FELDA GLOBAL VENTURES PLANTATION MALAYSIA SDN BHD (FELDA PLANTATIONS SDN BHD)

RSPO Membership No: 1-0013-04-000-00

PLANTATION MANAGEMENT UNIT KKS Kalabakan grouping Tawau, Sabah, Malaysia

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 2 of 70 KKS Kalabakan grouping: ASA-01

ANNUAL SURVEILLANCE ASSESSMENT REPORT ON RSPO CERTIFICATION

FELDA GLOBAL VENTURES PLANTATION MALAYSIA SDN BHD (FELDA PLANTATIONS SDN BHD)

RSPO Membership No: 1-0013-04-000-00

PLANTATION MANAGEMENT UNIT KKS Kalabakan grouping Tawau, Sabah, Malaysia

Certificate No: RSPO 9288 88 Issued date: 7 Oct 2014 Expiry date: 6 Oct 2019

Assessment Type Assessment Dates Initial Certification (Main Assessment) 09 -13 June 2014 Annual Surveillance Assessment (ASA-01) 17 - 21 August 2015 Annual Surveillance Assessment (ASA-02) Annual Surveillance Assessment (ASA-03) Annual Surveillance Assessment (ASA-04) Re-Certification

Intertek Certification International Sdn Bhd (formerly known as Moody International Certification (Malaysia) Sdn Bhd) 6-L12-01, Level 12, Tower 2, Menara PGRM No. 6 & 8 Jalan Pudu Ulu, Cheras, 56100 Kuala Lumpur, Malaysia. Tel: +00 (603) 9283 9881 Fax: +00 (603) 9284 8187 Email: [email protected] Website: www.intertek.com

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 3 of 70 KKS Kalabakan grouping: ASA-01

TABLE OF CONTENTS

Section Content Page No 1.0 SCOPE OF ASSESSMENT 4 1.1 Introduction 4 1.2 Location (address, GPS and map) mill, estates and hectarage 4 1.3 Description of supply base (fruit sources) 4 1.4 Year of plantings and cycle 5 1.5 Summary of Land Use – Conservation and HCV Areas 6 1.6 Other certifications held and Use of RSPO Trademarks 6 1.7 Organizational information/contact person 6 1.8 Tonnages Verified for Certification 7-8 1.9 Time Bound Plan 9 1.10 Abbreviations Used 10 2.0 ASSESSMENT PROCESS 11 2.1 Assessment Methodology, Plan & Site Visits 11 2.2 Date of next scheduled visit 11 2.3 Qualifications of the Lead Assessor and Assessment Team 11 2.4 Certification Body 11 2.5 Process of Stakeholder consultation 12-14 3.0 ASSESSMENT FINDINGS 14 3.1 Summary of findings 14-48 3.2 Status of Identified Noncompliance and Corrective Actions, Observations and 48-56 Identified Positive Elements 3.3 Summary of Feedback Received from Stakeholders and Findings 56-58 4.0 ASSESSMENT CONCLUSION AND RECOMMENDATION 59 4.1 Acknowledgement of Internal Responsibility and Confirmation of Assessment Findings 59

4.2 Intertek RSPO Certification Details for Plantation Management Unit 60

APPENDICES Appendix A Qualifications of the Lead Assessor and Assessment Team 61 Appendix B Assessment Plan 62-64 Appendix C Maps of location – Mill, Estates, Conservation and HCV areas 65-67 Appendix D Photographs of Assessment findings at PMU 68 Appendix E Time Bound Plan for Other Plantation Management Units 69-70

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

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1.0 SCOPE OF ASSESSMENT

1.1 Introduction This Surveillance Assessment was conducted on the Plantation Management Unit (PMU) KKS Kalabakan grouping of Felda Global Ventures Plantation Malaysia Sdn Bhd (hereafter abbreviated as FGVPM), from 17 – 21 August 2015, to assess if the organization’s operations of the mill and its supply bases for compliance against the RSPO Principles and Criteria (Apr 2013), Malaysian National Interpretation (Nov 2014) and the RSPO Supply Chain Certification Standard (Nov 2014) for Palm Oil Mill.

The plantation management unit (PMU) or management unit is equivalent to a certification unit as defined in the RSPO Certification Systems Document. Each PMU consists of one mill and its supply bases which are made up of estates owned by Felda Global Ventures Plantation Malaysia Sdn Bhd

1.2 Location (address, GPS and map) of palm oil mill and estates KKS Kalabakan grouping consists of one (1) palm oil mill, namely KKS Kalabakan and three (3) estates as indicated in Table 1 below, which includes the addresses and GPS locations of the mill and estates. The location maps are provided in Appendix C.

Table 1: Address of Palm Oil Mill, Estates and GPS Location

GPS Reference Name Address Latitude Longitude Kalabakan Mill POM Kilang Sawit Kalabakan, Peti Surat No. 62007, 4°24'36"N 117°29'21"E (Capacity:45 MT/hour) 91030 Tawau, Sabah FGVPM Kalabakan Ladang Kalabakan Tengah, Peti Surat No. 61954, 4°23'25"N 117°27'35"E Tengah estate 91029 Tawau, Sabah FGVPM Kalabakan Ladang Kalabakan Selatan, Peti Surat No. 61954, 4°16'50"N 117°31'11"E Selatan estate 91029 Tawau, Sabah FGVPM Kalabakan Ladang Kalabakan Utara, Peti Surat No. 61954, 4°26'45"N 117°25'20"E Utara estate 91029 Tawau, Sabah

1.3 Description of supply base (fruit sources)

The supply base i.e. FFB sources to the POM at KKS Kalabakan grouping PMU are from the abovementioned three (3) estates which are owned by Felda Global Ventures Plantation Malaysia Sdn Bhd. Note: There is no Felda Settlers Scheme or organized smallholders under at the KKS Kalabakan PMU grouping. There was FFB supply from other external estates which are owned by independent smallholders and outgrowers, which had also supplied FFB to the POM. These other supply sources have also been considered in the overall assessment of KKS Kalabakan grouping PMU and have been verified to be part of the Time Bound Plan committed by FGVPM for certification.

Details of the planted hectarage for the FFB supply for KKS Kalabakan grouping are as shown below:

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Table 2: Estate Area Summary

Area Summary (ha) – Previous Area Summary (ha) – Current Estate 2014 2015 Certified Area Planted Area Certified Area Planted Area FGVPM Kalabakan Tengah 3,236.01 2,520.45 3,204.62 2,453.61 estate FGVPM Kalabakan Selatan 2,928.01 2,149.99 2,850.24 2,023.32 estate FGVPM Kalabakan Utara 2,231.00 2,009.80 2,231.00 1,842.56 estate 6,319.49 Total: 8,395.02 6,680.24 8,285.86 Percentage: 100% 79.5% 100% 76.3%

Notes: 1. This Assessment covered the overall land use for oil palm plantation areas which includes the identified Conservation areas including any HCV areas and other planted areas such as Teak, Mahogany and Durian trees (at Kalabakan Tengah and Kalabakan Selatan), as marked out at the respective estates. 2. The estates sampled for this Assessment have been selected based on their potential risks on social, environmental and biodiversity issues such as their proximity to forest reserves, hill sides, riparian zones and high conservation value areas.

1.4 Summary of plantings and cycle The 3 estates been developed beginning from 1984 and are currently in the 2 nd cycle of planting for the oil palms The age profile is as shown in Table 3.

Table 3: Age Profile of Planted Oil Palm 2015

Cycle of Planting Mature OP (ha) Immature OP (ha) Estate Name Year of Planting - Current – Above 3 years – 3 years & below

FGVPM Kalabakan Tengah 1984 – 1987 (1 st ) 2nd 1,312.56 1,141.05 estate 2010 – 2014 (2 nd )

FGVPM Kalabakan Selatan 1984 – 1987 (1 st ) 2nd 1,969.27 54.05 estate 2009 – 2013 (2 nd )

FGVPM Kalabakan 1984 – 1987 (1 st ) 2nd 1,842.56 0.00 Utara estate 2009 – 2012 (2 nd ) Total 5,124.39 1,195.10

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

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1.5 Summary of Conservation and HCV Areas The summary of Conservation and HCV Areas as identified in KKS Kalabakan grouping during this assessment is as shown in Table 4 below:

Table 4: Conservation and HCV Areas

# Statement of Land Use (Ha) 2014 2015 Hectarage – Ha Hectarage – Ha 1 Planted Area (ha) – Oil Palm - Mature 4,650.83 5,124.39 - Immature 2,029.41 1,195.10 2 Conservation Area (ha) - comprising buffer zones along small streams, hilly 1,200.00 1,200.00 areas, swampy and unplantable areas 3 HCV Area (ha) - comprising buffer zones near forest reserves, Nil Nil water catchments, burial & religious sites

1.6 Other certifications held and Use of RSPO Trademarks Presently the Palm Oil Mill at KKS Kalabakan grouping holds the ISO 9001, ISO 14001 and OHSAS 18001 certifications. The RSPO’s trademarks and logo are not being used by the PMU audited. Instructions for use were provided and acknowledged by the PMU through a signed Memorandum of commitment agreeing to adhere to the latest “RSPO Rules on Communications & Claims”.

1.7 Organizational information / Contact Person

Name: Norazam Abdul Hameed Designation: General Manager, Sustainability and Quality Management (PSQM) Department Full Address: Plantation Sustainability and Quality Management (PSQM) Department, Felda Global Ventures Plantations (Malaysia) Sdn Bhd (FGVPM), Menara Felda Platinum Park, Level 20 No 11 Persiaran KLCC, 50088 Kuala Lumpur, Malaysia. Tel: +603 2859 1995 Fax: +603 2859 0016 Email: [email protected]

Name: Anthonius Sani Designation: Sustainability Manager, Plantation Sustainability and Quality Management (PSQM) Department Full Address: Plantation Sustainability and Quality Management (PSQM) Department, Felda Global Ventures Plantations (Malaysia) Sdn Bhd (FGVPM), Menara Felda Platinum Park, Level 20 No 11 Persiaran KLCC, 50088 Kuala Lumpur, Malaysia. Tel: +603 2859 1623 Fax: +603 2859 0016

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

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1.8 Tonnages Verified for Certification

The breakdown of all the suppliers and their tonnages of FFB supplied to the POM at KKS Kalabakan grouping based on the actual for January to July 2015 and projected from August till December 2015 are as follows:

Table 5: Tonnages Verified for Certification (Jan – Dec 2015) FFB Processed Main Receiving # Estate /Supplier Certified By (MT) Mill PMU Estates: 1. FGVPM Kalabakan Tengah 22,760.00 KKS Kalabakan Intertek 2. FGVPM Kalabakan Selatan 53,683.23 KKS Kalabakan Intertek 3. FGVPM Kalabakan Utara 33,945.06 KKS Kalabakan Intertek Sub-total for PMU estates 110,388.29 FELDA Smallholder Scheme: 4. Nil 0 Sub-total FELDA Smallholders 0 Other Felda Certified estates: 5. Nil 0 Sub-total other certified estate 0 Total Certified FFB: 110,388.29 External FFB / Outgrowers: 6. Various Traders/Dealers 8,874.67 KKS Kalabakan Non-certified 7. Various Estates 111,822.71 KKS Kalabakan Non-certified Various Independent 8. 361.17 KKS Kalabakan Non-certified Smallholders Total Non-Certified FFB: 121,058.55 Grand total 231,446.84

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Total annual volumes / tonnages of FFB supplied from the supply base to KKS Kalabakan grouping POM during the previous period, current assessment period and projected period are as follows:

Table 6: FFB Processed (Certified & Non-certified) tonnages

FFB Processed in FFB Processed in FFB Processed for Estate / Supplier Jan – Dec 2014 Jan – Dec 2015 Jan – Dec 2016 - Actual - Actual & Projected - Projected MT % MT % MT % KKS Kalabakan PMU 98,577 46.78 110,388 47.70 105,975 45.00 grouping estates Other Suppliers (under 0 0 0 0 0 0 FGVPM Group) Certified FFB 98,577 46.78 110,388 47.70 105,975 45.00 Non-certified FFB from Other Suppliers / External 112,121 53.22 121,058 52.30 129,525 55.00 /Outside crop Total 210,699 100 231,446 100 235,500 100.00 SCCS Model for POM MB MB MB

The annual certified tonnages of CPO and PK production at the PMU from the supply base/suppliers as assessed and verified during the current Assessment and projected year are detailed as follows:

Table 7: Certified FFB tonnages only (2015)

Jan – Dec 2014 Jan – Dec 2015 Jan – Dec 2016 POM - Actual - Actual & Projected - Projected Total certified FFB 98,577 110,388 105,975 Processed (MT) Total certified CPO OER: OER: OER: 23,047 25,500 24,586 Production (MT) 23.38% 23.10% 23.20% Total certified PK KER: KER: KER: 4,288 4,636 4,557 Production (MT) 4.35% 4.20% 4.30% SCCS Model for POM MB MB MB

Note: Currently, the POM has established and maintained procedures for the book keeping and monitoring requirements for the CPO at the mill and was verified to be adopting the Mass Balance – MB’ model in accordance with the RSPO Supply Chain Certification Standard (SCCS) requirements. Verified activities and checked items for the SCCS of the POM are reported in section.3.1.1.

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1.9 Time Bound Plan for Other Plantation Management Units and Requirements for Partial Certification

FELDA / FGVPM Group operate 70 palm oil mills and 416 oil palm estates and schemes throughout Malaysia. The organization is a member of RSPO since 2004 and has been taking an active role in the RSPO certification.

Currently, a significant number of its Certification Units is undergoing the RSPO certifying process in accordance with its time bound plan to achieve RSPO certification for all its plantation certification units by 2017.

Intertek was able to verify that FELDA / FGVPM has been conducting periodical review of its due diligence process for all its plantations both certified and non-certified under their Time Bound Plan as required under the RSPO requirements under Partial Certification (4.2.4) whereby all cases of ongoing complaints and allegations on their certified and non certified plantation units were responded and duly made available to any interested party.

Intertek was able to obtain the updates and responses by FGVPM on the allegations which are made publicly available via the web link below:

1. FGV’s response to the Wall Street Journal (WSJ) article, 27 Jul. 2015

http://www.feldaglobal.com/fgvs-response-to-the-wall-street-journal-wsj-article/

2. FGV Clarifies on Wall Street Journal Allegations of Abuses of Malaysian Plantations, 30 Aug. 2015.

http://www.feldaglobal.com/fgv-clarifies-on-wall-street-journal-allegations-of-abuses-of-malaysian- plantations/#sthash.vsdSEPqp.dpuf

Intertek had also referred to the RSPO’s Complaints website for the latest update on any cases of complaints filed against Felda/FGVPM under the web link below:

1. Land dispute claim at Lahad Datu, Sabah against FELDA filed by RSPO on 16 Feb 2015 http://www.rspo.org/members/status-of-complaints?keywords=FELDA&country=&category= http://www.rspo.org/members/complaints/status-of-complaints/view/79

Based on Intertek’s review on the progress made todate, FGVPM is considered to have maintained its commitment under the 4.2.4 Partial certification requirements to ensure that there were no significant land conflicts, no replacement of primary forest or any area containing HCVs since Nov 2005, no labour disputes that are not being resolved through an agreed process, no evidence of non-compliance with law in any of the non-certified holdings.

FGVPM had also updated it’s declaration on the new planting and new acquisition of plantation units / lands and the progress of the said activities are ongoing. These have been reviewed and updated in the Time Bound Plan as submitted by FGVPM.

Details of the present status of the Time Bound Plan as submitted by FGVPM are in Appendix E.

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1.10 Abbreviations Used

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

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2.0 ASSESSMENT PROCESS

2.1 Assessment Methodology, Plan and Site Visits

Since 16 July 2015, Intertek has initiated public communications and notifications and invited the relevant stakeholders before the assessment to provide feedback and comments on their concern (if any) on KKS Kalabakan grouping regarding the environmental, biodiversity, community development and other relevant issues.

From 17 – 20 August 2015, the Assessment team of Intertek conducted the Surveillance Assessment in which 2 out of the 3 estates of KKS Kalabakan grouping namely FGVPM Kalabakan Utara estate and FGVPM Kalabakan Tengah estate as well as the palm oil mill were assessed for compliance against the RSPO requirements. The number of estates sampled was based on a minimum sample of 0.8 √y where y is the number of management sub- units and the selection was made based on their potential risks on social, environmental and biodiversity issues such as their proximity to forest reserves, hill sides, riparian zones and high conservation value areas.

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

KKS Kalabakan grouping POM was also assessed against the requirements for the ‘Mass Balance – MB Module’ as specified in RSPO Supply Chain Certification Standard for CPO mill. This part of the assessment covered the verification of implementation of documented procedures and availability of records to demonstrate compliance against all the elements for Segregation requirements. These include documented procedure, purchasing and goods in, record keeping, sales and goods out, processing, monitoring and traceability of the CSPO and CSPK quantities, training for staff and claims.

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

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

2.2 Date of next scheduled visit

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

2.3 Qualifications of the Lead Assessor and Assessment Team

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

2.4 Certification Body

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

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2.5 Process of stakeholder consultation

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

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

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

Among the list of key stakeholders consulted was the following:

Government Agencies (by emails) 1. Department of Lands And Mines (Kuala Lumpur) 2. Department of Environment (Kuala Lumpur) 3. Department of Forestry Peninsular Malaysia (Kuala Lumpur) 4. Department of Immigration (Kuala Lumpur) 5. Department of Irrigation & Drainage (Kuala Lumpur) 6. Department of Labour (Kuala Lumpur) 7. Department of Occupational Safety & Health (Kuala Lumpur) 8. Department of Orang Asli Affairs (Kuala Lumpur) 9. Department of Wildlife & National Parks (Kuala Lumpur) 10. Environment Protection Department Sabah 11. Department of Forestry Sabah 12. Department of Immigration Sabah 13. Department of Irrigation & Drainage Sabah 14. Department of Labour Sabah 15. Department of Occupational Safety & Health Sabah 16. Department of Wildlife Sabah 17. Land and Mines Office Sabah

Statutory Bodies (by emails) 18. Malaysian Palm Oil Board (MPOB) 19. Malaysian Palm Oil Board (MPOB) - Northern Region 20. Malaysian Palm Oil Board (MPOB) - Central Region 21. Malaysian Palm Oil Board (MPOB) - Southern Region 22. Malaysian Palm Oil Board (MPOB) - Eastern Region 23. Malaysian Palm Oil Board (MPOB) - Sarawak Region 24. Malaysian Palm Oil Board (MPOB) - Sabah Region 25. Malaysia Palm Oil Association (MPOA) 26. Malaysia Palm Oil Association Kuala Lumpur (MPOA) 27. Malaysia Palm Oil Association Sabah (MPOA)

NGOs (by emails) 28. All Women’s Action Society (AWAM) 29. BCSDM - Business Council for Sustainable Development in Malaysia 30. Borneo Child Aid Society (Humana) 31. Borneo Resources Institute Malaysia (BRIMAS) 32. Borneo Rhino Alliance (BORA) 33. Center for Orang Asli Concerns COAC 34. Centre for Environment, Technology and Development, Malaysia – CETDEM 35. Consumers Association Of Penang – CAP 36. EcoKnights 37. ENO Asia Environment 38. Environmental Management and Research Association of Malaysia (ENSEARCH) 39. Environmental Protection Society Malaysia (EPSM) 40. Friends of the Earth, Malaysia 41. Future in Our Hands Society, Malaysia

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42. Global Environment Centre 43. HUTAN - Kinabatangan Orang-utan Conservation Programme 44. Institute of Foresters, Malaysia (IRIM) 45. JUST - International Movement for a Just World 46. Malaysian CropLife & Public Health Association (MCPA) 47. Malaysian Environmental NGOs – MENGO 48. Malaysian National Animal Welfare Foundation – MNAWF 49. Malaysian Plant Protection Society (MAPPS) 50. Mountaineering and Outdoor Pursuits Association of Negeri Sembilan 51. National Council of Welfare & Social Development Malaysia – NCWSDM 52. National Union of Plantation Workers (NUPW) 53. Partners of Community Organisations (PACOS) 54. Penang Institute previously known as Socio-Economic & Environmental Research Institute (SERI) 55. Pesticide Action Network Asia and the Pacific (PAN AP) 56. Proforest - South East Asia Regional Office

Local community (On-site interviews) 57. Consultative Committee & Gender representatives 58. Workers & Workers representatives 59. Village Heads & representatives 60. Suppliers & Contractors representatives

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3.0 ASSESSMENT FINDINGS

3.1 Summary of findings

Principle 1: Commitment to transparency

Criterion 1.1 Growers and millers provide adequate information to relevant stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making. Indicators Findings and Objective Evidence Compliance 1.1.1 There shall be evidence that Documented procedure ML-1A/L2-PR3-0, Mar 2012 for Complied growers and millers provide adequate providing information, handling responses and requests from information upon request for stakeholders was established and communicated at Felda information on (environmental, social Kalabakan PMU. The mill and estate management have and/or legal) issues relevant to RSPO Criteria to relevant recorded and responded constructively and promptly to any stakeholders for effective requests for information from the interested stakeholders. participation in decision making. The annual stakeholders meeting was held on Dec 2014 with Minor Compliance stakeholders’ feedback recorded. This was evident from records sighted among which were letters, minutes of meetings, attendance notes held together with local authorities, security services, schools, clinics, smallholders, employee consultative committees and local community leaders Date of public notification of this assessment of the PMU was made prior to assessment (see section 2.1 Assessment Methodology, Plan and Site Visits ).

1.1.2 Records of requests for The PMU maintained an updated list of internal stakeholders, Complied information and responses shall be external stakeholders which included the government maintained. departments/agencies, consultants, contractors, suppliers and Major Compliance transporters. The POM and estates also obtained feedback from internal and external stakeholders through survey questionnaire and action plans identified for implementation. Request and responses were noted in the Record Log book maintained since December 2013 till todate. Other implementation documents & records were sighted from FFB supplying estates, which included land titles, training materials, health & safety plan, environmental & social impacts assessment, pollution prevention plan, complaint files, negotiation procedure, continual improvement plans. There has been no new request made by any stakeholders on the operations of the PMU in 2015 till present. Criterion 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes. Indicators Findings and Objective Evidence Compliance 1.2.1 Publicly available documents In line with the organization’s policies, Kalabakan PMU had Complied shall include, but are not necessarily maintained the established & documented information of land limited to: titles, health and safety plan, plans and impact assessments relating to environment and social impacts, mechanism for Major Compliance complaints and grievances, negotiation procedures and continuous improvement plans. These documents are made

available to the public & also for internal reference.

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INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 15 of 70 KKS Kalabakan grouping: ASA-01

• Land titles/user rights (Criterion Copies of all MOT/land titles were available and have been Complied 2.2); maintained at the POM and Estates. HQ kept the original copies. • Occupational health and safety Detailed documented plan of OSH established in ML-1A/L4-F2 Complied plans (Criterion 4.7); (0), reviewed and updated in Jan 2015. Policy and HIRAC documented for both mill and estates. The HIRAC was also reviewed for the POM and estates. The OSHA Plan include the establishment and implementation of CHRA, medical surveillance, Fire Drill training, First Aid training, Audiometric test, PPE training. POM is certified to OSHA 18001. POM has conducted the Emergency Preparedness (ERP). Safety Committee meetings held quarterly in year 2014. Programmes for protecting workers’ health and safety were satisfactorily implemented. • Plans and impact assessments Environmental aspect and impact assessment, as well as Complied relating to environmental and social Social impact assessments with respective plans for mitigation impacts and monitoring were documented and available. (Criteria 5.1, 6.1, 7.1 and 7.8); The SEIA established by Sustainability team (HQ) was reviewed and updated in Jan 2015 with feedback from the Mill, Estate managers and RSPO implementation team. See also related findings in C 5.1 and 6.1. • HCV documentation (Criteria 5.2 Procedure Guidelines ML-1A/L3-GPS (0) for the identification Complied and 7.3); of HCV. HCV Identification Survey conducted on Umas and Kalabakan Complexes by HCV consultant and report dated 29/03/2014. Action Plan for HCV and conservation areas with implementation dates. There are no HCV areas at Felda Kalabakan PMU. Management Action for Conservation areas were reviewed and progressively implemented at the respective Estates. See also findings detailed under C5.2 and C7.3. • Pollution prevention and reduction Documented pollution prevention and reduction plans include Complied plans (Criterion 5.6); measures for pollution control (smoke emission, POME / effluent discharge), pesticides reduction, schedule wastes (chemicals, drums, tyres, used PPE, hydraulic oil) and organic/domestic wastes disposal, reuse and recycling (paper, glass, scrap iron). See also findings detailed under C5.6. • Details of complaints and Documented in ML-1A/L2-PR4(0), dated Mar 2012. Complied grievances (Criterion 6.3); Complaints / queries and enquiries records for internal and external stakeholders were maintained. Actions found to be appropriately implemented and recorded. There is also Complaints Box provided in the mill and estates with a Complaints and Grievances Form for recording any complaints/grievances. A Complaint Book (“Buku Aduan”) is also maintained in the POM and estates. Logbook entries for the period concerned found to be complaints from employees and settlers relating to repairs on workers housing/quarters, security, road maintenance, requests for financial contributions, etc. Actions found to be taken to address the complaints and recorded in the Complaints Book. As to date, the PMU did not receive any complaints from any

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 16 of 70 KKS Kalabakan grouping: ASA-01

external stakeholders.

• Negotiation procedures (Criterion Negotiation procedure was documented in ML-1A/L2-PR1 (0), Complied 6.4); dated Mar 2012. There were no reported cases of any land conflict so far, at the Kalabakan PMU.

• Continual improvement plans Documented in ML-1A/L2-PR11 (0), dated Mar 2012. Complied (Criterion 8.1); The PMU has identified, documented and implemented Continuous Improvement Plans over the period 2014-2015. See also findings under C8.1. • Public summary of certification Public summary of RSPO certifications of FELDA/FGVPM are Complied assessment report; under Felda Global Ventures website as follows: http://www.feldaglobal.com/sustainability.html These details may be available from the company upon request. • Human Rights Policy (Criterion The Human Rights Policy (“Polisi Hak Asasi Manusia”) has Complied. 6.13). been documented and signed by the President and CEO of Felda Global Ventures on 01/06/2014 and communicated to all levels of the workforce and operations. Copies of the policy found to be displayed at prominent locations in the POM and estates. Criterion 1.3 Growers and millers commit to ethical conduct in all business operations and transactions. Indicators Findings and Objective Evidence Compliance 1.3.1 There shall be a written policy The Policy of commitment to a Code of Ethical Conduct and Complied. committing to a code of ethical conduct and integrity Integrity has been documented and signed by the President in all operations and transactions, and CEO of Felda Global Ventures on 01/06/2014 and which shall be documented and communicated to all levels of the workforce and operations. communicated to all levels of the Copies of the policy found to be displayed at prominent workforce and operations. locations in the POM and estates. Minor Compliance There is a booklet containing details of Service Terms and Conditions and Code of Ethical Conduct and Integrity for Employees of Felda Group of Companies.

Principle 2: Compliance with applicable laws and regulations

Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. Indicators Findings and Objective Evidence Compliance 2.1.1 Evidence of compliance with A Register of Legal and Other Requirements covering the Complied relevant legal requirements shall be applicable local and international laws and regulations have available. been compiled at the mill and estates. A Compliance Checklist is used by the mill and estates for verification of Major Compliance compliance with legal requirements. The relevant laws and legislations identified and listed cover safety and health, environment, pollution management, chemical handling, usage & storage, schedule waste management, labour laws, Unions, EPF, SOCSO, Housing and Amenities. There were no cases of any violation or actions imposed by

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 17 of 70 KKS Kalabakan grouping: ASA-01

relevant authorities. Statutory returns to relevant authorities found to be in compliance. Based on the site observations, interviews and records checking at the POM and estates, there were evidences of compliance with the relevant laws, regulations, local and international laws. Licenses and permits (License for Foreign Workers Employment, Workers Wages Deduction Permit, License for Controlled Items – Diesel and Fertilizer, MPOB license, DOSH Certificate, DOE license, BOMBA Fire Certificate, Energy Commission License, etc.) were monitored for their expiry dates and found to be renewed and valid. Environmental Quality Act 1974 and Environmental Quality (Scheduled Wastes) Regulations 2005: Scheduled wastes such as hydraulic and used motor oils, rags, empty chemical and lubricants containers collected at six monthly intervals by DOE licensed contractor. Weight and Measures Act 1972, regulations 16, 28A, 45): Weighbridges were duly calibrated. Factory and Machinery Act 1967, Regulations 1970: Steam engineers (Grade 1 and 2), boilermen and electricians were noted to be with valid certificates from relevant authorities (DOSH and Energy Commission). The POM has maintained a boiler register that indicate the date of commission, cleaned, inspected, tested or repaired. Valid certificates of fitness for boilers, sterilizers, air receivers, thermal deaerator, steam separator, vacuum oil dryer, etc. issued by DOSH. Valid license for diesel generators issued by Energy Commission (“Suruhanjaya Tenaga”). Valid licenses for authorized gas tester (ACT), authorized entrant and standby by person for confined space activities in POM. Occupational Health and Safety Act 1994 – safety and health meetings to be conducted at quarterly intervals. Noise Monitoring Report is available. The POM is certified by SIRIM for its Quality, Environment and Safety & Health Management Systems. Legal documents (work permits, passports) of foreign workers (Indonesian) in the estates. Insurance coverage is available for foreign workers in the estates. Noted that there are no foreign workers in the POM. Statutory returns to relevant authorities found to be in compliance. 2.1.2 A documented system, which The documented system Doc No. ML-1A/L2-PR2 (0) (March Complied includes written information on legal 2012) for identifying, determining, reviewing and updating requirements, shall be maintained. applicable legal and other requirements has been maintained. List of legal requirements (both international & national) filed & Minor Compliance maintained in oil mill & estate levels. Review was done in January 2015 and related legal and regulatory changes had been updated. 2.1.3 A mechanism for ensuring The procedure includes a monitoring mechanism of a regular Complied compliance shall be implemented. check and evaluation for compliance against the applicable Minor Compliance laws in the Legal Register. Monitoring mechanism was done through a yearly evaluation check against the items in the Legal Register. The POM and the estates have carried out the evaluation for ensuring compliance by completion of the Compliance Checklist.

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 18 of 70 KKS Kalabakan grouping: ASA-01

2.1.4 A system for tracking any Tracking of changes in the relevant laws are communicated Complied changes in the law shall be and received from HQ. implemented. Monitoring of changes to the applicable laws and regulations Minor Compliance carried out through periodical review in accordance with the documented procedure ML-1A/L2-PR2 (0) dated Mar 2012. The Mill and Estate Managers maintain the tracking with the support from Felda Headquarters for any changes in legal requirements. These were reviewed on yearly basis and updated (when necessary) with the compliance status indicated.

Note: Requirements by EPD, Sabah (JPAS) had been included during replanting in the states and complied accordingly. Thus, NC # 5 – Minor (2014) was adequately implemented and closed. See section 3.2

Criterion 2.2 The right to use the land is demonstrated, and is not legitimately contested by local people who can demonstrate that they have legal, customary or user rights. Indicators Findings and Objective Evidence Compliance 2.2.1 Documents showing legal The lands in the Kalabakan PMU are legally leased by Felda Complied ownership or lease, history of land from the Sabah State Government since 1983 as evidenced tenure and the actual legal use of the by the copies of land tiles produced and verified on-site. land shall be available. The original copies are maintained by the corporate head Major Compliance office at KL. The legal use of the land was confirmed for the cultivation of oil palms and agricultural use. Copies of the land titles of all the PMU estates were verified to have been properly maintained.

2.2.2 Legal boundaries shall be It was verified that there has been no change to the stated Complied clearly demarcated and visibly land titles and designated use for cultivation of oil palms and maintained. agricultural use. Boundary pole markers and trenches were sighted and Major Compliance maintained along the perimeters of estate lands. No boundary stones could be found at the estates. Pole markers placed were verified to be within the boundary parameters of the estates audited. Demarcation via dug up trenches and drains which were adjacent to neighbouring villager / outgrower estates were also evidenced.

2.2.3 Where there are or have been There has been no recent dispute on the land rights within the Complied disputes, additional proof of legal Kalabakan PMU. acquisition of title and evidence that fair compensation has been made to As such, the process of fair compensation and FPIC is currently not applied. previous owners and occupants shall Refer to be available, and that these have Note: Refer also to Section 1.9 of report concerning land been accepted with free, prior and Section 1.9 of dispute at other FELDA / FGVPM units under RSPO Partial report informed consent (FPIC). Certification requirements. Minor Compliance

2.2.4 There shall be an absence of There is a documented procedure ML-1A/L2-PR 4 (0) dated Complied significant land conflict, unless Mar 2014 for handling and response to land disputes and requirements for acceptable conflict customary rights as well as for calculation and distribution of resolution processes (see Criteria 6.3 compensation. and 6.4) are implemented and

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 19 of 70 KKS Kalabakan grouping: ASA-01 accepted by the parties involved. There has been no dispute on the land rights within the Major Compliance Kalabakan PMU (see C2.2.3 above) Note: Refer also to Section 1.9 of report concerning land Refer to dispute at other FELDA / FGVPM units under RSPO Partial Section 1.9 of Certification requirements. report

2.2.5 For any conflict or dispute over As per the procedure and mechanism documented, whenever Complied the land, the extent of the disputed there were incidences of land conflict, the disputed areas area shall be mapped out in a would be mapped out in participatory way with involvement of participatory way with involvement of affected parties. Internal investigation would be carried out, affected parties (including neighbouring communities and and appropriate follow up actions taken to resolve land conflict relevant authorities where issues. This was evidenced at the PMU estates as follows: applicable). At Kalabakan Tengah, Native Customary Rights – NCR land of Minor Compliance 281.79 ha, belonging to the indigenous Murut community has been mapped out and proper contract of agreement had been made to manage the land by FELDA (Agreement dated 10 February 1983 was evidenced for the 99 year lease between Sabah State Government and FELDA – on behalf of the Murut Community). At Kalabakan Selatan, it was noted the Native Customary Rights – NCR land of 198.29 ha, belonging to the indigenous local community has been mapped out and released back to the community for their own use since 2009. There has been no other dispute on the land rights within the Kalabakan PMU (see C2.2.3 above) 2.2.6 To avoid escalation of conflict, As per the procedure and mechanism documented, Complied there shall be no evidence that palm precautionary measures would be exercised on any disputed oil operations have instigated area during the investigation period. Avoidance of violence violence in maintaining peace and would be exercised to maintain peace and order in their order in their current and planned operations. current and planned operations at the estates. Major Compliance Verified that there was no evidence of such instances at the Kalabakan PMU. Criterion 2.3 Use of the land for oil palm does not diminish the legal, customary or user rights of other users without their free, prior and informed consent. Indicators Findings and Objective Evidence Compliance 2.3.1 Maps of an appropriate scale The lands in the Kalabakan region are legally leased by Felda Complied showing the extent of recognised from the Sabah State Government since 1983 as evidenced legal, customary or user rights by the copies of land tiles and maps produced which were (Criteria 2.2, 7.5 and 7.6) shall be verified on-site. developed through participatory mapping involving affected parties (including neighbouring communities where applicable, and relevant authorities). Major Compliance 2.3.2 Copies of negotiated Records are available to show that the land lease comply with Complied agreements detailing the process of legal requirements and does not infringe on any legal rights free, prior and informed consent that require free, prior and informed consent (FPIC). (FPIC) (Criteria 2.2, 7.5 and 7.6) This was evidenced at Kalabakan Tengah, Native Customary shall be available and shall include: Rights – NCR land of 281.79 ha, belonging to the indigenous a) Evidence that a plan has been Murut community has been mapped out and proper contract of developed through consultation and agreement had been made to manage the land by FELDA discussion with all affected groups in the communities, and that information (Agreement dated 10 February 1983 was evidenced for the 99 has been provided to all affected year lease between Sabah State Government and FELDA – groups, including information on the on behalf of the Murut Community).

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 20 of 70 KKS Kalabakan grouping: ASA-01 steps that shall be taken to involve There has been no other dispute on the land rights within the them in decision making; Kalabakan PMU. b) Evidence that the company has respected communities’ decisions to give or withhold their consent to the operation at the time that this decision was taken; c) Evidence that the legal, economic, environmental and social implications for permitting operations on their land have been understood and accepted by affected communities, including the implications for the legal status of their land at the expiry of the company’s title, concession or lease on the land. Minor Compliance 2.3.3 All relevant information shall be No cases of further land claims in this PMU. Not applicable available in appropriate forms and As such this process is not applicable for verification. languages, including assessments of impacts, proposed benefit sharing, and legal arrangements. Minor Compliance 2.3.4 Evidence shall be available to This process is not applicable for verification. Not applicable show that communities are represented through institutions or representatives of their own choosing, including legal counsel. Major Compliance

Principle 3: Commitment to long-term Economic & Financial Viability Criterion 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability. Indicators Findings and Objective Evidence Compliance 3.1.1 A business or management The 3-year management plan from 2015 -2017 had been Complied plan (minimum three years) shall be documented, with details of budget & cost of operation, both documented that includes, where for oil mill & estates. appropriate, a business case for scheme smallholders. Annual budget of Business Management Plan included the following: (i) Planting materials (DXP seedling and cloned seedling); Major Compliance (ii) Crop projection = FFB yield/ha trends; (iii) Mill extraction rates = OER trends; (iv) Cost of Production = Cost/MT FFB trends; (v) Cost of Production = Cost/MT CPO trends; (vi) Forecast prices; (vii) Financial indicators = Cost labour, supervision, production and machinery depreciation).

The PMU i.e. POM and its 3 estates are managed under FGVPM i.e. no Felda Settler Schemes are involved.

Estate Managers monitor the monthly, quarterly and annual performances which includes cost and quality. Reports are submitted to the GM of Zone/Wilayah. Performances are discussed in the monthly meetings held at the PMU i.e. POM & Estate Managers being present. Issues and actions needed are minuted for follow up in next monthly meeting. The records of these meetings were available and verified during audit.

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 21 of 70 KKS Kalabakan grouping: ASA-01

3.1.2 An annual replanting The Annual replanting programme projected for the next 5 Complied programme projected for a minimum years for each estate in this PMU is available. of five years (but longer where necessary to reflect the management Verified the replanting has been completed in Dec 2014 for all nd of fragile soils, see Criterion 4.3), with the 3 estates at the PMU i.e. in 2 cycle. yearly review, shall be available. No further replanting is expected over the next 20 years (i.e. Minor Compliance for 3 rd cycle).

Principle 4: Use of appropriate best practices by growers and millers

Criteria 4.1 Operating procedures are appropriately documented, consistently implemented and monitored. Indicators Findings and Objective Evidence Compliance 4.1.1 Standard Operating POM has documented SOPs for the following : Complied Procedures (SOPs) for estates and 1. Palm Oil Mill Operation from reception of FFB until the mills shall be documented. delivery of processed oil and POME management. 2. Laboratory Operation Manual Major Compliance 3. Quality, Environmental and Occupational Health & Safety Manual and Procedures of Palm Oil Mill - The SOP for pollution prevention includes measuring and monitoring mill effluents and waste disposal / recycling. 4. Procedure for Safe Work and Management of Safety and Health for Workers - The SOP for safe working practices in the POM includes hazards identification, risk assessment and control measures. The hazards include noise, chemicals, heat, fire, fuel spillage, working at heights, working in enclosed space, hot work, lightning, electrocution, machinery, etc. Control measures include the use of PPE, fire drill training, first aid training, etc. and “permit to work system” for the mill. Records of ‘Permit to Work’ including gas entry and stand-by permits issued by NIOSH to the competent personnel at the POM was verified to be maintained and found to be in order. 5. Work instruction are available in Bahasa Malaysia for workers easy understanding. The estates have the following SOPs: 1. Sustainable Oil Palm Estate Operation Manual - The manual describes operational procedure of nursery practices, land preparation, planting practices, ground cover maintenance, roads, immature stage, harvesting, collection of bunches, manuring, pesticide application, pests & diseases control. The SOP for pesticides specifies safe working practices and application of pesticides. It includes annual medical surveillance for pesticides operators. 2. SOP for riparian zone management with specified buffer zones.

Relevant Key Performance Indicators (KPIs) specified for quality, environment, safety and cost control.

4.1.2 A mechanism to check The mechanism to check the implementation of SOPs was Complied consistent implementation of procedures shall be in place. available and implemented. Records had been kept by the assigned staff concerned for Minor Compliance each operation to monitor the work progress which is checked by the respective Assistant Managers and the Managers regularly. Implementations of procedures are found to be generally

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 22 of 70 KKS Kalabakan grouping: ASA-01

consistent at the mill and estates. 4.1.3 Records of monitoring and any The records of monitoring and the actions taken had been Complied actions taken shall be maintained and available, as appropriate. maintained for more than 12 months on the mill and estates concerned. These records had been verified to be Minor Compliance satisfactorily maintained. Note: Readings on POME flow meter records were corrected and recorded accordingly. Thus, NC # 1 – Minor (2014) was adequately implemented and closed. See section 3.2

4.1.4 The mill shall record the origins The mill maintained record on the origins of all third-party Complied of all third-party sourced Fresh Fruit Bunches (FFB). sourced Fresh Fruit Bunches (FFB), and it had been verified to be satisfactory. Major Compliance Criteria 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. Indicators Findings and Objective Evidence Compliance 4.2.1 There shall be evidence that good GAP for minimization of soil erosion and maintenance of Complied agriculture practices, as contained in Standard Operating Procedures soil fertility is maintained via the frond stacking and fertilizer (SOPs), are followed to manage soil application as per the recommendation provided from fertility to a level that ensures optimal FELDA Research Centre. and sustained yield, where possible.

Minor Compliance 4.2.2 Records of fertiliser inputs Records of fertilizer application had been verified to be Complied shall be maintained. adequately maintained. Minor Compliance 4.2.3 There shall be evidence of Leaf and soil sampling and analysis had been carried out Complied periodic tissue and soil sampling to monitor changes in nutrient status. annually to determine the nutrient levels for fertilizer recommendations that aimed to sustain the long term soil Minor Compliance fertility and nutrient efficiency. Records of the sampling and analysis had been verified to be satisfactory. 4.2.4 A nutrient recycling strategy shall EFB mulching had been carried out i.e. in the inter-row of Complied be in place, and may include use of Empty Fruit Bunches (EFB), Palm Oil mature area while compost had been used for mulching in Mill Effluent (POME), and palm the immature palms. residues after replanting. This was verified during on-site field inspection at the Kalabakan Utara and Tengah estates. Minor Compliance POME land irrigation had been carried out in Kalabakan Tengah estate over 150 ha by gravity feed. Criteria 4.3 Practices minimise and control erosion and degradation of soils. Indicators Findings and Objective Evidence Compliance 4.3.1 Maps of any fragile/marginal soils Based on the soil maps, there was no fragile/marginal soil Complied shall be available. on the group Estates

Major Compliance 4.3.2 A management strategy shall Planting terraces had been constructed on land with slope Complied be in place for plantings on slopes between 6 and 25 degrees unless 6° to 25°. specified otherwise by the Records and maps on terraces constructed had been company’s SOP. verified at the Kalabakan Tengah and Utara estates.

Minor Compliance Note:

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 23 of 70 KKS Kalabakan grouping: ASA-01

Thus, NC # 2 - Minor (2014) was adequately implemented and closed. See section 3.2

4.3.3 A road maintenance Road maintenance programme was available and Complied programme shall be in place. maintenance carried out as per schedule. Minor Compliance Due to soil conditions and heavy use, frequent patching and gravelling was noted done at the estate roads to ensure safe and smooth movement of vehicles. Proper warning signages were found erected on several stretches at Kalabakan Tengah which were prone to landslides during rainfall periods. Note: Thus, NC # 3 - Minor (2014) was adequately implemented and closed. See section 3.

4.3.4 Subsidence of peat soils shall be Based on the estate soil maps, there was no peat soil on Not minimised and monitored. A documented water and ground cover the estates as confirmed by auditor’s on-site assessment applicable management programme shall be in place.

Major Compliance 4.3.5 Drainability assessments where As above. Not necessary will be conducted prior to replanting on peat to determine the applicable long-term viability of the necessary drainage for oil palm growing.

Minor Compliance 4.3.6 A management strategy shall Based on the estate soil maps and visit to the estates, it is Not be in place for other fragile and problem soils (e.g. podzols and acid verified that there were no other fragile and problematic applicable sulphate soils). soils on these estates.

Minor Compliance Criteria 4.4 Practices maintain the quality and availability of surface and ground water. Indicators Findings and Objective Evidence Compliance 4.4.1 An implemented water Documented Water Management Plan verified to be in Complied management plan shall be in place. order for the POM and estates. Minor Compliance The estates are supplied water from the water treatment plant maintained by Felda Engineering Sdn. Bhd. Water samples are taken at monthly interval at the final discharge point of the mill effluent ponds and at upstream and downstream of water ways. Tests conducted for pH, BOD, COD, total solids, suspended solids, oil grease, ammonical nitrogen and total nitrogen. Analytical results had met DOE requirements. Human consumption water is being treated and relevant tests are carried out on parameters to meet the Ministry of Health Specifications for drinking water quality. Rainfall data available at mill and estates. Monitoring of water management is satisfactory and records had been verified to be adequately maintained. 4.4.2 Protection of water courses and Verified that there were no constructions of bunds, weirs, Complied wetlands, including maintaining and dams observed during field visits at Kalabakan Utara and restoring appropriate riparian and Tengah estates. other buffer zones (refer to national Buffer zones noted to be demarcated on the palms which

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 24 of 70 KKS Kalabakan grouping: ASA-01 best practice and national were adjacent to streams and water ways present at the guidelines) shall be demonstrated. field blocks of estates audited. Note: Major Compliance NC # 4 – Major (2014) was adequately implemented and closed. See section 3 See also related findings reported under Indicator 5.1.2 4.4.3 Appropriate treatment of mill The mill has taken necessary steps to reduce the BOD effluent to required levels and regular levels in line with the DOE requirements. monitoring of discharge quality, shall be in compliance with national regulations The mill had cleaned ponds no.1, 2 and 3 since June to (Criteria 2.1 and 5.6). July 2015. Although the mill was operating, no effluent was discharged out. The effluent was retained in the Bio gas Minor Compliance pond and bio-polishing facility. The effluent is only expected to be discharged out sometime in September or October 2015 when it is already fully functioning. This activity will be followed up during the next surveillance. 4.4.4 Mill water use per tonne of Fresh Water usage in the mill was monitored with noted to be an Complied Fruit Bunches (FFB) (see Criterion 5.6) shall be monitored. average of 0.92 m3/tonne FFB during the audit period. The level of water usage was within the industrial norm. Minor Compliance Criteria 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management techniques. Indicators Findings and Objective Evidence Compliance 4.5.1 Implementation of Integrated Pest Records on planting of beneficial plants had been verified Complied Management (IPM) plans shall be monitored. on the estates. Trapping of Rhinoceros beetle with pheromone had been Major Compliance carried out the replanted areas. Pest infestation was minimal on the estates. Programme for planting of beneficial plants such as Turnera subulata, Cassia cobanensis, and Antigonon leptopus , and records on areas planted had been verified together with the respective maps to be satisfactory The campaigns of rat baiting were carried out around April and August of each year on the Estates. 4.5.2 Training of those involved in IPM Training records for personnel on IPM implementation were Complied implementation shall be demonstrated. available and was verified on-site to be adequately

Minor Compliance maintained during field assessment. Criteria 4.6 Pesticides are used in ways that do not endanger health or the environment. Indicators Findings and Objective Evidence Compliance 4.6.1 Justification of all pesticides used Written justification in Standard Operating Procedures of all Complied shall be demonstrated. The use of agrochemicals use had been reviewed and found selective products that are specific to the target pest, weed or disease and acceptable. which have minimal effect on non-target species shall be used where available.

Major Compliance 4.6.2 Records of pesticides use Records of pesticides and their active ingredients used, Complied (including active ingredients used and their LD50, area treated, amount LD50, area treated, amount of a.i. applied per ha, and of active ingredients applied per ha number of applications had been maintained and kept for a and number of applications) shall be minimum of 5 years. Verified that records of monitoring provided. were satisfactorily.

Major Compliance

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 25 of 70 KKS Kalabakan grouping: ASA-01

4.6.3 Any use of pesticides shall be It had been the policy of the estates to minimize the use of Complied minimised as part of a plan, and in accordance with Integrated Pest pesticides in accordance with integrated pest management. Management (IPM) plans. There shall No prophylactic use of pesticides had been carried out at be no prophylactic use of pesticides, the estates for the period concerned. except in specific situations identified in industry’s Best Practice.

Major Compliance 4.6.4 Pesticides that are categorised as It is the policy of the group to reduce the use of Paraquat Complied World Health Organisation Class 1A or 1B, or that are listed by the Stockholm gradually and achieve zero usage eventually. or Rotterdam Conventions, and The pesticide reduction program is monitored on usage per paraquat, are not used, except in hectare basis. On overall, it has shown a decline on a year specific situations identified in industry’s to year basis. Noted that the usage was mainly limited to Best Practice. The use of such the immature palm areas. pesticides shall be minimised and The requirements for use of Highly Toxic Pesticides (HTP) eliminated as part of a plan, and shall only be used in exceptional such as paraquat were checked and verified for compliance circumstances. Pesticides selected for under the Pesticides Act 149 and USECHH 2000 use are those officially registered under regulations i.e. they are kept under lock and key; records of the Pesticides Act 1974 (Act 149) and Form II for the paraquat used were available; First Aid Kits the relevant provision (Section 53A); was issued to all Mandores & Supervisors; Portable and in accordance with USECHH Signage boards were available and noted to be displayed at Regulations (2000). areas of spraying activity during field inspection and visit.

Minor Compliance 4.6.5 Pesticides shall only be handled, All pesticide operators had been given training on the Complied used or applied by persons who have completed the necessary training and handling and application of the pesticides. Appropriate shall always be applied in accordance safety and application equipment had been provided and with the product label. Appropriate used by the operators. safety and application equipment shall The necessary precautions attached to the products had be provided and used. All precautions been observed, applied, and understood by the workers. attached to the products shall be properly observed, applied, and Programme and training records had been verified to be understood by workers (see Criterion satisfactorily maintained. 4.7).

Major Compliance 4.6.6 Storage of all pesticides shall be Storage of pesticides found to be in accordance with the Complied according to recognised best practices. Occupational Safety and Health Laws and Regulations and All pesticide containers shall be local laws on pesticides control. Permit for the hazardous properly disposed of and not used for waste storage was available and maintained at Estate other purposes (see Criterion 5.3). Pesticides shall be stored in offices. Records were verified. accordance to the Occupational Safety Empty chemical containers had been reused for mixing and chemicals for spraying pesticides in the field. Extra unused Health Act 1994 (Act 514) and empty chemical containers were triple rinsed and punctured Regulations and Orders, Pesticides Act before disposal by external contractors. 1974 (Act 149) and Regulations. Verified that this was satisfactorily implemented on-site. Major Compliance 4.6.7 Application of pesticides shall Pesticides had been applied using the proven methods Complied be by proven methods that minimise risk and impacts. (Best Management Practices) that minimize risk and impacts. Minor Compliance 4.6.8 Pesticides shall be applied aerially No aerial application of pesticides was carried out as per Complied only where there is documented justification. Communities shall be FELDA’s group policy. This policy has been adhered. informed of impending aerial pesticide applications with all relevant information within reasonable time prior to application.

Major Compliance 4.6.9 Evidence of continual training Periodic training on pesticide handling had been carried out Complied

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 26 of 70 KKS Kalabakan grouping: ASA-01 to enhance knowledge and skills of as per the Annual Training plan. employees and associated smallholders on pesticide handling Information on the pesticides were found displayed on the shall be demonstrated or made notice board and next to the pesticides in the store. available. (see Criterion 4.8).

Minor Compliance 4.6.10 Proper disposal of waste Empty pesticide containers had been reused for mixing Complied material, according to procedures that are fully understood by workers and chemical for spraying in the fields. Scheduled waste of palm managers shall be demonstrated (see oil mill had been disposed of through licensed contractor Criterion 5.3). approved by DOE. Records of scheduled waste storage and disposal were Minor Compliance maintained at the mill and estates. 4.6.11 Specific annual medical Annual medical surveillance for pesticide operators had Complied surveillance for pesticide operators, and documented action to treat related been implemented as follows: health conditions, shall be Kalabakan POM has sent 9 workers for medical demonstrated. surveillance on 21 Oct 2014.

Major Compliance Kalabakan Tengah estate had sent 16 of its workers for medical surveillance on 16 Sept 2014. Kalabakan Utara estate has sent 12 of its workers for medical surveillance on 28 Sept 2014. Medical surveillance reports of individual sprayers were available and details checked. Comments of abnormalities are stated by the Medical doctor. Those found unsuitable for handling pesticides or other health reasons are recommended by the Medical doctor to be assigned for other work. Estate managers do reassign those found unfit for spraying work. Besides the annual medical surveillance, clinical records are checked as maintained by at the clinics available. Interviews with the clinic nurses confirm that the workers with medical disorders or symptoms are checked thoroughly to determine if they are still suitable for field work. Workers interviewed at field visit were found to be healthy and fit for their designated work. 4.6.12 No work with pesticides shall Verified from records, field inspections and interviews that Complied be undertaken by pregnant or breast- feeding women. no pregnant or breast-feeding woman had been offered work as pesticide operator. Major Compliance Kalabakan Tengah and Utara used only male workers for all spraying operations. Criteria 4.7 An occupational health and safety plan is documented, effectively communicated and implemented. Indicators Findings and Objective Evidence Compliance The occupational health and safety plan Occupational Safety and Health (OSH) plan in compliance Complied shall cover the following: with OSH Act and Factory Machinery Act was documented 4.7.1 An occupational health and safety and implemented. policy shall be in place. An occupational OSH policy was clearly displayed at POM and in estates health and safety plan covering all office. Workers had demonstrated awareness towards activities shall be documented and occupational safety and health policy. implemented, and its effectiveness monitored. Risk assessment carried out on all operations where health and safety is an issue (e.g. noise exposure, pesticides / Major Compliance chemicals exposure, accident, fire). POM & its estates established their accident reporting KPI, and incident monitoring implemented. Procedures and actions documented and implemented on

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 27 of 70 KKS Kalabakan grouping: ASA-01

the issues concerned. Awareness and training programmes was consistently implemented. Evidence of training on safe working practices for workers involved in pesticides spray, use of fire extinguishers, awareness & understanding of MSDS/CSDS, First Aid boxes were sighted at both POM & estates. Precautions attached to products properly observed and applied to workers in the mill and estates. Appropriate PPE (safety boots, safety helmets, rubber boots, cartridge masks, safety goggles, ear plugs and mufflers, hand gloves, body aprons) verified to be provided in accordance to the area of work which has adequately covered all potentially hazardous operations such as high noise areas (above 90dB at POM) , welding/repair works (POM), pesticides application and harvesting (estate fields) The Safety & Health officer was responsible for overall in charge of safety and health planning, operation & coordination. Adequate fire extinguishers found to be located at strategic locations, operational and maintained in working condition. Training for estate workers in First Aid was carried out in the Group Estates and records maintained. First Aid equipment was available at POM, estates and at worksite. 4.7.2 All operations where health and All operations had been risk assessed, documented and Complied safety is an issue shall be risk assessed, and procedures and actions implementation noted to be maintained. shall be documented and implemented The necessary precautions attached to the products had to address the identified issues. All been observed and applied to the workers as stated in the precautions attached to products shall MSDS/CSDS. be properly observed and applied to the workers.

Major Compliance 4.7.3 All workers involved in the Awareness and training programme had been carried out. Complied operation shall be adequately trained in safe working practices (see Criterion All workers involved had been adequately trained in safe 4.8). Adequate and appropriate working practices. protective equipment shall be available Appropriate PPE had been provided to all workers at the to all workers at the place of work to cover all potentially hazardous place of work to cover all potentially hazardous operations. operations, such as pesticide application, machine operations, and land preparation, harvesting and, if it is used, burning.

Major Compliance 4.7.4 The responsible person/persons The responsible person (usually the Mandore or Headman) Complied shall be identified. There shall be records of regular meetings between had been identified. the responsible person/s and workers. Records of regular meetings between the responsible Concerns of all parties about health, person and workers to discuss about health and safety had safety and welfare shall be discussed at been verified to be satisfactory. these meetings, and any issues raised shall be recorded.

Major Compliance 4.7.5 Accident and emergency Accident and emergency procedures had been written and Complied procedures shall exist and instructions shall be clearly understood by all briefed to staff, workers, contractors and visitors. workers. Accident procedures shall be Workers trained in First Aid were present in the mill and available in the appropriate language of field operations. the workforce. Assigned operatives First Aid Kits were available at worksites. The first aid kit

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 28 of 70 KKS Kalabakan grouping: ASA-01 trained in First Aid should be present in was being kept and handled by the supervisor at the both field and other operations, and first worksite. Records on all accidents had been verified to be aid equipment shall be available at maintained satisfactorily. worksites. Records of all accidents shall be kept and periodically reviewed. Quarterly review on accident cases had been carried out during quarterly meeting of Environment, Safety, & Health Minor Compliance (ESH). 4.7.6 All workers shall be provided Medical care had been provided to all the workers. Local Complied with medical care, and covered by accident insurance. workers are covered by SOCSO, whereas foreign workers of the Group Estates are covered by Foreign Workers Minor Compliance Compensation Scheme with ETIQA Takaful Bhd. insurance company. 4.7.7 Occupational injuries shall be Records on Lost Time Accident (LTA) metrics had been Complied recorded using Lost Time Accident (LTA) metrics. verified to be satisfactory. The annual LTA and accident report to DOSH was Minor Compliance submitted 20 Dec 2014. Criteria 4.8 All staff, workers, smallholders and contract workers are appropriately trained. Indicators Findings and Objective Evidence Compliance 4.8.1 A formal training programme shall A formal training programme on all aspects of RSPO Complied be in place that covers all aspects of the RSPO Principles and Criteria, and Principles and Criteria has been established and that includes regular assessments of implemented. training needs and documentation of Training for various categories of operators, including all the programme. field and office staff, with regards to their duties and training needs had been reviewed and found acceptable. Major Compliance 4.8.2 Records of training for each Records of training for the employees including new Complied employee shall be maintained. employees, who were still under the probation period, were Minor Compliance available at the mill and estates. Note: Thus OBS: CFK-02 (2014) was adequately addressed and closed.

Principle 5: Environmental responsibility and conservation of natural resources and biodiversity

Criterion 5.1 Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continual improvement. Indicators Findings and Objective Evidence Compliance 5.1.1 An environmental impact Documented Environmental Aspect and Impact Assessment, Complied assessment (EIA) shall be documented. Plans were documented for the POM and respective estates Major Compliance of Kalabakan PMU by the Plantation Sustainability and Quality Management (PSQM) Department of FELDA Group

based in Kuala Lumpur. The assessment documents had included the identification of aspects from field activities that includes fertilizing, spraying, transportation of FFB, garbage disposal and road maintenance. The report includes action plans and recommendations in order to mitigate negative effects and promote positive ones such as sewage, landfills and conservation activities applicable to the PMU. 5.1.2 Where the identification of impacts Management plans / action plans for mitigation of impacts, Complied requires changes in current practices, in timeframe for action and responsible persons were identified order to mitigate negative effects, a

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 29 of 70 KKS Kalabakan grouping: ASA-01 timetable for change shall be developed and had been implemented and monitored for year 2015. and implemented within a comprehensive management plan. The The Mill and Estate Managers have been identified as management plan shall identify the persons responsible for their respective management plans. responsible person/persons. Presently, the Management Plan/Action Plan documented Minor Compliance and implemented have included activities such as: • Biogas plant construction for power generation at POM; • Upgrading of POM operations and POME treatment; • Recycling of fertilizer bags, paper, used PPE, tyres and chemical containers for pesticide mixing; • Scheduled Wastes storage and disposal; • Building new roads, new housing and related facilities for workers at POM and estates; • Monitoring and maintenance of designated buffer and conservation areas; There are a few streams at the Kalabakan Kalabakan Tengah and Kalabakan Kalabakan Utara. At both these estates, the extent of the buffer zones had been marked at the palms alongside the smaller rivers which lead to Sungai Kalabakan. Buffer zone signages were noted to be placed at appropriate locations. Note: NC # 6 - Minor (2014) was adequately implemented and closed. See section 3.2 (Related details are also reported in indicators 2.1.4 and 4.4.2)

5.1.3 This plan shall incorporate a Implementation and monitoring of the documented Complied monitoring protocol, adaptive to environmental improvement plans were planned and has operational changes, which shall be been reviewed on an annual basis and done in between Feb implemented to monitor the and March 2015 at the mill and estates. effectiveness of the mitigation measures. The plan shall be reviewed The review was verified to have included updates on the as a minimum every two years to reflect mitigation measures for pollution prevention and related to the results of monitoring and where environmental activities. there are operational changes that may have positive and negative environmental impacts. Minor Compliance Criterion 5.2 The status of rare, threatened or endangered species and other High Conservation Value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and operations managed to best ensure that they are maintained and/or enhanced. Indicators Findings and Objective Evidence Compliance 5.2.1 Information shall be collated in a Information has been collated in a HCV assessment and Complied High Conservation Value (HCV) being conducted by a consultancy company, Aksenta dated assessment that includes both the 29 March 2014 for the Kalabakan PMU. The exercise has planted area itself and relevant wider taken into consideration all aspect of environmentally landscape-level considerations (such as wildlife corridors). sensitive areas such as ponds, streams and forest reserve boundaries. Major Compliance Conservation areas such as neighbouring forest reserves, swamp lands and river tributaries adjacent to the PMU were indicated. Based on the review and on site visit to the estates, it was confirmed there was no HCV area in these PMU, apart from the identified conservation areas for hilly terrain, steep gorges and buffer zones needed for streams passing within the PMU

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 30 of 70 KKS Kalabakan grouping: ASA-01

estates It was confirmed that Kalabakan Selatan was surrounded by palm oil estates. However at Kalabakan Tengah and Kalabakan Utara, there are some forest reserves located in between and bordering the Kalabakan Tengah and Kalabakan Utara.

5.2.2 Where rare, threatened or Regular patrols within the POM and PMU were being carried endangered (RTE) species, or HCVs, out and findings recorded by the respective Estate executives are present or are affected by plantation to monitor the Conservation / buffer zone areas. or mill operations, appropriate The occasional sightings of some wildlife encountered such measures that are expected to maintain and/or enhance them shall be as wild boars and long tailed macaques were found to have implemented through an action plan. been recorded. Major Compliance There are no recorded sightings of any RTE at the PMU estates. Monitoring and control of any illegal hunting, fishing or collecting activities was also implemented.

Monitoring and control of any illegal hunting, fishing or

collecting activities was also implemented. Some signages that prohibit hunting, fishing and water polluting activities were verified on-site and found to have been satisfactorily maintained. The program to educate the workforce and community NCR: SH-01 about the status of these RTE species has not been (Major) implemented accordingly, although a program has been established. There was no evidence of it being implemented and no appropriate measures were taken in line with company laws and national regulation. In addition, signages informing activities not to be conducted in the forested areas were not made available at areas bordering the forest. There were also no signages placed at other conservation areas identified in the plantation i.e. Hutan Durian at Kalabakan Utara.

Thus NCR: SH-01 (Major) was issued.

5.2.3 There shall be a programme to At Kalabakan Utara estate, though the program to educate Refer NCR regularly educate the workforce about the workforce and community about the status of these RTE above the status of these RTE species, and species was established at the PMU, it has not been appropriate disciplinary measures shall implemented. Refer to NCR issued under C.5.2.2 above. be instigated in accordance with company rules and national law if any individual working for the company is found to capture, harm, collect or kill these species. Minor Compliance 5.2.4 Where an action plan has been Management plans were established and monitoring Complied created there shall be ongoing outcomes were reviewed by the Estate managers. There are monitoring: no HCV or reported RTE at the Kalabakan Utara and • The status of HCV and RTE species Kalabakan Tengah estates which have been verified during that are affected by plantation or mill on-site assessment and found to be satisfactory. operations shall be documented and reported; Ongoing monitoring of the overall management plan on the status of any HCV and / or RTE species at the overall • Outcomes of monitoring shall be fed back into the action plan. Kalabakan estate areas is collated and reviewed by the HQ Sustainability team and estate management in April 2015. Minor Compliance

5.2.5 Where HCV set-asides with It is verified that there has been no instance of HCV set-aside Not

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 31 of 70 KKS Kalabakan grouping: ASA-01 existing rights of local communities that conflicts with the rights of local communities at the 2 applicable have been identified, there shall be sampled estates i.e. Kalabakan Utara and Kalabakan evidence of a negotiated agreement Tengah. Thus negotiated agreement of such nature is not that optimally safeguards both the applicable. HCVs and these rights. Minor Compliance Criterion 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. Indicators Findings and Objective Evidence Compliance 5.3.1 All waste products and sources of Visits made to POM and PMU estates at Kalabakan Utara Complied pollution shall be identified and and Kalabakan Tengah showed that all waste products and documented. sources of pollution were identified and documented. Major Compliance The documentation and identification of all the waste products such as scheduled waste, domestic waste , clinical waste and recyclable waste such as metal, plastic, mill waste and polluting materials e g. EFB, POME, Stack emissions and Boiler ashes were maintained and monitored at the PMU. Segregation of wastes i.e. general wastes and scheduled wastes was verified to be satisfactory. Proper storage areas were identified for the storage of the recyclable wastes at the estates and mill. The mill and estates also have a proper Scheduled Waste Store for storing scheduled waste until time of disposal by DOE authorized waste disposal contractors e.g. Petrojadi Sdn Bhd. Scheduled Waste identified included spent hydraulic oil (SW 305), spent lubricant oil (SW 306), used chemical containers/drums (SW 409), used filters (SW 410), clinical waste (SW 404) and used batteries (SW 102). Appropriate secondary containment for the diesel skid tanks, chemical and scheduled waste storage areas was verified to be maintained. Visits made to POM and PMU estates showed that all waste products and sources of pollution were identified and documented. The documentation and identification of all the waste products such as scheduled waste, domestic waste , clinical waste and recyclable waste such as metal, plastic, mill waste and polluting materials e g. EFB, POME, Stack emissions and Boiler ashes were maintained and monitored at the PMU. Segregation of wastes i.e. scheduled wastes and general wastes were verified to be satisfactory. The mill and estates also have a proper Scheduled Waste Store for storing scheduled waste until time of disposal by DOE authorized waste disposal contractors e.g. Petrojadi Sdn Bhd. Scheduled Waste identified included spent hydraulic oil (SW 305), spent lubricant oil (SW 306), used chemical containers/drums (SW 409), used filters (SW 410), clinical waste (SW 404) and used batteries (SW 102). Appropriate secondary containment for the diesel skid tanks, chemical and scheduled waste storage areas was verified to be maintained. Proper storage areas were available for the storage of the recyclable wastes at the POM and estates. 5.3.2 All chemicals and their containers At the POM, the disposal of used chemicals and containers shall be disposed of responsibly. were done accordingly to their schedule on waste

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 32 of 70 KKS Kalabakan grouping: ASA-01

Major Compliance management as planned. Scheduled waste stores inspected at audited sites and disposal was done by scheduled waste disposal company authorized and licensed by Department of Environment (Jabatan Alam Sekitar) i.e. Petrojadi Sdn Bhd. The last record of disposal done was in May 2015. However at the PMU estates, chemical containers were not disposed in a responsible manner. NCR: SH-02 It was evident that chemical containers at the PMU (Major) estates were not disposed of responsibly. As example, at Kalabakan Utara, there was no proper record being kept on the collection and disposal of empty pesticide containers and empty fertilizer bags. Note: NC # 7 - Minor (2014) was not adequately implemented and a Major NC: SH-02 is currently issued. See section 3.2.

5.3.3 A waste management and The waste management and disposal plan were in place at disposal plan to avoid or reduce both the POM and PMU. It has been documented and pollution shall be documented and implemented as required and is being carried out responsibly. implemented. Recycling of crop residues / biomass i.e. EFB and POME had Minor Compliance been implemented. Management EFB application plans and progress reports were verified to be satisfactory. Recycling bins of three different colour codes for specific recycle waste were available in the POM and estates and were used for solid waste segregation and recycling.

Waste disposal was done an appointed contractor that is

licensed by the Department of Environment.

The solid waste management and disposal plan using landfills was available at the mill and estates. The waste management and disposal plan were in place at both the POM and PMU. It has been documented and implemented as required and is being carried out responsibly. Waste disposal was done an appointed contractor that is licensed by the Department of Environment.

The solid waste management and disposal plan using landfills was available at the mill and estates. At Kalabakan Mill: Appropriate signages should be placed at appropriate OBS: SH-01 strategic sites such as landfill and effluent treatment ponds to enhance safety concerns. Thus OBS: SH-01 was issued. Recycling bins of three different colour codes for specific recycle waste were available in the POM and estates and were used for solid waste segregation and recycling. The designated landfill areas at Kalabakan Tengah and Utara estates were verified to be at least more than 50m away from any streams / water sources, thus minimizing the risk of contamination of contamination of water sources. Criterion 5.4 Efficiency of fossil fuel use and the use of renewable energy is optimised. Indicators Findings and Objective Evidence Compliance 5.4.1 A plan for improving efficiency of The use of energy in palm oil mill and line site was monitored Complied the use of fossil fuels and to optimise monthly to compare the energy usage against the production renewable energy shall be in place and of CPO. Electricity generation was through steam turbine and monitored. boiler where Palm fiber and PK shells were used as

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 33 of 70 KKS Kalabakan grouping: ASA-01

Minor Compliance renewable energy/fuel on a 70:30 ratio basis. Monthly records of energy consumption of non-renewable and renewable fuel per metric tonne of palm product at the POM were available. . The average energy usage for 2015 todate is at 0.32 kWh/mt FFB processed at the POM which showed a slight increase from the previous year. At the estates, diesel consumption per metric ton FFB was also monitored on a monthly basis. It is verified that energy usage are being monitored at the PMU for better control and comparison of trends. The use of energy in palm oil mill and line site was monitored monthly to compare the energy usage against the production of CPO. Electricity generation was through steam turbine and boiler where Palm fiber and PK shells were used as renewable energy/fuel on a 70:30 ratio basis. Monthly records of energy consumption of non-renewable and renewable fuel per metric tonne of palm product at the POM were available. The current average for 2015 is at 0.26 kWh/mt FFB processed which is slight higher to the previous year. At the estates, diesel consumption per metric ton FFB was also monitored on a monthly basis. It is verified that the plans to improve efficiency are made and being monitored. Criterion 5.5 Use of fire for preparing land or replanting is avoided, except in specific situations as identified in the ASEAN guidelines or other regional best practice. Indicators Findings and Objective Evidence Compliance 5.5.1 There shall be no land preparation The Group policy of ‘Zero open burning’ is enforced since Complied by burning, other than in specific July 2011. situations as identified in the ‘Guidelines for the Implementation of the ASEAN Both the POM (Kalabakan) and PMU estates had observed Policy on Zero Burning’ 2003. the policy of ‘Zero open burning’ for any replanting at the Major Compliance estates. Field inspections made at Kalabakan Utara and Kalabakan Tengah estates showed no evidence of open burning.

5.5.2 Where fire has been used for The PMU has adhered to the ‘zero burning ‘policy for Complied preparing land for replanting, there shall replanting at the estates. Replanted areas visited showed no be evidence of prior approval of the evidence of fire being used for land preparation. controlled burning as specified in ‘Guidelines for the Implementation of There was also no evidence of any burning of domestic the ASEAN Policy on Zero Burning’ waste at the housing line sites and at the sanitary landfills of 2003. the estates during on site field assessment. Minor Compliance Criterion 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored.

Indicators Findings and Objective Evidence Compliance 5.6.1 An assessment of all polluting The PMU had reviewed the environmental impact Complied activities shall be conducted, including assessment on potential pollution to water, gaseous gaseous emissions; particulate/soot emissions to air and contamination on land. emissions and effluent (see Criterion 4.4). Monitoring of POM gas emissions is being done online using Major Compliance the Continuous Emissions Monitoring System (CEMS) and emissions were verified to be within the permissible limits of

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 34 of 70 KKS Kalabakan grouping: ASA-01

DOE. POME treatment, monitoring and land application is monitored, maintained and adhered to DOE regulations. Correspondence with DOE/EPD Sabah had indicated that the POM is instructed to lower their BOD limits from the existing 50ppm to 20ppm in the Kalabakan region, by the end of 2014. An extension letter for upgrading of POM effluent treatment to EPD, Sabah dated 24 April 2014 was evidenced. The mill last discharged the effluent on 4 th December 2014. From then till audit date, no effluent was discharged but was diverted and retained in the bio-gas and bio polishing facility. No recording of BOD limit was also taken during this period. Readings will be recorded later when the bio gas and bio- polishing plant functions fully, expected to run sometime in September or October 2015. (See also Criteria 4.4.3). Further development on this will be checked in the next audit. 5.6.2 Significant pollutants and Identification of significant pollutants and greenhouse gas greenhouse gas (GHG) emissions shall (GHG) emissions was implemented e.g. POME, diesel / fuel be identified, and plans to reduce or and fertilizer. Their usage have been recorded and minimise them implemented. documented at the PMU. Major Compliance Action had not been adequately taken on OBS: AL-01 Refer to NC: (2014) regarding GHG emission monitoring. AL-01 Refer to NC: AL-01 issued under Indicator 5.6.3.

5.6.3 A monitoring system shall be in Monitoring and reporting of the significant pollutants to water, place, with regular reporting on gaseous emissions to air and contamination on land had progress for these significant pollutants been implemented. Tools and systems used include the DOE and emissions from estate and mill online CEMS monitoring for air emissions, water quality at operations, using appropriate tools. discharge points as per DID regulations and SW disposal Minor Compliance . were adhering to DOE requirements

Monitoring and reporting of the significant pollutants to water, gaseous emissions to air and contamination on land are in place. Tools and systems used include the DOE/EPD online CEMS monitoring for air emissions, water quality analysis at the discharge points and SW disposal in accordance with Sabah DOE requirements. POME is being treated using a series of 14 ponds including aerobic and anaerobic ponds before discharge.

Water samples were regularly taken every six months and

tested by mill environment officer in charge and analyzed to

ensure compliance to DOE requirements at final discharge

points.

The water samples were sent to Felda Agricultural Services

analytical laboratory for analysis. The discharged water is

100% used for land application into Kalabakan Tengah estate

of the PMU as per approval issued by the Sabah DOE.

Records and regular reporting to DOE were noted to be maintained and verified on-site. The PMU has completed their GHG emissions report (using PalmGHG). However, the evidence of submission NCR: AL-01 for review and acceptance by the RSPO Secretariat is (Minor) still pending. If using tools other than PalmGHG, the PMU is required to submit these tools and their calculations for

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 35 of 70 KKS Kalabakan grouping: ASA-01

endorsement by RSPO prior to the certification assessment. Thus NCR: AL-01 (Minor) was issued.

Principle 6: Responsible consideration of employees, and of individuals and communities affected by growers and mills

Criteria 6.1 Aspects of plantation and mill management that have social impacts, including replanting, are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continual improvement. Indicators Findings and Objective Evidence Compliance 6.1.1 A social impact assessment (SIA) The Social Impact Assessment (SIA) dated 29 Mar 2014 Complied including records of meetings shall be prepared by Aksenta for both Umas and Kalabakan PMU documented. were verified. The SIA covers all potential impact factors Major Compliance including access and use rights, economic livelihood, subsistence activities, etc. Both Kalabakan POM and estates had also conducted an internal assessment through distribution and collection of survey form in April 2015. In addition to the SIA, the estate managements have also submitted monitoring the social welfare status through monthly reports submitted to the regional office. The report included all social of the society aspects such students’ achievement, education and assistance to those with special care, religious and ethical development plan, social delinquency among society members, funding distribution and monitoring of the small enterprises, etc. 6.1.2 There shall be evidence that the The participation of both internal and external stakeholders Complied assessment has been done with the participation of affected parties. (including local from Governmental organizations) during the main Stakeholder Consultation was evident with the list Major Compliance of participants recorded. Minutes of meetings as appended to the SIA Report were maintained as records. List of stakeholders were verified and included Felda settlers, school teachers, auxiliary police, government bodies, neighbouring estates and small holders, management staff and workers (incl. representative of foreign workers i.e. Indonesians), contractors/suppliers and health clinic staff. The social impact assessment was also conducted through the distribution of questionnaire form and weekly house visit by the estate managements. 6.1.3 Plans for avoidance or mitigation Included in social documents in each estate visited are Complied of negative impacts and promotion of plans for avoidance or mitigation of negative impacts and the positive ones, and monitoring of the promotion of the positive ones, e.g. in Kalabakan Utara impacts identified, shall be developed estate, the mitigation plans dated 25 June 2015 was in consultation with the affected parties, documented and timetabled, including prepared by Asminin Rosli (Asst. Manager) and signed by responsibilities for implementation. Husil Samin, Estate Manager. Major Compliance Timetables of implementation and person in-charge are clearly identified in the plan. 6.1.4 The plans shall be reviewed as a The PMU has planned to review the plans above every year Complied minimum once every two years and updated as necessary, in those cases for follow-up and updating to current practices. The review where the review has concluded that is to include the participation of affected parties. The changes should be made to current revision was conducted through survey method which practices. There shall be evidence that questionnaire forms were distributed and analysed. the review includes the participation of In Kalabakan Utara estate, the mitigation plans dated 25 affected parties.

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June 2015 was prepared by Asminin Rosli (Asst. Manager) Minor Compliance and signed by Husil Samin, Estate Manager. 6.1.5 Particular attention shall be Positive impacts such as increased work opportunities, Complied paid to the impacts of smallholder schemes (where the plantation increased income and improved living standards are includes such a scheme). identified. Two OCPs supplying to the PMUs, i.e. Persatuan Peladang Minor Compliance Kawasan [PPK] and Usahawan Borneo, reported an increase in quantity of FFB supplied the POM. Criteria 6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties. Indicators Findings and Objective Evidence Compliance 6.2.1 Consultation and communication Documented policies and procedures are available for Complied procedures shall be documented. internal and external communication and consultation.

Major Compliance Policy on industrial relations is available, i.e, “Polisi Perhubungan Sosial”, for internal communication and consultation. Complaint procedure is also available through complaint and handling methods, i.e. reference document is ML-1A/L2-PR3(0). Estate managers are responsible for communication with the stakeholders. Channels of communications between the management and affected or interested parties include the Joint Consultative Committee [JCC] and workers representatives at the management meetings. Affected parties also have access to workplace inspections, suggestion boxes, housing maintenance request forms and morning roll calls to raise their concerns. Meetings minutes recorded are verified to be available. 6.2.2 A management official Organisation charts in all PMUs visited show that different Complied responsible for these issues shall be nominated. responsible persons are nominated for different sectors of stakeholders. Interviews with mill and estate managers Minor Compliance verified the understanding of their roles and responsibilities. Example of assigned staff attending to social issues are; 1. Hamid Sanum (Asst. Mill Manager) 2. Asminin Rosli (Asst. Manager), Kalabakan Utara 3. Mohd. Firdaus (Asst. Manager), Kalabakan Tengah Verified that reports are prepared and submitted which are signed by the respective managers. 6.2.3 A list of stakeholders, records List of stakeholders are sighted in “P6 Tanggungjawab of all communication, including confirmation of receipt and that Terhadap Pekerja dan Komuniti” file at the POM and in “Impak and Sosial Mitigasi 6.1.1” file in estates. effort are made to ensure understanding by affected parties, ASA-01: and records of actions taken in response to input from At Kalabakan Utara and Tengah estates, updates on the OBS: AL-03 stakeholders, shall be maintained. listing of stakeholders should include the subcontractors and regular suppliers of goods and Minor Compliance miscellaneous services. Maintenance of records of inputs, communications and consultations made should also be properly filed. Thus OBS: AL-03 was issued.

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

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Indicators Findings and Objective Evidence Compliance 6.3.1 The system, open to all affected The PMU has an established and documented system for Complied parties, shall resolve disputes in an effective, timely and appropriate dealing with complaints and grievances and it was well manner, ensuring anonymity of implemented. Reference document Manual Lestari 1A [ML- complainants and whistleblowers, 1A/L2-PR4(0)] sighted and verified. where requested. Respect of anonymity and protection of complainants is provided through “Polisi Pemberian Maklumat”, dated 18 Major Compliance Jan. 2013 signed by Dato’ Sabri Ahmad, Group President. Record are maintained the ‘Complaints and Grievances Book’ in estates audited. Complaints and grievances are mostly on maintenance needed at the housing quarters which were followed-up and recorded. Note: ASA-01 The briefing and training to external stakeholders on channels to submit complaints and grievances was done and verified understood by sample of stakeholders interviewed during group stakeholder consultation. Thus, Major NC # 8 (2014) was adequately implemented and closed. See section 3.2

6.3.2 Documentation of both the Complaints and grievances have been handled by process by which a dispute was respective responsible persons. Thus the outcomes from resolved and the outcome shall be the actions taken are recorded but done in a haphazard available. manner e.g. meeting minutes, payment chits to contractors Refer to OBS: AL-03 Minor Compliance and scribbled notes attached to various registers. Thus improvement should be made in the recording of issued. such issues. Refer to OBS: AL-03 issued.

Criteria 6.4 Any negotiations concerning compensation for loss of legal, customary or user rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions. Indicators Findings and Objective Evidence Compliance 6.4.1 A procedure for identifying legal, There are borders adjacent to villages and native land in the Complied customary or user rights, and a Kalabakan PMU which manages some parts of the Murut procedure for identifying people entitled Community (NCR lands) under the state government and to compensation, shall be in place. Felda agreement dated 10 Feb. 1983.

Major Compliance Based on the said agreement the NCR land will be under Felda management for 99 years with annual dividend paid to the Murut community affected. This pertains to Murut community lands which are currently managed under Kalabakan Tengah estate. The payment of annual dividend was verified to have adequately implemented. There has been no case requiring any further negotiation or compensation.

6.4.2 A procedure for calculating and There have been no changes in this status as at the period Complied distributing fair compensation (monetary or otherwise) shall be of verification on site, therefore, no cases requiring any established and implemented, negotiation or compensation pertaining to these criteria. monitored and evaluated in a participatory way, and corrective actions taken as a result of this evaluation. This procedure shall take into account: gender differences in the power to claim rights, ownership and access to land; differences of migrants and long-established communities; and differences in ethnic groups’ proof of

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Minor Compliance 6.4.3 The process and outcome of any No cases requiring any negotiation or compensation Complied negotiated agreements and pertaining to these criteria. compensation claims shall be documented, with evidence of the As above. participation of affected parties, and made publicly available.

Major Compliance Criteria 6.5 Pay and conditions for employees and for contract workers always meet at least legal or industry minimum standards and are sufficient to provide decent living wages. Indicators Findings and Objective Evidence Compliance 6.5.1 Documentation of pay and Documentation and conditions of pay are available for both Complied conditions shall be available. local and foreign workers. Employment agreement for

Major Compliance Indonesian foreign workers in “Surat Perjanjian Pekerjaan diantara Felda Global Ventures Plantations (M) Sdn. Bhd. (974143 – H) dengan Pekerja Asing Indonesia”.stated all statutory fringe benefits and eligible incentives, e.g. working hours, overtime, leave and medical benefits, maternity leave for women, insurance coverage, deductions, resignation notice period, company rules. All monthly payments are made latest by 7 th of each month and consistent with Minimum Wage Order 2012 for all employees in the PMU. Holidays entitlements as required by the laws are satisfactorily fulfilled, e.g. annual leaves, public holidays, and maternity leave. The payment slips sighted are easy to understand and this fact was further verified with sample of foreign workers (Indonesian) interviewed during the period of assessment. Payments for unused annual leaves in December 2014 were made and were verified. 6.5.2 Labour laws, union agreements Documented employment contract verified for foreign Complied or direct contracts of employment workers had covered all issue such as working hours, detailing payments and conditions of deductions, overtime, sickness, holiday entitlement, employment (e.g. working hours, maternity leave, and reasons for dismissal, period of notice deductions, overtime, sickness, holiday entitlement, maternity leave, reasons made available in Bahasa Malaysia which is understood by for dismissal, period of notice, etc.) the workers (local and Indonesian foreign workers). This shall be available in the languages contract is known as “Surat Perjanjian Pekerjaan diantara understood by the workers or explained Felda Global Ventures Plantations (M) Sdn. Bhd. (974143 – carefully to them by a management H) dengan Pekerja Asing Indonesia. official. Similar terms and conditions are stated in contract document for local workers, i.e. “Pengakuan Penerimaan Minor Compliance Syarat-syarat Perkhidmatan Petugas Syarikat Kumpulan Felda & Kod Etiksa dan Tatalaku Petugas Syarikat Kumpulan Felda yang berkuatkuasa Mulai 1 Januari 2010” The PMU has monitored the achievement of minimum wages of RM900 which was applied to all workers including workers hired by contractors on project basis or on piece rated basis. 6.5.3 Growers and millers shall The estate management was noted to have complied with Complied provide adequate housing, water supplies, medical, educational and Workers’ Minimum Standard of Housing and Amenities Act 1990 (Act 446). welfare amenities to national standards or above, in accordance Site visits to workers’ homes and interviews with their with Workers’ Minimum Standard of dependents revealed their general satisfaction with their Housing and Amenities Act 1990

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(Act 446) or above, where no such housing conditions and amenities. public facilities are available or accessible (not applicable to Housing, electricity and water supply smallholders). Workers are given a small patch of land to grow vegetables/fruit trees and keep poultry around their houses Minor Compliance in order to reduce the cost of living. The workers staying in the estate are provided with free electricity and treated pond water 24 hours daily. There are still wooden quarters being used however the PMU is in the process of replacing them with brick terrace houses.

Schools

The foreign workers’ children had received free education in

a NGO-managed school, i.e. Yayasan Pelita located in Felda Kalabakan Tengah. Maintenance of the school building, furniture, electric and water supplied are is under the purview of the estate management. Furthermore, foreign teachers (Indonesians) are also being paid by the estate management. There are government managed primary, secondary, kindergarten and religious schools in the vicinity of the PMUs for local workers children. School children of local and foreign workers are ferried to and from the school on the estates own school buses. Sundry shops Sundry shops available outside the PMU but still within nearby accessible to the workers. From interviews with the workers in PMU it was found that most household sundries, including frozen foodstuffs were available on sale. Fresh food, such as fish, chicken, vegetable and meat are also brought in by fresh food suppliers into the estates in food trucks at least twice a week. Crèche ( Rumah Asuhan Kanak-kanak) There is no crèche within PMU. Children are either stay at home under the care of other relatives or sent to the kindergarten. Medical clinics Felda Kalabakan PMU panel clinic is located in Kalabakan village nearby and easily accessible. All medical related issues minor or major will be referred to the panel clinic. All workers (both local and foreign), with or without family, are entitled for medical allowance of RM200/year. Fogging activities for controlling of mosquitoes by the local Dept. of Health are frequently done at the workers quarters. Other amenities available are playing field and courts, community hall, playing grounds as well as mosque. 6.5.4 Growers and millers shall make There is proper road accessibility to sundry shops at the Complied demonstrable efforts to monitor and where able, improve workers’ access to Kalabakan PMU. adequate, sufficient and affordable The PMU also allows access to the food trucks supplying food. fresh food to the workers quarters at least twice a week.

Minor Compliance Criteria 6.6 The employer respects the rights of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel. Indicators Findings and Objective Evidence Compliance

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6.6.1 A published statement in local The published statements of policy “Kebebasan Complied languages recognising freedom of association shall be available. Menganggotai Kesatuan /Khidmat Sukarela”, dated 28 Jun. 2011 signed by Dato’ Dzulkifli Abd. Wahab, Pengarah Major Compliance Besar Felda, recognises the employee’s freedom of association, was found to be available and widely displayed in all notice boards of the PMUs. This policy is available in Bahasa Malaysia which can be understood by majority of the workers. 6.6.2 Minutes of meetings with main Under the policy mentioned above two workers unions are Complied trade unions or workers representatives shall be formed, i.e. “Kesatuan Pekerja-Pekerja FPISB (Sabah)” for documented. local mill workers and “Kesatuan Pekerja-Pekerja Felda Global Plantation” for the local plantation workers. No Minor Compliance association available for foreign workers as it is prohibited by the law. Minutes of the FPISB last meeting was 12 Apr 2015 and meeting for the Kesatuan Pekerja-Pekerja FPISB (Sabah) was on 24 Jan 2015. Meeting minutes were supported by attendance list and issues raised were verified to have been appropriately followed up. Criteria 6.7 Children are not employed or exploited. Indicators Findings and Objective Evidence Compliance 6.7.1 There shall be documentary The PMU has a policy of not employing child labour i.e. Complied evidence that minimum age requirements are met. persons below 17 years old in accordance with Employment Act 265 as evidenced in “Polisi Pekerja Kanak-Kanak”, Major Compliance dated 20 Dec. 2010 signed by Dato’ Dzulkifli Abd. Wahab, Pengarah Besar Felda This policy is displayed at strategic public places. Employees and workers profile were sighted during the audit. No underage workers or children were noted to be working at the estates. This was verified through interviews with staff and workers during office and field visits at the PMU mill and estates. Criteria 6.8 Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited. Indicators Findings and Objective Evidence Compliance 6.8.1 A publicly available equal The PMU has a publicly displayed documented policy on Complied opportunities policy including identification of relevant/affected equal opportunities, i.e. “Polisi Kesetaraan Peluang”, dated groups in the local environment shall 20 Dis. 2010, signed by Dato’ Dzulkifli Abd. Wahab, be documented. Pengarah Besar Felda. The policy stressed on non- discrimination based on race, caste, nationality, religion, Major Compliance gender, sexual orientation, disability/handicap, and union/political affiliations. However, positive discrimination for the benefit of certain society groups may be allowed after consultation. The POM does not employ any foreign workers. Only foreign Indonesian workers were hired at the estates. 6.8.2 Evidence shall be provided that There is a documented policy on foreign workers “Polisi Complied employees and groups including local communities, women, and Pengambilan Pekerja Asing” dated 28 June 2011, signed by foreign workers have not been Dato’ Dzulkifli Abd. Wahab, Pengarah Besar Felda. It is discriminated against. publicly displayed along with other policies at strategic places. Major Compliance Compliance to relevant regulatory requirements such as Sabah Labour Ordinance 1950, Minimum Wages Order

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2012, Immigration Act 1959/63 and Workmen’s Compensation Act 1952 are observed when recruiting workers from Indonesia. The employment of foreign workers was implemented without affecting the opportunities for local communities. Local workers are covered under SOCSO scheme and the foreign workers are covered under Foreign Workers Compensation scheme (FWCS) underwritten by Etiqa Takaful with latest coverage valid until 31 Jan. 2016. There were cases of accidents approved by the local Labour Department for compensation. Compensations were paid to the respective workers and all necessary documents were sighted and verified. Interviews with foreign workers’ dependents revealed their satisfaction with the PMU for job opportunities and they enjoy all common welfare amenities like free housing, free water and electricity supplies, medical care, and transportation of school children. They are aware of the “aduan” mechanism by which they can make any complain or request to the management. 6.8.3 It shall be demonstrated that The PMU management has taken into consideration the Complied recruitment selection, hiring and promotion where relevant are based on needs for technical qualifications/experience and related skills, capabilities, qualities, and skills in recruitment selection, hiring and promotion medical fitness necessary for the jobs exercises. available. It was verified that the promotions to higher positions at the mill and estates were based on evaluations which considered Minor Compliance the skill, capabilities, qualities and medical fitness of the employees. Criteria 6.9 There is no harassment or abuse in the work place, and reproductive rights are protected. Indicators Findings and Objective Evidence Compliance 6.9.1 A policy to prevent sexual and all A documented policy to prevent sexual harassment and Complied other forms of harassment and violence shall be implemented and violence is available and publicly displayed at the mill and communicated to all levels of the estates i.e. “Polisi Gangguan Seksual Dan Keganasan”, workforce. dated 28 Jun. 2011 signed by Dato’ Dzulkifli Abd. Wahab, Pengarah Besar Felda. Major Compliance Gender Committees i.e. Kelab Keluarga Dayabudi [KKD] were formed and led /represented by adequately senior staff with proper appointment by the respective managers’ e.g. Pn. Noriah Sulaiman (Supervisor, Kalabakan Tengah) and Pn. Azurah Balin (Supevisor, Kalabakan Utara). Basic understanding of the forms of harassment was verified based on interview held with the staff and field workers. Records of Gender meetings were available and noted to have adequately covered all levels of workers. 6.9.2 A policy to protect the The commitment to protect the reproductive rights and rights Complied reproductive rights of all, especially of women, shall be implemented and of all workers was also stated in the policy to prevent sexual communicated to all levels of the harassment and violence “Polisi Gangguan Seksual Dan workforce. Keganasan”, dated 28 Jun. 2011 signed by Dato’ Dzulkifli Abd. Wahab, Pengarah Besar Felda. Major Compliance Local female staff is fully aware that they are entitled for two months paid maternity leave. Sample of staff on paid maternity leave (two-month pay) was verified e.g. Pn Kalsom Noria (Kalabakan Utara) who was on maternity from Mar - Apr 2015. Interviews made with foreign workers (Indonesian) at

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Kalabakan Utara, confirmed that the female foreign workers would cease work during pregnancy and normally return to their home country. 6.9.3 A specific grievance mechanism Complaint and grievance procedures “Prosedur Menangani Complied which respects anonymity and protects complainants where requested shall be Aduan dan Rungutan dan Polisi Pemberian Maklumat / established, implemented, and whistle-blowing” are available to manage grievances and communicated to all levels of the complaints from internal and external stakeholders. workforce. Onsite audits verified that the complaint and grievance procedure and whistle blowing procedure are displayed Minor Compliance outside staff offices, muster call stations and at the public areas. Interviews with Management personnel confirmed that there has been no report of sexual harassment in the PMU so far. Criteria 6.10 Growers and millers deal fairly and transparently with smallholders and other local businesses. Indicators Findings and Objective Evidence Compliance 6.10.1 Current and past prices paid for On-site audit verified that the current and past prices paid for Complied Fresh Fruit Bunches (FFB) shall be FFB pricing were displayed at the Mill and Estate offices. publicly available. FFB price paid per delivery is also stated in each truck Minor Compliance delivery slip issued by the mill. 6.10.2 Evidence shall be available Pricing mechanism for FFB is fair and transparent. Price of Complied that growers/millers have explained FFB pricing, and pricing FFB was set based on MPOB approved price. FFB was also mechanisms for FFB and graded by licensed graders based on MPOB specification. inputs/services shall be documented (where these are under the control of the mill or plantation).

Major Compliance 6.10.3 Evidence shall be available that Stakeholder consultation conducted during the assessment Complied all parties understand the contractual agreements they enter into, and that involving suppliers, contractors, local and foreign workers contracts are fair, legal and confirmed that they understand the contractual agreements transparent. (such as terms and payment) they enter into with the PMU. They also consider the business transactions as fair and Minor Compliance transparent. 6.10.4 Agreed payments shall be made Agreed payments are made promptly within the 30-day of the Complied in a timely manner. following month. Through interviews made, there is no Minor Compliance evidence to suggest of any unfair business practices with the local businesses. Criteria 6.11 Growers and millers contribute to local sustainable development where appropriate. Indicators Findings and Objective Evidence Compliance 6.11.1 Contributions to local The PMU’s contribution towards local communities had been Complied development that are based on the results of consultation with local evidenced in several social areas and verified during on site communities shall be demonstrated. visit as follows: • Providing maintenance of public amenities at Murut Minor Compliance community village, e.g. bridges, road, water works. • Providing free water, electricity, transport for school children as well as paying the wages of teachers at Yayasan Peduli. • Free transportation to and from the schools for local and foreign workers. • Maintenance of mosques and surau. • Continuous plan to replace old wooden quarters with new brick quarters for all workers.

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6.11.2 Where there are scheme It was verified that there were no smallholder scheme Not smallholders, there shall be evidence that efforts and/or resources have been programs at the Felda Kalabakan PMU estates. applicable. allocated to improve smallholder productivity.

Minor Compliance Criteria 6.12 No forms of forced or trafficked labour are used. Indicators Findings and Objective Evidence Compliance 6.12.1 There shall be evidence that no In general Felda is adopting “Polisi Pengambilan Pekerja Complied forms of forced or trafficked labour are used. Asing” dated 1 June 2014 signed by Mohammed Emir Mavani Abdullah, President and CEO FGV with regards to Major Compliance the issue of trafficked labour. The policy clearly stated all foreign workers hired by Felda are acquired through legal channels. It is verified from the employment records such as work permits in the estate offices, that all foreign workers were recruited through legal means and according to the regulatory requirements. Unit Tenaga Kerja, FELDA Global Ventures [FGV] is the main unit organising recruitment of new foreign workers in collaboration with private recruitment agencies in the country of origin. PMUs responsibilities are only to allocate each foreign worker with suitable accommodation and offer them enough jobs in a month. It was observed that upon arrival at the estate all foreign workers had already filled a form stating their consent for the management office to keep the passport on their behalf. The main reason for this practice is for safekeeping and smooth work permit renewal process each year. Copy of the passport with official stamp from the office will be provided to the foreign workers should they require it. The original passport will be given back when the foreign worker intends to apply for long leave or when wanting to go back to their home country. Interviews with sampled foreign workers and their dependents in the housing areas confirmed that there were no forced or trafficked labours. 6.12.2 Where applicable, it shall be There was no evidence of contract substitution and this was Complied demonstrated that no contract substitution has occurred. confirmed from interviews with workers and relevant stakeholders. Minor Compliance 6.12.3 Where temporary or foreign The special policy on recruitment of foreign workers “Polisi Complied workers are employed, a special labour policy and procedures shall be Pengambilan Pekerja Asing” and equal opportunities “Polisi established and implemented. Kesetaraan Peluang” are established and the implementations are verified to be satisfactory. Review on Major Compliance employment contracts of foreign workers also confirmed that the policies, including minimum wages have also been duly implemented. Criteria 6.13 Growers and millers respect human rights. Indicators Findings and Objective Evidence Compliance 6.13.1 A policy to respect human rights Felda in general is adopting “Polisi Hak Asasi Manusia”, Complied shall be documented and communicated to all levels of the dated 1 June 2014 signed by Datuk Faizoull Ahmad, workforce and operations (see Criteria Pengarah Besar Felda. This policy similar with all other 1.2 and 2.1). policies adopted by Felda are communicated to all stakeholder by displaying the policies in public places, Major Compliance

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briefing during morning roll calls, etc. 6.13.2 As long as children of plantation The PMU is in collaboration the Yayasan Peduli Pendidikan Complied workers of Sabah and Sarawak are not secured a right to go to government Anak Indonesia (YPPAI) which is an NGO catering to the school, the plantation companies education needs of the children of school going age for the should engage in a process to secure Indonesian foreign workers both primary and secondary. the children of the plantation workers It was verified that transport has been provided free for access to education as a moral children of the workers and the PMU has maintained obligation. contribution to the monthly operation of both the primary and

Minor Compliance secondary level of these schools.

Principle 7: Responsible development of new plantings KKS Kalabakan PMU grouping has a procedure for this development but has not carried any new plantings after November 2005. Therefore Principle 7 is not applicable during this assessment.

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

Criterion 8.1 Growers and millers regularly monitor and review their activities, and develop and implement action plans that allow demonstrable continual improvement in key operations. Indicators Findings and Objective Evidence Compliance 8.1.1 The action plan for continual Action plans for the continual improvement as documented Complied. improvement shall be implemented, and reviewed by the POM and estates for year 2015 based on a consideration of the main includes: social and environmental impacts and opportunities of the grower/mill, and POM shall include a range of Indicators • To convert oil palm waste into compost and the covered by these Principles and compost to be used as fertiliser by the Group Estates. Criteria. • To increase budget for road maintenance leading to mill As a minimum, these shall include, but are not necessarily be limited to: Estates:

• Increase planting of beneficial plants ( Turnera subulata, • Reduction in use of pesticides Cassia cobanensis and Antigonon leptopus ); (Criterion 4.6); • Increase use of CPA pump/equipment to reduce the use of water • Environmental impacts (Criteria 4.3, 5.1 and 5.2); • Increase the use of organic fertilisers. • Increase the area of sub-soil fertiliser application. • Waste reduction (Criterion 5.3); Environmental: • Pollution and greenhouse gas (GHG) • emissions (Criteria 5.6 and 7.8); To increase awareness and implementation of the 3R program Reuse, Reduce & Recycle for fertilizer bags

and chemical containers. • Social impacts (Criterion 6.1);

Social: • Encourage optimising the yield of the supply base. • Progressive replacement of the old wooden quarters with new brick quarters for all workers.

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Major Compliance • Providing maintenance of public amenities for the local community and villages e.g. bridges, road, water works. • Providing free water, electricity and transport for school children for local and foreign workers. • Maintenance of mosques and surau.

3.1.1 Supply Chain Certification Standards Findings - on CPO Mill

The Supply Chain model applied at KKS Kalabakan POM during this assessment is Module E – CPO Mills: Mass Balance (MB).

Details of findings are as follows:

E.1 Definition Indicators Findings and Objective Evidence Compliance E.1.1 Complied Certification for CPO mills is The POM processed FFB from its own supply base and necessary to verify the volumes of Outside Crop Producers (see Section 1.3 ). The CPO Mill is certified and uncertified FFB entering therefore applying the Mass Balance (MB) module. the mill and volume sales of RSPO certified producers. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. In that scenario, the mill can claim only the volume of oil palm products produced from processing of the certified FFB as MB. E.2 Explanation Indicators Findings and Objective Evidence Compliance E.2.1 Complied The estimated tonnage of CPO and The estimated tonnage of CPO and PK products that could PK products that could potentially be potentially be produced by the POM is recorded in this produced by the certified mill must Assessment Report. This figure represents the total volume of be recorded by the CB in the public certified palm oil product (CPO and PK) that the certified mill is summary of the P&C certification allowed to deliver in a year. The actual tonnage produced has report. been recorded in each annual surveillance report (see Section This figure represents the total 1.8.2 Table 6 and Section 1.8.3 Table 7 ). volume of certified palm oil product (CPO and PK) that the certified mill is allowed to deliver in a year. The actual tonnage produced should then be recorded in each subsequent annual surveillance report. E.2.2 The POM meets all registration and reporting requirements for Complied The mill must also meet all the appropriate supply chain through the RSPO Supply Chain registration and reporting managing organization (RSPO IT platform or Book and Claim). requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim).

E.3 Documented procedures E.3.1 A documented Supply Chain Procedure Doc No. FGVPM- Complied The site shall have written RSPO SCCS Issue 2.0 Rev 1.0 (Effective 21 Mar 2015) SOP for Mill RSPO Supply Chain Certification System has been

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 46 of 70 KKS Kalabakan grouping: ASA-01 procedures and/or work instructions established and implemented. to ensure the implementation of all The procedure covered the implementation of all elements of the elements specified in these MB Module that include Organization Chart, Management requirements. This shall include at Functions & Job Descriptions, Claims, FFB Delivery Plantation minimum the following: to Mill, CPO/PK Delivery Mill to customer, Record Keeping, Training. a) Complete and up to date The documented procedure and its implementation confirmed Complied procedures covering the to have complied with all the specified requirements of Mass implementation of all the elements in Balance (MB) Module E. these requirements b) The name of the person having POM’s Mill Manager, Mr. Mohd Nazri has been appointed as Complied overall responsibility for and the PIC for the overall responsibility and authority for authority over the implementation of implementation and compliance with the documented these requirements and compliance procedure. He and other relevant staff under his charge with all applicable requirements. demonstrated competence, skill and knowledge of the RSPO This person shall be able to Supply Chain Certification Standard Module E requirements demonstrate awareness of the site’s and its implementation. procedures for the implementation of this standard. Interviews of the relevant staff confirmed their knowledge of the RSPO Supply Chain Certification requirements for the

respective areas of operations. The Palm Oil Mill Organization Chart and job responsibilities of employees (Mill Manager, Assistant Managers, Engineers, Assistant Engineers, Technicians, Security Officer, Weighbridge Operator, Laboratory Chemist and clerks) have been suitably defined in the SOP. E.3.2 The SOP covers the receiving of FFB supply from the PMU Complied The site shall have documented estates, other FGVPM/Felda PMUs and also Outside Crop procedures for receiving and Producers. All supplies of FFB were subjected to verification of processing certified and non-certified documents (delivery notes) to determine the origin, quantity FFBs. and quality of the FFB. The Weighbridge Ticket for FFB indicated the date, vehicle number, estate & field number, harvesting date, security seal number and weight. All Storage tanks at the POM are designated as Mass Balance CPO and PK. Monthly FFB and CPO/PK Report and YTD Report for the year 2014 and Jan–Jul 2015 were verified to have complied with requirements of the MB Module whereby the Palm Oil Mill received and processed FFB from its own estates and Outside Crop Producers.

E.4 Purchasing and goods in Indicators Findings and Objective Evidence Compliance E.4.1 The Mill verifies and records tonnages and supply source of Complied The facility shall verify and document FFB received at the weighbridge in the delivery notes and the tonnages and sources of certified weighbridge tickets and all FFB data are entered by the and non-certified FFBs received. weighing clerk into the Felda computer system or reporting spreadsheet every day. Daily and monthly reports are submitted to the Sabah Zone Office and Kuala Lumpur Head Office through the Mill Performance Report (MPR) system. Production Report for year 2014 and Jan–Jul 2015 verified to be Mass Balance palm products. Satisfactory performance of deliveries of FFB made by transport contractor, Felda Transport Services. Noted that there are FFB from Outside Crop Producers received and processed by the POM, which are considered as non-certified FFB using the Mass Balance Module.

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E.4.2 The documented Supply Chain SOP has specified that the Complied The facility shall inform the CB responsible POM personnel shall check production quantity immediately if there is a projected against the certified amount and notify RSPO, the CB and overproduction of certified tonnage. Sustainability Department of any projected overproduction of certified tonnage. So far, there is no projected overproduction. E.5 Record keeping Indicators Findings and Objective Evidence Compliance E.5.1 As per the SOP, the records are archived and to be stored for a Complied a) The site shall record and balance minimum of 10 years. all receipts of RSPO certified FFB Traceability was verified for the production reports for year and deliveries of RSPO certified 2014 and Jan-Jul 2015 from the related records (FFB Delivery CPO and PK on a three-monthly Note, Weigh Ticket, FFB & Truck Daily Summary, Production basis. Report, CPO & PK Storage Report, and CPO & PK Delivery b) All volumes of palm oil and palm Orders. kernel oil that are delivered are Transaction documents and bookkeeping of CPO and PK are deducted from the material done daily and monthly summary report of FFB receipt, FFB accounting system according to conversion ratios stated by RSPO. processed, CPO production, PK production and balance stocks submitted to the Sabah Zone Office and Kuala Lumpur Head c) The site can only deliver Mass Office. Balance sales from a positive stock. Positive stock can include product The two weighbridges at the Mill are duly calibrated and ordered for delivery within three calibration certificates found to be in order. months. However, a site is allowed to sell short.(ie product can be sold There is no PKO and Palm Kernel Mill at the said POM facility. before it is in stock). PK sold and delivered to Kilang Isi Sawit Sahabat at Wilayah Sahabat. Deduction and conversion ratios for the volumes of CPO and PK delivered from the Palm Oil Mill have been appropriately done and recorded. All deliveries of the MB sales are from positive stock. The POM had maintained a monthly summary of all receipts of FFB, production tonnage and dispatch of CPO and PK. This inventory is balanced every 3 months. E.5.2 Not In cases where a mill outsources No outsourcing of activities. Applicable activities to an independent (not owned by the same organization) palm kernel crush, the crush still falls under the responsibility of the mill and does not need to be separately certified. The mill has to ensure that the crush is covered through a signed and enforceable agreement.

3.1.2 Status on Supply Chain on POM: Based on the documents and records presented during the on-site verifications made, it is concluded that the Felda KKS Kalabakan POM has been able to comply with the requirements of the RSPO SCCS under the ‘MB’ module and is thus eligible for ‘MB’ trading for its palm products for year 2015/2016.

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 48 of 70 KKS Kalabakan grouping: ASA-01

3.1.3 Monitoring of CSPO and CSPK traded:

The POM has monitored the trading of the RSPO CSPO and CSPK via RSPO eTrace. The records maintained at the POM relied on internal communications and instructions received from the FGVPM HQ, KL (Logistics Dept) on the deliveries of the CSPO and CSPK. The tonnages of certified products traded as verified during current assessment are as follows:

CSPO - Actual CSPK - Actual CSPO - Actual CSPK - Actual Jan-Dec 2014 Jan-Dec 2014 Jan 2015 till current Jan 2015 till current (MT) (MT) (MT) (MT) RSPO MB 3,282.49 609.41 14,250.41 2,528.86

Book & Claim 0 0 0 0 (GreenPalm) ISCC 0 0 0 0

Total Traded 3,282.49 609.41 14,250.41 2,528.86

Actual Produced 23,047 4,288 14,250.41 2,528.86

Notes: • CPO is delivered out as either as CSPO or non-CSPO according to contract issued from HQ. • PK is delivered out as either as CSPK or non-CSPK according to contract issued from HQ. • Trading under Book & Claim (GreenPalm) is under a single FGVPM account. • There is no trade under ISCC as the PMU is not certified for ISCC.

Based on records maintained at the POM, it was verified that the total tonnage of the certified products traded has not exceeded the annual certified quantity.

3.2 Status of Identified Noncompliance and Corrective Actions, Observations and Positive Elements. The status of the Noncompliances (NCR) and Observations (OBS) identified against the MYNI Compliance Indicators is as per the details below: Assessment Type Year Noncompliance (NCR) Observations (OBS) Follow up status

Initial / Main 2014 8 (2-Major & 6-Minor) 3 Actions taken on the NCRs Assessment and OBS verified to be adequate during ASA-01 except for C5.3.2. Minor NC was upgraded to Major in ASA-01. Refer to NC: SH-02 (Major)

Annual Surveillance 2015 3 (2-Major & 1-Minor) 2 Next surveillance. Assessment (ASA-01)

Year 2014: Main Assessment (8 NCRs)

NCR #1 MYNI Details of NCR Indicator 1 of 8 - 4.1.3 Date issued: 12 June 2014 Minor Nonconformance: In Palm Oil Mill, some of the readings on POME flow meter records were erroneously written. Thus the records are not properly and accurately maintained.

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 49 of 70 KKS Kalabakan grouping: ASA-01

Root Cause and Corrective Action: Mill personnel taking readings was not properly trained. Briefing was done for Mill personnel how to perform and record the readings of the POME flow meter and checking of monthly data.

Verification for closure: Actions taken and evidences including records and photographs submitted were verified and found to have satisfactorily addressed the nonconformance. NC status verified by auditor: Closed by CFK Date closed: 11 July 2014 Verification (for effectiveness): Implementation of corrective action taken was verified to be adequate during surveillance assessment (ASA-01). NC status verified by auditor: SH Date verified: 12 Aug 2015

NCR #2 MYNI Details of NCR Indicator 2 of 8 - 4.3.2 Date issued: 12 June 2014 Minor Nonconformance: At the PMU estates sample audited and inspected i.e. Kalabakan Tengah and Selatan estates, the palms were planted on the slope >6° without having planting terraces. For instance at Kalabakan Tengah Estate, Field PM 10G Block 17. This is contrary to the Company’s policy.

Root Cause and Corrective Action: 1) Type of soil there is ‘Musang Coral’ and thus not suitable for terracing. 2) High rainfall experienced led to more frequent erosion. At affected areas, ‘platforms’ will be constructed and more frequent monitoring done.

Verification for closure: Actions taken and evidences including records and photographs submitted were verified and found to have satisfactorily addressed the nonconformance. NC status verified by auditor: Closed by CFK Date closed: 11 July 2014 Verification (for effectiveness): Implementation of corrective action taken was verified to be adequate during surveillance assessment (ASA-01). NC status verified by auditor: SH Date verified: 12 Aug 2015

NCR # MYNI Details of NCR Indicator 3 of 8 - 4.3.3 Date issued: 12 June 2014 Minor Nonconformance: On Kalabakan Tengah Estate, in Field PM 11H Block 12, the road had been partially eroded due to rain, there was no signage to give warning to the passerby on the potential hazard of falling into the ravine.

Root Cause and Corrective Action: Estate Manager had overlooked the safety issue at that area. New warning signage will be made and placed at the strategic position to warn users of the potentially hazardous area on the road.

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 50 of 70 KKS Kalabakan grouping: ASA-01

Verification for closure: Off-site verification was conducted. Actions taken and evidences including records and photographs submitted were verified and found to have satisfactorily addressed the nonconformance. NC status verified by auditor: Closed by CFK Date closed: 11 July 2014 Verification (for effectiveness): Implementation of corrective action taken was verified to be adequate during surveillance assessment (ASA-01). NC status verified by auditor: SH Date verified: 12 Aug 2015

NCR MYNI Details of NCR Indicator 4 of 8 - 4.4.2 Date issued: 12 June 2014 Major Nonconformance: At the PMU estates sample audited and inspected i.e. Kalabakan Tengah and Selatan estates, the buffer zone signages and markings were not adequately maintained.

For example at Kalabakan Tengah Estate:

1. In Field PM 09F Block 5, there was no marking of buffer zone on both sides of the stream, the palms had been planted too close to the stream, and there was sign of chemical spraying on grasses within the palm circles next to the river. 2. In Field PR 13P Blocks 8 & 9 new replants, there was no marking of buffer zone on both sides of the river, and the palms had been planted too close to the river.

These are contrary to the Company’s policy.

Root Cause and Corrective Action: There was limited buffer zone signage due to budget constraints. Signages for the ‘Buffer zone’ and ‘No Spraying of Chemicals’ will be prepared to ensure no chemical applications at the ‘Buffer zone’ areas. Communication notices, briefing and warning will be given to the workers and contractors. Photographs for the completed signages and documentation will be submitted.

Verification for closure: On site verification was followed up and conducted on 4 August 2014 by HQ-PSQM. Buffer zones and signages were confirmed to have been erected and records of briefings done were available and photographs were taken on site and submitted to CB auditor. The evidences submitted were reviewed and accepted for the closure of NC. NC status verified by auditor: Closed by CFK Date closed: 11 July 2014 Verification (for effectiveness): Implementation of corrective action taken was verified to be adequate during surveillance assessment (ASA-01). NC status verified by auditor: SH Date verified: 12 Aug 2015

NCR MYNI Details of NCR Indicator 5 of 8 - 2.1.4 Date issued: 12 June 2014

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Minor Nonconformance: A system for tracking changes in the law established and documented at the POM and estates. However, at the estates of Ladang Tengah and Selatan, the tracking and updating did not sufficiently include other relevant legal requirements for Sabah state, e.g. requirement for EIA / PMM during replanting and approval by JPAS.

Root Cause and Corrective Action: The updating had been overlooked by the estate managers. Tracking of legal requirements is being done and PMU has written to JPAS for latest approval. Records will be updated once received approval from JPAS.

Verification for closure: Off-site verification was conducted. Actions taken and evidences including records and photographs submitted were verified and found to have satisfactorily addressed the nonconformance. NC status verified by auditor: Closed by AL Date closed: 11 July 2014 Verification (for effectiveness): Implementation of corrective action taken was verified to be adequate during surveillance assessment (ASA-01). NC status verified by auditor: AL Date verified: 12 Aug 2015

NCR MYNI Details of NCR Indicator 6 of 8 - 5.1.2 Date issued: 12 June 2014 Minor Nonconformance: The Management plan for mitigation of environmental impacts, timeframe for action and responsible persons were not adequately followed up by the Estate managers at the PMU. For instance at Ladang Tengah and Ladang Selatan the management of the landfill areas were not adequately developed.

EIA /PMM (Pelan Pengurusan Mitigasi) documentation review by Environment Protection Department i.e. Jabatan Perlindungan Alam Sekitar (JPAS) not available for Kalabakan PMU, and thus plans and recommendations on mitigating impacts which on replanting activities were also not available.

Root Cause and Corrective Action: The EIA / PMM (Pelan Pengurusan Mitigasi) were not properly followed up by the Estate Managers. All Management plan items indicated will be immediately followed up, actions taken, reviewed and supported with photographic evidences.

Verification for closure: Off-site verification was conducted. Actions taken and evidences including records and photographs submitted were verified and found to have satisfactorily addressed the nonconformance. NC status verified by auditor: Closed by AL Date closed: 11 July 2014 Verification (for effectiveness): Implementation of corrective action taken was verified to be adequate during surveillance assessment (ASA-01). NC status verified by auditor: SH Date verified: 12 Aug 2015

NCR MYNI Details of NCR Indicator

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 52 of 70 KKS Kalabakan grouping: ASA-01

7 of 8 - 5.3.2 Date issued: 12 June 2014 Major Nonconformance: Chemical containers were not disposed in a responsible manner at the PMU estates. For instance at Ladang Tengah and Ladang Selatan, the disposal plan for chemical containers which are under Scheduled waste code SW 409 were not adequately documented and implemented. At Ladang Selatan, there was improper re-use of some empty chemical containers at the line site and field.

Root Cause and Corrective Action: The matter was overlooked and no proper storage area was available. Proper area for storage and disposal of the chemical containers will be done. Briefing will be done for all workers about proper re-use and disposal of the containers

Verification for closure: On site verification was followed up and conducted on 4 August 2014 by HQ-PSQM. Actions taken and evidences including records and photographs submitted were verified and found to have satisfactorily addressed the nonconformance. NC status verified by auditor: Closed by AL Date closed: 11 July 2014 Verification (for effectiveness): Implementation of corrective action taken was not adequate during surveillance assessment. Major NC was issued in ASA-01. (Refer to subsequent closure as detailed in ASA-01) NC status verified by auditor: SH Date verified: 12 Aug 2015

NCR MYNI Details of NCR Indicator 8 of 8 - 6.3.1 Date issued: 12 June 2014 Major Nonconformance: 1. Complaints and grievances received are not appropriately recorded thus determination whether the complaints and grievances are handled in timely manner cannot be made. However, grievances from staff are recorded appropriately.

2. The channels for external stakeholders to submit complaints and grievances are not well explained and made accessible to them.

Root Cause and Corrective Action: The proper recording has been overlooked by the Estate Managers. 1. Complaints and grievance register has been established with columns for dates of complaints and follow up done. Recording will commence for any complaints received. 2. Briefing for external stakeholders will be done and channels made available.

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 53 of 70 KKS Kalabakan grouping: ASA-01

Verification for closure: On site verification was followed up and conducted on 4 August 2014 by HQ-PSQM. The complaints and grievance register established was available and complaints received will be reviewed by respective Estate Managers and signed off upon completion. Briefing for external stakeholders done on 11July 2014 as per guidelines of FGV Stakeholder consultations booklet for Kompleks Sabah, issued in December 2013. Records of consultations done are maintained. The evidences submitted to CB auditor were reviewed and accepted for the closure of NC. (Refer to attachments in Part 2 of report) On site verification was followed up and conducted on 4 August 2014 by HQ-PSQM. The complaints and grievance register established was available and complaints received will be reviewed by respective Estate Managers and signed off upon completion. Briefing for external stakeholders done on 11July 2014 as per guidelines of FGV Stakeholder consultations booklet for Kompleks Sabah, issued in December 2013. Records of consultations done are maintained. The evidences submitted to CB auditor were reviewed and accepted for the closure of NC. NC status verified by auditor: Closed by JMD Date closed: 11 July 2014 Verification (for effectiveness): Implementation of corrective action taken was verified to be adequate during surveillance assessment (ASA-01). NC status verified by auditor: AL Date verified: 12 Aug 2015

Year 2014: Main Assessment (3 Observations)

Status MYNI Opened Closed Remark, Ref No: Location Details of Observation Indicator date date if any

OBS: 5.6.2 / PMU- POM It is noted that the PMU has not 12 June 25 Sept Refer to AL-01 5.6.3 & Estates compiled the GHG emissions and 2014 2015 NC: AL-01 the plans to further reduce or (Minor) issued minimise GHG emissions are yet to in ASA-01 be established and implemented. Thus an Observation was issued for the follow up during next assessment. OBS: 4.4.3 POM The mill had applied and obtained 12 June 21 Aug Action taken. CFK-01 permission for a 6- month extension 2014 2015 Closed period since April 2014 from the DOE to complete and commission a Bio-Polishing plant in order to further reduce the BOD level to the DOE new specified limits of 20ppm by end 2014. Thus an Observation was issued for the follow up during next assessment. OBS: 4.8.2 Estates Records of training were available. 12 June 21 Aug Action taken. CFK-02 However at Kalabakan Selatan 2014 2015 Closed estate, some records for new employees taken in over the past 3 months were not updated yet. Thus an Observation was issued for the follow up during next assessment.

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 54 of 70 KKS Kalabakan grouping: ASA-01

Year 2015: ASA-01 (3 NCRs)

NCR #1 MYNI Details of NCR Indicator SH-01 5.2.2 Date issued: 21 August 2015 (Major) Nonconformance:

The program to educate the workforce and community about the status of these RTE species has not been implemented accordingly, although a program has been established. There was no evidence of it being implemented and no appropriate measures were taken in line with company laws and national regulation. In addition, signages informing activities not to be conducted in the forested areas were not made available at areas bordering the forest. There were also no signages placed at other conservation areas identified in the plantation i.e. Hutan Durian at Kalabakan Utara.

Root Cause: Estate management had not provided training to all workers and local community involved. Besides understanding of RTE species is still quite poor.

Corrective Action: 1. To conduct training to all workers including foreign workers and local community 2. To erect proper signages at the designated conservation areas at the estates.

Verification (Corrective Action): Actions taken and evidences including records and photographs submitted were verified and found to have satisfactorily addressed the nonconformance. NC status verified by auditor: Closed by SH Date closed: 25 Sept 2015 Verification (for effectiveness): At next assessment (ASA-02) NC status verified by auditor: - Date verified: -

NCR #2 MYNI Details of NCR Indicator SH-02 5.3.2 Date issued: 21 August 2015 (Major) Nonconformance: It was evident that chemical containers at the PMU estates were not disposed of responsibly. As example, at Ladang Kalabakan Utara, there was no proper record being kept on the collection and disposal of empty pesticide containers and empty fertilizer bags. (Note: This was a Minor nonconformance issued in the previous assessment. As the implementation is not effective, this nonconformance has been upgraded to a Major NC status).

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 55 of 70 KKS Kalabakan grouping: ASA-01

Root Cause: The empty pesticide containers have been reused for mixing of pesticides and inventory of the number of containers used has been overlooked.

Corrective Action: 1. To maintain the stock records for empty chemical containers are returned to the store. 2. To perform triple rinsing before storage 3. To install signage to prohibit leaving of empty containers at the field blocks 4. To record the sale or disposal of all unused empty containers

Verification (Corrective Action): Actions taken and evidences including records and photographs submitted were verified and found to have satisfactorily addressed the nonconformance. NC status verified by auditor: Closed by SH Date closed: 25 Sept 2015 Verification (for effectiveness): At next assessment (ASA-02) NC status verified by auditor: - Date verified: -

NCR #3 MYNI Details of NCR Indicator AL-01 5.6.3 Date issued: 21 August 2015 (Minor) Nonconformance:

The PMU has completed their GHG emissions report (using PalmGHG). However, the evidence of submission for review and acceptance by the RSPO Secretariat is still pending. If using tools other than PalmGHG, the PMU is required to submit these tools and their calculations for endorsement by RSPO prior to the certification assessment.

Root Cause: The PSQM representative who is in charge of compiling the GHG data has not ensure the sending of the GHG emission report to the RSPO Secretariate. Corrective Action: 1. The GHG emission report will be submitted to the RSPO Secretariate (Ms. Melissa Chin) accordingly 2. A record of receipt by RSPO will be retained and filed. Verification (Corrective Action): Actions taken and evidences submitted were verified and found to have satisfactorily addressed the nonconformance. NC status verified by auditor: Closed by AL Date closed: 25 Sept 2015 Verification (for effectiveness): At next assessment (ASA-02) NC status verified by auditor: - Date verified: -

Year 2015 (ASA-01): Observation Log (2 OBS)

Status MYNI Opened Closed Remark, Ref No: Location Details of Observation Indicator date date if any

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 56 of 70 KKS Kalabakan grouping: ASA-01

OBS: 5.3.3 Kalabakan Appropriate signages should be 21 Aug - To follow up SH-01 Mill placed at appropriate strategic 2015 during next sites such as landfill and effluent Surveillance. treatment ponds to enhance safety concerns.

OBS: 6.2.3 Kalabakan Updates on the listing of 21 Aug - To follow up AL-01 Utara and stakeholders should include the 2015 during next Tengah subcontractors and regular Surveillance. estate suppliers of goods and miscellaneous services. Maintenance of records of inputs, communications and consultations made should be properly maintained.

3.2.2 Identified Positive Elements 1) KKS Kalabakan PMU has been provided proper infrastructure such as road access and basic social amenities such as grocery stores, clinics and schooling to the local communities at the PMU Grouping estates.

2) The PMU has made financial contributions during local festivities and assisted in the significant events such as marriages, burial and medical assistance when needed.

3.3 Feedback Raised by Stakeholders and Findings

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

2014: Main Assessment Communication done via email since 27 March 2014 to various categories of stakeholders (see list under para 2.5).

Stakeholders’ Feedback PMU Response Intertek verification / Follow up (if any) comments Government Agencies

No feedback received. There has been no Verified during on-site Nil feedback / enquiries assessment that there has received from any been no issues from any government Agencies Government Agencies concerning the concerning the PMU’s operations of KKS operations. Kalabakan Grouping PMU.

Non-Governmental

Organizations No feedback received. There has been no Verified during on-site Nil feedback / enquiries assessment that there has received from any NGOs been no issues from any concerning the NGOs concerning the operations of KKS PMU’s operations. Kalabakan Grouping PMU.

Local Communities

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 57 of 70 KKS Kalabakan grouping: ASA-01

A total of 18 stakeholders comprising of Village heads, Contractors, Native Murut and Local community,Government agencies and Employees / workers was interviewed during the on-site assessment. Concerns and suggestions The programs for Verified during on-site Verified during raised include: improvement of road assessment that the PMU Surveillance • Improve on road building & maintenance has a mid and long term assessment (ASA-01) maintenance and waste and waste management management plan for the that appropriate actions management activities. will be monitored. imporvement of taken for the infrastructure, social and improvement of the Native Murut community Concerns of the Murut environmental needs of local community which under FGV / Felda at community is being the local community included the needs of Kalabakan Tengah estate progressive resolved including the Native Murut the Native Murut issues: through on going community under FGV / community under FGV / • Deductions & costing to be consultation with them. Felda. Felda. See report more transparent Request for assistance in See report details under details under P&C 6 & • Request for housing housing & transportation P&C 4, 5, 6 & 8) 8) assistance has been considered and • Request for transportation provided whenever assistance for sending their possible. children to school

Other Interested parties Nil Nil

2015: ASA-01 Communication done via email since 16 July 2015 to various categories of stakeholders (see list under para 2.5).

Stakeholders’ Feedback PMU Response CB verification / Follow up verification comments (if any) Government Agencies: No response needed. Verified that the PMU has Not required No feedback received. maintained consultations. Non-Governmental No response needed. Verified that the PMU has Not required Organizations: maintained consultations. No feedback received. Local Communities - Stakeholders’ Consultation: A total of 12 stakeholders comprising of Village heads, Contractors, Suppliers, Native Murut and Local community, Government agencies were present for interview during stakeholder consultations during the on-site assessment. Some of the feedback obtained pertained to: • Poor road conditions of the stretch leading to the POM The feedbacks will be To be followed up during Next surveillance. • To put up more signages considered. Appropriate next surveillance. regarding wildlife protection ongoing improvement and handling of occasional actions will be taken intrusion by elephants to accordingly. villages bordering with the

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 58 of 70 KKS Kalabakan grouping: ASA-01

PMU estates

• Overall positive improvements seen on the safety and social amenities provided by the PMU such as adequate workers housing, transport to schools, mosque maintenance and contribution during local festivities.

Local Communities – Worker Interviews: Interviews of sampled staff and workers were also conducted during office and field visits at the PMU: No issues raised by the No response needed. No response needed. Nil sampled staff and workers.

Other Interested parties: No response needed. No response needed. Nil No feedback received.

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Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 60 of 70 KKS Kalabakan grouping: ASA-01

4.2 Intertek RSPO Certificate details for KKS Kalabakan grouping

Certificate No: RSPO 928888 Issue date: 7 October 2014 Expiry date: 6 October 2019 New Certificate date (ASA-01): 7 October 2015 Organization Felda Global Ventures Plantations (Malaysia) Sdn Bhd Address of Head Office: Felda Global Ventures Plantations (Malaysia) Sdn Bhd (FGVPM), Plantation Sustainability and Quality Management (PSQM) Department, Menara Felda Platinum Park, Level 20 No 11 Persiaran KLCC, 50088 Kuala Lumpur, Malaysia. RSPO Membership No: 1-0013-04-000-00

Plantation Management Unit: KKS Kalabakan Grouping Address of POM: KKS Felda Kalabakan Grouping, Peti Surat No. 62007, 91030 Tawau, Sabah Standards: RSPO Principles and Criteria (Apr 2013); Malaysian National Interpretation (MY- NI 2014); RSPO Supply Chain Certification Standards (Nov 2014) for the Palm Oil Mill. Certification scope: Production of Crude Palm Oil and Palm Kernels Supply Chain model for Mass Balance (MB) CPO & PK:

Details of the Mill and Supply bases covered by this certificate and the tonnage approved are: GPS Reference Certified Name Address Area (ha) Latitude Longitude Kalabakan Mill POM Kilang Sawit Kalabakan, Peti Surat No. 4°24'36"N 117°29'21"E (Capacity:45 MT/hour) 62007, 91030 Tawau, Sabah

FGVPM Kalabakan Ladang Kalabakan Tengah, Peti Surat 4°23'25"N 117°27'35"E Tengah estate No. 61954, 91029 Tawau, Sabah 8,285.86 FGVPM Kalabakan Ladang Kalabakan Selatan, Peti Surat 4°16'50"N 117°31'11"E Selatan estate No. 61954, 91029 Tawau, Sabah FGVPM Kalabakan Ladang Kalabakan Utara, Peti Surat 4°26'45"N 117°25'20"E Utara estate No. 61954, 91029 Tawau, Sabah

The annual certified tonnages of CPO and PK production at the PMU from the supply base/suppliers as assessed and verified during the current Assessment and projected year are detailed as follows:

Jan – Dec 2014 Jan – Dec 2015 Jan – Dec 2016 KKS Kalabakan - Actual - Actual & Projected - Projected Total certified FFB 98,577 110,388 105,975 Processed (MT) Total certified CPO 23,047 25,500 24,586 Production (MT) Total certified PK 4,288 4,636 4,557 Production (MT) SCCS Model for POM MB MB MB

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 61 of 70 KKS Kalabakan grouping: ASA-01

Appendix A:

Qualifications of Lead Assessor and Assessment Team

Mr. Augustine Loh (AL) Lead Assessor/ Team Leader / Technical Expert (Palm Oil Mill, Environment, Social, Conservation & HCV area, Land Use and Supply Chain) – Master in Business Administration, USA and Diploma in Maritime Studies, Singapore

Mr. Augustine Loh is an IRCA Third Party Assessment (TPA) Lead Auditor and IRCA Lead Tutor for IRCA ISO 9001 and OHSAS 18001 Lead Auditor Courses as well as Tutor for RSPO Certification Programs and Integrated Management System in Intertek, Malaysia. He has over 25 years of fieldwork and experience in Palm based product survey, supply chain monitoring, inspection and testing. He has successfully completed the IRCA accredited Lead Auditor course in ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, ISO 22000, RSPO Principles and Criteria Lead Assessor Course, RSPO Supply Chain Certification and International Sustainable Carbon Certification (ISCC) Lead Auditor course. He has also completed the RSPO training on RSPO P&C (2013), RSPO Palm GHG tool and RSPO RED requirements. He has conducted assessments of organizations in Malaysia, Singapore, Indonesia, Brunei, Thailand and Cambodia. He is currently the RSPO Program Manager in Intertek, Malaysia and has performed over 700 auditing days on quality, environmental and safety & health assessments in various sectors including oil palm plantations. He was the RSPO CB Assessment Team Leader / Member which audited several RSPO certified Plantation Management Units since in 2009. He was the CB Team Leader in the stakeholder consultation and development of the RSPO Cambodian Local Indicators. He is a member of the Internal Review Panel for RSPO Assessment reports since 2010.

Mr. Sazali Hasni (SH) – Assessor / Technical Expert (Environment, Conservation and HCV area) - Bachelor of Science (Forestry)

Mr. Sazali Hasni (SH) has over 25 years work experience in the forestry sector. He is an IRCA Auditor for ISO 9001 and auditor for the PEFC Chain-of-Custody Certification. He has successfully completed training in the Intertek In House RSPO P&C, MYNI Assessor course. He was a member in the stakeholder consultation and development of the Malaysian Criteria & Indicators (MC&I) for Forest management Certification. He has been involved in the auditing of Forest Management Certification for the Perak State Forestry Department and Pahang State Forestry Department. He has also been involved with a German based company in testing their criteria for carbon tracing in an oil palm plantation in 2011. He had also acted as the regional consultant to International Tropical Timber Organization (ITTO) for the Asia Pacific region in the Evaluation and Monitoring of Projects funded by the organization from 1994 to 1998. Projects funded are mainly forestry related such as reforestation, conservation, community forestry apart from other research based projects. He is a member of the RSPO CB Assessment team which audited several RSPO certified Plantation Management Units since 2014.

Mr. Heru Tjatur Witjaksono (HTW) – Trainee Assessor / Technical Expert (Palm Oil Mill, Environment, Social, HCV area, Land Use and Supply Chain – As Trainee Assessor) - Master in Marine Technology and Bachelor in Fish Processing

Mr. Heru Witjaksono is an IRCA Lead Auditor for ISO 9001, ISO14001, OHSAS18001, ISO22000 / HACCP / BRC - Food Safety, ISCC and RSPO SCC. He has more than 15 years work experience in various fields including agricultural related industries such as fish and shrimp farming. He has been involved in Management Systems auditing and training for over 10 years in various manufacturing, engineering, plantation, service and government sectors both in Indonesia and Malaysia. Currently he is Business Certification Manager at PT Intertek Utama Services, Indonesia. He is has joined the RSPO P&C CB Assessment Team in August 2015 and was involved in the assessment of an RSPO certified Plantation Management Unit in Sabah, Malaysia.

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 62 of 70 KKS Kalabakan grouping: ASA-01

Appendix B:

Assessment Plan (Actual)

Date Time Assessors and Assessment Activity Asssessment Team 17 Aug 7.00 am – Travel to KKS Kalabakan Palm Oil Mill (POM) Office 15 11.30 am Monday 11.30 am - Opening Meeting and Briefing at KKS Kalabakan - POM Office 12.00 pm (to be attended by representatives from the Estates as well) (Day 1) 12.00 pm Lunch Break – 1.00 pm 1.00 pm – Document Review and Assessment by all Assessors on respective 5.00 pm RSPO P&C:1 to 8 at POM AL SH HTW Site assessment at Site assessment at Site assessment at Palm Oil Palm Oil Mill Palm Oil Mill Mill • P1 Transparency • P2 Laws & regulations • P1 Transparency • P2 Laws & regulations • P4 Best Practices at Mill • P2 Laws & regulations • P3 Economic & • P5 Environmental, • P3 Economic & Financial Financial Viability Conservation & HCV Viability • P6 Employees, • P8 Continual • P6 Employees, Individuals & Individuals & Improvement Communities incl. Gender Communities incl. Issues Gender Issues • P8 Continual Improvement • P8 Continual • SCC for POM Improvement • SCC for POM • Review of changes for compliance to revised RSPO P&C, MYNI and RSPO SCC • Review of Time Bound Plan • Verification for compliance with rules on partial certification • Verification of effectiveness of corrective actions for previous year’s NCRs 5.00 pm – Travel to Hotel & Break 6.00 pm 6.00 pm – Team Meeting and Discussion 7.00 pm

Date Time Assessors and Assessment Activity 18 Aug 15 8.30 am – AL SH HTW Tuesday 12.30pm Site assessment at FPSB Site assessment at FPSB Site assessment at FPSB Kalabakan Tengah estate Kalabakan Tengah estate Kalabakan Tengah estate (Day 2) • P1 Transparency • P2 Laws & regulations • P1 Transparency • P2 Laws & regulations • P4 Best Practices at • P2 Laws & regulations • P3 Economic & Financial Estates • P3 Economic & Financial Viability • P5 Environmental, Viability • P6 Employees, Individuals Conservation & HCV • P6 Employees, Individuals & Communities incl. • P7 New Plantings & Communities incl. Gender Issues • P8 Continual Gender Issues • P8 Continual Improvement • P8 Continual Improvement Improvement 12.30 pm – Lunch Break 1.30 pm 1.30 pm - Continue site assessment at FPSB Kalabakan Tengah estate 5.00 pm 5.00 pm – Travel to Hotel & Break 6.00 pm 6.00 pm – Team Meeting and Discussion

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

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7.00 pm

Date Time Assessors and Assessment Activity 19 Aug 15 8.30 am – AL / HTW SH HTW Wednesday 12.30pm Site assessment at FPSB Site assessment at FPSB Site assessment at FPSB Kalabakan Utara estate Kalabakan Utara estate Kalabakan Utara estate (Day 3) • P1 Transparency • P2 Laws & regulations • P1 Transparency • P2 Laws & regulations • P4 Best Practices at • P2 Laws & regulations • P3 Economic & Financial Estates • P3 Economic & Financial Viability • P5 Environmental, Viability • P6 Employees, Individuals Conservation & HCV • P6 Employees, Individuals & Communities incl. • P7 New Plantings & Communities incl. Gender Issues • P8 Continual Gender Issues • P8 Continual Improvement • P8 Continual Improvement Improvement 12.30 pm – Lunch Break 1.30 pm 1.30 pm - Continue site assessment at FPSB Kalabakan Utara estate 5.00 pm 5.00 pm – Travel to Hotel & Break 6.00 pm 6.00 pm – Team Meeting and Discussion 7.00 pm

Date Time Assessors and Assessment Activity 20 Aug 15 8.30 am – AL SH HTW Thursday 11.00 am Site assessment at Stakeholders’ Consultation on the following (Day 4) Kalabakan Palm Oil Mill categories (see Notes 1 and 2 below): • P1 Transparency • Contractors • P2 Laws & regulations • Suppliers • P3 Economic & Financial • Transporters Viability • NGOs • P6 Employees, Individuals • Government Department / Agencies & Communities incl. • Local Community Gender Issues • Settlers, in the case of independent and organized • P8 Continual smallholders. Improvement Notes • SCC for POM 1. It is mandatory for the PMU to inform Intertek and provide the information (as a minimum the no. of stakeholders in each applicable category and contact number) on the stakeholders prior to the assessment. 2. This will facilitate the random and impartial selection of stakeholders (including independent and organized smallholders, where applicable) and to meet the sample size requirement 11.00 am – Site assessment at POM or estates to follow up on any specific criteria/areas 12.30 am 12.30 pm – Lunch Break 1.30 pm 1.30 pm – Site assessment at POM or estates to follow up on any specific criteria/areas 5.00 pm 5.00 pm – Travel to Hotel & Break 6.00 pm 6.00 pm – Team Meeting and Discussion 7.00 pm

Date Time Assessors and Assessment Activity

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 64 of 70 KKS Kalabakan grouping: ASA-01

21 Aug 15 8.30 am – AL SH HTW Friday 12.30 am Site assessment at POM or estates to follow up on any specific criteria/areas (Day 5) 12.30 pm – Lunch Break 1.30 pm 1.30 pm – Preparation for Closing Meeting 3.00 pm 3.00 pm – Team Meeting and Discussions with KKS Kalabakan Management Representative 4.00 pm 4.00 pm – Closing Meeting & Briefing at Palm Oil Mill Office 5.30 pm 5.30 pm Travel to Tawau airport & flight back to Kuala Lumpur onwards

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 65 of 70 KKS Kalabakan grouping: ASA-01

Appendix C-1:

Location of Felda KKS Kalabakan grouping, Tawau, Sabah, Malaysia

Appendix C-2-1: Kalabakan Utara estate

Felda Kalabakan

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 66 of 70 KKS Kalabakan grouping: ASA-01

Appendix C-2-2: Kalabakan Tengah estate

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 67 of 70 KKS Kalabakan grouping: ASA-01

Appendix C-2-3: Kalabakan Selatan estate

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 68 of 70 KKS Kalabakan grouping: ASA-01

Appendix D: Photographs of Assessment findings at Felda KKS Kalabakan grouping (ASA-01)

Biogas plant being built at Kalabakan POM Scheduled waste storage at Kalabakan Utara estate

Euphorbia planting being introduced as part of IPM at Vetiver grass had been planted to prevent soil erosion Kalabakan Utara estate on Kalabakan Tengah Estate.

No Open Burning signages at the housing quarters Stakeholder consultations conducted at PMU adjacent areas

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 69 of 70 KKS Kalabakan grouping: ASA-01

Appendix E:

Revised FELDA RSPO Time Bound Plan (2015)

No Mill complexes to be audited in the respective year 2009 2010 2011 2012 2013 2014 2015 2016 2017

1 K.Gelanggi Jengka 21 Adela Belitong F. Harapan Embara Budi Palong Timor Aring A Sampadi

2 L. Utara 6 Jengka 3 Lok Heng Bkt Besar Baiduri Ayu L. Kemudi Serting Hilir Cini 3 Pontian

3 Jengka 8 Semencu Kahang Kalabakan Maokil Ciku Air Tawar

4 L. Utara 4 Waha Kulai Umas Tenggaroh Kemahang

5 Jengka 18 B. Kepayang Nitar Neram T.Timor Tersang

6 Padang Piol Bukit Mendi Penggeli Pancing Kechau A Cini 2

7 Kemasul Lepar Hilir Besout Kechau B

8 Tementi Bukit Sagu Trolak Keratong 9

9 Triang Keratong 2

10 Keratong 3

11 Sg Tengi

12 Krau

13 Mempaga

14 Serting

15 Pasoh

16 Selancar 2A

17 Selancar 2B

18 Chalok

19 J. Barat

20 J. Baru

21 Kertih

22 Selendang

23 K. Sakti

24 M. Puspita

25 N. Permata

26 H. Badai

Total 2 6 9 8 2 26 8 6 3

Audited Certified Total: 70

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)

INTERTEK CERTIFICATION INTERNATIONAL SDN BHD (188296-W)

Report No.: R9288/14-2 Felda Global Ventures Plantation Malaysia Sdn Bhd Page 70 of 70 KKS Kalabakan grouping: ASA-01

Additional information:

FGV new land concessions for Oil Palm Plantations in Malaysia.

On August 2014, FGV signed a deal to acquired Asian Plantations Limited (APL), a company based in Singapore. The acquisition of APL which consists of 5 estates measuring 24,000.00 ha and 60 ton/hr mill was completed on 7th November 2014. APL will be included in Felda/FGV RSPO time bound plan beginning January 2016 due to some legal matters to be solved. Note: No new land concession outside Malaysia for 2015.

New Planting Procedure for newly acquired plantations.

FGV had conducted HCV and SIA assessment for the APL concession and in the process of submitting the NPP to RSPO.

Proposed New Date of Hectarage New Planting Procedure Updated Status – SEIA & HCV Acquisition Propossal (Ha) (NPP) Sept 2015

NREB Approved for No Planting allowed SEIA: development on 4 Feb until NPP process Completed 2012. completed Limbang, Sarawak (100% 15 Mac 2011 10,907.00 Joint mapping under Felda) pending due to HCV: NPP to be conducted after perimeter survey not Conducted perimeter and join mapping completed by state with community. government.

HCV management Asian Plantation HCV and SIA 07 Nov 2014 24,000.00 NPP in process. plan needed by NPP Limited conducted. verification team.

At INDONESIA

Proposed New Date of New Planting Procedure Updated Status – Hectarage SEIA & HCV Acquisition Proposal (NPP) Sept 2015 Nursery and Planting SEIA: Development PT CNP, Completed Jun 2012 14,385.00 NPP Completed (718 ha planted as Kalimantan HCV: September 2015) Completed

SEIA: PT TAA, Completed NPP completed and 738 ha planted as at Dec 2012 8,193.00 Kalimantan HCV: approved by RSPO September 2015. conducted

---End of Report—

INTERTEK RSPO Report: 17 – 21 August 2015 (Final)