010 – 2240.00mm 2011 – 2460.50mm

ME: Recorded and summarised since 2004 -. 2011 recorded an annual rainfall of 2460.50 mm

In Maran Estate (Sg Bakapor) marking of buffer zones is now easily visible to guide workers to avoid spraying in watercourse areas . For Maran, C/011-01/2010 Guidelines on River water sampling procedure. 4/2/2010 is used. Analysis result report 18/Jan / 2012. Quality of the Sg Bakapor river was categorized as Class III. (Observation 03 is Closed-out) Monitoring and sampling done

There is also a documented report of a retention pond collapse of the neighbouring Mining company Phoenix Lake Sdn Bhd in 9th Oct 2011 owned by the Zhong Xheng Mining company. Soil and water sample were taken and a report was done by a consultant. The Jabatan Pengairan and Saliran Negeri Pahang DM visited the area. Discussion is still in progress on how the area will be compensated. The area affected is Blk PR11A of an area of 17ha. From the consultant report there were higher than normal levels of heavy metals in both the water and soil. Doc ref C/003-01/2008 ( 12/11/2008) Guideline on water management plans-WM. Riparian zone Demarcation of wetland areas Soil and water conservation area No construction of weirs and dams Monitoring of water in main river Monitoring of Household consumption For 2011, av usage per peron for ME is 126 lit/person Fitration system awaiting spare part form overseas

Criterion 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques.

MA2009 The “Guidelines on Integrated Pest and Disease Management of Oil Palm” is the primary document for the IPM system. This covers subject areas that include: monitoring, chemical controls, calibration of spraying equipment, management of leaf-eating caterpillars, rats, ganoderma, management for barn owls, etc. The extent of IPM implementation is monitored and the results recorded include: the census on Barn Owl occupation of nests and breeding status; pesticide usage; progress for planting species beneficial to the predators of pests; monitoring the use of pesticides; recording the use of, and application sites for rat bait; monitoring pest damage to crop in the field. Included in IPM resources is the use of non-lethal trenches and electric fences to dissuade intrusion into the estate by elephants. The field data collection for monitoring the incidence and severity of pest events has been recently standardised using common data entry forms. A record is maintained of the amounts, dates and blocks where pesticides have been

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applied. This includes the use of rat bait; Chlorpyrifos for termites, Cypermethrin for rhinoceros beetles, Armitraz for red spider mites, etc. Pesticide usage is reported in the “Monitoring of Pesticide Usage” in units per tonne FFB and per tonne CPO produced. This is updated every 3 months. In the period July – September 08, the rate was 0.15 gm per tonne CPO and between January – March 09 the rate was 0.14 gm per tonne CPO. There are no small holders or growers that require IPM training. The company demonstrates its strengths by pro-actively seeking opportunities to reduce the use of chemicals – options to use biological controls to control rhinoceros beetles population. A possible weakness could include the lack of data, analysis and mapping of sub-critical incidences of pest damage to monitor and prepare for potential ‘hot spots’ for future pest problems. Essentially the estates have a deterministic approach to IPM that substitutes the prophylactic use of chemicals with biological or physical means, and reacting pest damage exceeds critical thresholds. Another area of potential weakness involves stakeholder consultation. Since the source of potential pests include neighbouring land, consultation with the stakeholders to integrate local IPM effort concerned could be beneficial. Concerning the low frequency but persistent intrusion by elephants, the Jabatan PERHILITAN -the agency responsible for wildlife management, has been consulted but not NGOs who may have an interest in wildlife conservation.

SA2010 Guidelines for IPM are in place and implemented through various means. The use of biological control agent is being practiced with barn owl box placement and the planting of beneficial plants - Cassia cobanensis, Antigonon, Tunera. Pesticide usage is monitored and efforts to reduce usage are evident. For example, the company has discontinued using Paraquat since 2009.

SA2012 Doc Ref L/001-02/2011 Guidelines on IPM – Ver 2. 14/04/2011 Revised ‘guidelines on rat control and baiting ( L/002-04/2011)-30/11/2011 IPM monitoring of bag worm census was not done according to SOP although there were signs and evidence of infestation – HL2 (Minor CAR 11- Raised) In HL2, Barn owl census in progress : Record for Jan/Feb 2012 available. In ME, Barn Owl occupancy record available. In Dec 2011, out of an area of 1631.37 ha and 140 nest boxes, they recorded 64 eggs, 50 chicks and 116 adults In POPE, in year 2011, total barn owl is 87 boxes. As at February 2012, total barn owl already exceeds 134 boxes.

Hwa Li 1 Weedicide Spraying record : Circle spraying ( Nov 2011) - Ally :191.90ha , 4750.00gm ( 24.75gm/ha) - Nurfam : 191.90ha,105.00 lit ( 0.55 lit/ha) - Miracle : 191.90ha, 4.50ml ( 0.02lit/ha)

Pesticide monitoring records are available. An example is shown below. Flocoumafen Apr to June 2011 Total FFB : 49773.44MT Total CPO : 901397.00MT Tot Flocoumafen used : 1000.00kg

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In Hwa Li 2, Monitoring of Pesticide Usage units per tonne CPO is also available.

Herbicide : Ally 500GM Period : Jan 2012 Total FFB : 3086.79MT Total CPO : 695.20MT Amount Ally (gm) : 4910.00 Total a.i : 2013.10gm Pahang Palm Oil Mill The company has no longer using Paraquat as an effort to reduce usage of pesticide. Grass cutting method been used within the mill area.. Hwa Li 2 Predator host plants:  Antigonon Leptopus  Tuneral Subulata  Cassia Canbanensis Summary on rat damage census – Dec. 2011 = 3.30% Census on bagworms been conducted for each division of the estate. Example of pesticide usage record observed as below: Ally 500gm (December 2011) - gram a.i used per mt FFB = 4.6040 - gram a.i used per mt Oil = 22.5022 Ally 500gm (January 2012) - gram a.i used per MT FFB = 1.5580 - gram a.i used per MT Oil = 8.0187 Communication with the wildlife dept on elephants intrusion problem is ongoing.

Criterion 4.6 Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented.

MA2009 A written justification for agrochemical use can be seen in “Justification for: Weedicide usage; insecticide/rodenticide usage”. The chemicals listed for use by the estates are registered under the Pesticides Act 1974 and are referred to in the Chemical Health Risk Assessment (CHRA) with the exception of ‘Pursuit 50A’. It was reported that ‘Pursuit 50A’ was not currently in use by the estates. The miss-match of lists suggests that the inadequate implementation of the procedure for the listing of chemicals and the identification of their risks. (Observation). Storage of chemicals was observed to be consistently in compliance with the Occupation Safety and Health Act 1974. Information on the usage and hazards of chemicals was sourced from the suppliers and translated into Bahasa Malaysia, and displayed at the workstation – chemical store. This information has been explained to the workers concerned by the supervising staff for the working level, and they in turn were trained by the estate management. A record for

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training for the use of ‘Racun’ was viewed for 27/04/09 with a follow-up training exercise on 05/05/09. Attendance records and training materials were available. The annual medical surveillance is carried out in compliance with “Guidelines on medical surveillance” DOSH, with reports by the responsible medical officer is available. No women are currently working as sprayers, and no WHO Type 1 chemicals are stored or used by the estate. The last bottle in stock was a liter of ‘Cobra’ - a 1b chemical, which has been returned to the supplier. No spraying from aircraft is practiced and there has been no request yet for CPO testing by purchasers. The current book that records pesticide use has entries that go back to 01/11/07. The record identifies the active ingredients, blocks sprayed, amounts applied and any follow up application. The strength of the estates is that they have the will and resources to take a responsible approach to the use of chemicals. The only possible weakness maybe that the system that would begin with the register of aspects of estate activities and the potential effects and impacts (see 5.1) is not well documented. This register should be related to a potential list of chemicals that could be used and the CHRA for those chemicals and implications for OSH. All these should be subjected to periodic reviews and updating.

SA2010 Lists of chemicals and record of usage are maintained at all the estates and a CHRA was carried out and report available. Results of medical screening of field workers (sprayers) are maintained. Workers and staff training records are maintained. However there is no evidence that the health assistant (HA) has been trained on chemical handling scenarios (New Minor CAR- 09).

SA2012 B/009-02/2011 Justification for weedicides usage B/008-08/2012 Justification for insecticide,fungicides and rodenticide under IPM ( 17/01/2012 ) ME and HL2 has the MSDS in English and Bahasa Malaysia. Risk assessment of Agro-chemical impact on health and environment. Doc Ref O/001-05/2011 ( 13/9/2011 ) OSHA sprayer medical file and CHRA report

No aerial sprayer at Hwa Li Estate 2.

Hwa Li 2 estate do not have a Hospital Assistant ( HA) . They hire Dr. Ling Kay Kwong, Doktor Kesihatan Pekerjaan for medical surveillance as per CHRA for plantation pesticide operators. POPE: Storekeeper Nor Dalinah annual medical surv 2011 was checked and verified. Storekeeper and sprayer annual medical surveillance is checked and found to be updated. E.g. storekeeper Renugah No pregnancy amongst female sprayers in AOPE1.

HA Vejaya Kumar A/L Kunjiraman / Occumed Consultance & Services Sdn Bhd by Dr Yasriza Yahaya MD Pg. DOH on 9th June 2011 ( See 4.8 for Close CAR 09 )

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Criterion 4.7 An occupational health and safety plan is documented, effectively communicated and implemented.

MA2009 Health and Safety Policy and Prosedur Bekerja dengan Selamat are available. A health and safety committee with membership from the management and workers is formed at the mill and estate level. Carotino Sdn Bhd has adequately documented the occupational health and safety plan, which includes a health and safety policy, work procedures, training, and monitoring system. The implementation of health and safety policy and procedures are considered adequate. Accident records are adequately maintained. It was evident that the mill has taken additional step to form an emergency response team. Monthly accidents records are compiled and submitted to Jabatan Kesihatan & Keselamatan Pekerjaan (JKKP) Pahang. Of the 70 mill workers, 35 are Malaysians and have SOCSO while the 40 foreign workers are covered under Foreign Workers Compensation Scheme Policy, as per the Workmen Compensation Act 1952 and Workmen’s Compensation (Amendment) Act 1976, which includes repatriation expenses and personal accident coverage (accidental death, permanent total disablement, temporary disablement and medical expenses). In all estates and mill site, sign boards on health and safety are displayed at appropriate places such as main entrance, management office, workshop area, along main road and workers’ quarters. Workers have been adequately trained in safe working practices and PPE supplied for all workers, both in the estates and mills. There is a daily briefing by the assistant manager during the morning muster call for workers prior to commencing work, during which workers are reminded of OSH requirements and their PPE checked, to reduce consumption of water and power; and raise awareness to workers on RSPO and matters related to their welfares (such as levy increase, cleanliness). Besides, small groups based activity (for harvesters, sprayers, manuring workers, drivers and general workers) discussions are also held from time to time. Records on muster announcement are available. The workers are also tested on their knowledge on RSPO, safety and health measures to be taken from time to time. In Hwa Li1, Hwa Li 2, Pahang Oil Palm Estate and Asia Oil Palm Estate, discussion with workers indicated that they have better understanding on RSPO, especially on health & safety and cleanliness of the environment. Field visits in the estates showed that workers wore PPE while performing tasks such as fruit harvesting, spraying and manuring. In addition, all “mandors” are given first aid kit before daily work commencement. The estate management has also increased their annual budget on OSHA PPE. In Pahang Oil Palm Estate, the budget allocated for this item increased from RM5, 000 (2007/2008) to RM8, 000 (2008/2009). The “Safety and Health Plan” (SHP) document was viewed. This includes a policy on the health and safety which is filed together with other policies available for public viewing. A safety and health risk assessment has been carried out and is documented. There is an awareness and training programme which involves safe working practices, precautions related to the equipment employed and the use of PPE. The workers do a health & safety self-evaluation after each training session. PPEs are issued to workers, but there is no evidence to link the PPE issued to a hazard assessment for the activity (Observation). The SHP identified the persons responsible for OSH in the estate and OSH meeting records were viewed in the Jabatan Keselamatan dan Kesihatan Perkerja (JKKP) meeting file. The SHP discusses accident and emergency procedures and these have been presented to staff in training sessions. Workers are given training in the use of First Aid

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and First Aid boxes are provided for each work station and to work supervisors in the field. An accident investigation file is maintained with completed “Borang Permeriksaan Kemalangan, - Laporan Kemalangan”. The JKKP have a form to record accident and chemical poisoning. The LTA records are maintained with the current records going back to Feb 2008. Data is summarized as: 1) fatality rate, 2) incident rate, 3) frequency rate, 4) severity rate. All workers are covered by insurance where the relevant insurance policy was observed “Foreign workers compensation scheme policy. No: xxxxxxx). Local staffs are covered by SOCSO where up to date receipt of payment is available. In addition, the local staffs are also covered by insurance but the details of the insurance policy are maintained at the company’s head quarters. The current strength of the estates and mill is that they have the ability and the support from the staff and workers to address OSH issues. With such support plus advises and monitoring from the JKKP, the OSH application at all level could be strengthened and improved. The weakness as noted in the observation above is that without a register of aspects of estate and mill activities (see 5.1), there is no base line information on which to relate potential hazards, assessment risks and criteria for suitable PPE.

SA2010 All Health and Safety policies, SOPs and guidelines are in place and a plan is available for training and awareness programmes. There is adequate and consistent use of PPE among the estate workers. More safety signage has been erected along the access road and within the estates and mill.

SA2012 In ME, they have a SOP for contractors. M/014-02/2011 Health & safety for contractors ( 18/4/2011 ) OSH plan M/013-01/2008 ( 1/10/2008) maintained Foreign workers are insured under Lonpac Hospital & Surgical and for Staff is under Axa Insurance

4.7.1 AD OSH , JCC and Gender Committee meeting records are maintain at Hwa Li 1 and Hwa Li 2 estates.

Hwa Li 1 Safety Committee Org. Chart available - chaired by Mr. Leu Cher Kiong ( Estate Manager)

Hwa Li 1 : Safety Committee meeting conducted on the followings:

1) 26 Dec 2011 2) 26 Sept 2011 3) 25 June 2011

Hwa Li 1 : Accident records

Latest record : 28/02/2012 - accident report and medical certificate available. statistic record for year 2007 to 2011 . Records were reviewed by top management.

Pahang Palm oil Mill All the company’s policies was made publicly available on the notice board of the office mill Example of policies observed are as below:  Safety and Health Policy

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 Environmental Policy  Sexual Harassment Policy  Equal Opportunities Policy  Social Policy The company’s charts also was made publicly available on the notice board as below:  Management Chart  Emergency Response Learn  Sexual Harassment Community  Joint Consultation Community  O.S.H.A Community  Sustainability Operation Community A meeting on Safety and Health was made on 20/12/2012 between the management of the company and the workers as to ensure the understanding of workers regarding safety and health issues.

Hwa Li 2 Latest meeting was conducted on 15/12/2011 regarding safety and health of workers at Bilik Mesyuarat Hwa Li Estate Division 2. Mr. Vejaya Kumar A/L Kunjiraman from Pahnag Oil Mill Estate is the responsible person regarding safety and health of the workers. First aid kit located at the office entrance door. First aid kit training was conducted on 11/07/2011 by Mr. Vejaya Kumar A/L Kunjiraman from Pahang Oil Mill Estate. Accident insurance = Lonpac Insurance Berhad - Class of Policy = Foreign Worker Compensation Scheme - Policy No. = J/11/WF00/026094/JHR-05 Accident record for year 2011 = 76 medical records have been recorded for the whole 2011 year. The company record all accident record in a file called “Statistik Kemalangan Pekerja”.

Maran Estate Gender comity meeting (held twice a year)  15 December 2012  15 June 2011 J.C.C Meeting (quarterly)  01 February 2012  05 October 2011 OSHA meeting (quarterly)  01 February 2012

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17 July 2011

a) Leaking Ointment inside the first aid kit & causing contamination of the bandage and rusted the scissors - MRE b) Another mandore used a shampoo container to fill the solution of the leaky ointment bottle.-MRE c) Mosquitoes larvae was found breeding in stagnant water on a parked trailer – POPE (Observation 05 – raised )

Criterion 4.8 All staff, workers, smallholders and contractors are appropriately trained

MA2009 The training file was reviewed that contains data on the types and dates of training session given, with the individuals who attended and a self evaluation by each individual on the new knowledge that they could internalize from each session. However, there is no data kept for each worker on the training they have not received, nor is their data from systematic monitoring of their working performance after training to ensure training has been appropriate (Observation). It was reported that Estate Hospital Assistants (EHA) were given training on chemical use and the law by the doctor concerned with CHRA. As in all work places, there are inevitably some minor lapses in operating procedures – un attended and unsheathed harvesting knives, but as a rule, workers and staffs have accepted training according to documented procedures. The weaknesses include: formal training schedules that cannot be frequent enough to match the rate of movement of workers between jobs, making workers reliant on supervisor/peer training in their working sections; the absence of a systematic monitoring that evaluate worker’s performance after training, which evaluates the effectiveness of both the training given and the need for remedial training. Training programme and training records are available. However, the individual training record that could lead to evaluation and monitoring of performance for the training need of each worker is not properly maintained (Observation). At the mill level, evidence on training program, assessment & records of training for employees are kept for lab staff (CHRA), storekeeper (CHRA),engine drivers (CHRA), Boilermen (CHRA), electrician (CHRA & welding, workshop staff (CHRA & OSHA), 2 supervisors & 38 workers (CHRA & OSHA, power point presentation). RSPO training for all staff and workers was also conducted in early 2009. In this special training, RSPO standards (i.e. Piawaian RSPO Ladang Pahang) was laminated and placed in their residences. Record showed that the standards include the use of PPE, cleanliness, hunting prohibition, no open burning, prohibition of illegal activities and other health and safety measures to be observed. Discussion with some of the workers showed that adequate training has been given to the workers. In general, workers were able to explain what RSPO is and their role in achieving RSPO requirements. In all estates, training programme is planned and implemented as demonstrated by two estates. In Hwa Li Oil Palm Estate Division 1, records showed that the annual training program in 2009 comprises first aid training, internal training for tractor drivers on tractors maintenance, in-house training for manuring gang, in-house training for harvesters, fire drill training, and in-house training for herbicide sprayers. Attendance list signed by trainees and trainer for each training is kept in file. The participants are tested verbally on

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their understanding of the training. In Hwa Li Oil Palm Estate Division 2, plan is made for training of drivers and manuring workers, spraying and harvesting workers, with details such as month of training, target group, workers involved, subject matter and trainer. Attendance list is documented. Field discussion with seven Indonesian workers (2 harvesters, 3 sprayers and 2 manuring workers) in Pahang Oil Palm Estate and Asia Oil Palm Estate said that they were given proper training before task commencement. The supervisors explained and demonstrated to them the best practices to ensure their health and safety while performing their tasks. They were provided safety helmet, ear plug, goggle, mask, apron, gloves, sickle and chisel cover before commencing the related relevant tasks. The health and safety training for the workers has brought encouraging responses. According to the hospital assistant (HA) in-charge of Asia Oil Palm Estate, Pahang Oil Palm Estate and Maran Oil Palm Estate, with the implementation of RSPO requirements on PPE, the number of injury caused by falling fruits and fronds has reduced in the last two years.

SA2010 Training records and programme are available. However there is no evidence that the health assistant (HA) has been trained on chemical handling scenarios (see new Minor CAR-09).

SA2012 Pahang Palm Oil Mill Trainings have been conducted several times as example as below: Subject Date Recycle Bin Training 22/02/2012 Emergency Assembly Point 22/02/2012 PPE Training 22/02/2012 Training on Safe Welding Practice 10/10/2011 (trained by JP Consultancy and Engineering)

Training plan for a period of July 2011 until June 2012 also made available in company’s Training Master File. Health Assistant (HA) has been trained and the copy of the training certificate attended by the HA is made available.

Hwa Li 2 Training file includes all records on training conducted by the company. Example of training records observed are:  Sprayer training – 10/10/11  Manuring – 21/09/2011  Harvesting – 08/08/2011  Workshop – 08/07/2011  Driver – 05/12/2011  First aid kit – 11/07/2011 RSPO training for staffs to engage their knowledge on RSPO has been conducted on 28 September 2011.

Maran Estate Eye Wash training – 27/02/2012 First Aid Kit training – 22/11/2011

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Fire Fighting Training – 15/11/2011 Person responsible: Mr. Vijayakumar (Hospital Assistant for Pahang, Maran and Asia POM) Borang JKKP 8 had been observed which show the result of accident occur in the estate and this report is made by JKKP staffs which came for a visit on 7 January 2012.

Workers been covered with Lonpac Insurance Berhad.

A training programme that includes regular assessment of training needs and documentation, including records of training for employees are kept Workers and staff training records are maintained. However there was evidence that the health assistant (HA) has been trained on chemical handling scenarios based on interviews with workers and other personnel Documented evidence of HA being trained for the handling of chemicals. (CAR 09 is Closed-out).

Empty chemical container found at one home for domestic use although memo has inform workers against the use.-AOPE1 Evidence of spraying found in area where they were signages informing workers not to spray.- AOPE1

( Observation 06 – Raised)

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Criterion 5.1 Aspects of plantation and mill management 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 continuous improvement.

MA2009 It is noted that all estates and the mills were established prior to the legal requirement of an EIA. In 2008, the “Social and Environmental Impact Assessment” (SEIA) was prepared which provided a generic list of potential effects from company activities and proposed some mitigation measures. Though this document can be used as the basis for identifying the general aspects for developing an approach to taking environmental responsibility and conservation of natural resources, it is too weak to support management needs. It does not present: a systematic risk assessment of estate and mill activities; the systematic identification of the social, environmental and biological aspects that could arise from these activities; an identification of the effects and mapping of site of potential impacts; an identification and mapping of site-specific pathways and targets; and schedule and methods for review and update. The current SEIA does outline some actions for mitigating negative impacts – biodiversity, waste, mitigation of pollution, continuous improvement, but because an absence of a system aspects list, there is no mechanism to assess how comprehensive is the list for mitigating activities. Also there is no record that the SEIA descriptive assessment and proposals for mitigation were presented for stakeholder consultation and review. In summary, there is a general lack of environmental improvement plan that were developed through stakeholder consultation (Minor CAR-04).

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Since there are no outstanding social issues concerning local community and workforce, or on-site biodiversity concerned issues affecting HCV 1, 2 or 3 issues that would probably have been raised through stakeholder consultation, the inadequacies of this document are considered as technical rather than material that is why the issue raised is not considered as major. The strength is that there is a document that constitutes a first public statement on potential aspects of the activities in the estates and mill. The weakness is that this document makes no attempt to systematically review activities, identify aspects and site- specific impacts, site-specific mitigation proposals, and present the documents for stakeholder review and consultation. SA2010 Evidence of consultation with relevant agencies, including the Forestry Department, Department of Environment, Department of Irrigation and Drainage, and the Department of Wildlife and National Parks and local communities, observed in various documents and minutes of meetings (Minor CAR-04 is closed). The E & S improvement plan includes identification of aspects, impact, actions to be taken and further actions required, as well as requests made by local communities.

SA2012 There are no outstanding social issues concerning local community and workforce, or on- site biodiversity concerned issues affecting HCV 1, 2 or 3 issues. AOPE1 has records on the incidences of elephant intrusions and damage done. There is also a documented report of a retention pond collapse of the neighbouring Mining company Phoenix Lake Sdn Bhd in 9th Oct 2011 owned by the Zhong Xheng Mining company. ( refer to 4.4 )

Criterion 5.2 The status of rare, threatened or endangered species (ERTs) and 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 their conservation taken into account in management plans and operations

MA2009 A “Conservation Assessment of Carotino’s Peninsular Malaysia Estates Conservation Values and recommendations” has been prepared that identifies habitat areas of significance within the estates and makes recommendations for their conservation. This includes a timetable for implementation of riverine buffers and suggests support for the conservation of lowland forest and karst areas surrounding the estates. But the report does not give any maps to identify the location and extent of potential HCV areas within the estate nor regard the estate as a stakeholder that would also have its own HCV interests – HCV to support IPM (Minor CAR-05). There is a general prohibition on hunting and fishing within the estate. Information signs are posted and the control practice is being effectively implemented. Strengths include management of riverine buffers and recommendations for the restoration of vegetation along the riverbanks. This should improve the capacity of the soil in the buffer areas to attenuate agrochemicals in soil water before they can enter waterways as well as trap sediment in surface run-off. Restoration of vegetation should also help reinforce the banks against erosion from flood pulses. The field study undertaken on ERTs showed strengths in bird species, but made comparatively little effort to assess the status of mammals, reptiles, amphibians in the estate and immediate adjacent areas. Considering elephant are a threatened species (IUCN En C2 a (ii)) and a crop pest at Hwa Li 1, mention would have been expected of their status in the Lesong Forest Reserve, and discussion on the role of the estate in relation to regional conservation management. The general weakness is that there is little information and guidance for estate management action for ERTs management on the estate and the immediate adjacent areas.

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SA2010 A final ‘A conservation assessment of Carotino’s Peninsular Malaysian Estates – Conservation values and recommendations’ report includes estate level map identifying HCVs within each estate is available (Minor CAR-05 is closed). HCV improvement plans for each estate exist and actions that were taken by the company to manage and enhance the HCVs (e.g rehabilitation plantings within buffer zone, establishment of biological corridor etc) are documented.

SA2012 HCV identification and management plan for Carotino Group. Value identified, area / habitat identified, HV+CV value, Threat and management plan documented. C/015- 01/2010 ( 3/9/2010 )

Criterion 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner.

MA2009 The “Guidelines on Waste Management” state the objectives and outline procedures for waste management on the estates. This includes wastes subject to regulated disposal as well as wastes from domestic, and other non-regulated sources. While the current document provides guidelines for the management of all scheduled wastes currently used by the estates (disposed according to EQA 1974 (Scheduled Wastes) Regulations 2005), it does not make reference to a comprehensive register of wastes nor identify their potential sources (see 5.1) (Minor CAR -06). Among the omissions for waste products and sources, examples include: Green House Gases (GHG); disposal of buffalo carcases; building demolition and construction, etc. Operating procedures cover the management of wastes from agro-chemicals and their containers and material recovery is practiced through waste separation and recycling. These contribute towards the avoidance and reduction of pollution. With the exception of Hwa Li 2 Estate, all estates are outside local authority waste management areas. Hwa Li 2 is inside the controlled by Majlis Daerah Bera (Bera District Council). Though there was no documentation to indicate the estates had consulted with local authorities on requirements for waste management in a Majlis Daerah’s controlled area, observations indicate that current practices for waste storage, collection and disposal are in line with, or exceed practices in similar areas managed by the authorities. Significant effort is made to capture waste from crop residues and put back for beneficial use. This includes non-oil mill output: EFB either as fibre or as nutrients from incinerator ash (reported to be in demand to reduce the use of EFB in areas at risk from rhinoceros beetle damage); boiler ash; fibre and shell. Fronds are stacked and left to rot in the field. Empty bunches and stalks are re-applied to the field. Biomass from replanting is buried in trenches in the field, which minimises the nutrient loss and eutrophication of local waterways as well as to avoid pests. POME from the mill are applied in limited areas in the field while tertiary treatment facilities are being built for further processing of POME and piping system are laid to spread the field application to cover more areas. The strength demonstrated is that the company can develop and consistently comply with their SOP for managing identified wastes. The possible weakness is that without the baseline information a register of aspects and impacts, not all the types and sources of waste have been identified and their significance assessed (pls see 5.1). SA2010 The company has prepared a ‘Wastes and Waste Products Identification and Disposal Plan for Estates and Mills’ that identify waste generated from each activity/location, prescribed methods for handling and disposal (Minor CAR-06 is closed). EFB are shredded and applied to the field and treated POME is being applied in Asia and Pahang Estate using a sprinkler system covering about 100 ha. There are recycling bins placed at the office, workshop etc. However, residents are re- using old chemical containers for potting plants, trash containers and other uses. In addition, scrap metal in Hwa Li 2 is left unattended and in Asia Estate, plastic and tins are

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being disposed of in the land fill (new Minor CAR-010).

SA2012 There is a register of waste from production. Empty containers: follow guidelines F/001-03/2011 Waste management Plan – Ver 3 ( 15/4/2011 ) . containers to be triple rinsed and pierced bottom and sides. Records are kept and in collaboration with a licensed disposal company G-Planter who recycles these containers for the manufacture of planting trays.

The Guidelines on Waste Management plan – Ver3 ( Doc ref F/001-03/2011) has guidelines to identify the different categories of Scheduled Waste and non-Scheduled waste. Used Lubricants are collected and disposed off through licensed collectors eg Hiap Huat Chemicals Sdn Bhd and recorded.. For domestic waste, after collection in fertiliser bags, the linesweeper will segregate the waste. The balance after segregation will be disposed inside the landfill. When full, the garbage will be buried and the date recorded. The landfill site is recorded in the map. They have separated organic and non-organic pits too. No re-using old chemical containers for potting plants, trash containers and other uses. Scrap metal now is place in designated storage area. Recyclable plastic and tins are now being segregated from the domestic waste . (Minor CAR 10 - Closed-out)

Diesel leaking from parked tractor during driver’s break time – HL2 ( New Observation 07 – Raised )

Criterion 5.4 Efficiency of energy use and use of renewable energy is maximised.

MA2009 Currently the major use of renewable energy is from the use of fibre as a fuel to generate steam in the mill. At present, the amount of the fibre fuel used is estimated as proportion of the measured crop received, minus the quantity of the fibre transported out and applied in the field. The fibre used for fuel is fed automatically into the firing chamber of the boilers according to the demand for steam pressure. Observations suggest the fuel feed controls are well adjusted and thus use of fuel is efficient – no smell of fuel burning in reducing conditions, no black smoke from the stacks or carbon deposits around doors and inspection holes to the firing chamber. However, despite the impressive operating performance at this 30-year old mill, the mill operators have no mechanism to directly monitor the rate of consumption of renewable energy and thus they have no baseline data from which they can plot trends in energy use and thus ensure energy use is maximized. (Minor CAR-07) A minor use of renewable energy is at the remote guard posts, which have been provided with solar panels to replace the small fossil fuel generators, used previously. Fossil fuel use is carefully monitored and daily records kept which summarise fuel use per tonne of CPO. Currently the data available has not been used to identify trends. (See 5.6 below) There is no mention of plans to use biodiesel for estate and mill operations, but it is reported that a methane recovery facility is planned for POME treatment with use of the gas in the mill. The strength of the estates and mill are that they are manned by competent staff who can maintain and operate their equipment efficiently. Cost control for fuel used has been a traditional concern and efforts made to find ways to reduce fuel demand and thus expenditure.

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The weakness here is that because renewable fuels have no direct cost, there has been no directive to maximize efficiency and thus investigate options for metering. The challenge that needs to be met is the incorporation of an effective and affordable mechanism to meter renewable fuel use, and the models to use the data collected to improve the management of fuel use. SA2010 The company has installed a fibre weighing system at the boiler to measure input of renewable energy (fiber and shell) into the boiler (Minor CAR-07 is closed). Records are currently available. Records of fossil fuel used at the estates and mill are available and compared to the FFB and CPO produced. SA2012 Mesocarp fibre used as renewable energy. Kernel shell is sold since 2011. Records of sale are documented. Graphical presentation of fuel used by the estate / MT FFB is monitored from 2006 – Dec 2011

Criterion 5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice.

MA2009 The company has a zero burning policy, which is promoted to the staff and workers. Observations in the field indicate there is full compliance with the policy in areas being replanted and for the disposal of estate wastes. It was however noted that the EFB incinerators at the mill were still in use (with current approval from the DoE). These produce ash that is reported to be in demand and use in those areas of the estate where EFB application would increase the risk of rhinoceros beetle damage to the palms. As a product in demand, the ash is considered in this assessment to be a by-product from incineration rather than as waste whose volume is being reduced by incineration. If the demand for the ash were no longer required or justifiable, incineration would be considered to be waste disposal. In the field being replanted, old palms are pushed over, chipped and the biomass buried in inter-row trenches. At present, the incidence of pests and disease in the fields being replanted are considered to be acceptable, and the use of fire to clear the fields is not required. Full compliance indicates the company has the strengths to set policy goals and translate these into field practices. There are no current weaknesses for this standard.

SA2010 There is no evidence of use of fire during replanting or in the estates and the previous crop felled is chipped and left to rot on the site. Census on rhinoceros beetle is conducted in replanting areas (e.g 14.9 % damage in PR10 of Maran Estate) and application of Furadan takes place when damage is more than 5 %.

SA2012 The company zero burning policy during replanting is adhered. The old palms are felled by an excavator, chipped to 6”, whole bole root dug out, were required terrace are constructed using a bulldozer. The the chipped parts are contour –buried in spaces between terraces. For the flat area the chipped parts are buried along the palm inter row

Criterion 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored.

MA2009 There company has developed a ‘Guidelines on pollution mitigation plans for estates’ that form as a guidance for the developing, implementing and monitoring of appropriate plans for reducing pollution and emission in the estates. Subject areas covered include: diesel storage, workshops, generators, tractors, used lubrication storage, chemical mixing, sewage leaks, siltation of drains, etc. However, without a comprehensive baseline

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document on aspects and impacts, it is not known if the mitigation measures discussed cover all potentially polluting activities (see 5.1 above). The first draft of the document plan was prepared for this year. No date has been set for an annual review of the plan. Though no specific mention is made for green house gases (GHG), there are in progress activities that should mitigate its emission. These include the installation of facilities to capture methane from POME treatment. Efficient fuel/air management of the boiler minimises sub-stoichiometric combustion producing CO. The company use buffalo for fruit evacuation in all the oil palm estates apart from Maran Estates, making a direct reduction in demand for diesel fuel and associated emissions. The company has recorded diesel consumption in each estate and mill. Record of diesel consumption between July 08 – February 09 are as follows:

Estate FFB production (MT) Total consumption Diesel consumption per ton production (litre)

AOP 29,756 123,845 4.16

POP 23,653 82,780 3.5

Maran 19,513 136,084 6.7

Hwa Li1 35,997 119,450 3.3

Hwa Li2 33,102 277,101 8.4

It should be noted that the presence and extent of replanting work would skew the annual ratio of diesel consumed per tone CPO/FFB making comparisons between estates not useful. However, it is interesting to note that Hwa Li1 and Hwa Li2 are located at least 3 hrs drive to the Carotino mill. Hwa Li1 delivers most of the fruits to nearby mill while 80 % of Hwa Li2 fruits are delivered to Carotino mill. Between the same periods, Carotino oil mill has received and processed a total of 98,584 MT of FFB producing 20,321 MT of CPO. The process has consumed 76,741 liter of diesel. As described in the earlier sections of this report, there are no peat soils within any of the estates under this certification unit. SA2010 Guidelines for pollution mitigation plans for the estates are in place.

SA2012 The estate has 1) Guidelines on Garbage disposal ( Doc ref F/006-02/2011) 2) Guidelines on Pollution Mitigation Plans for Estates –ver 2 ( doc ref F/002—2/2010) – it identifies a) Pollution control measures against Diesel and Lubricants spillage b) Pollution control measures against pesticides spillage during premixing c) Pollution control measures against sewage leaks from Septic tanks d) Pollution Control measures against siltation of Drains and Rivers. It also has guidelines on how to calculate the volume require to build a ‘Chemical Store Spillage bund. At the POPE chemical store, a bund has been constructed to contain any spillage.

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PPRRIIINNCCIIIPPLLEE 66::: RReessppoonnssiiibblllee ccoonnssiiiddeerrraatttiiioonn oofff eemmpplllooyyeeeess aanndd oofff iiinnddiiivviiidduuaalllss aanndd ccoommmmuunniiitttiiieess aaffffffeeccttteedd bbyy ggrrroowweerrrss aanndd mmiiillllllss

Criterion 6.1 Aspects of plantation and mill management, including replanting, that have social impacts 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 continuous improvement.

MA2009 A scoping note on the SEIA is available that includes some evidence of stakeholder consultation. More comprehensive documentation, that includes maps and identification of communities and neighbours, needs to be made available (Minor CAR-08). The estates and mill set up a Joint Consultative Committee (Jawatankuasa Perundingan Bersama) and Gender Committee. In Hwa Li Oil Palm Estate Division 1, records showed that the Joint Consultative Committee plans quarterly meetings in 2009. Attendance list signed by all attendants is kept in the file. Meeting minutes in local language (Malay) dated 18 February 2009; include welfare, health and safety of workers, sexual harassment, use of PPE and awareness on maintenance of clean and healthy environment. Similarly, the Gender Committee in this estate also plans to have quarterly meeting. Records showed that during the meeting of this committee on 16 February 2009, among the issues discussed are sexual harassment, women’s welfare and activities to be carried out for 2009 proposed.

SA2010 Final Social and Environmental Impact Assessment Report includes maps identifying all the stakeholders. In addition, a more comprehensive documentation that includes maps and identification of communities and stakeholders around each estate is also available (Minor CAR-08 is closed).

SA2012 Hwa Li 2 Meeting “Jawatankuasa Majikan J.C.C” has been conducted on 15/12/2011 that discuss on issues as below:  Hal Ehwal Pekerja  Hal-hal Lain Berkaitan

Gender meeting was held on 15 December 2011 that discussed on:  Kebersihan  Pekerjaan  Rawatan  Peralatan

OSH meeting has been conducted on 15/12/2011. Minutes of meeting was observed to be in place in OSH meeting file of the company

Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or mills, local communities and other affected or interested parties. MA2009 The company has a comprehensive list of stakeholder relevant to the mill and estate operation. Complaints and grievances procedure is in place, i.e. via the establishment of JCC, H& S Committee & Gender Committee. Records of consultation with stakeholders are available. Mechanisms for communication and consultation with employees and other stakeholders have been established. These mechanisms include Joint Consultative Committee, Health & Safety Committee, Gender Committee, Complaints and Grievance Procedure, Suggestion Box. For committees, objectives, membership, selection of committee

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representative from workers, frequency of meeting, agenda of meeting, refreshment after meeting and actions to be taken on matters discussed. The mechanisms are implemented in all estates and mill. Mechanism is also set up to communicate with other stakeholders living in the vicinity of all estates. Available minutes of meeting showed that the JC Chang Group estates/mill, Sri Jaya, Pahang organised communication with local stakeholders in the regions, namely Sri Jaya Village head and his committee members, Ketua kampong of Kg. Mengapur, managers of Kema Development Sdn Bhd Plantation/Mill, Bakti Juwita Sdn Bhd Iron Ore Mine, Malaco Mining Sdn Bhd Copper Mine, Felda Lapar Utara Plantation. The meeting was attended by 25 participants to discuss matters affecting each other and local communities such as construction of alternative road and replacement of Sri Jaya bridge. In Hwa Li Oil Palm Estate Division 1, there is no local community in the nearby area; the management had consultation with other estates in the region (Suburban Properties Sdn Bhd, Harn Len Corporation Bhd, Kuantan trading Co. Sdn Bhd) on 15 April 2009. Issues related to RSPO certification and common access road and boundary sharing were discussed. Feedbacks from these estates are kept in file entitled “Stakeholders – Neighbouring Estate Mill”. In Hwa Li Oil Palm Estate Division 2, meeting minutes of the Joint Consultative Committee on 18 March 2009 showed that issues discussed include what is RSPO, use of suggestion box, health & safety. The four workers in Ladang PERKIM Pahang (150 acres), located between Pahang Oil Palm Estate and Asia Oil Palm Estate, claimed that their source and quality of river water is not affected by the estate operations. According to the manager of Felda Lepar Utara 2, annexed to Asia Oil Palm Estate, the manager of latter consulted him from time to time, particularly with regards to the RSPO certification. He subsequently took steps to inform his 180 foreign workers (60% Indonesian and 40% Bangladeshi) not to hunt or fish in Asia Oil Palm Estate. In a letter dated 22 April 2009, the manager of Pahang Oil Palm Estate offered the Training Centre (Department of Orang Asli Affairs) in Paya Bungor (a few km from Sri Jaya town) employment opportunities for the Orang Asli.

SA2010 The company maintains records of JCC meetings and provides evidence of consultation with stakeholders. Interviews with local communities determined that the relationships are mutually agreeable.

SA2012 AOPE1 : SOP on Mechanisms for Communication and Consultation is maintain. 3 type of mechanisms 1) Joint Consultative Committee 2) Complaints and Grievance Procedure 3) Suggestion Box A Nominated Plantation Management Official - Mr. Fan Kwan Fook ( Estate Mananger) Alternate Official : Mr. Saravana A/L Subramaniam List of stakeholders and communication reports were documented

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Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties.

MA2009 Complaints and Grievances Procedure and SOP on Mechanism for Complaints and Grievances are available. Under this SOP, what is grievances, who are the complainants, redress of grievance, freedom from retaliation, consolidation of grievance and grievance procedure are outlined. The procedures and mechanisms are displayed on the office notice boards. Interview with workers and communities showed no major issues. At estate level and mill level, a joint consultation committee was formed. In the minutes dated 18 December 2008 and 6 May 2009, the chairman of the mill management (located in Pahang Oil Palm estate) encouraged the staff to or Jawatankuasa Persidangan Bersama Majikan dan Pekerja 2009-2010 to raise issues related to welfare, rate of pay and facilities provided by the companies such as maternity payment, sick entitlement, vacation leave pay (VLP), retirement benefits, Socso, EPF, yearly bonus, leave entitlement, workmen compensation insurance and group personal insurance. Matters related to water and electricity supply for household consumption were also discussed. Workers are encouraged to make use of the other mechanisms outlined in Criterion 6.3 in dealing with complaints and grievances. Evidences on grievances and complaints are kept with details such as date, grievance, complainant and action taken by all estates and mill.

SA2010 Interviews with workers and local communities revealed no unresolved issues. SA2012 AOPE1 SOP on Mechanism for Complaints and Grievances ( revision 03) dated 18/10/2011 available.

Criterion 6.4 Any negotiations concerning compensation for loss of legal or customary 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.

MA2009 SOP for Identifying Legal and Customary Rights and Identifying People Entitled to Compensation is available. The SOP included identification procedure, calculating and distributing fair compensation procedure and documentation on outcome of compensation. No evidence on dispute on legal and customary rights. No claim on estate land. There is no reported case of dispute with any parties which have resulted in payment of compensation ever occurred. The individual estates recognised management by customary users and provide material support for the maintenance and places of worship (Muslims, Chinese and Hindu) located within the estate’s land. In Hwa Li Oil Palm Estate Division 2, the Orang Asli community in Kg Pasal did not make any claim on their customary rights within the estate area. The headman of this village said that Hwa Li Oil Palm Estate Division 2’s management respects and recognises the customary land of villagers in the nearby areas. Such discussion has yet to be properly documented. Discussion note showed that the estate management had discussion with the nearby Ladang Pertanian Kelapa Sawit (Pahang) Sdn Bhd on 23 February 2009 where access road, water supply, deduction of levy and bridge and culvert in main access road was discussed.

Similarly, Orang Asli at Kg. Tomsel Anak Sg. Bekapor and Kg. Ulu Sg. Bekapor, located about 5 km away from nearest boundary of Maran Oil Palm Estate, also did not make

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compensation claim as their customary land is located outside Maran Oil Palm Estate.

SA2010 There are no claims by indigenous people. SA2012 SOP for Identifying Legal and Customary Rights and Identifying People Entitled to Compensation is available and maintained and there were still no claims by indigenous people during this surveillance.

Criterion 6.5 Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

MA2009 Guidelines on Terms and Conditions of Employment for Estate Workers are available. The guidelines include contract agreement, wages and other employment benefits, workers’ repatriation, workers’ passport. Employment agreement and related conditions is available. There are terms of reference or signed contracts between employers and employees stipulating the position, working hours, type of work, location of work, workers’ responsibility, wages, allowances, holidays, rest days, annual leave, fringe benefits, levy deductions (for foreign workers), dismissal, etc. Clear and transparent remuneration system is in place. Workers were issued with pay slips every time salary payment is made where wage and deduction made is clearly printed. In the estates, the wage rates of different categories of harvesting activities are available. The wage rates may differ slightly between estates depending on the terrains and difficulty of task. As for the foreign workers, personnel information is kept in appropriate file with details on the rate of payment and benefits. For foreign workers, employment contract kept contain details information on job title, minimum basic pay, shift allowance and average overtime per month, yearly medical check-up, leave benefits and insurance. In Hwa Li Oil Palm Estate Division 2, pay slips showed field workers received RM1, 200 (harvesting worker) and RM969 (general worker). Discussion with workers showed that they are satisfied with the income received. In Pahang Oil Palm Estate, a harvester received between RM600 and RM1, 200 a month, depending on the fruiting conditions. In this estate, 2 contract manuring workers revealed that they each receives about RM600- RM800 a month while another 2 contract sprayers indicated that monthly income received is about RM 600 each. Workers are generally happy with the salaries received. Discussion with workers at the quarters in the estates showed that management provided satisfactory housing, water supply, electricity supply and welfare amenities to all the workers. Workers also have access to potable water (the company provides water tanks), segregated sanitary and bathing facilities and electricity. SA2010 Discussion with workers shows no dispute on the pay or benefits provided to workers. SA2012 Interview with workers at the Carotino palm Oil mill reveal that they understood their payslip and its allocation. AOPE1: Workers Contract File : Contain adequate information: - salary -overtime rate -public holidays -date join -age -annual leave -Nationality

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Checks on documentation to allow the company or estate to ‘keep for security’ the workers passport is also available. This document is known as “Kebenaran Memegang Passport“ of worker named Muslim.

Criterion 6.6 The employer respects the right 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..

MA2009 The company does not provide restriction for Malaysian workers to form workers union. Foreign workers are subjected terms and conditions of employment which restrict them from having association. In all estates and mill, a published statement in local language recognising freedom of association was placed on the notice board of the management office. The statement reads “Pekerja-pekerja bebas untuk mengikut atau menyertai mana-mana agensi berdaftar di bawah undang-undang Malaysia. Kenyataan ini adalah sebagai tambahan kepada kontrak pekerja yang sedia ada. Daripada Pihak Pengurusan”. A total of 21 office staff is members of All Malaysian Estate Staff Union. Carotino allows workers to join trade union. A clerical staff at the mill office said that she has been the member of this trade union for the last 7 years. According to her, the company did not forbid workers to be members of trade union.

SA2010 The management statement of freedom of association is publicly available and in the local language with some employees are members of MAPA. SA2012 AOPE 1 : JCC conducted on 12/10/2011 (18 person attended) , 15/01/2012(22 person attended) and 13/07/2011( 19 Person attended).

The policy on freedom of association available

Criterion 6.7 Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions.

MA2009 Carotino does not employ persons under 16 years old. Personal information of workers showed that all workers are above 16 years old. There is no evidence of use of child labour in mill and estate operation. The mill and estates maintain a complete register of workers with the individual details including date of birth. There was no evidence of under age (below 16 years) worker operating in the estates. Records maintained to confirm ages of workers. Youngest registered worker as 21 years old (foreign worker) and 39 year old (local Malaysian worker). In Hwa Li Oil Palm Estate Division 2, record showed the youngest local worker is 21 years old. In Maran Oil Palm Estate, of the total 13 Malaysian workers employed, the youngest is 24 years old while among the 170 foreign workers; the youngest is 20 years old. SA2010 No evidence of underage workers. The company maintained a complete list of workers with the qualification age information. SA2012 AOPE 1 : The company ensure minimum age of 17 years old for the employment of employee Minimum age recorded is 19 years old ( 1 person)

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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.

MA2009 Equal Opportunities Policy is documented and is translated into the Malay language (Polisi Kesamaan Peluang) and placed on the notice boards of the management offices. Observations indicated that the policy is put into practice. Discussion with one Orang Asli (Jakun, aged 29, with 9 years working experience as a storekeeper in Hwa Li Oil Palm Estate Division 1) showed that the management does not discriminate even though he is an Orang Asli. He started working as a field worker in 2000 and was promoted to store keeper in 2005, earning a monthly income of RM1, 500. Just like other workers, he also enjoyed the benefit of housing, water and electricity supply, medical claims based on bills for all family members. The monthly pay slip of another Orang Asli worker showed that every month he receives RM860 as basic wages, RM210 transport allowance, RM10 fuel allowance, RM150 remote allowance. Deduction was made for RM153 (EPF) and RM5.25 (SOCSO). Another discussion with two Indonesian workers indicated that they did not experience any discrimination on wages, housing facilities and welfare compared to their Malaysian counter parts. In Hwa Li Oil Palm Estate Division 2, of the 139 foreign workers (135 Indonesian & 4 Indians), discussion with 4 Indonesian workers (3 males and 1 female) showed that the management practises equal opportunities policy. Discussions with field workers in other estates showed the foreign workers are not discriminated against. SA2010 No cases of discrimination were reported. SA2012 The Mill maintains the policy on equal opportunities. Carotino POM To date, the Mill has a total of 34 locals - Malay -22, Indian -12 and 33 (foreigners). Interviews with foreigner - general worker, local driver.

Criterion 6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied.

MA2009 Sexual Harassment Policy is in place and displayed. The policy was also written in the Malay language and displayed on the notice boards. No evidence or practices that contradict this policy were observed. Discussion with female staff shows that the company provide fair and just treatment to women. Grievance mechanism for sexual harassment is in place, with the formation of the Gender Committee. A SOP on “Mechanism for the Prevention and Eradication of Sexual Harassment and Violence in the Work Place” is also in place. The SOP includes preventing sexual harassment in workplace, rationale, what is sexual harassment, forms of sexual harassment, strategies to prevent sexual harassment, a clear sexual harassment policy, monitor the work place regularly, take all complaints seriously, guidelines for handling complaints on sexual harassment. No cases of harassment against women. Discussion with female staff in Hwa Li Oil Palm Estate Division 1, Hwa Li Oil Palm Estate Division 2 and Maran Oil Palm Estate showed that there is no incidence of sexual harassment. The female staff expressed that they felt comfortable and safe working in the estates. SA2010 There are no evidence of cases of sexual harassment. Complaints and grievance mechanism appears to be in place.. SA2012 Policy on sexual harassment dated 15 Aug 2011 is maintained. Briefing on sexual harassment in work place was conducted on 24 Oct 2011 attended by 18 which all are general workers. To date, no complaint received on sexual harassment. SOP on Mechanism For the Prevention and Eradication of Sexual Harassment and Violence in the Workplace. dated 1/10/2008 is available

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Criterion 6.10 Growers and mills deal fairly and transparently with smallholders and other local businesses.

MA2009 Carotino palm oil mill only processes FFB sourced from own plantation as such the company does not deal with smallholders and the company carries out all operations within the estates. SA2010 Not applicable as Carotino does not deal with smallholders and outgrowers. SA2012 Not applicable as Carotino does not deal with smallholders and outgrowers.

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

MA2009 Records of annual educational subsidies. The estate and mill managements provide various additional benefits to their staff, particularly in relation to their educational welfare. Free transportation is made available for children to attend primary and secondary schools in the nearby areas. A primary student receives RM200 a year and a secondary student RM300 a year as educational subsidy. Records in Maran Oil Palm Estate showed that parents received the cash from the management. For this estate, a total of RM4, 200 was spent between July and December 2008. There are evidences of contribution to the Orang Asli community during needs. The Orang Asli in Kg. Pasal near to Hwa Li Oil Palm Estate Division 2 confirmed that the management assists the villagers by transporting water to the village in time of water shortage. The management also helped in minor village repairs when needs arise. Contribution was extended to JKKK Sri Jaya for maintaining the access road. In a letter dated 6 January 2009 by Jawatankuasa Kemajuan & Kelamatan Kampung Sri Jaya, Carotino Sdn Bhd contributed RM80, 000 (from mill, Pahang Oil Palm Estate, Asia Oil Palm Estate and Maran Oil Palm Estate) for the maintenance and management of the temporary access road between Taman Emas and Multipurpose Hall, Sri Jaya. Records from Maran Oil Palm Estate and Pahang Oil Palm Estate showed that a total of RM40, 000 was paid by cheques to JKKK Sri Jaya. Besides, Carotino Sdn Bhd also maintains the road leading Sri Jaya to the estates, thus also benefiting smallholders using the road. Records showed that between July 2008 and March 2009, Maran Oil Palm Estate spent RM66, 777 on maintaining the main access road from Sri Jaya to the estate.

SA2010 Records of annual educational subsidies to worker’s children at primary and secondary levels are available. Furthermore, contributions to Orang Asli community and maintenance of good rapport with local communities in the estate’s vicinity are taken. SA2012 Carotino Sdn Bhd has been maintaining the road leading to the nearest town SriJaya, however the road was damage by the iron ore mining companies lorries. Carotino also contributes to the local indigenous people especially in time of water needs. They also offer employment for those who seek work in the plantation The estate and mill managements provide various additional benefits to their staff, particularly in relation to their educational welfare. Free transportation is made available for children to attend primary and secondary schools in the nearby areas. A primary student receives RM200 a year and a secondary student RM300 a year as educational subsidy AOPE1: The last contribution was made to the family of Late Anthonisamy condolence dated 24/04/2011 : RM 2000.00

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Criterion 7.1 A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management and operations.

MA2009 This Principle is not applicable as all Carotino oil palm plantations in Pahang were all planted since 1970s. The lands are either purchased from other companies or developed by the Group in 1970s. Currently, the company only carried out limited replanting in some of the estates. There are no new plantings within the certification unit and the company is only involved in re-planting programme after felling of old palms and there is no plan for expansion. SA2010 Not applicable as there are no new plantings within the certification unit. SA2012 Not applicable as there are no new plantings within the certification unit since the last surveillance. Criterion 7.2 Soil surveys and topographic information are used for site planning in the establishment of new plantings, and the results are incorporated into plans and operations.

MA2009 Pls see 7.1.

Criterion 7.3 New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values.

MA2009 Pls see 7.1

Criterion 7.4 Extensive planting (to be determined by SEIA) on steep terrain, and/or on marginal and fragile soils, is avoided.

MA2009 Pls see 7.1

Criterion 7.5 No new plantings are established on local peoples’ land without their free, prior and informed consent, dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

MA2009 Pls see 7.1.

Criterion 7.6 Local people are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreement.

MA2009 Pls see 7.1.

Criterion 7.7 Use of fire in the preparation of new plantings is avoided other than in specific cases as identified in the ASEAN Guidance or other regional best practice.

MA2009 Pls see 7.1.

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Criterion 8.1 Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations.

MA2009 Pesticide use is carefully controlled and applied in response to monitoring. IPM methods have been incorporated into operating practices with provision of nesting boxes for barn owls and establishing plants beneficial to the predators of crop pests. However, in young planting areas, poison rat bait is still applied to protect the palms at this vulnerable stage. No information has been provided on investigation to seek alternative non-chemical mitigating measures. To further reduce the need for application, the company is beginning trials on biological control methods such as the use of Metarhizium fungus to

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control rhinoceros beetles population and potentially reduce the use Cypermethrin. It was noted in 4.6 that there is a miss-match between the chemical listed for potential use on the estates and the CHRA. At present, the company does not have a programme to systematically review chemical use for continuous improvement in CHRA, and biological and environmental protection. But without a systematic review of the aspects and impacts assessment of estate and mill activities to identify the activities where chemicals including pesticides, and ensure all related documentation for social and biological plans are updated, continuous improvements will be difficult to sustain. There is a current version of “Social and Environmental Impact Assessment” (SEIA) but as noted in 5.1, this is not considered complete and is in need of review in order to ensure a comprehensive examination of aspects and impacts from estate and mill activities is made to improve the adequacy of the current plan, and identify where gaps may still exist. Efforts are in place to separate and, where possible, recycle materials from the scheduled and non-scheduled waste streams (See 5.3). Agricultural by-products exported with the crop from the estates to the mill are either used as renewable fuel for power generation or returned to the field as fibre or ash. Effort is made in mill to maximise oil-extraction from mill by-product. A pollution prevention plan is in place, (see 5.6). Investment is currently being made to further reduce emissions –lower BOD, to water from POME and through investment in facilities to capture methane -lower climate changing emissions to air. Social impacts are mentioned in the current version of the SEIA, however, the findings and recommendations of this document were not been presented for stakeholder review (See 6.1) Scoping note on SEIA is available with some evidence of stakeholder consultation. However, the documents currently available do not include detail maps that identify the communities and neighbours need to be made available (Minor CAR-08) as part of system to initiate improvement. The company has demonstrated strength in the areas that deal with efficient crop production, harvesting practices, field maintenance, mill operations as well as staff and worker management and subjects that require legal compliance. The weakness, on the other hand are in organising the management systems that can assess estate and mill activities for aspects and impacts, collect and update the necessary data and synthesise this into information for making management decisions. This includes data on: social issues, support for biodiversity and reduction of impacts on the environment. The company lacks a system that would allow adaptive management cycles that:  can make systematic assessments of estate and mill activities for potential effects,  screen those effects for impacts on society and the environment,  set thresholds to identify significant impacts,  identify the source, pathways and targets of those impacts so that mitigation measures can be designed,  set the indicators and methods to monitor for effective management,  establish a systematic mechanism to evaluate monitoring records and revise mitigation measures at regular intervals.

SA2010 There were a number of improvements observed:  Upgrading of the mill to enhance productivity, increase safety, reduce energy use and reduce use of manpower.  Reduction in use of pesticides and no usage of paraquat

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 Road maintenance and replacement of bridges to concrete and permanent structure  Construction of new housing for workers  Methods for reducing erosion etc during replanting  Safety procedures and the use of PPEs SA2012 In line with continuous improvement the Mill on Dec 27th, 2011, approval was granted to 1) increase capacity to 45MT/hr and 2) a CDM project to capture the methane gas using a tank system having 1 acidification pond, 2 AnO2 tank, 2 Aerobic tank and 3 units of discharge settling tank. Watermech Engineering Sdn Bhd. The have upgraded the digester, screwpress, sludge separator etc. In the estates, they have : • Replace used drum barn owl boxes with plywood boxes in the estate to 1 box/10 ha • Supplying of new plastic dustbins for all the residence in the estate. • Construction of containment in chemical store , lubricant store and schedule waste store. • Upgrading of vehicle washing bay. • Provide new water tank for rain harvest in staff quarters • Use chemical spillage tray below farm tractors to prevent soil contamination • .Use of rotoslasher • Purchase of forest seedlings Kundang, Keranji, Bunga tanjung for planting along riparian areas • Repair and construction of new housing unit • Sports facilities like fields and courts • Kindergarten • Introduction of mechanical collecting FFB

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3.1 Summary of findings In the Main Assessment audit, conducted in May 2009, there were 8 Minor CARs issued and subsequently, the RSPO certificate was issued in April 2010. The results of the first surveillance visit, conducted in March 2011, closed out 7 Minor CARs issued during the Main Assessment, in view of sufficient objective evidence provided to the auditors. However, 3 Minor CAR were left outstanding with one Observations. In this second surveillance , there were evidence documented as well shown in the field the 3 Minor CARs and the Observation were closed. Nevertheless 1 new CARs and 4 new Observations were raised at the close of the audit. The CAR was closed when documented evidence were submitted to show census done for the IPM programme. There being no Major CARs issued and in view that excellent progress has been made on closing out of the Minor CAR, it is recommended that this unit remain certified.

3.2 Maintenance of certification During the surveillance evaluation, it is assessed if there is continuing compliance with the requirements of the MYNI. Any areas of non-conformance are raised as one of two types of Corrective Action Request (CAR): .01 Major CARs - which must be addressed and closed out urgently with an agreed short time frame since the organisation is already a certified organisation. Failure to close out within the agreed time frame can lead to suspension of the certificate. .02 Minor CARs - which must be addressed within an agreed time frame, and will normally be checked at the next surveillance visit The full record of CARs raised over the certification period is listed under section below. The table below provides a progressive summary of findings for each surveillance.

SURVEILLANCE 1 Issues that were hard to assess The outstanding CAR relates to official designation of boundaries and boundary markers. Due to procedural regulations of local authorities, the survey process proceeds slowly with full cooperation from the company. Number of CARs closed 7 Outstanding CARs were closed. Nr of CARs remaining open 1 Outstanding CAR from previous evaluation was not closed. New CARs raised 2 New Minor CARs were raised. Certification Decision The management of the oil palm mill and estates of Carotino Sdn. Bhd. remains certified as: . The management system is capable of ensuring that all of the requirements of the applicable standard(s) are met over the whole certification unit covered by the scope of the evaluation; and . The certificate holder has demonstrated, subject to the specified corrective actions, that the described system of management is being implemented consistently over the whole certification unit covered by the scope of the certificate. SURVEILLANCE 2 Issues that were hard to assess No issues that were hard to assess were found. . The surveillance 02 visit focused on reviewing the records and documents pertaining to the compliance to the P&C requirements of the RSPO. Field visits were done to confirm Carotino Sdn Bhd complying to the RSPO P&C. Carotino Sdn Bhd was found to be committed and has acted on the CARs and

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Observations raised during the previous audit. Number of CARs closed 3 Outstanding Minor CARs and 1 Observation were closed. Nr of CARs remaining open 0 CARs remain open New CARs raised 1 New Minor CAR and 4 new observation were raised. Number of CARs closed The Minor CAR was immediately closed before the next surveillance Certification Decision In view of the findings, we recommend the management of the oil palm mill and estates of Carotino Sdn Bhd remains certified as: . The management system is capable of ensuring that all of the requirements of the applicable standard(s) are met over the whole certification unit covered by the scope of the evaluation; and The certificate holder has demonstrated, subject to the specified corrective actions, that the described system of management is being implemented consistently over the whole certification unit covered by the scope of the certificate.

3.3 Status of non-conformities Presented below is the tabulated form of non-conformities closed during the surveillance. To present a comprehensive record of non-conformities, the non-conformities raised during the main assessment are also presented in the same table.

List of Corrective Action Requests

CAR # MYNI CAR Detail Indicator 01 2.2.3 Date 15 May Due Next Date

Recorded> 2009 Date> Surveillance Closed> Non-Conformance: The right to use the land need to be demonstrated, and is not legitimately contested by local communities with demonstrable rights. The audit team observed adequate physical demarcation on the ground (i.e. boundary markers), however, apart from Hwa Li 2 and Maran Estate, other estates are without boundary stone markers.

Objective Evidence:

Evidence that boundary stones along the perimeter adjacent to state land and other reserves are being located and visibly maintained.

Close-out evidence:

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CAR # MYNI CAR Detail Indicator POPE & HL2 has completed its marking. AOP1, MRE, HL1 surveying is actively in progress (Minor CAR 01 is Closed-out)

09 4.8.1 Date 16 March Due Date 8 March

Recorded> 2011 Date> Closed> 2012 Non-Conformance:

Insufficient training for health assistants to deal with chemical contamination obtained by workers in field activities and other handling scenarios.

Objective Evidence:

. A training programme that includes regular assessment of training needs and documentation, including records of training for employees are kept Workers and staff training records are maintained. However there was evidence that the health assistant (HA) has been trained on chemical handling scenarios based on interviews with workers and other personnel

Close-out evidence: Documented evidence of HA being trained for the handling of chemicals. (CAR 09 is Closed-out).

10 5.3.2 Date 16 March Due Date 8 March

Recorded> 2011 Date> Closed> 2012 Non-Conformance: Monitoring and management of recyclable materials is insufficient to prevent improper use and disposal. Objective Evidence: See below Close-out evidence: No re-using old chemical containers for potting plants, trash containers and other uses. Scrap metal now is place in designated storage area. Recyclable plastic and tins are now being segregated from the domestic waste . (Minor CAR 10 - Closed-out)

11 4.3.2 Date 5 March Due Date 9 March Next Surv Recorded> 2012 Date> Closed> 2012 Non-Conformance: No monitoring extent of IPM implementation for major pests. Objective Evidence:

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CAR # MYNI CAR Detail Indicator IPM monitoring of bag worm census was not done according to SOP although there were signs and evidence of infestation – HL2 CAR 11- Raised Close-out evidence: The evidence was provided that census was done immediately according to SOP. (Minor CAR 11- closed)

List of Observations

OBS # Indicator Observation Detail 03 4.4 Protection of water courses and wetlands, including maintaining and restoring appropriate riparian buffer zones at or before replanting along all natural waterways within the estate Date 16 March 2011 Date Closed> 7 March 2012 Recorded> Observation: In Maran Estate (Sg Bakapor) marking of buffer zones is not easily visible to guide workers to avoid spraying in flooded areas (Observation). Follow-up evidence: In Maran Estate (Sg Bakapor) marking of buffer zones is now easily visible to guide workers to avoid spraying in watercourse areas. (Observation 03 is Closed-out) 04 4.3.5 Best management practices should be in place for other fragile and problem soils (e.g. sandy, low organic matter and acid sulphate soils) lacking Date 6 March 2012 Date Closed> Recorded> Observation: Evidence of silted drains and clogged culvert.- HL2 ( Observation 04 - raised)

Follow-up evidence:

05 4.7.1 Incomplete evidence of documented Occupational Safety Health (OSH) plan which is in compliance with OSH Act 1994 and Factory and Machinery Act 1967(Act 139)

MY01910 Surveillance 02 Evaluation for RSPO MYNI Requirement for Page 57 Carotino Production Unit, Carotino Sdn. Bhd.

OBS # Indicator Observation Detail Date 07 March Date Closed> Recorded> 2012 Observation: d) Leaking Ointment inside the first aid kit & causing contamination of the bandage and rusted the scissors - MRE e) Another mandore used a shampoo container to fill the solution of the leaky ointment bottle.-MRE f) Mosquitoes larvae was found breeding in stagnant water on a parked trailer – POPE (Observation 05 – raised )

Follow-up evidence:

06 4.8.1 A training programme (appropriate to the scale of the organization) that includes regular assessment of training needs and documentation, including records of training for employees are kept- training on safety not observed by worker Date 7 March 2012 Date Closed> Recorded> Observation: Empty chemical container found at one home for domestic use although memo has inform workers against the use.-AOP1 Evidence of spraying found in area where they were signage informing workers not to spray.- AOP1

( Observation 06 – Raised) Follow-up evidence:

07 5.3.2 Although identified waste and pollutants, some practices are still practice that increases risk of pollution Date 6 March 2012 Date Closed> Recorded> Observation: Diesel leaking from parked tractor during driver’s break time – HL2

( Observation 07 – Raised )

Follow-up evidence:

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3.4 Supply Chain of Custody for Palm Oil Mill In compliance with the RSPO Supply Chain Certification Standard dated 25 November 2011, Carotino Palm Oil Mill was audited.

Project Number: Part of the RSPO P&C audit. MY01910

Carotino Sdn Bhd 026-06(0) Client: Carotino Palm Oil Mill RSPO membership #

Country: Malaysia

Purchase of FFB for the production and sales of CPO and Palm Kernel using Scope: the Segregation supply chain module D option

Single Mill Supply Chain Certification Type of certificate: Number of Sites 1

N/A as this is a Palm Oil Mill certified Date of Issue: N/A Certificate Number: under the RSPO P&C Date of Expiry: N/A

RSPO trademark license This is the first Supply Chain assessment code: Estate Department/Sustainability Manager Contacts Job Description:

Mr Seow Chee Chiang Name: Estate Department/Sustainability Manager Email: [email protected] Physical address: Postal address: Address:

Location : Srijaya Street and number: 26030, Kuantan , Head office: Town/City Pahang , Malaysia Unit 30-08, Mail Box 238, Menara State/Country Landmark, No.12, Jalan Ngee Heng, Zip/Postal code Country 80000, Johor Bahru, Johor

Tel: +607-223 1633 Cell Phone : 016 7172998 Fax: 07-2241546 www.carotino.com Web Site Address:

Email: [email protected]

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Standard: RSPO Supply Chain Certification Standard dated 25 November 2011 Date of last report update 20 June 2012

Category Mill / Plantation Approximate Number of Employees 57

Palm Oil Product Categories Approximate Annual Purchases ( Jan 11- Dec 11) FFB 118,331.79 MT / yr Purchased

CPO Produced : 23,994.69 MT/yr Sale as RSPO Certified Despatched 22,797 MT /yr PK Produced : 6,483.11

Despatched : 6476.56 MT /yr

End of Public Summary

Module D – CPO Mills: Segregation Documented Procedures

Requirements and Findings  The facility shall have written procedures and/or work instructions to ensure the implementation of all the elements specified in these requirements. This shall include at minimum the following. (Requirement D.1.1)  Complete and up to date procedures covering the implementation of all the elements in these requirements  The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. This person shall be able to demonstrate awareness of the facilities procedures for the implementation of this standard

MA Procedures has been updated to cover the implementation of all the elements in these requirements

The Mill manager , R.Nadarajah has a Job Description that he is responsible for the CoC / traceability , safety health, social and environment documentation SA-01  The facility shall have documented procedures for receiving and processing certified and non-certified FFBs. (Requirement D.1.2)

MA The POM only received FFB from their supply base estates SA-01

Purchasing and Goods in

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Requirements and Findings  The facility shall verify and document the volumes of certified and non-certified FFBs received. (Requirement D.2.1)

MA The facility receives only from the supply base estate and the figures are documented in the a) Daily report b) Final figure for the month

SA-01  The facility shall inform the CB immediately if there is a projected overproduction. (Requirement D.2.2)

MA The facility has procedure to inform CB on overproduction. SA-01

Record Keeping

Requirements and Findings  The facility shall maintain accurate, complete, up-to-date and accessible records and reports covering all aspects of these requirements. (Requirement D.3.1)

MA The facility maintain accurate , complete up to date and accessible records of all aspects of these reqt SA-01  Retention times for all records and reports shall be at least five (5) years. (Requirement D.3.2)

MA Records kept for at least 5 years SA-01  The facility shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO, PKO and palm kernel meal on a three-monthly basis. (Requirement D.3.3)

MA Monthly records available and three month summary is in the record. SA-01  The following trade names should be used and specified in relevant documents, e.g. purchase and sales contracts, e.g. *product name*/SG or Segregated. The supply chain model used should be clearly indicated. (Requirement D.3.4)

MA Outgoing documents specifies product name /SG SA-01

Sales and Good out

Requirements and Findings  The facility shall ensure that all sales invoices issued for RSPO certified products delivered include the following information. (Requirement D.4.1) a) The name and address of the buyer; b) The date on which the invoice was issued c) A description of the product, including the applicable supply chain model (Segregated) d) The quantity of the products delivered e) Reference to related transport documentation

MA The facility despatches the product to Carotino Refinery Sdn Bhd , Pasir Gudang for their sales.

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POM documentation will state that the product is despatched. Documents available : a) CPO Shipping Barge and Pipeline inspection Checklist b) Sounding Report c) Declaration for weight discrepancy d) Bill of lading ( no SG is printed as this is a legal shipping doc which the facility is not allowed to deface ) . However SG is stamped on the attached documents e)

SA-01

Processing

Requirements and Findings  The facility shall assure and verify through clear procedures and record keeping that the RSPO certified palm oil is kept segregated from non certified material including during transport and storage and be able to demonstrate that is has taken all reasonable measures to ensure that contamination is avoided. The objective is for 100 % segregated material to be reached. The systems should guarantee the minimum standard of 95 % segregated physical material; up to 5 % contamination is allowed. (Requirement D.5.1)

MA The POM only receives SG material from their supply base

SA-01  The facility shall provide documented proof that the RSPO certified palm oil can be traced back to only certified segregated material. (Requirement D.5.2)

MA The facility receives only SG material only. SA-01  In cases where a mill outsources activities to an independent palm kernel crush, the crush still falls under the responsibility of the mill and does not need to be separately certified. The mill has to ensure that. (Requirement D.5.3) a) The crush operator conforms to these requirements for segregation b) The crush is covered through a signed and enforceable agreement

MA No outsourcing except transport SA-01

Training

Requirements and Findings  The facility shall provide the training for all staff as required to implement the requirements of the Supply Chain Certification Systems. (Requirement D.6.1)

MA Supply chain training conducted on traceability SA-01

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3.5 Certified organisations acknowledgement of internal responsibility

It is acknowledged that the assessments cited in this surveillance report have been carried out as stipulated and we confirm the acceptance of the assessment report contents including assessment findings.