RSPO Audit Report

Audit Report

2nd Annual Surveillance Audit for

PT. Rigunas Agri Utama Peranap Mill and Its Supply Bases

FMS40006

RSPO Membership number: 1-0022-06-000-00 RSPO Member Name: PT. Inti Indosawit Subur

Audited Address: Peranap Mill: Simelinyang, Pauh Ranap, Sengkilo Village, Peranap District, Indragiri Hulu Regency, Riau Province, Indonesia Peranap Estate: Simelinyang, Pauh Ranap, Sengkilo Village, Peranap District, Indragiri Hulu Regency, Riau Province, Indonesia Peranap Plasma : Simelinyang, Pauh Ranap, Sengkilo Village, Peranap District, Indragiri Hulu Regency, Riau Province, Indonesia

Date of audit: 22/11/2016 – 25/11/2016

COMMERCIAL- IN – CONFIDENCE I The contents of this report must not be disclosed to a third party without the agreement of the SAI Global Client

Audit Report

Table of contents Page Executive Overview 4 Abbreviations Used 5

1.0 SCOPE OF THE ASSESSMENT 6 1.1 Introduction 6 1.2 Audit Objective 6 1.3 Scope of Certification 6 1.3.1 Palm Oil Mill 7 1.3.2 Oil Palm Estate 7 1.4 Location of Mill and Estates 7 1.5 Description of Supply Base 10 1.6 Date of Plantings 10 1.7 Area of Plantations 11 1.8 Approximate Tonnages Offered for Certification (CPO and PK) 12 1.9 Other Certificates Held 14 1.10 Organisational Information/Contact Person 14 1.11 Time Bound Plan for Other Management Units 14 1.12 Partial Certification Requirements 17 1.13 Date of Issue of Certificate 18

2.0 AUDIT PROCESS 18 2.1 Certification Body 18 2.2 Audit Methodology 19 2.3 Qualification of the Lead Auditor and Audit Team Members 19 2.4 Stakeholder Consultation 20 2.5 Date of Next Surveillance Visit 21

3.0 AUDIT FINDINGS 22 3.1 Action taken on previous audit issues 22 3.2 Claim and use of certification mark and or logo 22 3.3 Description of audit findings 23 3.3.1 RSPO Principle and Criteria 23 3.3.2 Mill Supply Chain Requirements 138 3.3.2.1 Supply Chain Certification Standard 138 3.3.2.2 Supply Chain Certification System 146 3.4 Recommendation 148 3.5 Environmental and social risk for this scope of certification for 148 planning of the surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off 148 of Assessment Findings

List of Tables Page 1 Mill and Estates GPS Locations 7 2 FFB Production of the supply base 10 3 Peranap Estate and SmallholderAge Profiles of Planted Palms 10 4 Land use description of Peranap Estate and Smallholder in 2016 11 5 Estates and Area Planted 2016 11 6 Peranap Estate and Smallholder FFB Production Trend 2012 – 12 2016 7 Peranap Mill Total CPO and PK Production of 2016 and Estimate 12 Production of 2017

Audit Report

List of Tables Page 8 Actual Peranap Mill Production of CPO and PK 2016 13 9 Estimated Peranap Mi ll Production of CPO and PK 2017 13 10 Certificates Held by Mill and Estates 14 11 RSPO Certification Time Bound Plan 14 12 List of internal and external stakeholder 21 13 Actual Sales of Certified Palm Products 22

List of Figures Page 1 Map of Peranap Mill and Estates Location 8 2 Map of Peranap Smallholder Location 9

List of Appendices Page A Audit Plan 149 B Previous Nonconformities and Opportunity for Improvement 154 Summary C Nonconformities and Opportunity for Improvement Summary 159 D Stakeholder’s issues and comment 166 E Definition of, and action required with respect to audit findings 169

Audit Report

Executive Overview

This is the 2nd Annual Surveillance Audit visit on 22 – 25 November 2016. SAI Global has audited Peranap Mill, PT. Rigunas Agri Utama and its supply bases operations that comprising 1 (one) Palm Oil Mill and 2 supply bases, comprising 1 (one) estate owned by PT. Rigunas Agri Utama and 1 (one) scheme smallholder, support services and infrastructure. There are 6 (six) major and 5 (five) minor non-conformances issued during this audit. There is reccurence non-conformity which is in criterion 5.6 indicator minor 3, the indicator is upgraded to Major.

Follow up audit has been conducted on February 4th, 2017 to review the corrective action taken to the Major Nonconformities. Objective evidences reviewed conclude that Major Nonconformities consider as closed.

At the conclusion of this audit, Peranap Mill, PT. Rigunas Agri Utama and its supply bases operation was found complies with the requirements of the Generic of RSPO Principles and Criteria for Sustainable Palm Oil Production, May 2013 and the RSPO Supply Chain Certification System, November 2014 and RSPO Supply Chain Certification Standard, Module E – CPO Mill: Mass Balance, November 2014.

The recommendation from this audit is that certification for PT. Rigunas Agri Utama, Peranap Mill as a producer of RSPO Certified Sustainable Palm Oil and Palm Kernel Model MB can continue.

Estimated tonnage of certified CPO produced 39,219 MT Estimated tonnage of certified PK produced 9,632 MT

Audit Report

Abbreviations Used

AK3U OHS Expert (Ahli Kesehatan dan Keselamantan Kerja Umum) ANDAL Environmental Impact Analysis (Analisis Dampak Lingkungan) BOD Biological Oxygen Demand BPN National Land Agency (Badan Pertanahan Nasional) BPS Central Bureau of Statistic (Biro Pusat Statistik) CPO Crude Palm Oil CSR Corporate Social Responsibility EFB Empty fruit bunches FFB Fresh Fruit Bunch GPS Global Positioning HCV High Conservation Value HGU Land Use Title (Hak Guna Usaha) HPH Forest Authority Concession (Hak Penguasaan Hutan) IPM Integrated Pest Management ISO International Standards Organisation KHT (Karyawan Harian Tetap) kWH Kilo Watt Hour LCC Legume cover crops MSDS Material Safety Data Sheet MT Metric Ton NGO Non Government Organisation OHS Occupational Health and Safety POM Palm Oil Mill PPE Personal Protective Equipment PRA Participatory Rural Appraisal PK Palm Kernel PKB Joint Working Agreement (Perjanjian Kerja Bersama) RABQSA Quality Society of Australia RKL Environmental Management Plan (Rencana Pengelolaan Lingkungan) RPL Environmental Monitoring Plan (Rencana Pemantauan Lingkungan) RSPO Roundtable on Sustainable Palm Oil SA Social Accountability SCCS Supply Chain Certification System SIO Operation License (Surat Izin Operasi) SPSI Indonesian Worker Union (Serikat Pekerja Seluruh Indonesia) WWTP Waste Water Treatment Plant

Audit Report

1.0 SCOPE OF THE ASSESSMENT

1.1 Introduction

SAI Global conducted an audit of PT. Rigunas Agri Utama - Peranap Mill and Its Supply Bases on 22 – 25 November 2016 with Major and Minor Nonconformities identified. Follow up audit has been conducted on 4 February 2017 for verification of corrective action taken by the organisation.

The purpose of this audit report is to summarise the degree of compliance with the relevant criteria, as defined on the cover page of this report, based on the evidence obtained during the audit of your organisation.

SAI Global audits are carried out within the requirements of SAI Global procedures that also reflect the requirements and guidance provided in the international standards relating to audit practice such as ISO/IEC 17021, ISO 19011, RSPO Certification System, relevant RSPO Supply Chain Certification System and other normative criteria. SAI Global Auditors are assigned to audits according to industry, standard or technical competencies appropriate to the organisation being audited. Details of such experience and competency are maintained in our records. The audit team is detailed in the attached audit record.

In addition to the information contained in this audit report, SAI Global maintains files for each client. These files contain details of organisation size and personnel as well as evidence collected during preliminary and subsequent audit activities (Documentation Review and Scope) relevant to the application for initial and continuing certification of your organisation.

Details of your primary contact persons and their contact details and site addresses are also maintained. Please take care to advise us of any change that may affect the application/certification or may assist us to keep your contact information up to date, as required by SAI Global Terms and Conditions.

Please note that this report is subject to independent review and approval. Should changes to the outcomes of this report be necessary as a result of the review, a revised report will be issued and will supersede this report.

1.2 Audit Objective

This is the 2nd annual surveillance audit. The purpose of this audit was to determine continuing compliance of your organization’s management system with RSPO Principles and Criteria for Sustainable Palm Oil Production, May 2013 and the RSPO Supply Chain Certification System, November 2014 and RSPO Supply Chain Certification Standard, Module E – CPO Mill: Module E Mass Balance November 2014; and it’s effectiveness in achieving continual improvement and system objectives.

It was also to verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers.

1.3 Scope of certification

The scope of certification is the CPO production from 1 (one) Palm Oil Mill and 2 (two) FFB supply bases comprising 1 (one) estate owned by PT. Rigunas Agri Utama and 1 (one) scheme

Audit Report smallholder.

1.3.1 Palm Oil Mill

Peranap Mill, PT. Rigunas Agri Utama Location : Simelinyang, Pauh Ranap, Sengkilo Village, Peranap District, Indragiri Hulu Regency, Riau Province, Indonesia GPS Location : East 1020 01’ 10” South 00 35’ 05” Mill capacity : 45 MT FFB/hour

1.3.2 Oil Palm Estate

1. Peranap Estate, PT. Rigunas Agri Utama Location : Simelinyang, Pauh Ranap, Sengkilo Village, Peranap District, Indragiri Hulu Regency, Riau Province, Indonesia GPS Location : East 1010 59’ 33” - 1020 04’ 23” South 00 38’ 17” - 00 33’ 1”

2. Peranap Plasma (Scheme Smallholder) Location : Simelinyang, Pauh Ranap, Sengkilo Village, Peranap District, Indragiri Hulu Regency, Riau Province, Indonesia GPS Location : East 101° 49’ 46” – 102° 10’ 04” South 0° 43’ 43” – 0° 32’ 26”

1.4 Location of mill and estates

PT. Rigunas Agri Utama mill and estate are located in Riau Province, Indonesia. The geographical coordinate of the mill and estates are shown on Table 1.

Table 1: Mill and Estates GPS Locations included in certification assessment

Mill and Estate Easting Southing

Peranap Mill 1020 01’ 10” 00 35’ 05” Peranap Estate 1010 59’ 33” - 1020 04’ 23” 00 38’ 17” - 00 33’ 51” Peranap Plasma 101° 49’ 46” – 102° 10’ 04” 0° 43’ 43” – 0° 32’ 26”

Audit Report

Figure 1 Map of Peranap Mill and Estates Location

Source: PT. Rigunas Agri Utama, November 2016

Audit Report

Figure 2 Map of Peranap Smallholder Location

Source: PT. Rigunas Agri Utama, November 2016

Audit Report

1.5 Description of supply base

The FFB source is one (1) estate owned by PT. Rigunas Agri Utama, one (1) scheme smallholder estate associated with PT. Rigunas Agri Utama, and third party estates. The smallholder estate, Peranap Plasma is a scheme smallholder. As a scheme smallholder, Peranap Smallholder has agreement to supply FFB to Peranap mill. Peranap Smallholder has been certified by SAI Global in August 2016. Third party estate is excluded from certification. The third party (independent smallholders) sold FFB to the mill based on the agreed price and does not have special agreement with PT. Rigunas Agri Utama. The hectarage and FFB production of the estates are shown on Table 2. Table 2a. FFB Production of the supply base

Estate Planted Area (ha) FFB (ton/year) (Actual 2015)

Peranap Estate, PT Rigunas Agri 3,658 70,447 Utama

Peranap Smallholders Estate, PT 5,142 66,806 Rigunas Agri Utama

Sub Total 8,800 137,253

3rd Party N/A 64,686

Total 8,800 201,939

Source: PT. Rigunas Agri Utama, November 2016

Total area of Peranap Smallholder was 5,142 Ha and consists of 2,571 farmers that grouped into 113 farmer group that cooperated into 12 KUD. The profil of Peranap smallholder are shown on Table 3.

Table 2b. Peranap Smallholder Profile of Cooperatives

Audit Report

Number of Number of No Mill DIV Ha Name of KUD Chairman Address District Regency Farmer Group Farmer

1 Peranap Mill I 600 15 300 Bukit Makmur Syahrul Efendi Sencano Jaya Peranap Indragiri Hulu

2 Peranap Mill II 420 9 210 KetipoJaya Syarifuddin Pauhranap Peranap Indragiri Hulu

3 Peranap Mill II 500 10 250 Bukit Permai Suwanto Sungai Aur Peranap Indragiri Hulu

4 Peranap Mill II 306 6 153 Semelinang Lestari Siswadi Semelinang Peranap Indragiri Hulu

1,826 40 913

5 Peranap Mill IV 320 8 160 Gapoktan Abu Nawas Pesajian Batang Peranap Indragiri Hulu

6 Peranap Mill IV 390 9 195 Serangge Permai Hulman Pasaribu Punti Kayu Batang Peranap Indragiri Hulu

7 Peranap Mill IV 640 16 320 Lembah Rezeki Sundono Peladangan Batang Peranap Indragiri Hulu

8 Peranap Mill IV 120 3 60 Sadar Mandiri Usman Mustafa Peranap Peranap Indragiri Hulu

1,470 36 735

9 Peranap Mill III 200 4 100 Maju Bersama Ahmad Lana Harahap Talang 7 Buah Tangga Rakit Kulim Indragiri Hulu

10 Peranap Mill III 600 12 300 Maju Usaha Bersama Andi Kusman Pulau Sengkilo Kelayang Indragiri Hulu

11 Peranap Mill III 340 7 170 Usaha Tani Bersama Aprizal Talang Durian Cacar Rakit Kulim Indragiri Hulu

12 Peranap Mill III 706 14 353 Lakat Makmur Sarifudin Husein Kota Baru Rakit Kulim Indragiri Hulu

1,846 37 923

Total 5,142 113 2,571

1.6 Date of plantings

Table 3: Peranap Estate and Smallholder Age Profiles of Planted Palms

Year of Estate Planted Area (Ha) % of Planted Planting Area Peranap Peranap Total Estate Smallholder

1992 865 - 865 9.83

1993 1,315 - 1,315 14.94

1994 256 600 856 9.73

1995 575 1,226 1,801 20.47

1996 534 - 534 6.07

1997 113 1,350 1,463 16.63

1998 - 1,500 1,500 17.05

2000 - 360 360 4.09

2001 - 106 106 1.20 Mature 3,658 5,142 8,800 100

Immature - - - - Total 3,658 5,142 8,800 100 Source: PT. Rigunas Agri Utama, November 2016

Audit Report

1.7 Other certificates held

The areas details for organisation owned estates are shown on Table 5. Review of estate boundary maps has been done. There is no new open area since November 2005. All land in inside the concession area has been developed in period 1987 – 1989. The submitted estate boundary maps dated 23 June 2014 indicated that there are natural vegetated land has been cleared however the cleared area are within the enclave which is rubber plantation and it is open by the community who encroached to the company concession which the company do not have control.

Table 4: Land use description of Peranap Estate and Smalholder in 2016

HECTARES USED AREA PERANAP PERANAP TOTAL ESTATE SMALLHOLDER Mature plantation area 3,658 5,142 8,800

Immature plantation area 0 0 0

Total area planted 3,658 5,142 8,800

Emplacement and Mill 35 0 35

HCV Area (include in Total Area) 99 0 99 Other area (enclave, water ponds, 1,522 0 1,522 land with slope >30 %) Total leased area 5,215 5,142 10,357 Source: PT. Rigunas Agri Utama, November 2016

Table 5: Estates and Area Planted 2016

ESTATE MATURE (HA) IMMATURE (HA)

Peranap Estate 3,658 0

Peranap Smallholder 5,142 0

Total 8,800 0 Source: PT. Rigunas Agri Utama, November 2016

1.8 Approximate tonnages offered for certification (CPO and PK)

Approximate tonnages offered for certification is estimated based on the organisation last three years actual FFB production from Peranap Estate; also last year CPO and PK, OER and KER of Peranap Mill.

Audit Report

Table 6: Peranap Estate and Smallholder FFB Production Trend 2012 – 2016

Actual Production (MT) YEAR Peranap Estate Peranap Smallholder 2012 103,040 98,456 2013 97,301 95,823 2014 96,512 73,031 2015 98,586 87,742 2016 94,769 85,474 Source: PT. Rigunas Agri Utama, January 2016

Table 7: Peranap Mill Total CPO and PK Production of 2016 and Estimate Production of 2017

FFB CPO PK KER Supply Base Processed Production OER (%) Production (MT) (MT) (MT) (%) Actual production Jan - Dec 2016 Peranap Estate 92,471 20,986 22.69 4,978 5.38 Peranap Smallholder 85,474 17,612 20.60 4,587 5.37 Sub Total Certified 177,945 38,597 21.69 9,565 5.38 The 3rd Party 76,931 14,056 18.27 4,135 5.37 Total actual production 254,876 52,653 20.66 13,700 5.38 Estimate production Jan - Dec 2017 Peranap Estate 95,108 21,875 23.00 5,183 5.45 Peranap Smallholder 81,620 17,344 21.25 4,448 5.45 Sub Total Certified 176,728 39,219 22.19 9,632 5.45 The 3rd Party 85,000 15,768 18.55 4,633 5.45 Total estimated production 261,728 54,987 21.01 14,265 5.45 Source: PT. Rigunas Agri Utama, Februari 2017

The FFB from Peranap Estate are processed together with FFB from other supply based, therefore Peranap Mill used RSPO Supply Chain Mass Balance Model – Module E.

Audit Report

Table 8: Mill Production and Delivery of ALL Certified Products (CPO and Kernel), actual 2016

FFB (Ton) Palm Oil (MT) PK (MT) Month Peranap Peranap Peranap Peranap Peranap Peranap Sub Total Sub Total Sub Total Estate Smallhoders Estate Smallhoders Estate Smallhoders January 6,107 5,726 11,833 1,446 1,251 2,697 333 312 645 February 6,213 5,222 11,435 1,479 1,147 2,626 338 284 622 March 6,019 4,843 10,862 1,457 1,082 2,538 330 265 595 April 5,564 5,204 10,768 1,318 1,136 2,454 303 284 587 May 5,127 5,677 10,804 1,172 1,197 2,369 266 294 560 June 5,947 6,402 12,348 1,282 1,271 2,552 306 329 635 July 5,405 6,217 11,622 1,127 1,213 2,340 276 318 594 August 7,575 9,177 16,752 1,623 1,817 3,440 401 486 887 September 10,766 9,089 19,856 2,317 1,748 4,065 546 461 1,007 October 11,723 9,249 20,973 2,656 1,871 4,528 666 526 1,192 November 11,058 9,175 20,232 2,527 1,882 4,408 598 496 1,094 December 10,966 9,493 20,459 2,583 1,996 4,579 615 533 1,148 Total 92,471 85,474 177,945 20,986 17,612 38,597 4,978 4,587 9,565 Source: PT. Rigunas Agri Utama, Februari 2017

Table 9: Estimated Production of Certified CPO and PK 2017

FFB (Ton) Palm Oil (MT) PK (MT)

Month Peranap Peranap Peranap Peranap Peranap Peranap Total Total Total Estate Smallhoders Estate Smallhoders Estate Smallhoders

January 6,471 5,553 12,024 1,488 1,180 2,668 353 303 655 February 6,548 5,620 12,168 1,506 1,194 2,700 357 306 663 March 7,564 6,492 14,056 1,740 1,379 3,119 412 354 766 April 7,209 6,187 13,396 1,658 1,315 2,973 393 337 730 May 6,876 5,901 12,776 1,581 1,254 2,835 375 322 696 June 7,053 6,053 13,107 1,622 1,286 2,909 384 330 714 July 8,651 7,424 16,075 1,990 1,578 3,567 471 405 876 August 9,168 7,868 17,036 2,109 1,672 3,780 500 429 928 September 9,033 7,752 16,786 2,078 1,647 3,725 492 423 915 October 9,352 8,026 17,378 2,151 1,705 3,856 510 437 947 November 8,720 7,483 16,203 2,006 1,590 3,596 475 408 883 December 8,462 7,262 15,723 1,946 1,543 3,489 461 396 857 Total 95,108 81,620 176,728 21,875 17,344 39,219 5,183 4,448 9,632 Source: PT. Rigunas Agri Utama, Februari 2017

The FFB from Peranap Estate are processed together with FFB from other supply based, FFB from 3rd party supply bases will processed together with FFB from own estates, and therefore Peranap Mill used RSPO Supply Chain Mass Balance Model – Module E.

Based on the above figures, the estimated of certified CPO and PK offered in 2017 for certification are: Estimated tonnage of certified CPO produced 39,219 MT Estimated tonnage of certified PK produced 9,632 MT

Audit Report

1.9 Other certificates held The organisation is implementing ISCC standard based on the following certificate.

Table 10: Certificates Held by Mill and Estates

MILL/ESTATE OTHER CERTIFICATION HELD

Peranap Mill and Estate ISCC by SGS Germany, EU-ISCC-Cert-DE100-20130950, Period of 26 November 2013 – 25 November 2014 Source: PT. Rigunas Agri Utama, January 2016

1.10 Organizational information/contact person

PT. Rigunas Agri Utama Jl. MH. Thamrin No. 31, Jakarta 10230 Phone : (+62-21) 2301119 Fax : (+62-21) 2301120 Contact person : Ms. Asrini Subrata Stakeholder Relation Manager Email : [email protected]

1.11 Time bound plan for other management units

PT. Rigunas Agri Utama as a subsidiary of PT. Inti Indosawit Subur is committed to RSPO certification of all its Management Units located in North Sumatera, Riau and Jambi Provinces. Time bound plan has been developed to achieve the RSPO certification for all its Management Units by 2018 and 2016 for Plasma. The time bound plan is realistic and challenging. The plan was detailed on Table 11. The time bound plan was revised in February 2016, because the previous version was not updated.

Table 11: RSPO Certification Time Bound Plan

Name of Supply Estate Time bound for Name of Mill Mill Address Progress Base Plantation Address certification

Buatan I Mill Delik & Pangkalan Buatan Estate Delik & Pangkalan 2010 Certified on Kerinci Village, Kerinci Village, Bunut 16 September Bunut Langgam Langgam District, 2010 District, Pelalawan Pelalawan Regency, Regency, Riau Riau Re-Certified Buatan (Plasma) Delik & Pangkalan on 17 Kerinci Village, Bunut September Langgam District, 2015 Pelalawan Regency, Riau Buatan II Mill Delik & Pangkalan Buatan Estate Delik & Pangkalan 2010 Certified on Kerinci Village, Kerinci Village, Bunut 16 September Bunut Langgam Langgam District, 2010 District, Pelalawan Pelalawan Regency, Regency, Riau Riau Re-Certified

Audit Report

Name of Supply Estate Time bound for Name of Mill Mill Address Progress Base Plantation Address certification

Buatan (Plasma) Delik & Pangkalan on 14 Kerinci Village, Bunut Desember Langgam District, 2015 Pelalawan Regency, Riau Ukui I Mill Ukui Village, Ukui Ukui Estate Ukui Village, Ukui 2010 Certified on District, Pelalawan District, Pelalawan 1 March 2011 Regency, Riau Regency, Riau Re-Certified on 29 Februari 2016 Ukui (Plasma) Ukui & Lubuk Batu Brought forward Certified on Jaya District, from 2012 to 11 June 2012 Pelalawan & Inhu 2011 Regency, Riau Re-Certified on 29 Februari 2016 Ukui II Mill Ukui Village, Ukui Soga Estate Ukui Village, Ukui 2010 Certified on District, Pelalawan District, Pelalawan 1 March 2011 Regency, Riau Regency, Riau Re-Certified on 29 Februari 2016 Ukui (Plasma) Ukui & Lubuk Batu Brought forward Certified on Jaya District, from 2012 to 11 June 2012 Pelalawan & Inhu 2011 Regency, Riau Re-Certified on 29 Februari 2016 Tungkal Ulu Pulau Pauh / Tungkal Ulu Pulau Pauh / 2011 Certified on Mill Penyabungan / Estate Penyabungan / 15 August Merlung Village, Merlung Village, 2012 Tungkal Ulu Tungkal Ulu District, District, Tanjung Tanjung Jabung Jabung Regency, Regency, Jambi Jambi Tungkal Ulu Renah Mendalo, 2012 Certified on (Plasma) Merlung, Muara 11 July 2013 Papalik District, Tanjung Jabung Barat Regency, Jambi Muara Bulian Singoan / Bukit Muara Bulian Singoan / Bukit Sari / 2011 Certified on Mill Sari / Bulian Jaya Estate Bulian Jaya Village, 28 August Village, Muara Muara Bulian / 2012 Bulian / Pemayung Pemayung District, District, Batang Batang Hari Hari Regency, Regency, Jambi Jambi Muara Bulian Maro Sebo Ilir 2012 Certified on (Plasma) District, Batanghari 12 July 2013 Regency, Jambi

Topaz Mill Petapahan Village, Topaz & Seed Petapahan Village, 2013 Certified on Tapung District, Garden Estate Tapung District, 30 March Kampar Regency, Kampar Regency, 2015 Riau Riau Taman Raja Lubuk Bernai / Taman Raja & Lubuk Bernai / 2013 Certified on Mill Kampung Baru / Badang Estate Kampung Baru / 20 February Pelabuhan Dagang Pelabuhan Dagang / 2015 / Pematang Pauh Pematang Pauh Vilage, Tungkal Ulu Vilage, Tungkal Ulu

Audit Report

Name of Supply Estate Time bound for Name of Mill Mill Address Progress Base Plantation Address certification

District, Tanjung District, Tanjung Jabung Regency, Jabung Regency, Jambi Jambi Segati Mill Langkan / Segati Estate Langkan / Penarikan Main Audit in 8 – On Progress Penarikan / / Tambak / Sotol 18 December awaiting for Tambak / Sotol Village, Langgam 2014 by BSI certificate Village, Langgam District, Pelalawan Group Indonesia District, Pelalawan Regency, Riau Regency, Riau Penarikan & Pangkalan Sarik / Main Audit in 8 – On Progress Gondai Estate Baru Village, 18 December awaiting for Langgam / Siak Hulu 2014 by BSI certificate District, Pelalawan / Group Indonesia Kampar Regency, Riau Penarikan (KKPA) Pangkalan Sarik / 2018 Gap analysis Baru Village, and Internal Langgam / Siak Hulu audit in May District, Pelalawan / 2016. Also, Kampar Regency, socialization Riau to farmers Gunung Sahilan Gunung Sahilan 2018 - (KKPA) Village, Lipat Kain District, Pelalawan Regency, Riau Tanah Datar Tanah Datar Tanah Datar Tanah Datar Petatal Brought Forward Certified on Mill Petatal Village, Estate Village, Talawi from 2015 to 18 May 2015 Talawi District, District, Asahan 2013 Asahan Regency, Regency, North North Sumatera Sumatera Bahilang Estate Bahilang Village, Tebing Tinggi District, Serdang Bedagai Regency, North Sumatra Aek Nabara S1-S3 / Sukadame Aek Nabara S1-S3 / Sukadame Brought Forward Certified on Mill Village, Bilah Hulu / Estate Village, Bilah Hulu / from 2015 to 6 March 2015 Kota Pinang Kota Pinang District, 2013 District, Labuhan Labuhan Batu Batu Regency, Regency, North North Sumatra Sumatra Teluk Panjie Teluk Panjie Teluk Panjie Teluk Panjie Village, Brought Forward Certified on Mill Village, Kampung Estate Kampung Rakyat from 2015 to 21 April 2015 Rakyat District, District, Labuhan 2013 Labuhan Batu Batu Regency, North Regency, North Sumatra Sumatra Peranap Mill Simelinyang / Pauh Peranap Estate Simelinyang / Pauh Brought Forward Certified on Ranap / Sengkilo Ranap / Sengkilo from 2016 to 7 January Village, Peranap Village, Peranap 2013 2015 District, Indragiri District, Indragiri Hulu Hulu Regency, Regency, Riau Riau Peranap (Plasma) Simelinyang / Pauh 2016 Certified on Ranap / Sengkilo 4 May Village, Peranap 2016 District, Indragiri Hulu Regency, Riau Bungo Tebo Tuo Sumai / Bungo Tebo Tuo Sumai / Sungai 2016 Certified on Mill Sungai Rambai Estate Rambai Village, PWK 3 December Village, PWK Sumai / Tebo Ulu 2015 Sumai / Tebo Ulu District, Bungo Tebo

Audit Report

Name of Supply Estate Time bound for Name of Mill Mill Address Progress Base Plantation Address certification

District, Bungo Regency, Jambi Tebo Regency, Jambi Bungo Tebo Tuo Sumai / Sungai 2016 Certified on (Plasma) Rambai Village, PWK 24 september Sumai / Tebo Ulu 2016 District, Bungo Tebo Regency, Jambi Tanjung Kampung Padang Tanjung Selamat Kampung Padang 2017 Certified on Selamat Mill Village, Bilah Hilir Village, Bilah Hilir 26 May 2015 District, Labuhan District, Labuhan Batu Regency, Batu Regency, North North Sumatra Sumatra Pangkatan Sennah Village, Bilah 2017 Certified on Hilir District, Labuhan 26 May 2015 Batu Regency, North Sumatra Gunung Rahuning Village, Pulau Maria Rahuning Village, 2017 Certified on Melayu I Bandar Pulau Estate Bandar Pulau District, 7 September District, Asahan Asahan Regency, 2015 Regency, North North Sumatra Sumatra Gunung Gonting Mahala Sentral & Batu Gonting Mahala 2017 Certified on Melayu II Village, Bandar Anam Estate Village, Bandar Pulau 8 July 2015 Pulau District, District, Asahan Asahan Regency, Regency, North North Sumatra Sumatra Negri Lama II Negri Lama Negri Lama Negri Lama 2018 - Certified on Seberang Village, Utara, Seberang Village, 23 Bilah Hilir District, Negri Lama Bilah Hilir District, December Labuhan Batu Central, Labuhan Batu 2016 as Regency, North Negri Lama Regency, North Independen Sumatra Selatan Sumatra t Mill Aek Kuo Aek Korsik Village, Audit in 2016 Aek Natas District, as Mill and Labuhan Batu Supply Base Regency, North Sumatra Negri Lama I Negri Lama *3rd party which is Negri Lama Brought Forward - Certified on Seberang Village, excluded from Seberang Village, from 2018 to 8 April 2015 Bilah Hilir District, scope of Bilah Hilir District, 2013 Audit in 2016 Labuhan Batu certification Labuhan Batu as Regency, North Regency, North Independent Sumatra Sumatra Mill Source: Asian Agri, November 2016

1.12 Partial Certification Requirements

The internal auditor organisation conducted the site visit and review regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3, land conflict, labour disputes and legal non-compliance to all management units which have not been certified to ensure that partial certification requirements were fulfilled.

All Management Units have been audited for RSPO Certification based on Table 13: RSPO Certification Time Bound Plan, except several areas which land use title are not ready. Statuses of land use title for the related management unit were:  Negeri Lama Estate, PT. Hari Sawit Jaya: Land titles HGU Extension No.02-12-00-00-2-

Audit Report

00074 issued on 29 February 2016 includes SK BPN Sumatera Utara No.3/HGU/BPN.12/XI/2015 dated 8 December 2015 regarding extension land titles issues for PT Hari Sawit Jaya for area coverage 188.75 Ha. Until this annual surveillance audit, other HGU of the rest of area is still in process for technical consideration in gaining Location Permit from Land Agency (BPN) of Labuhan Batu Regency.  Teluk Panjie Estate, PT. Supra Matra Abadi: on progress for technical consideration in gaining Location Permit from Land Agency (BPN) of Rokan Hilir Regency, Riau Province.  Topaz Estate, PT. Tunggal Yunus Estate: Until this annual surveillance audit is on progress for recommendation regarding Location Permit applied to Regent (Bupati) of Kampar for area 230 Ha.

1.13 Date of issue of certificate and date of previous assessment

Date of issue of first certificate: January 7th 2015 Date of previous assessment: November 17th to 19th, 2015 and May 4th, 2016

2.0 AUDIT PROCESS

2.1 Certification body

PT. SAI Global Indonesia Graha Iskandarsyah, 4th floor Jl. Iskandarsyah Raya No. 66 C Kebayoran Baru, Jakarta 12160, Indonesia Phone : +62 21 720 6186, 720 6460 Fax : +62 21 720 6207 Contact person : Inge Triwulandari Technical Manager Email : [email protected]

SAI Global is one of the world’s leading business providers of independent assurance. SAI Global provides organisations around the world with information services and solutions for managing risk, achieving compliance and driving business improvement.

We provide aggregated access services to Standards, Handbooks, Legislative and Property publications; we audit, certify and register your product, system or supply chain; we facilitate good governance and awareness of compliance, ethics and policy issues and provide training and improvement solutions to help individuals and organisations succeed.

The SAI Global business is driven by two equally important client needs - the mandated need for organisations to conform to regulations, standards and legislation in all their locations, and the operational need for organisations to improve business processes and procedures as well as corporate culture. As we are a global company, we can meet these needs for any client - those operating within one country's borders and in one language or those operating across borders and in many languages.

There are three business units/divisions within SAI Global namely the Information Services Division, the Compliance Division, and the Assurance Division. The Assurance Division helps organisations manage risk, achieve process or product certification and drive improvement by

Audit Report providing training, registration audits and supplier management programs that can improve business performance. We provide independent audits, assessments and certification of your products or business processes to ensure they comply with industry standards or customer specific requirements. We understand how compliance with those standards can improve the efficiency, economy and profitability of your operation. With auditing and assessment staff located around the world, our clients include large global corporations as well as single site organisations.

2.2 Audit methodology

The 2nd Annual Surveillance Audit was performed on 22 – 25 November 2016. The audit plan is available in Appendix A of this report on page 149. Assessments plan has included but not be limited to areas of potential environmental and social risk. Considering previous audit findings, the mill and all supply bases were audited during this surveillance audit.

The audit methodology for collection of objective evidences is site inspection, documentation and record review and interview with staffs, workers, and group discussion with the stakeholders. Objective evidences from documentation/record review in one area may also be cross checked with other objective evidences in other areas and with the evidence of implementation on site during the audit. Inputs from stakeholders via letter, email, or other communication media were also considered for this surveillance audit.

During the audit, particular attention has been paid to previous non-conformities (Appendix B). The previous major and minor non-conformities were checked for being closed.

2.3 Qualification of the lead auditor and audit team member

Eko Purwanto – Lead Auditor and Verifying Auditor Eko Purwanto graduated as Bachelor of Forestry from Forest Conservation Department, Faculty of Forestry, Bogor Institute of Agriculture (IPB) in 2001. He owned working experience at Oil Palm Plantation in East Kalimantan since 2003 to 2012, the last position was Estate Manager. He has implemented good agricultural practice including integrated pest management and limited pesticides uses. He has completed lead auditor training courses for RSPO P & C (2013), ISO 9001:2008 (2012), ISO 14001:2004 (2013), ISPO (2012) and RSPO SCC (2012). He has also completed training course of ISO 14001 (2012), Minaut (Oil and Automotive) Indonesia (2011) and Introduction to HCV Toolkit HCV (2011). Since October 2012 he has been involved in quality (ISO 9001) management system audits for very broad industrial and involved in Indonesia Sustainable Palm Oil (ISPO) and RSPO P&C audit for several plantations and mills, also RSPO Supply Chain audit for several KCP, Bulking and Refinery.

Ahmad Furqon – Audit Team Member and audited Legal, best agriculture practice and Supply Chain He graduated as bachelor from Department of Agronomy and Horticulture, Faculty of Agriculture, Bogor Agricultural Institute in 2010. Having work experience as Section Head of plantation in PT Astra Agro Lestari for 6 years. Having the experience in management of sustainable palm oil (RSPO and ISPO), environment management, social impact, and safety management system at palm oil plantations. Join at SAI Global since in Mei 2016 as Auditor for the ISO 9001:2015, ISPO, and RSPO. Involved in the quality management system for various the industry sectors, RSPO and ISPO. Some training that have been followed were Hazard Analysis and Critical Control Point

Audit Report

(HACCP) (2013), Industrial Relation Training (2016), ISO 9001:2015 Lead Auditor (2016), ISO 14001:2015 Lead Auditor (2016), RSPO P&C Lead Auditor (2016), RSPO Supply Chain Lead Auditor (2016) and ISPO Lead Auditor (2016).

Daniel Sitompul – Audit Team Member and audited OHS aspect Daniel graduated with Bachelor of Chemical Engineering degree from Indonesia Institute of Technology in 1995. He has working experience as Quality, Environment and Safety Consultant for many years. She has completed ISO 14001 (2007), OHSAS 18001 (2010), Ahli K3 Umum (2007), ISO 9001 (2009), RSPO PC Training (2013), Auditor SMK3 (2013) dan ISPO Auditor Training (2013). He has also completed the training form government regarding to Safety Management System (SMK3), PROPER and AMDAL (environment). For the last 5 years she has been involved in quality (ISO 9001), Safety (OHSAS 18001) and environmental (ISO 14001) management system consultancy and audits for very broad industrial and in the palm oil sector since 2013 for several plantations and mills.

Eko Prastio Ramadhan – Audit Team Member and audited Social Aspect Eko Prastio Ramadhan graduated as Bachelor of Forestry from Forest Conservation and Ecotourism Department, Faculty of Forestry, Bogor Institute of Agriculture (IPB) in 2008. He owned working experience at NGO Birdlife Indonesia since May 2009 – December 2012 as Field Officer, at PT Inoa Konsultindo since May 2013 – November 2013 as Biodiversity Consultant and at PT Salim Ivomas Pratama Tbk since May 2014 – November 2015 as Assistant of Sustainability Department. He has completed training courses for Social Impact Assessment (2016), Supply Chain Certification Lead Auditor (2016), LAT ISO 9001:2008 (2015), ISPO Auditor (2015), Introduction to RSPO Supply Chain Certification (2015) and HCV Assessment and Identification (2014).

Yosi Zainal Muhammad – Audit Team Member auditor for environment aspect and HCV He was graduated as bachelor from Department of Forest Resources Conservation and Ecotourism, Faculty of Forestry, Bogor Agricultural Institute in 2008. Having the work experience as Sustainablity Assistant at Musim Mas Group (2008-2009), as Research Assistant at World Agroforestry Centre for The Palm Oil Carbon Footprint Project, and as Sustainability Supervisor at Bima Palma Group (2011-2015). Having the experience in management of sustainable palm oil (RSPO and ISPO), environment management, social impact, and safety management system at palm oil plantations. Join at SAI Global since on December 2015 as Auditor for the ISO 9001:2008, ISPO, and RSPO. Involved in the quality management system for various the industry sectors, RSPO and ISPO. Some trainings that have been followed were Calculation of Palm Oil Footprint Carbon (2011), Safety Specialist (2013), and Social Impact Assessment (2014). He has also completed lead auditor training / course for ISO 9001:2008 (2015), ISO 14001:2015, ISPO P&C (2016), RSPO Supply Chain (2016), and RSPO P&C (2016).

2.4 Stakeholder consultation

Stakeholder consultation was performed to internal and external stakeholders. Internal stakeholders included staffs and workers. External stakeholders were selected by considering that they have an interest in the organisation activities, directly border with organisation, area which the workers live. External stakeholders included NGO, governments and civil societies.

Letters were also sent to external stakeholders to invite for comment or individual/group discussion. Group and Individual discussion with stakeholders was conducted during audit, to verify compliance against relevant criteria and indicator related to land status and conflict,

Audit Report environmental, social aspect and HCV. Surrounding Village of estate and mill has been chosen to represent societies.

Group interview was conducted for workers with similar job while others were interviewed individually in the scope to verify compliance against relevant criteria and indicator related to infrastructure facility, labour, social aspect (discrimination and sexual harassment), environment and HCV. The result of stakeholder consultation was used to justify fulfilment of some indicators, e.g. criterion 2.2 indicator major 3, minor 1 and minor 2, criterion 2.3 indicator major 1, criterion 6.5 indicator minor 1, criterion 6.6 indicator minor 1, criterion 6.7 indicator minor 1, criterion 6.8 indicator minor 1, criterion 6.9 indicator minor 1, 2 and 3, criterion 6.10 indicator minor 1 and 2, criterion 6.11 indicator minor 1, etc.

The result of these consultations was provided in Appendix “D” on page 166.

Table 12: List of internal and external stakeholder

Stakeholders Methods of Consultation

Internal stakeholders ( mill & estates )

Head of SPSI Group discussion

Head of Gender Committee Group discussion Group discussion for workers with similar role, Workers otherwise individually interviewed Farmer groups (FFB Supplier / KUD) - KUD Bukit Permai Group discussion - KUD Serangge Permai - KUD Lakat Makmur External Stakeholders ( mill & estates ) Head of Villages : - Talang Individual discussion - Semelinang Social and Labour Agency (Dinas Sosial dan An invitation letter to comment was sent Tenaga Kerja Kabupaten Indragiri Hulu) Agriculture and Plantation Agency (Dinas Pertanian dan Perkebunan Kabupaten An invitation letter to comment was sent Indragiri Hulu) Environment Agency (BLHD Kabupaten An invitation letter to comment was sent Indragiri Hulu) National Land Agency (Badan Pertanahan An invitation letter to comment was sent Nasional (BPN) Kabupaten Indragiri Hulu) Sub District Police (Kepolisian Sektor An invitation letter to comment was sent Peranap) Sub District Head (Camat Peranap) An invitation letter to comment was sent NGOs: AMAN (Aliansi Masyarakat Adat Nasional), GAPKI, Sawit Watch, WWF, An invitation letter to comment was sent Lentera Rakyat and Walhi District Head (Bupati Kabupaten Indragiri An invitation letter to comment was sent Hulu)

Audit Report

2.5 Date of next surveillance visit

The next surveillance visit will be conducted around November 2017 or three months before datum month of the certification period.

3.0 AUDIT FINDINGS

3.1 Action taken on previous audits findings

All non-conformances (Major and Minor) from the previous audits have been followed up by taking corrective actions. Corrective actions have been implemented and verified. All corrective actions were considered as closed satisfactorily, except for one indicator RSPO P&C 5.6.3, the finding is repeated therefor the category is upgraded from minor to major.

3.2 Claim and use of certification mark and or logo

Certified CPO and PK were sold under RSPO and other scheme (ISCC). Delivery of RSPO certified product during last one year period is described below.

Table 13: Actual Sales of Certified Palm Products (January – December 2016) CPO PK Month Non RSPO ISCC Non Certified RSPO ISCC Certified January - 1,612 2,177 422 416 332 February 2,995 666 439 364 379 368 March - 2,708 1,619 213 86 633 April - 2,556 1,427 490 248 406 May 507 1,763 1,267 188 331 420 June - 2,513 945 190 244 207 July - 2,499 536 386 275 169 August 518 3,115 512 288 407 205 September - 3,680 1,426 932 - 319 October - 4,564 1,081 1,118 - 552 November - 4,365 1,503 1,261 - 205 December - 4,304 485 1,278 - 232 Total 4,021 34,345 13,417 7,131 2,387 4,048

Audit Report

3.3 Description of audit findings

3.3.1 RSPO Principle and Criteria

PRINCIPLES 1: COMMITMENT TO TRANSPARENCY CRITERION / INDICATOR OBSERVATIONS & COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST OBJECTIVE EVIDENCE (YES/NO) 1.1 Growers and millers provide adequate information to relevant stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making. 1.1.1 There shall be evidence that growers and millers provide adequate information on (environmental, social and/or legal) issues relevant to RSPO Criteria to relevant stakeholders for effective participation in decision making.

Specific Guidance: For 1.1.1: Evidence should be provided that information is received in appropriate form(s) and language(s) by relevant stakeholders. Information will include information on the RSPO mechanisms for stakeholder involvement, including information on their rights and responsibilities. a. Does the company maintain a list of - Stakeholder list of PT The organization documented and maintained stakeholder list on document “Daftar Stakeholder YES stakeholders? (E.g. listed by Rigunas Agri Utama, PT Rigunas Agri Utama” updated on 5 February 2016. Stakeholder consists of governance category and stakeholders listed updated September agency, village chief, prominent figure, workers organization and third parties. Data and should be site specific) 2016 information will be update by SSL Officer (Public Relations) if there are changes. Information provided to public and stakeholder specified in social communication procedures AA-GL-5008.1- b. What is the frequency of updating the stakeholder list? - SOP AA-GL-5008.1- R1 – Communication and consultation procedure. Stakeholder verification conducted by Public R1 dated 22 August Relation if there are changes, it was shown during interview with stakeholder that they c. Is there evidence of stakeholder 2011 continuously communicate with Public Relation. verification?

d. What type of information is - List information for The Organization has determined the type of information that is available and accessible to all provided? (E.g. Environmental, stakeholder updated 5 stakeholders. There are 13 types of information that is available to stakeholders : social and legal) February 2016 - Number of employees and a list of basic wages of employees (village, sub-district,

e. What is the frequency and level of district Manpower and province, worker, worker union) - Interview with access to this information? - NPWP (KPP) stakeholder and field - Payment of local taxes/levies (Dispenda) f. How and where is the information observation - Document of EIA (BLH District and Province, KLH, NGOs) disseminated? - Certificate of incorporation and its amendments, areal statement and its production g. Who is responsible for providing & (Disbun District and Province, BPS, BPPT) updating information? - Evidence of land tenure (village, subdistrict, Disbun district and province, BPN, NGOs) - Report of HCV identification (Village, BKSDA, BLH District and province, NGOs) h. Is there an SOP available to - Reports SIA identification (Village, BKSDA, BLH District and province, NGOs) describe the process (of information

Audit Report

CRITERION / INDICATOR OBSERVATIONS & COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST OBJECTIVE EVIDENCE (YES/NO) sharing/dissemination)? - Report of empowerment (Village, Subdistrict, District, Province, NGOs) - Report of P2K3 (Manpower office district and province) i. Are stakeholders aware of the type - Document improvement program (Government agencies) of information available and the procedures for accessing the - Document RSPO audit report (Village, Subdistrict, District, Province, NGOs) - Document human rights policy (Village, Subdistrict, District, Province, NGOs) information? All information above can be accessed by interested parties. Provision of information should be known by SSL Officer and approved by the General Manager. If the information is confidential trade must go through the approval of Regional Head Office. The relevant stakeholders received information on the RSPO mechanisms for stakeholder involvement, including information on their rights and responsibilities. All information provided in several stakeholders is in accordance with the terms and language used, for example in the form of reports and the contents of the report. Delivery of Information is delivered in Bahasa.

1.1.2 (M) Records of requests for information and responses shall be maintained.

Guidance: Growers and millers should have a Standard Operating Procedure (SOP) to respond constructively to stakeholders, including a specific timeframe to respond to requests for information. Growers and millers should respond constructively and promptly to requests for information from stakeholders. Growers and millers should ensure that sufficient objective evidence exists to demonstrate that the response is timely and appropriate. See Criterion 1.2 for requirements relating to publicly available documentation. See Criterion 6.2 on consultation. See Criterion 4.1 on SOPs. a. Does the company have an SOP to - SOP AA-GL-5008.1- YES Organization has established and implemented a mechanism for receiving and providing ensure constructive response to R1 dated 22 August information in the procedure - SOP Penanganan Permintaan Informasi Stakeholder (Handling of stakeholders? 2011 Information Request from Stakeholder) SOP AA-GL-5008.1-R1 dated 22 August 2011 which

b. Who is the personnel in charge explain the mechanism of response to requests for information by referring to the list of - Logbook (PIC)? stakeholders and stakeholder information according to the principles and criteria for sustainable Communication and palm oil. The initial response was given no later than 14 days after receipt of the request from c. Does the SOP cover the elements Consultation Y2016 stakeholders. under 1.1.1? d. Is there a clear time frame for - Record of information All information except confidential commercial information or information which has a negative response to request for information? request and responses impact on the environment and social can be provided by the organization. Request for Y2016 information outside of the list of public information should be approval of top management and e. Are records of requests for - Log Book ‘Information the provision of information comes with an official receipt. information and responses Request and In the procedure also described specific timeframe to respond the requests for information from maintained? Response year 2016 –

Audit Report

CRITERION / INDICATOR OBSERVATIONS & COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST OBJECTIVE EVIDENCE (YES/NO) f. Are responses to requests for KUD Serangge Permai stakeholder depend on its request. Organizations usually respond directly to requests for information timely and appropriate? - Log Book ‘Information information from all interest party/stakeholder. Request and All information requests from stakeholder and their respond were listed and recorded by Mill and Response year 2016 – Estate on logbook “Record of information request and responses”. Most of requests were an KUD Lakat Makmur invitation to follow the event held by the stakeholders, for example: invitation for memorial of - Interview with religious holidays, invitation for area meeting from Camat (Head of Subdistrict) and proposal for smallholder in 24 and borrowing heavy machine like excavator, etc. 25 November 2016 - Interview with However, organizations are routinely required to submit reports to the regulatory agencies, such stakeholder dated 23 as: Monthly Social Security, Report to the CTF return period PPh21, P2K3 Report (Office of November 2016 Manpower and Transmigration), and Report of the implementation of the RKL / RPL (Environmental Agency of the district, the province and the Ministry of Environment, Land Application Report (LA). Organization (estate and Mill) monitor all of the information that is communicated to stakeholders routinely.

Smallholders Smallholder estate send their FFB to the Mill, in this case is PT Rigunas Agri Utama (Peranap Mill). It’s operational and procedure are in accordance to company/organizations procedure. Each KUD get help from company to upkeep their plantation and each of them have an agreement letter and justified by regional plantation agency. Requests for information submitted in proposal and send to company, all the information and aspirations will be addressed to organization with consideration company policy. Some of proposal were rejected and approved by the company. PIC who’s tasked associated with social communication are Estate manager with the daily implementing are ‘Public Relations’. And elements 1.1.1. already described in this procedure. The initial response was given no later than 14 days after receipt of the request from stakeholders. This time frame already decided in the procedure AA-GL-5008.1-R0 – ‘Stakeholder Information Request Handling’. The initial response was given no later than 14 days after receipt of the request from stakeholders. Records of information requests and aspirations documented in the Log Book ‘Information

Audit Report

CRITERION / INDICATOR OBSERVATIONS & COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST OBJECTIVE EVIDENCE (YES/NO) Request and Response year 2016’. Information and responses may include the following:  The contract between the manager and farmer partnership.  Letter of land / property certificate.  Material / training materials on IPM and the use of agricultural chemicals safely.  Health and safety plan.  Planning and impact assessments relating to social impacts and environmental.  Pollution prevention plans.  Complete description of complaints and objections.  Negotiation procedure.  Procedures for calculating the price, and to establish the quality of TBS  Records of current debts and payments, deductions and charges  Continuous improvement plan 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes. 1.2.1 (M) Publicly available documents shall include, but are not necessarily limited to: • Land titles/user rights (Criterion 2.2); • Occupational health and safety plans (Criterion 4.7); • Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8); • HCV documentation (Criteria 5.2 and 7.3); • Pollution prevention and reduction plans (Criterion 5.6); • Details of complaints and grievances (Criterion 6.3); • Negotiation procedures (Criterion 6.4); • Continual improvement plans (Criterion 8.1); • Public summary of certification assessment report; • Human Rights Policy (Criterion 6.13).

Guidance:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST OBJECTIVE EVIDENCE (YES/NO) This concerns management documents relating to environmental, social and legal issues that are relevant to compliance with RSPO Criteria. Management documents will include monitoring reports. The auditors will comment on the adequacy of each of the documents listed in the public summary of the assessment report. Examples of commercially confidential information include financial data such as costs and income, and details relating to customers and/or suppliers. Data that affects personal privacy should also be confidential. Ongoing disputes (within or outside of a legal mechanism) can be considered as confidential information where disclosure could result in potential negative outcomes for all parties involved. However, affected stakeholders and those seeking resolution to conflict should have access to relevant information. Examples of information where disclosure could result in potential negative environmental or social outcomes include information on sites of rare species where disclosure could increase the risk of hunting or capture for trade, or sacred sites which a community wishes to maintain as private. Growers and millers should ensure that sufficient objective evidence exists to demonstrate that the level of measuring and monitoring of the management plan, and information, is appropriate and made available. For National Interpretation: Specific approaches to personal privacy safeguards, including any legal requirements, will be considered. a. How are the management documents - List information for YES Organisation documents that is generally available by the organisation. List of management listed in (c) below made publicly stakeholder updated documents are publicly available such as: Site Permit (Izin Lokasi), Land Use Title (HGU), available? on 5 February 2016 Plantation Operation Permit (IUP), Environmental and Environment Impact Analysis document - SOP AA-GL-5008.1- b. Where are the documents placed? (AMDAL), environmental management and monitoring report (RKL and RPL implementation R1 dated 22 August reports), HCV Assessment report, Social Impact Assessment (SIA) Report, Occupational Health c. Is the information provided 2011 and Safety Management Plan, Corporate Social Responsibility (CSR) and Continuous adequate? Note: At minimum, an - Site Permit (Izin Improvement Plan Those documents were accessible and shown during this audit. information summary of the Lokasi), document listed below should be - Land Use Title (HGU), The documented procedure was established, it’s described the process and responsibilities and made available. - Plantation Operation authorities in regards responding the request on information from the public. The coverage of  Land titles/user rights (Criterion Permit (IUP), request on information as stated in the procedure including information on legal documents, 2.2) - Environmental and environmental documents, social activities documents, occupational health and safety - Legal boundaries ,land Environment Impact programme documents and continual improvement documents. Analysis document use, classification, total All monitoring reports publicly available such as environmental management and monitoring (AMDAL), area, grant title, permit report (RKL and RPL implementation reports), reports of P2K3 and etc. validity , NCR rights, - Environmental  Occupational health and safety management and Smallholders plans (Criterion 4.7); monitoring report (RKL and RPL Documents available to the public specified in the ‘List of Documents – PT. Rigunas Agri - risk assessment and Utama’. mitigation, emergency implementation response plan, training, reports), Documents available to the public and stakeholder can be provided to stakeholders according to accident records - HCV Assessment their relevance through a written request to the organization. report,

Audit Report

CRITERION / INDICATOR OBSERVATIONS & COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST OBJECTIVE EVIDENCE (YES/NO)  Plans and impact assessments - Social Impact Documents available to the public placed in the respective sections within the organization. Such relating to environmental and Assessment (SIA) as identity cards, domicile of the owner, the total area, type of plant, seed origin, productivity, social impacts (Criteria 5.1, 6.1, Report, location of the garden as well as information related to legal issues, environmental and social. 7.1 and 7.8); - Corporate Social Information provided adequate at minimum, an information summary of the document listed such - main social and Responsibility (CSR) as : environmental impacts and - Continuous mitigation measures, Improvement Plan • Land titles/user rights, hold on by owner/farmers  HCV documentation (Criteria 5.2 - List of Documents and

and 7.3); Information – KUD - identification on HCV Serangge Permai and • Environmental – AMDAL, inside EIA PT RAU already covered smallholder scheme areas, maps, management KUD Lakat Makmur • Social Activities, documented in one document called CSR PT RAU where one of is and monitoring HCV - Social activities report activities is smallholder development  Pollution prevention and – KUD Serangge reduction plans (Criterion 5.6); Permai and KUD • Production - identification of pollutants, Lakat Makmur • RAT report, smallholder farmers are united in one organization called “Koperasi Unit Desa” management and reduction so every year they have annual meeting. List of them are : measures  Details of complaints and grievances (Criterion 6.3); - nature of complaints, parties involved, status of case  Negotiation procedures (Criterion 6.4); - SOP, consultative, neutral, inclusiveness, timeframe, responsibility •  Continual improvement plans (Criterion 8.1); - for all elements under 8.1,  Public summary of certification assessment report; - follow RSPO format  Human Rights Policy (Criterion 6.13).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST OBJECTIVE EVIDENCE (YES/NO) - policy statement should comply to the requirements of 6.13 d. Do the management documents contain monitoring plans and reports? e. Are all monitoring reports publicly available?

1.31 Growers and millers commit to ethical conduct in all business operations and transactions. *1 New Criteria - Growers and millers commit to ethical conduct in all business operations and transactions. 1.3.1 There shall be a written policy committing to a code of ethical conduct and integrity in all operations and transactions, which shall be documented and communicated to all levels of the workforce and operations.

Guidance: All levels of the operations will include contracted third parties (e.g those involved in security). The policy should include as a minimum: • A respect for fair conduct of business; • A prohibition of all forms of corruption, bribery and fraudulent use of funds and resources; • A proper disclosure of information in accordance with applicable regulations and accepted industry practices.

The policy should be set within the framework of the UN Convention Against Corruption, in particular Article 12. a. Is there a written policy committing to - Policy Code of Ethic YES Written policy committing to a code of ethical conduct and integrity in all operations and a code of ethical conduct and dated 1 December transactions was available in “Company Policy” dated 1 December 2014 and signed by the integrity in all operations and 2014 Managing Director. transactions? - Minutes and b. Does the policy include as a attendance Ethic policy includes several aspects, such as: dissemination of code minimum: of ethics policy in PPN - Social Responsibility  A respect for fair conduct of - Wages and KPN business? - Fair conduct of business  A prohibition of all forms of - Infrastructure and accommodation corruption, bribery and - Labour union fraudulent use of funds and - Child labour resources? - Indiscriminative treatment

Audit Report

CRITERION / INDICATOR OBSERVATIONS & COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST OBJECTIVE EVIDENCE (YES/NO)  A proper disclosure of - Protection against sexual harassment and violence information in accordance with - Protection of reproductive rights applicable regulations and - Receipts and provision of gifts, entertainment or assistance in job, corruption and fraud accepted industry practices? - Relation with supplier - Occupational health and safety, and environment c. Is the policy documented and - Employee cooperatives communicated to all levels of the - Human rights workforce and operations, including contracted third parties? How is it The policy was well documented on 01 December 2014 and signed by the Management communicated? Director. The policy has been communicated to all levels of the workforce and operations, including contracted third parties. Dissemination of code of ethics policy has been carried out on d. Are the documentation and communication done in the 18 April 2016 and 26 September 2016. appropriate languages?

Note to auditor: The workforce should be interviewed to determine level of understanding of policy

Audit Report

PRINCIPLES 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. 2.1.1 (M) Evidence of compliance with relevant legal requirements shall be available.

Guidance: Implementing all legal requirements is an essential baseline requirement for all growers whatever their location or size. Relevant legislation includes, but is not limited to: regulations governing land tenure and land-use rights, labour, agricultural practices (e.g. chemical use), environment (e.g. wildlife laws, pollution, environmental management and forestry laws), storage, transportation and processing practices. It also includes laws made pursuant to a country’s obligations under international laws or conventions (e.g. the Convention on Biological Diversity (CBD), ILO core Conventions, UN Guiding Principles on Business and Human Rights). Furthermore, where countries have provisions to respect customary law, these will be taken into account. Key international laws and conventions are set out in Annex 1 Contradictions and inconsistencies should be identified and solutions suggested. For National Interpretation: All relevant legislation will be identified, and any particularly important requirements identified. a. Is the complete list of legal requirements • Procedure Identification and The relevant legal requirement or regulations for Peranap mill and Peranap estate YES available? (Refer to relevant NIs or LIs for evaluation regulation have been established and identified. A list of legal requirements was mentioned (Major NCR list of legal requirements) compliance (AA-GL-5001.1- in List of Environment Regulation, on 01 November 2016. 2016-01 closed) RO) b. Does the company have copies of the Copies of the legal requirements were shown and maintained properly. The legal requirements? • List of Environment Regulation, regulations were regarding to: on 01 November 2016 (AA- Best practise Agronomi/Plantation and mill, such as: Note to auditor: A due diligence on the 432-001-LT) - UU No. 5 tahun 1960 regarding basic regulations of agrarian specifics company/area or management unit on legal • List of Legal Compliance comply by oil palm planting in accordance HGU owned, Fertilizing performed compliance should be conducted prior to field Evaluation 2016 KUD Bukit according to the procedure that is specified audit. Any non-compliance should be verified Permai and Lakat Makmur. during the field audit. - UU No. 12 tahun 1992 regarding cultivation system comply by oil palm • Attendance List – 25 August Relevant legislation includes, but is not limited cultivation performed according to the procedures specified and attention to 2015 – Socialization for to: regulations governing land tenure and land- aspects of environmental pollution and damage to health and safety, not use smallholders use rights, labour, agricultural practices (e.g. pesticides are banned, create the IPM report, perform the plantation chemical use), environment (e.g. wildlife laws, • Record of regulatory business permit pollution, environmental management and compliance evaluation called “ - UU No. 41 tahun 1999 regarding Forestry comply by Appropriate land use forestry laws), storage, transportation and Evaluasi Kepatuhan Hukum PT right, not conduct a cultivation in forest areas processing practices. It also includes laws RAU” updated on June 2016 made pursuant to a country’s obligations under Socialization to smallholders has been done by the company on 22 August 2016. international laws or conventions (e.g. the • PHLwork attendance in behalf The copies of legal regulation was sighted on hardcopy and saved by Convention on Biological Diversity (CBD), ILO

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) core Conventions and UN Guiding Principles on of. Rodiyah, Asmawati and management of smallholders. Based on interview with some smallholders, they Business and Human Rights. Chairul Anwar Period August – understood the regulation relevant and related to oil palm cultivation. October 2016

• List of Legal Compliance Environmental legal compliance such as: Evaluation 2016 KUD Serangge Permai and KUD - Government regulation of the Environment No. 5/2014 - water quality Lakat Makmur standard, environmental impact analysis, etc. • Interview with smallholder in 24 - Government Regulation No. 101/2014 hazardous waste management, and 25 November 2016 company has manage the waste properly (liquid, air and solid waste management) - Government Regulation No. 41/1999 re: Emission Control, Company has conducted air pollution control and emission control periodically in every six month at mill. Conservation legal compliance, such as: - Keppres No. 32 / 1990 regarding Management of protected areas comply by identifying areas comply with HCV in the estate and surrounding area, perform management and monitoring of HCV - UU No. 5 / 1990 regarding the conservation of natural resources and ecosystems, comply with managing HCV areas, create HCV management and monitoring plan and performed it well, create procedures regarding HCV protection.

OHS Legal requirement: - Permit of machinery, safety committee, safety officer, medical insurance, monitoring of working environment, paramedic and first aid officer, clinic for workers, handling of hazardous materials including pesticides, firefighting team and equipment etc. - Evidence of compliance with applicable local, national and ratified international laws and regulations of Peranap Mill and estate have been provided, including: availability of MSDS, periodic safety parameter monitoring (illumination, vibration and noise), medical check-up, safety

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) committee and occupational health and safety report to authority. - At Peranap Plasma, first aid equipment and first aid officer, personal protective equipment, safety sign, firefighting team and fire prevention equipment etc.

Major Non Conformity: 1) There was no documented evidence of compliance with Ministry of Agriculture Regulation No. 98 tahun 2013 regarding Guidelines of The plantation business licensing. It was observed that the PUP (Perkembangan Usaha Perkebunan) report was not sent yet periodically (bi-annually) to local agriculture authorities (Dinas Perkebunan) since the last report in December 2013. 2) Evidence of compliance with legal regulation were not available. Several lifting equipment (grader, tractor and compactor) has not been retested annually by local authorities as required by regulation and one unit backhoe loader also has not been approved by local authorities. 2.1.2 A documented system, which includes written information on legal requirements, shall be maintained.

a. Is there a document system which includes • Procedure Identification and Mechanism for ensuring compliance with all applicable local, national and ratified YES the following? evaluation regulation international laws and regulations were described in Procedure Identification and - Personnel in charge to manage compliance (AA-GL-5001.1- evaluation regulation compliance (AA-GL-5001.1-RO). Evaluation of compliance - Set of legal documents RO) with regulation was conducted by Sustainability Sub Department and Mill and - Comprehensive list of international, Estate Manager. Comprehensive list of international, national, sub-national and • List of Environment Regulation, national, sub-national and provincial provincial laws which details the requirements of specific to the mill and estate on 01 November 2016 (AA- laws which details the requirements operations described in List of Environment Regulation in 2016. 432-001-LT) of specific to the mill and estate The evaluation of compliance was conducted together with the relevant functions operations. between public relation department, sustainable department, and representative - Relevant sections within the law that from estate and mills. The communication to relevant functions was conducted by is identified and linked to activities socialization from public relation department and sustainable department to b. Are the documents available to all levels of respected persons at mill and estate. management? The copies of the applicable regulations were distributed to related section

according to their evaluation and also to management level such as mill manager

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and estate manager.

2.1.3 A mechanism for ensuring compliance shall be implemented. a. Is an internal audit for legal compliance • List of Attendances – Company has performed internal audit for legal compliance conducted annually YES conducted annually and documented? Corrective Action RSPO and well documented : • Internal Audit Sustainability For environment issues there are conducted periodically (once in year) internal (RSPO, ISPO, Environment, audit against the requirement of RSPO, ISPO, Environment, and SMK3 include and SMK3), on 10 – 12 the legal compliance evaluation. Records were sighted for period 2016. The October 2016 internal audit was conducted on 10 – 12 October 2016. Moreover there is a PROPER audit also from local government. • Check list and corrective action audit internal year 2016 2.1.4 A system for tracking any changes in the law shall be implemented.

Specific Guidance: For 2.1.4: The systems used for tracking any changes in laws and regulations should be appropriate to the scale of the organisation. a. Is there a documented methodology (e.g.: • Procedure Identification and Documented methodology for tracking any changes in the law was described in YES personnel in charge (PIC), source of info, evaluation regulation Procedure Identification and evaluation regulation compliance (AA-GL-5001.1- frequency of update) for tracking changes compliance (AA-GL-5001.1- RO). and communication of changes to RO) The sustainable department and SSL department (social, security, and licence) relevant sections of the legislation? • Evaluation of the legal was conducted identification, verification and registered the all legal and other

requirement year 2016 requirements include environment issues. The last updated 01 November 2016, the method of updating regulation was conducted by internet, email and/or by direct visits to the government bodies, the new environment regulation was identified, such as Regulatory Environment Minister 5/2014 waste water quality standard and Government Regulation 101/2014 hazardous waste management. The evaluation of compliance was conducted together with the relevant functions between sustainable team, public relation, and representative from estate and mills. The communication to relevant functions was conducted by socialization from sustainable team and public relation to respected persons at mill and estate 2.2 The right to use the land is demonstrated, and is not legitimately contested by local people who can demonstrate that they have legal, customary or user rights. 2.2.1 (M) Documents showing legal ownership or lease, history of land tenure and the actual legal use of the land shall be available.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

Guidance Where there is a conflict on the condition of land use as per land title, growers should show evidence that necessary action has been taken to resolve the conflict with relevant parties. A mechanism should be in place to resolve any conflict (Criteria 6.3 and 6.4). Where operations overlap with other rights holders, companies should resolve the issue with the appropriate authorities, consistent with Criteria 6.3 and 6.4. For National Interpretation: Any legal, customary or user rights to land, or disputes, which are likely to be relevant, will be identified. a. Are there documents showing legal YES • Decree of the Head of National Company already has the documents showing legal ownership or lease of the ownership or lease of the land available? Land Agency (Badan land in the form of HGU. Copy of land title (HGU) of Rigunas Agri Utama was (e.g. land titles, lease documents) Pertanahan Nasional), sighted and legally owned by the company. Copy of land use title was available b. Are there documents showing history of No.18/HGU/ BPN/2000, dated and well maintained in the office of Peranap Estate, while the original one was land tenure available? (e.g. legal 27th April 2000 kept in the regional Office Pekanbaru. Land use title mentioned that the land was documents showing land status change, located at Pauh Ranap Village, Peranap Sub District, Indragiri Hulu District, Riau • Land Title (HGU) No. 03; Ranap SIA and EIA reports, HCV assessment Province. reports) Pauh village, Sub District: Peranap and Kelayang, District The plantation has a land rights area of 5,215.142 ha, by Decree of the Head of c. Are there documents showing the actual Indragiri Hulu, Riau Province, National Land Agency (Badan Pertanahan Nasional), No.18/HGU/ BPN/2000, legal use of the land available? dated 21st June 2000 dated 27th April 2000 and Land Title (HGU) No. 03; Ranap Pauh village, Sub District: Peranap and Kelayang, District Indragiri Hulu, Riau Province, dated 21st d. Are the documents complete? • Letter of Measurement No. June 2000 and Letter of Measurement No. 01/Inhu/2000, areas 5,215.142 Ha, 01/Inhu/2000, areas 5,215.142 valid until 24th June 2035. Actual land use right was defined in company areal Ha, valid until 24th June 2035. statement, land usage consist of plantation area, emplacement, road Smallholder infrastructure and general facility, mill and conservation area. • Legal ownership of the land for Documents showing legal ownership or lease of the land available were smallholder in KUD Bukit completely avalilable and kept in regional Office Pekanbaru, the copy was sighted Permai, KUD Lakat Makmur during audit in Peranap Estate and mill. and KUD Serangge Permai Smallholder • Site Observation Smallholders already has the legality of its land ownership in the form of property right certificates (SHM) issued by BPN. Each farmer has a SHM 2 ha. In KUD Bukit Permai there were 250 member of smallholder with their own certificate and total area 500 ha, in KUD Lakat Makmur there were 250 member of smallholder with their own certificate and total area 500 ha. In KUD Serangge Permai there were 200 member of smallholder with their own certificate and total area 400 ha. Evidence of ownership SHM can be shown, consists of 10 overlay (farmer groups)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and each overlay consist of 25 members. Several certificate on behalf smallholder were verified during audit such as: - Hardiman, Kavling No. 314, farmers participant (NPP) no. 121, SHM, Property Right Book (SHM) No. 99 as wide as 2 Ha, Surat ukur dated 21 April 2016 based on SK Kepala Kantor Pertanahan Kab. Indragiri Hulu dated 20 April 2016 No. 52/hm/BPN-05.54/SMS/2016. - Sumadi, Kavling No. 13 NPP No. 155, SHM No. 2, SK Kepala Kantor Pertanahan Kab. Indragiri Hulu No. SK : 56/hm/BPN-05.03/SMS/2016 as wide as 2 ha. Surat ukur dated 12 January 2016. - Ade Rosima, Kavling No. 539, NPP No. 121, SHM No. 23, SK Kepala Kantor Pertanahan Kab. Indragiri Hulu No. SK : 22/HM/BPN- 12.90/SMS/2001 as wide as 2 ha. Surat ukur dated 01 August 2001 2.2.2 Legal boundaries shall be clearly demarcated and visibly maintained.

Specific Guidance: For 2.2.2: Plantation operations should cease on land planted beyond the legally determined area and there should be specific plans in place to address such issues for associated smallholders. a. Is there a legal map showing location of YES • Situation Map / HGU map with a There was a legal map showing location of boundary markers recorded on the boundary markers? scale of 1: 40,000, dated Situation Map / HGU map with a scale of 1: 40,000, dated 01/08/1997, no. b. Is there physical presence of boundary 01/08/1997, no. 12/1997 12/1997. markers? • Field observation was to pegs There were physical presence of boundary markers in the form of HGU pegs. c. Is there an SOP for boundary demarcation number Legal boundaries marker were sighted during the audit and maintained along the and maintenance? perimeters of estate lands which were mapped with Global Positioning System • Working Instruction (NLG-WI- (GPS). 001/Rev.0/01-8-16) monitoring Note to auditor: Ground verification of boundary and maintenance of boundary Field observation was conducted to pegs number: markers using GPS should be conducted. markers Priority should be on boundaries with other - Peg HGU 3 (00º 34’16.9” S and 102º 00.41.4' E), block A95F • Legal ownership of the land for estates, community areas, protected area and - Peg HGU 6 (00º 33’52.7” S and 102º 01.45.1' E), block A95B rivers smallholder in KUD Bukit Permai, KUD Lakat Makmur - Peg HGU 7 (00º 33’51.6” S and 102º 02.22.0' E), block A95B and KUD Serangge Permai In the case of Associated Smallholders: Smallholders already has the legality of its land ownership in the form of property d. Are there documents showing that the • Location map of KUD Bukit right certificates (SHM) issued by BPN. There was a legal map showing location boundaries of associated smallholders Permai, KUD Lakat Makmur of boundary markers recorded on the certificate map. Evidence of recording and have been recorded and verified by the and KUD Serangge Permai

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) mill? with a scale of 1: 25,000, dated verifying boundary markers by the mill can be shown. 12 Februari 2014 e. In case of boundary breach, is there proof It was observed, during the field observation that there was no boundary breach in of a mitigation plan being implemented? smallholder estate.

2.2.3 Where there are or have been disputes, additional proof of legal acquisition of title and evidence that fair compensation has been made to previous owners and occupants shall be available, and that these have been accepted with free, prior and informed consent (FPIC).

a. Are there, or have there been any land N/A • Public consultation with No complaints associated with land disputes between the company and the disputes? stakeholders on 23 November surrounding community. This was also confirmed during the public consultation

2016 with stakeholders on 23 November 2016. Note to auditor: Due diligence should be conducted on the management to provide • SOP: Social Conflict and Land PT. Rigunas Agri Utama has established a mechanism for resolution of conflicts evidence that there has been no historical or Dispute Resolution has been and disputes through SOP for Social Conflict and Land Dispute Resolution has current land dispute described in AA-GL-0052.1-R1. been described in AA-GL-0052.1-R1.

b. If there are or have been disputes, are • Site observation and interview This procedure mentioned how the company solves the problem if any conflict with smallholder occurred, both internal and external conflicts. This procedure also mentioned if the there: problem cannot be resolved by negotiation, the company will take legal action - Documents to proof legal acquisition? involving the related institution. - Records of FPIC process?

c. If there has been acquisition involving compensation, are there: Smallholders - Records that Fair compensation has been provided and accepted by Based on public consultation with stakeholder in 23 November 2016 it was note parties involved? and confirm that there were no land dispute that occurred in plasma/smallholder - Records that all affected parties are area. consulted and represented? Smallholder organisation has established a mechanism for resolution of conflicts - Documents of negotiations/discussion and disputes through SOP for Social Conflict and Land Dispute Resolution has available? been described in AA-GL-0052.1-R1.

Note to auditor: There should be direct verification of above with the affected parties

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 2.2.4 (M) There shall be an absence of significant land conflict, unless requirements for acceptable conflict resolution processes (see Criteria 6.3 and 6.4) are implemented and accepted by the parties involved.

a. Does the company have cases of N/A • Public consultation with No complaints associated with land disputes between the company and the significant land conflict? (i.e. preventing stakeholders on 23 November surrounding community. This was also confirmed during the public consultation the company from operating normally) 2016 with stakeholders on 23 November 2016. b. If the company has cases of conflict, are records of the following available? • SOP: Social Conflict and Land PT. Rigunas Agri Utama has established a mechanism for resolution of conflicts - Status of conflict Dispute Resolution has been and disputes through SOP for Social Conflict and Land Dispute Resolution has described in AA-GL-0052.1-R1. been described in AA-GL-0052.1-R1. - SOP/ mechanism for conflict resolution This procedure mentioned how the company solves the problem if any conflict - Implementation of SOP/mechanism occurred, both internal and external conflicts. This procedure also mentioned if the - Acceptance of the procedures by all problem cannot be resolved by negotiation, the company will take legal action parties involving the related institution. - Records of conflict resolution

2.2.5 For any conflict or dispute over the land, the extent of the disputed area shall be mapped out in a participatory way with involvement of affected parties (including neighbouring communities where applicable).

a. Is there an SOP for participatory mapping N/A • Public consultation with No complaints associated with land disputes between the company and the of disputed area? stakeholders on 23 November surrounding community. This was also confirmed during the public consultation

b. Is a dispute map available? 2016 with stakeholders on 23 November 2016. c. Is there documented evidence of • SOP: Social Conflict and Land PT. Rigunas Agri Utama has established a mechanism for resolution of conflicts involvement and acceptance by the Dispute Resolution has been and disputes through SOP for Social Conflict and Land Dispute Resolution has affected parties? described in AA-GL-0052.1-R1. been described in AA-GL-0052.1-R1. This procedure mentioned how the company solves the problem if any conflict Note to auditor: Actual ground verification occurred, both internal and external conflicts. This procedure also mentioned if the showing the accuracy of the dispute map problem cannot be resolved by negotiation, the company will take legal action should be conducted involving the related institution.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 2.2.6 (M) To avoid escalation of conflict, there shall be no evidence that palm oil operations have instigated violence in maintaining peace and order in their current and planned operations.

Specific Guidance: For 2.2.6: Company policy should prohibit the use of mercenaries and para-militaries in their operations. Company policy should prohibit extra-judicial intimidation and harassment by contracted security forces (see Criterion 6.13). a. Does the company have a policy to YES Company have a policy to circumvent instigated violence to maintain peace and circumvent instigated violence to maintain order in current and planned operations. It documented in the Company Policy peace and order in current and planned • Company policy. dated 1 December 2014 and mentioned in the item no 8 and stated circumvent operations? • Public consultation with instigated violence to maintain peace and order in current and planned. b. Is there any evidence of: stakeholders on 23 From the results of the public consultation with stakeholder on 23 November - The use of confrontation and November 2016 intimidation by the company to 2016, also confirmed that no act of violence and militaristic ways adopted by the maintain peace and order? company in solving problems with public / stakeholders. - Use of para-militaries and mercenaries in the plantation?

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.

2.3.1 (M) Maps of an appropriate scale showing the extent of recognised legal, customary or user rights (Criteria 2.2, 7.5 and 7.6) shall be developed through participatory mapping involving affected parties (including neighbouring communities where applicable, and relevant authorities).

Guidance: All indicators will apply to current operations, but there are exceptions for long-established plantations which may not have records dating back to the time of the decision making, in particular for compliance with Indicators 2.3.1 and 2.3.2. Where there are legal or customary rights over land, the grower should demonstrate that these rights are understood and are not being threatened or reduced. This Criterion should be considered in conjunction with Criteria 6.4, 7.5 and 7.6. Where customary rights areas are unclear these should be established through participatory mapping exercises involving affected parties (including neighbouring communities and local authorities). This Criterion allows for sales and negotiated agreements to compensate other users for lost benefits and/or relinquished rights. Negotiated agreements should be non-coercive and entered into voluntarily, carried out prior to new investments or operations, and based on an open sharing of all relevant information. The representation of communities should be transparent and in open communication with other community members. Adequate time should be given for customary decision making and iterative negotiations allowed for, where requested. Negotiated agreements should be binding on all parties and enforceable in the courts. Establishing certainty in land negotiations is of long-term benefit for all parties. Companies should be especially careful where they are offered lands acquired from the State by its invoking the national interest (also known as ‘eminent domain’). Growers and millers should refer to the RSPO approved FPIC guidance (‘FPIC and the RSPO: A Guide for Companies’, October 2008)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) For National Interpretation: Any commonly encountered situations should be identified.

a. Does the company have an SOP on FPIC? YES • SOP Penanganan Konflik Company has established SOP Penanganan Konflik Lahan (Conflict Management b. Is there evidence that the identification of Lahan (Conflict Management and Handling) AA-GL-5003.1-R2 dated 5 May 2015 which stated the mechanism legal, customary or user rights has been and Handling) AA-GL-5003.1- of FPIC. done through FPIC process? R2 dated 5 May 2015. However FPIC process was not applicable due to all land in inside the concession c. Is there evidence that the FPIC process • Areal Statement of PT Rigunas area has been developed in period 1992 – 1997 (based on areal statement). has been implemented in accordance to Agri Utama Based on Social Impact Assessment, HCV Assessment and public consultation the company SOP? Where is this evidence there were no customary rights in the land. recorded? (E.g.: Documents, Minutes of • Public consultation with meeting, Records, Agreements, Maps etc.) stakeholders on 23 November 2016 d. Is there a map of the extent of legal, Smallholders • Legal ownership of the land for customary or user rights? Is this map of Peranap Smallholder scheme already has the documents showing legal smallholder in KUD Serangge appropriate scale (1: 10,000)? ownership or lease of the land in the form of property right certificates (SHM) Permai and KUD Lakat Makmur e. Was the map produced through issued by BPN.

participatory mapping with reference to Smallhoder estate development was based on smallholdings Peranap Location SIA and HCV assessment? Permit (Izin Lokasi) issued by the Governor Riau number: KPTS.78/IL-VI/1992 f. Does the map have a title, legend, source, regarding Location Permit and rights acquisition/acquisition of land in the district

scale and projections/georeference? of Pasir Penyu and Indragiri Hulu district Peranap for oil palm plantations PIR- Trans pattern on behalf of PT. Rigunas Agri Utama. In the first phase granted g. Are the maps accepted by the relevant locations covering 12.857 ha. communities? No complaints associated with land disputes between the smallholders and the surrounding community. This was also confirmed during the public consultation with stakeholders and the local community on 23 November 2016. Documents showing legal ownership or lease of the land available were completely available and kept in Smallholder office/KUD.

2.3.2 Copies of negotiated agreements detailing the process of free, prior and informed consent (FPIC) (Criteria 2.2, 7.5 and 7.6) shall be available and shall include: a) Evidence that a plan has been developed through consultation and discussion with all affected groups in the communities, and that information has been provided to all affected groups, including information on the steps that shall be taken to involve them in decision making; b) Evidence that the company has respected communities’ decisions to give or withhold their consent to the operation at the time that this decision was taken;

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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.

a. Are copies of negotiated agreements with Organizations have established procedures SOP Penanganan Konflik Lahan N/A • SOP Penanganan Konflik affected parties available? (Conflict Management and Handling) AA-GL-5003.1-R2 dated 5 May 2015. Lahan (Conflict Management Describes the mechanism of land conflict resolution mechanisms between b. Is there evidence that the agreement is and Handling) AA-GL-5003.1- companies and land owners. The land cleared for oil palm plantations should prepared through proper FPIC process? R2 dated 5 May 2015. ensure not be a problem and there is no dispute over land ownership. Procedure c. Does the agreement contain the following: • Areal Statement of PT Rigunas was presented to the head of the village around the plantation. - An action plan developed through Agri Utama consultation with affected parties, is Procedure for FPIC process was available, and during public consultation with inclusive and evidence that members • Public consultation with Villages Heads, it was confirmed that the procedure was made in consultation and of affected parties are well informed stakeholders on 23 November discussion with them. The procedure was consulted with surrounding 2016 and involved in the decision making communities around the area of company in September 2012. Stakeholder process meeting held every 5 year and the next stakeholder meeting will be held in 2017. - Evidence of options to give or There are no customary or user right in the plantation. It has been verified during withhold consent for development group discussion with villages head, community leader and young leader around - Evidence that members of the estate. affected communities understand and accept the implication involved in The results of the consultation can be seen that the legal implications, economic, permitting/rejecting oil palm and social environment so that the use of land for plantation development has development on their land (E.g.: legal been understood and accepted by the affected communities, including the status, social, environmental, implications for the legal status of their land, concessions or compensation for economic) their land. - Evidence that the negotiated agreement was entered voluntarily without coercion by all parties - Evidence that adequate time was given for customary decision making and iterative negotiations - Clause which states that the negotiated agreement is legally binding

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 2.3.3 All relevant information shall be available in appropriate forms and languages, including assessments of impacts, proposed benefit sharing, and legal arrangements.

a. Is there evidence that all the information - Interview with stakeholder on 23 Before performing land clearing, the company ensures that all of lands that will be N/A (maps, agreement, records, impact November 2016 cultivated have a clear status. The company has a land map according to the assessment, benefit sharing and legal location permit given by the government. If there was land that become around arrangements) is available in appropriate community ownership within the area of location permit, companies will freeze the forms and languages, understood and land with compensation as agreed both parties. accessible to affected parties? There is no element of coercion and violence that performed by companies. This was also confirmed when the public consultation on 23 November 2016 with Note to auditor: this should be cross checked to community leaders, prominent figure and local governance. a sample of the affected parties Planted areas of the Estate are wholly on Government land, leased under HGU. Maps have been developed for each estate indicating Legal demarcation and planted areas. Currently organizations have established procedures SOP SOP Penanganan Konflik Lahan (Conflict Management and Handling) AA-GL-5003.1-R2 dated 5 May 2015. Describes the mechanism of land conflict resolution mechanisms between companies and land owners. The land cleared for oil palm plantations should ensure not be a problem and there is no dispute over land ownership. Procedure was presented to the head of the village around the plantation 2.3.4 (M) Evidence shall be available to show that communities are represented through institutions or representatives of their own choosing, including legal counsel.

Specific Guidance: For 2.3.4: Evidence should be available from the companies, communities or other relevant stakeholders. a. Who is the representative of the - Interview with stakeholder on 23 FPIC process was not applicable due to all land in inside the concession area has N/A community in the negotiation process? November 2016 been developed in period 1992 – 1997. Based on Social Impact Assessment, HCV Assessment and public consultation there were no customary rights in the b. Is the representative accepted by the community? land c. Is the record of appointment to represent the community available and shared with other parties?

Audit Report

PRINCIPLES 3: COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability. 3.1.1 (M) A business or management plan (minimum three years) shall be documented that includes, where appropriate, a business case for scheme smallholders. Specific Guidance: For 3.1.1: The business or management plan should contain: • Attention to quality of planting materials; • Crop projection = Fresh Fruit Bunches (FFB) yield trends; • Mill extraction rates = Oil Extraction Rate (OER) trends; • Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends; • Forecast prices; • Financial indicators.

Suggested calculation: trends in 3-year running mean over the last decade (FFB trends may need to allow for low yield during major replanting programmes).

Guidance: Whilst it is recognised that long-term profitability is also affected by factors outside their direct control, top management should be able to demonstrate attention to economic and financial viability through long-term management planning. There should be longer term planning for plantations on peat, particularly in regards to subsidence and flooding issues (see Indicator 4.3.5). Consideration of smallholders should be inherent in all management planning where applicable (see also Criteria 6.10 and 6.11). For scheme smallholders the content will vary from that suggested (refer to RSPO Guidance On Scheme Smallholders, July 2009). Growers should have a system to improve practices in line with new information and techniques. For smallholder schemes, the scheme management should be expected to provide their members with information on significant improvements. This Criterion is not applicable to independent smallholders (refer to RSPO Guidance for Independent Smallholders under Group Certification, June 2010) a. Does the company have a documented YES • Management plan during the Management plan during the three-years period 2015 - 2018 was used to achieve business or management plan with a three-years period 2015 – economic viability and long-term financial. The plan was approved by the top minimum planning period of 3 years? 2018 LUK and LUP for period management. The parameters listed in the management plan which includes : b. Does it include the following: 2016 - Land area statement (planting years, non-planted areas, i.e. HCV, - Land area statement (planting • Document of “Rencana Kerja conservation areas, fragile soils, enclaves) with updated location maps. years, non-planted areas, i.e. HCV, Jangka Panjang Peranap conservation areas, fragile soils, Plasma 2016-2018” - Plan for management of scheme smallholders enclaves) with updated location • Smallholder Estate Unit - Quality of planting materials maps. Maps should have title, Report (LUK) 2016 - Crop projection = Fresh Fruit Bunches (FFB) yield trends legend, source, scale and projections/georeferenced - Mill extraction rates = Oil Extraction Rate (OER) trends - Plan for management of scheme - Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) smallholders (where appropriate) - Forecast prices - Quality of planting materials - Financial indicators – profitability forecast (income vs cost) - Crop projection = Fresh Fruit - General strategy and allocation for environmental and social management Bunches (FFB) yield trends - Mill extraction rates = Oil Extraction The achievement of the management plan is reviewed every month in the Estate Rate (OER) trends Unit Report (LUK) and Mill Unit Report (LUP) according to the current month. - Cost of Production = cost per tonne Reviewing of LUK and LUP was conducted for period 2016. of Crude Palm Oil (CPO) trends There was no peat land in PT Rigunas Agri Utama, so that there was no long term - Forecast prices viability plan for plantation on peat. - Financial indicators – profitability forecast (income vs cost) Company have a system to improve practices in line with new information and - Projected expansion (area, mill techniques with implementing internal control and monitoring processes, check capacity, infrastructure, social and report the implementation of the Management Guidelines. These include amenities) independent checks of the Mill and Estates by the corporate internal audit. Person - General strategy and allocation for in charge was internal audit department and research and development (RnD) environmental and social department and each section managers and assistant to cooperate and conduct management (refer to P5, P6 and the continual improvement. Organization has defined the procedure to address P8) non-compliance and corrective action for continuous improvement in Correction c. Is this management document subjected and Corrective Action Procedure. All new information was communicated to to an annual review? workers and scheme smallholders through socialization and update the procedure. It described in Document control procedure No. AA-MPM-DC-12 Rev. d. For plantations on peat, is there a long 04 dated 5th March 2016. Last dissemination performed in April - May 2016 to all term viability plan – e.g. flooding, workers and scheme smallholders. drainability assessments and subsidence issues? (see 4.3.5) Smallholders e. Does the grower have a system to Documented operational work plan for a minimum duration of 3 years period 2015 improve practices in line with new - 2018 has been create by KUD and assist by Company PT Rigunas Agri Utama. information and techniques? Smallholder management plan was create to achieve economic viability and long- - Has the personnel in charge (PIC) term financial. The plan was approved by each KUD (such as Bukit Permai, been identified? Langkat Makmur, Serangge Permai). The parameters listed in the management - How is the information updated? plan which includes : - Is there a documented SOP which - Land area statement (planting years, non-planted areas, i.e. HCV, requires monitoring and updating conservation areas, fragile soils, enclaves) with updated location maps. information to improve practices? - Is new information communicated to - Plan for management of scheme smallholders

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) workers and scheme smallholders - Crop projection = Fresh Fruit Bunches (FFB) yield trends (where appropriate)? How is it - Cost of Production = cost per tonne of FFB trends communicated? - Forecast prices - Financial indicators – profitability forecast (income vs cost) - General strategy and allocation for environmental and social management The achievement of the management plan is reviewed every month in the Smallholder Estate Unit Report (LUK) according to the current month. Reviewing of LUK was conducted for period 2016.. 3.1.2 An annual replanting programme projected for a minimum of five years (but longer where necessary to reflect the management of fragile soils, see Criterion 4.3), with yearly review, shall be available. a. Is there an annual replanting programme YES • Replanting program for Year Company has develop replanting program for Year 2018 - 2023 with the total area projected for a minimum of five years? 2018 – 2023 of 3,658 ha. b. Has it been documented? • Replanting Program for Replanting program has been communicated to each division and estate manager c. Is the progress of implementation smallholder Rigunas Agri Utama and well documented in each division depend on the replanting program. documented? 2017-2020 Replanting program will be performed begin in 2018, so that there was no d. How does the programme take into progress of implementation documented. consideration fragile soils such as peat? Is there a longer projection period (see There was no peat land in area PT RAU, Peranap Estate and Peranap C4.3)? Smallholder. e. Is there evidence of a yearly review of Review of the replanting programme has been performed by organization through the replanting programme? management meeting in September 2016. Minutes of meeting and attendance register could be demonstrated.

Audit Report

PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 4.1 Operating procedures are appropriately documented, consistently implemented and monitored. (M) Standard Operating Procedures (SOPs) for estates and mills shall be documented.

Specific Guidance: For 4.1.1 and 4.1.4: 4.1.1 SOP and documentation for mills should include relevant supply chain requirements (see RSPO Supply Chain Certification Standard, Nov 2011).

For National Interpretation: National codes of practice or Best Management Practices (BMPs) will be referenced. • Standard Operating Procedures The documented Standard Operating Procedures (SOP) for Estate was evident: YES (SOP) for Estate PT RAU a. Have the SOPs for mills and plantation • AA-APM-OP-1100.01-R1 Nursery been documented? • Standard Operating Procedures • AA-APM-OP-1100.02-R1 Land Preparation (SOP) for Smallholder estate. b. Does the SOP cover key processes, • AA-APM-OP-1100.03-R1 Creation and Maintenance of Road harvesting, transportation, manuring, • Standard Operating Procedures • AA-APM-OP-1100.04-R1 Creation and Maintenance Trenches IPM, GAP, Supply Chain requirements for (SOP) for Mill PT RAU • AA-APM-OP-1100.06-R1 Planting Leguminous Cover Crop the mill, etc.? • SOP dissemination minutes in • AA-APM-OP-1100.07-R1 Oil Palm Planting c. Is a copy of the SOP available on site and April – May 2016 to all • AA-APM-OP-1100.09-R1 Manuring is it documented in an appropriate employee language? • SOPs for IPM: • Field observation in harvesting  AA-APM-OP-1100.10-R1 Pest & Diseases Control d. Is there evidence that SOPs are process in Block A93D Division implemented and understood by I Peranap Estate and pesticide  AA-APM-OP-1100.08-R1 Weeding Control workers? spraying in Block A95E Division  AA-APM-OP-1100.14-R1 Census and Identification Plant e. Are the SOPs appropriate and adequately I Peranap Estate • AA-APM-OP-1100.11-R1 Management Pesticides cover all estate and mill processes and • Interview with employee • AA-APM-OP-1100.12-R1 Castration activities? • AA-APM-OP-1100.13-R1 Pruning f. How are the SOPs made available at the • AA-APM-OP-1100.15-R1 Census of Production point of use? SOP for mill: • AA-APM-OP-1100.16-R1 Consolidation  AA-MPM-OP-1400.02-R2 FFB • AA-APM-OP-1100.17-R0 Water Management Receiver Procedure • AA-APM-OP-1100.18-R1 FFB Harvesting  AA-MPM-OP-1400.03-R1

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Sterilizer station Procedure • AA-APM-OP-1100.19-R1 Transportation Management  AA-MPM-OP-1400.04-R1 • AA-APM-OP-1100.20-R1 Replanting Threshing station Procedure Hardcopy of procedure were available and controlled. Copy of the procedure were  AA-MPM-OP-1400.05-R1 available on site and is it was documented in Indonesian language. SOP Digesting and Screw Press distribution to all section and division was well documented. station Procedure  AA-MPM-OP-1400.06-R1 Clarifier SOPs are implemented and understood by workers. Work Instructions has been station Procedure developed and posted at work stations within the mill and each division in estate. Procedure has been disseminated periodically to all related employee (harvest,  AA-MPM-OP-1400.07-R1 Nut upkeep employee and operator). Last dissemination performed in April - May Polishing Procedure 2016 to all employee. Interviews with the employees indicate satisfactory level of  AA-MPM-OP-1400.08-R1 Kernel understanding and implementation in relation to their respective job function. station Procedure  AA-MPM-OP-1400.11-R1 Water Sample of estate operational implementation were taken in harvesting process in Treatment Procedure Block A93D Division I Peranap Estate and pesticide spraying in Block A95E  AA-MPM-OP-1400.12-R1 Division I. The results were shown and it was observed that all of the activity was Laboratory Procedure met with the procedure and well implemented.  AA-MPM-OP-1400.14-R2 Procedure (SOP) were appropriate and adequately cover all estate processes Storage and delivery Procedure and activities includes new area and replanting planning, nursery, land clearing,  AA-MPM-OP-1400.15-R1 preparation before planting, manuring, upkeep, pest management, road Preventive machineries maintenance, peat land management, drainage system, mature and immature maintenance Procedure upkeep, integrated pest management, harvesting and transportation.  AA-MPM-OP-14000.13-R1 WWTP Process Hardcopy of smallholder procedure are available and controlled. Copy of the • Etc procedure were available in each KUD and it documented in Indonesian • Work Instructions of Palm Oil language. SOPs were established and evaluated by PT RAU and it was available Process at the point of use (in all section and division of estate and mill). Standard Operating Procedures (SOPs) for Estate and mill been documented. The procedures included land clearing, nursery, and preparation before replanting, fertilizing, drainage system, integrated pest management, maintenance of immature and mature upkeep and harvesting, RSPO SC requirement according to RSPO SC standard 2014. The procedure for mill including Loading Ramp. Sterilisation, Threshing, Pressing, Clarification etc. Work instruction for plantation and mill activities has been established and documented. Work instruction describes planting of oil palm, fertilizing, spraying, harvesting, peat land management, and integrated pest management. Based on

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) interview with some workers (harvesting and spraying worker, mill operator), they were understood with procedures and work instructions, they worked based on and appropriate with procedure. SOPs made were available at the point of use (in all section and division of estate and mill). A mechanism to check consistent implementation of procedures shall be in place.

4.1.2 Guidance: Mechanisms to check implementations could include documentation management systems and internal control procedures. a. Is there a master list of all SOPs?  The master list of SOP Master list of all SOPs document and its revision history were available and well YES document and its revision b. How does the company keep track of documented. Organization keeps track of revision of the SOPs in revision history history revisions? in the cover of SOPs. Organization has defined the Controlled document  Audit agronomy and mill and c. Is there mechanism for: procedure which was explaining the translation of SOP into work instructions in RSPO internal audit in appropriate languages (Indonesian language) and its document control. SOPs - Translation of SOP into work September 2016 instructions in appropriate training and dissemination to all of employee has been conducted, the evidence  Procedure Internal Audit was sighted and well documented. All of SOPs have been socialized to all languages?  Procedure for Corrective and - Records of training for all levels? relevant functions among others the training has been performed for all activities Preventive Action of Mill area and Estate. - Internal control (e.g. audit and  Control of record procedure review, field inspection) procedure  Master List of SOP Internal audit RSPO covering audits of sustainability in all parts of plantation and in place to monitor consistent  RSPO internal audit mill operational. Programmed once a year, last audit performed in October 2016. implementation of SOPs? Audit report and its finding followed up and action plan was well documented.  VE Report #PPN-VE-FULL 01- - Trained and competent personnel 16 Trained and competent personnel were assigned to carry out Internal Audit RSPO assigned to carry out internal control (Head Office Sustainability department). activities? - Implementation audits to be carried The organisation conducted monitoring and checking for all applicable procedure out regularly covering and GAP twice in a year by Visit Engineering (VE) from Head office. The last visit implementation of all the SOPs? was conducted on 18-20 January 2016. - Procedure to address non- The content of the report covers evaluation of mill operational activities, Mill compliance and corrective action for process and cost control. The report includes recommendation to follow up from continuous improvement? RAM and progress of follow up action from the previous visit. Procedure to address non-compliance and corrective action for continuous improvement defined in procedure preventive and corrective action.

4.1.3 Records of monitoring and any actions taken shall be maintained and available, as appropriate.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Have the records been maintained on the - BKM (Buku Kegiatan Mandor - Record of monitoring and any action taken were maintained and available for YES following? Log book of group leader Peranap Estate, such as. : - Measurements or results of internal activity). control and monitoring activities - Daily Harvesting report - BKM (Buku Kegiatan Mandor - Log book of group leader activity). BKM of (refer 4.1.2) - Logbook Monitoring Ancak several activities was reviewed, e.g. manuring, manual road maintenance, - Records of corrective actions and Panen manual weeds control, census of diseases, circle and path spraying. improvement undertaken - FFB Transport inspection form - Daily Harvesting report - Logbook of harvesting activity - Log sheet - Shift Report book - Logbook Monitoring Ancak Panen, inspection items: preparing the midrib, - Breakdown report ripe fruit was not harvested, the fruit lagged (not harvested) and cut raw fruit - Daily record activities - FFB Transport form, inspection items: FFB maturity and loss of fruits - Repair Request Logbook (berondolan) including cutting the fruit stalk (V = mouth frog system) and - Maintenance Report Logbook quality of FFB. - Control of Process work program and routine maintenance and equipment repair. The records of other internal audit also were maintained properly such as internal audit RSPO and ISPO Records of corrective actions and improvement undertaken for all of the control and monitoring activity above has been maintained by the organization. Record of monitoring and any action taken were maintained and available, e.g. : - Shift Report book to control and monitor daily work activity of mill, record number of attendance employee, starting hour, throughput, oil and kernel production, issue/trouble in process activity. - Log sheet every station from loading ramp, sterilizer, threshing, press, clarification, boiler and effluent. Record daily activity of process in each station and process performance in each station. - Breakdown report and repair request Logbook, supervisor check the machine condition and report to maintenance section to repair if there was a breakdown condition. - Control of Process work program and routine maintenance and equipment repair.

Records of corrective actions and improvement undertaken for all of the control

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and monitoring activity above has been maintained by the organization.

4.1.4 (M) The mill shall record the origins of all third-party sourced Fresh Fruit Bunches (FFB). a. Is there an SOP for third-party FFB SOP of third party sourcing has been defined in procedure AA-MPM-OP-1400.02-  SOP of third party sourcing YES sourcing? R2 FFB Receiver. The list of approved third party has been sighted and contained procedure AA-MPM-OP- 25 third party suppliers. The sorting process was sighted in relevant records and b. Is there a list of approved third-party FFB 1400.02-R2 suppliers? conducted accordingly to the above procedure.  List approved third party FFB Daily and summary record of 3rd party FFB received was shown and several c. Is there proof of observed implementation supplier samples were reviewed such as for FFB received on 19 November 2016 from KT of SOP?  Record of FFB received Timber Jaya. Verification conducted against the SOP of third party sourcing d. Is there daily and summary records of procedure AA-MPM-OP-1400.02-R2 FFB Receiver and the related receipt notes. volume and origins of third-party FFB There was also statement in all receipt notes from third party supplier that justify received? that the source of FFB received was not from illegal source and also not an illegal e. Have these records been verified against FFB. the available document?

4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. There shall be evidence that good agriculture practices, as contained in Standard Operating Procedures (SOPs), are followed to manage soil fertility to a level that ensures optimal and sustained yield, where possible.

Guidance: 4.2.1 Long-term fertility depends on maintaining the structure, organic matter content, nutrient status and microbiological health of the soil. Nutrient efficiency should take account of the age of plantations and soil conditions.

For National Interpretation: The range of appropriate techniques will be identified. a. Are there SOPs for Good Agricultural • SOP AA-APM-OP-1100.09-R1 Company has establish the SOPs for Good Agricultural Practices in managing soil YES Practices in managing soil fertility? – Manuring Procedure fertility which defined in AA-APM-OP-1100.09-R1 – Manuring Procedure and AA- b. Is there evidence that the SOPs have APM-OP-1100.05-R1 - Soil and Water Conservation. Manuring was performed • SOP AA-APM-OP-1100.05-R1 - been implemented and monitored? manually with spreading the fertilizer by person uniformly in each palm oil trees in Water Conservation accordance with dose which has defined by Research and Development • Division Work Program 2016 recommendation.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) • Plan and Realisation of Estates activities are carried out based on Division Work Program which Manuring KUD Bukit Permai, generated from annual budget. Activities program are such as manuring and other KUD Serangge Permai and operation activity. Site observation was performed during audit to some activities: KUD Lakat Makmur in 2016 spraying and manuring. Field observation and interview with employees working in those activities showed that procedures were well implemented. Activities have • Field observation and interview been performed at defined interval. with employees Peranap Smallholder has established the SOPs for Good Agricultural Practices in managing soil fertility which defined in AA-APM-OP-1100.09-R1 – Manuring Procedure. Manuring was performed manually with spreading the fertilizer by person uniformly in each palm oil trees in accordance with dose which has defined by Research and Development recommendation. Estates activities are carried out based on KUD Work Program which generated from annual budget. Activities program are such as manuring and other operation activity. Site observation was performed during audit to some activities: spraying and manuring. Field observation and interview with employees working in those activities showed that procedures were well implemented. Activities have been performed at defined interval.

4.2.2 Records of fertiliser inputs shall be maintained. a. Is records of fertiliser inputs maintained? • “Rencana dan Realisasi Records of fertiliser inputs are well maintained in document “Rencana dan YES b. Is there records to proof that the fertiliser Pemupukan 2016” (Plan and Realisasi Pemupukan” (Plan and Realisation of Manuring). Fertiliser inputs program is linked to the agronomic Realisation of Manuring) recorded each semester. Manuring recommendation in 2016 for Peranap Estate report? has been defined based leaf sampling unit (LSU). • Manuring recommendation in c. Is there records of fertilizer usage per 2016 for Peranap Estate Record of manuring realisation in first semester of 2016 shows that the tonne of FFB production (>in Summary realisations are in accordance with the plan/recommendation. Table, specific types of fertilizers)? • Leaf sampling unit (LSU) and Soil sampling unit (SSU) result Annual fertilizer recommendation has been implemented and monitored. 2016Records of total fertilizer Fertilizer/manuring programme was developed by Research and Development usage 1st semester 2016 Asian Agri for all Division. • FFB Production trend 2015 – Records of total fertilizer usage per tonne FFB production was available in 1st 2016 Peranap Smallholder semester 2016. scheme

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 4.2.3 There shall be evidence of periodic tissue and soil sampling to monitor changes in nutrient status. a. Is there SOPs for tissue and soil NO • Leaf sampling unit (LSU) Work Organisation has been defined work instruction for LSU (Leaf sampling unit) sampling? (Minor NCR instruction issued by RnD Asian which issued by Research and Development Asian Agri. 2016-02) b. Is there evidence of implementation of the Agri SOPs, including availability of records? Diagnosis/leaf visual observations was done by considering the following criteria: • Leaf sampling unit (LSU) result • Comparison of green leaf with standard green colour (dark green). c. Is there records of tissue and soil 2015 analysis? • The signs and symptoms (symptom) of nutrient deficiency. • Manuring recommendation in d. Is the results of the study incorporated 2016 for Peranap Estate • Symptoms of pests and plant diseases. into the fertilizer program? • Records of total fertilizer usage The result of this visual monitoring was conducted by R & D Centre and the 1st semester 2016 monitoring results were reported in the leaf samples and submitted to the Estate Manager. Visual monitoring is more regular performed by foremen and field assistant, with standard procedures based on Nutrient deficiency (symptoms), but it can also be a symptom of pest attack. Report included observation result and its recommendation for improvement. Records of tissue analysis was available. Leaf analysis for manuring recommendation 2016 was conducted in 2015 and for manuring recommendation 2017 has been conducted in September 2016. The results of the study was incorporated into the fertilizer program. Fertilization recommendations are made annually based on the results study of LSU.

Minor Non-conformity : There was no evidence that periodic soil sampling was implemented. It was observed that SOP / mechanism for soil sampling to monitor changes in nutrient was not available. There was no recording of "activities and results" related soil sampling as basic fertilizer recommendations both in 2013, 2014, 2015.

A nutrient recycling strategy shall be in place, and may include use of Empty Fruit Bunches (EFB), Palm Oil Mill Effluent (POME), and palm residues after replanting.

4.2.4 Guidance: The nutrient recycling strategy should include any use of biomass for by-products or energy production.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a nutrient recycling strategy in YES • POME (Palm Oil Mill Effluent) There was the Nutrient recycling strategy performed by company such as land place? and Empty fruit bunch (EFB) application from POME (Palm Oil Mill Effluent) and Empty fruit bunch (EFB) b. Does the strategy include the following? application 2016 application. POME or liquid waste from mill used as Land application, it give  Clear objectives and time-bound nutrient for palm oil plantation. POME is applied using piping system and flat bed. • License of waste water targets Land application was applied in Peranap Estate based on license of waste water discharge No.33/2012 dated  Inventory of discharge No.33/2012 dated 22nd October 2012. Liquid waste (POME) applied 22nd October 2012 - EFB dosage was 375 m3 /ha/year with 3 times rotation and BOD 2.500 – 4.000 mg/L. - POME • Site observation in KUD Bukit POME and EFB were not applied nearby housing and water spring. EFB were - Fibre Permai, KUD Lakat Makmur applied in Peranap Estate manually spread in each plant. EFB were applied - Boiler ash and KUD Serangge Permai. based on the recommendation from R n D in terms of dosage per ha and location - Kernel shell (60 ton/ha dosage). Empty fruit bunch application was performed as mulch ground • Interview with Palm residues from replanting cover and added of organic material. - smallholder/farmers  Biomass recycling program At the time of the audit conducted there was no application of EFB in Smallholder  Implementation and monitoring estate (KUD Bukit Permai, KUD Lakat Makmur and KUD Serangge Permai.). records Organic fertilizer which used by smallholder was the oil palm midrib and leaf which were arranged in gawangan mati. Note to auditor: Ground verification required 4.3 Practices minimise and control erosion and degradation of soils. (M) Maps of any fragile soils shall be available.

Guidance: Plantations on peat should be managed at least to the standard set out in the ‘RSPO Manual on Best Management Practices (BMPs) for existing oil palm cultivation on peat’, June 2012 (especially water management, fire avoidance, fertiliser use, subsidence and vegetation cover). 4.3.1 Techniques that minimise soil erosion are well known and should be adopted, where appropriate. These should include practices such as ground cover management, biomass recycling, terracing, and natural regeneration or restoration instead of replanting.

For National Interpretation: National Interpretation (or an RSPO recognised parallel means) will refer to national guidance, and identify the best management practices and appropriate techniques for maintaining soil quality in local conditions, including guidance on soil types, and any appropriate performance thresholds such as maximum acceptable slope gradient for planting.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there soil maps showing presence of • Map of Soil Type with scale YES There were no areas with fragile soils in Peranap Estate based on Map of Soil fragile soils and problem soils (refer to 1:25000 (Asian Agri Research Type (Asian Agri Research and Development Centre Tebing Tinggi – Sumatera 4.3.6)? and Development Centre Utara, October 2012). b. Are maps georeferenced and of Tebing Tinggi – Sumatera Utara, October 2012) appropriate scale (1:50,000)? Maps georeferenced was available with scale 1 : 25.000.

4.3.2 A management strategy shall be in place for plantings on slopes above a certain limit (this needs to be soil and climate specific).

a. Is there a management strategy in place YES • Work instruction AA-APM-OP- The organisation has management strategy for planting on slopes above certain for plantings on slopes? 1100.05-R1 described limit, as referred to company’s SOP and work instructions. The work instruction b. Does the management strategy include preparation for planting AA-APM-OP-1100.05-R1 described preparation for planting including planting on the following? including planting on slopes slopes area has been developed by organisation: - Identification of steep areas not o o suitable for planting • Site observation in KUD Bukit - Flat undulating 0 – 5 Permai, KUD Lakat Makmur o o - Policy of planting on slopes - Rolling 6 - 12 and KUD Serangge Permai. - SOPs to minimise soil erosion - Hilly 13o - 20o based on local soil and climate - Steep >20o conditions, e.g. ground cover management, biomass recycling, System for planting on slopes area was provided through terracing, levelling of terracing, and natural regeneration terrace, planting legume cover crops and determining of planting space. or restoration instead of replanting Site observation indicated that practices to control and minimize erosion have c. Is there proof of records of field been applied by : inspection on SOP implementation? • Terracing • Making the catchment where runoff water, called: “Tapak Kuda”. • Making the catchment where runoff water, called “Rorak”. • Planting legume cover crop.

4.3.3 A road maintenance programme shall be in place.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a road maintenance programme YES • Division Work Programme 2016 Procedure for road maintenance has been established. Company have in place with supporting budget and established road maintenance programme for main road, collection road and resources? • Road maintenance program and access road by manual and mechanical maintenance. Road maintenance its realization from January to b. Is there road maintenance records? includes manual, grading and compacting and road hardening. Road hardening December 2016 budget for 2016 has been observed including the realisation. Manual road • Field observation maintenance programme was provided in Division Work Programme. Manual road maintenance was implemented based on Division Work Programme or road condition. Mechanical road maintenance use heavy equipment – motor grader and compactor. The mechanical road maintenance programme was provided for

all division and detailed in Blocks. Manual and mechanical road maintenance realisation was recorded including complex area maintained, distance of road maintained, diesel fuel consumption and quantity of gravel. During audit it was observed that road passed was in good condition. Road maintenance recorded in work plan 2016. The plan for 2016 is 280.740 meters. Road maintenance program and its realization from January to December 2016 was sighted include : Grading and Hardening of the road. (M) Subsidence of peat soils shall be minimised and monitored. A documented water and ground cover management programme shall be in place.

Specific Guidance: 4.3.4 For 4.3.4: For existing plantings on peat, the water table should be maintained at an average of 50cm (between 40 - 60cm) below ground surface measured with groundwater piezometer readings, or an average of 60cm (between 50 - 70cm) below ground surface as measured in water collection drains, through a network of appropriate water control structures e.g. weirs, sandbags, etc. in fields, and watergates at the discharge points of main drains (Criteria 4.4 and 7.4). a. Is there an SOP to provide guidance on • Map of Soil Type with scale There was no peat soil in PT Rigunas Agri Utama. The organisation has a N/A subsidence management? 1:25000 (Asian Agri Research detailed soil map showing gradients and soil types. The soil map available in b. Does the SOP make reference to the and Development Centre Peranap Estate and Peranap Plasma, are Map of Soil Type Unit with scale Tebing Tinggi – Sumatera 1:25,000 issued by Research & Development Centre. RSPO BMPs on peat? Utara, October 2012) c. How is subsidence being monitored? • Interview with company staff d. Are there records of subsidence monitoring? • Field observation e. How is subsidence being minimised? f. Is there a water management programme

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and evidence of implementation? For existing plantings on peat, the water table should be maintained at an average of 50cm (between 40 - 60cm) below ground surface measured with groundwater piezometer readings, or an average of 60cm (between 50 - 70cm) below ground surface as measured in water collection drains, through a network of appropriate water control structures e.g. weirs, sandbags, etc. in fields, and watergates at the discharge points of main drains (Criteria 4.4 and 7.4). g. Is there a ground cover management programme and is there evidence of implementation?

Drainability assessments shall be required prior to replanting on peat to determine the long-term viability of the necessary drainage for oil palm growing.

Specific Guidance: 4.3.5 For 4.3.5: Where drainability assessments have identified areas unsuitable for oil palm replanting, plans should be in place for appropriate rehabilitation or alternative use of such areas. If the assessment indicates high risk of serious flooding and/or salt water intrusion within two crop cycles, growers and planters should consider ceasing replanting and implementing rehabilitation. a. Was a drainability assessment conducted • Map of Soil Type with scale Not applicable. N/A before replanting on peat? 1:25000 (Asian Agri Research There was no peat soil in PT Rigunas Agri Utama. The organisation has a b. Was a flood risk map provided as a result and Development Centre detailed soil map showing gradients and soil types. The soil map available in of the drainability assessment? Tebing Tinggi – Sumatera Peranap Estate, is Map of Soil Type Unit with scale 1:25,000 issued by Research Utara, October 2012) c. If the drainability assessment shows that & Development Centre. an area is unsuitable for replanting, are • Field observation there alternative plans in place for rehabilitation and alternative use in accordance to the RSPO BMPs?

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

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

a. Is there a management strategy in place • Map of Soil Type with scale Based on Map of Soil type Unit, there are no areas of marginal land / fragile soil in N/A for other fragile and problem soils? 1:25000 (Asian Agri Research Peranap Estate. b. Does the management strategy include and Development Centre

SOPs for the management of other fragile Tebing Tinggi – Sumatera and problem soils? Utara, October 2012) c. Is inspection and implementation records • Field observation available?

4.4 Practices maintain the quality and availability of surface and ground water. An implemented water management plan shall be in place.

Specific Guidance: For 4.4.1: The water management plan will: • Take account of the efficiency of use and renewability of sources; • Ensure that the use and management of water by the operation does not result in adverse impacts on other users within the catchment area, including local communities and customary 4.4.1 water users; • Aim to ensure local communities, workers and their families have access to adequate, clean water for drinking, cooking, bathing and cleaning purposes; • Avoid contamination of surface and ground water through run-off of soil, nutrients or chemicals, or as a result of inadequate disposal of waste including Palm Oil Mill Effluent (POME).

Guidance: Growers and millers should address the effects of their use of water and the effects of their activities on local water resources. a. Is there a water management plan in  Documented procedure (AA- The documented procedure defined the method of water management plan YES place for mill and plantation with identified MPM-OP-1400.11-R1 dated include water source and distribution identification, volume of water utilization, actions? February 2009) regarding water parameter/standards of water utilization, identify the impacts include water b. Does the plan include the following? treatment effluents/wastes and also the method to reduce and control.  Identification of water sources  License of river/surface water The water sources at Peranap Mill were from surface water (Ketipo river) for mill  Efficient use of water (APU) from Kepala Badan processing as the license of water utilization No. 23/BPMD&PPT/BP/SIPPA-  Renewability of water source Penanaman Modal Daerah and P/III/2015 on 18 March 2015 valid for 3 years approval from Kepala Badan  Impacts on catchment area and Pelayanan Perizinan Terpadu, Penanaman Modal Daerah and Pelayanan Perizinan Terpadu, Indragiri Hulu local stakeholders Indragiri Hulu Regency No. Regent. The water was utilize for mill operations (include boilers, processes and 23/BPMD&PPT/BP/SIPPA- domestics usage) that through the water treatment plant (using physicals and

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Access of clean drinking water all P/III/2015 on 18 March 2015 chemicals method). year round for stakeholders  Water analysis measurement For estate operations (include housing, pesticides mixings and office operations)  Avoidance of surface and ground for period 2015-2016 by Dinas using water sources from ground water (ABT) as the licence renewal was in water contamination Bina Marga, Riau Province process at Badan Pelayanan Perizinan Terpadu, Riau Province on 12 November c. Have the identified actions in the plan 2015. In 2016, there was communication between the company and the been implemented?  Records of water consumption institution, that the license renewal process cannot be conducted because there period 2015 and 2016 at mill was change of obtaining a license. Until this audit has been no decision. The and estate. monitoring of water volume utilization was conducted, records was also sighted  Mill operations summary 2015 for mill consumption. The organisation has program to reduce water consumption, and 2016 such as: recycle the water cooler turbine discharge water basin; recycle condensate water discharge water dilution; minimize duration of cleaning to be  Water management programme every two weeks. The measurement analysis for surface water was conducted periodically against the standard of PP 82/2001 for Ketipo river, Rotan river, Indragiri river, Pelangkawan river, Sengkilo river by third party laboratory (Dinas Bina Marga, Riau Province) last measurement conducted for 2nd Semester of 2015 and 1st Semester of 2016. Surface water quality was analysed both for upstream and downstream. So far the results of both measurement/analysis are still within the parameters/limit value. Surface water quality is monitored periodically, basis on monitoring wells at Land Application area and non-Land Application area and employee’s drinking water source against the standard of Permenkes 492/2010 by third party laboratory (Dinas Bina Marga, Riau Province). So far the results of both measurement/analysis are still within the parameters/limit value. Flow meters were installed to monitor water usage. The organization has paid retribution to local government (Dinas Pendapatan Daerah Provinsi Riau). (M) Protection of water courses and wetlands, including maintaining and restoring appropriate riparian and other buffer zones (refer to national best practice and national guidelines) shall be demonstrated.

4.4.2 Specific Guidance: For 4.4.2: Refer to the ‘RSPO Manual On Best Management Practices (BMP) for management and rehabilitation of natural vegetation associated with oil palm cultivation on peat’, July 2012.

For National Interpretation:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) National Interpretation will refer to national guidelines or best practice and where appropriate include performance thresholds for requirements such as the size and location and methods of restoration of riparian strips or acceptable maximum run-off levels.

a. Is there a map identifying water courses • Identified water courses and Organization has been identify water courses and wetland in the plantation area. YES and wetlands? wetland in Peranap Estate, There were identified water courses and wetland in Peranap Estate, i.e: b. Are the water courses and wetlands documented in HCV Identification report River Area (Ha) protected? Ketipo River 32.70 c. Are the riparian and buffer zones • AA-APM-OP-1100.05-R1-Soil Sengkilo River 78.88 maintained and restored in existing and Water Conservation Pelengkawan River 46.51 plantation and replanting areas? • Riparian restoration program Todung River 32.00 Water ponds 10.00 d. Is there SOP for riparian and buffer zone • Field observation at Block A95a, protection? Afdeling 1, Ketipo River Protection of waterways and wetlands have been made by the company with the e. Has the SOP been implemented? following way : - Protection of riparian areas with no chemical crops care activities both fertilizer and herbicide spraying - Conduct rehabilitation of riparian - Performs of water level in the peatlands area by maintaining surface water height between 40-60 cm, this can be proved by the routine piezometers monitoring on peatland. Riparian zone were well maintain, the following was activity to maintain riparian zone such as : - Boundary markers placement in 5 rows of palm trees (50 m) related restrictions spraying of chemicals and chemical fertilizers in the area of 50 m side of the river. There was the evidence during the audit, riparian zone was well maintain and no contamination of chemical usage and fertilizer - Warning boards placement which contain information restrictions the pesticide usage and chemical fertilizers in the riparian area. - Riparian rehabilitation by planting vetiver grass, a shade trees and barriers to erosion trees (Bamboo, Mahoni, etc.). There was the evidence of plan and realization for riparian rehabilitation, its observed Bamboo and Mahoni trees

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) was planted and grow well in both side of the river. Organization also has been establish the procedure for riparian and buffer zone protection which documented in AA-APM-OP-1100.05-R1-Soil and Water Conservation. During field audit, it was observed that the procedure has been implemented well and it evidenced as described above.

Appropriate treatment of mill effluent to required levels and regular monitoring of discharge quality, especially Biochemical Oxygen Demand (BOD), shall be in compliance with national 4.4.3 regulations (Criteria 2.1 and 5.6).

a. Is the mill effluent treatment process in  Report of analysis mill effluent Peranap Mill waste water (POME) was processed through a series of waste water YES place? period January – October 2016 treatment ponds: one cooling pond, one acid pond, two anaerobic ponds, one b. Is there a process in place for checking from Dinas Bina Marga Riau aeration pond, one sediment pond, and three buffer ponds. Process parameter monitoring and maintenance of the ponds were sighted. and monitoring water discharge quality, Province particularly BOD?  Permit of waste water discharge POME is monitored monthly as required by permit. The results of POME c. Is the water discharge quality in from Head of Environmental monitoring were reviewed including measurement of BOD for January to October

compliance with national regulations? Agency Indragiri Hulu Regent 2016. The Environment Ministry Decree No. 28/2003 required that BOD of POME No. 33 Year 2012 on 22 October discharged is less than 5000 mg/litre. The result of POME quality during this d. Does the mill have a license for 2012 period was under 5000 mg/litre. treatment, discharge or land application of mill effluent, and is the mill in compliant There is sighted the license of waste water discharge No.33/2012 on 22 October with the requirements of the license? 2012 that valid for 5 (five) years from Kepala Badan Lingkungan Hidup Indragiri Hulu Regent.

4.4.4 Mill water use per tonne of Fresh Fruit Bunches (FFB) (see Criterion 5.6) shall be monitored.

Mill operation summary 2015 and Mill water use per tonne of FFB is monitored monthly. Result of monitoring of mill YES 2016 water use per tonne of FFB was sighted in January to October 2016. The a. Are there procedures to measure mill organisation has program to reduce water consumption, such as: recycle the water usage, and are the procedures water cooler turbine discharge water basin; recycle condensate water discharge implemented? water dilution; minimize duration of cleaning to be every two weeks. b. Are there records of mill water use per The following is mill water use per tonne of FFB in 2014 – 2016 : tonne of Fresh Fruit Bunches (FFB)? Year M3 / MT FFB FFB Production (MT) 2014 1.51 169,543

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 2015 1.14 186,328 2016 1.27 180,243

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

(M) Implementation of Integrated Pest Management (IPM) plans shall be monitored.

4.5.1 Guidance: Growers should apply recognised IPM techniques, incorporating cultural, biological, mechanical and physical methods to minimise the use of chemicals. Native species should be used in biological control where possible. a. Is there a documented IPM plan? • Division Work Program 2016 .IPM Plan has been developed by organization and documented in “Pest and YES b. Does the IPM plan include the following? Diseases management program”. IPM Plan have been prepared within the budget • “Pest and Diseases  Identification of potential pests and in 2016. Estate have established Division Work Program annually for IPM for each management program 2016 ” thresholds division. IPM programme includes detection and census of pest and diseases,  What are the techniques used • SOP AA-APM-OP-1100.10-R1 weeds controlling, planting and upkeep of beneficial plant, use of pesticide and (cultural, biological, mechanical and Pest & Diseases Control herbicide. physical methods)? • SOP AA-APM-OP-1100.08-R1 IPM plan include the following :  What are the native species used as Weeding Control part of the biological control • Identification of potential pests and thresholds method? • SOP AA-APM-OP-1100.14-R1 • The techniques used (cultural, biological, mechanical and physical methods) Census and Identification Plant  Does it help in reducing the use of • The native species used as part of the biological control method chemicals over a period of time? • Records of pest occurrence and • Reducing the use of chemicals over a period of time  Prophylactic use of pesticides control 2015  Minimization of pesticide use • Prophylactic use of pesticides  Review on the plans to suit the • Minimization of pesticide use present condition such as • Review on the plans to suit the present condition such as replanting replanting? Company has establish the SOPs for IPM: c. Is there an SOP to implement the plan and monitor its effectiveness?  AA-APM-OP-1100.10-R1 Pest & Diseases Control d. Is there records of pest occurrence and  AA-APM-OP-1100.07-R1 Weeding Control control?  AA-APM-OP-1100.14-R1 Census and Identification Plant The SOP describes integrated pest control (integrated pest management/IPM)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) which combines various control techniques e.g. mechanical, biological, physical and chemical, applied early warning system (EWS) through periodically census for pests by : 1. Visual observation (visual plant e.g. leafs or broken stems and fruit rot) 2. Conducting a census (to determine the distribution and level of attack) 3. Control (manual, biological or chemical) e.g planting of Turnera Subulatta (nest of natural predator caterpillars (Ulat Api)). 4. Census of evaluation (to see the effect of control). Several records of pest occurrence and control verified such as : - Rat census conducted every 3 months, Last census in August 2016 in Peranap Estate known the average level of rat attacks was less than 5% (1- 3%) so that there is no chemical control using pesticides. - Detection of leaf-eating caterpillar pests (UPDKS) was performed by rotation 6 times a year or every two months on the same block. Last early detection of the rotation 1-3 period January – August 2016 in Peranap Estate, there were no UPDKS pests detected. Plans and realization of early detection of pests and diseases was well documented. - IPM training to IPM workers has been performed in June 2016 by internal Asistant and Managers. Records of training was evidenced. - Monitoring Gufon (Tyto alba) is performed every month to monitor the activity of owls as predators of rats. Last observation conducted in July 2016. - Planted the beneficial plant as the host/nest for natural enemies UPDKS (Eucanticona purcelata, cycanus sp). The beneficial plant such as : Turnera subulata planted in the collection and the main road, Antigonon leptopus planted in every corner of the main road intersections and road collection, Casia cobanensis planted alternately with Turnera in Collection Road and Main Road. Evidence of planting and upkeep was sighted and the field observations were also observed well maintained. I - IPM Plan for smaalholder has been developed by smallholder scheme and documented in “Pest and Diseases management program”. IPM Plan has

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) been prepared within the budget in 2016. KUD assisted by PT Rigunas Agri Utama has established Work Program annually for IPM. IPM programme includes detection and census of pest and diseases, weeds controlling, planting and upkeep of beneficial plant, use of pesticide and herbicide. - Detection of leaf-eating caterpillar pests (UPDKS) was performed by rotation 6 times a year or every two months on the same block. Last early detection of the rotation 1-3 period July - September 2016 in Peranap Smallholder scheme, there were no UPDKS pests detected. Plans and realization of early detection of pests and diseases was well documented. - Training of IPM (Integrated Pest Management) has been performed by PT Rigunas Agri Utama to smallholder on 14 June 2016. The record of training were evident. During audit and interview with farmers/smallholder in KUD Bukit Permai, KUD Lakat Makmur and KUD Serangge Permai indicate satisfactory level of understanding on IPM knowledge and implementation in the field.

4.5.2 Training of those involved in IPM implementation shall be demonstrated.

• IPM workers training record in IPM training to IPM workers has been performed in June 2016 by internal YES June 2016 Assistant and Managers. Records of training was evidenced. Training of IPM (Integrated Pest Management) has been performed by PT a. Is there records of training provided to Rigunas Agri Utama to smallholder in June 2016. The record of training were those involved in the implementation of evident. During audit and interview with farmers/smallholder in KUD Bukit Permai, IPM? KUD Lakat Makmur and KUD Serangge Permai indicate satisfactory level of understanding on IPM knowledge and implementation in the field. Personnel interviewed during field observation were verified has received training of IPM.

4.6 Pesticides are used in ways that do not endanger health or the environment.

(M) Justification of all pesticides used shall be demonstrated. The use of selective products that are specific to the target pest, weed or disease and which have minimal effect on non-target 4.6.1 species shall be used where available.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Specific Guidance: For 4.6.1: Measures to avoid the development of resistance (such as pesticide rotations) should be applied. The justification should consider less harmful alternatives and IPM.

Guidance: The RSPO has identified some examples of alternatives to pesticide use, which include those listed in the ‘Research project on Integrated Weed Management Strategies for Oil Palm; CABI, April 2011’. Due to problems in the accuracy of measurement, monitoring of pesticide toxicity is not applicable to independent smallholders (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010). a. Does the organization have a policy on  Procedure AA-KL-06-EFP – So far there is no specific policy regarding the safe use of pesticides; however the YES safe use of chemicals? Handling of Hazardous Waste organisation only used approved and registered pesticides, permitted by the relevant authority, and based on “The Green Book of pesticides” issued by The b. Does the organization have SOPs for use  Procedure AA-APM-OP- of selective products that are specific to Pesticides Commission of the Agricultural Ministry of the Republic of Indonesia. 1100.11-R1 dated 1 February As seen on the list of pesticides, pesticides that used in Peranap Estate such as target pests, weeds, or diseases and 2009 – Management Pesticide Gramoxone 276SL (expired 18 March 2016), Metsulindo 20WP (expired 11 Mei which have minimal effect on non-target species?  Field observation at central 2021), Biona SA480SL (expired 29 April 2018), Starane 290EC (10 Agustus 2014), Agristik, Kenlon (expired 23 June 2016), and Kenrane 288 EC (expired 10 i. Measures to avoid the warehouse and spraying development of resistance (such activities at estate operation December 2020) as pesticide rotation) should be  List of pesticide use in oil palm Pesticides use was similar in 2015 and 2016. Less harmful alternatives has not applied. Estate in 2016 been applied or considered. These pesticides were still effective to the target pest, ii. Is there a list of all pesticide with weed or disease and have minimal effect on non-target species. target species and justification of use? Circle and path spraying is conducted 2 times a year using the same active iii. The justification should consider ingredients for each type spraying but sometimes using different trading name of less harmful alternatives and IPM. pesticide. Pesticide rotations have been applied. c. Is there evidence of implementation of SOP on the ground?

4.6.2 (M) Records of pesticides use (including active ingredients used and their LD50, area treated, amount of active ingredients applied per ha and number of applications) shall be provided.

a. Does the company have a pesticide • Records of pesticides use Company have a pesticide application program which documented in annual work YES application program? Peranap Estate 2016 programme. Activities using pesticides among others circle and path spraying,

b. Is records of pesticides use available? selective spraying etc. • Record of monitoring of c. Do the records detail the active pesticides toxicity unit Records of pesticides use have been recorded including active ingredient, area

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) ingredients used and their LD50, area LD50/tonne FFB 2016 treated, amount applied per ha, use of selective product and rotation number of treated, amount of active ingredients applications. Several records of pesticide used were sighted, e.g. application • Site observation in KUD Bukit applied per ha and number of schedule, list of pesticide use in oil palm estate, work achievement and pesticide Permai, KUD Lakat Makmur applications? use, stock card of agrochemicals. The records covered date of application, and KUD Serangge Permai quantity of pesticide use and name of sprayers.

The company has monitored and recorded pesticides use in 2012, 2013, 2014, 2015 and 2016. Usage quantity of pesticides was within the recommended levels. Monitoring of pesticides toxicity unit LD50/tonne FFB was conducted on July 2016. Monitoring of pesticides toxicity unit was available for 2016. In the monitoring it was shown that the use of all pesticides was at 0.0020 gr/tonne FFB in 2016. Agrochemicals have been applied and handled by trained spraying workers who have received usage of limited pesticide training. Training was delivered by Pesticide Commission of Agriculture Department Riau Province on 25th March 2014 in Peranap estate. Training record and certificates were sighted for all sprayers. Training covered handling of concentrate agrochemical and spraying method including pesticide hazard. Pesticides handled, used and applied only by persons who have completed the necessary training, it was observed during field audit that all sprayers’ workers have trained. (M) Any use of pesticides shall be minimised as part of a plan, and in accordance with Integrated Pest Management (IPM) plans. There shall be no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines.

Specific guidance for 4.6.3: Justification of the use of such pesticides will be included in the public summary report.

4.6.3 For National Interpretation: National Interpretation will consider: statutory requirements concerning pesticide use, lists of legally prohibited pesticides, pesticide residues that should be tested for and the appropriate levels of residues, and best management practices for pesticide use or sources of information on these. National Interpretation will develop best practice guidelines on the exceptional circumstances that would allow the use of pesticides categorised as World Health Organisation Class 1A or 1B, or those listed by the Stockholm or Rotterdam Conventions, and paraquat as well as how they will be used in ways that do not endanger health or the environment. a. Does the company have an IPM plan? • Division Work Program 2016 IPM Plan developed by organization and documented in “Pest and Diseases YES b. Has that plan been implemented? management program”. IPM Plan have been prepared within the budget in 2016. • “Pest and Diseases c. Is the effectiveness of the IPM plan Estate have established Division Work Program annually for IPM for each

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) monitored? management program 2016” division. IPM programme includes detection and census of pest and diseases, weeds controlling, planting and upkeep of beneficial plant, use of pesticide and d. Are there records showing that the use of • SOP AA-APM-OP-1100.10-R1 herbicide. pesticides have been minimised in Pest & Diseases Control accordance with Integrated Pest IPM plan include the following : Management (IPM) plan? • SOP AA-APM-OP-1100.08-R1 Weeding Control • Identification of potential pests and thresholds e. Has there been prophylactic use of • The techniques used (cultural, biological, mechanical and physical methods) pesticides? If so, justification must be • SOP AA-APM-OP-1100.14-R1 provided in accordance to National Best Census and Identification Plant • The native species used as part of the biological control method Practices. • Reducing the use of chemicals over a period of time • Prophylactic use of pesticides • Minimization of pesticide use • Review on the plans to suit the present condition such as replanting IPM Plan has been implemented by organization. Early detection UPDKS (ulat pemakan daun kelapa sawit) performed every 2 months, it documented in BKM (buku kegiatan mandor). Beneficial plant Turnera subulata, Cassia cobanensis and Antigonon leptopus already planted almost in every block along the main road and collection road. Owl introduction and monitoring implemented by create owl nest (Gufon) and monitoring. The effectiveness of the IPM plan was monitored regularly as described in 4.5.1. There were records showing that the use of pesticides have been minimised in accordance with Integrated Pest Management (IPM) plan. Use of pesticides in the field was always lower than the planned budget. It also shows the company's commitment to always reduce pesticide usage and give priority to the prevention of mechanical, biological and integrated pest management. There was no prophylactic use of pesticides, its evident by site visit and field observation in Peranap Estate. Pesticide only used and apply for weeds and pest. Pesticides that are categorised as World Health Organisation Class 1A or 1B, or that are listed by the Stockholm or Rotterdam Conventions, and paraquat, are not used, except in specific 4.6.4 situations identified in national Best Practice guidelines. The use of such pesticides shall be minimised and eliminated as part of a plan, and shall only be used in exceptional circumstances. a. Does the company have a complete YES • Document Listing of WHO class Company have a complete listing of WHO class 1A, class 1B, and Stockholm or listing of WHO class 1A, class 1B, and 1A, class 1B, and Stockholm or Rotterdam Conventions pesticide. It was well documented in Estate office. Stockholm or Rotterdam Conventions Rotterdam Conventions pesticide? Paraquat which was the active ingredient of Gramoxone was still used in PT. pesticide

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) b. Is there a policy, procedure or • Paraquat usage in PT. Rigunas Rigunas Agri Utama Peranap Estate, however the organisation has set internal management plan committing to minimise Agri Utama Peranap Estate target to reduce paraquat use. and eliminate use of these pesticides and period 2009 – 2016 Data of paraquat used has been provided since 2009 to 2016, as mention below: paraquat? c. Are there records of minimisation of Year Unit Total pesticides and paraquat use? 2009 Liter 2.064 d. Where there is the use of the above 2010 Liter 2.033 pesticides or paraquat, has justification in line with national best practice guidelines 2011 Liter 4.877 been documented? 2012 Liter 969 e. Does physical verification of inventory in 2013 Liter 288 the chemical store agree back to the 2014 Liter 270 inventory records? 2015 Liter 250 2016 Liter 33

(M) Pesticides shall only be handled, used or applied by persons who have completed the necessary training and shall always be applied in accordance with the product label. Appropriate 4.6.5 safety and application equipment shall be provided and used. All precautions attached to the products shall be properly observed, applied, and understood by workers (see Criterion 4.7). YES a. Is there SOP for chemicals/pesticides • SOP AA-APM-OP-1100.11-R1- Pesticide use and handling was documented in the procedure SOP AA-APM-OP- handling? Management Pesticides 1100.11-R1-Management Pesticides and SOP AA-APM-OP-1100.08-R1-Weeding Control. General instructions of security in working with pesticides described in b. Is there a training plan and training • SOP AA-APM-OP-1100.08-R1- procedure includes the selection of kinds of pesticides, pesticide storage, records for workers who apply or handle Weeding Control pesticides? pesticide use, addressing pesticide contamination, first aid instructions, medical • Training record by Pesticide assistance. c. Is there evidence that training has been Commission of Agriculture conducted in an appropriate language Agrochemicals have been applied and handled by trained spraying workers who Department Riau Province on understood by the workers? have received usage of limited pesticide training. Training was delivered by 28 Oktober 2016 in Peranap Pesticide Commission of Agriculture Department Riau Province on 25th March d. Are pesticides handled, used or applied estate 2014 in Peranap estate. Training record and certificates were sighted for all only by persons who have completed the sprayers. necessary training? • Site observation in KUD Bukit Permai, KUD Lakat Makmur Its evidence that training has been conducted in an appropriate language (Bahasa e. Are the workers involved in chemical and KUD Serangge Permai handling or application able to Indonesia) and understood by the workers. • Field observation and interview demonstrate understanding of the Training covered handling of concentrate agrochemical and spraying method with workers hazards and risks related to chemicals including pesticide hazard. Pesticides handled, used and applied only by persons

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) used when interviewed? who have completed the necessary training, it was observed during field audit that all sprayers workers have trained. f. Are pesticides always applied in accordance with the product label? Personnel interviewed (sprayer workers) can clearly explain the type of work g. Are MSDS for pesticides used readily including work methods and goals, materials used (pesticides) including the available for easy reference? dosage and hazards and risks, personal protective equipment and first aid. h. Is appropriate safety and application Pesticides were always applied in accordance with the product label and storage equipment provided and used? instruction , such as : Gramoxone dose 1,5 L/ha, Garlon dose 0,33/ha, Lindomin dose 200-500 L/ha. i. Is PPE used appropriate according to recommendations in any risk Agrochemicals storage was locked areas with limited access. The storage was assessments done? ventilated. MSDS and hazard symbol label were provided nearby of agrochemicals. j. Is appropriate PPE provided and used, and can it be easily replaced if damaged? Emergency shower and eyewash were also provided to anticipate in case of an emergency of agrochemical handling. The possible spill was managed. k. Does the management checked the Secondary containment was provided around the chemical storage area. Spill kit workers usage of appropriate PPEs? was also provided in the area. PPE for handling of chemicals were provided including boots, apron, safety glass, respiratory mask and hand gloves. PPE used was appropriate according to recommendations in any risk assessments. PPE provided and used can be easily replaced if damaged.. Site visit in Block A93D Division I Peranap Estate has been done to observe the spraying and pesticide application in field. Interview with spraying workers were evident that all of them has a good knowledge regarding the pesticide usage and its material usage and toxicity. All the workers has used the personal protective equipment meet with the safety rules and work instruction such as: Appron, safety goggles, chemical masker, hand gloves and safety shoes. All precautions attached to the products properly observed, applied, and understood by workers. Mandor as person in charge to check the workers usage of appropriate PPEs was well monitored in each spraying job. Sample of smallholder pesticide spraying implementation were taken such as in Kavling No. 13 hamparan IV KUD Bukit Permai on behalf Sumadi. The results were shown and it was observed that all of the activity of upkeep (herbicide

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) spraying) was met with the procedure and well implemented. (M) Storage of all pesticides shall be according to recognised best practices. All pesticide containers shall be properly disposed of and not used for other purposes (see Criterion 5.3).

4.6.6 Specific guidance for 4.6.6: Recognised best practice includes: Storage of all pesticides as prescribed in the FAO International Code of Conduct on the distribution and use of pesticides and its guidelines, and supplemented by relevant industry guidelines in support of the International Code (see Annex 1).  Procedure AA-KL-06-EFP – Pesticides were stored in the determined area separated from fertiliser and other YES a. Has the SOP for pesticide storage been Handling of Hazardous Waste. chemicals. Pesticides storage was provided in central workshop and was locked documented and implemented? areas with limited access, both Peranap Estate and Smallholder. The storage was  Procedure AA-APM-OP- ventilated through cross flow ventilation. MSDS and hazard symbol label were b. Are all pesticides stored according to 1100.11-R1 dated 1 February provided nearby of pesticides. Emergency shower and eyewash were also recognised best practices? 2009 – Management Pesticides provided to anticipate in case of an emergency of chemical handling. PPE for c. Is there evidence that empty pesticide  Field observation at central handling of chemicals were provided including boots, apron, safety glass, containers are properly stored and warehouse and spraying respiratory mask and hand gloves. The possible spill was managed. Secondary disposed off and not used for other activities at estate operation containment was provided around the pesticides storage area. Spill kit was also purposes? provided in the area. EHS patrol was regularly performed monitor possible spill.  The training list of attendance d. Is there evidence observed in the field and training material All empty pesticides containers were triple rinsed and collected in the temporary that pesticide containers are storage of hazardous waste. Pesticides containers were transported by authorised indiscriminately disposed (in dump site) transporter, PT Shali Riau Lestari. Records of pesticides containers quantity were or used for other purposes, .e.g. as waste evident. Liquid waste from pesticides was reused for the next spraying containers, flower pots? applications also there are several ex-containers “jerry can” that may re-use for field application. 4.6.7 Application of pesticides shall be by proven methods that minimise risk and impacts. a. Is there work instruction for pesticide  Procedure AA-APM-OP- The documented procedure was defined on how the method to conduct pesticide YES application? 1100.11-R1 dated 1 February application by using “knapsack sprayer”, handling empty pesticides containers. 2009 – Management Pesticides b. Is there training provided on work The training was also available regarding to describe the content of procedure, instruction including risk and impacts of  The training list of attendance risk and hazard of pesticides, attendance records was also sighted for all pesticide applications? and training material pesticide sprayer and supervisors. (M) Pesticides shall be applied aerially only where there is documented justification. Communities shall be informed of impending aerial pesticide applications with all relevant information 4.6.8 within reasonable time prior to application. a. Has aerial spray been applied? If yes, is  Interview with RAU Based on interview with RAU Management and field observation, there was no N/A there documented justification? Management pesticide application aerially.

b. Is the impact and risk associated with  Field observation aerial application documented and made

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) available? c. Are the identified affected communities informed of impending aerial pesticide applications with all relevant information within reasonable time prior to application?

Maintenance of employee and associated smallholder knowledge and skills on pesticide handling shall be demonstrated; including provision of appropriate information materials (see Criterion 4.6.9 4.8). NO • Work instruction including risk Company has provided information materials on pesticide handling to all (Minor NCR a. Has the company provided information and impacts of pesticide employees. Training and dissemination on work instruction including risk and 2016-03) materials on pesticide handling to all applications (Material safety impacts of pesticide applications (Material safety data sheet) has been performed employees and associated smallholders data sheet) by organization on March 2015 and August 2016 to all sprayer workers. Training (if any) (see Criterion 4.8)? and dissemination records was sighted. • Training and dissemination b. Is there evidence of periodic training (in records 2016 Company has conducted periodic training (in Bahasa Indonesia) of employees on appropriate language) of employees and pesticide handling. associated smallholders on pesticide • Site observation in KUD Bukit handling? Permai, KUD Lakat Makmur and KUD Serangge Permai Minor Non-conformity : • Field observation and interview Note: Interview with workers and smallholders There was no evidence that training and dissemination of handling pesticide to with workers on their knowledge and skills in pesticides smallholders (KUD) was conducted. Based on document review and interview handling. with smallholders and company staff, There was no evidence KUD (smallholders) has been trained on handling pesticide.

4.6.10 Proper disposal of waste material, according to procedures that are fully understood by workers and managers shall be demonstrated (see Criterion 5.3).

a. Is there an SOP for proper disposal of  Procedure AA-KL-06-EFP – All empty pesticides containers were triple rinsed and collected in the temporary YES waste material? Handling of Hazardous Waste. storage of hazardous waste. Pesticides containers were transported by authorised b. Is there training provided to workers and transporter, PT Shali Riau Lestari. Records of pesticides containers quantity were  Procedure AA-APM-OP- evident. Liquid waste from pesticides was reused for the next spraying managers on proper waste disposal? 1100.11-R1 dated 1 February applications also there are several ex-containers “jerry can” that may re-use for c. Is there evidence of implementation of 2009 – Management of field application. proper ways for waste disposal by the

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) company? Pesticides Training/briefing regarding disposal of waste material has been conducted to all workers and staffs. Based on interview with sprayer workers at Afdeling I, Block  Field observation at central A95c, they understood the disposal of waste material. During audit, there was no warehouse, spraying activities field observation for spraying activities at smallholder area, because was raining. at estate operation The waste material disposal at smallholder area was managed by Peranap  The training list of attendance Estate. and training material

4.6.11 (M) Specific annual medical surveillance for pesticide operators, and documented action to treat related health conditions, shall be demonstrated.

 List Of Pesticides Operator 2016 List of pesticides operator was shown and updated periodically. Specific health YES  Medical records at local polyclinic surveillance has been performed on for pesticide operators included a. Is there an updated list of pesticide  MCU Recapitulation Report cholinesterase, spirometry and audiometry on 12-14 May 2016. The surveillance operators? was planned to be conducted twice in a year. Reports of the health surveillance for all workers were available. b. Is there records of annual medical

surveillance of pesticide operators? Socialization of health surveillance results have been conducted to the workers c. Is there medical and treatment records of that need to be followed up. Base on recommendation company doctor the all pesticide operators? actions were executed. Follow up medical records for were available at polyclinic. Several records were sighted and reviewed such as for: Nurhayani, Winda and Mardiana (lung problem and SGOT/SPOT) as pesticides operators from Block A95E Division 01. They all were sent to Puskesmas Peranap in June 2016.

4.6.12 (M) No work with pesticides shall be undertaken by pregnant or breast-feeding women.

a. Is there a policy statement preventing YES • Company Policy dated 1 Policy related to prevent pregnancy and breastfeeding women from handling pregnant and breast-feeding women from December 2014 pesticides has been described in the Company Policy. handling pesticides? b. Is there a lists of female workers handling • Field observation and interview List of female workers are available and include female workers related to pesticides available? with sprayer workers pesticide as well as worker's age can be identified. c. Does the company have a system to • Interview with workers union Identification of pregnancy and lactating mothers performed by a clinical nurse. identify pregnant and breast-feeding and committee gender on 23 And result was recorded. And based on the medical records of nursing there is no women? November 2016 evidence that pregnant and lactating women work in handling pesticides. When there are pregnant and lactating women, the women workers will be transferred to

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) d. Is there evidence showing that pregnant other jobs. Based on record review and field observation it was evidence that no and breast-feeding women are not pregnant or lactating women work with pesticides. allowed to handle pesticides? Based on interview with sprayers, committee gender and worker union said that it’s prohibited for pregnant and breast-feeding women working as fertilizer and sprayer or other work that related to chemical compounds.

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

(M) A health and safety policy shall be in place. A health and safety plan covering all activities shall be documented and implemented, and its effectiveness monitored.

Guidance: 4.7.1 Growers and millers should ensure that the workplace, machinery, equipment, transport and processes under their control are safe and without undue risk to health. Growers and millers should ensure that the chemical, physical and biological substances and agents under their control are without undue risk to health when appropriate measures are taken. All indicators apply to all workers regardless of status. The health and safety plan should also reflect guidance in ILO Convention 184 (see Annex 1). a. Is there a health and safety policy in  Health and Safety Policy Occupational health and safety (OHS) policy is remained unchanged. The policy YES place?  OHS Target and Plan 2016 was displayed at strategic locations of estate and mill and communicated to  Is it written in an appropriate  Notes of Meeting Safety employees including contractor workers. The Health and safety policy was signed language? Committee by organization director on 1 December 2014. The mitigation of risks to workers health and safety was included in point 4 and 5 in the policy.  Has the policy been approved by an  Risk Assessment register 2016 authorized personnel and dated?  OHS Training Records OHS Plan 2016 was evident such as: safety trainings, safety inspection, safety  Does the policy cover mitigation of  Safety Working Permit Records parameters monitoring, MCU, Handling of incidents, emergency simulation, safety risks to workers health and safety at  Etc. report, safety committee meeting etc. Health and safety plan and target for all all workplace activities?  Observations of OHS estates and mill were evident and and reflected the guidance provided in ILO  Are the workers aware of and implementation on: Convention 184. understand the policy? - Peranap Estate: spraying The implementations of the programs were evident such as: activities (block A95E Division b. Is there a health and safety plan in 01) and harvesting activities  Safety Committee meeting during January-October 2016 place? (block A93D Division 01),  Safety Performance Report to local authority period July-September  Does the plan include targets for warehouse and workshop. 2016 improving occupational health and - Peranap Mill: loading and  Basic Fire Training on 31 March 2016 safety? unloading, production process  Medical Check Up for risk employee and non-risk employee  Does the plan reflect guidance including utilities, workshop,  Emergency Procedure Testing/Simulation on 28 April and 7 March 2016 provided in the ILO Convention 184 storage and laboratory.  etc.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) (see Annex 1)? c. Is there evidence of implementation of Monitoring of the safety plan was conducted by regular safety meeting once in a the plan? month. Several action plans were raised for the unachieved safety targets and d. Is the effectiveness of the health and plans. The safety target and plan was also publicly available via company safety plan monitored? website. e. Is the health and safety plan made Health and safety guideline for smallholders is in place. OHS policy was available publicly available? and signed by Chief of KUD. f. Is there an action plan if targets are not OHS Plan 2016 for Peranap Estate and Smallholder were available and achieved? implemented such as: safety trainings (first aid, basic fire, and basic safety), Personal Protective equipment, Handling of incidents and emergency simulation. Reviewed conducted at Koperasi Serangge Permai and Koperasi Lakat Makmur. The implementations of the programs were evident such as: • Safety meeting during April-October 2015 • Emergency procedure simulation on 17 May 2016 • Safety Inspection • Fire Fighting Training 17 May 2016 • First aid training on 18 February 2016 • OHS Training 2 February 2016 (M) All operations where health and safety is an issue shall be risk assessed, and procedures and actions shall be documented and implemented to address the identified issues. All 4.7.2 precautions attached to products shall be properly observed and applied to the workers.

a. Have risk assessments been conducted  Fire Handling Procedure (AA- Risk Assessment for all operations regarding to health and safety was available YES for all operations where health and safety KL-15-EFP) within the scope of oil palm mill processes activities and agricultural estate (Major NCR is an issue?  Emergency Response activities has already conducted, as it was considered the stages of OHS risk 2016-04 closed) b. Does the risk assessment cover all the Procedure (AA-KL-14-EFP) control hierarchy such as elimination, substitution, engineering, administrative and organization’s processes and activities?  Safety At Workshop Procedure PPE (Personnel Protective Equipment) in order to OHS risk precautions. (Lock out/Tag out) (AA-KL-09- Risk Assessment for all operations for estate and mill was available and c. If any accidents had occurred, were these EFP) disseminated to the workers and operators. included in the risk assessments with  Handling of Pressurized The mill risk assessment cover processes and activities attached to the realisation action plans to prevent further Cylinder Gas Procedure (AA- of product CPO such as: weighing bridge, boiler, engine room, loading ramp, recurrence? KL-13-EFP) sterilizer, threshing, pressing, kernel operation, clarification, office, lab, dispatch d. Have the procedures and action plans  Chemical Handling Procedure CPO, water treatment, chemical warehouse, firefighting simulation, etc. been documented and implemented to (AA-KL-03-EFP)

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) address the identified issues?  Risk Assessment for Mill and The estate risk assessment covers processes and activities attached to the realisation of product FFB such as: spraying, fertilizing, weeding, replanting, road e. Have all precautions attached to products estate Year 2016 maintenance, harvesting, transportation, warehouse, workshop, infrastructure, been properly observed and applied to policlinic, office etc. the workers? Risk Assessment for Peranap Plasma have also been established and socialized to the related workers. Several risk assessment was sighted such as fertilizing, road maintenance, harvesting and FFB transporting. Basic safety training was performed on 30-31 March 2016 for Peranap mill and estate and 2 August 2016 to smallholders. The risk assessments were reviewed yearly and should any accident had occurred. Several procedures related to these issues have been raised and documented such as:

Several OHS procedures related to the risk assessment were established such as:  Fire Handling Procedure (AA-KL-15-EFP)  Emergency Response Procedure (AA-KL-14-EFP)  Safety At Workshop Procedure (Lock out/Tag out) (AA-KL-09-EFP)  Handling of Pressurized Cylinder Gas Procedure (AA-KL-13-EFP)  Chemical Handling Procedure (AA-KL-03-EFP)

Monitoring of physical chemistry factors has been conducted such as noise, vibration, air ambient, etc. Several factors were found exceeded than regulation such as noise. Follow up regarding to this condition has been conducted and evaluated. OHS induction was performed by Safety Officer at mill and estates. Utility equipment were available and installed such as boilers, sterilised, steam vessel, compressors, generator, heavy equipment and lifting equipment. This equipment has been inspected by local authority and the records were evident. Periodic monitoring was also performed internally such as boiler parameter monitoring (pressure, temperature, water quality, water level, etc. Moving parts of machine/equipment generally has been covered or guarded. Safety sign was provided to make workers aware on this hazard and risk. Electrical hazard symbol

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) was provided at electrical panel. Inspection regarding to electrical installation has been made. Access for workers to workplace in general also good e.g. stair was provided with hand rail and platform at height was provided with border to prevent fall risk. There was also detailed working instruction which described process for conducting activities including requirement concerning to OHS aspects such as requirement of PPE. Working instructions were sighted such as spraying, harvesting, pesticide preparation, etc. OHS control for working in confined space (e.g. cleaning of storage tank), working at height and welding. Work permit system has been implemented for these works. However the cleaning of storage tank activity conducted on 5 June 2016 was not applied the safety working permit though the system has been defined in the work instruction. Lock out tag out has also been established and implemented especially intended for risk control of maintenance activities. The PPE for each activity has been established, e.g. working at mill, working at generator set, welder, working at laboratory, harvester, sprayer, fertilizer storage, chemical storage, etc. Observation during this audit generally concluded that PPE has been well provided and implemented. Workers were interview during this audit and generally they understood the risk of their work and the purpose of using PPE. Emergency Response Team has been defined and the emergency flow charts have been established for any kind of emergency situation such as earthquake, fire, flood etc. The awareness of employee was gained with the simulation of emergency response conducted on 7 March 2016 for mill and 28 April 2016 for estate. The evacuation routes and emergency flowcharts have been socialized during simulation. Emergency signs and boards were provided in several areas. The muster points for each area such as workshop, warehouse, office etc. were sighted All precautions attached to products been properly observed and applied to the workers. Several controls such as providing PPE and administration control were applied to workers in some activities such as: mill maintenance process, spraying activities, handling of pesticides etc.

Major Non-Conformity: Safety working permit process for CPO Tank washing on June 2016 has not been implemented.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) (M) All workers involved in the operation shall be adequately trained in safe working practices (see Criterion 4.8). Adequate and appropriate protective equipment shall be available to all 4.7.3 workers at the place of work to cover all potentially hazardous operations, such as pesticide application, machine operations, and land preparation, harvesting and, if it is used, burning.

a. Are all workers involved in the operation  List Attendance of Basic Safety Safe working practices training have been performed to all workers in the YES appropriately trained in safe working Training for mill and estate. operation. Samples were taken such as: harvesting, spraying and chemical (Major NCR practices (see Criterion 4.8)?  PPE Checklist Maintenance warehouse workers. The trainings were conducted by Safety Officer who has 2016-05 closed) been qualified as Safety Officer by the government. The trainings conducted on b. Are OSH training programs and training  PPE Distribution Records 30-31 March 2016. records available and conducted by  List attendance of emergency qualified persons? The PPE for each activity has been provided, e.g. working at Mill, working at simulation at Peranap Plasma c. Is adequate and appropriate protective generator set, welder, working at laboratory, harvester, sprayer, fertilizer storage, equipment available to all workers at the chemical storage, etc. Observation during this audit generally concluded that PPE place of work to cover all potentially has been well provided and implemented. Workers were interview during this hazardous operations, such as pesticide audit and generally they were understood the risk of their work and the purpose of application, machine operations, and land using PPE. However several workers were found not using mandatory PPE during preparation, harvesting and, if it is used, audit. burning? List of PPE Distribution was evident and included: ear plug, helmet, ear muff, d. Is PPE provided to workers and replaced safety shoes, gloves, googles, mask, gas mask, apron etc. The records of PPE when damaged? distribution were evident such as safety masks distribution on 11 April 2016 for

 Does the organization maintain a list pesticides workers at Division 01. of PPE distribution? Several mandatory PPE were provided and worn by the workers such as: helmet,  Are workers observed wearing safety googles, safety shoes, safety clothes, chemical mask, ear plugs, ear muffs appropriate PPE? and respirators. Emergency simulation has been conducted on 17 May 2016 at Koperasi Serangge Permai and on 20 June 2016 at Koperasi Lakat Makmur. The simulation was related to fire handling and prevention. The muster points was available and the workers were aware for the evacuation route.

Major Non-Conformity: Adequate and appropriate protective equipment were not available to all workers and equipment at the place of work to cover all potentially hazardous situations such as:  Pesticides operators at Kebun Peranap (block A95E Div.01) were not equipped

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) by safety glasses and  it was found the harvesting equipment (egrek) was kept in the emplacement without its cover

(M) The responsible person/persons shall be identified. There shall be records of regular meetings between the responsible person/s and workers. Concerns of all parties about health, safety 4.7.4 and welfare shall be discussed at these meetings, and any issues raised shall be recorded.

a. Has the company identified the  Approval Letter of Safety The responsible person was identified as Chief of P2K3 (estate manager Mr. YES responsible person/persons to implement Committee (P2K3) from local Mephan Supriadi and mill manager Mr. Husniyah) and P2K3 secretary (Safety OSH? government Pemkab Peranap Officer Denny M. Sitompul and Ady Candra Tampubolon). The safety committee b. Are meetings between the responsible  Notes of Safety Committee (P2K3) structure was evident and been approved by local authority Pemkab Peranap. persons and workers conducted on a Meeting regular basis, or as required by law, if Notes of Regular Meeting of Safety Committee (mill and estate) with workers were evident. Sample were reviewed for January - October 2016. Several concerns any? were discussed such as: evacuation route, incident investigation, and request for c. Are minutes of meeting recording PPE. The actions were monitored for realisation and reported to management and attendees and issues discussed local authority. available? d. Are concerns of all parties about health, safety and welfare discussed at these meetings?

Note to Auditor: Interviews with workers reflect compliance to a-d above. Accident and emergency procedures shall exist and instructions shall be clearly understood by all workers. Accident procedures shall be available in the appropriate language of the workforce. 4.7.5 Assigned operatives trained in First Aid should be present in both field and other operations, and first aid equipment shall be available at worksites. Records of all accidents shall be kept and periodically reviewed.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Are there SOPs for accidents and  Emergency respond procedure Accident and Emergency respond procedure written in Bahasa Indonesia was YES emergencies? AA-EMS-447-PR described by AA-EMS-447-PR and was covered reporting, responsibility of all  Do these cover all major potential  Accident procedure members of ERP Team, handling of ERP situation, mitigating of ERP situation, emergencies, such as, but not  List attendance of First Aid etc. Some situations were identified such as accident, fire and hazardous spillage. limited to fire, chemical spillage, and Training Emergency respond procedure has been socialized to workers during simulation potential natural disasters specific  List Attendance of Emergency of emergency situation and attended by all workers. The list of attendance was for the region, e.g. earthquakes, Simulation Mill on 7 March available. From workers interview in the field it was observed that the workers volcanoes, etc.? 2016 were clearly understood of what is required in the procedure.  Are accidents investigated and  List Attendance of Emergency action taken to prevent recurrence? Simulation estate and The last accident has been investigated and reported to the local authority  Are accident records provided to the smallholder on 28 April 2016 Disnaker Peranap. All the records were available and maintained by the safety local authority in accordance with  Records of accident officer. local legal requirements, if any? investigation Trained First Aid operators were provided in the field area. There were also First  Available in the appropriate Aid trainings from local paramedic on 14 July 2016. The First Aid equipment language of the workforce? carried by foreman were available at worksites such as harvesting area, spraying b. Are the instructions on emergency area etc. and were checked in accordance with local regulation Permenaker procedures clearly understood by all 15/2008.

workers? There were no reports for any accidents for the last two years in Koperasi c. Are assigned operators trained in First Serangge Permai. But the related procedure was available in handling any Aid present in both field and other accidents occurred. During 2016 there were 3 accidents happened in Koperasi operations? Lakat Makmur that was on 20 August 2016 and 30 August 2016 and 4 October 2016. The records were evident and follow up actions such as referred to nearest d. Is there records of training of the first Poly clinic. The workers were covered by insurance from government (Jamkesda). aiders? e. Is first aid equipment available at worksites? Is the equipment available during conduct of field manual work? e. Are first aid kits adequately stocked and regularly checked in accordance with local legal requirements? f. Are records of all accidents kept and periodically reviewed for continuous improvement?

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

4.7.6 All workers shall be provided with medical care, and covered by accident insurance.

a. Is there evidence that all workers are Company Internal Memorandum All workers (permanent, contract and daily) were covered by internal medical care YES provided with medical care (refer to regarding to employee medical. and internal accident insurance provided by organisation. Evidence was sighted Criterion 6.5.3), and covered by and documented such as: accident insurance by the company? For contract workers, the contract BPJS Kesehatan (medical care) between the company and the - Bank slip payment in October 2016 for payment October 2016 for mill contractor shall be in compliance. and estate employee b. For accidents that have occurred, is - Bank slip payment in November 2016 for payment November 2016 for there evidence that the affected workers mill and estate employee received appropriate medical treatment, and was able to claim and receive BPJS Ketenagakerjaan (accident Insurance)

compensation under the insurance - Bank slip payment dated in November 2016 for October 2016 for 298 policy (if relevant)? estate employees c. Is there evidence that the insurance - Bank slip payment in November 2016 for October 2016 for 82 mill policies are valid? employees

Medical treatment covered by medical care insurance was received by sprayer Nurhayani referred to Puskesmas Peranap dated 7-06-2016 and was covered by medical care insurance from government.

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

Specific Guidance for 4.7.7: The National Interpretation will define the metrics for LTA. For countries where there are no national interpretations, the growers will determine their own metrics. 4.7.7 For National Interpretation: National Interpretation will define the metrics for LTA. All legal requirements together with any local or national guidance on safe working practice in agriculture will be identified and used. It will also be important to identify what constitutes a ‘hazardous’ operation in the local context. a. Are occupational injuries recorded Frequency Rate and Severity Rate Safety performance for both mill and estates was calculated using frequency rate YES using Lost Time Accident (LTA) Calculation Table and severity rate. metrics? The performance for mill and estates were as below:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Mill: SR=0;FR=0 Estate=SR=11;FR=79

The calculation for frequency rate and severity rate was generated from lost time incident data, employee working hour’s data and lost time hours data. The timesheet calculation for each month were shown during audit.

4.8 All staff, workers, smallholders and contract workers are appropriately trained.

(M) A formal training programme shall be in place that covers all aspects of the RSPO Principles and Criteria, and that includes regular assessments of training needs and documentation of the programme.

Guidance: Workers should be adequately trained on: the health and environmental risks of pesticide exposure; recognition of acute and long-term exposure symptoms including the most vulnerable groups (e.g. young workers, pregnant women); ways to minimise exposure to workers and their families; and international and national instruments or regulations that protect workers’ health. The training programme should include productivity and best management practice, and be appropriate to the scale of the organisation. Training should be given to all staff and workers by growers and millers to enable them to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of these Principles, Criteria, Indicators and Guidance. Contract workers should be selected for their ability to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of the RSPO 4.8.1 Principles, Criteria, Indicators and Guidance. Growers and millers should demonstrate training activities for schemes smallholders who provide Fresh Fruit Bunches (FFB) on a contracted basis. Workers on smallholder plots also need adequate training and skills, and this can be achieved through extension activities of growers or millers that purchase fruit from them, by smallholders’ organisations, or through collaboration with other institutions and organisations (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009) For individual smallholder operations, training records should not be required for their workers, but anyone working on the farm should be adequately trained for the job they are doing (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009).

For National Interpretation: Appropriate occupational training qualifications will be identified.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Does the company maintain a list of staff, • Training Identification Matrix YES Training need identification matrix 2016 was evident and covered staff, workers, workers, smallholders and contract • Training Programme 2016 smallholders, and contract worker. Training programme 2016 were sighted and workers whom training must be provided • Training Records established based on the training needs identification and covered all aspects of to? (List Attendance, evaluation etc.) the RSPO criteria such as safety, environment, social, best practice, human b. Is there a formal training programme in rights, management program, HCV and ethical. place that covers all aspects of the RSPO Principles and Criteria? Does the formal The list of attendance and the training handout were evident such as: training program include:  First Aid Training: 7 September 2015  Regular assessment of training  Fire Fighting Training on 28 April 2016 needs of all staff, workers,  Basic Safety Training on 31 March 2016 smallholders and contract workers;  Hiperkes Training on 1-2 November 2016  Training for workers on smallholder  First Aid Training on 14 July 2016 plots;  Pesticides Application Training on 30 September 2016  Documentation of all the training  OHS Management training on 10-11 December 2015 assessment needs, formal training  Etc. conducted and the list of Training for smallholders has been performed such as: participants attending these formal  Emergency procedure simulation on 17 May 2016 training;  Safety Inspection  Does the training for workers cover,  Fire Fighting Training 17 May 2016 at minimum, to the following:  First aid training on 18 February 2016 o The health and  OHS Training 2 February 2016 environmental risks of  Basic safety training on 2 August 2016 pesticide exposure; o recognition of acute and Base on interview to workers (harvesting workers at Peranap estate block A93D long-term exposure Div.01; sprayers workers at Peranap estate block A95E Div.01) during audit they symptoms including the were aware the need of the training and they were assisted by information most vulnerable groups provided during training. (e.g. young workers, pregnant women); o ways to minimise exposure to workers and their families; o International and national instruments or regulations that protect workers’

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) health; and o Productivity and best management practice.

Note to auditor: To interview staff, workers, smallholders and contract workers to verify that the training has been conducted effectively.

4.8.2 Records of training for each employee shall be maintained.

a. Are training records maintained for each Personal Training Records of Evidence of training for key persons were verified and sighted and the records YES employee? managers and Safety Officer were maintained for each employee such as for Safety officer. The system to record personal training was established-in this record; the training which has

been completed by each person was recorded. Training realisation records are sighted such as hazardous substance handling training, boiler training, safety officer, pesticides training, etc.

Audit Report

PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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 5.1 made, implemented and monitored, to demonstrate continual improvement. (M) An environmental impact assessment (EIA) shall be documented.

Guidance: The EIA should cover the following activities, where they are undertaken: • Building new roads, processing mills or other infrastructure; • Putting in drainage or irrigation systems; • Replanting and/or expansion of planting areas; • Management of mill effluents (Criterion 4.4); • Clearing of remaining natural vegetation; • Management of pests and diseased palms by controlled burning (Criteria 5.5 and 7.7).

5.1.1 Impact assessment can be a non-restrictive format e.g. ISO 14001 EMS and/or EIA report incorporating elements spelt out in this Criterion and raised through stakeholder consultation. Environmental impacts should be identified on soil and water resources (Criteria 4.3 and 4.4), air quality, greenhouse gases (Criterion 5.6), biodiversity and ecosystems, and people’s amenity (Criterion 6.1), both on and off-site. Stakeholder consultation has a key role in identifying environmental impacts. The inclusion of consultation should result in improved processes to identify impacts and to develop any required mitigation measures. For smallholder schemes, the scheme management has the responsibility to undertake impact assessment and to plan and operate in accordance with the results (refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009).

For National Interpretation: National Interpretation will consider any national legal requirements together with any other issues that are not required by law but are nevertheless important, e.g. independent social and environmental impact assessment (SEIA) for replanting may be desirable under specific situations. a. Has an EIA been conducted according to  Document of RKL and RPL for Initial Environmental Impact Assessment documents (ANDAL, RKL and RPL) YES the scope of operation covering at Rigunas Agri Utama Mill and which were approved by Governor of Riau Province KPTS 332/VII/2005 dated minimum the following: Estate #KPTS 332/VII/2005 July, 8 2005 for RAU Mill and Estate.  Building new roads, processing mills dated 8 July 2005 The company have the document approval of KA-ANDAL for PT. RAU Plantation or other infrastructure; and Mill No. 660.1/BAPEDAL Prop/AMDAL/567a, on 04 November 2002. EIA  Putting in drainage or irrigation  EMS-431-003-LT Rev.10 form rd Area of 5,215.24 ha (core), 23,502.26 ha (smallholder), and Process Capacity of systems; updated on 3 March 2015 Identification of Environmental 60 MT/hour at PT. RAU Plantation and Mill in Peranap District, Indragiri Hulu  Replanting and/or expansion of Regency, Riau Province. planting areas; Aspect For internal environmental aspect and evaluated its impact document, as required  Management of mill effluents  Procedure AA-EMS-431-PR

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) (Criterion 4.4); Rev.3 dated January 2007 by the procedure AA-EMS-431-PR Rev.3 dated January 2007, the information of  Clearing of remaining natural Identification and Evaluation of environmental aspect and impact was reviewed and updated at least once a year. vegetation; Environmental Aspects. Last review and update of environmental aspect and impact register was performed on 3rd March 2015. Document of environmental impact assessment  Management of pests and diseased palms by controlled burning (Criteria included: 5.5 and 7.7).  Processing mills or other infrastructure; b. Has the EIA been conducted and  Putting in drainage or irrigation systems; documented according to local  Replanting and/or expansion of planting areas; requirements?  Management of mill effluents; c. Does the assessment include consultation  Clearing of remaining natural vegetation; with relevant stakeholders to identify  Management of pests and diseases palms by controlled burning; impacts and to develop any mitigation  Road management measures? The assessment include consultation with relevant stakeholders to identify impacts and to develop any mitigation measures. Where the identification of impacts requires changes in current practices, in order to mitigate negative effects, a timetable for change shall be developed and implemented within a 5.1.2 comprehensive management plan. The management plan shall identify the responsible person/persons. a. Is there an environmental management  Procedure AA-EMS-431-PR – Peranap Mill, Peranap Estate, and Smallholders implemented procedure for YES plan in place? Environmental aspect and identifying environmental aspect and evaluating its impact based on Environmental Management System ISO 14001:2004. As required by the b. Is the environmental management plan impact identification documented to include the following: procedure, the information of environmental is reviewed and updated annually.  EMS-431-003-LT Rev.10 form Last review and update of environmental aspect and impact register Peranap Mill,  Identification of responsible person(s); updated on 3rd March 2016 Estate, and Smallholders were performed on 3 March 2016. No changes of  Potential impacts from current Identification of Environmental identification of impacts since last audit. practices; Aspect  Measures to mitigate negative Peranap Mill, Peranap Estate, and Smallholders has ensured that all activities impacts; with significant environmental impacts were managed. Control measure were  Timetable for change (where changes defined and implemented for ensuring that negative environmental impact were in current practices are required). prevented or mitigated. There were several types of control measures defined: engineering control, administrative control and PPE. The implementation of those c. Has the environmental management plan control measures are monitored during monthly environmental patrol and also been implemented? round of internal audits. The result of environmental patrol and internal audit described that management plan has implemented. This plan shall incorporate a monitoring protocol, adaptive to operational changes, which shall be implemented to monitor the effectiveness of the mitigation measures. The plan shall be 5.1.3 reviewed as a minimum every two years to reflect the results of monitoring and where there are operational changes that may have positive and negative environmental impacts.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Does the plan incorporate a monitoring  Document of RKL and RPL for Based on interview with RAU management, smallholders, and field observation, YES protocol? Rigunas Agri Utama Mill and there was no changes of identification of impacts since last audit. Estate #KPTS 332/VII/2005 b. Is the monitoring protocol adaptive to Management plan and monitoring of environmental impacts documented in RKL dated 8 July 2005 operational changes? (Rencana Kelola Lingkungan) and RPL (Rencana Pantau Lingkungan) as c. Is the monitoring protocol implemented to  Interview with RAU monitoring protocol. Environmental management plans adapted to estate and mill monitor the effectiveness of the mitigation Management operations change and regulations, if there are changes in the regulations related measures? to operational and environmental, management plan will be reviewed and re-  Field observation conducted the update to be relevant annually. d. Is the plan reviewed at a minimum every

two years to reflect the results of The reporting of RKL/RPL was conducted 6 monthly issued by Sustainability monitoring and where there are Department that consist of the implementation of environment management and operational changes that may have monitoring plan include analysis of waste water quality and flow rate also the air positive and negative environmental emissions measured by third party (Environmental Laboratory). The effectiveness impacts? of the outcome from the implementation of environmental management and monitoring was reviewed on the report through the evaluation of compliance, evaluation of trends and evaluation of the effectiveness of management and environmental monitoring. The environmental management plan (RKL-RPL) was reported to Indragiri Hulu District Environmental Agency and cc to Riau Province Environmental Agency, Riau Region Environmental Management Centre, and Ministry of Environmental. Receipt note was also sighted. Whenever there is a material change, changes in operations and regulatory changes must precede environment aspect and impact assessment. This identification was updated annually. 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, 5.2 shall be identified and operations managed to best ensure that they are maintained and/or enhanced. (M) Information shall be collated in a High Conservation Value (HCV) assessment that includes both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors).

Specific Guidance: 5.2.1 This information will cover: • Presence of protected areas that could be significantly affected by the grower or miller; • Conservation status (e.g. IUCN status), legal protection, population status and habitat requirements of rare, threatened, or endangered (RTE) species that could be significantly affected by the grower or miller;

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) • Identification of HCV habitats, such as rare and threatened ecosystems, that could be significantly affected by the grower or miller;

Guidance: This information gathering should include checking available biological records and consultation with relevant government departments, research institutes and interested NGOs if appropriate. Depending on the biodiversity values that are present, and the level of available information, some additional field survey work may be required. Wherever HCV benefits can be realised outside of the management unit, collaboration and cooperation between other growers, governments and organisations should be considered.

For National Interpretation: Appropriate sources of information can include government or international lists of threatened species (‘red data lists’), national wildlife protection legislation, authorities responsible for protected areas and species, or relevant NGOs. Note: Operators need to consider a variety of land management and tenure options to secure HCV management areas in ways that also secure local peoples’ rights and livelihoods. Some areas are best allocated to community management and secured through customary or legal tenures, in other cases co-management options can be considered. Where communities are asked to relinquish rights so that HCVs can be maintained or enhanced by the companies or State agencies, then great care needs to be taken to ensure that communities retain access to adequate land and resources to secure their basic needs; all such relinquishment of rights must be subjected to their free, prior, and informed consent (see Criteria 2.2 and 2.3). a. Has a High Conservation Value (HCV) • HCV Assessment Report by HCV Assessment has been conducted at RAU and smallholders areas by YES assessment been conducted and cover the Forestry Department, Bogor independent assessors from Forestry Department, Bogor Agriculture Institute on following: Agriculture Institute in 2014 24 - 28 September 2012. Assessment has been conducted and cover the  Presence of protected areas that following: • Field observation could be significantly affected by the • Presence of protected areas that could be significantly affected by the grower grower or miller; or miller;  Conservation status (e.g. IUCN status), legal protection, population • Conservation status (e.g. IUCN status), legal protection, population status status and habitat requirements of and habitat requirements of rare, threatened, or endangered (RTE) species rare, threatened, or endangered that could be significantly affected by the grower or miller. (RTE) species that could be • Identification of HCV habitats, such as rare and threatened ecosystems, that significantly affected by the grower or could be significantly affected by the grower or miller miller.  Identification of HCV habitats, such as HCV assessment performed by a qualified HCV assessor. All assessors were rare and threatened ecosystems, that approved in RSPO as HCV assessor - Discipline Specialist, coordinated by an could be significantly affected by the RSPO approved HCV assessor - Team Leader. grower or miller; HCV assessment performed in consultation with relevant stakeholders around b. Was the HCV assessment performed by a plantation. Public consultation conducted on December 2012 with the community qualified HCV assessor? leaders and figures around the estate and government agencies (Village Head, c. Was the HCV assessment performed in his officials and community leaders in the village).

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) consultation with relevant stakeholders? HCV assessment also include checking of available biological records and include both the planted area itself and relevant wider landscape-level d. Does the HCV assessment include considerations (such as wildlife corridors). checking of available biological records? e. Does the HCV assessment include both Methodology of assessment using a toolkit of HCV 2008, implementation of the the planted area itself and relevant wider assessment consists of: Secondary data collection, field survey, mapping and landscape-level considerations (such as landscape, Assessment of fauna aspect with a rapid assessment (direct wildlife corridors)? observation, interviews with the parties), assessment of flora aspects (direct survey and interview), assessment of socio-economic and cultural aspects f. Was the HCV assessment performed in (interviews and direct observation at selected sites), analysis and mapping. accordance to the latest methodology available at global and national level? All HCV identified areas was mapped in HCV Identification Report. g. Are identified HCVs mapped? (M) Where rare, threatened or endangered (RTE) species, or HCVs, are present or are affected by plantation or mill operations, appropriate measures that are expected to maintain and/or enhance them shall be implemented through a management plan.

Specific Guidance: 5.2.2 These measures will include: • Ensuring that any legal requirements relating to the protection of the species or habitat are met; • Avoiding damage to and deterioration of HCV habitats such as by ensuring that HCV areas are connected, corridors are conserved, and buffer zones around HCV areas are created; • Controlling any illegal or inappropriate hunting, fishing or collecting activities, and developing responsible measures to resolve human-wildlife conflicts (e.g. incursions by elephants). a. Are HCVs and/or RTEs present? • HCV Assessment Report by HCV assessment results showed that in the plantation area of Peranap Estate YES b. If HCVs and/or RTEs are present, has a Forestry Department, Bogor were identified several areas of HCV, i.e : (Major NCR Agriculture Institute in 2014 2016-06 closed) management plan containing appropriate Description HCV Type Wide (Ha) measures that are expected to maintain • Conservation Management Plan Ketipo River 1.2 & 4.1 15.70 and/or enhance them been prepared? The 2015 - 2016 Todung River 1.2 & 4.1 16.00 measures should include the following: • HCV Management and Pelengkawan River 1.2 & 4.1 22.96  Ensuring that any legal requirements Monitoring report 2015 - 2016 Sengkilo River 1.2 & 4.1 55.10 relating to the protection of the Water ponds 4.1 0.22 species or habitat are met; • RTE species monitoring result Sialang / Pohon Madu (Koompasia sp) 6 0.01  Avoiding damage to and deterioration 2015 - 2016 Total 109.99 of HCV habitats such as by ensuring • Field observation that HCV areas are connected, HCV Type: corridors are conserved, and buffer - HCV 1.2 : critically endangered species zones around HCV areas are created;

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Controlling any illegal or inappropriate - HCV 4.1 : areas or ecosystems important for the provision of water and hunting, fishing or collecting activities, prevention of floods for downstream communities and developing responsible measures - HCV 6 : areas critical for maintaining the cultural identity of local to resolve human-wildlife conflicts communities (e.g. incursions by elephants). Estate has establish the management plan to maintain and/or enhance High c. Are the measures contained in the conservation value area. HCV management and monitoring plan described management plan actively implemented to measures taken for each HCV and its monitoring. Relevant laws were taken into maintain and/or enhance HCV values? account for determining appropriate measure including UU #5/1990 about Natural d. Are the HCV values and the presence of resources conservation, PP#7/1999 about List of protected plan and wildlife, RTEs periodically monitored? Kepres #32/1990, and PP26/2008 Management plan consist of : e. Are the field inspections conducted Management plan was available containing appropriate measures that are regularly to ensure implementation of expected to maintain and/or enhance them, includes: mitigation plan (especially along areas bordering natural area)? - Maintenance of HCV marking, manual upkeep - Placement of warning sign/sign board - Monitoring of riparian area - Monitoring the presence of wildlife (Protected animal) - Monitoring of illegal hunting and HCV Patrol Management plans and monitoring of HCV was documented in “Conservation Management Plan PT RAU Peranap Estate 2015 - 2016” breakdown in Division HCV Management Program, each Division assistant was responsible for the program and its implementation. The measures contained in the management plan was actively implemented to maintain and/or enhance HCV values. Field observation to HCV area and document verification “Laporan Monitoring Biodiversity” of PT RAU Peranap Estate and Smallholders in 2nd Semester, 2015 and 1st Semester, 2016 was available and demonstrate that the measures contained in the management plan been actively implemented.

Major Non-Conformity: There was no evident that Sialang tree (Koompasia sp.) as HCV 6 was managed

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) and monitored by company. There shall be a programme to regularly educate the workforce about the status of these RTE species, and appropriate disciplinary measures shall be instigated in accordance with company 5.2.3 rules and national law if any individual working for the company is found to capture, harm, collect or kill these species. a. Does the company have policies or rules • Kebijakan Perusahan dated 1st Organization has a policies or rules to protect RTE species based on UU No.5 / YES to protect RTE species? December 2014 1990. Penalties under the UU No.5 / 1990 "person who deliberately capture, injure, kill, keep, possess, maintain, transport, and trade in protected animals alive b. Is there a programme to regularly • Environmental Field Procedure or dead can shall be punished with imprisonment of 5 years and a maximum fine educate the workforce about the status of Conservation Area Monitoring 100.000.000, - (one hundred million). Policy also documented in Company Policy the RTE species? (AA-PL-08-EFP) on 1st December 2014 and Environmental Field Procedure Conservation Area c. Is there evidence or action taken to • Conservation Management Plan Monitoring (AA-PL-08-EFP). implement the rules and programs? E.g. 2015 - 2016 Inspections conducted to check no Penalties were communicated directly to all employees and the local community traps/snares put up within or nearby • HCV Management and during HCV socialization and through the HCV sing boards and warnings board. Monitoring Report in 2015 - areas. Organisation also establish the programme to regularly educate the workforce 2016 d. Have appropriate disciplinary measures about the status of the RTE species. The program has been implemented, the been imposed in accordance with • Field observation and interview evidence of socialization invitation, list of attendance and photographs, minutes of company rules and national law, should with workers socialization was proved. HCV protection and wildlife protection dissemination any individual working for the company is conducted twice a year internally to employee and once a year externally to found to have captured, harmed, surrounding community. collected or killed any RTE species? Inspections conducted regularly through HCV patrol to check no traps/snares put up within or nearby areas of HCV. Schedule and report of HCV patrol was sighted. Organization has been appointed PIC HCV (Officer HCV) at Peranap Estate and Smallholders. The responsibility of HCV area management is part of the job description of the HCV Officer. The HCV Officers have no particular background for HCV management, however they has been trained in regard identification, management and monitoring of HCV. Relevant laws were taken into account for determining appropriate measure including UU #5/1990 about Natural resources conservation, PP#7/1999 about List of protected plan and wildlife, Keppres #32/1990, and PP26/2008. Where a management plan has been created there shall be ongoing monitoring: 5.2.4 • The status of HCV and RTE species that are affected by plantation or mill operations shall be documented and reported; • Outcomes of monitoring shall be fed back into the management plan.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Does the management plan contain • Conservation Management Plan Management plan of HCV has been established based on HCV assessment in YES ongoing monitoring of status of HCV and 2015 - 2016 2012. Ongoing monitoring of the HCV management plan is performed regularly in RTE species that are affected by monthly basis. HCV Officer is the personnel in charge for conducting the • HCV Management and plantation or mill operations? monitoring of HCV. Records of HCV monitoring were available and it was Monitoring report 2015 - 2016 observed that monitoring was performed consistently. b. Is the status documented and reported? • Field observation and interview HCV management plan is updated once a year based on the outcome of the HCV c. Are the outcomes of monitoring fed back with workers into the management plan? monitoring that performed regularly in monthly basis. HCV monitoring was conducted periodically twice in a year (January – June and July – December).

HCV and RTE species that are affected by plantation or mill operations have been monitored, documented and reported each semester to Indragiri Hulu District Environmental Agency and cc to Riau Province Environmental Agency, Riau Region Environmental Management Centre, and Ministry of Environmental. A record was available in Monitoring of RTE species existences and HCV area. Items checked contain RTE species existence, disturbance of people hunting and warning sign condition. The outcomes of monitoring fed back into the management plan that contained in RKL – RPL implementation document. Where HCV set-asides with existing rights of local communities have been identified, there shall be evidence of a negotiated agreement that optimally safeguards both the HCVs and these rights.

5.2.5 Specific Guidance: For 5.2.5: If a negotiated agreement cannot be reached, there should be evidence of sustained efforts to achieve such an agreement. These could include third party arbitration (see Criteria 2.3, 6.3 and 6.4). a. Is there HCV set-asides with existing • HCV Assessment report by Based on HCV map and public consultation with local communities there was no NO rights of local communities? Forestry Department, Bogor HCV set-asides with existing rights of local communities. Nevertheless, HCV 6 (Minor NCR Agriculture Institute in identified in the plantation area was Sialang tree (Koompasia sp.) which were not b. Who are the affected communities? 2016-07) September 2012 used as cultural identity and not used for ceremonial culture by surrounding c. Is the identified HCV areas mapped? community. Company allow the surrounding communities who will access to this • Field observation d. Is there evidence of stakeholder area and keep the area together. • Interview with stakeholder consultation and negotiated agreement, in accordance to FPIC principles, with local community to optimally safeguard Minor Non-conformity: both the HCVs and rights of local The organization has not had the negotiated agreement between organization and communities? local community to safeguards both the HCV 6 (Sialang tree) and these rights. e. If a negotiated agreement cannot be

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) reached, is there evidence of sustained efforts to achieve an agreement? Refer to specific guidance for 5.2.5.

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

5.3.1 (M) All waste products and sources of pollution shall be identified and documented.

a. Is there a registry/list of waste products - Procedure AA-KL-06-EFP – Identification of waste and pollution sources from Peranap Mill and Estate YES produced? Handling of Hazardous Waste activities was evident. The source of pollution, type and control method of waste was recorded. b. Is there a registry/list of pollution - Procedure AA-KL-07-EFP – sources? Handling of Medical Waste. The waste products from estate generally were domestics waste and also several hazardous waste from estate operations activities as detailed below (but not - Procedure AA-KL-11-EFP – limited): Handling of Laboratory Waste.  Ex-pesticides containers (bottles and jerry cans) - Form AA-KL-601-FM – Record  Used oils of Hazardous waste  Used battery from the vehicles - Form AA-KL-602-FM – record of  Plastics hazardous waste circulation  Medical waste (first aid usage)  Rags - EMS-431-003-LT Rev.10 form  Fertilizer containers rd updated on 3 March 2015  Emissions from vehicles Identification of Environmental  Usage lamps Aspect  Tires  Usage batteries  Usage oil filters While at the Mill it was several hazardous waste generated from the mill operations, in detailed below (but not limited):  POME  Palm shell  Fibre

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Empty bunch  Boiler ash  Chemicals jerry can and bottles  Gunny sacks from chemicals materials  Welding materials from workshop activities  Lubricants from workshop materials  Contaminated rags from workshop activities  Usage lamps  Tires  Usage batteries  Usage oil filters  Emissions from vehicles and other engines (generator, boilers) The agrochemical of scheme smallholders were management by RAU, such as triple rinsed and collected in the temporary storage of hazardous waste, recording of pesticides containers quantity, and transporting by authorised transporter (PT Shali Riau Lestari).

5.3.2 (M) All chemicals and their containers shall be disposed of responsibly.

a. Is there an inventory of chemicals and - Procedure AA-KL-06-EFP – Procedure waste handling including hazardous waste handling has been YES their containers that are used and kept on Handling of Hazardous Waste. established and implemented. The procedure required waste to be segregated site? from point of generation. In addition Mill and Estate also established waste - Procedure AA-KL-07-EFP – register, which described wastes generated from each activity/location, its b. How are chemicals and their containers Handling of Medical Waste. classification (organic, inorganic or hazardous), and its control measure. stored and disposed off? Is it in - Procedure AA-KL-11-EFP – accordance to best practices? (as All empty agrochemical containers were triple rinsed, the jerry can were reused to Handling of Laboratory Waste. prescribed by manufacturers’ labels, local spraying activities, while bottles containers were stored in the designated area requirement, national or international best - Form AA-KL-601-FM – Record and categorized as hazardous waste (B3). Records of chemical containers practice) of Hazardous waste quantity disposed were evident. Liquid waste from agrochemical was reused for the next spraying application. c. Are collection and disposal records of - Form AA-KL-602-FM – record chemicals and their containers of hazardous waste circulation Several ex-chemicals materials containers that use at mills operations such as maintained? laboratory chemicals ex-containers and the others, such as boiler additive liquids, - Hazardous waste manifest lubricants, workshop materials, use battery, etc were categorized as hazardous - Observation to temporary wastes that stored at hazardous waste temporary warehouse (TPS B3) that will be managed by licensed vendor, namely PT Shali Riau Lestari. Cooperation

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) storage of hazardous waste agreement between PT. Rigunas Agri Utama and PT. Shali Riau Lestari No. 065 / SRL-PKU/MOU/II/2016 on 09 February 2016 regarding the hazardous waste - Permit of temporary storage of cleaning, transportation, and destruction. Type of waste, such as waste oils, used hazardous waste for Peranap batteries, light bulbs, and waste non-economical (fabric majun former, filters used, Mill No.4/BPMD&PPT/BP- gloves former, former jerry cans, packing a used chemical, contaminated soil LB3/XI/2013 dated 28 waste, medical waste / clinic, and waste oil). Transportation by PT. Shali Riau November 2013 valid for 5 Lestari in the period January - November 2016 was carried out 2 times, on 25 years May 2016 and 01 November 2016. The manifest showed that deliveries are made - Permit of extension storage of to some of the processing that is medical waste, LED light bulbs, oil filter, air filter, hazardous waste from BLH chemical containers contaminated, and filter contaminated former PT. Wastec Indragiri Hulu Regent International, while for dirty oil sent through PT. Shali Riau Lestari. Report was No.660/BLH- sent to BLH Indragiri Hulu Regent, BLH Riau Province, KLH Jakarta, and PPE Wasdal/III/2015/87 dated 16 Sumatra. March 2015 License of hazardous wastes temporary storage (TPS B3) as issued from Kepala - Permit of PT. Shali Riau Badan Penanaman Modal Daerah and Pelayanan Perizinan Terpadu Indragiri Lestari No. 237/2011 from Hulu Regent No. 4/BPMD&PPT/BP-LB3/XI/2013 on 28 November 2013 valid Menteri Lingkungan Hidup as through 5 (five) years and permit as issued from BLH Indragiri Hulu Regent No. hazardous waste collector valid 660/BLH-Wasdal/III/2015/87 on 16 March 2015 for extension storage valid for 5 years. through 1 (one) year, defined that the time limit was 90 days but if produce (less than) < 50 kg per days may store 180 days. - Permit of PT. Shali Riau Lestari No. B- The license include: lubrication oil, battery, oil filter, rugs and medical wastes, 14559/Dep.IV/LH/PDAL/12/201 pesticides/chemical containers, used lamp, used cartridge, toner, used fibber. 4 dated 30 December 2014 Based on interview with stakeholders and smallholders, it was verified and from Kementrian Lingkungan confirmed that there was no complaints from local communities related to disposal Hidup for truct BM 8431 JU of hazardous chemicals and its resolution. valid through 5 years as hazardous waste transporter - Permit of PT Wastec as hazardous waste processor

No.004/WI/SKT-LB3/VI/2015 dated 25 June 2015, - MOU No.036/SRL- PKU/MOU/III/2015 dated February 9, 2015 between PT

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Rigunas Agri Utama and PT Shali Riau Lestari valid through 22 February 2016 - Interview with stakeholders and smallholders

A waste management and disposal plan to avoid or reduce pollution shall be documented and implemented.

Guidance: The waste management and disposal plan should include measures for: • Identifying and monitoring sources of waste and pollution. • Improving the efficiency of resource utilisation and recycling potential wastes as nutrients or converting them into value-added products (e.g. through animal feeding programmes). • Appropriate management and disposal of hazardous chemicals and their containers. Surplus chemical containers should be reused, recycled or disposed of in an environmentally and 5.3.3 socially responsible way using best available practices (e.g. returned to the vendor or cleaned using a triple rinse method), such that there is no risk of contamination of water sources or risk to human health. The disposal instructions on the manufacturers’ labels should be adhered to. Use of open fire for waste disposal should be avoided.

For National Interpretation: National Interpretation (or an RSPO recognised parallel means) should include, as appropriate: details of relevant national laws or policies, a list of waste types (hazardous, non-hazardous, domestic, etc.) which must be considered, any types of disposal which are not acceptable (e.g. untreated waste water may not be discharged directly into streams or rivers (see Criterion 4.4), existing best practice guidelines on recycling and re-use of nutrients, managing effluent ponds, increasing mill extraction efficiency and appropriate disposal of wastes. a. Is there a documented waste management  Procedure AA-KL-06-EFP – Procedure waste handling including hazardous waste handling has been YES and disposal plan to avoid or reduce Handling of Hazardous Waste. established and implemented. The procedure required waste to be segregated pollution? from point of sources. In addition Mill and Estate also established waste register,  Procedure AA-KL-07-EFP – which described wastes sources from each activity/location, its classification b. Does the waste management and disposal Handling of Medical Waste. (organic, inorganic or hazardous), and its disposal, reusing or recycling. plan, at minimum, include measures for:  Identifying and monitoring sources of  Procedure AA-KL-11-EFP – EFB was used as fertilizer in Peranap Estate. POME was applied to land Handling of Laboratory Waste. waste and pollution? application as liquid fertilizer in Peranap Estate. Fibre and Shell from Peranap Mill  Improving the efficiency of resource  Form AA-KL-601-FM – Record was used for boiler feed. It was observed that organic and inorganic waste was utilisation and recycling potential of of Hazardous waste segregated at point of source. Mill and Estate including housing has provided wastes as nutrients or converting different colour of waste bin for each type of waste. Organic and inorganic wastes them into value-added products (e.g.  Form AA-KL-602-FM – record from Mill and Estate including housing were disposed to landfill in the Estate area. through animal feeding of hazardous waste circulation Areas of organic and inorganic wastes disposal was far from housing, in the flood- free area and not in swamp area and completed with warning sign not burning programmes)?  Observation to temporary  Appropriate management and

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) disposal of hazardous chemicals and storage of hazardous waste wastes. their containers?  EMS-431-003-LT Rev.10 form There are evident the measurement periodical report include air ambience quality;  Reduction, re-use and recycle of updated on 3rd March 2015 emissions of vehicles and other engines (boilers, generators, etc.) also the waste? Identification of Environmental programme on how to reduce the fuel usage and environmentally friendly. c. Is there evidence that the plan has been Aspect Hazardous wastes generated by Mill and Estate are used oil, used oil filter, used implemented? battery, medical waste and used lamp. Temporary storage of hazardous waste d. Is there evidence that waste has not been was available to collect hazardous waste prior to be transported by licensed disposed off using open fire? vendor. Disposal of hazardous waste was completed with manifest. Manifest of disposal were sighted for on 25 May 2016 and 01 November 2016. Hazardous waste was reported to BLH Indragiri Hulu Regent, BLH Riau Province, PPE Sumatra, KLH Jakarta. Receipt note was also sighted. Other than that, the company has management domestic waste through the waste container available in the emplacement and office area, and also the company cooperate with relevant institution in Peranap Regency to transport weekly the domestic waste. Based on field observation and interview with worker, there was no domestic waste burning.

5.4 Efficiency of fossil fuel use and the use of renewable energy is optimised.

A plan for improving efficiency of the use of fossil fuels and to optimise renewable energy shall be in place and monitored.

Guidance: Renewable energy use per tonne of Crude Palm Oil (CPO) or palm product in the mill should be monitored. 5.4.1 Direct fossil fuel use per tonne of CPO or Fresh Fruit Bunches (FFB) should be monitored. Energy efficiency should be taken into account in the construction or upgrading of all operations. Growers and millers should assess the direct energy use of their operations, including fuel and electricity, and energy efficiency of their operations. This should include estimation of fuel use by on-site contract workers, including all transport and machinery operations. The feasibility of collecting and using biogas should be studied if possible.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a plan for improving efficiency of - Fossil fuels efficiency Peranap mill and estate has been develop the programme/plan on how to conduct YES the use of fossil fuels and to optimise programme efficiency for utilization of fossil fuel by develop the standard to manage the renewable energy? consumption each of vehicles and electricity generator within litre per hours for - Renewable energy (Fibre and organization owned; the monitoring conducted by monthly and reported to b. Has the plan been implemented and is it shell) optimization programme technical department. In order to support the target, there are several programme monitored? - Records of diesel fuels usage executed on how to efficiency of fossils fuels, such as: c. Does the monitoring system encompass the following : - Records of fibre and shell - Control hour mater of heavy vehicle with car-lock and control diesel  Renewable energy use/tCPO or palm usage consumption with evidence of heavy vehicle utilisation product; - Decrease diesel consumption of dump truck with increase  Direct fossil fuel use/tCPO or tFFB; - Decrease diesel consumption for heavy vehicle.  Estimated fuel use by on-site contract workers and transport and machinery - Decrease electrical consumption; using photocell for lighting on road and operations; housing; using MCB 2 Ampere for housing.  Electricity use in operations. There are monitoring records sighted regarding the utilization of fossils fuels and d. Was energy efficiency taken into account fibre shell that presented as below: during the construction or upgrading of all Renewable Energy (Fibre 2016 (YTD operations? 2014 2015 and shell) October) e. Has studies on the feasibility of collecting Fibre (ton) 1,118,761 5,917 12,916 and using biogas been carried out? Shell (ton) 821 2,266 2,324

2016 (YTD Fossil fuels 2014 2015 October) Vehicles (litre) 23,597 28,954 24,138 Genset (litre) 41,550 60,670 60,450 So far there is a plan regarding feasibility of collecting and using biogas, however it still on management discussion.

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.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) (M) There shall be no land preparation by burning, other than in specific situations as identified in the ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions.

Guidance: 5.5.1 Fire should be used only where an assessment has demonstrated that it is the most effective and least environmentally damaging option for minimising the risk of severe pest and disease outbreaks, and exceptional levels of caution should be required for use of fire on peat. This should be subject to regulatory provisions under respective national environmental legislation.

Extension/training programmes for associated smallholders may be necessary. a. Does the company have a zero burning - AA-APM-OP-1100.20-R1 – Replanting plan will be begun in 2018. YES policy or any statement on zero burning? Procedure for replanting It was noted that Peranap estate has not conducted replanting activities since its b. Does the company have SOPs for land first plant in 1992, as defined within the procedure that the replanting are within 25 preparation which mentions zero years since its first plant year. burning? However it was described within the replanting procedure (AA-APM-OP-1100.20- c. Was land prepared using the burn R1) that the organisation committed to zero burning by using “chipping technique” method? If yes, was it based on the at the ganoderma risks plantation by conducting topple to the palm trees, specific situations identified in the chopping and stacking using excavator by bucket modification. ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or Procedure replanting mentioned that Field Assistant, Assistant Chief and Estate comparable guidelines in other regions? Manager must perform checks to ensure that the contractor does not perform burning for land preparation for replanting. d. Has the policy been implemented throughout the operations? All the replanting activities requires to be documented and monitored, such as: Schedule of replanting (chipping, digging and planting), progress planting LCC e. Is there training programmes for (Legume Cover Crop) and Minutes Works replanting (Progress in the Works associated smallholders on zero burning Contractor) where appropriate? In the procedure of replanting mentioned that, the methods used are:

 Toppling trees using heavy equipment (excavators)  Chipping: cutting palm trunk, so as not infected with ganoderma  Planting LCC / legumes (Mucuna and Puereria javanica etc. So that the decay of the old oil palm trunks can be faster  Planting of oil palm. This method has been used in replanting the whole plantation belonging to Asian Agri group including PT. Rigunas Agri Utama.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Where fire has been used for preparing land for replanting, there shall be evidence of prior approval of the controlled burning as specified in ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions.

5.5.2 For National Interpretation: National Interpretation will identify any specific situations where such use of fire may be acceptable, for example through reference to ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions. a. Where fire has been used for preparing - Zero burning policy It was evident that no fire has been used. Replanting will started in 2018. YES land for replanting, is there evidence of - Field observation prior approval of the controlled burning as specified in ‘Guidelines for the Implementation of the ASEAN Policy on

Zero Burning’ 2003, or comparable guidelines in other regions? b. What was the justification for using fire?

Preamble

Growers and millers commit to reporting on operational greenhouse gas emissions. However, it is recognised that these significant emissions cannot be monitored completely or measured 5.6 accurately with current knowledge and methodology. It is also recognised that it is not always feasible or practical to reduce or minimise these emissions. Growers and millers commit to an implementation period until the end of December 2016 for promoting best practices in reporting to the RSPO, and thereafter to public reporting. Growers and millers make this commitment with the support of all other stakeholder groups of the RSPO.

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

(M) An assessment of all polluting activities shall be conducted, including gaseous emissions, particulate/soot emissions and effluent (see Criterion 4.4).

5.6.1 Specific Guidance: Where practically feasible, operations should follow best management practices to measure and reduce emissions. Advice on this is available from the RSPO. a. Has an assessment of all polluting  EMS-431-003-LT Rev.10 form Identification of pollution and emission sources at Peranap Mill activities was YES activities been conducted including updated Identification of evident. The source of pollution, type of pollution and its control was documented. gaseous emissions, particulate/soot Environmental Aspect Mill and The information of pollution and emission sources at Peranap Mill was reviewed emissions and effluent (see Criterion Smallholders and updated including boiler emission, methane from Palm Oil Mill Effluent, diesel 4.4)? electricity generator and vehicles and heavy equipment. b. Is there a documented list of all identified Identification of pollution sources from smallholders’ activities was evident. The

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) polluting activities? source of pollution, type and its control was recorded. The information of pollution and emission sources at smallholder was reviewed and updated annually

including emission from vehicles and electricity generator (not limited), electricity usage.

(M) Significant pollutants and greenhouse gas (GHG) emissions shall be identified, and plans to reduce or minimise them implemented.

5.6.2 Specific Guidance: For 5.6.2: Plans will include objectives, targets and timelines. These should be responsive to context and any changes should be justified. For 5.6.2 and 5.6.3: The treatment methodology for POME will be recorded. a. Is there a documented list of all identified f. Greenhouse gas emissions The program was identify the source of greenhouse gas emissions as listed YES significant pollutants and GHG reduction Programme year below: emissions? 2016 1. Methane from POME at mill b. Are there plans to reduce or minimise the 2. Fossil fuels emissions from vehicles and engines identified pollutants and GHG emissions? 3. Chemical fertilizer c. Do the plans include objectives, targets 4. Electricity usage and timelines for reduction that are There are also established the GHG reduction plan completed. The records of responsive to context? each programme were sighted as evident implementation. For examples, such as: d. Are the plans being implemented? Was  Fertilizer use in accordance with recommendation. there any changes? Is it justified?  Pesticide application on time, target, and dose. e. Is the treatment methodology for POME  Training for operators of fertilizer and pesticide. recorded? (refer to C 4.4.3)  Road maintenance.  Etc. Peranap Mill waste water was processed through a series of waste water treatment ponds: one cooling pond, one acid pond, two anaerobic ponds, one aeration pond, one sediment pond, and three buffer ponds. Process parameter monitoring and maintenance of the ponds were sighted. Quality of waste water effluent is monitored quarterly in line with the requirements The results of monitoring of waste water effluent were reviewed including measurement of BOD; the result of discharge effluent conforms to the limits for parameters.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Smallholders with scheme smallholder have been developed the programme on how to reduce emission. The programs such as reduce diesel consumption, reduce electricity consumption, reduce chemical fertilizer, pecticide training, etc. The records of each programme were sighted as evidence implementation. A monitoring system shall be in place, with regular reporting on progress for these significant pollutants and emissions from estate and mill operations, using appropriate tools.

Specific Guidance: For 5.6.3 (GHG): For the implementation period until December 31st 2016, an RSPO-endorsed modified version of PalmGHG which only includes emissions from operations (including land use practices) can be used as a monitoring tool.

5.6.3 For 5.6.3: In addition, during the implementation period, growers will start to assess, monitor and report emissions arising from changes in carbon stocks within their operations, using the land use in November 2005 as the baseline. The implementation period for Indicator 5.6.3 is the same implementation period for Criterion 7.8. During the implementation period, reporting on GHG will be to a relevant RSPO working group (composed of all membership categories) which will use the information reported to review and fine tune the tools, emission factors and methodologies, and provide additional guidance for the process. Public reporting is desirable, but remains voluntary until the end of the implementation period. During the implementation period the RSPO working group will seek to continually improve PalmGHG, recognising the challenges associated with measuring GHG and carbon stock. PalmGHG or RSPO-endorsed equivalent will be used to assess, monitor and report GHG emissions. Parties seeking to use an alternative to PalmGHG will have to demonstrate its equivalence to the RSPO for endorsement. a. Is there a system in place to monitor  Interview with RAU Major Non-Conformity: (recurrence): YES emission of pollutants including Management (Major NCR The organization has not conducted GHG emission monitoring in 2015, both greenhouse gases from estate (plantation) 2016-08 closed) calculating and reporting to RSPO. and mill operations? b. Is there regular reporting of the monitoring outcomes? How often and to whom is reporting done? c. Is the monitoring and reporting conducted using appropriate tools? What tool is being used to assess, monitor and report on GHG emissions?

Please refer to specific guidance for GHG requirements.

Audit Report

PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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 6.1 positive ones are made, implemented and monitored, to demonstrate continual improvement. (M) A social impact assessment (SIA) including records of meetings shall be documented.

Guidance: Identification of social impacts should be carried out by the grower with the participation of affected parties, including women and migrant workers as appropriate to the situation. The involvement of independent experts should be sought where this is considered necessary to ensure that all impacts (both positive and negative) are identified. Participation in this context means that affected parties are able to express their views through their own representative institutions, or freely chosen spokespersons, during the identification of impacts, reviewing findings and plans for mitigation, and monitoring the success of implemented plans. Potential social impacts may result from activities such as: building new roads, processing mills or other infrastructure; replanting with different crops or expansion of planting area; disposal of mill effluents; clearing of remaining natural vegetation; changes in employee numbers or employment terms; smallholder schemes. Plantation and mill management may have social impacts (positive or negative) on factors such as: 6.1.1 • Access and use rights; • Economic livelihoods (e.g. paid employment) and working conditions; • Subsistence activities; • Cultural and religious values; • Health and education facilities; • Other community values, resulting from changes such as improved transport /communication or arrival of substantial migrant labour force. The review can be done (once every two years) internally or externally.

For National Interpretation: As social impacts are particularly dependent on local social conditions, National Interpretation will identify the important issues, and methodologies for collecting data and using the results. This should include adequate consideration of the impacts on the customary or traditional rights of local communities and indigenous people, where these exist (Criteria 2.3 and 6.4). a. Has an SIA been conducted? When YES • Analisis Dampak Lingkungan – Social impact assessment result was documented in AMDAL document and was the last SIA conducted? PT. Rigunas Agri Utama. DPLH (Dokumen Pengelolaan Lingkungan Hidup) PT. Rigunas Agri Utama b. Is the process in conducting the SIA (Asian Agri group) year 2011 by LP-USU (Lembaga Penelitian Universitas • DPLH (Dokumen Pengelolaan and the findings documented? Sumatera Utara). The AMDAL studies including pre operation and operation Lingkungan Hidup) PT. Rigunas phase of estate and mill. c. Does the SIA cover all of the potential Agri Utama (Asian Agri group) impact factors, including: year 2011 by LP-USU (Lembaga In line with AMDAL legal requirements, the studies involved participation of  Access and use rights; Penelitian Universitas Sumatera affected parties and local communities.  Economic livelihoods (e.g. paid Utara) It was reviewed that social component covered is in line with the minimum

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) employment) and working • Attendance list of small holders guidance of AMDAL coverage including working opportunities, incomes, local conditions; dated 6-8 December 2015 perception, public health, and social conflict.  Subsistence activities; • Positive impacts were identified such as: Regional development, increased  Cultural and religious values; population of the village economy and ease of road access.  Health and education facilities; Negative impacts were identified such as: increase of road due to FFB transport  Other community values, resulting from changes such as (public health), Noise and dust coming from transport (social cultural.

improved transport The assessment scope are : /communication or arrival of substantial migrant labour force. a) Village monography b) Relationship between company and village c) Livelihoods d) Religion activities e) Village infrastructure f) Positive impact g) Negative impact Positive impacts on SIA were identified, such as: - CSR program - Work opportunities - General infrastructure (praying facility, sport facility, etc.) Negative impacts on SIA was identified, such as: • Dust pollution due to a passing truck on the road.

Smallholder Social impact assesment document has been available and dissemination to members of smallholders – Peranap Estate conducted on 6 – 8 December, 2015. For Year 2016, dissemination to smallholders will be held on February

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 2017.

6.1.2 (M) There shall be evidence that the assessment has been done with the participation of affected parties. a. Does the assessment involve YES • Analisis Dampak Lingkungan – PT. Social Impact assessments involve consultation with the affected parties covered consultation with the affected parties? Rigunas Agri Utama. Gumanti Village, Pauh Ranap Village, Tebing Village and Buah Tangga Village. Who are the affected parties? b. Is there record of how the participatory • DPLH (Dokumen Pengelolaan Evidence of participatory action from local communities was also sighted in assessment has been conducted? Lingkungan Hidup) PT. Rigunas related SIA documentation including photos. Agri Utama (Asian Agri group) year Were the affected parties able to SIA method is done by interview and questionnaire. Assessment has been done 2011 by LP-USU (Lembaga express their views through their own with the participation of affected parties such as head of villages, village Penelitian Universitas Sumatera representative institutions, or freely representatives, and sub district police head, etc. chosen spokespersons, during the Utara). Affected parties have been able to express their views through their own identification of impacts, review of • Interview with stakeholder on 23 representative institutions, or freely chosen spokespersons, during the findings and planning for mitigation? November 2016 identification of impacts, reviewing findings and plans for mitigation, and monitoring the success of implemented plans. This is demonstrated by interview result with stakeholder.

(M) Plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts identified, shall be developed in consultation with the affected 6.1.3 parties, documented and timetabled, including responsibilities for implementation. a. Is there any documented record to YES • Monitoring and CSR Program year PT. Rigunas Agri Utama has a management plan and monitoring of social outline the plan on mitigation, 2015 and 2016 impacts as contained in SIA report, has been developed into Monitoring and implementation and monitoring CSR Program. according to the SIA report? • CSR Report for year 2015 Social Assessment Monitoring conducted every year by CSR Region, monitoring b. Have plans for avoidance or mitigation • Action Plan and Implementation between planning and realization were identified and evident. Negative impact of negative impacts and promotion of SIA PT. Rigunas Agri Utama for was used and identified for CSR programme e.g. road repair facilities, road the positive ones, and monitoring of Peranap Estate and Plasma year watering, health checks impacts been developed? 2015 and 2016 All the planning and realization have been documented and are also completed c. Have these plans been documented, with clear timetables? Is the timeline with photos relevant to CSR activities. Action plan and their implementation was reasonable? documented. d. Have the persons responsible for Realization of planning have been defined and implemented within a reasonable

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) implementation of the plans been time. identified?

Smallholder Action Plan based on social impact assessment already made. Monitoring on planned social impact assessment already performed and reported in RKL – RPL PT Rigunas Agri Utama. And some social activities already performed, among others,  Dated 23 January 2016 in Desa Punti Kayu. Social contribution to mosque with amount Rp. 25.000.000 (KUD Serangge Permai)  Dated 2 July 2016 in Desa Punti Kayu. Social contribution to religious activities with amount Rp. 1.000.000 (KUD Serangge Permai)  Dated 3 July 2016 in Desa Kota Baru, contribution to religious activities with amount Rp. 5.500.000 (KUD Lakat Makmur)  Dated 5 September 2016 in Desa Kota Baru. Social contribution to sport and recreation activities with amount Rp. 1.000.000 (KUD Lakat Makmur) All above activities already recorded Time table for management of impact assesment has been determined. Action Plan on implementation Aspects Social Impact Identification divided into several components: education, economic, social, cultural and physical. The plans shall be reviewed as a minimum once every two years and updated as necessary, in those cases where the review has concluded that changes should be made to current 6.1.4 practices. There shall be evidence that the review includes the participation of affected parties. a. Is the plan reviewed every two years?  RKL RPL PT Rigunas Agri NO Review of Social Management Plan (RKS) and Social Monitoring Plan (RPS) Utama Period Semester 1 and (Minor NCR b. Has the plan been updated as was conducted minimum one times every year. Improvement and corrective 2 Y2015 and Semester 1 2016-09) necessary (i.e. in cases where the action regarding RKS and RPS would be performed as soon as possible based Y2016 review has concluded that changes on the relevant and actual condition. should be made to current practices)?  Analisis Dampak Lingkungan – PT. Rigunas Agri Utama. Management and monitoring social impact was conducted internally by the c. Have the changes to the plan been  Monitoring and CSR Program company. This can be seen on document “RKL RPL PT Rigunas Agri Utama

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) implemented? year 2015 and 2016 Period Semester 1 and 2 Y2015 and Semester 1 Y2016”.  CSR Report for Y2015 d. Is there evidence that the review has During the audit there was no changes regarding RKS and RPS, the been done with the participation of the  CSR Report for Y2016 management and monitoring plan of social impact was still relevant with the affected parties? (ongoing) actual condition. But, prove/evidence of stakeholder participation in social impact e. Has the process been management and monitoring can’t be shown. recorded/documented? Minor Non-conformity: Prove of stakeholder participation in social impact management and monitoring can’t be shown 6.1.5 Particular attention shall be paid to the impacts of smallholder schemes (where the plantation includes such a scheme). a. Are there schemed smallholders YES Plantation included smallholder as scheme. involved?  Analisis Dampak Lingkungan – PT. Rigunas Agri Utama. b. Have they been considered and Smallholder has been identified as part of Social Impact Assessment. involved in the whole process of the  RKL RPL PT Rigunas Agri Main impact affecting smallholders and they are already assessed during SIA SIA? Utama Period Semester 1 and are: 2 Y2015 and Semester 1 c. What are the main impacts affecting Y2016 a. request for partnership for replanting, these smallholders? b. development business unit not for land and c. capital for development of cooperatives.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  Dated 3 July 2016 in Desa Kota Baru, contribution to religious activities with amount Rp. 5.500.000 (KUD Lakat Makmur)  Dated 5 September 2016 in Desa Kota Baru. Social contribution to sport and recreation activities with amount Rp. 1.000.000 (KUD Lakat Makmur) All above activities already recorded.

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. (M) Consultation and communication procedures shall be documented.

Guidance: Decisions that the growers or mills are planning to make should be made clear, so that local communities and other interested parties understand the purpose of the communication and/or consultation. Communication and consultation mechanisms should be designed in collaboration with local communities and other affected or interested parties. These should consider the use of 6.2.1 appropriate existing local mechanisms and languages. Consideration should be given to the existence/formation of a multi-stakeholder forum. Communications should take into account differential access to information by women as compared to men, village leaders as compared to day labourers, new versus established community groups, and different ethnic groups. Consideration should be given to involving third parties, such as disinterested community groups, NGOs, or government (or a combination of these), to facilitate smallholder schemes and communities, and others as appropriate, in these communications.

For National Interpretation: National Interpretation will consider issues such as appropriate levels of consultation and the types of organisation or individuals that should be included.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Does the company maintain a list of YES The Company has a list for the local community and other interested parties and local communities and other affected  Public consultation on 23 mentioned in the List of Stakeholder updated on September 2016. or interested parties? November 2016 b. Is there SOP being developed by the  SOP AA-GL-50009.1-R0 - SOP related to communication and consultation is described in the SOP AA-GL- company for communication and Mechanism local communication / 50009.1-R0 - Mechanism local communication / public consultation for interested consultation between the company public consultation for interested parties. and the local communities and other parties. FPIC was not applicable in PT. Rigunas Agri Utama, however FPIC approach affected or interested parties?  Stakeholder list of PT Rigunas Agri was incorporated in the SOP for communication and consultation with the local c. Is the FPIC approach incorporated in Utama, updated September 2016 communities and other affected or interested parties the SOP for communication and The existing communication and consultation mechanisms (SOP related to consultation with the local communication and consultation is described in the SOP AA-GL-50009.1-R0 - communities and other affected or Mechanism local communication / public consultation) has been designed with interested parties? consideration to the use of appropriate existing local mechanisms and d. Has the SOP been developed together languages. Consideration has been given to the existence/formation of a multi- with the local communities and other stakeholder forum. affected or interested parties using The Procedure has disseminated to the stakeholder. Minutes of socialization and appropriate existing local mechanisms attendance list was sighted. The existing communication and consultation was and in languages understood by these taken into account differential access to information by women as compared to parties? men, village leaders as compared to day labourers, new versus established e. Has the SOP been socialized with the community groups, and different ethnic groups. local communities and other affected Procedure was available in Indonesian and easily to understand and it was or interested parties taking into effective. It was verified during public consultation and interview with stakeholder account the differential access to dated 23 November 2016. information by women as compared to men, village leaders as compared to Smallholder day labourers, new versus established The last meeting between KUD and local communities was held in 17 February community groups, and different ethnic 2016 regarding safety equipment for farmers. groups? Periodic meeting between smallholders organization and member was f. Have interviews with affected parties conducted once in 2 month and in the end of year will be held Rapat Anggota been carried out to verify that the Tahunan (RAT) - Annual Member Meeting – SOPs are effective? For Y2015, RAT was conducted in 2 February 2016 for KUD Serangge Permai and 20 January 2016 for KUD Lakat Makmur.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 6.2.2 A management official responsible for these issues shall be nominated. a. Who in the company is appointed to - Assignment Letter as PIC PT Rigunas Agri Utama has appointed one of its staff to become PIC Social YES be responsible for communication Social PT Rigunas Agri Utama through Confirmation Letter No 005/HRD/AA/CFM/VII/2014 dated 3 July 2014 in and consultation with the affected - Jobs descriptions behalf of Mr Doni Soemarto Zendrato as SSL Officer (Public Relations Officer). parties? - Interview with stakeholder on 23 November 2016 Job description PIC Social are : b. Has the position been made official with clear and proper job description? a. Responsible to consult and communicate with stakeholder b. Responsible to report to Group Manager regarding point 1 above c. Have the affected parties been made From the interview with the local community that represented by village head, aware and have access to the person they already know that the PR Officer is responsible for the communications and

in charge? consultation e. Smallholder KUD Serangge Permai has appointed one of its management member as Humas (Public Relations Officer), Mr Khairul Ali Rosahan. On daily basis, he work as Treasury Officer in KUD Serangge Permai. KUD Lakat Makmur has appointed one of its management member as Humas (Public Relations Officer), Mr Henri Azlian. On daily basis, he work as Secretary of KUD Lakat Makmur. A list of stakeholders, records of all communication, including confirmation of receipt and that efforts are made to ensure understanding by affected parties, and records of actions taken in 6.2.3 response to input from stakeholders, shall be maintained. a. Is the following maintained? - SOP AA-GL-5008.1-R1 dated YES Organization has established and implemented a mechanism for receiving and  List of stakeholders (local 22 August 2011 providing information in the procedure - SOP Penanganan Permintaan Informasi communities and other affected Stakeholder (Handling of Information Request from Stakeholder) SOP AA-GL- or interested parties etc.); - Logbook Communication and 5008.1-R1 dated 22 August 2011 which explain the mechanism of response to Consultation Y2016  Records of all communication, requests for information by referring to the list of stakeholders and stakeholder including confirmation of receipt information according to the principles and criteria for sustainable palm oil. The or endorsement; - Record of information request initial response was given no later than 14 days after receipt of the request from  Evidence that efforts have been and responses Y2016 stakeholders. made to ensure understanding by affected parties; - Stakeholder list of PT Rigunas All information except confidential commercial information or information which  Record of actions taken in Agri Utama, updated has a negative impact on the environment and social can be provided by the response to input from September 2016 organization. Request for information outside of the list of public information stakeholders. should be approval of top management and the provision of information comes

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) - List information for stakeholder with an official receipt.

updated 5 February 2016 In the procedure also described specific timeframe to respond the requests for

information from stakeholder depend on its request. Organizations usually - Interview with stakeholder on respond directly to requests for information from all interest party/stakeholder. 23 November 2016 All information requests from stakeholder and their respond were listed and recorded by Mill and Estate on logbook “Record of information request and responses” e.g. road maintenance, donation, scholarship, invitation for memorial, etc. Interview result with outgrower representative was concluded that the prices paid for FFB was transparent and complied with agreement. Determination of FFB’s price was conducted through the pricing mechanism of government. In general, interview result indicated that the communication between local society and Estate was evident where some agreements were made to improve social relationship.

Smallholder All aspiration from community has been recorded including their follow up. Among others : - 30 June 2016 regarding land certificate and it has been followed up with meeting between KUD Serangge Permai with members - 16 September 2016 regarding road maintenance and it has been followed up in 20 September 2016

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. (M) The system, open to all affected parties, shall resolve disputes in an effective, timely and appropriate manner, ensuring anonymity of complainants and whistleblowers, where requested.

Specific Guidance: 6.3.1 For 6.3.1: The system should aim to reduce the risks of reprisal.

Guidance: See also to Criterion 1.2.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Dispute resolution mechanisms should be established through open and consensual agreements with relevant affected parties. Complaints should be dealt with by mechanisms such as Joint Consultative Committees (JCC), with gender representation as necessary. Grievances may be internal (employees) or external. For scheme and independent smallholders, refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009. Where a resolution is not found mutually, complaints can be brought to the attention of the RSPO Complaints System. Refer to helpful texts for guidance, such as the Human Rights Commission (HRC) endorsed ‘Guiding Principles on Business and Human Rights: Implementing the UN "Protect, Respect and Remedy" Framework’, 2011. a. Is there an system in place to deal with YES • SOP handling of customer Organization has defined the system to deal with complaints and grievances for complaints and grievances for all complaints / stakeholders SOP: all affected parties which documented in SOP handling of customer complaints / affected parties? AA-HR-3085.5 – R.0. stakeholders SOP: AA-HR-3085.5 – R.0. b. Who in the company is responsible to receive complaints and grievances? • Interview with stakeholder on 23 Person who responsible to receive complaints and grievances has assigned by November 2016 organization that was Estate Manager. In the procedure also described stages c. Is the existence of the system been follow up of complaint, problem identification and escalation of complaint to • Asian Agri Sustainability Policy made known and communicated to all Estate Manager, General Manager, Region Head and Head Office (if necessary) parties? • Interview with smallholder in 24 The existence of the system has been communicated and made known to all and 25 November 2016 d. Is there evidence that the system is parties. It has been disseminated to all parties together. understood by all parties? Socialization and procedures training have been performed to all levels of e. Is training provided to the workers on employees were conducted in 18 April 2016 and 26 September 2016. the procedures/systems? The system was effective to ensure that complaints or grievances are addressed f. Is the system effective to ensure that or resolved in an effective, timely and appropriate manner. Evidence that the complaints or grievances are procedures have been implemented is the logbook of complaint. Records are addressed or resolved in an effective, routinely monitored monthly. Since January to October 2016 there were no timely and appropriate manner? complaints submitted by the public community and employees. g. Does the mechanism or procedure Mechanism and procedure was providing a way for workers to report a grievance provide a way for workers to report a against a supervisor to someone other than the supervisor. grievance against a supervisor to someone other than the supervisor? The system was enable resolution of disputes in an effective and appropriate h. How is a complaint or grievance manner by way of classifying complaints into internal and external, appointed the investigated, addressed and resolved? person who responsible for handling complaints, including level of officials who Are complaints dealt with by make decisions for complaint resolution. mechanisms such as JCC? Non-retaliation or non-reprisal policy that protects complainants or whistle- i. Is there a non-retaliation or non- blowers was described in Company Policy Privacy of parties who submitted the

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) reprisal policy that protects compliant and aspirations were protected if necessary. complainants or whistle-blowers? Where a resolution is not found mutually by means of deliberations between two j. Is the privacy of parties protected? parties, the problem can be resolved through third-party mediation / authorities, k. Where a resolution is not found including grievance if there is no agreement it will be resolved through the RSPO mutually, is there a process for Complaints System and it is described in the Asian Agri Sustainability Policy. complaints to be brought to the RSPO Based on public consultation with stakeholder and smallholder it was verified Complaints System? and confirmed that there was no complaints from local communities related to disposal of hazardous chemicals and its resolution.

Smallholder Communication, consultation and complaints from stakeholders either orally or in writing has been conveyed and responded by Chairman of the KUD. Based on the interview result with smallholders organization, there is no issue regarding dispute.

6.3.2 (M) Documentation of both the process by which a dispute was resolved and the outcome shall be available.

a. Is the complaints or grievance YES • Complaint log book – PT. RAU Complaints or grievance resolution process documented in the logbook of resolution process documented? Complaint. Records are routinely monitored monthly. However since during 2015 • Interview with stakeholder on 23 b. Are outcomes or decisions reported there were no complaints submitted by the public community and employees. to the parties? November 2016 It was also confirmed based on public consultation with surrounding village • Interview with union, workers and c. Who has access to the representative, labour union and gender committee. documentation of the process and/or committee gender on 23 outcomes? November 2016 Outcomes or decisions as response to followed up the complaint reported to affected parties as described in example above.

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 6.4 other stakeholders to express their views through their own representative institutions.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) (M) A procedure for identifying legal, customary or user rights, and a procedure for identifying people entitled to compensation, shall be in place.

6.4.1 Guidance: This criterion should be considered in conjunction with Criteria 2.2 and 2.3, and the associated Guidance. a. Are procedures for identifying legal, YES • SOP AA-GL-5003.1-R1 - Calculation and compensation method for land has been described in a customary or user rights in place? Calculation and compensation procedure SOP AA-GL-5003.1-R1. b. Are procedures for identifying people method for land entitled to compensation in place? The steps of the procedures to identification and calculation of land • Interview with stakeholder on 23 compensation , consist of: c. Are those procedures jointly November 2016 developed, agreed and accepted by 1. Identification of land owner local communities? 2. Measurement 3. Data input (mapping) 4. Negotiating compensation 5. Payment of compensation 6. Data documentation. Procedure also described identifying people entitled to compensation. Procedures was jointly developed, agreed and accepted by local communities It has been designed with consideration to the use of appropriate existing local mechanisms and languages. Consideration has been given to the existence/formation of a multi-stakeholder forum. A procedure for calculating and distributing fair compensation (monetary or otherwise) shall be established and implemented, 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 6.4.2 transmigrants and long-established communities; and differences in ethnic groups’ proof of legal versus communal ownership of land. Specific Guidance: For 6.4.2: Companies should make best efforts to ensure that equal opportunities have been provided to both female and male heads of households to hold land titles in smallholder schemes.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Has a procedure for calculating and YES • SOP AA-GL-5003.1-R1 - Procedure for calculating and distributing fair compensation (monetary or distributing fair compensation Calculation and compensation otherwise) has been established and available in procedure of Identification and (monetary or otherwise) been method for land calculation of land compensation SOP AA-GL-5003.1-R1 - Calculation and established and implemented? compensation method for land. The steps are as described in criterion 6.4.1. b. Are the procedures jointly developed, • Public consultation with agreed, accepted and clearly stakeholder on 23 November Procedures was jointly developed, agreed and accepted by local communities It understood by affected parties? 2016 has been designed with consideration to the use of appropriate existing local mechanisms and languages. Consideration has been given to the c. Is the procedure monitored and existence/formation of a multi-stakeholder forum. evaluated in a participatory way? Have corrective actions been taken as a The procedure monitored and evaluated in a participatory way, procedures will result of this evaluation? be revised if there is a reasonable request from stakeholders. d. Does this procedure take into account This procedure take into account of the gender differences in the power to claim the following: rights, ownership and access to land, differences of transmigrants and long-

 Gender differences in the power established communities, differences in ethnic groups’ proof of legal versus to claim rights; communal ownership of land.  Ownership and access to land;  Differences of transmigrants and long-established communities;  Differences in ethnic groups’ proof of legal versus communal ownership of land. e. Where there are schemed smallholders, is there effort to ensure equal opportunity has been provided to.

(M) The process and outcome of any negotiated agreements and compensation claims shall be documented, with evidence of the participation of affected parties, and made publicly 6.4.3 available.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is the process and outcome of - Public consultation with It was noted that there was no ongoing progress of new land acquisition during N/A negotiated agreements and stakeholder on 23 November interview with sampled villager’s representative, all previous land acquisition was compensation claims documented? 2016 solved before Land Use Title-Hak Guna Usaha (HGU). b. Does this documentation include

evidence of the participation of affected parties? Is there any approval/signed by effected parties? c. Was consent obtained from all parties to make the documents publicly available?

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.

(M) Documentation of pay and conditions shall be available.

6.5.1 For National Interpretation: National Interpretation will define a Decent Living Wage. Where there is no National Interpretation, the legal minimum wage will be used. a. What types of employment - Payroll list Payment of wages in 2016 based on the Letter form Governor of Riau Nomor : YES arrangements are there in the KPTS.15/I/2016 dated 7 January 2016, minimum wages (UMP) for Kabupaten company? (E.g. contractual, - Letter form Governor of Riau Indragiri Hulu is Rp. 2,174,473. outsourced, apprenticeships, direct Nomor : KPTS.15/I/2016 dated 7 In PT Rigunas Agri Utama there are 2 types of worker status, SKU and PHL. hires, piecemeal basis, etc.) January 2016, minimum wages (UMP) for Kabupaten Indragiri b. Is there documentation of pay and Beside basic salary, SKU workers get monthly fixed aid called “Catu beras” or Hulu is Rp. 2,174,473. conditions for each employee? Rice Ration with details below :

c. Is there a definition for living wage in - Letter from Man Empowerment, a. Workers alone : 15 kg the country? If not, how was the Transmigration and Civil Body of b. One legal wife: 9 kg c. Children (until 3): 7,5 kg decision on wage for employees and Riau Province No : contract workers made? 560/Disnakertransduk.HK/1258 If worker have one wife and 2 kids then he will receive 15 kg + 9 kg + 15 kg (for dated 2 June 2016 about 2 kids), total 39 kg of rice every month. Minimum Wage Sub Agriculture / Plantation and Palm Oil and Based on Internal Memorandum No 010/HR-AAS/MEMO/04/16 dated 25 April Rubber Plant Riau Province 2016 2016 about PHL workers wages, PHL wages is Rp. 93.000/day with working Is Rp. 2,325,000. days are 6 days per week.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

Recordings are available in the employee's salary slip salary payment. - Internal Memorandum No 010/HR-AAS/MEMO/04/16 dated 25 April 2016 about PHL and SKU wages. Smallholders Plasma plantations are managed by smallholders, and they are the owners of - Joint Agreement or PKB the estate. (Perjanjian Kerja Bersama) And smallholders formed a smallholder groups and under managed by the Period 2015 – 2017 smallholder organization.

- Interview with smallholders dated Farmer’s income does not come from the minimum wage but of the harvest is 24 and 25 November 2016 done by the farmers themselves. Based on interview on 24 November 2016, in one day they can get 1,5 – 3 ton of FFB. Price of FFB determined by Purchase - Site observation dated 24 Price Determination Team FFB –Riau Province. November 2016

(M) Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday 6.5.2 entitlement, maternity leave, reasons for dismissal, period of notice, etc.) shall be available in the languages understood by the workers or explained carefully to them by a management official. a. Is the pay and conditions of - Joint Agreement or PKB YES Agreement / contract of employment for workers, has been included in the PKB employment clearly detailed in the (Perjanjian Kerja Bersama) (Major NCR (Joint Agreement) has been endorsed by Disnakertrans (Labour Governance employment or service contracts? Period 2015 - 2017 2016-10 closed) Body) District of Banyuasin. In the agreement regulates the : working hours, (E.g. working hours, deductions, - Contract for PHL workers deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for overtime, sickness, holiday - List of employees of PT RAU dismissal, period of notice, etc.). entitlement, maternity leave, reasons updated October 2016 for dismissal, period of notice, etc.) - Interview workers union and Contract for BHL employees was reviewed, such as : workers on 23 November 2016 b. Is the contract prepared in languages a. In behalf of Rodiyah, Peranap Estate, wages Rp. 93.000/days, dated 1 understood by the workers, explained - Field observation in Peranap November 2016, contract for 6 month until April 2017 Estate on 22 November 2016 carefully to workers by management b. In behalf of Asmawati, Peranap Estate, wages Rp. 93.000/HOK, dated 1 officials, and signed by both the - Interview with smallholders dated November 2016, contract for 6 month until April 2017 24 and 25 November 2016 authorised signatory of the company c. In behalf of Chairul Anwar, Peranap Estate, wages Rp. 93.000/HOK,

and employee? dated 1 November 2016, contract for 6 month until April 2017 d. In behalf of Hasanudin, Peranap Mill, wages Rp. 93.000/HOK, dated 1 c. Does the pay and conditions November 2016, contract for 6 month until April 2017 provided in labour laws, union

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) agreements or direct contracts of e. In behalf of Surianto Maruli, Peranap Mill, Upah Rp. 93.000/HOK, dated 1 employment comply with: November 2016, contract for 6 month until April 2017  The decent living wage as f. In behalf of Almiades, Peranap Mill, wages Rp. 93.000/HOK, dated 1 provided in the National November 2016, contract for 6 month until April 2017 Interpretation for the country; or  The local legal requirements in Employee payment slip was sight and reviewed for Mrs. Rodiyah, Mrs. Asmati, meeting the minimum wage; or Mr. Chairul Anwar and Mr Hasanudin.  The industry minimum standard for a similar position or work Based on field observation in Peranap Estate, it was found 3 (three) woman responsibilities working as “Kutip brondolan” or loose-fruit picker in behalf of Mrs. Isoh, Mrs. Warsini and Mrs. Tuminsih. They said that they are working to help their d. Is the pay received by the employee husband and doesn’t have a work contract. consistent with the terms of the This information followed up to review document and it was found workers contract and the law (relates to P2)? contract for Mrs. Isoh, Mrs. Warsini and Mrs. Tuminsih can’t be shown during e. Have there been any cases recorded audit. of breach by the company, or complaint made by employees Smallholder against the company on unjust pay Estate owners are smallholders themselves and they do not hiring employees. and conditions? They only recruited families who are aged above 18 years. And smallholders do not provide wages to his family.

Major Non-conformity: Contract for 3 peoples who work as “Kutip Brondolan” (loose fruit picker) can’t be shown.

Objective evidence : Based on field observation, it was found 3 wife of workers named Mrs. Isoh, Mrs. Warsini and Mrs. Tuminsih working as loose fruit pickers. Growers and millers shall provide adequate housing, water supplies, medical, educational and welfare amenities to national standards or above, where no such public facilities are available 6.5.3 or accessible.

a. Have growers and millers provided - List of public facilities of PT RAU NO Public facilities were provided by the organisation and covered residential adequate housing and other basic (Minor NCR facilities, day care, kindergarten, building for prayers, sports facility (e.g. volley necessities such as that listed below to - Site visit and field observation in 2016-11) ball, badminton, futsal, and tennis), etc. Housing for workers and medical

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) national standards or above, where no emplacement PT RAU facilities (clinics) were was provided by the organisation with basic facilities. such public facilities are available or Company has provided housing complex for the workers, Its permanent house accessible? - Certificate of clean water analysis with two doors in one roof and permanent house. Clean water of MCK was  adequate housing; in PT RAU dated 1 August 2016 available in housing complex, the resource is from the well or ground water.

 adequate electricity; Water has been analysed by UPT Pengujian Material Dinas Bina Marga Provinsi  clean water supplies (availability of Riau on 1 August 2016 and the results is comply to Permenkes No 416/1990. clear water all year round);  medical services (distance to Based on field observation in Division 3 Peranap Estate, it was found one of health care facility i.e. clinic, worker house is in inadequate condition (the ceiling is leaking in the room and hospital); living room and the back door is in damaged condition). The workers has  children education (distance to informed it since 2012 to the superior but until now there is no followed up by the school and schooling attendance company. (%) of children under 12)  welfare amenities. Minor Non-conformity:

It was found one of workers house is in inadequate condition.

Objective evidence : Based on field observation in Division 3 Peranap Estate, it was found one of worker house is in inadequate condition such as the ceiling is leaking in the room and living room and the back door is in damaged condition.

6.5.4 Growers and millers shall make demonstrable efforts to monitor and improve workers’ access to adequate, sufficient and affordable food.

a. Have growers and millers made Interview with workers on 23 YES Company policy stated that workers will be given 15 kg additional rice (if worker demonstrable efforts to monitor and November 2016 is not married) and if worker have a family the he will be give 15 kg additional improve workers’ access to adequate, rice, 9 kg rice for wife and 7,5 kg rice for each child, maximum 3 child. Besides sufficient and affordable food? that, extra food given for the workers such as milk and green-bean porridge.

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 6.6 are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) (M) A published statement in local languages recognising freedom of association shall be available.

Guidance: The right of employees, including migrant and transmigrant workers and contract workers, to form associations and bargain collectively with their employer should be respected, in accordance with Conventions 87 and 98 of the International Labour Organisation (ILO). 6.6.1 Labour laws and union agreements, or in their absence direct contracts of employment detailing payments and other conditions, should be available in the languages understood by the workers or explained carefully to them by a management official.

For National Interpretation: National Interpretation will define migrant and transmigrant workers. ILO definitions and other international protocols, instruments and explanations should be used throughout. a. Has the company published a YES - Attendance list worker for Freedom of association has been mentioned in Company Policy dated 1 statement in local languages socialization Company Policy 18 December 2014. Organizations understand that workers have the right to recognising the rights of employees to April 2016 and 26 September argued, associate and organize in a labour union. freedom of association? 2016 – PT. Rigunas Agri Utama. b. Are the employees, including migrant Organization committed to provides opportunities for workers to organize in and transmigrant workers and contract - Company Policy – dated 1 unions and express an opinion. December 2014. workers, allowed to form associations Commitment covered in the policy are: and bargain collectively with their - Collective Labour Agreement / “ Respect the right of every employee to form or join trade unions in accordance employer? PKB – PT. RAU Peranap Estates they want and to bargain collectively” c. Was the outcome, if any, from the period 2015 – 2017 Based on interview with labour union leader, the company has accommodated collective bargaining process between - Attendance list socialization of employee rights to argued, associate and organize in a labour union. Until now the company and the association cooperative policy on 9 April there has been no bargaining between companies and unions. Normative rights respected, implemented and adopted 2016 in KUD Serangge Permai of employees was already filled with the company in full or partially by the company? and 21 May 2016 in KUD Lakat d. Are there Labour laws and union Makmur Employees, including migrant and transmigrant workers and contract workers agreements, or in their absence direct were allowed to form associations and bargain collectively with their employer. contracts of employment detailing There were union workers represent estate and mill employee incorporated in payments and other conditions, made the SPSI /Union Labour - Perkebunan PT. Rigunas Agri Utama and registered available in the languages understood as “PUK Serikat Pekerja Pertanian dan Perkebunan Serikat Pekerja Seluruh by the workers or explained carefully to Indonesia PT. Riguna Agri Utama” which was founded in October 11th 2012 them by a management official? (registration no. Kep 036/PC-FSPPP-SPSI/K/10/2012).”

Labour laws, union agreements which described in working agreement/PKB and direct contracts of employment detailing payments and other conditions was made available in the languages which understood by the workers and explained

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) carefully to them by management official.

Smallholder Cooperative Policy at point 10, to have the freedom of association in accordance with Law of 1945 and Pancasila. This has been disseminated by Smallholder Manager of the Company on 9 April 2016 and 21 May 2016 to the Chairman of KUD, member of KUD and KUD Trustees.

6.6.2 Minutes of meetings with main trade unions or workers representatives shall be documented.

a. Are there documented minutes of - Minutes meeting of SPSI Based on the information the chairman of the union, the union meeting YES meetings between the company and conducted in accordance with the requirements of temporary and existing main trade unions or workers issues, the recording of this meeting with the unions, among others: the representatives? attendance list and note taker. Several meetings were conducted with the unions, among others: b. Are the minutes made readily available - Meeting on 5 February 2016 about health facilities to employees upon request? - Meeting on 29 July 2016 about preparation of Indonesia Independence Day Celebration

6.7 Children are not employed or exploited.

(M) There shall be documentary evidence that minimum age requirements are met.

Guidance: Growers and millers should clearly define the minimum working age, together with working hours. Only workers above the minimum school leaving age in the country or who are at least 15 6.7.1 years old may be employed. The minimum age of workers will not be less than stated under national regulations. Any hazardous work should not be done by those under 18, as per International Labour Organisation (ILO) Convention 138.

Please refer to ‘Guidance for Independent Smallholders under Group Certification’, June 2010, and ‘Guidance on Scheme Smallholders’, July 2009for additional guidance on family farms. a. Is the minimum working age for YES - Collective Labour Agreement / PT Rigunas Agri Utama has a policy for minimum working age. It was stated workers together with working hours PKB – PT. RAU Peranap Estates that company committed to not employ underage workers required by national clearly defined in the company’s

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) recruitment policy? period 2015 – 2017. legislation. b. Are workers employed above the - Procedure AA-HR-305-2-00 – Besides that, company has a procedure AA-HR-305-2-00 – Recruitment and minimum school leaving age of the Recruitment and Selection. Selection which stated that every candidate must have identity card “(KTP), country or who are at least 15 years of Kartu Keluarga, Surat Nikah (if married)”. age? - List of worker for Peranap Estate and Mills updated October 2016 Based on document review as listed in “Daftar Tenaga Kerja PT Rigunas Agri c. Is there evidence that the nature of Utama there are no underage workers in List of workers did not show any worker - Cooperative policy dated 7 July work for workers under 18 is in under 18 years old when they joined the company. accordance with International Labour 2014, point no 8 Organisation (ILO) Convention 138? - Attendance list socialization of List of workers did not show any worker under 18 years old when they joined the cooperative policy on 9 April company. Some copies of worker’s ID were also filled as evidence. No underage d. Does ground verification show 2016 in KUD Serangge Permai worker was met during the audit. Workers interviewed indicated no worker under evidence of employment of workers and 21 May 2016 in KUD Lakat 18 years old. below the minimum working age? Makmur

- Field observation in smallholder - Interview with smallholders dated Smallholder 24 and 25 November 2016 Cooperative Policy at point 8 which states the prohibition of acceptance of workers aged under 18 years. This has been disseminated by Smallholder Manager of the Company on 9 April 2016 and 21 May 2016 to the Chairman of KUD, member of KUD and KUD Trustees. Based on the field visit and interview with smallholders, there is no worker under 18 years,

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.

(M) A publicly available equal opportunities policy including identification of relevant/affected groups in the local environment shall be documented.

Guidance: Examples of compliance can be appropriate documentation (e.g. job advertisements, job descriptions, appraisals, etc.), and/or information obtained via interviews with relevant stakeholders 6.8.1 such as affected groups which may include women, local communities, foreign workers, and migrant workers, etc.

Notwithstanding national legislation and regulation, medical conditions should not be used in a discriminatory way.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) The grievance procedures detailed in Criterion 6.3 apply. Positive discrimination to provide employment and benefits to specific communities is acceptable as part of negotiated agreements.

a. Is there a company policy on non- YES - Collective Labour Agreement / The company encourage equal working opportunities without discrimination as discrimination and equal opportunities? PKB – PT. RAU Peranap Estates committed and written in the Company Policy dated 1 December 2014. Does it at least cover the items period 2015 – 2017. mentioned in the criteria (6.8)? An equal opportunities policy was documented in Company Policy No. 13 and b. Is the policy made publicly available for - Company Policy mentioned : the relevant stakeholders? - List of worker for Peranap Estate “Respect for human rights by putting all employees fairly, both in terms of c. Is there evidence that the policy has and Mills updated October 2016 reception, assessment, conditions and working environment, as well as the representation, regardless of race, caste, national origin, religion / belief, been implemented? - Interview with stakeholder on 23 disability, gender, sexual orientation. union membership workers, political November 2016 affiliation or age” - Cooperative policy dated 7 July The policy has been communicated to workers and relevant stakeholders. 2014, point no 7. - Attendance list socialization of Recruitment data and list of worker notifies that workers are from different race, cooperative policy on 9 April religion, sexual orientation, etc. are treated equally. Based on interview with PHL

2016 in KUD Serangge Permai (casual workers) they know the promotion process in the company, usually there and 21 May 2016 in KUD Lakat are workers performance review in the end of year and if the review is good the Makmur the workers will be suggest to be promoted. -

Smallholder . Stated in the Policy Cooperative in point 7 stating treating all employees of cooperatives in a fair and respectful of human rights, as well as representation regardless of race, caste, national origin, religion/belief, disability, gender, sexual orientation, union membership, political affiliation and or age This has been disseminated by Smallholder Manager of the Company on 9 April 2016 and 21 May 2016 to the Chairman of KUD, member of KUD and KUD Trustees.

6.8.2 (M) Evidence shall be provided that employees and groups including local communities, women, and migrant workers have not been discriminated against.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there evidence that employees and YES - Procedure: AA-HR-305-2-00 – Recruitment process was documented in Procedure: AA-HR-305-2-00 – groups including local communities, Recruitment and Selection. Recruitment and Selection. women, and migrant workers have not been discriminated against? - Collective Labour Agreement / Process covers : PKB – PT. RAU Peranap Estates b. Are the employees and groups - The collection of application file including local communities, women, period 2015 – 2017. - Selection of administration and migrant workers happy with the - List of worker for Peranap Estate way the company is treating them? and Mills updated October 2016 - Announcement of the selection schedule c. Are there complaints against the - Pay Roll List for Worker – - Test questions and physical tests company on issues relating to October 2016 discrimination? - Summary of the results of the selection - Interview with union and workers d. What is the nature of complaints on 23 November 2016 - Announcement of selection results employees and groups including local - Provision of a cover letter MCU to candidates who pass the selection communities, women, and migrant - Cooperative policy dated 7 July workers have lodged against the 2014, point no 7. - Implementation of MCU company, if any? - Attendance list socialization of cooperative policy on 9 April Through interviews with workers in mill and plantation, it confirmed that there 2016 in KUD Serangge Permai was no discrimination on working opportunities, all workers treated equally and 21 May 2016 in KUD Lakat List of workers and payment list shows that the payment of wages of workers Makmur also seen that there is no discrimination related to wages earned and includes working hours. From the interviews with workers, they feel that the basic rights of workers already filled by company. From the interview with Union, there is no complaint related to discrimination.

Smallholder Stated in the Policy Cooperative in point 7 stating treating all employees of cooperatives in a fair and respectful of human rights, as well as representation regardless of race, caste, national origin, religion/belief, disability, gender, sexual orientation, union membership, political affiliation and or age This has been disseminated by Smallholder Manager of the Company on 9 April 2016 and 21 May 2016 to the Chairman of KUD, member of KUD and KUD

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) Trustees.

6.8.3 It shall be demonstrated that recruitment selection, hiring and promotion are based on skills, capabilities, qualities, and medical fitness necessary for the jobs available.

a. Does the company keep and maintain YES - Procedure AA-HR-305-2-00 – Recruitment process was documented in procedure AA-HR-305-2-00 – a record of their employees’ work Recruitment and Selection Recruitment and Selection. Based on that procedure, it was described that the credentials and medical history? selection, recruitment and promotion of workers based on worker competency. b. Does the company explicitly state the - Medical Records for workers. indiscriminatory policy during the Employees credential and medical history were documented and recorded, recruitment selection, hiring and medical history employees are available and kept by the nurse at the clinic. promotion process? All company policy reviewed every year by Sustainability Department, PT. c. Is the company’s indiscriminatory Rigunas Agri Utama policy reviewed regularly? Employee’s evaluation was conducted every year to decides promotion of d. Are the company’s employees employees. Based on their competency some of worker from estate was recruited and promoted based on skills, promoted to Admin.

capabilities, qualities, and medical The process of recruitment, selection and promotion is conducted transparently, fitness necessary for the job? How is and this is communicated to of candidates. this evidenced? In discriminatory policy is reviewed once a year during according that stated in the Company Policy Recruitment process and promotion is done in accordance competency and medical fitness result. And this is evident from ratings performance review that conducted every year her. And it looks that personnel accordance with his/her competency (e. g, Estate Asst, Public Relations, Nurse, foreman, etc.). Workers appraisal for Y2015 was reviewed. 6.9 There is no harassment or abuse in the work place, and reproductive rights are protected. (M) A policy to prevent sexual and all other forms of harassment and violence shall be implemented and communicated to all levels of the workforce. 6.9.1 Specific Guidance:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) For 6.9.1 and 6.9.2: These policies should include education for women and awareness of the workforce. There should be programmes provided for particular issues faced by women, such as violence and sexual harassment in the workplace. A gender committee specifically to address areas of concern to women will be used to comply with this Criterion. This committee, which should include representatives from all areas of work, will consider matters such as: training on women’s rights; counselling for women affected by violence; child care facilities to be provided by the growers and millers; women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks; and women to be given specific break times to enable effective breastfeeding. For 6.9.2: see Indicator 4.6.12.

Guidance: There should be a clear policy developed in consultation with employees, contract workers and other relevant stakeholders, and the policy should be publicly available. Progress in implementing the policy should be regularly monitored, and the results of monitoring activities should be recorded.

Notwithstanding national legislation and regulation, reproductive rights are respected. a. Does the company have the policy to YES - Company Policy dated 1 The company has prohibited sexual harassment and violence as committed and prohibit any form of sexual and all December 2014. written in company policy dated 1 December 2014. other forms of harassment and violence? - Attendance list worker – 18 April This policy has been documented, implemented and communicated to all level b. Has this policy been documented, 2016 and 26 September 2016 workers. Communication was conducted by Afdeling Assistant to his team. implemented and communicated - Organization structure Gender In case there is any harassment and violence, it will be reported to Gender clearly to all levels of the workforce? Committee PT. Rigunas Agri Committee to be followed up. Documented procedure has been established to c. Is there a clear protocol for the Utama. describe handling mechanism of sexual harassment case - SOP AA-HR-309.01- R0. company to deal/handle such - Interview with gender committee issues/complaints received from the on 23 November 2016 Awareness/training program was listed and discussed during Gender Committee workforce? meeting. - Cooperative policy dated 7 July d. Is there a list of awareness programs 2014, point no 9. Gender Committee has been made regular program for all employees, women or training provided to the workforce in - Attendance list socialization of and the training required. relation to these issues? cooperative policy on 9 April Company has formed A Gender Committee since April 2013 and consist : e. Has the company formed a Gender 2016 in KUD Serangge Permai Committee to address areas of and 21 May 2016 in KUD Lakat The members are : concern to women? Is there a list of Makmur - Head of Committee the members sitting in the committee? - What are the Terms of Reference of - Vice of head committee the committee? Does it include the - Secretary handling of issues such as:  training on women’s rights; - Vice of secretary

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)  counselling for women affected - Members by violence; Gender Committee activities such as handle complaint from female workers,  child care facilities to be provided reporting and data collecting if case appeared concerning sexual harassment. by the growers and millers;  women to be allowed to Based on interview with Gender Committee, their activities include training on breastfeed up to nine months women’s rights, counselling for women affected by violence, child care facilities before resuming chemical and breastfeeding policy. spraying or usage tasks; and  women to be given specific break times to enable effective Smallholder breastfeeding. Stated in the Cooperative Policy in point 9 which states prevent sexual f. Is the policy regularly reviewed? harassment and all forms of violence against women and protect the rights of reproduction. This has been disseminated by Smallholder Manager of the Company on 9 April 2016 and 21 May 2016 to the Chairman of KUD, member of KUD and KUD Trustees.

6.9.2 (M) A policy to protect the reproductive rights of all, especially of women, shall be implemented and communicated to all levels of the workforce.

a. Is there a policy to protect the YES - Company Policy dated 1 The company gave protection of reproductive rights for female workers as reproductive rights of all, especially of December 2014. committed and written in Company Policy dated 1 December 2014. women? b. Has this policy been documented, - Attendance list worker – 18 April This policy has been documented, and implemented and communicated to all implemented and communicated 2016 and 26 September 2016 the employees. During the audit proved that no pregnant and lactating women working in the area of pesticide (spraying and fertilization). clearly to all levels of the workforce? - This policy has been communicated by the Afdeling Assistant to all women c. How is this policy communicated to all levels of the workforce? worker.

6.9.3 A specific grievance mechanism which respects anonymity and protects complainants where requested shall be established, implemented, and communicated to all levels of the workforce.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Does the company have a mechanism YES - Company Policy dated 1 Company has procedure: SOP: AA-HR-3085.5 - R.0 "Complaints of employees - to handle employment grievances, that December 2014. the delivery and settlement of employee complaints'. respects anonymity and protects complainants where requested? - Attendance list worker – 18 April In the procedure also described the process of complaint. Complaint process b. Does the mechanism provide a way for 2016 and 26 September 2016 cannot report only to Supervisor but other such Union, Gender Committee. workers to report a grievance against a - Document of Mechanism Grievances complaint procedures already communicated all employees by the supervisor to someone other than that Communication Consultation and estate manager. supervisor? Complaints (smallholder) Company has appointed that the PR Officer is responsible to receive and c. Is the mechanism documented, handling complaint. implemented and communicated clearly to all levels of the workforce? Until now no complaint regarding harassment or abuse received by the company. d. Has the company identified personnel who will be responsible to receive and Policy related to the handling of complaint related to harassment and reviewed manage complaints received from the once a year during by the Sustainable Department workforce? According log book and interview with related workers in the company, there is e. Has the company received any reports no complaint that received by company. or complaints of harassment or abuse?

How was it addressed or resolved? Smallholder f. Is the policy reviewed regularly? All complaints has been recorded by smallholder organization. All complaint recorded in the 'Document Communication Mechanism of Consultation and Complaints ". In 2016 there are no complaints from smallholder members

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

Current and past prices paid for Fresh Fruit Bunches (FFB) shall be publicly available.

Guidance: 6.10.1 Transactions with smallholders should consider issues such as the role of middle men, transport and storage of FFB, quality and grading. The need to recycle the nutrients in FFB (see Criterion 4.2) should also be considered; where it is not practicable to recycle wastes to smallholders, compensation for the value of the nutrients exported can be made through the FFB price.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

Smallholders should have access to the grievance procedure under Criterion 6.3 if they consider that they are not receiving a fair price for FFB, whether or not middle men are involved. The need for a fair and transparent pricing mechanism is particularly important for outgrowers who are contractually obliged to sell all FFB to a particular mill. If mills require smallholders to change practices to meet the RSPO Principles and Criteria, consideration should be given to the costs of such changes, and the possibility of advance payments for FFB can be considered. a. How is the price of FFB determined? Letter from Local Government The FFB price for smallholder was determined by government via Weekly YES b. Is current and past prices paid for Disbun Pemprov Riau related to FFB Pricing Letter from Dishutbun. The latest Pricing Letter #46/TPH TBS-XI/2016 price determination no. 46/TPH TBS- for period 23 – 29 November 2016 from Dishutbun Riau Province was available. Fresh Fruit Bunches (FFB) publicly available? How? XI/2016 for period 23 – 29 The price was identified IDR 2,011/kg FFB 10-20 year. There was no complaint November 2016. regarding to the FFB price. c. Was there any complaints on FFB pricing? d. How was the complaint handled? e. What was the solution?

(M) Evidence shall be available that growers/millers have explained FFB pricing, and pricing mechanisms for FFB and inputs/services shall be documented (where these are under the 6.10.2 control of the mill or plantation).

a. What is the mode of  Log Book FFB Received 2016 Transactions to smallholder and 3rd party supplier have been recorded by form YES recording/documenting transactions  Letter from Local Government Log Book of FFB Received. between millers with middlemen and/or Disbun Pemprov Riau related to Several records were sighted such as for Smallholder: KT Saiyo Sakato on 15 smallholders? FFB price determination no. November 2016 b. Is there evidence that growers/millers 46/TPH TBS-XI/2016 for period 23 The update FFB price was informed to the FFB supplier via email and directly informed by Mill through information board that placed in the front area of the have explained FFB pricing and pricing – 29 November 2016. mechanisms for FFB? factory. There were services rendered to the smallholder however there were no influence to the price of FFB. The services was spraying application. The value c. Are there any inputs/services rendered of the waste of FFB (as EFB nutrient) has been compensated in the pricing by the millers to smallholders/middle calculation. men? Are these inputs/services having any influence to the pricing and pricing mechanisms for FFB? d. Have inputs/services been documented (where these are under

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) the control of the mill or plantation)? e. Where it is not practicable to smallholders to recycle waste (i.e. EFB), is there compensation for the value of the nutrients of EFB given to the smallholders? Is this translated into the pricing factors of FFB?

6.10.3 Evidence shall be available that all parties understand the contractual agreements they enter into, and that contracts are fair, legal and transparent.

a. Is there a contractual agreement  Contract agreement with local The agreement/contract documents between contractor and organisation is YES between the miller and smallholders/ contractor as Well Driller sighted such as for FFB Transporter. middle men? #008/P2/PB/KPN/VI/16 All contracts are acknowledged by all parties as part that contain of contract are well understood. The contract contains all relevant information such as payment b. Do all parties understand the  Contract Agreement with KUD contractual agreements they have Serangge Permai and KUD Lakat method, work requirements, force majeure, contract period, cancellation of contract, etc. Both parties kept the contract. entered into? Makmur (smallholder).  The contract document with FFB c. Are all contractual agreements fair, Transporter no. 01/KUD- The agreement/contract documents between contractor and smallholder is legal and transparent? MR/XII/2015 dated 1 December sighted such as for FFB transporter. The contract was acknowledged by both d. Who keeps the contractual 2015 (KUD Serangge Permai). parties and well understood. The contract contained all relevant information such agreements?  The contract document with FFB as payment method, work requirements, force majeure, contract period, Transporter (Mr. Hendri Hakim) no. cancellation of contract, etc.

01/KUD-SP/XII/2016 dated 1 December 2016 (KUD Lakat Makmur).

6.10.4 Agreed payments shall be made in a timely manner.

a. How are all payments made to the  Slip payment for Armanto as Well A review to several payment records in year 2016 demonstrated that the YES smallholders/middle men? Driller contractor on 22 July 2016 payment has been made according to the agreement. The payment was been made periodically according to the contract agreement. b. What is the mode of as IDR 22,000,000

recording/documenting transactions  Slip payment IDR 1,507,442,918 for 895,750 kg of FFB from KUD The receipt of payment for KUD Serangge Permai was evident for 21 July – 20

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) between millers with middlemen and/or Serangge Permai on 2 September August 2016 IDR 1,507,442,918 on 2 September 2016 for 895,750 kg of FFB. smallholders? 2016 The receipt of payment for KUD Lakat Makmur was evident for 21 October – 20 c. Have agreed payments been made in a timely manner? November 2016 IDR 2,741,664,539 on 21 November 2016 for 1,446,080 kg of FFB.

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

Contributions to local development that are based on the results of consultation with local communities shall be demonstrated.

Guidance: Contributions to local development should be based on the results of consultation with local communities. See also Criterion 6.2. Such consultation should be based on the principles of transparency, openness and participation, and should encourage communities to identify their own priorities and needs, including the different needs of men and women. Where candidates for employment are of equal merit, preference should always be given to members of local communities. Positive discrimination should not be recognised as conflicting 6.11.1 with Criterion 6.8. Efforts should be made to identify independent smallholders in the supply base. Where sourcing of fruit is from identified independent smallholders, efforts should be made to contribute to the improvement of their farming practices.

For National Interpretation: National Interpretation will consider specific parameters or thresholds such as use of local and national goods and services where possible, whether a certain percentage of the plantation’s profit/turnover should be used for social development projects, and minimum quotas for local employment. a. Have the local development needs and - CSR Program PT SMS year YES Records of organization contribution to regional development were evident, priorities been identified in consultation 2015 and 2016 among either: agreement contract, and social assistance list. with local communities? (refer also to C - Realization of CSR Program 6.2) year 2015 and 2016 CSR program was provided by the organization and deployed in to CSR - RKL RPL PT RAU Y2015 and b. What are the contributions made to program. Activity of CSR was identified by the estate/mills, including: repairs the local development? Are they in Y 2016 Semester 1 village road, low-cost market, mosques renovation in surrounding villages, - Public consultation on 23 accordance with the results of checks and medical for free, etc. Implemented document was recorded within November 2016 consultation? photo and minutes of aid delivery. Evidence of the implementation of CSR program is also evidenced by confirmation from the stakeholders during the c. Are there efforts to improve or public consultation on 23 November 2016. However company have to keep maximise employment opportunities at trying to improve and develop CSR programs based on the needs of local the company for local communities? communities. Company's contribution towards improving the local economy around is also

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) quite large it can be seen by the number of local employees who work in the company. Where candidates for employment are of equal merit, organization has preference always been given to members of local communities. Another local business was supported for growers and mills, main supports were pertinent to procurement spare parts and vehicle maintenance. The local business is assigned and controlled by central purchasing in Head Office. To improve the manpower recruitment for local communities, company through Public Relations Officer conduct communication to head of village. Realization of CSR program in 2015 in amount of Rp. 302.229.483 for activities such as education, health, economy, maintenance of infrastructure, religion activities, social, recreation and sports activities and for smallholder (farmers). Realization of CSR program in 2016 until October in amount of Rp. 516.147.720 for activities such as education, health, economy, maintenance of infrastructure, religion activities, social, recreation and sports activities and for smallholder (farmers).

Smallholder Some help from smallholder organization has been carried out to the surrounding community, for example  Dated 23 January 2016 in Desa Punti Kayu. Social contribution to mosque with amount Rp. 25.000.000 (KUD Serangge Permai)  Dated 2 July 2016 in Desa Punti Kayu. Social contribution to religious activities with amount Rp. 1.000.000 (KUD Serangge Permai)  Dated 3 July 2016 in Desa Kota Baru, contribution to religious activities with amount Rp. 5.500.000 (KUD Lakat Makmur)  Dated 5 September 2016 in Desa Kota Baru. Social contribution to sport and recreation activities with amount Rp. 1.000.000 (KUD Lakat Makmur) All above activity has been recorded.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO)

6.11.2 Where there are scheme smallholders, there shall be evidence that efforts and/or resources have been allocated to improve smallholder productivity.

a. Is there a complete registry of YES - Public consultation with The company has been paying particular attention and allocated resources to independent smallholders in the supply stakeholder on 23 November improve smallholder productivity to smallholder scheme. PT RAU have the base? 2016 pattern cooperation of plantation (partnership) for the community (smallholdings) b. Have efforts been made to improve the of 5.142 ha. Cooperation Agreement with Koperasi was available. A form of - Interview with head of Koperasi farming practices of independent cooperation is PIR Trans with full Manage by smallholders. smallholders? Serangge Permai and Lakat Makmur Whole plant maintenance and harvesting activities performed by smallholders c. Where there are schemed and supervised by company. Standard maintenance and care of plants and smallholders, have efforts and/or harvesting in accordance with best practice agronomic also applied by resources been allocated to improve smallholders and supervised by company. smallholder productivity? FFB price determination mechanism has been disseminated to farmers through meetings between board smallholder organization with the Company, such a meeting on February 15, 2016 and also Price of FFB has ben mentioned in the bulletin board in the each smallholder organization. No forms of forced or trafficked labour are used. 6.121 *1 New Criteria - No forms of forced or trafficked labour are used. (M) There shall be evidence that no forms of forced or trafficked labour are used.

Specific Guidance: For 6.12.1: Workers should enter into employment voluntarily and freely, without the threat of a penalty, and should have the freedom to terminate employment without penalty given reasonable notice or as per agreement.

Guidance 6.12.1 Migrant workers should be legalised, and a separate employment agreement should be drawn up to meet immigration requirements for foreign workers and international standards. Any deductions made should not jeopardise a decent living wage. Passports should only be voluntarily surrendered. There should be evidence of due diligence in applying this to all sub-contract workers and suppliers. National guidance should be used on contract substitution.

For National Interpretation:

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) National Interpretation will define the following: temporary workers; migrant workers; special labour policy; contract substitution; and decent living wage. International Labour Organisation (ILO) definitions (ILO Convention 29 and 105) and other international protocols, instruments and explanations should be used throughout. See Criterion 6.5 for further guidance.

a. What is the company’s policy on forced YES Policy related forced or trafficked labour has been determined in the company or trafficked labour?  Company policy policy dated 1 December 2014. b. How does the company define forced  Procedure : AA-HR-305-2-00 – or trafficked labour? Recruitment and Selection There are no foreign workers in Peranap Site, based on evidences which has been reviewed such as “Daftar Tenaga Kerja Kebun Peranap dan PKS Peranap” c. What is the process of recruiting  Daftar Tenaga Kerja Kebun foreign/ migrant workers directly and/or Peranap dan PKS Peranap” Recruitment process was documented in Procedure: AA-HR-305-2-00 – through licenced outsourcing agencies/ updated October 2016 Recruitment and Selection stated that Staff recruitment conduct by Head Office labour suppliers? in Jakarta.  Interview with union and d. Who is the person responsible for workers on 23 November 2016 For workers in site, recruitment processes conduct by Site Management with selecting/ screening labour suppliers/ approval from company management. outsourcing agents? There are no restrictions for workers to leaving mill or estate area outside e. Do the foreign workers have to pay a working hours. fee to the employment recruitment agency or labour suppliers in the workers’ countries of origin? If yes, does it jeopardise decent living wage? f. Are there restrictions on workers from leaving the mill or estate or their housing facilities outside working hours? g. What is the process if a worker wants to terminate their employment before their contract expires? In this case, who pays for the return transportation? h. What are the penalties imposed if the workers were terminated or fired before their contract expires? i. Who keeps the workers passports or identity documents?

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) j. If workers do not keep their passports or identity documents, is this legally allowed? k. What is the process for workers’ to hand over their passports or identity documents to the company? l. Do workers have unrestricted access to their passports or identity documents? Describe how workers are able to access their documents?

6.12.2 Where applicable, it shall be demonstrated that no contract substitution has occurred.

a. Is there evidence of contract - Interview with workers on 23 There was no substitution contract occurred. Workers get the job and contract N/A substitution occurring? November 2016 conform with agreement between company and its workers. - Perjanjian Kerja Bersama (Joint b. Are foreign workers asked to sign a contract upon arriving in the receiving Agreement) PT RAU Period 2015 - 2017 and PHL contract country? If yes, is that contract identical to the one signed in the country of origin? c. Are workers given a copy of their employment contracts? If yes, is the contract identical to the one signed at the time of recruitment?

(M) Where temporary or migrant workers are employed, a special labour policy and procedures shall be established and implemented.

Specific Guidance: 6.12.3 For 6.12.3: The special labour policy should include: • Statement of the non-discriminatory practices; • No contract substitution;

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) • Post-arrival orientation programme to focus especially on language, safety, labour laws, cultural practices etc.; • Decent living conditions to be provided.

a. What is the company’s policy and - List of Employees PPN and KPN N/A There was no migrant workers in PT. Rigunas Agri Utama – Peranap Estate. Its procedures for temporary or updated October 2016 verified during audit documentation list of employee, interview with employee foreign/migrant workers? Does the - Interview with stakeholder, union and stakeholders special labour policy include: and workers on 23 November  Statement of the non-discriminatory 2016 practices?  No contract substitution?  Post-arrival orientation programme with emphasis on language, safety, labour laws, cultural practices etc.?  The provision of decent living conditions? b. Have the policies and procedures been implemented?

Growers and millers respect human rights. 6.132 *2 New Criteria - Growers and millers respect human rights. (M) A policy to respect human rights shall be documented and communicated to all levels of the workforce and operations (see Criteria 1.2 and 2.1).

Guidance: See also Criterion 6.3. All levels of operations will include contracted third parties (e.g those involved in security).

6.13.1 Note: From the UN Guiding Principles on Business and Human Rights: “The responsibility of business enterprises to respect human rights refers to internationally recognised human rights – understood, at a minimum, as those expressed in the International Bill of Human Rights and the principles concerning fundamental rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work” (“The corporate responsibility to respect human rights” in Guiding Principles on Business and Human Rights). The RSPO WG on Human Rights will provide a mechanism to identify, prevent, mitigate and address human rights issues and impacts. The resulting Guidance will identify the relevant issues on human rights to all RSPO Members.

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) a. Is there a company policy on human YES • Company Policy dated 01 Human rights policy was determined on the Company Policy dated 01 December rights? December 2014 2014. b. How is this communicated to all employees, including outsourced • Dissemination of policy on 18 Policy has been disseminated to all workforce on 18 April 2016 and 26 workers, customers and suppliers? If April 2016 and 26 September September 2016. This policy also has been communicated to all customer and by training, how often is the training 2016 supplier. Communication is conducted through company web site or email that conducted? distributed by the Head Office. • Interview with union and workers c. Who has the task of communicating on 23 November 2016 Public Relation officer is appointed by the company to responsible for internal and external communications. the policy internally and externally? d. Does the company have any Based on the interview with worker, Union and stakeholder there is no issues outstanding cases of human rights related human right violations. violations?

Audit Report

PRINCIPLES 7: RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS

All land inside the concession area has been developed in the period of 1987 – 1989, therefore Principles 7 is not applicable

Audit Report

PRINCIPLES 8: COMMITMENT TO CONTINUOUS IMPROVEMENT IN KEY AREAS OF ACTIVITY

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) 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. (M) The action plan for continual improvement shall be implemented, based on a consideration of the main social and environmental impacts and opportunities of the grower/mill, and shall include a range of Indicators covered by these Principles and Criteria. As a minimum, these shall include, but are not necessarily be limited to: • Reduction in use of pesticides(Criterion 4.6); • Environmental impacts (Criteria 4.3, 5.1 and 5.2); • Waste reduction (Criterion 5.3); • Pollution and greenhouse gas (GHG) emissions (Criteria 5.6 and 7.8); • Social impacts (Criterion 6.1); 8.1.1 • Optimising the yield of the supply base.

Guidance: Growers should have a system to improve practices in line with new information and techniques, and a mechanism for disseminating this information throughout the workforce. For smallholders, there should be systematic guidance and training for continual improvement.

For National Interpretation: National Interpretation will include specific minimum performance thresholds for key indicators (Criteria 4.2, 4.3, 4.4, and 4.5). • HCV Management plan 2015 Evidence of several improvements was shown, e.g. YES a. Is there an action plan for continual improvement? • CSR Program 2015  Reduction in use of certain chemicals: b. Describe the main components of the plan. • SIA Report and review 2015 o The organisation committed that Paraquat only used for specific species: a few species of ferns, such as: Stenochlaena and Lycopodiophyta. c. Has the action plan been implemented? • OHS Internal Audit Report on Reduction of Gramoxone consumption d. Provide examples of continual 11-13 February 2015 improvements that have been • OHS Management Review  Environmental impacts: implemented. Report on 2-3 March 2015 o Segregation of domestic water run off with industrial waste water by e. Are history records available to develop the • RSPO internal audit report building trench around shell storage area to prevent contaminated water to action plan? 2015 and it Corrective action open drainage f. Are records of implementation of the action • Field observation o Improvement in monitoring of fuel consumption by calibrating fuel injection plan available? pumps and check fuel nozzle pipe.

g. Does the action plan include strategies for: o Improvement in monitoring of domestic water consumption by installing • Reduction in use of pesticides

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) (Criterion 4.6)? Is IPM widely flow meter to monitor water consumption in housing implemented? o Recycle the water cooler turbine discharge water basin; • Environmental impacts (Criteria 4.3, 5.1 and 5.2)? o Recycle the condensate water discharge water dilution; • Waste reduction (Criterion 5.3)? o Minimize duration of mill cleaning to be every two weeks. • Pollution and greenhouse gas (GHG) emissions (Criteria 5.6 and 7.8)?  Waste reduction: • Social impacts (Criterion 6.1)? o • Optimising the yield of the supply Reduction in discharged waste water. The project including: Injection of base? water from hydro cyclone and blow down boiler to boiler chimney. It can prevent blow down boiler drain to water body, reduce waste water treated h. Do growers have a system to improve in WWTP. practices in line with new information and techniques, and a mechanism for  Pollution and emissions: disseminating this information throughout • Reduction of potential particulate release to the atmosphere by increase the workforce? boiler ash capture by the chimney  Biodiversity conservation • Planting riparian zone/river border with barrier to erosion plant and native species to conserve riparian zone • Monitoring of RTE species regularly to control the population dynamics of wildlife • Sign board installation for HCV protection and awareness to conserve biodiversity and HCV area Regular evaluation of plantation and mill operation was performed through internal and external audits. The coverage of the audit including production planning, production, power generation and utilization, consumable, process control, quality control – including waste water treatment, maintenance, occupational health and safety, FFB incoming and inspection, and laboratory. The above audit reports indicated that all gaps against standard operation procedure of plantation and operation were noted. Corrective action plan was issued and implemented to demonstrate effort for compliance as well as continual improvement. A monitoring action plan has been established after AMDAL/social impact assessment and annual evaluation was also done to monitor result and progress

Audit Report

CRITERION / INDICATOR OBSERVATIONS & OBJECTIVE COMPLIANCE NO SUMMARY OF FINDINGS FOR EACH INDICATOR CHECKLIST EVIDENCE (YES/NO) of action. Most of the plans were executed and the result found was as expected (CSR, local recruitment, etc).

Audit Report

3.3.2 Mill Supply Chain Requirements PART A COMPANY DETAIL

Company Name (covered by certification): PT. RIGUNAS AGRI UTAMA - PERANAP MILL

RSPO member name: PT INTI INDOSAWIT SUBUR RSPO member number: 1-0022-006-000-00

RSPO IT Platform Registration number: RSPO_PO1000002063

Site Address: Simelinyang, Pauh Ranap, Sengkilo Village, Peranap District, Indragiri Hulu Regency, Riau Province, Indonesia: 29354

Management Representative: Mr. Welly Pardede

Site type: Palm Oil Mill

Site capacity: According to SPUK / Surat Pendaftaran Usaha Perkebunan ( as IUP / Izin Usaha Perkebunan ) No. 350/94/Dj.Bun.5/II/2002 dated February 28, 2002 which has been approved by authorized institution is that the Licensed Capacity : 60 MT FFB per hour and the Installed Capacity : 30 MT Fresh Fruit Bunches per hour

Certified palm product sold: From January 1, 2016 to October 31, 2016 are as follows: 9,346 MT of CPO and 7,233 MT of PK

Certified palm product used: From January 1, 2016 to October 31, 2016 are 7,123 Ton of FFB

Audit Report

App/Cert No: FMS40006 Audit Type: Second Surveillance (ASA 2)

SAI Global Auditor/Team: Ahmad Furqon Audit Date: NOV 25, 2016 Activity/Audit No:

Audit objectives : To verify the volume of certified and uncertified FFB entering the mill and sold volume of RSPO certified producers.

Supply Chain Model: Module E - CPO Mills (MB) Mass Balance

Pertinent record period: January 2016 – December 2016

Estimated tonnage of certified palm product produced: 38,988 MT CPO and 9,864 MT PK

Estimated of tonnage of non certified palm product produced 18,977 MT CPO and 4801 MT PK

String description: Palm Oil Mill

Outsource activity(ies) (if any): None

Independent third party(ies) performing outsource activity(ies): None name, address and Capability

Audit Report

3.3.2.1 Supply Chain Certification Standard

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C )

CPO MILLS (MB) MASS BALANCE SUPPLY CHAIN MODELS – MODULAR REQUIREMENTS

E.1 Definition

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

E.2 Explanation

E.2.1. The estimated tonnage of CPO and PK products that could potentially be produced by the certified mill must be recorded by the CB in the public summary of the P&C certification report. This figure represents the total volume of certified palm oil product (CPO and PK) that the certified mill is allowed to deliver in a year. The actual tonnage produced should then be recorded in each subsequent annual surveillance report.

The estimated tonnage of CPO and PK products has been recorded by certification body, i.e.: ASA 1: Estimated CPO : 42,791 MT Compliant a. Has the estimated tonnage of CPO and PK products Estimated PK : 10,194 MT (that could potentially be produced by the certified mill) been recorded by the certification body (CB) in the ASA2: public summary of the P&C certification report ? Estimated CPO : 38,988 MT

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) Estimated PK : 9,864 MT b. Does the figure represent the total volume of certified Yes, the figure does represent the total volume of certified palm oil palm oil product (CPO and PK) that the certified mill is product (CPO and PK) that the certified mill allowed to deliver in a Compliant allowed to deliver in a year ? year. The actual tonnage produced has been recorded in each subsequent annual surveillance report, i.e: c. Does the actual tonnage produced have to then be ASA 2: recorded in each subsequent annual surveillance Compliant Actual CPO : 28,079 MT report ? Actual PK : 7,322 MT

E.2.2. The mill must also meet all registration and reporting requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim). Management of the mill has been aware about the registration a. The mill must also meet all registration requirements requirements. Among others with regards to registration through for the appropriate supply chain through the RSPO RSPO IT Platform with Reg.No. : RSPO_PO1000002063 and they Compliant supply chain managing organization (RSPO IT also recorded registration of transactional CPO and PK on RSPO IT platform or book and claim)? Platform (e-trace) consistently. Transactional CPO and PK performed as evidence could be shown b. The mill must also meet all reporting requirements for PT. Rigunas Agri Utama has met all registration requirements for the the appropriate supply chain through the RSPO supply appropriate supply chain through the RSPO supply chain managing Compliant chain managing organization (RSPO IT platform or organization (RSPO IT platform), with register number book and claim)? RSPO_PO1000003004.

E.3 Documented Procedure

E.3.1. The site shall have written procedures and/or work instructions to ensure the implementation of all the elements specified in these requirements. This shall include at minimum the following: a. Complete and up to date procedures covering the implementation of all the elements in these requirements;

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) b. The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. This person shall be able to demonstrate awareness of the site procedures for the implementation of this standard. The site has written procedures in form of documented SOP in place to ensure the implementation of all applicable elements specified in the RSPO SC standard, as follows: SOP # AA-MPM-OP-1400.17-R4 with a title of Traceability, it was supported a number of dedicated forms such as: 1/ Weighbridge card record which describes :  Name of estate / Plasma and number of afdeling (block)  Date of harvesting  Certificate No a. Does the site have written procedures and/or work 2/ Delivery Notes and Order for CPO & PK from Medan marketing instructions in place to ensure the implementation of all which describes : Compliant elements specified in these requirements ?  Site Name  Name of receiver  Contract Number  Product type, model and amount of product  Delivery date 3/ Daily Mill Report  FFB receiving  FFB Processing for sustainable and non sustainable product  Delivering to Bulking station  Daily Stock Opname report  Sounding report b. Are procedures / work instructions completely covering The site has determined the procedure in form of Documented SOP the implementation of all the elements in these Compliant which covered the implementation of the requirement RSPO SC requirements? standard.

c. Have the site had the role of the person having overall Based on the Procedure of Traceability, Top Management has Compliant responsibility for and authority over the implementation assigned personnel who having overall responsibility for and authority

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) of these requirements and compliance with all over the implementation of these requirements and compliance with applicable requirements ? all applicable requirements, who is the Mill Manager. Weighing clerk responsible for data input and print out weighing card. Receiving of FFB was based on SPB (delivery note) covers whether are sustainable or non-sustainable. If sustainable then delivery note must covers: - Estate name and block number - Year of planting - Date of harvesting - Certificate number - Batch number - Transporter identity. All related personnel regarding Mill Manager, Head of Administration, weighing clerk, security, storage keeper etc. has been trained for refreshment of Traceability and Mass Balance on 10 August 2016 d. Is the person able to demonstrate awareness of the The person was able to demonstrate awareness of the site’s site’s procedures for the implementation of this Compliant procedures for the implementation of this standard. standard? E.3.2. The site shall have documented procedures for receiving and processing certified and non-certified FFBs. The site has had documented procedures for receiving certified FFBs a. Has the site had documented procedures for receiving in form of SOP # AA-MPM-OP-1400.17-R4 “Traceability” and SOP for Compliant certified FFBs ? station of Receiving (AA-MPM-OP-1400.02-R1)

b. Has the site had documented procedures for receiving The site has had documented procedures for receiving NON certified non-certified FFBs? FFBs in form of SOP # AA-MPM-OP-1400.17-R4 “Traceability” and Compliant SOP for station of Receiving (AA-MPM-OP-1400.02-R1) The site had documented procedures for processing certified FFBs in form of SOP # AA-MPM-OP-1400.17-R4 “Traceability”, SOP for c. Has the site had documented procedures for Compliant processing certified FFBs? production (AA-MPM-OP-1400.03 to 08-R1), SOP for storing and delivering (AA-MPM-OP-1400.14-R1) d. Has the site had documented procedures for Compliant processing non-certified FFBs? The site had documented procedures for processing NON certified

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) FFBs in form of SOP # AA-MPM-OP-1400.17-R4 “Traceability”, SOP for production (AA-MPM-OP-1400.03 to 08-R1), SOP for storing and delivering (AA-MPM-OP-1400.14-R1)

E.4 Purchasing and Goods In

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

Person who has responsibility for recording results weighbridge can demonstrate mechanism to verify and document the volumes of a. Does the site verify and document the volumes of certified FFBs received, among others regarding certified FFBs received ? Compliant  Name of estate (Sources of certified FFB)  Date of harvesting  Certificate No Person who has responsibility for recording results Weighbridge can demonstrate mechanism to verify and document the volumes of b. Does the site shall verify and document the volumes of certified FFBs received, among others regarding non-certified FFBs received ?  Name of growers / plasma and number of afdeling (Sources Compliant of non certified FFBs)  Date of harvesting  Certificate No

E.4.2. The site shall inform the CB immediately if there is a projected overproduction of certified tonnage.

a. Does the site inform the CB immediately if there is a The site has commitment to always keep in touch with SAI Global as projected overproduction of certified tonnage ? CB to immediately inform if there is a projected overproduction of Compliant certified tonnage.

E.5 Records Keeping

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C )

E.5.1. The site shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO and PK on a three-monthly basis. All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system according to conversion ratios stated by RSPO. The site can only deliver Mass Balance sales from a positive stock. Positive stock can include product ordered for delivery within three months. However, a site is allowed to sell short.(ie product can be sold before it is in stock.) For further details refer to Module C.

a. Does the site record and balance all receipts of RSPO The site has recorded and made balancing all receipts of RSPO certified FFB on a three-monthly basis ? certified FFB on a three-monthly basis. Compliant

b. The site shall record and balance all deliveries of The site has recorded and made balancing all receipts of RSPO RSPO certified CPO and PK on a three-monthly basis Compliant certified CPO and PK on a three-monthly basis. ? c. Are all volumes of palm oil and palm kernel oil that are The entire amount or volume of CPO and PK have being deducted delivered being deducted from the material accounting from the material (FFB) accounting system according to OER and Compliant system according to conversion ratios stated by RSPO KER defining on average of each process (i.e.: certified and non ? certified). d. Is the site only able to deliver Mass Balance sales from a positive stock ? There were found that the site has delivered the certified products from positive stocks. PT. Sari Dumai Sejati which has been RSPO Positive stock can include product ordered for delivery SC certified model IP, SG and MB based on certificate number CU- Compliant within three months. However, a site is allowed to sell RSPO SCC 821960 short.(ie product can be sold before it is in stock.)

E.5.2. In cases where a mill outsources 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. a. Does the mill outsource activities to an independent (not owned by the same organization) palm kernel No outsourced activity Not applicable crush, the crush still falls under the responsibility of the mill and does not need to be separately certified ?

Audit Report

Requirements STATUS Audit Findings / Objective Evidence ( NC / AOC / C ) b. Does the mill have to ensure that the crush is covered No outsourced activity Not applicable through a signed and enforceable agreement ?

3.3.2.2 Supply Chain Certification System

Supply Chain Certification System Status ( Yes / No )

5.3.1 Has the client been made aware with necessary information concerning the RSPO Supply Chain Certification and the RSPO Rules on Communication and Claims Has the client been made aware with necessary information concerning the RSPO Supply Chain Certification and the RSPO Rules on Communication and Claims? Yes If potential clients have any further questions concerning the RSPO these shall be directed to the RSPO secretariat.

5.3.2 Has the client been made aware of the contractual agreement for certification services against the RSPO Supply Chain Yes Standard and maintain a record of any agreement? 5.3.6 Has the organization been informed about the following items? Yes a. Certification process Yes b. Agree logistics for the assessment and time of exit (closing) meeting. Yes c. Confirm acess to all relevant documents, field sites and personnel Yes d. Explain confidentiality and conflict of interest Yes

5.3.7 Have the management documentation of the organization fully met to the requirements of the RSPO Supply Chain Yes Certification Standard?

Audit Report

Supply Chain Certification System Status ( Yes / No )

5.3.7 Have any issues or areas of concern been clarified to the organization? Yes 5.3.7 Have the internal audits against RSPO supply chain standard been fully planned and underway before certification is Yes awarded ? 5.3.8 Have the organization sufficiently and adequately implemented the organizational systems, the management systems and the operational systems, including any documented policies and procedures, to meet the intent and requirements of Yes the RSPO Supply Chain Certification Standard?

5.3.8 Have the client made aware that when there is outsourcing process to the third party after certification is granted therefor Yes SAI Global shall be informed and SAI Global decides whether an interim visit is required for the next audit ? 5.3.9 Has certification audit reviewed pertinent RSPO Supply Chain records relating to the receipt, processing and supply of Yes certified oil palm products? 5.3.10 Have all activities conducted by subcontractors complied with the intent and requirements of the RSPO Supply Chain Yes Certification Standard 5.3.11 Have the client made aware that until they receive written confirmation of their RSPO Supply Chain certification Yes registration and its expiry date that they are not certified and can not make any claims concerning registration? 5.3.11 Have a detail records have been compiled of the entry (opening) meeting including a list of the participants in the Yes meeting? 5.3.11 Have the client made aware of the findings of the audit team including any deficiencies which may result in a negative Yes certification decisions or which may require further actions to be completed before a certification decision can be taken? 5.3.11 Have the client made aware that the findings of the audit team are tentative pending review and decision making by the Yes duly designated representatives of the certification body?

Audit Report

3.4 Recommendation

The recommendation from this audit is that certification for PT. Rigunas Agri Utama, Peranap Mill as a producer of RSPO Certified Sustainable Palm Oil and Palm Kernel Model MB can continue.

Audit recommendations are always subject to ratification by RSPO.

This report was prepared by: Eko Purwanto, Yosi Zainal, Daniel Sitompul, Ahmad Furqon, Eko Prastio Ramadhan.

3.5 Environmental and social risk for this scope of certification for planning of the surveillance audit

 Environmental risk: compliance with regulations, hazardous waste management, RKL RPL reporting, HCV Assessment including its Conservation Management Plan and Monitoring.  Social risk: compliance with regulations, Social Impact Assessment including its social management plan and monitoring  OHS: prevention of hazard and risk.  Certified FFB entering the mill and certified oil palm product produced.

3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of Assessment Findings

Welly Pardede Date : 5 April 2017

Signed for and on behalf of PT. SAI Global Indonesia

Inge Triwulandari Technical Manager Date : 5 April 2017

Appendix “A” – Audit Record

Times* Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts audited: # Shifts* From - To Traveling Jakarta – Pekanbaru – Peranap 21/11/2016 All (GA170 ETD 06.00 – ETA 07.45)

22/11/2016 Day #1 - Tuesday

Peranap Estate

All Opening Meeting 08.00 – 08.30

RSPO Document review and site visit: Criteria: 2.1 all indicators for best agriculture practice Criteria: 2.2.1 and 2.2.2 Criteria: 3.1 all indicator Eko + Furqon 08.30 – 17.00 Criteria: 4.1.1 (Estate), 4.1.2, 4.1.3 Criteria: 4.2, 4.3 and 4.5 all idicator Criteria: 4.6 indicator 2, 3, 4, 5, 9, 12 Criteria: 7.3 if applicable Criterion: 8.1 RSPO: Document review and site visit: Criteria: 2.1 all indicators for environmental and HCV aspects Criteria: 4.3 indicator 4 Yosi 08.30 – 17.00 Criteria: 4.4 indicator 1, 3, 4 Criteria: 4.6 indicator 1, 6, 7, 8, 10 Criteria: 5.1, 5.2, 5.3, 5.4, 5.6 all indicators Criterion: 8.1 RSPO: Document review and site visit: Criteria: 2.1 all indicators for OHS aspects Daniel Criterion: 4.6.11 08.30 – 17.00 Criteria: 4.7 all indicators Criterion: 4.8 all indicators Criterion: 5.5 all indicators

Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 152 of 175 Audit Report Times* Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts audited: # Shifts* From - To Criterion: 8.1

RSPO & ISPO:

Interview with stakeholder: Interview with BPN Kab. Indragiri Hulu Pras 08.30 – 17.00 Interview with Dinas Sosial dan Tenaga Kerja Kab. Indragiri Hulu Interview with Badan Lingkungan Hidup Kab. Indragiri Hulu Interview with Dinas Kehutanan dan Perkebunan Kab. Indragiri Hulu

All Break 12.00 – 13.30

23/11/2016 Day #2 – Wednesday

Peranap Mill

Document review and site visit: Eko + Furqon RSPO Supply Chain 08.00 – 17.00 RSPO Certification System Clause 4.2.4 RSPO: Document review and site visit: Yosi Criteria: 4.4.1, 4.4.2, 4.4.3, 4.4.4 08.00 – 17.00 Criteria: 5.1, 5.2, 5.3, 5.4, 5.6 all indicators Criteria: 8.1 all indicators RSPO: Document review and site visit: Criteria: 4.1.1 (Mill), 4.1.2, 4.1.3, 4.1.4 Daniel 08.00 – 17.00 Criteria: 4.6 indicator 11 Criteria: 4.7, 4.8 and 6.10 all indicators Criteria: 8.1 all indicators RSPO: Document review and stakeholder interview: Pras Criteria: 1.1; 1.2; 1.3 all indicators 08.00 – 17.00 Criteria: 2.1.1 for social aspect Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator

QEF08sa.RSPO.01 / Issue Date: 2009-Apr-15 © SAI Global Indonesia Copyright 2009 Page 153 of 175 Audit Report Times* Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts audited: # Shifts* From - To Criteria: 4.6.12 Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13 Criterion: 8.1

Interview with employees, labour union and committee gender

All Break 12.00 – 13.30

24/11/2016 Day #3 – Thursday

Peranap Plasma (KUD Bukit Permai & Serangge Permai)

Document review and site visit: Criteria: 2.1 all indicators for best agriculture practice Criteria: 2.2.1 and 2.2.2 Criteria: 3.1 all indicator Furqon 08.00 – 17.00 Criteria: 4.1.1 (Estate), 4.1.2, 4.1.3 Criteria: 4.2, 4.3 and 4.5 all indicator Criteria: 4.6 indicator 2, 3, 4, 5, 9, 12 Criterion: 8.1 Document review and site visit: Criteria: 2.1 all indicators for environmental aspects Criteria: 4.3 indicator 4 Yosi + Eko Criteria: 4.4 indicator 1, 2, 3, 4 08.00 – 17.00 Criteria: 4.6 indicator 1, 6, 7, 8, 10 Criteria: 5.1, 5.2, 5.3, 5.4, 5.6 all indicators Criterion: 8.1 Document review and site visit: Criteria: 2.1 all indicators for OHS aspects Criterion: 4.6.11 Daniel + Eko Criteria: 4.7 all indicators 08.00 – 17.00 Criterion: 4.8 all indicators Criterion: 5.5 all indicators Criterion: 8.1 Document review and site visit Pras Criteria: 1.1; 1.2; 1.3 all indicators 08.00 – 17.00 Criteria: 2.1.1 for social aspect

QEF08sa.RSPO.01 / Issue Date: 2009-Apr-15 © SAI Global Indonesia Copyright 2009 Page 154 of 175 Audit Report Times* Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts audited: # Shifts* From - To Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator Criteria: 4.6.12 Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13 Criterion: 8.1

Interview with employees, labour union and committee gender

All Break 12.00 – 13.30

25/11/2016 Day #4 – Friday

Peranap Plasma (Lakat Makmur)

Document review and site visit: Criteria: 2.1 all indicators for best agriculture practice Criteria: 2.2.1 and 2.2.2 Criteria: 3.1 all indicator Furqon 08.00 – 12.00 Criteria: 4.1.1 (Estate), 4.1.2, 4.1.3 Criteria: 4.2, 4.3 and 4.5 all indicator Criteria: 4.6 indicator 2, 3, 4, 5, 9, 12 Criterion: 8.1 Document review and site visit: Criteria: 2.1 all indicators for environmental aspects Criteria: 4.3 indicator 4 Yosi Criteria: 4.4 indicator 1, 2, 3, 4 08.00 – 12.00 Criteria: 4.6 indicator 1, 6, 7, 8, 10 Criteria: 5.1, 5.2, 5.3, 5.4, 5.6 all indicators Criterion: 8.1 Document review and site visit: Criteria: 2.1 all indicators for OHS aspects Criterion: 4.6.11 Daniel Criteria: 4.7 all indicators 08.00 – 12.00 Criterion: 4.8 all indicators Criterion: 5.5 all indicators Criterion: 8.1 Document review and site visit Pras + Eko 08.00 – 12.00 Criteria: 1.1; 1.2; 1.3 all indicators

QEF08sa.RSPO.01 / Issue Date: 2009-Apr-15 © SAI Global Indonesia Copyright 2009 Page 155 of 175 Audit Report Times* Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts audited: # Shifts* From - To Criteria: 2.1.1 for social aspect Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator Criteria: 4.6.12 Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13 Criterion: 8.1

Interview with employees, labour union and committee gender

All Break 12.00 – 14.00

All Auditor Discussion 14.00 – 15.00

All Closing Meeting 15.00 – 16.00

All Traveling Peranap – Pekanbaru 16.00 – 22.00

26/11/2016 Day #5 – Saturday

Traveling Pekanbaru – Jakarta All (GA173, ETD 08.30 – ETA 10.20)

Appendix “B” – Previous Nonconformities and Opportunity for Improvement Summary

Reviewed RSPO Completion No Details Corrective Action PIC Status during 2nd Indicator Date ASA Initial Certification Audit Evidence of compliance with partial certification - RSPO Internal Audit report for un-certified units have been shown, 1 RSPO Estate 23/03/2014 Closed Closed requirements can be shown during audit the report indicated that the organisation has reviewed Certificatio and Mill Objective evidence: requirements of RSPO certification system section 4.2.4. e, f, g, n System No evidence that the organisation has evaluated and h. The internal audit report indicated that partial certification clause partial certification requirements for un certified unit. requirements have been met. 4.2.4 - Management has appointed SPO officer to ensure that all partial requirements to be covered during RSPO Internal Audit report, and to ensure that evidence of compliance with partial certification requirements are available and can be shown during audit. There was no documented evidence of compliance - Evaluation of compliance in regards to legal aspects regarding: 2 RSPO Estate 23/03/2014 Closed Closed with laws and regulations.  PP 81/2012 (Pengelolaan sampah rumah tangga dan Criterion and Mill Objective evidence: sejenisnya), 2.1. a. Compliance with several laws and regulations  Per.MenLH 21/2008 (Raw Mutu Emisi Sumber tidak bergerak), indicator have not been evaluated, e.g.  Per.Menkes 416/1990, major 1 - PP 81/2012 (Pengelolaan sampah rumah  PermenakerNo.25/2008 (Diagnosis PAK), tangga dan sejenisnya),  KepMenakerNo.609/2012 (Pedoman Penyelesaian kasus - Per.Men LH 21/2008 (Baku Mutu Emisi kecelakaan kerjadan PAK). Sumber tidak bergerak),  No. Per.Gub Riau. 35/2007 (Limbah cair) - Per.Menkes 416/1990, Permenaker was evident No.25/2008 (Diagnosis PAK), - Noise level measurement result was available and mutation letter - KepMenaker No.609/2012 (Pedoman of employee who were exposed by to the risk of occupational Penyelesaian kasus kecelakaan kerja dan disease based on Medical Check Up was also available. PAK). - Registration letter of PHL worker to national insurance program - Per.Gub Riau No. 35/2007 (Limbah cair) (Jamsostek) was available. b. Based on latest resume medical check-up of - KTU responsibilities have been added by the management audiometry test it was noted 16 mills employees including updating regulation and applicable laws in the Legal and 34 estate employees were not in normal Compliance Evaluation. Added responsibilities also cover ensuring condition (hearing losses) also based on immediate further action if there any abnormalities of workers spirometer it was noted 22 estate employees based on the results of the MCU. were had lungs restriction, however there was no further investigation (anamneses and diagnoses) from the medical doctor which is required by Permenaker No.2/1980 article 3 point 6.

Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 157 of 175 AUDIT REPORT Reviewed RSPO Completion No Details Corrective Action PIC Status during 2nd Indicator Date ASA c. Some workers have not been covered by national insurance program (Jamsostek) as required by Kepmenakertrans no.150/1999, e.g. some PHL workers (81 harvesters and 62 people in maintenance work) Maintenance has not been carried out entirely on the - HGU peg number has been completed and the concession 3 RSPO Estate 23/03/2014 Closed Closed BPN peg conforming to the BPN measurement; coordinate map was available so that the appointed personnel Criterion measurement certificate no. 01/INHU/2000, and (sustainability officer) can performed crosscheck between 2.2. Special Situations Map dated 01/08/1997 no. 12/1997, coordinate points in the map with HGU peg in the field. indicator a map with a scale of 1 : 40,000. - Records of HGU peg maintenance were available in the “Laporan major 2 Objective evidence: Pemeriksaan dan Perawatan Patok Batas” and program of HGU • Map of HGU pegs was not entirely equipped with peg monitoring was available in “Jadwal Pemeriksaan dan BPN numbering and coordinate and peg Perawatan Patok Batas” scheduled in June and December. conditions was poorly maintained. • Records / documents such as map of BPN pegs, list of BPN pegs with its coordinates and maintenance of pegs (legal boundaries) cannot be shown during audit. BOD of mill effluent was not complied with the Another circulation pump has been installed so that now there were 4 RSPO Mill 23/03/2014 Closed Closed environmental limit. two circulation pumps. Record of both circulation pump operation Criterion Objective evidence: (hour machine) was available. Result of analysis from environmental 4.4 According to Report of Analysis of mill effluent dated forensic laboratory of University of Riau dated December 23rd 2013 indicator December 5th 2013, BOD value was 9,673.5 mg/l, was available and the result is that BOD level was 3,185 mg/L minor 2 while the standard based on KepMenLH 28/2003, (normal). Pergubri 35/2007, SNI 06-6989.72-2009 and RKL dokumen was 5000 mg/l. There were no clear rules and/or mechanism to - Records related dissemination regarding the use of PPE and the 5 RSPO Estate 23/03/2014 Closed Closed ensure of transporter personnel (especially the palm importance of safety to the contractor were available. Criterion and Mill shell transporter PT. SDS/PT. SK) were concern - Mechanism regarding the use of PPE for contractors which enter 4.7 about OHS regulation as it was observed that several factory work area was established in “Mekanisme Pemakaian APD indicator transporter personnel did not use proper PPE while bagi kontraktor memasuki areal pabrik”. major 1 climbing the trucks which were above 2 metres high. Several high-risk routine activities were not covered in - Risk analysis in confined spaces and for work at height has been 6 RSPO Estate 23/03/2014 Closed Closed Risk Analysis in POM. established. Criterion and Mill Objective evidence: - Gas detector and full body harness have been provided. 4.7 Based on the observation during audit, it was sighted - Job safety analysis before doing work in confined spaces and indicator several personnel of transporter, especially working at heights has been established. Documented system that Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 158 of 175

AUDIT REPORT Reviewed RSPO Completion No Details Corrective Action PIC Status during 2nd Indicator Date ASA minor 3 transporter of palm shell (PT SDS/PT SK) was not required job safety analysis was done before working was stated wearing PPE (helmet and shoes) while loading the in the Job Safety Analysis format, it was also stated that Ahli K3 palm shell at the mill area. The transporter personnel (OHS personnel) responsible to ensure that job safety analysis also sighted was climbing the trucks (above 2 meters was done before working and the Manager has full responsibility high) to assist the loading activities. for all activities in regard technical, non-technical and safety aspects. Hazardous waste temporary storage exceeds the time - Program of hazardous waste transportation has been established 7 RSPO Mill 23/03/2014 Closed Closed limits specified in the permit storage in “Rencana dan Realisasi Pengangkutan Limbah B3”, for Peranap Criterion (4/BPMD&PPT/BP-LB3/XI/2013). Mill was scheduled in March, June, September and December. 5.3 Objective evidence: - Logbook of hazardous waste temporary storage was available in indicator Based on the existing manifest, hazardous waste “Lembar Kegiatan Penyimpanan Limbah B3” covers type of major 2 shipment was made on May 22nd, 2013 and hazardous waste, date of entry, source, quantity, date taken out, December 9th, 2013, the time interval exceeds the quantity taken out and destination, evidence that Environment maximum temporary storage limit (90 days) specified Staff of Regional Office Pekanbaru has monitored the logbook was in the license no. 4/BPMD & PPT/BP-LB3/XI/2013. available. The outside grower has not been recognized as - Outside FFB supplier has been added to the stakeholder list 8 RSPO Estate 23/03/2014 Closed Closed stakeholder for sustainability support. including address, contact person, phone number should be Criterion and Mill Objective evidence: mentioned in detail 6.2. The stakeholder list did not contain any local farmers - Responsibilities of Mill KTU has been added in regard of ensuring indicator as outside supplier. the addition of outside FFB Supplier to the stakeholders list if there major 1 was new FFB supplier. The company doesn’t have appropriate measures to - Procedure of specific HCV management was available and can be 9 RSPO Estate 23/03/2014 Closed Closed preserve existing HCV. shown. Criterion Objective evidence: - KTU responsibilities have been added by the management in 5.2. The Company doesn’t have SOP which is specific for regard ensuring the availability and updating of documented indicator the HCV management. procedures. major 2 Measures taken for protecting species and their - Monitoring Program of endangered habitat and species (key 10 RSPO Estate 23/03/2014 Closed Closed habitats included actions to control any illegal or species) based on HCV Assessment Report of PT. Rigunas Agri Criterion inappropriate hunting, fishing or collecting activities Utama-Peranap Mill has been added in the Conservation 5.2. have not been in accordance with relevant laws. Management Plan, including the method of line transect, indicator Objective evidence: personnel in charge and due date. major 3 1. The HCV Management Plan and its - In the Conservation Management Plan, it has been described that implementation did not cover conservation and Estate Manager and Assistant were responsible for monitoring of rare or threatened species and their implementation of CMP, including direct method which is habitats, which were HCV 1 key elements: conducting dissemination in regard of prohibition of hunting in Southeast Asian Box Turtle Coura amboinensis, production area and indirect dissemination through the use of Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 Page 159 of 175

AUDIT REPORT Reviewed RSPO Completion No Details Corrective Action PIC Status during 2nd Indicator Date ASA and Southeast Asian Soft shell Turtle Amyda signboard in regard of prohibition of wildlife hunting. cartilaginea. - Laws and Regulation have been added in the CMP as the basic of 2. Controls of illegal wildlife hunting, fishing, or illegal wildlife hunting control, e.g.: harvesting, have not been implemented in a IUCN Red list and CITES (international regulation for protected planned and consistent manner. Efforts were wildlife) limited to the establishing of UU No.5/1990 (Conservation of Natural Resources and information/warning/prohibition boards. Ecosystems) PP No.7/1999 (List of protected plants and animals) Kepres No.32/1990 (Management of protected areas).

1st ASA Organization has create the maintenance program for Providing hardcopy and filing work instructions mechanism and 1 RSPO Estate 22/11/2016 Closed Closed boundary stakes of HGU however SOP/mechanism method of determination of boundary markers and maintenance and 2013 for boundary demarcation and its maintenance was monitoring in each division 2.2.2 not available yet (minor) Evidence of report and retribution payment of ground • Reported the ground water usage for period 2014 – 2015 to Dinas 2 RSPO Estate 28/12/2015 Closed Closed water usage cannot be shown during audit Pendapatan Daerah (Dispenda) Indragiri Hulu District 2013 • Updating and filing the new regulation about retribution of water 4.4.1 utilization (minor) Permit of pesticides use has been expired Listing and filing the type of pesticide that used at Peranap Estate as 3 RSPO Estate 28/12/2015 Closed Closed well as completing and updating the authorization of pesticides. 2013 4.6.1 (Major) Records of LD50 for each pesticides use has not Consistently include LD50 values in LUK 4 RSPO Estate 02/03/2016 Closed Closed been provided by Organization 2013 4.6.2 (Major)

AUDIT REPORT Reviewed RSPO Completion No Details Corrective Action PIC Status during 2nd Indicator Date ASA Several workers at Peranap estate have not been The employee ID and family card has been the requirement for new 5 RSPO Estate 02/03/2016 Closed Closed covered by accident insurance employee recruitment and also been follow up by registration to the 2013 accident insurance. 4.7.6 (minor) There is no evidence that the monitoring activity of Make a standardized format for report writing and analysis Results 6 RSPO Estate 22/11/2016 Closed Closed biodiversity especially RTE species give the outcomes of identification and biodiversity monitoring and review it routinely 2013 and feed back into the conservation management plan 5.2.4 (minor) GHG calculation has not been reported to RSPO Reported to RSPO GHG calculation result regularly once a year 7 RSPO Estate Not complete Open Repeated, 2013 refer to Major NCR 5.6.3 2016-08 (minor) Document which describes mechanism to perform Socialization of the SOP No.: AA-SM-405.2-RO regarding E-Trace 8 RSPO SC Mill 01/03/2016 Closed Closed dispatch announcement through RSPO IT platform (E- system has been done. 2014 Trace) and how to keep relevant data update between E.3.1 Medan Marketing and Mill cannot be shown. (Major) Internal audit against RSPO supply chain standard Audit program and checklists have been made. Responsible 9 RSPO SC Mill 01/03/2016 Closed Closed has not been planned and conducted for Main /Own persons have been briefed that RSPO SC system requires internal 2014 Estate and Plasma. audit to ensure the effectiveness system. 5.3.7 (Major)

AUDIT REPORT Appendix “C” – Nonconformities and Opportunity for Improvement Summary

Section 1 Section 2 Section 3 Section 4

SAI Root Cause and Corrective SAI Global Verification of Details of non-conforming Verification Correction : Action : SAI Global Corrective Action for situation and Objective Evidence : (how and (immediate fix) (action to prevent recurrence) Response Review:

Effectiveness: NCR Nr. NCR

clause(s) when)

Classification Standard(s) & & Standard(s)

2016- RSPO Major Non-conformance situations : Due Date: 1) Carry out reporting of Root cause: Response : Verification of Effectiveness: 01 P&C 2013 the latest PUP There was not enough evidence of 25/01/2017 1) The evidence of latest Acceptable KTU of Peranap Estate has create (Perkembang-an 2.1.1 compliance with laws and PUP reporting to the monitoring of report/document Usaha Perkebunan) regulations. Agriculture Authority was Reviewer: delivery that will ensure handover PT Rigunas Agri evidence will be collected at SAI only available at the Ahmad Furqon & Utama to Local maximum 2 weeks. Follow up Regional Office Pekanbaru Daniel Sitompul Objective evidences : Method: Agriculture Authorities and not distributed yet to Safety Officer has create monitoring Evidence (DISBUN) Indragiri 1) PUP (Perkembangan Usaha the site office. checklist of the due date permits of submitted to Hulu Regency. Date: 04/02/ 2017 lifting equipment and other Perkebunan) report was not 2) Lack of effort to monitor 2) Communicated with machineries that will ensure permits sent yet periodically (bi- Audit Team the due time for Periodic Leader third party to conduct will not be passed its expiry date. annually) to local agriculture testing of lifting equipment periodic testing authorities (Disbun) since the Non Conformance consider as

last report in December 2013. It closed. was not comply with Permentan Corrective Action : Major NCR #2016-01 is closed. No.26/Permentan/OT.140/2/ 1) PIC of PUP report (KTU of 2007, Permentan No. Peranap Estate) must 98/Permentan/OT.140/9/2013 Name: Ahmad Furqon & Daniel collect evidence of PUP 2) Several lifting equipment in Sitompul report handover at Peranap Mill has not been maximum 2 weeks after retested by local authorities delivery to Pekanbaru. Date: 04/02/ 2017 and one backhoe loader has 2) Safety Officer provide not been approved by local monitoring checklist of the authorities. due date permits of lifting equipment and other machineries

AUDIT REPORT

Section 1 Section 2 Section 3 Section 4

Effectiveness: NCR Nr. NCR

clause(s) when)

Classification Standard(s) & & Standard(s)

2016- RSPO Minor Non-conforming situation: Due Date: Correction : Root cause: Response : Verification of Effectiveness: 02 P&C 2013 Acceptable 4.2.3 There was no evidence that periodic Next Audit Communicated with Group The Procedure of Soil Analysis Root cause analysis has been soil sampling was implemented. R&D Department-Bahilang was only available at Group defined by organisation as well as

Requirement: to send the Procedure of R&D Department-Bahilang Reviewer: correction and corrective action. It SAI Soil Analysis to Peranap and not available yet in will be verified next audit. RSPO Criterion 4.2 indicator 3 Estate, PT Rigunas Agri Peranap Estate. The soil Ahmad Furqon Follow up Method: Utama. analysis was carried out by the Objective evidence: R & D, it was done once in 6 Date: 04/02/ 2017 Name: Ahmad Furqon years.  SOP / mechanism for soil Onsite sampling to monitor changes in Date: 04/02/ 2017 nutrient was not available. Corrective Action :  There is no recording of "activities and results" related Sustainability Officer must soil sampling as basic fertilizer keep the Procedure of Soil recommendations both in 2013, Analysis in the form of soft and 2014, 2015. It was noted that hard copy at Peranap Estate the last soil sampling in 2012 PT Rigunas Agri Utama.

AUDIT REPORT

Section 1 Section 2 Section 3 Section 4

Effectiveness: NCR Nr. NCR

clause(s) when)

Classification Standard(s) & & Standard(s)

2016- RSPO Minor Non-conforming situation: Due Date: Correction : Root cause: Response : Verification of Effectiveness: 03 P&C 2013 Acceptable 4.6.9 There was no evidence that training Next Audit Conducted dissemination Training and dissemination Root cause analysis has been and dissemination of handling and training regarding program of pesticides handling defined by organisation as well as

pesticide to smallholders (KUD) was handling of pesticide to established by Sustainability Reviewer: correction and corrective action. It conducted. smallholder farmers. Officer was only covers will be verified next audit. SAI Ahmad Furqon Follow up nucleus estate employees. Further, the Smallholder Requirement: Method: Manager did not monitored Date: 04/02/ 2017 Name: Ahmad Furqon RSPO Criterion 4.6 indicator 9 this activity. Onsite

Objective evidence: Date: 03/04/ 2017 Corrective Action : Based on document review and interview with smallholders and Sustainability Officer company staff, there was no established training and evidence that KUD (smallholders) dissemination program has been trained on handling regarding pesticides handling pesticide including for smallholders (KUD) and its realization monitoring will be monitored by Smallholder Manager.

AUDIT REPORT

Section 1 Section 2 Section 3 Section 4

Effectiveness: NCR Nr. NCR

clause(s) when)

Classification Standard(s) & & Standard(s)

2016- RSPO Major Non-conforming situation: Due Date: Correction : Root cause: Response : Verification of Effectiveness: 04 P&C 2013 Operations where health and safety 25/01/2017 Safety Officer create The program of CPO Tank Acceptable Dissemination regarding the 4.7.2 is an issue were not assessed, and Safety working permit for Washing was not reported to importance of applying Safety

actions were not implemented to CPO Storage Tank Safety Officer. Reviewer: Working Permit when conducting address the identified issues SAI washing. high risk activities has been Daniel Sitompul Follow up conducted in the end of November 2016. The list of attendance was Objective evidence: Method: Corrective Action : Evidence Date: 06/01/2017 evident. Safety working permit process for submitted to • Mill Assistant in CPO Tank Washing on June 2016 coordination with Safety All submitted evidence have been has not been implemented Audit Team Officer established verified and effectively can be implemented. Non Conformance Leader Program of CPO Tank Washing, so that the consider as closed.

activity of Tank Washing will be equipped with safety working permit. Major NCR #2016-04 is closed • Safety Officer conducted

dissemination to workers working with high risk Name: Daniel Sitompul (confined space, height etc.) regarding the importance of safety Date: 04/04/2017 working permit process.

AUDIT REPORT

Section 1 Section 2 Section 3 Section 4

Effectiveness: NCR Nr. NCR

clause(s) when)

Classification Standard(s) & & Standard(s)

2016- RSPO Major Non-conforming situation: Due Date: Correction : Root cause: Response : Verification of Effectiveness: 05 P&C 2013 Adequate and appropriate protective 25/01/2017  Provide the personal Lack of awareness from Acceptable Dissemination regarding the 4.7.3 equipment were not available to all workers for health safety importance of using PPE (carbon protective equipment that workers and equipment at the place is carbon activated mask matters related to personal Reviewer: activated mask) and using protective of work to cover all potentially protective equipment and working equipment (egrek cover) SAI to the related workers. Daniel Sitompul hazardous situations. Follow up working tools protection and have been performed in the end of  Provide working tolls Method: lack of monitoring from Esate November 2016. The list of Evidence protection that is egrek Manager. Date: 06/01/2017 attendance was evident. Objective evidence: (harvesting knives) cover submitted to All submitted evidence have been  Pesticides operators at to related workers. verified and effectively can be Peranap Estate were not Audit Team Corrective Action : implemented. Non Conformance equipped by safety glasses. Leader  Conduct dissemination to consider as closed.  It was found the harvesting workers regarding to the knife (egrek) was kept without Major NCR #2016-05 is closed importance of using PPE its cover in the emplacement  Conduct dissemination to (house) of Afdeling 3. workers regarding the Name: Daniel Sitompul

importance of protection for working tools such as egrek (harvesting knives) Date: 04/04/2017  Estate Manager conduct monitoring to the pesticide application at minimum one Division in a day.  Estate Manager conduct monitoring to the employee housing facility at minimum once a week.

AUDIT REPORT

Section 1 Section 2 Section 3 Section 4

Effectiveness: NCR Nr. NCR

clause(s) when)

Classification Standard(s) & & Standard(s)

2016- RSPO Major Non-conformance situations : Due Date: Correction : Root cause: Response : Verification of Effectiveness: 06 P&C 2013 Monitoring of HCV area has not 25/01/2017 Carry out monitoring of There was no PIC for HCV Acceptable Monitoring schedule of Sialang tree 5.2.2 been fully conducted in 2015 – 2016 HCV 6 and The existence monitoring and management. as HCV 6 has been established

period. of Sialang (Koompasia Reviewer: incorporated into the presence of sp.) tree in Peranap Corrective Action : Flora and Fauna Monitoring. SAI Ahmad Furqon Follow up Estate and documented it.  Estate Manager Assign the All submitted evidence have been Objective evidences : Method: PIC for HCV management verified and effectively can be Evidence and monitoring. Date: 04/02/2017 implemented. Non Conformance There was no monitoring for Sialang submitted to tree (Koompasia sp.) as HCV 6.  Arrange the HCV consider as closed. Audit Team management and Major NCR #2016-06 is closed Leader monitoring each 6 months and also reported to site.

 The existence of Sialang Name: Ahmad Furqon trees in the Peranap Estate and monitoring of HCV 6 was incorporated into the Date: 04/04/2017 presence of Flora and Fauna Monitoring.

AUDIT REPORT

Section 1 Section 2 Section 3 Section 4

Effectiveness: NCR Nr. NCR

clause(s) when)

Classification Standard(s) & & Standard(s)

2016- RSPO Minor Non-conformance situations : Due Date: Correction : Root cause: Response : Verification of Effectiveness: 07 P&C 2013 The organization has not had the Next Audit Conducted cooperation There was no PIC for HCV Acceptable Root cause analysis has been 5.2.5 negotiated agreement between and established document monitoring and management. defined by organisation as well as

organization and local community to of agreements with local Reviewer: correction and corrective action. It safeguards both the HCV 6 (Sialang communities regarding will be verified next audit. SAI Ahmad Furqon tree) and these rights. Follow up protection of HCV area. Corrective Action :

Method:  Estate Manager Assign the Date: 04/02/2017 Name: Ahmad Furqon Objective evidences : PIC for HCV management Onsite and monitoring including to  There was no evidence conduct cooperation with negotiated agreement between local communities Date: 04/04/2017 organization and local community regarding protection of HCV to safeguards both the HCV area. (Sialang tree) and these rights.  Estate Manager as the representative of the company responsible for performing communication with local communities regarding protection of HCV area

AUDIT REPORT

Section 1 Section 2 Section 3 Section 4

Effectiveness: NCR Nr. NCR

clause(s) when)

Classification Standard(s) & & Standard(s)

2016- RSPO Major Non-conformance situations : Due Date: Correction : Root cause: Response : Verification of Effectiveness: 08 P&C 2013 (NCR The organization has not conducted 25/01/2017 Communicate with The calculation of GHG Acceptable Schedule to conduct calculation of 5.6.3 Reoccur) GHG emission monitoring in 2015 Pekanbaru Office and emission and its reporting to GHG emission and reported it to

Jakarta Office to conduct RSPO was conducted by Reviewer: RSPO periodically has been calculation of GHG Head Office Jakarta, however established. SAI Ahmad Furqon Objective evidences : Follow up emission and reported it to the result of GHG calculation RSPO. was not distributed to Peranap All submitted evidence have been Method: verified and effectively can be There was no available the GHG Evidence site Date: 04/02/2017 emission calculating and reporting to implemented. Non Conformance submitted to consider as closed. RSPO Audit Team Corrective Action : Major NCR #2016-08 is closed Leader Mr. Welly Joel Candra as representative of Jakarta Head Office responsible for Name: Ahmad Furqon distributing GHG Calculation result to the site office on the same day reporting to the Date: 04/04/2017 RSPO.

2016- RSPO Minor Non-conformance situations : Due Date: Correction : Root cause: Response : Verification of Effectiveness: 09 P&C 2013 Acceptable 6.1.4 Prove of stakeholder participation in Next Audit Distributed questionnaire Social Impact Assessment Root cause analysis has been social impact management and to stakeholder for was refer to AMDAL (DPLH, defined by organisation as well as

monitoring can’t be shown participation related social issued in 2011). Prove of Reviewer: correction and corrective action. It SAI impact management and stakeholders participation was will be verified next audit. monitoring not available in AMDAL Ahmad Furqon Objective evidence : Follow up Method: Document. Based on document review, social Date: 04/02/2017 Name: Ahmad Furqon impact management and monitoring Year 2015 Onsite Corrective Action : Performed monitoring of social Date: 04/04/2017 impact management and monitoring related to stakeholder participation twice a year, and reported it in report of environment management and moniroting implementation.

AUDIT REPORT

Section 1 Section 2 Section 3 Section 4

Effectiveness: NCR Nr. NCR

clause(s) when)

Classification Standard(s) & & Standard(s)

2016- RSPO Major Non-conformance situations : Due Date: Correction : Root cause: Response : Verification of Effectiveness: 10 P&C 2013 Acceptable 6.5.2 Contract for 3 peoples who work as 25/01/2017 Conduct dissemination to Lack of knowledge from Memorandum issued by Senior “Kutip Brondolan” (loose fruit picker) all harvesters in order not Division Assistant regarding Manager regarding prohibition of

can’t be shown. to bring his family or legal requirement of Reviewer: harvester to bring his family or others to assist employees. Previously others to assist harvesting was SAI Ahmad Furqon Follow up harvesting. harvester are advised by available. Objective evidence : Division Assisstant to bring Method: All submitted evidence have been Based on field observation in Block Evidence wife to help collecting loose Date: 04/02/2017 A93d Division 1 Peranap Estate, it fruit. verified and effectively can be submitted to implemented. Non Conformance was found 3 wife of workers named Mrs. Isoh, Mrs. Warsini and Mrs. Audit Team consider as closed. Tuminsih working as loose fruit Leader Corrective Action : Major NCR #2016-10 is closed pickers. Estate Manager issued Memorandum to all staff and harvesters in order not to bring Name: Ahmad Furqon his family or others to assist harvesting. As the most responsible person in the Date: 04/04/2017 area, Estate Manager conduct monitoring to the harvesting area every day, at minimum one Division a day, to ensure that no harvester bring their wife or other unemployed person.

AUDIT REPORT

Section 1 Section 2 Section 3 Section 4

Effectiveness: NCR Nr. NCR

clause(s) when)

Classification Standard(s) & & Standard(s)

2016- RSPO Minor Non-conformance situations : Due Date: Correction : Root cause: Response : Verification of Effectiveness: 11 P&C 2013 Acceptable 6.5.3 It was found one of workers house is Next Audit Conducted repair to the Supervisor has not yet Root cause analysis has been in inadequate condition. employees house which recorded consistently defined by organisation as well as

have been broken. employee complaint regarding Reviewer: correction and corrective action. It SAI the housing facilities in will be verified next audit. Objective evidence : Employee Complaint Logbook. Ahmad Furqon Follow up Based on field observation in Method: Division 3 Peranap Estate, it was Date: 04/02/2017 Name: Ahmad Furqon found one of worker house is in Corrective Action : inadequate condition, such as the Onsite ceiling is leaking in the living room Supervisor immediately take and the back door is in damaged notes on employee complaints Date: 04/02/2017 condition. logbook if any employee reporting. The action in response to the complaint the employee at least 14 days.

AUDIT REPORT Appendix “D” – Stakeholder’s issues and comment

Date Stakeholder Feedback and or request PT RAU response and action to be taken 1. The Company has fulfilled its obligations such as reporting RKL BLH Kab. RPL and environmental licensing Indragiri Hulu 2. Peranap Mill have earned the status of “PROPER BIRU” (Environment 22.11.2016 3. During this time there was never a complaint from public and local No need response. Agency of communities Indragiri Hulu 4. Company has managed their environmental aspect Regency) 5. Communication and coordination in good condition 1. The company has been doing regularly such as reporting Dinas Tenaga obligations P2K3, Employment Report, etc. Kerja Kab. 2. Companies routinely communicate and coordinate with the Indragiri Hulu Department of Labour Kab. Indragiri Hulu 22.11.2016 (Labour 3. UMSP 2016 is Rp. 2.325.000 No need response. Agency of 4. All related licensing K3 have been met Indragiri Hulu 5. Dismissal of employees but appropriate procedures have been Regency) established 6. No accident related to work happen at PT RAU

Dinas 1. Reporting plantation business conducted per year Perkebunan 2. Currently, PT RAU have Class II status by PUP in 2011. According Kab. Indragiri to the plan in December 2016 will be made reassessment Hulu 22.11.2016 3. During this time there was never a complaint or complaints from No need response. (Plantation the public or local communities Agency of 4. Smallholders are within HGU permits Indragiri Hulu 5. KUD plasma has been registered Regency) 1. The medical examination of the employees BPJS do in Kerinci 1. This medical examination matter has been agreed by all district. Pelalawan. It is quite difficult for employees to travel employees and labour union. Health infrastructure in around Peranap - Kerinci because it’s far enough. plantation is limited. The objection regarding medical in Kerinci 2. There is a community land in the village Talang 7 Buah Tangga was only from a small amount of employees and not representing Stakeholder area of 800 hectares which fall within the concession area of PT all employees. This matter has been performed since before RAU. Current conditions, the land are still productive land. national health insurance facility (BPJS Kesehatan). 23.11.2016 (Head of Village, Public However, the owner can not have a certificate of land being in the 2. Government Regulation PP #24/1997 article 32 paragraph 2 figure, etc.) HGU PT RAU stated “In terms of the plot of land has been legally issued 3. Empowerment security forces in the district. Peranap not optimal certificates in the name of a person or legal entity who obtained 4. The relationship between companies and communities around the land in good faith and real control, then other party that pretty good believe had a right to the land cannot demanding of such rights if 5. Never happens land disputes within five years from the issuance of the certificate is not filed a

AUDIT REPORT Date Stakeholder Feedback and or request PT RAU response and action to be taken 6. The company helps the development of smallholdings written objection to the certificate holder and the head of the land 7. Until now, this has never happened to environmental pollution agency (BPN) or not filed a lawsuit to the court regarding the land 8. The Company routinely provide assistance CSR certificate issuance”. So it’s clear that other party cannot issued 9. Uptake of local labour is still lacking, but this is understandable new certificate because the same object has its previous because the company has set the requirements to become a certificate. HGU of PT. RAU was issued by government through labour land agency and cannot be diverted to another party until it’s 10. The security situation in the district Peranap conducive and expired in 2035. Change of HGU could be involving multiple minimal crime parties and would change all permit documents including AMDAL, 11. The company has cooperated with the security forces in and that will take a long time. Although this matter was not preventing fires covered during SIA (include in AMDAL), however the company had put it into social management plan in CSR program to support community peoples in term of infrastructure development, provision of education and sanitation facilities, heavy equipment support (grader), local economic support (cattle breeding and fisheries), etc. “Humas” (Public relation officer) has performed public consultation with communities regarding this. 3. Protection by police officers has been done approximately for 6 years. The warrant for monthly duty from the police (police district Peranap) was available. Auditor conclude that the reason is acceptable.

1. Member of SPSI are 406 peoples No need response. 2. Monthly member contribution is Rp. 10.000 3. Workers can tell their complaint directly to their superior 4. Bipartite meeting has been held to discuss about workers transfer 23.11.2016 Worker union 5. PKB using now is PKB Period 2015-2017 6. Salary comply to national law (decent living wages) 7. All workers get BPJS Ketenagakerjaan (Work Insurance)

1. Committee gender activities such as socialization of sexual No need response. harassment, health for children and mother (Posyandu), religion events and PKK 2. Until now, there is no case or complaints from women workers 23.11.2016 Committee Gender concerning sexual harassment 3. Women workers who still nursing their children or in pregnant condition, not allowed to work as sprayer and fertilizer team or high risk job 1. PPE provided by company No need response. 23.11.2016 Workers

AUDIT REPORT Date Stakeholder Feedback and or request PT RAU response and action to be taken 2. Salary comply to national law (decent living wages) 3. Beside salary, SKU worker get Rice Ration every month. 4. All workers have been registered to BPJS Ketenagakerjaan (Work Insurance) 5. No sexual harassment case in PT RAU 6. Sprayer worker get extra fooding 7. Workers tell their complaints directly to their supervisor 8. PPE will be change if the old ones is damaged 9. Women workers who in pregnant or breast-feeding condition are prohibited work as sprayer or fertilizer 10. Worker’s house will be repaired upon request to Supervisor. If the material is ready in the storage then it will repaired as soon as possible 11. Zero burning 12. Riparian buffer zone is prohibited for chemical treatment 13. Hunting protected wildlife is prohibited

Appendix “E” – Definition of, and action required with respect to audit findings:

Major Nonconformities occur when system is failing to meet a relevant compulsory indicator.

Action required: This category of findings requires SAI Global to issue a formal NCR; to receive and approve client’s proposed correction and corrective action plans; and formally verify the effective implementation of planned corrections and corrective action. Correction and corrective action plan must be submitted to SAI Global for approval within 14 days of the audit. Follow-up action by SAI Global must ‘close out’ the NCR or reduce it to a lesser category within 90 days or less where specified. Certificate of conformance to the RSPO Criteria cannot be issued while any major nonconformity is outstanding. Major nonconformities raised during surveillance audit shall be addressed within 60 days, or the certificate will be suspended. Major nonconformities not addressed within a further 60 days will result in the certificate being withdrawn.

Minor Nonconformities occur when system is failing to meet other indicators.

Action required: This category of findings requires SAI Global to issue a formal NCR; to receive and approve client’s proposed correction and corrective action plans; and formally verify the effective implementation of planned corrections and corrective action. In this instance, a certificate may still be awarded providing the root cause of the problem is identified and an acceptable plan is put in place to achieve the outstanding requirements in an agreed time frame. Verification will be made at subsequent surveillance audits. Minor nonconformities will be raised to major if they are not addressed by the following surveillance audit.

Opportunity for Improvement is a documented statement, which may identify areas for improvement, but shall not make specific recommendation(s). Client may develop and implement solutions in order to add value to operations and management systems. SAI Global is not required to follow-up on this category of audit finding.