RSPO Audit Report

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

Doc ID: 3843 / Issue Date May 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 of 191

Audit Report

1st Surveillance Visit for PT. PP London Sumatera Indonesia Tbk, Begerpang Mill and Its Supply Bases FMS40033 RSPO Membership number: 1-0015-04-000-00 Including child numbers for each certification unit

Audited Address: Begerpang Mill:

Batu Lokong Village, Galang District, Deli Serdang Regency, North Sumatera Indonesia

Its supply bases:

Begerpang Estate:

Batu Galang Village, Galang District, Deli Serdang Regency, North Sumatera Indonesia Sei Merah Estate:

Tanjung Morawa, Deli Serdang Regency, North Sumatera Indonesia

Rambong Sialang Estate:

Sei Rampah District, Serdang Bedagai Regency, North Sumatera Indonesia

Date of audit: 26 - 28/07/2016

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WORK ITEM: WI-869496 Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 of 191

Table of contents Page Executive Overview 4 Abbreviations Used 5 1.0 SCOPE OF THE ASSESSMENT 1.1 Introduction 6 1.2 Audit Objective 6 1.3 Scope of Certification 7 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 15 1.6 Date of Plantings 15 1.7 Area of Plantation 16 1.8 Approximate Tonnages Offered for Certification (CPO and PK) 18 1.9 Other Certificates Held 20 1.10 Organisational Information/Contact Person 20 1.11 Time Bound Plan for Other Management Units 20 1.12 Partial Certification Requirements 21 1.13 Date of Issue of Certificate dan Date of Previous Assessment 22 2.0 AUDIT PROCESS 2.1 Certification Body 23 2.2 Audit Methodology 23 2.3 Qualification of the Lead Auditor and Audit Team Members 24 2.4 Stakeholder Consultation 25 2.5 Date of Next Surveillance Visit 26 3.0 AUDIT FINDINGS 3.1 Action taken on previous audit issues 27 3.2 Claim and use of certification mark and or logo 27 3.3 Description of audit findings 30 3.3.1 RSPO Principle and Criteria, Indonesian National Interpretation 30 3.3.2 Mill Supply Chain Requirements 143 3.3.2.1 Supply Chain Certification Standard 143 3.3.2.2 Supply Chain Certification System 151 3.4 Recommendation 153 3.5 Environmental and social risk for this scope of certification for planning

of the surveillance audit 153

3.6

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

153

List of Tables

Page

1 Mill and Estates GPS Locations 7 2 FFB Production of the supply base 16 3 Estate Age Profiles of Planted Palms 2016 16 4 Land use description in 2016 17 5 Estates and Area Planted 2016 18 6 FFB Production Trend 2011 – 2015 18 7 Actual Production Figure 2015/2016 18 8 Actual Begerpang Mill Production of CPO and PK derived from

Begerpang, Sei Merah and Rambong Sialang Estate in July 2015 to June 2016

19

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9 Estimated Begerpang Mill Production of CPO and PK derived from Begerpang, Sei Merah and Rambong Sialang Estate FFB in July 2016 to June 2017

19

10 Certificates Held by Mill and Estates 20 11 RSPO Certification Time Bound Plan 21 12 List of internal and external stakeholder 25 131a-c Certified products sales 27 List of Figures

Page

1a Map of Mill and Estates Location 8 1b-1 Map of Bagerpang Estate 9 1b-2 Map of Bagerpang Estate 10 1b-3 Map of Bagerpang Estate 11 1c Map of Sei Merah Estate 12 1d-1 Map of Rambong Sialang Estates 13 1d-2 Map of Rambong Sialang Estates 14 1d-3 Map of Rambong Sialang Estates 15 List of Appendices

Page

A Audit Record 154 B Previous nonconformities, corrective actions and status 157 C Nonconformities, Corrective Actions and Observations Summary 172 D Stakeholder’s issues and comment 178 E Definition of, and action required with respect to audit findings 186

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Executive Overview SAI Global has audited Begerpang Mill PT. PP London Sumatera Indonesia Tbk. and its supply bases operations comprising one mill, three oil palm estates, support services and infrastructure. Six (6) Major and two (2) Minor Nonconformities (NCRs) were identified during this surveillance audit against the requirements of the of Generic RSPO Principles and Criteria for Sustainable Palm Oil Production, version May 2013 and the RSPO Supply Chain Certification System, November 2014 and RSPO Supply Chain Certification Standard, Module D – CPO Mill: Module D Identity Preserved November 2014. Follow up audit has been conducted to review the corrective action taken to the Major Nonconformities, objective evidences reviewed that all major Non Conformities could be closed out.

At the conclusion of this audit, Begerpang Mill of PT. PP London Sumatera Indonesia Tbk. and its supply bases operation was found complies with the requirements of the Generic RSPO Principles and Criteria for Sustainable Palm Oil Production, version May 2013 and the RSPO Supply Chain Certification Standard, Module D – CPO Mill: Indentity Preserved, version November 2014.

The recommendation from this audit is that PT. PP London Sumatera Indonesia Tbk. Begerpang Mill can continue as a producer of RSPO Certified Sustainable Palm Oil and Palm Kernel Model Identity Preserved.

Estimated tonnage of certified CPO produced 55,971.57 MT

Estimated tonnage of certified PK produced 14,444.26 MT

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Abbreviations Used AK3U Safety Office (Ahli Kesehatan dan Keselamatan Kerja Umum) BOD Biological Oxygen Demand BPN National Land Agency (Badan Pertanahan Nasional) COD Chemical Oxygen Demand CPO Crude Palm Oil CSR Corporate Social Responsibility EFB Empty fruit bunches FFB Fresh Fruit Bunch EHS Environmental Health and Safety GPS Global Positioning System HCV High Conservation Value HGU Land Use Title (Hak Guna Usaha) GHG Green House Gases IPM Integrated Pest Management ISCC International Sustainability and Carbon Certification ISO International Organisation for Standardisation ISPO Indonesia on Sustainable Palm Oil IUP Plantation Permit (Izin Usaha Perkebunan) Jamsostek Assurance (Jaminan Sosial Tenaga Kerja) KER Kernel Extraction Rate LB3 Hazardous Waste (Limbah Bahan Berbahaya dan Beracun) LD50 Lethal Dosage LOTO Lock Out Tag Out MCU Medical Check Up MT Metric Ton NCR Non-Conformance Report NGO Non Government Organisation OER Oil Extraction Rate OHS Occupational Health and Safety P2K3 Safety Committee PEL Environmental Evaluation Manual (Pedoman Evaluasi Lingkungan) PLN National Electricity Company POM Palm Oil Mill POME Palm Oil Mill Effluent PP Government Regulation (Peraturan Pemerintah) PPE Personal Protective Equipment 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 RTE Rare Threated Endangered SA Social Accountability SCCS Supply Chain Certification System SIA Social Impact Assessment SMK3 Occupational Health and Safety Management System (Sistem Manajemen

Kesehatan dan Keselamatan Kerja SPSI Indonesian Worker Union (Serikat Pekerja Seluruh Indonesia) WWTP Waste Water Treatment Plant

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1.0 SCOPE OF THE ASSESSMENT 1.1 Introduction SAI Global conducted an surveilance audit PT. PP London Sumatera Indonesia Tbk. Begerpang Mill and Its Supply Base on 26/07/2016 to 28/07/2016 with Major and Minor Nonconformities identified. Follow up audit has been conducted on 22, 23 and 27 September 2016 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 which also reflected 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 first annual surveillance audit. The purpose of this audit was to determine continuing compliance of your organization’s management system with the audit criteria (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 D – CPO Mill: Module D Identity Preserved 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.

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1.3 Scope of certification 1.3.1 Palm Oil Mill Begerpang Mill PT. PP London Sumatera Indonesia Tbk.

Location: Batu Lokong Village, Galang District, Deli Serdang Regency, North Sumatera Indonesia

GPS Location: East 98o49’27.64” North 3o27’33.16” Mill capacity: 50 MT FFB/hour 1.3.2 Oil Palm Estate Begerpang Estate PT. PP London Sumatera Indonesia Tbk.

Location: Galang District, Deli Serdang Regency, North Sumatera Indonesia GPS Location: East 98o49’12.00” North 3o26’40.41” Sei Merah Estate PT. PP London Sumatera Indonesia Tbk.

Location: Tanjung Morawa, Deli Serdang Regency, North Sumatera Indonesia GPS Location: East 98o49’26.14” North 3o30’32.57” Rambong Sialang Estate PT. PP London Sumatera Indonesia Tbk.

Location: Sei Rampah District, Serdang Bedagai Regency, North Sumatera Indonesia GPS Location: East 99o0’33.51” North 3o26’18.62” 1.4 Location of mill and estates PT. PP London Sumatera Indonesia Tbk. mill and estates are located in North Sumatera 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 NORTHING

Begerpang Mill 98o49’27.64” 3o27’33.16”

Begerpang Estate 98o49’12.00” 3o26’40.41”

Sei Merah Estate 98o49’26.14” 3o30’32.57”

Rambong Sialang Estate 99o0’33.51” 3o26’18.62”

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Figure 1a. Map of Mill and Estates Location

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Figure 1b-1 Map of Bagerpang Estate

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Figure 1c Map of Sei Merah Estate

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Figure 1d-1 Map of Rambong Sialang Estate

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1.5 Description of supply base The FFB source is three (3) organisation owned by PT. PP London Sumatera Indonesia Tbk. and no FFB from the third party. The hectarage and FFB production of the plantation is shown on Table 2.

Table 2: FFB Production of the supply base

ESTATE PLANTED AREA (HA) FFB (TON/YEAR) (BUDGET 2016)

Begerpang Estate 5,251.11 99,018.78

Sei Merah Estate 1,690.77 36,287.44

Rambong Sialang Estate 4,866.33 106,556.81

Total 11,808.21 241,863.03

Source: Lonsum, July 2016

1.6 Date of plantings

Table 3: Estate Age Profiles of Planted Palms 2016

Year Begerpang Estate

Sei Merah Estate

Rambung Sialang

Total % of Planted Area

1985 123.76 123.76 1.05

1986 37.51 37.51 0.32

1987 63.74 63.74 0.54

1988 12.03 200.79 18.43 231.25 1.96

1989 8.68 56.60 65.28 0.55

1990 447.86 447.86 3.79

1992 156.33 125.43 61.24 343.00 2.90

1993 215.40 65.40 268.46 549.26 4.65

1994 263.02 90.93 103.20 457.15 3.87

1995 97.86 70.77 261.24 429.87 3.64

1996 220.17 60.87 43.75 324.79 2.75

1998 417.42 187.35 432.54 1,037.31 8.78

1999 426.90 150.13 171.80 748.83 6.34

2000 215.22 79.65 605.68 900.55 7.63

2001 40.58 114.77 195.61 350.96 2.97

2002 420.24 167.77 81.00 669.01 5.67

2003 306.61 237.49 544.10 4.61

2004 101.31 33.36 101.48 236.15 2.00

2005*) 188.51 120.90 275.36 584.77 4.95

2006*) 173.09 173.09 1.47

2007*) 1,267.64 1,267.64 10.74

2008*) 406.29 215.07 621.36 5.26

2009*) 235.55 112.50 348.05 2.95

2010*) 189.96 20.59 210.55 1.78

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Year Begerpang Estate

Sei Merah Estate

Rambung Sialang

Total % of Planted Area

2011*) 255.42 77.15 332.57 2.82

2012*) 116.02 40.56 156.58 1.33

2013*) 283.93 283.93 2.40

Total Mature 5,212.81 1,582.82 4,743.29 11,538.92 97.72

2014*) 38.30 45.42 123.04 206.76 1.75

2015*) 62.53 62.53 0.53

Total Immature

38.30 107.95 123.04 269.29 2.28

Grand Total 5,251.11 1,690.77 4,866.33 11,808.21 100.00 Source: Lonsum, July 2016 Note: *) replanting 1.7 Area of plantation The areas details for organisation owned estates are shown on Table 5. Review of estate boundary maps could be done. The organisation objections to send estate boundary maps due law of Republic of Indonesia #4/2001 mentioned that boundary maps was only organised by the organisation for their own interest and cannot disseminated.

Table 4: Land use description in 2016

AREA

HECTARES

BAGERPANG ESTATE

SEI MERAH ESTATE

RAMBONG SIALANG ESTATE

TOTAL

Mature area 5,212.81 1,582.82 4,743.29 11.538,92

Immature area 38.30 107,95 123.04 269,29

Total area planted 5,251.11 1,690.77 4,866.33 11,808.21

Emplacement, Mill and infrastructure

355.74 141.07 347.04 843.85

Nursery 8.00 - 6.00 14.00

Other area (enclave, water ponds, land with slope >30%, HCV area)

109.37 22.62 55.64 187.63

Total non Planted 473.11 163.69 408.68 1,045.48

Total leased area 5,724.22 1,854.46 5,275.01 12,853.69

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Table 5: Estates and Area Planted 2016

ESTATE MATURE (HA) IMMATURE (HA)

Begerpang Estate 5,212.81 38.30

Sei Merah Estate 1,582.82 107.95

Rambong Sialang Estate 4,743.29 123.04

TOTAL 11,538.92 269.29


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 of Begerpang, Sei Merah and Rambong Sialang Estate as well as last year CPO and PK, OER and KER of Begerpang Mill. The OER and KER of each supply bases were estimated based on laboratory analysis. The projection of FFB production in 2016 taken into account increase productivity of oil palm planted in year 2000 – 2011, which estimated around 6 – 7%.

Table 6: FFB Production Trend 2011 – 2015

YEAR Actual Production (MT)

Begerpang Estate

Sei Merah Estate

Rambong Sialang Estate

Total

2011 103,644.77 38,384.66 123,730.73 265,760.16

2012 104.376,00 42,030.19 122,282.91 268,690.06

2013 95,307.58 37,273.15 117,650.09 250,230.82

2014 98,040.02 34,636.11 113,986.80 246,662.93

2015 99,018,78 36,287.44 106,556.81 241,863.03 Source: Lonsum, July 2016

Table 7: Actual Production Figure 2015/2016

Supply Base FFB Processed CPO

Production (MT)

OER (%) PK

Production (MT)

KER

(MT) (%)

Actual production August 2015 – July 2016

Begerpang Estate 94.486,81 56.703,42

24,63 %

15.051,91

6,54%

Sei Merah Estate 34.957,29

Rambong Sialang Estate 100.836,23

Total 230.280,33 56.703,42 24,63% 15.051,91 6,54%

Estimate production August 2016 – July 2017

Begerpang Estate 99.476,82 55,971.57 24,80% 14,444.26 6,40%

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Sei Merah Estate 32.537,88

Rambong Sialang Estate 93.677,05

Total 225.691,75 55,971.57 24,80% 14,444.26 6,40%


*Detail see Table 8

** Based on laboratory analysis The FFB from Begerpang, Sei Merah and Rambong Sialang Estate are processed without FFB from other supply based, therefore Begerpang Mill used RSPO Supply Chain Segregation Model – Module D.

Table 8: Actual Begerpang Mill Production of CPO and PK derived from

Begerpang, Sei Merah and Rambong Sialang Estate in August 2015 to July 2016

Year Month FFB

CPO PK BGE SME RSE Total

2015

AUG 9.951,21 3.570,11 12.050,78 25.572,10 6.242,330 1.682,999

SEP 9.586,96 3.406,79 11.298,75 24.292,50 6.018,625 1.646,155

OCT 11.842,04 4.012,05 12.310,18 28.164,27 7.106,725 1.862,279

NOV 8.669,61 3.153,78 8.319,46 20.142,85 5.013,694 1.331,396

DEC 8.784,79 3.228,92 7.637,82 19.651,53 4.841,104 1.382,173

2016

JAN 5.955,31 2.607,04 5.683,55 14.245,90 3.530,944 929,879

FEB 5.484,69 2.246,66 4.874,94 12.606,29 3.111,512 847,348

MAR 5.922,66 2.331,02 5.897,85 14.151,53 3.484,182 917,589

APR 5.698,58 2.035,90 5.732,64 13.467,12 3.344,569 850,013

MAY 6.338,94 2.375,43 6.906,01 15.620,38 3.827,821 981,452

JUN 8.370,20 3.066,25 10.228,33 21.664,78 5.144,387 1.338,435

JUL 7.881,82 2.923,34 9.895,92 20.701,08 5.037,528 1.282,189

TOTAL 94.486,81 34.957,29 100.836,23 230.280,33 56.703,421 15.051,907


Table 9: Estimated Begerpang Mill Production of CPO and PK derived from Begerpang, Sei Merah and Rambong Sialang Estate FFB in August 2016 to July 2017

Year Month FFB

CPO PK BGE SME RSE Total

2016

AUG 10.587,44 2.535,75 9.858,10 22.981,28 5.699,36 1.470,80

SEP 12.217,77 3.197,25 11.076,58 26.491,60 6.569,92 1.695,46

OCT 8.898,86 2.767,59 9.154,45 20.820,90 5.163,58 1.332,54

NOV 8.517,24 2.864,86 7.709,01 19.091,11 4.734,60 1.221,83

DEC 9.557,17 3.373,56 7.736,11 20.666,84 5.125,38 1.322,68

2017

JAN 5.841,44 2.517,42 4.658,50 13.017,37 3.228,31 833,11

FEB 5.477,05 2.130,00 4.751,67 12.358,73 3.064,96 790,96

MAR 6.487,39 2.622,78 6.242,39 15.352,56 3.807,44 982,56

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APR 7.323,60 2.370,48 6.670,98 16.365,05 4.058,53 1.047,36

MAY 7.104,06 2.422,84 6.549,86 16.076,76 3.987,04 1.028,91

JUN 8.493,76 3.109,00 8.757,99 20.360,75 5.049,47 1.303,09

JUL 8.971,04 2.626,35 10.511,41 22.108,80 5.482,98 1.414,96

TOTAL 99.476,82 32.537,88 93.677,05 225.691,75 55,971.57 14,444.26

Source: Lonsum, July 2016 Based on the above figures, the estimated of certified CPO and PK offered in 2016 for certification are:

Estimated tonnage of certified CPO produced 55,971.57 MT

Estimated tonnage of certified PK produced 14,444.26 MT

1.9 Other certificates held The organisation is implementing occupational health and safety management system based on Indonesian OHS (SMK3). The details of other certifications held are shown in the following table.

Table 10: Certificates Held by Mill and Estates

MILL/ESTATE OTHER CERTIFICATION HELD

Begerpang Mill and it Supply Bases

SMK3, certificate 199/177/2011 from Sucofindo, expired 4 May 2016

Source: Lonsum, July 2016 1.10 Organizational information/contact person PT. PP London Sumatera Indonesia Tbk. Jl A. Yani No.2 Medan 20111 Phone : (+62-61) 4532300 Fax : (+62-61) 45504621 Contact person : Mr Muhammad Waras Head of Environmental and CSR Email : [email protected] 1.11 Time bound plan for other management units PT. PP London Sumatra Indonesia Tbk. is committed to RSPO certification of all its Management Units located in North Sumatera, South Sumatera and East Kalimantan. Time bound plan has been developed to achieve the RSPO certification for all its Management Units and Plasma by 2016. The time bound plan is realistic and challenging. The plan is detailed on Table 11.

mailto:[email protected]

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Table 11: RSPO Certification Time Bound Plan

Name of Mill

Mill Address Name of

Supply Base Plantation

Estate Address Time

Bound Remarks

Turangie Langkat, Sumatera Utara

Turangie Langkat, Sumatera Utara

2014 Certified on 9 January 2015 Pulo Rambong

Bungara

Dolok Batubara, Sumatera Utara

Dolok Batubara, Sumatera Utara

2014 Certified on 19 August 2015

Sibulan Serdang Bedagai, Sumatera Utara

Bah Bulian Simalungun, Sumatera Utara Bah Lias

Gunung Malayu

Asahan, Sumatera Utara

Gunung Malayu

Asahan, Sumatera Utara

2014 Certified on 23 July 2015

Sei Rumbiya Labuhanbatu, Sumatera Utara

Begerpang Deli Serdang, Sumatera Utara

Begerpang Deli Serdang, Sumatera Utara

2014 Certified on 10 August 2015 Sei Merah

Rambong Sialang

Serdang Bedagai, Sumatera Utara

Pahu Makmur

Kutai Barat, Kalimantan Timur

Pahu Makmur Kutai Barat, Kalimantan Timur

2015 Stage-1 audit in December 2014

Isuy Makmur

Kedang Makmur

Belani Elok Musi Rawas, Sumatera Selatan

Belani Elok Musi Rawas, Sumatera Selatan

2014 Certified in September 2015

Bukit Hijau

Batu Cemerlang

Ketapat Bening

Sei Kepayang

Arta Kencana

Lahat, Sumatera Selatan

Arta Kencana Lahat, Sumatera Selatan

2015 Stage-1 audit in October 2015

Kencana Sari

Sei Lakitan Musi Rawas, Sumatera Selatan

Sei Lakitan Musi Rawas, Sumatera Selatan

2015

Stage-1 audit in December 2015

Riam Indah

Sei Gemang

Gunung Bais

Musi Rawas, Sumatera Selatan

Gunung Bais Musi Rawas, Sumatera Selatan

2016 -

Terawas Musi Rawas, Sumatera Selatan

Eka Sari Region (Plasma)

Musi Rawas, Sumatera Selatan

2016 -

Source: Lonsum, May 2016

1.12 Partial Certification Requirements The organisation conducted the site visit and reviewing 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

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certification requirements were fulfilled. Site visit was conducted by the organisation for ensuring compliance against partial certification requirements according to RSPO Certification System clause 4.2.4:

PT PP London Sumatra Indonesia Tbk: Terawas Indah Mill and their supply bases on 17 November 2015

PT PP London Sumatra Indonesia Tbk: Gunung Bais Mill and their supply bases on 18 November 2015

Based on the reviewing it was concluded that:

There was 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.

There were no land conflict and labour disputes

There was no non-compliance with regulations. 1.13 Date of issue of certificate and date of previous assessment Date of issue of first certificate: 9 August 2015

Date of previous audit: 01 – 05 April 2014

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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 : Ms 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 several 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 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 This 1st Surveillance Audit was performed on 26 – 28 July 2016. The audit plan is available in Appendix A of this report on page 152. 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

mailto:[email protected]

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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 Mujinius Jalaraya – Lead Auditor Bachelor degree from Faculty of Forestry, Bogor Agricultural University (IPB) in 2008, Majoring in Forest Resources Conservation. He has a working experience in palm oil plantations as SHE Assistant at PT. Astra Agro Lestari Tbk in 2008 - 2012 and as Supervisor Sustainability at Teladan Prima Group in 2012 – 2014. He joined the SAI Global since April 2014 as Auditor ISO 9001: 2008, ISPO and RSPO. Various training has followed, such as: Lead Auditor ISO 9001: 2008 Training (2014), Lead Auditor ISPO Training (2014), Lead Auditor RSPO Training (2014), HCV Assessor Training (2013), Internal Auditor ISO 14001: 2004 Training (2013), Training for Trainers (2013), OHS Expert/Ahli K3 Umum Training (2010), etc. He has much experience in application of quality management system, environmental and OHS management system in the company and much involved in audit of the management system. During work at SAI Global he has had experience for audit ISO 9001: 2008 in various industries and Services Company, RSPO and ISPO audit for several oil palm plantation companies. Daniel Sitompul – Audit Team Member 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 Purwanto – Audit Team Member Eko Purwanto graduated with Bachelor degree of Forestry from Forest Conservation Department, Faculty of Forestry, Bogor Institute of Agriculture (IPB) in 2001. He has working experience at Oil Palm Plantation in East Kalimantan since 2003 to 2012 with the last position was Estate Manager. He has implementing 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 Indonesia (2011) and Introduction to HCV Toolkit HCV (2011). For the last 2 year he has been involved in quality (ISO 9001) management system audits for very broad industrial and involved in Indonesia Sustainable Palm Oil (ISPO) audit for several plantations and mills since October 2012. Yosi Zainal Muhammad – Audit Team Member 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

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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, 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 175.

Table 12: List of internal and external stakeholder

STAKEHOLDERS METHOD OF CONSULTATION

Internal stakeholder

SPSI and Worker cooperative head of Rambong Sialang and Bagerpang

Individual discussion

Group Discussion

Representative of worker and nurse Bagerpang estate and mill

Individual discussion

Representative of worker and nurse Rambong Sialang

Group Discussion

External Stakeholder

Head of Village around Rambong Sialang estate Individual discussion

Head of Village around, Christian leader, Moslem leader of Bagerpang estate and mill

Group discussion

Local NGO “ Topan” Individual discussion

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STAKEHOLDERS METHOD OF CONSULTATION

Cooperative, transmigration and social Department of Serdang Begadai

An invitation letter to comment was sent

Plantation Department of Deli Serdang An invitation letter to comment was sent

Forestry Department of Deli Serdang An invitation letter to comment was sent

Trasmigration and Labour Department of Deli Serdang


District Head (Camat) of Sei Rampah An invitation letter to comment was sent

District Head (Camat) of Pegajahan An invitation letter to comment was sent

District Head (Camat) of Sei Bamban An invitation letter to comment was sent

District Head (Camat) of Galang An invitation letter to comment was sent

District Head (Camat) of Bangun Purba An invitation letter to comment was sent

District Head (Camat) of STM Hilir An invitation letter to comment was sent

District Police of Galang An invitation letter to comment was sent

District Police of Bangun Purba An invitation letter to comment was sent

District Police of Talun Kenas An invitation letter to comment was sent

District Police of Firdaus An invitation letter to comment was sent

Walhi-Wahana Lingkungan Hidup Indonesia of North Sumatera


GAPKI An invitation letter to comment was sent

AMAN (Aliansi Masyarakat Adat Nusantara) An invitation letter to comment was sent

WWF Indonesia An invitation letter to comment was sent

Sawit Watch An invitation letter to comment was sent

2.5 Date of next surveillance visit The next surveillance visit will be conducted around three months before datum month of the certification period.

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3.0 AUDIT FINDINGS 3.1 Action taken on previous audits findings

Minor non conformances 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. There were several recurrence of non conformances raised during this audit, detail of non-conformances was provided in Apendice C on page 169. 3.2 Claim and use of certification mark and or logo Logo is used in company website. Claim of certified CPO and PK was conducted in 2015. During period July 2015 – June 2016 there is no delivery and sale of physical certified CPO. Certified CPO and PK were sold under Greenpalm. During 2015 the organisation did not record and balance CPO and PK certificate sales for each mill, but overall record for PT PP London Sumatera and started recorded for each individual mill on 2016. The data is presented in Table 13a to c below. Certified PK delivery physically performed in May 2016 as much as 500 tonne and in July 2016 as 870 tonne. Below is detail transaction of CSPK delivery.

Table 13a: Green Palm CPO Certificate Sales 2015 – all PT PP London Sumatera

DATE VOLUME

(MT) BUYER REF

6-May-15 10.346 Fritolay (A Division of Pepsico) 11670

8-May-15 200 Kappus Seifen GmbH Riesa & Co Kg 11681

8-May-15 25 Natra SA 11683

11-May-15 2.000 Beiersdorf AG 11689

12-May-15 2.775 Vandemoortele Group 11717

19-May-15 3.731 Procter & Gamble 11742

4-Jun-15 4.848 Fritolay (A Division of Pepsico) 11820

4-Jun-15 152 Fritolay (A Division of Pepsico) 11821

4-Jun-15 25 Farmo SPA 11828

5-Jun-15 1.400 AB Foods & Beverages (Thailand) Ltd. 11829

5-Jun-15 100 Daudruy Van Cauwenberghe Et Fils 11830

11-Jun-15 893 Van Delft Biscuits BV 11862

18-Jun-15 250 Advanced Liquid Feeds Ltd 11894

24-Jun-15 1.520 Sodexo 11931

24-Jun-15 10.978 Unilever Supply Chain Company AG 11968

24-Jun-15 1.500 Agro Supply A/S 11977

3-Jul-15 1.132 Frieslandcampina 12080

7-Jul-15 420 Advanced Liquid Feeds Ltd 12106

7-Jul-15 45 Advanced Liquid Feeds Ltd 12107

22-Jul-15 1.535 Conagra Foods Inc 12164

22-Jul-15 1.000 Conagra Foods Inc 12168

15-Sep-15 6.946 Fritolay (A Division of Pepsico) 12472

15-Sep-15 3.054 Fritolay (A Division of Pepsico) 12473

15-Sep-15 125 Fritolay (A Division of Pepsico) 12474

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DATE VOLUME

(MT) BUYER REF



16-Sep-15 25 Maymo Cosmetics S.A 12490

28-Sep-15 500 Lantmannen Unibake Sweden AB 12579

30-Sep-15 200 Daudruy Van Cauwenberghe Et Fils 12603

30-Sep-15 3,800 Ulker Biskuvi Sanayl A.S 12604

2-Oct-15 450 Advanced Liquid Feeds Ltd 12631

6-Oct-15 1,000 Fiska Molle AS 12641

6-Oct-15 1,000 PT Brahma Binabakti 12644

6-Oct-15 550 Oy Karl Fazer AB 12656

6-Oct-15 2,375 Oy Karl Fazer AB 12661

6-Oct-15 25 Nuova Ruggeri SRL 12662

6-Oct-15 2,477 Fritolay (A Division of Pepsico) 12663

6-Oct-15 123 Fritolay (A Division of Pepsico) 12664

8-Oct-15 2,000 Fritolay (A Division of Pepsico) 12667

13-Oct-15 50 Nove Alpi SRL 12750

13-Oct-15 2,950 AB Mauri (UK) Limited 12753

20-Oct-15 3,000 Procter & Gamble 12814

22-Oct-15 1,252 Procter & Gamble 12828

22-Oct-15 300 Daudruy Van Cauwenberghe Et Fils 12833

22-Oct-15 2,700 Nevedi (Dutch Feed Industry Association) 12836

3-Nov-15 2,000 Procter & Gamble 12939

3-Nov-15 25 Carecos Kosmetik GmbH 12946

3-Nov-15 75 Advanced Liquid Feeds Ltd 12948

4-Nov-15 74 Dulcesa S.L. Unipersonal 12949

4-Nov-15 68 Culinary Arts Specialties, Inc 12951

4-Nov-15 3,360 Fritolay (A Division of Pepsico) 12952

19-Nov-15 1,000 Daudruy Van Cauwenberghe Et Fils 13107

30-Nov-15 900 PT Salim Ivomas Pratama Tbk (Refinery) 13199

2-Dec-15 100 Valio Ltd 13252

2-Dec-15 1,200 Kaka AB 13253

2-Dec-15 25 The Belgian Chocolate Group NV 13254

10-Dec-15 3,675 Mondelez Europe GmbH 13392

10-Dec-15 2,000 Kerry Foods Limited 13407

10-Dec-15 938 Delhaize Group SA/NV 13410

10-Dec-15 200 Qualityfoodgroup Spa 13412

10-Dec-15 1,862 Colgate Palmolive Company 13422

11-Dec-15 331 Cadbury India Limited 13435

15-Dec-15 5,000 Mondelez Global LLC 13453



15-Dec-15 100 Gala Kerzen GmbH 13459

15-Dec-15 709 Moi International (Aust) Pty Ltd 13460

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DATE VOLUME

(MT) BUYER REF

TOTAL 112,827

Table 13c: CSPK certified delivery from Begerpang Mill

Period PK

Production (tonne)

CSPK delivery to

PT. Musim Mas (tonne)

PT Agro jaya Perdana (tonne)

2015

August 1,683.00 - -

September 1,646.15 - -

October 1,862.28 - -

November 1,331.40 - -

December 1,382.17 - -

2016

January 929,879 - -

February 847,348 - -

March 917,589 - -

April 850,013 - -

May 981,452 - 500

June 1.338,435 - -

July 1.282,189 807 -

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3.3 Description of audit findings 3.3.1 RSPO Principle and Criteria

PRINCIPLES 1: COMMITMENT TO TRANSPARENCY

NO CRITERION / INDICATOR

CHECKLIST OBSERVATIONS & OBJECTIVE

EVIDENCE SUMMARY OF FINDINGS FOR EACH INDICATOR

COMPLIANCE (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 stakeholders? (E.g. listed by category and stakeholders listed should be site specific)

b. What is the frequency of updating the stakeholder list?

c. Is there evidence of stakeholder verification?

d. What type of information is provided? (E.g. Environmental, social and legal)

e. What is the frequency and level of access to this information?

f. How and where is the information disseminated?

g. Who is responsible for providing & updating information?

h. Is there an SOP available to describe the process (of information sharing/dissemination)?

List of Stakeholders, on 21 July 2016

Procedure EMS P05 – Communication, on 10 August 2009

SPO 01 - Logbook of Record of information request and responses

Interview with stakeholders date on 26 – 27 July 2016

Attendance list on 01 July 2016

The company has maintained a list of stakeholders which listed by category, such as Statutory Bodies, Indigenous People, Local Communities, Worker Organization, and Local NGO. The stakeholders list was stored in List of Stakeholders, both at estate and mill office. The frequency of updating the stakeholder verification was annually conducted or whenever there was changed by Public Relation Department. The last updating was conducted date on 21 July 2016. Stakeholder verification has been performed by company through visiting and contacting with directly stakeholders. It was sighted that stakeholder verification has been done and evidenced.

Type of the information available to the public and stakeholder are environmental, social and legal in accordance with their relevance through a written or verbal request to the company. The information provided to the public and stakeholders was directly disseminated through public information boards, info in the office, and website. All information can be accessed by interested parties. Provision of

information to be known by Estate and Mill Manager. If the information is confidential trade must go through the approval of Head Office. Provision of information to the relevant agencies recorded in the Record of Information Request and Response (SPO-01).

There was SOP available to describe the process of information sharing / disseminated in Procedure EMS-P05– Communication, on 10 August 2009. Stakeholders aware of the type of information available and the procedures for

YES

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COMPLIANCE (YES/NO)

i. Are stakeholders aware of the type of information available and the procedures for accessing the information?

accessing the information. They were made aware through verbal instructions or written notices. It was verified during public consultation and interview with stakeholder on 26 – 27 July 2016. Socialization this procedure to employee was conducted on 01 July 2016.

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 ensure constructive response to stakeholders?

b. Who is the personnel in charge (PIC)?

c. Does the SOP cover the elements under 1.1.1?

d. Is there a clear time frame for response to request for information?

e. Are records of requests for information and responses maintained?

f. Are responses to requests for information timely and appropriate?


SPO 01 - Logbook of Record of information request and responses

The company has had an SOP to ensure constructive response to stakeholders in EMS-P05 (Communication) date on 10 August 2009. List of stakeholder and types

of information are updated every year or if there are changes. Estate and Mill Manager is the personal in charge for collecting information request and response that assisted by SPO Officer. The SOP covered issues of environment, social and legal

With the use of the log book Logbook of Record of Information Request and Response, the organization (Estate and Mill) can monitor all of the information that is communicated to stakeholders. Records of requests for information and response have maintained.

Non-Conformance :

In Communication Procedure (EMS-P05), there is no time frame to respond to request for information.

Correction:

Set time limits (14 days) for responding to requests for information from stakeholders. Done 25 August 2016.

Corrective Action:

Revise SOP of Communication by setting time limits (14 days) to response on requests for information, then disseminate it to the interested parties. Dissemination

YES

(Major NCR # 2016 – 01 Closed)

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COMPLIANCE (YES/NO)

done on 15 September 2016 at Begerpang Estate and 16 September 2016 at Rambong Sialang Estate.

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: 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 listed in (c) below made publicly available?

b. Where are the documents placed?

c. Is the information provided adequate? Note: At minimum, an information

Procedure EMS-P05– Communication, 10 August 2009

Social Impact Assessment (SIA)

Organization documents are generally provided by the organisation. List of management documents are publicly available such as Site Permit (Izin Lokasi), Land Use Title (HGU), Plantation Operation Permit (IUP), Environmental and Environment Impact Analysis (AMDAL), Environmental Management and Monitoring (RKL and RPL), HCV Assessment, Social Impact Assessment (SIA), Occupational Health and Safety Management Plan, Corporate Social Responsibility (CSR) and

YES

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COMPLIANCE (YES/NO)

summary of the document listed below should be made available.

Land titles/user rights (Criterion 2.2) - Legal boundaries ,land use,

classification, total area, grant title, permit validity , NCR rights,

Occupational health and safety plans (Criterion 4.7); - risk assessment and mitigation,

emergency response plan, training, accident records

Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8); - main social and environmental

impacts and mitigation measures,

HCV documentation (Criteria 5.2 and 7.3); - identification on HCV areas,

maps, management and monitoring HCV

Pollution prevention and reduction plans (Criterion 5.6); - identification of pollutants,

management and reduction 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,

Report

EIA (AMDAL) and its implementation report

Site Permit (Izin Lokasi),

Land Use Title (HGU)

HCV Assessment

Continuous Improvement Plan. Those documents were placed at each unit office (estate and mill), accessible and shown during this audit.

The documented procedure was established, it’s mentioning the process and responsibilities and authorities in regards responding the request on information from the public. The coverage of request on information as stated in the procedure including information on legal documents, environmental documents, social activities documents, occupational health and safety programme documents and continual improvement documents.

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COMPLIANCE (YES/NO)

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). - 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 a code of ethical conduct and integrity in all operations and transactions?

b. Does the policy include as a minimum:

A respect for fair conduct of business?

A prohibition of all forms of corruption, bribery and fraudulent use of funds

Code of Conduct at PT. PP. London Sumatra Indonesia Tbk, on 20 January 2005


Attendance list on 08 April 2016, 09 May 2016, and 19 July

There was written policy committing to a code of ethical conduct and integrity in all operations and transactions in Code of Conduct at PT. PP. London Sumatra Indonesia Tbk, on 20 January 2005. Ethic policy includes several aspects, such as :

The accuracy of business records

Preparation and storage of business records

The response to the questions of shareholders

YES

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COMPLIANCE (YES/NO)

and resources?

A proper disclosure of information in accordance with applicable regulations and accepted industry practices?

c. Is the policy documented and communicated to all levels of the workforce and operations, including contracted third parties? How is it communicated?

d. Are the documentation and communication done in the appropriate languages?

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

2016 Procedures organizer general meeting of shareholders

Protection of company assets

Conflicts of interest

Inside information and insider trading

The policy was documented and communicated to all levels of the workforce and operations, including contracted third parties. It was communicated by both of meeting and notice boards. The documentation and communication have done in the appropriate languages was Bahasa Indonesia. It was verified during public consultation and interview with stakeholder on 26 – 27 July 2016 at RSE, BGE, and BGPOM. The workforce and stakeholder understood the policy. Socialization this

policy to employee was conducted on 08 April 2016 and 19 July 2016 and to stakeholder on 09 May 2016.

Audit Report


PRINCIPLES 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS




COMPLIANCE (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 available? (Refer to relevant NIs or LIs for list of legal requirements)

b. Does the company have copies of the legal requirements?

Note to auditor: A due diligence on the company/area or management unit on legal compliance should be conducted prior to field audit. Any non-compliance should be verified during the field audit. 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

Form EMS f-02a- Register of SPO regulation

Form EMS IA-C6- Evaluation of Compliance with Laws and Regulations

Procedure EMS – P02 Legal Requirement dated 10 April 2014

Memorandum internal of HR Director No. 001/HRD/C-SAL/IV/2016, on 11 April 2016 about provisions of salary increase 2016

Employee pay list on June 2016

Complete list of legal requirements was available. Relevant legal requirement were documented in Register of SPO Regulation EMS F-02.a updated Januari 2016. Updating of law and regulations change activities were well documented. Legal requirements compliance was updated twice a year and last update was performed in January 2016. Information on all applicable legal and other requirements have been reviewed and summarised include the Agronomy best practises, employment, social, conservation, OHS and environment regulation. Legal requirement compliance such as:

Agronomy best practises such as:

- UU No. 5 regarding Basic regulation of Agraria, comply by planting palm oil conform with own HGU from BPN, manuring process performed as defined in procedure.

- UU No. 12 tahun 1992 regarding Agronomy Plantation system, comply by planted and develop palm oil plantation based on procedure defined with consider environment and OHS aspect, not use forbidden pesticide, create report and implementing integrated pest management, plantation permit

Labour/employment management such as:

- UU No. 13 tahun 2003 Employment comply by organization with issued the ethical policy not discriminative, provide training based on each job, identify

YES


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COMPLIANCE (YES/NO)

core Conventions and UN Guiding Principles on Business and Human Rights.

training needs for employee, register employee to Jamsostek, not use child workers, implementing OHS, etc.

Environmental and OHS compliance such as:

- Government regulation of the Environment No. 5/2014 - water quality standard, environmental impact analysis, etc.

- Government Regulation 101/2014 hazardous waste management, 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:

- Kepres No. 32 Tahun 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 tahun 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

The sopies of the legal requirements were shown on soft copy also on hard copy and maintained properly.

Major Non-Conformities:

Compliance with the Regulation No. 98 / 2013, the overall unmet. Plantation performance reporting for the period Semseter 1 and 2 in 2015 has not been demonstrated

Vickers Hoskins boiler that operated at Begerpang mill has not been approved by local authority Disnaker.

Valid permits for Lifting equipment at Sei Merah Estate (tractor and excavator) were not available

Correction:

Sending Plantation Business progress report to the relevant agencies for the

reporting period has not been sent. Done on 22 September 2016.

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COMPLIANCE (YES/NO)

Accelerating the process of obtaining licenses for Begerpang POM Boilers

and Lifting Equipment for Sei Merah Estate. Testing done on 23 September

2016

Corrective Action:

Perform benchmarking to other units on the reporting mechanism and then

disseminate the results to the personnel in the Begerpang unit.

Communicate with relevant agencies to determine the standard format and

frequency of reporting so that it can be used as guidelines and put in a one

of the working plan in related units.

Perform benchmarking on the cost of licensing then budgeted it in the next

year based on the results of benchmarking.

Application for license / inspection conduct at least 3 months prior to expiry.

2.1.2 A documented system, which includes written information on legal requirements, shall be maintained.

a. Is there a document system which includes the following? - Personnel in charge to manage - Set of legal documents - Comprehensive list of international,

national, sub-national and provincial laws which details the requirements of specific to the mill and estate operations.

- Relevant sections within the law that is identified and linked to activities

b. Are the documents available to all levels of management?


Procedure EMS – P02 Legal Requirement dated 10 April 2014

A documented system which includes written information on legal requirements was well maintained. It was documented in Procedure EMS – P02 Legal Requirement dated 10 April 2014. The procedure described that identification and evaluation performed against regulation and requirement regarding environment, OHS, plantation, labour, social, etc. the updating of legal regulation performed once a year in January; personnel in charge to manage the updating and evaluation which is sustainability division together with estate personel in each section.

This document was available to all staff and all level management, the document was stored at central office.

YES

2.1.3 A mechanism for ensuring compliance shall be implemented.

a. Is an internal audit for legal compliance conducted annually and documented?

- RSPO Internal audit report 10 March 2016

Internal audit related to legal compliance has been performed by organisation annually through RSPO internal audit which planned annually. The last audit was conducted on 10 March 2016 by approved auditor. The audit checklist covered the implementation of the all applied regulations. Status of compliance with the

YES

Audit Report





COMPLIANCE (YES/NO)

applicable environment, OHS, plantation, labour, social laws and regulations were evaluated, and evaluation of compliance result indicated that compliance status was justified with reference to the objective evidence of compliance.

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.: personnel in charge (PIC), source of info, frequency of update) for tracking changes and communication of changes to relevant sections of the legislation?


- Procedure EMS – P02 Legal Requirement dated 10 April 2014

A system for tracking any changes in the law has been implemented and documented in Register of SPO Regulation EMS F-02.a updated Januari 2016. Sustainability division was responsible for updating new regulation every year.

Company has defined the procedure to identify and evaluated legal compliance which documented in Procedure EMS – P02 Legal Requirement dated 10 April 2014.

Evaluation conducted by contacting the relevant agencies or searching on the internet all copy of the rules and requirements specified in the list of identification. In case of any revision and new regulations/requirements, company performed the action:

- Updating the record identification and evaluation of regulations and other requirements

- Doubling and distribute the new regulations to estate

- Updating the list regulatory record of OHS and environmental regulations

- Keep track of revisions and new regulations.

Record was available for period January 2016. New regulations were identified e.g. PermenLH 5/2014, PP 101/2014, UU 39/2014, and Permentan 47/2014.

PIC to update legal requirement was sustainability and document controller. Legal requirement compliance evaluation performed by call the statutory body and browsing to internet.

YES

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. 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.

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COMPLIANCE (YES/NO)

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 ownership or lease of the land available? (e.g. land titles, lease documents)

b. Are there documents showing history of land tenure available? (e.g. legal documents showing land status change, SIA and EIA reports, HCV assessment reports)

c. Are there documents showing the actual legal use of the land available?

d. Are the documents complete?

- Land use title permit: SK HGU

and HGU certificate.

- Decision of the Head of BPN.

- State Minister for Agrarian Affairs / Head of National Land Agency.

Begerpang Estate

Copy of land use title (HGU) of Begerpang Estate was sighted and legally owned by PT. PP London Sumatere Indonesia Tbk. Copy of land use title was available. Land use title of Begerpang Estate was located at Deli Serdang District, Province of North Sumatera.

Based on Decree Letter of Interior Minister #Sk.17/HGU/DA/77, Begerpang Estate was Concession rightwhich consisted of Begerpang and Namo Rambei Concession, based on decision of Resident Sumatra Timur 1895 and 1900 on behalf of The United Serdang (Sumatra) Rubber Plantations Ltd and Concession Right/erfpacht based on agreement Zelf bestuur Deli on 1st of November 1895 and legalled by decision of Resident Sumatra Timur on 7th of December 1895 and 20th of July 1898 on behalf of The Sialang Rubber Est. Ltd and valid through 75 years. The Concessiion Right was converted to HGU based on letter of Agriculture and Agrarian Minister #Ka.13/7/1 on 1st of March 1962. During period 1964 – 1967, the company was under authority and control of the government until availability of agreement between Government of Republic of Indonesia and Harison & Crosfield Ltd. On 20th of March 1968, government will give HGU during 30 years implicitly on 1st of April 1968.

Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #173/Mentanhut/VII/2000, dated 10th of June 1997. Area: 2,539.68 Ha.

Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #174/Mentanhut/VII/2000, dated 2nd of July 1997. Area: 2,204.48 Ha.

Plantation Business Assessment (Penilaian Usaha Perkebunan (PUP)); Class II, based on the Decree SK No. 525/038.a/F

The first concession was issued by decree Minister of Internal Affairs in 1978, further extensions of the concession in 2005, according to the Decree of the Head of BPN, as follows:

1. SK HGU of BPN, no. 62/HGU/BPN/97, dated 2nd of July 1997, covering an

YES

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COMPLIANCE (YES/NO)

area of 2,204.48 ha.

2. SK HGU of BPN, no. 66/HGU/BPN/97, dated 10th of June 1997, covering an

area of 2,539.68 ha.

3. SK HGU of BPN, no. 02/HGU/BPN.12/VII/2012, covering an area of 35.06

ha.

4. Certificate no. 1/Lau Rampak D.I.208 no. 320/2003, dated 20th of January

2003. Initial rights holders on behalf of PT Karimun Aromatics Co.Ltd.

Acquired in 2007 (sale deed no. 35/2007), covering an area of 945 ha.

1) The deed of establishment of PT Karimun Aromatics Co. Ltd., date 2nd

of November 1973

2) SK HGU dated 28.05.1998 no. 18/HGU/BPN/98

3) Deed of Giving Rights Tanggunngan no. 01/2006, date. 09-01-2006,

created by TRIS DAME ERNITA TAMPUBOLON, SH PPAT Deli

Serdang over book Land / Certificate of no dependents. 32/2006.

Based on the decree and Certificate of HGU owned by Bagerpang Estates total area is 5,724.22 Ha, in compliance with the 'area statement in 2016.

Building Permit (IMB):

503/941/DPPWP/DS/2002 for mill

503.648/3619/BG/2014 for housing

Sei Merah Estate

Copy of land use title (HGU) of Sei Merah Estate was sighted and legally owned by PT. PP London Sumatere Indonesia Tbk. Copy of land use title was available. Land use title of Gunung Malayu Estate was located at Deli Serdang District, Province of North Sumatera.

Based on Decree Letter of Interior Minister #Sk.8/HGU/DA/78, Sei Merah Estate was Concessie right based on decision of Resident Sumatra Timur on 7th of January 1887 #40/L and agreement Zelfbestuur Deli on 20th of September 1895 and legally by decision of Resident Sumatra Timur on 10th of October 1895 document #150 on behalf of N.V The United Serdang (Sumatra) Rubber Plantation Ltd and valid

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COMPLIANCE (YES/NO)

through 75 years. The Concessive Right was converted to HGU based on letter of Agriculture and Agrarian Minister #Ka.13/7/1 on 1st of March 1962. During period 1964 – 1967, the company was under authority and control of the government until availability of agreement between Government of Republic of Indonesia and Harison & Crosfield Ltd. On 20th of March 1968, government will give HGU during 30 years implicitly on 1st of April 1968.

Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #HK.350/195/Bun.5/III/2001. Area: 1,854.46 Ha.

Plantation Business Assessment (Penilaian Usaha Perkebunan (PUP)); Class I, based on the Decree SK No. 525/5818/III/BUN.PPUP/2013.

Sei Merah Estate has gained the concession, by decree of the Minister of State Agrarian / Head of National Land Agency, dated 10th of July 1997, no. 65/HGU/BPN/9. HGU certificate no. 2/1997, dated 6th of October 1997 and based on Surat Ukur dated 30th of September 1997, no. 9180/1997, Sei Merah Estate covers an area of 1,854.46 ha area and in compliance with Area Statement Sei Merah Estate.


Copy of land use title (HGU) of Rambong Sialang Estate was sighted and legally owned by PT. PP London Sumatere Indonesia Tbk. Copy of land use title was available. Land use title of Gunung Malayu Estate was located at Deli Serdang District, Province of North Sumatera.

Based on Decree Letter of Interior Minister #Sk.36/HGU/DA/78, Sei Merah Estate was Concessie right based on agreement between Zelfbestuur Deli and N.V Rubber My Sibulan and Sei Rampah Rubber en Cocoanut Plantations Co. Ltd. on 14th of July 1910, 5th of April 1911, 21st of December 1908 and 1st of May 1910 and legally by decision of Resident Sumatra Timur on 10th of December 1910, 15th of April 1911, 27th of January 1909 and 29th of September 1910 and valid through 75 years. The Concessive Right was converted to HGU based on letter of Agriculture and Agrarian Minister #Ka.13/7/1 on 1st of March 1962. During period 1964 – 1967, the company was under authority and control of the government until availability of agreement between Government of Republic of Indonesia and Harison & Crosfield Ltd. On 20th of March 1968, government will give HGU during 30 years implicitly on 1st of April 1968.

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COMPLIANCE (YES/NO)

Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #176/Mentanhut/VII/2000 on 3rd of November 2000. Area: 650.98 Ha. Commodity: oil palm

Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #177/Mentanhut/VII/2000. Area: 554.19 Ha. Commodity: oil palm

Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #Hk.350/1999/Bun.5/III/2001. Area: 4,069.84 Ha. Commodity: oil palm and cocoa.

Rambong Sialang Estate has had the concession, which consists of 3 HGU certificates, that is:

1. HGU certificate no. 1/1997, dated 8th of October 1997, by decree of the

Minister of Agriculture / Head of National Land Agency dated 30th of June

1997, no. 58/HGU/BPN/97, located in the village of Firdaus Estate Subdistrict

Sei Rampah, Deli Serdang district. Covering an area of 554.19 hectares, in

accordance with the Surat Ukur no.9183/1997.




Sei Rampah, Deli Serdang district. Covering an area of 650.98 hectares, in





Sei Rampah, Deli Serdang district. Covering an area of 4,069.84 hectares, in


So based on concession certificate above, total area of Rambong Sialang Estate is 5,275.01 Ha.

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.

Audit Report





COMPLIANCE (YES/NO)

a. Is there a legal map showing location of boundary markers?

b. Is there physical presence of boundary markers?

c. Is there an SOP for boundary demarcation and maintenance?

Note to auditor: Ground verification of boundary markers using GPS should be conducted. Priority should be on boundaries with other estates, community areas, protected area and rivers In the case of Associated Smallholders: d. Are there documents showing that the

boundaries of associated smallholders have been recorded and verified by the mill?

e. In case of boundary breach, is there proof of a mitigation plan being implemented?

- Map of Land title use dated 1 January 2013

- Checklist of Pegs Weekly Monitoring.

- Field observation to HGU pegs

Legal boundaries marker were sighted during audit and maintained along the perimeters of estate lands which were mapped with Global Positioning System (GPS). Field observation was conducted to pegs number:

Begerpang Estate

1. BPN peg no. 26, N: 03°28’43.58”; E: 098°48’44.47”, the location in' Block

99113005 Division 03 Naga Timbul, bordered by Kampung Kali Tawang.

2. BPN peg no. 27, N: 03°28’48.40”; E: 098°48’55.16”, the location in Block

99113005 Division 03 Naga Timbul, bordered by Kampung Kali Tawang.


1. BPN peg no.25, N: 03°24’09.9”; E: 099°01’03.7”, the location on Division 7

Block 05113003, is bordered with Kampung Pekan Kamis.

2. BPN peg no. 28, N: 03°24’17.6”; E: 099°00’04.9”, the location on Division 7

Block 05113002, is bordered with Rambong Sialang Village.

Realization of pegs maintenance was sight in Weekly Checklist Monitoring which conducted by the Assistant Division and Estate Security Unit (Satpam), noted that peg monitoring is done every week with items checked are: identity, condition and position pegs.

All activities were carried out inside the legal boundaries, no activities conducted outside the boundaries.

YES

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 disputes?

Note to auditor: Due diligence should be conducted on the management to provide evidence that there has been no historical or current land dispute

b. If there are or have been disputes, are

HGU Map of Rambong Sialang and Bagerpang Estate

Interview with Estate Manager on 26 – 27 July 2016


Until this surveillance audit, there was no land dispute at PT. PP. London Sumatra Indonesia (Begerpang Mill and Supply Base). Planted areas of the Estates are wholly on Government’s land, leased under HGU as indicated above. Maps have been developed for estate indicating Legal demarcation and planted areas. It was verified during public consultation and interview with stakeholders and Estate Manager on 26 – 27 July 2016

N/A

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COMPLIANCE (YES/NO)

there: - Documents to proof legal acquisition? - Records of FPIC process?

c. If there has been acquisition involving compensation, are there: - Records that Fair compensation has

been provided and accepted by parties involved?

- Records that all affected parties are consulted and represented?

- Documents of negotiations/discussion available?

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

-

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 significant land conflict? (i.e. preventing the company from operating normally)

b. If the company has cases of conflict, are records of the following available? - Status of conflict - SOP/ mechanism for conflict

resolution - Implementation of SOP/mechanism - Acceptance of the procedures by all

parties - Records of conflict resolution



-

Until this surveillance audit, the company does not have cases of significant land conflict which for preventing the company form normally operating. It was verified during public consultation and interview with stakeholders and Estate Manager on 26 – 27 July 2016

YES

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).

Audit Report





COMPLIANCE (YES/NO)

a. Is there an SOP for participatory mapping of disputed area?

b. Is a dispute map available?

c. Is there documented evidence of involvement and acceptance by the affected parties?

Note to auditor: Actual ground verification showing the accuracy of the dispute map should be conducted




A mechanism to resolve conflict was described in the procedure communication (EMS-P05) and in the procedure land acquisition and compensation to identify and determine calculation method to provide fair compensation due to loss of land and customary rights where identified.

Until this surveillance audit, the company does not have conflict or dispute over the land. It was verified during public consultation and interview with stakeholders and Estate Manager on 26 – 27 July 2016.

YES

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 circumvent instigated violence to maintain peace and order in current and planned operations?

b. Is there any evidence of: - The use of confrontation and

intimidation by the company to maintain peace and order?

- Use of para-militaries and mercenaries in the plantation?



Until this surveillance audit, the company does not have conflict or dispute over the land. It was verified during public consultation and interview with stakeholders

and Estate Manager on 26 – 27 July 2016.

N/A

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.

Audit Report





COMPLIANCE (YES/NO)

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) For National Interpretation: Any commonly encountered situations should be identified.

a. Does the company have an SOP on FPIC?

b. Is there evidence that the identification of legal, customary or user rights has been done through FPIC process?

c. Is there evidence that the FPIC process has been implemented in accordance to the company SOP? Where is this evidence recorded? (E.g.: Documents, Minutes of meeting, Records, Agreements, Maps etc.)

d. Is there a map of the extent of legal, customary or user rights? Is this map of appropriate scale (1: 10,000)?

e. Was the map produced through participatory mapping with reference to SIA and HCV assessment?

f. Does the map have a title, legend, source, scale and projections/georeference?

g. Are the maps accepted by the relevant communities?





Maps have been developed for each estate indicating Legal demarcation and planted areas. Planted areas of the Estate are wholly on Government land, leased under HGU.

It was confirmed from the group discussion with Village Head on 26 – 27 July 2016 that until this surveillance audit, no land within Mill and Estates are encumbered by legal or customary rights.

N/A

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COMPLIANCE (YES/NO)

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; 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 affected parties available?

b. Is there evidence that the agreement is prepared through proper FPIC process?

c. Does the agreement contain the following: - An action plan developed through

consultation with affected parties, is inclusive and evidence that members of affected parties are well informed and involved in the decision making process

- Evidence of options to give or withhold consent for development

- Evidence that members of the affected communities understand and accept the implication involved in permitting/rejecting oil palm development on their land (E.g.: legal status, social, environmental, economic)

- 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







N/A

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COMPLIANCE (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 (maps, agreement, records, impact assessment, benefit sharing and legal arrangements) is available in appropriate forms and languages, understood and accessible to affected parties?

Note to auditor: this should be cross checked to a sample of the affected parties







N/A

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 community in the negotiation process?

b. Is the representative accepted by the community?

c. Is the record of appointment to represent the community available and shared with other parties?







N/A

Audit Report


PRINCIPLES 3: COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY




COMPLIANCE (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 business or management plan with a minimum planning period of 3 years?

b. Does it include the following: - Land area statement (planting

years, non-planted areas, i.e. HCV, conservation areas, fragile soils, enclaves) with updated location maps. Maps should have title, legend, source, scale and projections/georeferenced

- Plan for management of scheme smallholders (where appropriate)

Management Plan period 2016 – 2020.

Annual Budget period 2016.

The company has a documented business or management plan with planning period of 5 (five) years on Management Plan of PT. PP London Sumatra Indonesia, Tbk period 2016 – 2020.

The Management Plan has include:

- Land area statement (planting years, non-planted areas, i.e. HCV, conservation areas, enclaves) with updated location maps. Maps area completed with title, legend, source, scale and projections/ georeferenced.

- Quality of planting materials

- Crop projection = Fresh Fruit Bunches (FFB) yield trends

- Mill extraction rates = Oil Extraction Rate (OER) trends

YES

Audit Report





COMPLIANCE (YES/NO)

- 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 – profitability

forecast (income vs cost) - Projected expansion (area, mill

capacity, infrastructure, social amenities)

- General strategy and allocation for environmental and social management (refer to P5, P6 and P8)

c. Is this management document subjected to an annual review?

d. For plantations on peat, is there a long term viability plan – e.g. flooding, drainability assessments and subsidence issues? (see 4.3.5)

e. Does the grower have a system to improve practices in line with new information and techniques? - Has the personnel in charge (PIC)

been identified? - How is the information updated? - Is there a documented SOP which

requires monitoring and updating information to improve practices?

- Is new information communicated to workers and scheme smallholders (where appropriate)? How is it

- Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends

- Forecast prices

- Financial indicators – profitability forecast (income vs cost)

- Projected expansion (area, mill capacity, infrastructure, social amenities)

- General strategy and allocation for environmental and social management (refer to P5, P6 and P8)

There is no third party FFB supplied to Begerpang Mill.

The Management Plan is subjected to an annual review. The management plan is reviewed annually by top management including AMA (Area Manager Agronomy), AME (Area Manager Engineering), Estate Manager and Mill Manager, and revised as appropriate; based on the achievement against the plan and other parameters may change.

There is no peat area in Begerpang, Sei Merah and Rambong Sialang Estate.

The grower have a system to improve practices in line with new information and techniques. Estate Manager is the personnel in charge (PIC) to improve practices based on new information and technique. Information is updated through structural system, e.g. President Director to AMA, AMA to General Manager, General Manager to Estate Manager, Estate Manager to Field Assistant, then Field Assistant to Mandore and worker. Estate Manager communicated to Field Assistant through meeting, then Field Assistant communicated to worker through “Apel Pagi” (morning briefing).

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COMPLIANCE (YES/NO)

communicated?

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 projected for a minimum of five years?

b. Has it been documented?

c. Is the progress of implementation documented?

d. How does the programme take into consideration fragile soils such as peat? Is there a longer projection period (see C4.3)?

e. Is there evidence of a yearly review of the replanting programme?

Master Plan Replanting 2014-2020

Summary of Achievement and Target 2014 and 2015.

Replanting Program and Realisation are as follows: Rambong Sialang Estate

Year Plan Actual

2014 123.04 123.04

2015 - -

2016 18.43 -

2017 28.18 -

2018 44.93 -

2019 109.56 -

2020 54.08 -

Begerpang Estate

Year Plan Actual

2014 34.30 34.30

2015 - -

2016 - -

2017 38.66 -

2018 41.64 -

2019 149.24 -

2020 123.63 -

2021 87.09 -

It has been documented in Master Plan Replanting 2014-2020. Progress of implementation has been documented in Summary of Achievement and Target.

There is no fragile soil and peat soil in Rambong Sialang Estate, Bagerpang Estate and Sei Merah Estate, so no consideration needed to establish replanting program.

YES

Audit Report


PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS




COMPLIANCE (YES/NO)

4.1 Operating procedures are appropriately documented, consistently implemented and monitored.

4.1.1

(M) Standard Operating Procedures (SOPs) for estates and mills shall be documented.

Specific Guidance: For 4.1.1 and 4.1.4: 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.

a. Have the SOPs for mills and plantation been documented?

b. Does the SOP cover key processes, harvesting, transportation, manuring, IPM, GAP, Supply Chain requirements for the mill, etc.?

c. Is a copy of the SOP available on site and is it documented in an appropriate language?

d. Is there evidence that SOPs are implemented and understood by workers?

e. Are the SOPs appropriate and adequately cover all estate and mill processes and activities?

f. How are the SOPs made available at the point of use?

Standard Operating Procedure Oil Palm-Development Procedures

Standard Operating Procedures (SOPs) for Estate and mill been documented. Estates has established the procedure (SOP) for plantation cultivation best practices include land clearing, seeding, planting, maintenance, harvesting and transporting of FFB. Generally Bagerpang, Sei Merah and Rambong Sialang Estate have already implemented best management farming practices SOP that has been set. Procedures have been established in March 2008 in Oil Palm Procedure document, that is:

1. OP-1 Nursery Preparation and Upkeep

2. OP-2 Preparation and Planting (include Land Clearing)

3. OP-3 Immature Upkeep

OP-3.1 Weeding Management

OP-5.2 Pest and Disease (Integrated Pest Management)

OP-3.3 Fertilizer Schedule for Development Oil Palm

4. OP-0.4 Harvesting (Crop Potentials, Crop Forecasting, Harvesting Task,

Harvesting Standard, Fruit Handling and Transportation)

5. OP-5 Mature Upkeep (Weeding, Pest & Disease, pruning, Census &

survey operation, Fertilizer Management, Empty bunch & POME

application).

Procedures for mill have been established in March 2008 in Oil Palm Procedure document, that is:

YES

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COMPLIANCE (YES/NO)

- POM-WI/01 Weighbridge Rev.5

- POM-WI/02 Loading Ramp & FFB Sorting Rev.5

- POM-WI/03 Sterilisation Rev.1

- POM-WI/04Threshing Rev.1

- POM-WI/05 Pressing Rev.1

- POM-WI/06 Clarification Rev 1

- POM-WI/07 Depericarping

- POM-WI/09 Boiler Rev.1

- POM-WI/12 Effluent Treatment Rev.1

- POM-WI/16 Quality Rev. 1

- POM-WI/17 Dispatch Rev.5

- POM-WI/21 Composting Rev.0

It was verified that the SOP cover key processes, harvesting, transportation, manuring, IPM, GAP, Supply Chain requirements for the mill, mill process, 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. Work Instructions and procedures are available on site in Estate and mill made in Bahasa Indonesia. Based on interview with some workers (harvesting, spraying worker, mill operator) they were understood with procedures and work instructions, they worked based on and appropriate with procedure.

Hardcopies of procedure were available onsite, controlled and documented in appropriate language. Interviews with the employees indicated a satisfactory level of understanding and application in relation to their job function. SOPs are available at the point of use, e.g. at division office.

SOPs appropriate and adequately cover all estate and mill processes and activities.

4.1.2

A mechanism to check consistent implementation of procedures shall be in place. Guidance: Mechanisms to check implementations could include documentation management systems and internal control procedures.

Audit Report





COMPLIANCE (YES/NO)

a. Is there a master list of all SOPs?

b. How does the company keep track of revisions?

c. Is there mechanism for: - Translation of SOP into work

instructions in appropriate languages?

- Records of training for all levels? - Internal control (e.g. audit and

review, field inspection) procedure in place to monitor consistent implementation of SOPs?

- Trained and competent personnel assigned to carry out internal control activities?

- Implementation audits to be carried out regularly covering implementation of all the SOPs?

- Procedure to address non-compliance and corrective action for continuous improvement?

Masterlist document

Report of Operational Audit #OA-15-VIII-AMA.III-Est-015

Visiting Agent Report #RSE/VA/FULL 08-15

Visiting Agent Report #BGE/VA/FULL 08-15

Visiting Agent Report #SME/VA/FULL 08-15

RSPO internal audit report which conducted on 10 March 2016

AME (Area Manager Engineering) visit report

Master list of all SOPs and its revision history were available and well documented. Organization keeps track of revision of the SOPs in revision history in the cover of SOPs. SOP was provided in Indonesian language. SOPs training and dissemination to all of employee has been conducted.

The organization has well implemented internal control and monitoring processes that check and report on the implementation of the SOPs. These include independent checks of the Mill and Estates by the corporate internal audit. There were several internal audits, e.g. AMA visiting, AME Visiting, VP Inspection, RSPO internal audit, etc.

Internal audit was conducted to check implemetation of the procedures and work instructions. Internal audit covered operational activities of plantations and mill including the maintenance of palm oil crop (upkeep, manuring, IPM), harvesting and other supporting activities such as administration, road infrastructure, FFB transport and mill process.

AMA Visiting and VP Inspection in 2015 were in 5-8 August 2015, 12-14 December 2015, and 25-28 April 2016.

Area Manager Engineering (AME) from Head office yearly periodic visit, last visit was conducted on 25 May 2016. The content of the report covers evaluation of mill operational activities, Mill process and cost control. The report includes recommendation for follow up from Area Manager Engineering 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.(P-08 and P-17).

Corrective action of all non-conformities found has been follow up.

The organisation has established procedure to address non-compliance and corrective action for continuous improvement.

YES

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

a. Have the records been maintained on the following? - Measurements or results of internal

control and monitoring activities (refer 4.1.2)

BKM (Buku Kegiatan Mandor - Log book of group leader activity)

Form pengancakan panen –

Record of monitoring and any action taken were maintained and available for Estate and Mill, e.g. :

- BKM (Buku Kegiatan Mandor - Log book of group leader activity).

YES

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COMPLIANCE (YES/NO)

- Records of corrective actions and improvement undertaken

Form of harvesting planning

Form cek ancak panen – Checking of harvesting area

Surat pengiriman buah sawit (SPBS) – FFB transportation from Estate to Mill

Logsheet of every station in Mill

Calibration report

Field observation to Estate and Mill

- Form pengancakan panen – Form of harvesting planning

- Form cek ancak panen – Checking of harvesting area. The checking covered number of block, name of harvester.

- Pemeriksaan mutu buah – Checking of FFB quality. The checking covered number of block, name of harvester, FFB lagged, brondol lagged, midrib set out, abnormal harvested, etc

- Surat pengiriman buah sawit (SPBS) – FFB transportation from Estate to Mill covered name of Estate, number of block, FFB lagged, brondolan lagged, etc.

- Logsheet every station from loading ramp, sterilizer, threshing, press, clarification, boiler and effluent. Record daily activity of processs in each station and process performance in each station.

- Calibration reports of measuring equipement, e.g. analytical balance, weigh bridge, oven, water bath, etc.

- Control of Process work program and routin maintenance and equipment repair.

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

b. Is there a list of approved third-party FFB suppliers?

c. Is there proof of observed implementation of SOP?

d. Is there daily and summary records of volume and origins of third-party FFB received?

e. Have these records been verified against the available document?

Not Applicable This is not applicable clause due to all FFBs processed were received from the organizations own estates. The organization has commitment that the Mill will not use FFB from third party FFB.

N/A

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COMPLIANCE (YES/NO)

4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield.

4.2.1

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: 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 Practices in managing soil fertility?

b. Is there evidence that the SOPs have been implemented and monitored?

OP-3.3 Fertilizer Schedule for Development Oil Palm Procedure

Field observation of compost application

Organization has been defined the SOPs for Good Agricultural Practices in managing soil fertility which documented in OP-3.3 Fertilizer Schedule for Development Oil Palm. Manuring was performed manually with dosage stated in document “Fertiliser recommendation 2016”.Manuring activity was reported monthly.

During the date of audit, there was no manuring activity, only compos application in Block 06200032 Division 02 Dolok Estate.

Based on data on manuring recommendation and realisation 2015, it was noted that SOPs has been implemented and monitored.

YES

4.2.2 Records of fertiliser inputs shall be maintained.

a. Is records of fertiliser inputs maintained?

b. Is there records to proof that the fertiliser program is linked to the agronomic report?

c. Is there records of fertilizer usage per tonne of FFB production (>in Summary Table, specific types of fertilizers)?

Fertilizing Programme Begerpang Estate 2015 and 2016

Fertilizing Programme Rambong Sialang Estate 2015 and 2016

Records of fertiliser inputs are well maintained in document “Fertiliser recommendation 2015 and 2016”. Fertiliser inputs recorded each semester.

Record of manuring realisation in 2015 and 1st semester 2016 are:

Begerpang Estate:

Fertilizer

2015 2016

Plan (tonne) Actual (tonne)

Plan (tonne) Actual

todate June 2016 (tonne)

Urea 612 633 1,112 502

RP 986 1,072 483 207

KCL/MOP 339 339 453 182

Kieserite 51 51 7 -

YES

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COMPLIANCE (YES/NO)

Dolomite 248 253 68 35

HGFB 4 4 1

Enrich Mulch 51,489 44,306 46,621 13659

EFB - - - -

FFB: Sei Merah Estate:

Type of Fertiliser Realization 2015

Realization January – June 2016

MOP (kg) 59,682 40,905

RP (kg) 155,170 31,271

Urea (kg) 171,600 67,026

Super Dolomite (kg) 71,381 -

Total 457,833 139,202

FFB (ton) 35,651 14,662

Fertilizer use (kg/ton FFB) 13 9

Rambong SIalang Estate:

Type of Fertiliser Realization 2015

Realization January – June 2016

MOP (kg) 163,595 76,890

RP (kg) 554,330 260,535

Urea (kg) 462,123 217,198

Super Dolomite (kg) 177,367 83,363

Total 1,357,415 637,985

FFB (ton) 102,838 39,323

Fertilizer use (kg/ton FFB) 13 6

4.2.3 There shall be evidence of periodic tissue and soil sampling to monitor changes in nutrient status.

Audit Report





COMPLIANCE (YES/NO)

a. Is there SOPs for tissue and soil sampling?

b. Is there evidence of implementation of the SOPs, including availability of records?

c. Is there records of tissue and soil analysis?

d. Is the results of the study incorporated into the fertilizer program?

Report of Leaf Sampling Unit

Report of Soil Sampling Unit

Procedure of leaf sampling mentioned that leaf is analysed annually two months after the first application. Method of sample taken and preparation of analysis was described in the procedure no. RTD 5.1, by Research and Technology Development February 2006: Making Oil Palm Fertilizer Recommendations. Procedure of soil analysis mentioned that soil was analysed every 5 years. Soil and leaf sampling was analysed regularly to determine the nutritional status of soil, to assist and to be guided in the preparation of annual fertilising programme recommendation. Evidence of periodic leaf sampling analysis and soil sampling analysis in 2015:

Estate Leaf sampling

analysis (samples)

Soil sampling

analysis (samples)

Begerpang Estate 95 194

Sei Merah Estate 39 72

Rambong Sialang Estate 86 160

Total 220 426

Evidence and record of periodic leaf sample analysis was sighted.

Results of the study was incorporated into the fertilizer program. Soil and leaf sampling was analysed regularly to determine the nutritional status of soil, to assist and to be guided in the preparation of annual fertilising programme recommendation.

YES

4.2.4

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

a. Is there a nutrient recycling strategy in place?

b. Does the strategy include the following?

Clear objectives and time-bound targets

Inventory of - EFB - POME

Program and realisation of compost application

There was the nutrient recycling strategy performed by organisation, i.e. compost. Compost only applied in Begerpang Estate. The location, dosage and schedule of application have been determined.

Compost application in Begerpang Estate:

Month 2015 2016

Inlet Outlet Inlet Outlet

YES

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COMPLIANCE (YES/NO)

- Fibre - Boiler ash - Kernel shell - Palm residues from replanting

Biomass recycling program

Implementation and monitoring records

Note to auditor: Ground verification required

Compos LA Compos LA

JAN 7,813 5,430 12,054 6,339 7,256 10,464

FEB 7,249 4,048 9,180 6,925 5,073 9,760

MAR 7,266 4,544 6,372 7,233 6,758 9,408

APR 9,749 5,000 6,030 6,465 7,466 4,608

MEI 7,533 3,954 6,102 6,839 6,141 5,216

JUN 9,323 6,346 8,658 9,430 8,450 8,192

JUL 11,483 8,356 11,664

AGUST 10,819 9,245 12,024

SEP 10,692 6,925 12,096

OKT 11,798 9,468 12,132

NOP 7,922 6,274 16,416

DES 9,362 7,393 16,352

TOTAL 111,009 76,983 129,080 43,231 41,144 47,648

Site visit in Block 03111001 Division 01 Begerpang Estate has been done to observe the compost application in field.

4.3 Practices minimise and control erosion and degradation of soils.

4.3.1

(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). 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.

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COMPLIANCE (YES/NO)

a. Is there soil maps showing presence of fragile soils and problem soils (refer to 4.3.6)?

b. Are maps georeferenced and of appropriate scale (1:50,000)?

Maps of soil type in Begerpang Estate were available in scale 1 : 40,000

Maps of soil type in Sei Merah Estate were available in scale 1 : 40,000

Maps of soil type in Rambong SIalang Estate were available in scale 1 : 40,000

Field observation in Begerpang, Sei Merah and Rambong SIalang Estate

Based on the soil map and field observation there were no fragile soils in Begerpang, Sei Merah and Rambong Sialang Estate PT PP London Sumatra Indonesia Tbk.

YES

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 for plantings on slopes?

b. Does the management strategy include the following? - Identification of steep areas not

suitable for planting - Policy of planting on slopes - SOPs to minimise soil erosion

based on local soil and climate conditions, e.g. ground cover management, biomass recycling, terracing, and natural regeneration or restoration instead of replanting

c. Is there proof of records of field inspection on SOP implementation?

OP-2 Preparation and Planting Procedure

Field observation in Begerpang, Sei Merah and Rambong Sialang Estate

The organisation has defined the strategy for planting of slopes area in the procedure OP-2 Preparation and Planting Procedure. The procedure describes management strategy for minimising and controlling soil erosion. The organisation does not recommend plantings on slopes > 40% or > 22º. System for planting on slopes area was provided through terracing, growing of legume cover crops (LCC) and determining of planting space.

Based on maps of soil and field observation in Begerpang, Sei Merah and Rambong SIalang Estate, there was no area with slopes > 30%.

YES

Audit Report





COMPLIANCE (YES/NO)

4.3.3 A road maintenance programme shall be in place.

a. Is there a road maintenance programme in place with supporting budget and resources?

b. Is there road maintenance records?

Historis Hardening Road 2009 – 2015

Field observation in Begerpang, Sei Merah and Rambong Sialang Estate

Road maintenance program has been established in Begerpang, Sei Merah and Rambong Sialang Estate. Road maintenance was conducted manually and mechanically using grader and compactor. Realisation of road maintenance was well recorded covering block maintained, distance of road maintained and diesel fuel consumption.

Sample records of Realisation of road maintenance Begerpang Estate:

Year Realisation

(m)

2009 17,211

2010 11,430

2011 9,100

2012 14,279

2013 28,603

2014 10,270

2015 4,159

Programme 2016: 1,186 m

Realisation 2016 (todate July 2016): 719 m

During field observation all main roads and collection roads were well maintained and easily passable for vehicle.

YES

4.3.4

(M) Subsidence of peat soils shall be minimised and monitored. A documented water and ground cover management programme shall be in place. Specific Guidance: 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 subsidence management?

b. Does the SOP make reference to the


Based on Semi detail Soil Map and field observation at Begerpang, Sei Merah and Rambong SIalang Estate there are no peat soils in the plantation.

N/A

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COMPLIANCE (YES/NO)

RSPO BMPs on peat?

c. How is subsidence being monitored?

d. Are there records of subsidence monitoring?

e. How is subsidence being minimised?

f. Is there a water management programme 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?




4.3.5

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: 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.

Audit Report





COMPLIANCE (YES/NO)

a. Was a drainability assessment conducted before replanting on peat?

b. Was a flood risk map provided as a result of the drainability assessment?

c. If the drainability assessment shows that an area is unsuitable for replanting, are there alternative plans in place for rehabilitation and alternative use in accordance to the RSPO BMPs?






N/A

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 for other fragile and problem soils?

b. Does the management strategy include SOPs for the management of other fragile and problem soils?

c. Is inspection and implementation records available?




- Field observation in Begerpang, Sei Merah and Rambong SIalang Estate


N/A

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

4.4.1 An implemented water management plan shall be in place. Specific Guidance:

Audit Report





COMPLIANCE (YES/NO)

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

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 place for mill and plantation with identified actions?

b. Does the plan include the following?

Identification of water sources

Efficient use of water

Renewability of water source

Impacts on catchment area and local stakeholders

Access of clean drinking water all year round for stakeholders

Avoidance of surface and ground water contamination

c. Have the identified actions in the plan been implemented?

Documented procedure (SOC/PSM/4.22 Rev.01 dated 1st July 2015) regarding water management at mill and estate

License of river/surface water (APU)

License of ground water (ABT)

Water analysis measurement for period 2015 by Sucofindo

Records of water consumption period 2014 and 2015 at mill and estate.

Water management programme

The documented procedure defined the method of water management plan include water source and distribution identification, volume of water utilization, parameter/standards of water utilization, identify the impacts include water effluents/wastes and also the method to reduce and control.

The main source of water for Mill activity is surface water – Kali Tawang River. Permit of water abstraction from surface water has been obtained on 12 November 2013 and valid through 3 years. Flow meters were installed to monitor water usage. The volume of water usage is monitored monthly both for process and domestic usage. Water consumption data July – December 2013 and January – February 2014 was sighted. The organisation has program to reduce water consumption, e.g. recycle condensate water from steriliser for dilution in clarification station, repair water pipe in boiler.

Source of water for Bagerpang Estate and domestic activity is surface water and ground water. Permit of water abstraction from surface water has been obtained on 12 November 2013 and valid through 3 years. Flow meters were installed to monitor water usage. The volume of water usage is monitored monthly both for process and domestic usage. Water consumption data July – December 2015 and January – July 2016 was sighted.

Source of water for Rambong Sialang Estate and domestic is ground water. There are 7 ground water wells. Permit of water abstraction from ground water has been obtained on 20 February 2012. Flow meters were installed to monitor water usage. The volume of water usage is monitored monthly both for process and domestic usage. Water consumption data was sighted.

Surface water quality is monitored annually (Sungai Kali Tawang, Sungai Cimahi, Sungai Bah Perak, Sungai Greahan, Sungai Sialang dan Sungai Timbang

YES

(Minor NCR # 2016 – 03 Closed)

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COMPLIANCE (YES/NO)

Serdang both for upstream and downstream in Begerpang Estate and Sungai Panglong, hulu Sungai Bah Didua Dua I, hulu Sungai Bah Sidua Dua II, hilir Sungai Titi Payung, hulu dan hilir Sungai Firdaus in Rambong Sialang Estate) except for Sungai Kali Tawang is monitored quarterly. Monitoring result of surface water quality was review for 2nd semester 2015 against Government Regulation #82/2001 class II. Quality of river water was inline with Government Regulation #82/2001 class II. So far the results of measurement/analysis are still within the parameters/limit value.

Minor Nonconformance: Rambong Sialang Estate

It was found oil layer from car washing in last compartement of sand trap and

oil trap which flow in to the environment

Oiltrap in outlet of oil warehouse was nt standard and potentially polluted to

waterway/stream and environment

Bagerpang Mill

It was found several water faucet leaky in water treatment plant and

laboratory.

Correction: Rambung Sialang Estate:

Clean up oil spills and put on Hazardous Waste Storage. Done on 3 August

2016

Carry out renovation to oil trap refers to the standard (SOP). Done on 3

August 2016

Begerpang POM:

Fix the leaking faucet in the treatment plant and Laboratory. Done on 25

August 2016

Corrective Action: Rambung Sialang Estate:

Carry out 3D visualisation on the provisions of SOP so it can be easily

understood by the related PIC.

Conducting dissemination and training to the related PIC visually and also in

Audit Report





COMPLIANCE (YES/NO)

writing.

Begerpang POM:

Checking the stock on a regular basis for certain parts that have the potential

significant impacts on environment and has the potential for energy loss.

Conduct training and understanding to the PIC regarding emergency action

that should be done in case of the same possible impact

4.4.2

(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. 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: 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 and wetlands?

b. Are the water courses and wetlands protected?

c. Are the riparian and buffer zones maintained and restored in existing plantation and replanting areas?

d. Is there SOP for riparian and buffer zone protection?

e. Has the SOP been implemented?

- Management of riparian strips procedure (SOP-OP.13)

- EMS-P16 HCV Management and Monitoring Issued

- Field observation was conducted on Riparian zone of Sialang on Block 08116002 and Sei Embat River on Block 93117003 Bagerpang Estate as well as Riparian zone of Lembah on Block 07117201, Riparian zone of Bata on Block 05113001 and Block 11113001 Rambong Sialang Estate

Organization has identified water courses and wetland in the plantation area. Map identifying water courses and wetlands documented in “Peta Areal Sempadan Sungai” with scale 1: 25.000.

There were several rivers travers at Rambong Sialang including: Bata River, Panglong River, Batu Pihit River and Lembah River. In the Bagerpang, there was also several rivers including: Kali Tawang River, Cimahi River, Bah Perak River, Greahan River, Sialang River and Bagerpang River.

The riparian and buffer zones above was well maintained and restored in existing plantation.

Field observation was conducted on Riparian zone of Sialang on Block 08116002 and Sei Embat River on Block 93117003 Bagerpang Estate as well as Riparian zone of Lembah on Block 07117201, Riparian zone of Bata on Block 05113001 and Block 11113001 Rambong Sialang Estate to verify procedure implementation.

Riparian zone of Sialang on Block 08116002 and Sei Embat River on Block 93117003 Bagerpang Estate was preserved naturally. However, field observation observed pesticide application up to riverside on riparian zone of Lembah on Block 07117201 as well as Riparian zone of Bata on Block 05113001 and Block

YES

Audit Report





COMPLIANCE (YES/NO)

11113001 observed that there ware pesticide application up to riparian zone. Moreover, upkeep of oil palm in riparian zone of Lembah (water pump of nursery) was manually conducted however intensity of upkeep was impact surface erosion to river.

Riparian zone of Lembah on Block 07117201 has been enriched with woody trees, such as: Gmelina arborea and Tectona grandis. The organisation has established a program to reduce water consumption, such as: repair the boiler steam outlet pipelines toward turbines by installed joint expansion to replace the elbow in order to reduce losses; to recycle the vacuum drier water discharge into kernel processes operation; steam optimization by setting the boiler main valve; recycle the sterilizer condensates for solution oil phase decanter and water dilution press in order to minimize water usage.

Policy of riparian buffer zone management at or before replanting was provided in related procedure (Management of riparian strips procedure SOP-OP.13 and EMS-P16 HCV Management and Monitoring Issued). Procedure mentioned that riparian buffer zone is planted with monoculture plants (woody trees) to minimize land claim, communicate management and protection of riparian zone to employee and around community and setting up sign of riparian protection as well as manually maintenance oil palm in the riparian area.

During field observation shown that the procedure regarding riparian and buffer zone protection was well implemented, however there were some inconsistently of implementation refer to the non conformance bellow.

4.4.3 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 regulations (Criteria 2.1 and 5.6).

a. Is the mill effluent treatment process in place?

b. Is there a process in place for checking and monitoring water discharge quality, particularly BOD?

c. Is the water discharge quality in compliance with national regulations?

d. Does the mill have a license for

- Measurement of BOD for January to December 2015

- Waste water discharge No.503/PLC/BPPPM/0776/VI/2011 dated 15 June 2011 that valid for 5 (three) years from Asahan Regent.

Begerpang Mill waste water (POME) was processed through a series of waste water treatment ponds: one anaerobic pond, one facultative pond and one aerobic pond. Process parameter monitoring and maintenance of the ponds were sighted.

POME is monitored monthly as required by permit of land application on 21 April 2011. POME is monitored monthly as required by the permit. The results of POME monitoring were reviewed including measurement of BOD for January to June 2016. The Environment Ministry Decree No. 29/2003 required that BOD of POME discharged is less than 5,000 mg/litre. The result of POME quality during

YES

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COMPLIANCE (YES/NO)

treatment, discharge or land application of mill effluent, and is the mill in compliant with the requirements of the license?

this period was under 5,000 mg/litre (average 500 – 1,000 mg/litre).

Company has permit of Land application from Regent of Deli Serdang #486 year 2015 dated 23 Marchl 2015. The permit was valid through 3 years. Land application was permitted to area of 50 ha in plantation Begerpang estate.

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

a. Are there procedures to measure mill water usage, and are the procedures implemented?

b. Are there records of mill water use per tonne of Fresh Fruit Bunches (FFB)?

- Mill water use per tonne of FFB for 2015 and period January to June 2016

- Program to reduce water consumption

Mill water use per tonne of FFB is monitored monthly. Result of monitoring of mill water use per tonne of FFB was sighted for 2015 and period January to June 2016. It was noted that mill water use per tonne of FFB period January to June 2016 (1.32 m3/ton FFB) was below compared to year 2015 (1.33 m3/ton FFB). Mill water use comprise of usage for process, boiler and domestic usage.

The organisation has program to reduce water consumption, such as: repair the boiler steam outlet pipelines toward turbines by installed joint expansion to replace the elbow in order to reduce losses; to recycle the vacuum drier water discharge into kernel processes operation; steam optimization by setting the boiler main valve; recycle the sterilizer condensates for solution oil phase decanter and water dilution press in order to minimize water usage.

YES

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

4.5.1

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

b. Does the IPM plan include the following?

Identification of potential pests and thresholds

What are the techniques used (cultural, biological, mechanical and


Program census of caterpillar leaf eater

Pest and Diseases management program of oil palm plantations have been prepared in the budget 2016.

The SOP describes integrated pest control (integrated pest management/IPM) plan which combines various control techniques e.g. mechanical, biological, physical and chemical, applied early warning system (EWS) through periodically

YES

Audit Report





COMPLIANCE (YES/NO)

physical methods)?

What are the native species used as part of the biological control method?

Does it help in 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?

c. Is there an SOP to implement the plan and monitor its effectiveness?

d. Is there a record of pest occurrence and control?

Program census of rat

Summary census of caterpillar leaf eater

Monitoring barn owl in nest box

census for pests.

IPM program included:

Visual observation (e.g. broken leafs or stems and fruit rotten)

Conducting a census (to determine the distribution and level of attack).

Control (manual, biological or chemical), e.g hand picking, light trap, planting of beneficial plant (nest of natural predator for caterpillars)

Minimisation of pesticed use

Census of evaluation (to see the effect of control)

IPM plan was well implemented and documented, e.g.:

Census of caterpillar is conducted monthly. Based on result of caterpillar census in 2015, there was no caterpillar attact therefore there was no pesticide use.

Cencus of rat is conducted two monthly. To control rat, the organisation applied Tyto alba (barn owls) as predator of rat. Condition of Tyto alba is monitored periodically.

Census of Oryctes is conducted in immature oil palm. Application of chemical is conducted every 2 weeks.

The beneficial plant such as: Turnera subulata planted in the collection and the main road. Planting and upkeep of beneficial plants was sighted and during field observations, it was observed that beneficial plants were well maintained.

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

a. Is there records of training provided to those involved in the implementation of IPM?

- List of participant attendance Training of implementation of IPM has been conducted several times, e.g.

3 September 2014 in Begerpang Estate, attended by operator and staffs from Begerpang, Sei Merah and Rambong Sialang Estate.

Participant of training was staff and non staff from Estate. List of participant attendance was sighted. Training material covered IPM technique and implementation. However some of spraying worker were not trained yet as shown

YES


Audit Report





COMPLIANCE (YES/NO)

in Major Non Conformities below.

Major Non Conformities: (reoccurence of Major NCR 2014-09)

Not enough evidence that pesticides are only handled, used or applied by persons who have completed the necessary training.

Correction:

Conduct training on safe use of pesticides. Done on 18 August 2016.

Corrective Action:

Conduct special training to all pesticide operators and issues special permits

for pesticide operators who have qualified and meet the requirements.

Ensure that employees who did not have a Special Permit shall not be

employed as pesticide operator.

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

4.6.1

(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 species shall be used where available. 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 safe use of chemicals?

b. Does the organization have SOPs for use of selective products that are specific to target pests, weeds, or diseases and which have minimal effect on non-target species?

Management of Hazardous and Toxic Material and Waste Procedure - EMSP-14

Procedure OP 5.2.2 Guide to safe use of pesticide, March 2008

The organisation has established procedure on safe use of chemical. Procedure described on safe use of chemical, selection, use and storage of pesticide. The procedure also described use of selective pesticides that are specific to target pests, weeds, or diseases. Each type of pesticide used have been defined specific target of pest, types of weeds, application doses per hectare which have minimal effect on non-target species and a broad plan of applications specified in the annual budget. To avoid development of resistance have been implemented

YES

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COMPLIANCE (YES/NO)

i. Measures to avoid the development of resistance (such as pesticide rotation) should be applied.

ii. Is there a list of all pesticide with target species and justification of use?

iii. The justification should consider less harmful alternatives and IPM.

c. Is there evidence of implementation of SOP on the ground?

Type of Agrochemical and active ingredient

by pesticides rotation.

Less harmfull alternatives and IPM was applied by planting of beneficial plants, building nest box and census of caterpillar and rat.

Pesticides used has license and registered in the Agriculture Department as mentioned in Pesticide Commission Book “Buku Komisi Pestisida”:

Type of pesticides Register number Expired date of register number

Dipel WP RI 010101197517 6 July 2017

Klerat RM-B RI 666/9 – 2008 25 September 2018

Marshal 5G RI 010101196612 17 October 2017

Elang 480 SL RI 01030119941 9 January 2017

Gramoxone 276 SL RI 01030119751 9 January 2017

Topzone 276 SL RI 01030120072 17 October 2017

Starlon 665 EC RI 01030120072 6 July 2017

Metsulindo 20 WP RI 01030119991 23 June 2016

Othene 75 SP RI 010101197420 9 January 2017

Topzone 276 SL RI 01030120072 17 October 2017

Starthane 75 WG RI 010101200729 17 October 2017

During audit it was evidence that procedure was implemented.

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 application program?

b. Is records of pesticides use available?

c. Do the records detail the active

- Annual budget 2016

- Monitoring of Pesticides Toxicity

The organization has defined pesticide application program in the annual budget. Record of pestiside use realisation was well recorded and reported in monthly Estate report. Records also covered active ingredients used and their LD50, area treated, amount of active ingredients applied per ha.

YES

Audit Report





COMPLIANCE (YES/NO)

ingredients used and their LD50, area treated, amount of active ingredients applied per ha and number of applications?

Sample of Monitoring of Pesticides Toxicity are as follows:

Pesticides Ingredients Volume used

(L) Ratio (Kg/Ha)

Elang 480 SL Isopropilamina glifosat 480 g/L

1,472.41 0.110

Garlon 670 EC Triklopir butoksi etil esther 670 g/L

552.05 0.009

Lindomin 865 SL 2,4 D methilamina 865 g/L

399.80 0.433

Starane 200 EC Fluroksipir metilheptil ester 290 g/L

33.50 0.070

Marshal 200 EC Karbosulfan 200 g/L 7.20 0.100

Orthene 75 SP Asefat 75 % 28.80 0.150

Dipel WP Bacillus thuringiensis var Kurstaki strain HD-7 : 3.1 x

122.72 0.169

Dithane 80 WP Mankozeb 80 WP 3.00 0.024

Decis 25 EC Deltametrin 25 g/L 8.85 0.004

4.6.3

(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. 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?

b. Has that plan been implemented? OP-3.2 Pest and Disease Integrated Pest Management (IPM) program included: YES

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COMPLIANCE (YES/NO)

c. Is the effectiveness of the IPM plan monitored?

d. Are there records showing that the use of pesticides have been minimised in accordance with Integrated Pest Management (IPM) plan?

e. Has there been prophylactic use of pesticides? If so, justification must be provided in accordance to National Best Practices.

(Integrated Pest Management)

Program census of caterpillar leaf eater

Program census of rat

Summary census of caterpillar leaf eater

Monitoring barn owl in nest box

Form of Herbicide use

Visual observation (e.g. broken leafs or stems and fruit rotten)

Conducting a census (to determine the distribution and level of attack).

Control (manual, biological or chemical), e.g hand picking, light trap, planting of beneficial plant (nest of natural predator for caterpillars)

Minimisation of pesticed use

Census of evaluation (to see the effect of control)

IPM plan was well implemented and documented, e.g.:

Census of caterpillar is conducted monthly. Based on result of caterpillar census in 2015, there was no caterpillar attact therefore there was no pesticide use.

Cencus of rat is conducted two monthly. To control rat, the organisation applied Tyto alba (barn owl) as predator of rat. Condition of Tyto alba is monitored periodically.

Census of Oryctes is conducted in immature oil palm. Application of chemical is conducted every 2 weeks.

The beneficial plant such as: Turnera subulata planted in the collection and the main road. Planting and upkeep of beneficial plants was sighted and during field observations, it was observed that beneficial plants were well maintained.

Based on records of pesticides use it was verified that the use of pesticides has been minimised as part of a plan, and in accordance with Integrated Pest Management (IPM) plans.

It shown the company's commitment to always reduce pesticide usage and give priority to the prevention of mechanical, biological and integrated pest management.

It was evidence that there was no prophylactic use of pesticides in Estates. Pesticide only used and apply for weeds and pest.

4.6.4 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 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.

Audit Report





COMPLIANCE (YES/NO)

a. Does the company have a complete listing of WHO class 1A, class 1B, and Stockholm or Rotterdam Conventions pesticide?

b. Is there a policy, procedure or management plan committing to minimise and eliminate use of these pesticides and paraquat?

c. Are there records of minimisation of pesticides and paraquat use?

d. Where there is the use of the above pesticides or paraquat, has justification in line with national best practice guidelines been documented?

e. Does physical verification of inventory in the chemical store agree back to the inventory records?



Form of Herbicide use

Commitment from BOD SK #038/MGT/S&P/IX/2013 regarding minimise and eliminate use of paraquat to Area Manager Agronomy, Estate Manager, R&D, Legal Department, GS and ECSR, HRD dan OAD (Operational Administration)

Organization already has a list of pesticides that are included in WHO class 1A, class 1B, and Stockholm or Rotterdam Conventions pesticide.

The organisation has commitment to minimise and eliminate use of paraquat.

Based on records of pesticides use it was verified that pesticides and paraquat has been minimized.

In 2015 and 2016, no paraquat use in all Estates.

YES

4.6.5 (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 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).

a. Is there SOP for chemicals/pesticides handling?

b. Is there a training plan and training records for workers who apply or handle pesticides?

c. Is there evidence that training has been conducted in an appropriate language understood by the workers?

d. Are pesticides handled, used or applied only by persons who have completed the necessary training?

e. Are the workers involved in chemical handling or application able to demonstrate understanding of the


Certificate of training

Interview result during public consultation

Field observation at Begerpang, Sei Merah and Rambong Sialang Estate

The organisation has established procedure on safe use of chemical. Procedure described on safe use of chemical, selection, use and storage of chemicals.

Spraying workers have received usage of limited pesticide training. Training was delivered by Pesticide and Fertilizer Controlling Commission of Agriculture Department Nort Sumatera Province on 3 September 2014 for spraying worker and staffs of Begerpang, Sei Merah and Rambong Sialang Estate. However some of spraying worker were not trained yet as shown in Major Non Conformities below.

Training covered handling of concentrate agrochemical and spraying method including pesticide hazard.

Pesticides are always applied in accordance with the product label and procedure.

Pesticides storage was locked areas with limited access. The storage was

YES


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COMPLIANCE (YES/NO)

hazards and risks related to chemicals used when interviewed?

f. Are pesticides always applied in accordance with the product label?

g. Are MSDS for pesticides used readily available for easy reference?

h. Is appropriate safety and application equipment provided and used?

i. Is PPE used appropriate according to recommendations in any risk assessments done?

j. Is appropriate PPE provided and used, and can it be easily replaced if damaged?

k. Does the management checked the workers usage of appropriate PPEs?

ventilated. MSDS and hazard symbol label were provided nearby of pesticides. Emergency shower and eye washer were also provided to anticipate in case of an emergency of pesticides handling. The possible spill was managed. Secondary containment was provided around the pesticides storage area. Spill kit was also provided in the area. PPE for handling of pesticides 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.

Personnel interviewed (sprayer workers) during public consultation can clearly explain the type of work including work methods and goals, materials used (pesticides) including the dosage and hazards and risks, personal protective equipment and first aid. All the workers used the personal protective equipment meet with the safety rules and work instruction such as: Appron, safety goggles, mask, 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. PPE was replaced if damaged.

Major Non Conformities: (reoccurence of Major NCR 2014-09)

Not enough evidence that pesticides are only handled, used or applied by persons who have completed the necessary training.

Correction:


Corrective Action:





4.6.6

(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). 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).

Audit Report





COMPLIANCE (YES/NO)

a. Has the SOP for pesticide storage been documented and implemented?

b. Are all pesticides stored according to recognised best practices?

c. Is there evidence that empty pesticide containers are properly stored and disposed off and not used for other purposes?

d. Is there evidence observed in the field that pesticide containers are indiscriminately disposed (in dump site) or used for other purposes, .e.g. as waste containers, flower pots?


The training list of attendance and training material

Field observation at Begerpang, Sei Merah and Rambong Sialang Estate

Pesticides were stored in the determined area separated from fertiliser and other chemicals. Pesticides storage was provided in warehouse. Pesticides storage was locked areas with limited access. The storage was ventilated through cross flow ventilation. MSDS and hazard symbol label were provided nearby of pesticides. Emergency shower and eyewash were also provided to anticipate in case of an emergency of chemical handling. PPE for handling of chemicals were provided including boots, apron, safety glass, respiratory mask and hand gloves. The possible spill was managed. Secondary containment was provided around the pesticides storage area. Spill kit was also provided in the area. All empty pesticides containers were triple rinsed and collected in the temporary storage of hazardous waste. Pesticides containers were transported by authorised transporter, CV. Amindy Barokah. Records of pesticides containers quantity were evident. Liquid waste from pesticides was reused for the next spraying applications also there are several ex-containers “jerry can” that may re-use for field application.

YES

4.6.7 Application of pesticides shall be by proven methods that minimise risk and impacts.

a. Is there work instruction for pesticide application?

b. Is there training provided on work instruction including risk and impacts of pesticide applications?

OP-5 Mature Upkeep (Weeding, Pest & Disease, pruning, Census & survey operation, Fertilizer Management, Empty bunch & POME application).



Training and dissemination record

Pesticide application was described in OP-5 Mature Upkeep (Weeding, Pest & Disease, pruning, Census & survey operation, Fertilizer Management, Empty bunch & POME application) and OP-3.2 Pest and Disease (Integrated Pest Management).

Training and dissemination on work instruction including risk and impacts of pesticide applications has been performed by the organization regularly. Training and dissemination records were sighted.

Personnel interviewed (sprayer workers) during field observation can clearly explain the type of work including work methods and goals, materials used (pesticides) including the dosage and hazards and risks, personal protective equipment and first aid. However practice to minimize risk and impact are not fully proven as described in Non Conformity below.

Minor Non Conformity:

Not enough evidence that pesticides application has practiced minimize risk and impact.

Correction:

YES

(Minor NCR # 2016 – 05 Closed)

Audit Report





COMPLIANCE (YES/NO)

Carry out repair or replacement to the leaking part and repair installation according to the standard. Done 9 August 2016.

Corrective Action:

Dispose of the sprayer which is not in accordance with defined standards

and provide additional standard sprayer.





4.6.8 (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 within reasonable time prior to application.

a. Has aerial spray been applied? If yes, is there documented justification?

b. Is the impact and risk associated with aerial application documented and made available?

c. Are the identified affected communities informed of impending aerial pesticide applications with all relevant information within reasonable time prior to application?

- Filed observation

- Interview with management PT PP Lonsum- Begerpang Estate, Sei Merah Estate and Rambong Sialang Estate

There was no aerial spray been applied in Begerpang Estate, Sei Merah Estate and Rambong Sialang Estate

N/A

4.6.9 Maintenance of employee and associated smallholder knowledge and skills on pesticide handling shall be demonstrated; including provision of appropriate information materials (see Criterion 4.8).

a. Has the company provided information materials on pesticide handling to all employees and associated smallholders (if any) (see Criterion 4.8)?

b. Is there evidence of periodic training (in appropriate language) of employees and

Training and dissemination record

Training certificate

Interview result during public

There was no smallholder associated with Begerpang Mill.

The organisation has provided information materials on pesticide handling to all employees. Training and dissemination on work instruction including risk and impacts of pesticide applications has been performed by the organization regularly. Training and dissemination records were sighted.

YES

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COMPLIANCE (YES/NO)

associated smallholders on pesticide handling?

Note: Interview with workers and smallholders on their knowledge and skills in pesticides handling.

consultatio Spraying workers have received usage of limited pesticide training. Training was delivered by Pesticide and Fertilizer Controlling Commission of Agriculture Department Nort Sumatera Province on 3 September 2014.

Personnel interviewed (sprayer workers) during Field Observation can clearly explain the type of work including work methods and goals, materials used (pesticides) including the dosage and hazards and risks, personal protective equipment and first aid.

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 waste material?

b. Is there training provided to workers and managers on proper waste disposal?

c. Is there evidence of implementation of proper ways for waste disposal by the company?


Documented Work instruction EMS-WI-8 dated June 2011 Waste Management.

Field observation at central warehouse and afdeling warehouse include spraying activities at estate operation

The training list of attendance and training material

All empty pesticides containers were triple rinsed and collected in the temporary storage of hazardous waste. Pesticides containers were transported by authorised transporter, CV. Amindy Barokah. Records of pesticides containers quantity were evident. Liquid waste from pesticides was reused for the next spraying applications also there are several ex-containers “jerry can” that may re-use for field application.

Hazardous waste manifests were sighted for handling of agrochemical containers on 18 December 2015 for Bagerpang Estate and 17 December 2015 for Rambong Sialang. Liquid waste from agrochemical was reused for the next spraying application.

Training/briefing regarding disposal of waste material has been conducted to all workers and staffs. Based on interview with workers, they understood the disposal of waste material.

YES

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

a. Is there an updated list of pesticide operators?

b. Is there records of annual medical surveillance of pesticide operators?

c. Is there medical and treatment records of all pesticide operators?

List of Pesticides Operator 2016

MCU Recapitulation Report for operator pesticide:

Kamarudin and Jhoni Purba (Sei Merah)

List of pesticides operator was shown and updated periodically. There were 44 operators listed at Rambong Sialang estate and 22 operators at Sei Merah estate.

Specific health surveillance has been performed for all pesticide operators included cholinesterase, spirometry and audiometry and the MCU report was evident. The surveillance was planned to be conducted once in a year. The result

YES

Audit Report





COMPLIANCE (YES/NO)

Suhardi (Rambong Sialang)

Setia Gunawan (Bagerpang Mill)

Medical records from polyclinic

of surveillance was sighted as below:

Rambong Sialang Estate: 7 May 2015

Sei Merah estate: 6 May 2015

Begerpang Mill: 16 November 2015

There were no abnormality found from the result of health surveillance at Rambong Sialang, Sei Merah and Begerpang mill. Socialization of health surveillance results have also been conducted to the workers.

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

a. Is there a policy statement preventing pregnant and breast-feeding women from handling pesticides?

b. Is there a lists of female workers handling pesticides available?

c. Does the company have a system to identify pregnant and breast-feeding women?

d. Is there evidence showing that pregnant and breast-feeding women are not allowed to handle pesticides?

Monthly checking record of pregnant monitoring.

List of employee in July 2016.

Menstruation leave record

Interview with sprayer on 26 – 27 July 2016

The company has had a statement preventing pregnant and breast-feeding women from handling pesticides in OP 5.2.2 (Guide to Safe Use of Pesticide, date on March 2008. The policy explained that the company strictly forbidden to employ pregnant and lactating women for work related to pesticides, such as a warehouse clerk pesticides, mixer and spray pesticides. List of female workers handling pesticides was available in Monthly Monitoring of Pregnant and Breast-Feeding Women on 2 July 2016 conducted by Nurse Coordinator.

The company have a system to identify pregnant and breast-feeding women through directly checked by Nurse Coordinator to women work related to pesticides, such as a warehouse clerk pesticides, mixer and spray pesticides. Evidence showing that pregnant and breast-feeding women are shown during audit. It was verified on interview with women work related to pesticides, and there were no pregnant and lactating women sprayer.

YES

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

4.7.1

(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: 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.

Audit Report





COMPLIANCE (YES/NO)

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 place?

Is it written in an appropriate language?

Has the policy been approved by an authorized personnel and dated?

Does the policy cover mitigation of risks to workers health and safety at all workplace activities?

Are the workers aware of and understand the policy?

b. Is there a health and safety plan in place?

Does the plan include targets for improving occupational health and safety?

Does the plan reflect guidance provided in the ILO Convention 184 (see Annex 1)?

c. Is there evidence of implementation of the plan?

d. Is the effectiveness of the health and safety plan monitored?

e. Is the health and safety plan made publicly available?

f. Is there an action plan if targets are not achieved?

OHS Policy

OHS Manual

OHS Procedure dated

OHS Target and Plan 2016

Notes of Meeting Safety Committee Jan-March 2016

Risk Assessment register 2016

OHS Training Records 2016

Safety Performance Report

Evaluation Records of Emergency Simulation

Measurement Report of OHS Parameters

Valid permit of lifting equipment, machinery etc.

Safety Working Permit Records

Etc.

Observations of OHS implementation on:

- Sei Merah Estate: harvesting activities, workshop, warehouse and polyclinic

- Rambong Sialang Estate: harvesting activities,

OHS policy is established and approved by President Director on 12 September 2014 consisting commitment to mitigate the risks of safety and health including prevention from injury and work related disease. The documented manual of OHS was established on 15th of September 2013, there were also several documented procedures to support the OHS management system, such as: OHS communication and consultation, purchasing and contractor evaluation, emergency response, OHS monitoring and measurement, employees’ health monitoring, etc.

An OHS plan was documented as part of internal system such as objective, target and program, management review, internal audit program, emergency simulation program, monitoring and measurement program.

OHS implementation regarding to OHS plan has been reviewed and observed monthly and also been reviewed yearly in OHS management review meeting.

Last OHS management review was on 2 January 2016 and attended by management level (group manager) and relevant managers and chiefs. Minute of meeting is sight consisting information of reviewing OHS management system performance including OHS plan.

General implementation of OHS Plan and Target were described as below:

Hazard identification and risk analysis within the scope of oil palm mill processes activities and agricultural estate activities has already conducted, as it was considered the stages of OHS risk control hierarchy such as elimination, substitution, engineering, administrative and PPE (Personnel Protective Equipment) in order to OHS risk precautions.

Several mandatory PPE were available by the organization to the employees and visitors such as: helmet, safety shoes, ear plugs, ear muffs and respirators. There were also deployed several PPE symbols at the at risk areas.

Several working tools and machineries that utilized at Mill and Estate were also equipped with safety devices, such as knives cover those are used by

YES

Audit Report





COMPLIANCE (YES/NO)

warehouse, polyclinic and workshop.

- Begerpang Mill: loading/unloading, production process including utilities, workshop, storage and laboratory.

harvester and also pressure release valve at mill processing machineries.

Emergency response equipment were available by the organization at mill and estates such as first aid boxes those kept by each trained harvester supervisors and several hydrants and fire extinguishers at the risky areas, centre clinic and ambulance units were also available for each Estate.

Accident reports and records recapitulations were reported periodically by OHS committee (P2K3) to local government Ministry of Manpower, there were also separated log book of accident records at the clinic.

Moving parts of machine/equipment generally has been covered. Safety sign was provided to make workers aware on this hazard and risk. Housekeeping at Mill and Estate (office estate, storage, and workshop) in general was well monitored. 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. Vertical stair in general has been provided with cover as well.

Several license certificates were sighted for personnel who has special competencies such as: (SIO) for steam boilers operators and pressurized vessels SIO), operators of lifting equipment, Certified welder at mill, medical doctor certified industrial Hygienist (HIPERKES).

4.7.2 (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 precautions attached to products shall be properly observed and applied to the workers.

a. Have risk assessments been conducted for all operations where health and safety is an issue?

b. Does the risk assessment cover all the organization’s processes and activities?

c. If any accidents had occurred, were these included in the risk assessments with action plans to prevent further recurrence?

d. Have the procedures and action plans

List of identification and evaluation of OHS aspects

Risk Assessment procedure P-03 ev.01 dated 3 December 2013

Critical Safety Procedure P-22 Rev.01 dated 3 December 2013

Risk Assessment for all operations regarding to health and safety was available. The risk assessment covers all the organization’s processes and activities such as: spraying, fertilizing, weeding, replanting, road maintenance, harvesting, transportation, warehouse, workshop, infrastructure, policlinic, office etc. It also covered all the risk attached to the products.

Related risk assessments were reviewed if any accident or any change of process/machineries been occurred and the latest review was on 6 January 2016. Several procedures related to the issues (generally accident) have been documented and implemented.

Moving parts of machine/equipment generally has been covered. Safety sign was

YES

Audit Report





COMPLIANCE (YES/NO)

been documented and implemented to address the identified issues?

e. Have all precautions attached to products been properly observed and applied to the workers?

provided to make workers aware on this hazard and risk. Housekeeping at Mill and Estate (office estate, storage, and workshop) in general was well monitored. 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. Vertical stair in general has been provided with cover as well.

The procedure for critical activities P-22 Rev.01 3 December 2013 was established. The procedure was covering OHS control for working in confined space (e.g. cleaning of storage tank), working at height and welding. Work permit system was established but not well implemented, see non-conformance below. 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.

4.7.3 (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 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 appropriately trained in safe working practices (see Criterion 4.8)?

b. Are OSH training programs and training records available and conducted by qualified persons?

c. Is adequate and appropriate protective equipment available to all 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?

d. Is PPE provided to workers and replaced when damaged?

Does the organization maintain a list of PPE distribution?

Are workers observed wearing appropriate PPE?

List attendance of OHS Trainings

PPE Procedure P-02 Rev.01

Dated 3 December 2013

PPE Distribution Records of

Safety Shoes on

Safe working practices socializations planned to be conducted to related workers as WI SMK3 socialization. However there was no this socialization for other process at Begerpang mill, Rambong Sialang and Sei Merah estate.

OHS Training Program 2016 was available. Several trainings have been conducted such as:

Emergency Response Procedure Socialization 22 July 2016

Panen di Jalur PLN 18 March 2016

First Aid Training on8 April 2016

Safety Principle of FFB Loading Practice on 16 February 2016

The procedure for management of PPE has been established. The PPE for each activity was defined, 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. Workers in harvesting activities named Paidi, Saiful and M. Dani were interview during this audit and they were understood risks of their work and the purpose of using PPE.

YES


Audit Report





COMPLIANCE (YES/NO)

List of PPE was evident included: ear plug, helmet, ear muff, safety shoes, gloves, googles, mask, apron etc.

The List of PPE distribution was available at all estates and mill. However the mask given to the workers at all estate and mill were not appropriate for it was only dust mask.

Major Non-Conformities:

Mask used by workers with high risk hazardous operation such as operator at pesticide warehouse at all estates and mill, were not appropriate for they were only dust mask instead of chemical mask.

Safe Working Practices Training has not been conducted to the workers at Begerpang mill, Rambong Sialang Estate and Sei Merah Estate for all process.

Correction:

Replace the mask appropriate to the potential risks.

Conduct training / dissemination regarding OHS Work Instruction per unit process.

Corrective Action:

Conduct training on a regular basis, at a minimum, per semester.

Apply the mask purchase parameters based on the potential risks of each

unit process.

4.7.4 (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 and welfare shall be discussed at these meetings, and any issues raised shall be recorded.

a. Has the company identified the responsible person/persons to implement OSH?

b. Are meetings between the responsible persons and workers conducted on a regular basis, or as required by law, if any?

c. Are minutes of meeting recording attendees and issues discussed

- Approval Letter of Safety Committee from Pemkab Serdang Bedagai No.18.14/560/935/P2K3/2016 for Rambong Sialang estate

- Approval Letter of Safety Committee from Pemkab Deli Serdang No.560/3888/DTK-TR/2016 for Sei Merah estate


The responsible person was identified as Chief of P2K3 (Ir. Basuki Eka Jaya) and P2K3 secretary (Franz Joseph Nasution). The safety committee (P2K3) structure was evident and been approved by local authority Pemkab Serdang Bedagai, North Sumatra.

Notes of Regular Meeting of Safety Committee with workers were evident. Samples were reviewed for January - June 2016. The meeting was planned once in a month as required by Permenaker 04/1987.

YES

Audit Report





COMPLIANCE (YES/NO)

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.

- Approval Letter of Safety Committee from Pemkab Deli Serdang No.560/3139/DTK-TR/2010 for Begerpang Mill and estate

- Notes of Meeting Safety Committee (P2K3) January – June 2016

Several concerns were discussed such as: PPE patrol, emergency simulation preparation, fire equipment evaluation etc.

Sei Merah Estate

The responsible person was identified as Chief of P2K3 (Eddy Syahutra) and P2K3 secretary (May Indra Syahputra). The safety committee (P2K3) structure was evident and been approved by local authority Pemkab Deli Serdang, North Sumatra.

Notes of Regular Meeting of Safety Committee with workers were evident. Samples were reviewed for January - April 2016. The meeting was planned once in a month as required by Permenaker 04/1987.

Several concerns were discussed such as: first aid box at the field, using of PPE, safety patrol, incidents and near miss etc. The actions were monitored for realisation and reported to management and local authority.

Begerpang Mill and Estate

The responsible person was identified as Chief of P2K3 (Heriyanto) and P2K3 secretary (armansyah Siregar). The safety committee (P2K3) structure was evident and been approved by local authority Pemkab Deli Serdang, North Sumatra.

Notes of Regular Meeting of Safety Committee with workers were evident. Samples were reviewed for January - April 2016. The meeting was planned once in a month as required by Permenaker 04/1987.

Several concerns were discussed such as: health socialization, general waste, HIRAC, PPE and first aid box. The actions were monitored for realisation and reported to management and local authority.

4.7.5 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. 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





COMPLIANCE (YES/NO)

a. Are there SOPs for accidents and emergencies?

Do these cover all major potential emergencies, such as, but not limited to fire, chemical spillage, and potential natural disasters specific for the region, e.g. earthquakes, volcanoes, etc.?

Are accidents investigated and action taken to prevent recurrence?

Are accident records provided to the local authority in accordance with local legal requirements, if any?

Available in the appropriate language of the workforce?

b. Are the instructions on emergency procedures clearly understood by all workers?

c. Are assigned operators trained in First Aid present in both field and other operations?

d. Is there records of training of the first 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?

P-10 - Emergency procedure Rev.01 dated 3 December 2013

P-12 - Incident investigation procedure Rev.01 dated 3 December 2013

List attendance of emergency procedure socialization for all estates

List attendance of first aid training on 8 April 2016

Training Certificate of First Aid Officer (Paramedic Officer)

Emergency respond procedure written in Bahasa Indonesia was evident and covered reporting, responsibility of all members of ERP Team, handling of ERP situation, mitigating of ERP situation, etc. Some situations were identified such as earthquake, flooding, fire, hazardous spillage, explosion etc.

Incident/accident investigation procedure written in Bahasa Indonesia was evident. Accidents happened were investigated such as last accident on 8 June 2016 at Sei Merah estate. The accident has been reported to local government. The record of accident investigation was evident and maintained properly. There was no accident reported at Rambong Sialang and Bagerpang estate during 2015 and 2016.

Emergency respond procedure has been socialized to workers during the simulation of emergency situation on 22 July 2016 for Rambong Sialang estate, 29 March 2016 for Sei Merah estate and 28 February 2016 for Bagerpang mill. The list of attendance was available. From workers interview in the field it was observed that the workers were clearly understood of what is required in the procedure.

Trained First Aid operators were provided in the field area. First Aid trainings have been conducted for all estate and the list attendance was evident. The First Aid equipment were available at worksites such as harvesting area, spraying area, mill etc. and were checked in accordance with local regulation Permenaker 15/2008.

YES

Audit Report





COMPLIANCE (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 provided with medical care (refer to Criterion 6.5.3), and covered by accident insurance by the company? For contract workers, the contract between the company and the contractor shall be in compliance.

b. For accidents that have occurred, is there evidence that the affected workers received appropriate medical treatment, and was able to claim and receive compensation under the insurance policy (if relevant)?

c. Is there evidence that the insurance policies are valid?

Slip payment of medical care and accident insurance

Memo Management related to health and incidents insurance

All workers at Bagerpang Mill, Bagerpang estate, Sei Merah estate and Rambong Sialang Estate have been covered by medical care and accident insurance given by company and government.

However the daily workers (PHL) were not included in government insurance (BPJS Naker and Kesehatan) even though they had a health insurance from the company. Slip payment for the government insurance were available for payment on 18 April 2016. The insurances were still valid as seen by the recent slip payment for all estates and mill.

YES

4.7.7

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. 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 using Lost Time Accident (LTA) metrics?

- Accident Reports and Investigation

- Frequency Rate and Severity Rate Calculation Table

Safety performance for both mill and estates was calculated using frequency rate and severity rate. During 2015 and 2016 there was no incidents occurred at Rambong Sialang estate and Begerpang mill so the value for FR and SR was: FR=0; SR=0.

However there were two accidents occurred at Sei Merah estate during 2016 and the value for FR and SR was: FR=6.85; SR=23.97

YES

Audit Report





COMPLIANCE (YES/NO)

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

4.8.1

(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 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.

a. Does the company maintain a list of staff, workers, smallholders and contract workers whom training must be provided to?

b. Is there a formal training programme in place that covers all aspects of the RSPO Principles and Criteria? Does the formal training program include:

Regular assessment of training needs of all staff, workers, smallholders and contract workers;

Training for workers on smallholder plots;

• Training Identification Matrix

• Training Programme 2015 and 2016

• Training Records

(List Attendance, evaluation etc.)

Training need identification matrix 2016 has been conducted and the records were evident. Training programme 2016 were sighted and established based on the training needs identification and covered all aspects of the RSPO criteria such as safety, environment, social, best practice, human rights, management program, HCV and ethical.

The list of attendance and the training handouts for year 2016 were evident such as:

SOP Processing on 17 May 2016

Safety Management System and Safety Committee on 28 January 2016.

Hazardous Material Handling on 12 January 2016

YES

Audit Report





COMPLIANCE (YES/NO)

Documentation of all the training assessment needs, formal training conducted and the list of participants attending these formal training;

Does the training for workers cover, at minimum, to the following:

o The health and environmental risks of pesticide exposure;

o recognition of acute and long-term exposure symptoms including the most vulnerable groups (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’ 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.

Sustainability Training on 28 March 2016

First Aid Training on 14 April 2016

Emergency Response Training on 28 January 2016

PROPER (environmental audit) on 17 February 2016

Safety Management Socialization on 18 July 2016

For year 2015 several trainings have been conducted such as:

Boiler on 11 November 2015

HIRAC on November 2015

Working Site Inspection on 28 April 2015

4.8.2 Records of training for each employee shall be maintained.

a. Are training records maintained for each employee?

• Training attendance list

• Employee training record

Evidence of training for key person were verified and sighted and the records 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

YES

Audit Report





COMPLIANCE (YES/NO)

been completed by each person was recorded in employee training records 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




COMPLIANCE (YES/NO)

5.1 Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continual improvement.

5.1.1

(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). 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 the scope of operation covering at minimum the following:

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);

PEL of Begerpang Estate #RC.220/699/B/IV/1994 dated 18 April 1994

RKL RPL of Begerpang Estate #RC.220/948/B/V/1994 dated 28 May 1994

PEL of Rambong Sialang Estate #RC.220/699/B/IV/1994 dated

Initial Environmental Impact Assessment Impact assessment was documented in:

• Document of PEL of Begerpang Estate and Ranbong Sialang Estate approved by Ministry of Agricutrural on 18 April 1994.

• Document of RKL and RPL of Begerpang Estate and Rambong Sialang approved by Ministry of Agricutrural on 28 May 1994.

• Document of UKL UPL of Begerpang Mill approved by Kepala Bapedalda Kabupaten Deli Serdang on 26 March 2004.

YES

Audit Report





COMPLIANCE (YES/NO)

Clearing of remaining natural vegetation;

Management of pests and diseased palms by controlled burning (Criteria 5.5 and 7.7).

b. Has the EIA been conducted and documented according to local requirements?

c. Does the assessment include consultation with relevant stakeholders to identify impacts and to develop any mitigation measures?

18 April 1994

UKL UPL of Begerpang Mill #0318/BPDL/DS/2004 dated 26 March 2004

UKL UPL of Timbang Serdang Division #09151/BPDL/DS/2008 dated 5 September 2008

Environmental aspect identification and evaluation procedure – EMS-P01

Identification and evaluation of environmental aspect and impact

• Document of UKL UPL of Timbang Serdang Division Bagerpang Estate approved by Kepala Bapedalda Kabupaten Deli Serdang on 5 September 2008.

For internal environmental aspect and evaluated its impact document, as required by the procedure of Environmental aspect identification and evaluation – EMS-P01. The information of environmental aspect and impact was reviewed and updated at least once a year. Last review and update of environmental aspect and impact register was performed on January 2016. Document of environmental impact assessment included:

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;

Clearing of remaining natural vegetation;

Management of pests and diseases palms by controlled burning;

Result of stakeholder consultation.

5.1.2 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 comprehensive management plan. The management plan shall identify the responsible person/persons.

a. Is there an environmental management plan in place?

b. Is the environmental management plan documented to include the following:

Identification of responsible person(s);

Potential impacts from current practices;

Measures to mitigate negative impacts;

Timetable for change (where changes in current practices are required).

c. Has the environmental management plan



Begerpang Mill and it supply bases implemented procedure for identifying environmental aspect and evaluating its impact based on Environmental aspect identification and evaluation procedure – EMS-P01. As required by the procedure, the information of environmental is reviewed and updated regularly. Last review and update of environmental aspect and impact register for Begerpang Mill and Estate was performed on January 2016. No changes of identification of impacts since last audit.

Begerpang Mill and it supply bases has ensured that all activities with significant environmental impacts were managed. Control measure were defined and implemented for ensuring that negative environmental impact were prevented or mitigated. There were several types of control measures defined: engineering control, administrative control and PPE. The

YES

Audit Report





COMPLIANCE (YES/NO)

been implemented? implementation of those control measures are monitored during monthly environmental patrol and also round of internal audits.

5.1.3 This plan shall incorporate a monitoring protocol, adaptive to operational changes, which shall be implemented to monitor the effectiveness of the mitigation measures. The plan shall be reviewed as a minimum every two years to reflect the results of monitoring and where there are operational changes that may have positive and negative environmental impacts.

a. Does the plan incorporate a monitoring protocol?

b. Is the monitoring protocol adaptive to operational changes?

c. Is the monitoring protocol implemented to monitor the effectiveness of the mitigation measures?

d. Is the plan reviewed at 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?

RKL – RPL Document of Begerpang Mill, Begerpang Estate, Rambong Sialang Estate and Sei MErah Estate

Management Plan and monitoring of environmental impacts documented in RKL (Rencana Kelola Lingkungan) and RPL (Rencana Pemantauan Lingkungan) as monitoring protocol.

Environmental management plans adapted to estate and mill operations change and regulations, if there are changes in the regulations related to operational and environmental, management plan will be reviewed and re-conducted the update to be relevant.

The reporting of RKL/RPL was conducted 6 monthly issued by Head of administration/KTU that consist of the implementation of environment management and monitoring plan include analysis of waste water quality and flow rate also the air emissions measured by third party (Environmental Laboratory). The effectiveness 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.

Whenever there is a material change, changes in operations and regulatory changes must precede environment aspect and impact assessment. This identification was updated annually.

YES

5.2 The status of rare, threatened or endangered species and other High Conservation Value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and operations managed to best ensure that they are maintained and/or enhanced.

5.2.1

(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: 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; • Identification of HCV habitats, such as rare and threatened ecosystems, that could be significantly affected by the grower or miller;

Audit Report





COMPLIANCE (YES/NO)

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) assessment been conducted and cover the following:

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.

Identification of HCV habitats, such as rare and threatened ecosystems, that could be significantly affected by the grower or miller;

b. Was the HCV assessment performed by a qualified HCV assessor?

c. Was the HCV assessment performed in consultation with relevant stakeholders?

- HCV Assessment Report

Rambong Sialang Estate, Sei

Merah Estate and Begerpang

Estate 2014

- Lisf of Registered HCV RN

Assessor

(https://www.hcvnetwork.org/al

s/assessors)

- Map of High Conservation Area

with scale: 1:25,000

- Attendance list of HCV Public

consultation

Organization has performed HCV assessment collaborated with PT. SAIL consulting (PT. Siklus Alam Indonesia Lestari). Field assessment was conducted on 20-22 May 2014 (Rambong Sialang and Sei Merah Estate) and 13-15 May 2014 (Bagerpang Estate).

HCV assessment been conducted and cover the following:

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.

Identification of HCV habitats, such as rare and threatened ecosystems, that could be significantly affected by the grower or miller.

HCV Asessment performed by a qualified HCV assessor and accredited by

RSPO, comprised of:

- Sutopo S. Hut

- M. Sayidina, Amd

- Sulfan Ardiansyah, S. Hut

- Gilang Prastya P, S.Hut

YES

https://www.hcvnetwork.org/als/assessors

https://www.hcvnetwork.org/als/assessors

Audit Report





COMPLIANCE (YES/NO)

d. Does the HCV assessment include checking of available biological records?

e. Does the HCV assessment include both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors)?

f. Was the HCV assessment performed in accordance to the latest methodology available at global and national level?

g. Are identified HCVs mapped?

Assessment performed with consultation with relevant stakeholders on 19 May 2014 in Bagerpang Estate (attanded 38 stakeholders) and on 26 May 2014 in Rambong Sialangand Sei Merah Estate. Attendance register and resume of public consultation was documented and could be demonstrated. It had intended to get aspiration and responses from stakeholders related identification result of HCV and its management plan. HCV assessment report has commented by accredited assessor form Forestry Faculty of IPB.

Based on final report of HCV identification and analysis it was demonstrated that the HCV assessment include checking of available biological records.

HCV assessment also include both the planted area itself and relevant wider landscape-level considerations

HCV assessment performed in accordance to the latest methodology available at global and national level. The method used in accordance with scientific standards and Identification Guide HCVA in Indonesia version 2 in 2008 compiled by a Indonesia consortium of HCV toolkit revision. Stages of identification activities include:

- Review of the data and information that has been available

- Early identification of HCV

- Drafting of plans for field surveys

- Secondary data collection

- Field survey

- Mapping and landscaping

- Assessment aspect fauna

- Assessment aspects of flora

- Assessment aspects of social, economic and cultural

- Analysis and Mapping

HCVs identified were mapped in HCV map with scale 1: 25.000.

5.2.2 (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

Audit Report





COMPLIANCE (YES/NO)

enhance them shall be implemented through a management plan. Specific Guidance: 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?

b. If HCVs and/or RTEs are present, has a management plan containing appropriate measures that are expected to maintain and/or enhance them been prepared? The measures should include the following:

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).

c. Are the measures contained in the management plan actively implemented to maintain and/or enhance HCV values?

d. Are the HCV values and the presence of RTEs periodically monitored?

e. Are the field inspections conducted regularly to ensure implementation of mitigation plan (especially along areas




Estate 2014

- HCV Management Planning

2016

- HCV monitoring form 2015

- Field Observation

There were HCV area identified in HCV identified in Rambong Sialang and Sei Merah Estate consist of:

a. Areas critical to water catchments (HCV 4.1) regarding: River of Bata 1,2,3 (5.00 ha), Batu Pihit river (1.35 ha), Belidaan river (0.71 ha), Lembah river (3.55 ha), Panglong river (9.14 ha), Water pond in Pondok Bundar (3.07 ha), Water resource Dedet (2.60 ha) and Water resource for Nursery (0.23 ha)

b. Areas critical to religious significance (HCV 6) regarding: Cemetery of Egaharap (0.18 ha), Cemetery of emplasment (0.78 ha) and Cemetery of Firdaus (0.02 ha).

HCV identified in Bagerpang estate consist of:

Divisi Batu Lokong

a. Areas critical to water catchments (HCV 4.1) regarding: Batu Lokong rivers (4.94 ha), Water source of housing area : Batu Lokong 1 (0.10 ha), Batu Lokong 2 (0.08 ha), Naga Timbul 1 (0.56 ha), Naga Timbul 2 (0.18 ha), Namu Rambe (0.34 ha),

b. Areas critical to religious significance (HCV 6) regarding: Cemetery of Batu Lokong (0.29 ha), Naga Timbul 1 (0.15 ha), Naga Timbul 2 (0.28 ha), Namu Rambe 1 (0.09 ha), Namu Rambe 2 ( 0.002 ha), Namu Rambe 3 (0.08 ha), Namu Rambe 4 (0.10 ha)

Divisi Tambang Serdang

a. Areas critical to water catchments (HCV 4.1): Serdang river (3.63 ha), Water source 1 (0.02 ha), Water source 2 (0.004 ha), Water source 3 (0.007 ha), Water source 4 (0.01 ha), River of BG 1 (0.98 ha), River of BG 2 (0.23 ha), River of KF 1 (0.39 ha), River of KF 2 (0.71 ha), River of KT 1

YES

Audit Report





COMPLIANCE (YES/NO)

bordering natural area)?

(1.14 ha), River of KT 2 (3.55 ha), Water source of BG (1.34 ha), Water source of KF (0.19), Water surce of KT (0.11 ha)

b. Areas critical to religious significance (HCV 6) regarding: Cemetery 1(0.05 ha), Cemetery M2 (0.06), Cemetery BG (0.52 ha) Cemetery KF (0.36 ha).

Management plan was available containing appropriate measures that are expected to maintain and/or enhance them, includes:

- Maintenance of HCV marking, manual upkeep, NPK fertilization by drilling at the riparian

- Replacement of warning sign

- Monitoring of riparian

- Erosion handling

- Monitoring the presence of wildlife

- Monitoring of illegal hunting

- Cemetery maintenance

Management plans and monitoring of HCV was breakdown in Division HCV Management Program, each Division assistant was responsible for the program and its implementation. The measure contained in the management plan was actively implemented to maintain and/or enhance HCV values.

HCV values and the presence of RTEs were periodically monitored by organization. Monitoring the kinds of protected animals which include in category RTE (Rare, Threat and Endangered) and protected species was monitored monthly by HCV officer. Data monitoring and monitoring results were available and can be emostrated.

There is no RTE species identified, however there are identified some protected species in appropriate to PP No.7/99 regarding Kucing kuwuk (Felis bengalensis), Raja udang (Alcedo meninting), Burung madu kelapa (Anthreptes malacensis), Burung madu belukar (Anthreptes singalensis), and Piton (Phyton morulus).

Riparian monitoring also has been performed by organization, with the result:

- No interference cattle

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COMPLIANCE (YES/NO)

- There is no interruption of people

- No occupational community

- There is no erosion of the riverbank

- The condition of warning sign was good

- The boundary conditions HCV was good

Field observation to HCV area and document “Evaluasi Program Pengelolaan HCV” (Evaluation of HCV program and management) period January to Desember 2015 was available demonstrate that the measures contained in the management plan been actively implemented.

5.2.3 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 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 to protect RTE species?

b. Is there a programme to regularly educate the workforce about the status of the RTE species?

c. Is there evidence or action taken to implement the rules and programs? E.g. Inspections conducted to check no traps/snares put up within or nearby areas.

d. Have appropriate disciplinary measures been imposed in accordance with company rules and national law, should any individual working for the company is found to have captured, harmed, collected or killed any RTE species?

- HCV Management and

Monitoring procedure EMS-P16

2011

- HCV Programs and Realization

in 2015

- HCV Monitoring Form

- Field observations i.e warning

sign

Policies and regulations related to the protection of protected species and RTE species specified in the Procedures Management and Monitoring of HCV EMS-P16 2011. The company has also installed warning sign in to preserve, maintain, and protect the protected species and do do not hunt wild and those who practice hunting will be penalized in accordance with Law No. 5 1990. Warning signs prohibition of hunting also installed at strategic locations in and around of plantation area.

Company has programme to regularly educate the workforce about the status of the RTE species through socialization and awareness. Socialization HCV protection and RTE species to all employees has been conducted. The list attendance and minutes of socialization was sighted. Socialization was also performed to representatives of community in and through warning sign and campaign HCV which installed in the strategic place.

Company has been establish the HCV management plan program 2016, such as :

HCV 1.2 management plan :

- Monitoring the existence of protected species

- Monitoring the condition of warning sign

- Replacement of damaged warning sign

- Monitoring of illegal hunting

YES

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COMPLIANCE (YES/NO)

- Dissemination and awareness to all workers to conserve the HCV and protected species

HCV 4.1 management plan:

- Maintenance of HCV boundary markers

- Upkeep oil palm trees manually and forbidden to apply pesticides / herbicides in the river border/riparian area

- Replacement warning sign

- Monitoring of river border/riparian area

- Erosion monitoring

HCV 6 management plan :

- Cemetery boundary mark maintenance

- Warning sign monitoring

- Warning sign replacement

- Shrine graves maintenance

Implementation of the management plan has been performed well in the field and the record of implementation can be demonstrated.

Organization has been appointed an officer to monitor any plans and activities of HCV management and monitoring program (Decision Letter of Estate Manager No. 015/RS/DIV/V12, date on 25 January 2012).

Organization has a policies or rules to protect RTE species based on UU No.5 / 1990. Penalties under the UU No.5/1990 "person who deliberately capture, injure, kill, keep, possess, maintain, transport, and trade in protected animals alive or dead can shall be punished with imprisonment of 5 years and a maximum fine 100.000.000, - (one hundred million). Penalties were communicated directly to all employees and the local community during HCV socialization and through the HCV warnings sign boards.

5.2.4 Where a management plan has been created there shall be ongoing monitoring: • 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.

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COMPLIANCE (YES/NO)

a. Does the management plan contain ongoing monitoring of status of HCV and RTE species that are affected by plantation or mill operations?

b. Is the status documented and reported?

c. Are the outcomes of monitoring fed back into the management plan?

- Management and Monitoring Plan HCV 2016

- HCV Programs and Realization

in 2015

- HCV Monitoring Form in 2015

Management plan of HCV has been established based on HCV assessment in May – June 2014. Ongoing monitoring of the HCV management plan is performed regularly in monthly basis. Division Assistant is the personnel in charge for conducting the monitoring of HCV. Records of HCV monitoring were available and it was observed that monitoring was performed consistently.

HCV management plan is updated once a year based on the outcome of the HCV monitoring that performed regularly in monthly basis.

Monitoring of management plan 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 in monthly basis. A record was available in “Monitoring Keberadaan Satwa Dilindungi” (Monitoring of RTE species existences). Items checked contain RTE species existence, disturbance of people hunting and warning sign condition.

Outcomes of monitoring feed back into the management plan. Monitoring result has been evaluated by organization. Last evaluation for monitoring period January – December 2015. Some outcomes of monitoring fed back into the management plan.

YES

5.2.5

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. 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).

Audit Report





COMPLIANCE (YES/NO)

a. Is there HCV set-asides with existing rights of local communities?

b. Who are the affected communities?

c. Is the identified HCV areas mapped?

d. Is there evidence of stakeholder consultation and negotiated agreement, in accordance to FPIC principles, with local community to optimally safeguard both the HCVs and rights of local communities?

e. If a negotiated agreement cannot be reached, is there evidence of sustained efforts to achieve an agreement? Refer to specific guidance for 5.2.5.




Estate 2014

- Map of High Conservation Area

in Aek Loba scale: 1:25,000

- Interview with stakeholder in

July 2016

Based on HCV map and report there was HCV 6 identified within HGU concession.

HCV 6 identified in the plantation areas are public cemeteries which were made by company for employees and the surrounding communities who need graveyard. Companies allow the surrounding communities who will bury their citizens in this area.

YES

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 produced?

b. Is there a registry/list of pollution sources?

Identification and evaluation of Environment and Social Aspect and Impact for Palm Oil Estate (updated 22 Juni 2016).

Identification of waste and pollution sources from Begerpang Mill and Estate, Sei Merah and Rambong Sialang Estate activities were evident. The source of pollution, type and control method of waste was recorded in document Identification and evaluation of Environment and Social Aspect and Impact for Palm Oil Estate (updated 22 Juni 2016).

The waste products from estate generally were domestics waste and also several hazardous waste from estate operations activities as detailed below (but not limited):

Ex-pesticides containers (bottles and jerry cans) Used battery from the heavy vehicles Plastics Medical waste (first aid usage)

YES

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COMPLIANCE (YES/NO)

Polybag rags and fertilizer containers Emissions from vehicles

While at the Mill it was several hazardous waste generated from the mill operations, in detailed below (but not limited):

POME Palm shell Fibre Depricaper waste Empty bunch Boiler ash Chemicals jerry can and bottles Gunny sacks from chemicals materials Sacks resulted from fertiliser 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 (genset, boilers)

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

a. Is there an inventory of chemicals and their containers that are used and kept on site?

b. How are chemicals and their containers stored and disposed off? Is it in accordance to best practices? (as prescribed by manufacturers’ labels, local requirement, national or international best



Record of hazardous and non-hazardous waste

The disposal methods were described on documented Procedure Management of Hazardous and Toxic Material and Waste - EMSP-14 and Work instruction EMS-WI-8 dated June 2011 Waste Management. Detailed as follows:

Waste category, such as:

1. Hazardous waste, separated for reuse and non-reuse 2. Non-hazardous waste, separated for non-organics (economic and

non-economic value) and organics (economic and non-economics).

YES

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COMPLIANCE (YES/NO)

practice)

c. Are collection and disposal records of chemicals and their containers maintained?

Hazardous waste manifest

Observation to temporary storage of hazardous waste

Record of hazardous waste (Logbook Monitoring Limbah B3 PT PP London Sumatera Tbk)

“Laporan pengelolaan LB3” quarte 1 – 4 year 2015

License of hazardous wastes temporary storage (TPS B3) in Begerpang Mill and Estate as issued from Decree Regent of Deli Serdang No. 440 year 2012

License of hazardous wastes temporary storage (TPS B3) in Sei Merah Estate as issued from Decree Regent of Deli Serdang No.499 tahun 2014 dated 1 April 2014

Disposed methods:

1. TPA (organics and non-organics) 2. TPS B3 managed by licensed vendors 3. Reuse 4. Send back to supplier/vendors 5. Burnt as boiler fuel 6. Composting

All empty agrochemical containers were triple rinsed, the jerry can were reused to spraying activities, while bottles containers were stored in the designated area and categorized as hazardous waste (B3). Records of chemical containers quantity disposed were evident. Liquid waste from agrochemical was reused for the next spraying application. While the ex-fertilizer sacks was also rinsed and reuse for fertiliser distribute “untilan” at estate operations.

Several ex-chemicals materials containers that use at mills operations such as laboratory chemicals ex-containers were sent to mill and the others, such as boiler additive liquids, lubricants, workshop materials, use battery, etc. were categorized as hazardous wastes that stored at hazardous waste temporary warehouse (TPS B3) that will be managed by licensed vendor: CV. Amindy Barokah for transporter and CV. Karisma as used oil processor, PT. Wahana Pamunah Limbah Industri as clinic waste, used battery, used oil filter, used agrochemical container processor.

License of hazardous wastes temporary storage (TPS B3) in Begerpang Mill and Estate as issued from Decree Regent of Deli Serdang No. 440 year 2012 was valid for 5 years defined that the time limit was 180 days but if produced (less than) < 50 kg per days may store more than 180 days.

License of hazardous wastes temporary storage (TPS B3) in Sei Merah Estate as issued from Decree Regent of Deli Serdang No.499 tahun 2014 dated 1 April 2014 was valid for 5 years defined that the time limit was 90 days.

The license include: lubrication oil, battery, oil filter, rugs, pesticides/chemical containers and medical wastes. Manifest of disposal were sighted for July 2015.

Others records sighted, such as: “Logbook Monitoring Limbah B3 PT PP London Sumatera Tbk” and “Laporan pengelolaan LB3” Period quarter 1 – 4

Audit Report





COMPLIANCE (YES/NO)

year 2015.

5.3.3

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

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 and disposal plan to avoid or reduce pollution?

b. Does the waste management and disposal plan, at minimum, include measures for:

Identifying and monitoring sources of waste and pollution?

Improving the efficiency of resource utilisation and recycling potential of 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?



Record of hazardous and non-hazardous waste

Hazardous waste manifest

Observation to temporary storage of hazardous waste

Record of hazardous waste (Logbook Monitoring Limbah B3 PT PP London Sumatera

Procedure waste handling including hazardous waste handling has been established and implemented. The procedure required waste to be segregated from point of sources. In addition Mill and Estate also established waste register, which described wastes sources from each activity/location, its classification (organic, inorganic or hazardous), and its disposal, reusing or recycling.

POME was treated in waste installation to land application. EFB was used as mulch to the plantation as an organic fertilizer. Solid from decanter were used for fertiliser in Begerpang Estate and Sei Merah Estate. Fibre and Shell from Begerpang Mill was used for boiler feed. It was observed that organic and inorganic waste was segregated at point of source.

Mill and Estate including housing has provided different colour of waste bin for each type of waste. Organic and inorganic wastes from Mill and Estate including housing were disposed to landfill in the Estate area. Areas of organic and inorganic wastes disposal was far from housing, in the flood-free area and

YES

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COMPLIANCE (YES/NO)

Reduction, re-use and recycle of waste?

c. Is there evidence that the plan has been implemented?

d. Is there evidence that waste has not been disposed off using open fire?

Tbk)

“Laporan pengelolaan LB3” quarte 1 – 4 year 201

not in swamp area and completed with warning sign not burning wastes.

There are evident the measurement periodical report include air ambience quality; emissions of vehicles and other engines (boilers, generators, etc.) also the programme on how to reduce the fuel usage and environmentally friendly.

Hazardous waste was reported quarterly to North Sumatera Province and Deli Serdang and Serdang Bedagai District Environmental Agency, Central of Environmental Management Regional Sumatera and Ministerial Office of Environment. Receipt note was also sighted. Last report was for period January-March 2016 and April – June 2016.

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

5.4.1

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. 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.

a. Is there a plan for improving efficiency of the use of fossil fuels and to optimise renewable energy?

b. Has the plan been implemented and is it monitored?

c. Does the monitoring system encompass the following :

Renewable energy use/tCPO or palm product;

Direct fossil fuel use/tCPO or tFFB;

Estimated fuel use by on-site contract workers and transport and machinery operations;

Fossil fuels efficiency programme

Renewable energy (Fibre and shell) optimization programme

Records of diesel fuels usage

Records of fibre and shell usage

Begerpang mill and it supply bases has been develop the programme/plan on how to conduct efficiency for utilization of fossil fuel by develop the standard to manage the consumption each of vehicles and electricity generator (genset) within litre per hours both for organization owned and contractors; the monitoring conducted by monthly and reported to technical department. In order to support the target, there are several programme executed on how to efficiency of fossils fuels, such as:

Boiler modification by operated water treatment and turbine to reduce the utilisation of electrical generator (Genset)

Nozzle calibration and preventive maintenance for genset and vehicles

Turbine powers generate to supply electricity to composting activities in order to reduce genset utilization

YES

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COMPLIANCE (YES/NO)

Electricity use in operations.

d. Was energy efficiency taken into account during the construction or upgrading of all operations?

e. Has studies on the feasibility of collecting and using biogas been carried out?

Also it was developed the plan/programme regarding optimization of renewable energy known as fibre and shell as boiler energy source at mills, the target was sets on 80% as minimum energy availability, monitoring also conducted monthly by calculate the calories resulted from fibre and shell and utilize as boiler fuels whether during the construction or upgrading of all operations.

There are monitoring records sighted regarding the utilization of fossils fuels and fibre shell since January – June 2016 that presented as below:

Renewable Energy Usage volume

(Tonne)

Shell 4,952.35

Fibre 11,902.1

Fossil fuels Volume usage FFB Production

Diesel (litre) 101,354 91,727.73

Per tonnage FFB 1.11 litre/tonne FFB

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.

5.5.1

(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: 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 policy or any statement on zero burning?

b. Does the company have SOPs for land preparation which mentions zero burning?

c. Was land prepared using the burn

Procedure of land preparation – strategies and parameters no. OP 2.8 revises on March 2008 and replace on September 2006

The organisation has policy of zero burning documented in procedure of land preparation – strategies and parameters no. OP 2.8 revises on March 2008 and replace on September 2006: “The use any fire with any reason is strictly prohibited, such as activities in land preparation of new developments areas and replanting”. Realisation of land preparation for replanting activities was well documented and reported including activities of chipping, ripping, cleaning

YES

Audit Report





COMPLIANCE (YES/NO)

method? If yes, was it based on the specific situations identified in the ‘Guidelines for the Implementation of the ASEAN Policy on Zero Burning’ 2003, or comparable guidelines in other regions?

d. Has the policy been implemented throughout the operations?

e. Is there training programmes for associated smallholders on zero burning where appropriate?

Field Observation to Begerpang, Sei Merah and Rambong Sialang estate

ditch, making ditch and total area prepared. Zero burning.

There was no land preparation for replanting by burning.

Based on replanting report during October 2012 and 2013, land preparation for replanting was conducted by uprooting oil palm and stacking. No fire used for preparing land for replanting. During field observation there is no evidence of fire uses during land preparation on replanting area.

5.5.2

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. 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 land for replanting, is there 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?

b. What was the justification for using fire?

Not Applicable There is no fire used for preparing land for replanting in PT PP London Sumatera Indonesia Estate

N/A

5.6

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 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.

Audit Report





COMPLIANCE (YES/NO)

5.6.1

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

b. Is there a documented list of all identified polluting activities?



Identification of pollution and emission sources at Begerpang Mill and it supply bases activities was evident.

The source of pollution, type of pollution and its control was documented. The information of pollution and emission sources at Begerpang mill and estate was reviewed and updated on January 2016 including boiler emission, methane from Palm Oil Mill Effluent, diesel electricity generator and vehicles and heavy equipment.

YES

5.6.2

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

Is there a documented list of all identified significant pollutants and GHG emissions?

Are there plans to reduce or minimise the identified pollutants and GHG emissions?

Do the plans include objectives, targets and timelines for reduction that are responsive to context?

Are the plans being implemented? Was there any changes? Is it justified?

Is the treatment methodology for POME recorded? (refer to C 4.4.3)

Greenhouse gas emissions reduction Programme year 2016

The program was identify the source of greenhouse gas emissions as listed below:

1. Methane from POME at mill

2. Fossil fuels emissions from vehicles and engines

3. Chemical fertilizer

4. Electricity usage

5. Peat lands emissions

There are also established the GHG reduction plan completed with objectives, targets and timelines as below:

No Program Target 2015

1 Utilization of energy from fibre and shell

Minimum 80% of energy available

2 Optimizing fibre and shell as boiler fuel

80% minimum available

3 EFB utilization to reduce chemical Minimum 45,806 ton/year

YES

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COMPLIANCE (YES/NO)

fertilizers

4 POME debit Max 2.5 m3/ton CPO

5. Electricity sources 100% of available energy sources

The records of each programme were sighted as evident implementation.

Begerpang Mill waste water was processed through a series of waste water treatment ponds: one anaerobic pond, one facultative pond and one aerobic pond. 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.

5.6.3

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. 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 emission of pollutants including greenhouse gases from estate (plantation) and mill operations?

b. Is there regular reporting of the monitoring outcomes? How often and to whom is

Email and calculation of GHG RSPO calculation Year assessment 2015 reporting date March 2015

The GHG emission calculation for Begerpang Mill and Estate using Palm GHG V 2.1.1 as RSPO requirement. The reporting was conducted annually to the RSPO interest (Ms. Melissa Chin). Reports was sighted that summarized as below:

YES

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COMPLIANCE (YES/NO)

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.

Unit Total emissions

(tCO₂e)

Total emissions per tonne Palm

Product (tCO₂e)

Begerpang Estate 11,784.24 0.3

Sei Merah Estate 5,566.60 0.15

Rambong Sialang Estate 9,408.15 0.09

Begerpang Mill 30,676.57 0.22

Total 57,435.56 0.76

Audit Report


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




COMPLIANCE (YES/NO)

6.1 Aspects of plantation and mill management that have social impacts, including replanting, are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continual improvement.

6.1.1

(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: • 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 was the last SIA conducted?

b. Is the process in conducting the SIA and the findings documented?

c. Does the SIA cover all of the potential impact factors, including:

Access and use rights;

Economic livelihoods (e.g. paid employment) and working conditions;

SEIA Document, on 18 April 2016

CSR Program 2016 - 2017

PT. PP. London Sumatra Tbk has conducted Social-Environment Impact Assessment (SEIA) in Rambong Sialang Estate and Begerpang Estate by Sustainability Department on 18 April 2016. Some findings in SIA has been documented both positive and negative aspects. The SIA covered several factors, other between :

Access and use rights;

Economic livelihoods and working conditions;

Subsistence activities;

YES

Audit Report





COMPLIANCE (YES/NO)

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.

Cultural and religious values;

Health and education facilities;

Other community values.

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 consultation with the affected parties? Who are the affected parties?

b. Is there record of how the participatory assessment has been conducted? Were the affected parties able to express their views through their own representative institutions, or freely chosen spokespersons, during the identification of impacts, review of findings and planning for mitigation?



Major Non-Conformity:

Social Impact Assessment has not involved consultation with affected parties

Correction:

Conduct re-assessments by involving the public consultation into the report. Done on 20 September 2016.

Corrective Action:

Conduct training to increase competency of SIA PIC.

Perform benchmarking and made standards for assessment and reporting.

Conduct regular monitoring and review

YES


6.1.3 (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 parties, documented and timetabled, including responsibilities for implementation.

a. Is there any documented record to outline the plan on mitigation, implementation and monitoring according to the SIA report?

b. Have plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts been developed?

c. Have these plans been documented,



Plans on mitigation of negative impact have been documented in Social Impact Assessment report of PT. PP Lonsum Rambong Sialang Estate and Begerpang Estate. Plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts identified has been developed and documented in table of negative and positive impact management plan and monitoring of positive and negative impact implementation in Social Assessment report.

Positive impacts on SIA were identified, such as:

YES

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COMPLIANCE (YES/NO)

with clear timetables? Is the timeline reasonable?

d. Have the persons responsible for implementation of the plans been identified?

- Program CSR

- Work opportunities

- Road access

- Sources of livelihood

- General infrastructure (praying facility, sport facility, etc.)

- community economic drivers

Negative impacts on SIA was identified, such as:

- Air and water pollution

- Increasing crime rate

- Land conflict

Person that responsible for implementation of the social impact plans were Estate Managers and assisted by Head of Administration (KTU) for controlling and implementing.

6.1.4 The plans shall be reviewed as a minimum once every two years and updated as necessary, in those cases where the review has concluded that changes should be made to current practices. There shall be evidence that the review includes the participation of affected parties.

a. Is the plan reviewed every two years?

b. Has the plan been updated as necessary (i.e. in cases where the review has concluded that changes should be made to current practices)?

c. Have the changes to the plan been implemented?

d. Is there evidence that the review has been done with the participation of the affected parties?

e. Has the process been recorded/documented?


CSR Program 2016 – 2017

CSR Report 2015 – 2016

SEIA was conducted on 18 April 2016, organization has monitored the implementation and documented in CSR Report. Plans for avoidance or mitigation of negative impacts and promotion of the positive ones reviewed once a year.

YES

6.1.5 Particular attention shall be paid to the impacts of smallholder schemes (where the plantation includes such a scheme).

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COMPLIANCE (YES/NO)

a. Are there schemed smallholders involved?

b. Have they been considered and involved in the whole process of the SIA?

c. What are the main impacts affecting these smallholders?


Interview with unit estate manager agronomy


In according interview with unit head during audit and group discussion with village head surrounding estate, there are no smallholder schemes at Rambon Sialang Estate and Begerpang Estate.

N/A

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.

6.2.1

(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 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.

a. Does the company maintain a list of local communities and other affected or interested parties?

b. Is there SOP being developed by the company for communication and consultation between the company and the local communities and other affected or interested parties?

c. Is the FPIC approach incorporated in the SOP for communication and consultation with the local communities and other affected or

List of stakeholder (Statutory Body, Indigenous People, Local Community, Worker Organization, and Local NGO) on 21 July 2016



PT. PP. Lonsum Tbk has maintained a list of stakeholders for Statutory Body, Indigenous People, Local Community, Worker Organization, and Local NGO. List of local communities and other affected or interested parties was well documented and updated once a year and the last updated on 21 July 2016. Record of documentation was well maintained by document controller.

Procedure for communication and consultation with public was established by organization. Stage of communication and consultation with public was described in Communication procedure (EMS-P05), date on 10 August 2009.

FPIC was not applicable in PT. PP London Sumatera due to the establishment of company since 1906. However FPIC approach was incorporated in the SOP for communication and consultation with the local communities and other affected or

YES

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COMPLIANCE (YES/NO)

interested parties?

d. Has the SOP been developed together with the local communities and other affected or interested parties using appropriate existing local mechanisms and in languages understood by these parties?

e. Has the SOP been socialized with the local communities and other affected or interested parties taking into account the 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?

f. Have interviews with affected parties been carried out to verify that the SOPs are effective?

Attendance list on 01 July 2016 interested parties.

The existing Communication procedure (EMS-P05), 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.

Dissemination of social communication procedure has been performed in 01 July 2016 to stakeholder. Minutes of socialization and attendance list was sighted. It was verified during public consultation and interview with stakeholder on 26 – 27 July 2016

6.2.2 A management official responsible for these issues shall be nominated.

a. Who in the company is appointed to be responsible for communication and consultation with the affected parties?

b. Has the position been made official with clear and proper job description?

c. Have the affected parties been made aware and have access to the person in charge?

Estate and Mill Manager Job Description



Estate Manager and Mill Manager have the responsibility for response of the communication and consultation form stakeholders or affected parties that assisted by SPO Officer. Described in Job Description for Estate / Mill Manager is one of the function was develop and maintain the good social relationship with community and third party include affected parties.

During interview with stakeholders that they have understood the mechanism of the communication and consultation.

YES

6.2.3 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

response to input from stakeholders, shall be maintained.

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COMPLIANCE (YES/NO)

a. Is the following maintained?

List of stakeholders (local communities and other affected or interested parties etc.);

Records of all communication, including confirmation of receipt or endorsement;

Evidence that efforts have been made to ensure understanding by affected parties;

Record of actions taken in response to input from stakeholders.

List of stakeholder on 21 July 2016

SPO 01 - Record of information request and response

List of Incoming Mail in 2016


The company has maintained list of stakeholders, such as Statutory Body, Indigenous People, Local Community, Worker Organization, and Local NGO. Records of all communication, including confirmation of receipt or endorsement was available in List of Incoming Mail and Record of information request and response. It was verified during public consultation and interview with stakeholder on 26 – 27 July 2016.

YES

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.

6.3.1

(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: For 6.3.1: The system should aim to reduce the risks of reprisal. Guidance: See also to Criterion 1.2. 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 complaints and grievances for all affected parties?

b. Who in the company is responsible to receive complaints and grievances?

c. Is the existence of the system been made known and communicated to all


Internal Memorandum of HR Director # 028/HRD/CIR/IV/2011, on 1 April 2011 and HR Policy on

Organization has defined the system to deal with complaints and grievances for all affected parties which documented in Communication Procedure (EMS-P05), on 10 August 2009, Internal Memorandum of HR Director # 028/HRD/CIR/IV/2011 on 1 April 2011 and HR Policy on 25 May 2005 “Internal Complaint Procedure”. Person who responsible to receive complaints and grievances has assigned by organization that was Estate / Mill Manager. Its also described in Job description of Estate / Mill Manager.

YES

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COMPLIANCE (YES/NO)

parties?

d. Is there evidence that the system is understood by all parties?

e. Is training provided to the workers on the procedures/systems?

f. Is the system effective to ensure that complaints or grievances are addressed or resolved in an effective, timely and appropriate manner?

g. Does the mechanism or procedure provide a way for workers to report a grievance against a supervisor to someone other than the supervisor?

h. How is a complaint or grievance investigated, addressed and resolved? Are complaints dealt with by mechanisms such as JCC?

i. Is there a non-retaliation or non-reprisal policy that protects complainants or whistle-blowers?

j. Is the privacy of parties protected?

k. Where a resolution is not found mutually, is there a process for complaints to be brought to the RSPO Complaints System?

25 May 2005 “Internal Complaint Procedure”.

Job description of Estate / Mill Manager


Attendance list on 08 April 2016, 09 May 2016, and 19 July 2016

The existence of the system has been communicated and made known to all parties. It has been disseminated to all parties through stakeholder meeting on July 2014 both in Dolok Estate, Bah Bulian Estate and Si Bulan Estate.

Socialization and procedures training have been performed to all levels of employees through master morning and sign board in eah division.

The system was effective to ensure that complaints or grievances are addressed or resolved in an effective, timely and appropriate manner. Evidence that the procedures have been implemented is the logbook of complaint. Records are routinely monitored monthly.

Mechanism and procedure was provided a way for workers to report a grievance against a supervisor to someone other than the supervisor. The system was enable resolution of disputes in an effective and appropriate manner by way of classifying complaints into internal and external, appointed the person who responsible for handling complaints, including level of officials who make decisions for complaint resolution.

Non-retaliation or non-reprisal policy that protects complainants or whistle-blowers was described in sustainability policy PT. PP. Lonsum Tbk. Privacy of parties who submitted the compliant and aspiration was protected if necessary.

Where a resolution is not found mutually by means of deliberations between two parties, the problem can be resolved through third-party mediation / authorities, be resolved through the applicable law or brought the RSPO Complaints System. Socialization this policy to employee was conducted on 08 April 2016 and to stakeholder on 09 May 2016.

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 resolution process documented?

b. Are outcomes or decisions reported to the parties?

List of Complaint or Grievance of Internal and External in 2016

Procedure of Social Complaint

Complaints or grievance resolution process documented in the logbook of Complaint and documented in List of Complaint or Grievance of Internal and External. There were complaints from stakeholder internal (employee), such as

YES

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COMPLIANCE (YES/NO)

c. Who has access to the documentation of the process and/or outcomes?

Handling - Internal Memorandum No. 028/HRD/CIR/IV/2011 dated 01 April 2011


repair of the house. Complaints have completed by Head of Administration.

Organisation has defined the procedure for complaints and grievance handling which documented in Internal Memorandum No. 028/HRD/CIR/IV/2011 on 01 April 2011. Outcomes or decisions as response to followed up the complaint will be reported to affected parties as described in procedure. Affected parties have access to the documentation of the process and/or outcomes.

6.4 Any negotiations concerning compensation for loss of legal, customary or user rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

6.4.1

(M) A procedure for identifying legal, customary or user rights, and a procedure for identifying people entitled to compensation, shall be in place. 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, customary or user rights in place?

b. Are procedures for identifying people entitled to compensation in place?

c. Are those procedures jointly developed, agreed and accepted by local communities?

Policy Guidelines of Land Acquisition and Crops, on February 2007



Procedure for identifying legal, customary or user rights has been established and available in Policy Guidelines of Land Acquisition and Crops on February 2007. The steps of the procedures to identification and calculation of land compensation, consist of :

1. Identification of land owner

2. Measurement

3. Data input (mapping)

4. Negotiating compensation (according to the agreement and witnessed by a competent witness)

5. Payment of compensation

6. Data documentation.

Procedure for identifying people entitled to compensation has been established and available also in procedure of Identification and calculation of land compensation. The steps are as described above.

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.

YES

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COMPLIANCE (YES/NO)

The procedure has disseminated to the stakeholder together with stakeholder meeting on 08 April 2016, 09 May 2016, and 19 July 2016. Minutes of socialization and attendance list was sighted.

6.4.2

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

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.

a. Has a procedure for calculating and distributing fair compensation (monetary or otherwise) been established and implemented?

b. Are the procedures jointly developed, agreed, accepted and clearly understood by affected parties?

c. Is the procedure monitored and evaluated in a participatory way? Have corrective actions been taken as a result of this evaluation?

d. Does this procedure take into account the following:

Gender differences in the power to claim rights;

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

Policy Guidelines of Land Acquisition and Crops, on February 2007



Procedure for calculating and distributing fair compensation (monetary or otherwise) has been established and available in Policy Guidelines of Land Acquisition and Crops on February 2007.

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.

The procedure monitored and evaluated in a participatory way, procedures will be revised if there is a reasonable request from stakeholders. This procedure take into account of the gender differences in the power to claim rights, ownership and access to land, differences of transmigrants and long-established communities, differences in ethnic groups’ proof of legal versus communal ownership of land.

There was no smallholder scheme in Begerpang Estate and Rambong Sialang Estate.

YES

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COMPLIANCE (YES/NO)

to.

6.4.3 (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

available.

a. Is the process and outcome of negotiated agreements and compensation claims documented?

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?

Legal entities of PT. Londom Sumatera No.# 93/1962

Interview with Estate Manager of Rambong Sialang Estate and Bagerpang Estate


The organisation did not acquire any new land after 2005. It was noted that there was no ongoing progress of new land acquisition during interviews with stakeholders and estate manager.

N/A

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.

6.5.1

(M) Documentation of pay and conditions shall be available. 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 arrangements are there in the company? (E.g. contractual, outsourced, apprenticeships, direct hires, piecemeal basis, etc.)

b. Is there documentation of pay and conditions for each employee?

c. Is there a definition for living wage in

Northern Sumatera Governor’s Decree Letter No. 188.44/11/KPTS/tahun 2015

Letter of the BKSPPS No. 46/BKS-PPS/2016 on 22 February 2016

Documentation of employees

Documentation of employees’ pay rates was made by the organization. Workers were classified into daily worker (BHL – Buruh Harian Lepas), and permanent worker (MRP – Monthly Rate Person & DRP – Daily rate Person).

Evidence that the workers have received wage according regulation could be demonstrated. Minimum wages payment refers to latest Letter BKSPPS No. 46/BKS-PPS/2016 on 22 February 2016 regarding annual wage increment member of BKS-PPS in North Sumatera Province, minimum wage fixing in 2016 as much as IDR 2,178,625 + Rice accommodation (15 kg/employee + 9 Kg

YES

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COMPLIANCE (YES/NO)

the country? If not, how was the decision on wage for employees and contract workers made?

payroll 2015 and January – June 2016

BHL Job Agreement, for example No.035/BGE/I/2016


spouse + 7 kg children). Company releases a memorandum No. 001/HRD/C-SAL/IV/2016 on 11 April 2016 for employee minimum wage in 2016. Minimum wage DRP employee fixing was IDR. 2,178,625 + Rice accommodation, Overtime = 1/73 x (Minimum wage + Rice accommodation), Minimum wage MRP employee defined based on lowest grade G with minimum work time 1 year IDR. 2,412,000, highest grade A with work time 5 years IDR. 4,078,000.

Overtime was defined based on UU No. 13 / 2003. Rice accommodation value defined based on price standard which issued by BKS-PPS (Badan Kerjasama Perusahaan Perkebunan Sumatera). Wage of daily worker (PHL) defined in Memorandum No. 001/HRD/C-PW/III/2016 on 31 March 2016, Wage defined as amount IDR. 2,178,625 or IDR. 87,145/day.

Based on verification of employee payroll in Rambong Sialang Estate, Begerpang Estate, and Begerpang Milll from January to December 2015 and January to June 2016, there was no employee paid below minimum wage and it has compliance with the regulation.

Based on interview with worker it was noted that there was no worker wage deduction. Payments for workers were determined according to daily attendance register and over time shift. Daily attendance for workers was recorded and controlled manually by the each Assistant.

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. Payment of contracted employees (BHL) was based on the volume of work multiplied by the unit price.

6.5.2 (M) Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday 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 employment clearly detailed in the employment or service contracts? (E.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc.)

- PKB years 2015 – 2017 endorsed by the Director General of Industrial Relations Labor and Social Security with the decree RI on 18 June 2015 SK No.KEP.88/PHIJSK-PKKAD/PKB/VI/2015

Pay and conditions of employment clearly detailed in the employment or service contracts. Employees contract are available for permanent employees, contract labor agreement contains agreements include: working time, dependents, payroll and consent of both parties. Working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc described in PKB years 2015 - 2017 which have been agreed between the employees (represented by SPSI) and company and endorsed by BKSP-PPS on

YES

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b. Is the contract prepared in languages understood by the workers, explained carefully to workers by management officials, and signed by both the authorised signatory of the company and employee?

c. Does the pay and conditions provided in labour laws, union agreements or direct contracts of employment comply with:

The decent living wage as provided in the National Interpretation for the country; or

The local legal requirements in meeting the minimum wage; or

The industry minimum standard for a similar position or work responsibilities

d. Is the pay received by the employee consistent with the terms of the contract and the law (relates to P2)?

e. Have there been any cases recorded of breach by the company, or complaint made by employees against the company on unjust pay and conditions?

- Letter of the BKSPPS No. 46/BKS-PPS/2016 on 22 February 2016

21 April 2015.

Contract work by non-permanent employees performed in accordance with the employment contract agreement. The contract includes the amount of work, duration and value of the wage contract. The contract was signed and agreed by both parties.

Contract was prepared in languages which understood by the workers, explained carefully to workers by management officials, and signed by both the authorised signatory of the company and employee.

Pay and conditions provided in labour laws, union agreements and direct contracts of employment has been comply with:

• The decent living wage as provided in the National Interpretation for the country; or

• The local legal requirements in meeting the minimum wage; or

• The industry minimum standard for a similar position or work responsibilities

Payment of salaries performed once a month in the beginning of each month (date on 5) for permanent employees. Total salaries paid are in accordance with the district minimum wage (based on BKS-PPS fixing wage upper than UMK). Pay received by the employee was consistent with the terms of the contract and the law.

Since January – December 2015 and January – June 2016, there was no complaint made by employees against the company on unjust pay and conditions. Information was based on Complaint logbook 2016.

6.5.3 Growers and millers shall provide adequate housing, water supplies, medical, educational and welfare amenities to national standards or above, where no such public facilities are available or accessible.

a. Have growers and millers provided

adequate housing and other basic necessities such as that listed below to national standards or above, where no such public facilities are available or

List of public facility in 2016

Interview with representative worker on 26 - 27 July 2016

The organization provided adequate medical, educational and welfare amenities to national standards. Public facilities were provided by the organisation with basic facilities and covered child care, kindergarten, building for prayers (Mosque and Church), sports facility (e.g. volley ball, badminton, futsal, and

YES

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COMPLIANCE (YES/NO)

accessible?

adequate housing;

adequate electricity;

clean water supplies (availability of clear water all year round);

medical services (distance to health care facility i.e. clinic, hospital);

children education (distance to school and schooling attendance (%) of children under 12)

welfare amenities.

tennis), housing for workers and medical facilities (clinics).

Housing for workers and medical facilities (clinics) were was provided by the organisation with basic facilities. List of public facilities were available for employee documented.

The organization has provided adequate water supplies to national standards. Water analysis was conducted every semester based on Permenkes No. 416 / 1990. Management has been checked the clean water to the laboratory (refer to 4.4.1). Company also provides medical services for all employees freely in Plantation Clinic with the facility such as Ambulance, medicine, medical equipment, etc. All employee also covered by health insurance (BPJS) which was paid by company each month.

Education facility also provided by company such as “Rumah Pintar” which provides some educational tools and equipment, educational book/library and etc. Company also provided school bus and school transportation. Elementary school, Junior High School and Senior High School were available around company and company support and provide the transportation (school bus) for school children.

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 demonstrable efforts to monitor and improve workers’ access to adequate, sufficient and affordable food?

- List of facility for employee

- Interview with representative worker on 26 - 27 July 2016

- Field observation in Rambong Sialang and Begerpang Emplacement

The organization made demonstrable efforts to monitor and improve workers’ access to adequate, sufficient and affordable food. There are cooperatives that provide basic needs for employees “Koperasi Karyawan Perkasa PT. PP. Lonsum”.

The location of the plantation was on near of the national road, so there is no problem for the access to the market. Based on the interview with worker representative and labor union, it was conclude that there was no problem regarding access to adequate, sufficient and affordable food. Workers also have rice “catu beras” 15 kg for the employee, 9 kg for the spouse and 7.5 kg for each child, up to 3 children.

Employees and their dependents (children and wife) are also provided health insurance (BPJS Kesehatan) by the company.

YES

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COMPLIANCE (YES/NO)

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

6.6.1

(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). 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 statement in local languages recognising the rights of employees to freedom of association?

b. Are the employees, including migrant and transmigrant workers and contract workers, allowed to form associations and bargain collectively with their employer?

c. Was the outcome, if any, from the collective bargaining process between the company and the association respected, implemented and adopted in full or partially by the company?

d. Are there Labour laws and union agreements, or in their absence direct contracts of employment detailing payments and other conditions, made available in the languages understood by the workers or explained carefully to them by a management official?

- Company Sustainability Policy on 1 September 2014

- Internal Memorandum No. 006/HRD/CIR/I/2004 on 7 January 2004

- PUK-F Serikat Pekerja Perkebunan - SPSI PT PP Lonsum Tbk, North Sumatera (covered all estate in PT PP Lonsum Tbk in North Sumatera)

- Union workers officials ratified by the PC FSC. PP-SPSI, Deli Serdang District, No: Kep. 094/PC FSP.PP-DS/VI/2015 on 22 June 2015

Freedom of association has been mentioned in Company Sustainability Policy on 1 September 2014. Organizations understand that workers have the right to argued, associate and organize in a labour union. Company also issued internal memorandum No. 006/HRD/CIR/I/2004 on 7 January 2004 regarding freedom to associate and organize in a labour union

Organization committed to provides opportunities for workers to organize in unions and express an opinion. Commitment covered in the policy are :

- The organization recognizes workers' rights to express their opinions and organize freely and responsibly run in labour union organizations.

- Organizational policies related to ensure workers' rights are discussed and decided by taking into consideration the union.

- Ensured that the disclosure made by aspiration unions did not cause the collapse of a termination for union leaders and members.

- Promoting the principle of dialogue to reach consensus in addressing the aspirations from labour union to the company.

Based on interview with labour union leader, the company has accommodated employee rights to argued, associate and organize in a labour union. Employees, including migrant and transmigrant workers and contract workers were allowed to form associations and bargain collectively with their employer.

YES

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COMPLIANCE (YES/NO)

There were union workers represent estate and mill employee incorporated in the PUK-F Serikat Pekerja Perkebunan - SPSI PT PP Lonsum Tbk, North Sumatera (Covered all estate in PT PP Lonsum Tbk in North Sumatera). The composition of union workers officials have been ratified by The PC FSC. PP-SPSI, Deli Serdang District, No: Kep. 094/PC FSP.PP-DS/VI/2015 about Ratification of The Core Committee Composition and Personnel Labor Unions and Plantation Agriculture, PT. Lonsum Plantation, in 2014 – 2019 period.

Labour laws, union agreements which described in Collective Labor Agreement (PKB - Perjanjian Kerja Bersama) and direct contracts of employment detailing payments and other conditions was made available in the languages which understood by the workers and explained carefully to them by management official.

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

a. Are there documented minutes of meetings between the company and main trade unions or workers representatives?

b. Are the minutes made readily available to employees upon request?

Minutes of meetings Unions worker on 01 August 2015 and 26 October 2015

Minutes of meetings with main labour unions or workers representatives been documented, e.g. meeting on 01 August 2015 meeting to discuss Eid Mubarak celebration and on 26 October 2015 meeting to socialization in Collective Labor Agreement (PKB - Perjanjian Kerja Bersama) in 2015 – 2017 period. Minutes of meeting were available, list of attendance was sighted. The minutes was made readily available to employees upon request.

YES

6.7 Children are not employed or exploited.

6.7.1

(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 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.

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COMPLIANCE (YES/NO)

a. Is the minimum working age for workers together with working hours clearly defined in the company’s recruitment policy?

b. Are workers employed above the minimum school leaving age of the country or who are at least 15 years of age?

c. Is there evidence that the nature of work for workers under 18 is in accordance with International Labour Organisation (ILO) Convention 138?

d. Does ground verification show evidence of employment of workers below the minimum working age?

- Company Sustainability Policy on 1 September 2014

- List of employees which updated on June 2016

- Interview with representative worker on 26 - 27 July 2016

- Field observation

Company sustainability Policy mentioned that the organization comitted not to hire underage workers required by labour law that is at least 18 years. Companies ensure regulatory provisions governing the child labor were followed.

List of employees which updated on June 2016 showed that no employee under the age of 18 years. During field observations demonstrated that there was no underage worker and no children were invited to work by their parents. This complied with UU 13/2003 and with International Labour Organisation (ILO) Convention 138.

Ground verification through interview with the employee on 26 - 27 July 2016 could be demonstrated and evident that there was no worker below the minimum working age.

YES

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.

6.8.1

(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 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. 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-discrimination and equal opportunities? Does it at least cover the items mentioned in the criteria (6.8)?

b. Is the policy made publicly available for the relevant stakeholders?

c. Is there evidence that the policy has

Company Sustainability Policy on 1 September 2014

List of employees which updated in June 2016

Interview with representative

Equal opportunities has been documented in Company sustainability policy dated 1 September 2014, the document was publicly available for employee and stakeholder. Its cover race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age.

PT London Sumatera believe that every worker is entitled to equal treatment and not discriminate based on ethnicity, religion, race, sexual orientation and gender. PT London Sumatera committed to implementing anti-discrimination policy to all

YES

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COMPLIANCE (YES/NO)

been implemented?

worker on 26 - 27 July 2016


Field observation

employees.

Policy has been communicated to all employees on 08 April 2016, 09 May 2016, and 19 July 2016. Policy made was publicly available for the relevant stakeholders. Based on interview with stakeholders and employee on 26 - 27 July 2016 could be demonstrated that the policy has implemented well by organization.

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

a. Is there evidence that employees and groups including local communities, women, and migrant workers have not been discriminated against?

b. Are the employees and groups including local communities, women, and migrant workers happy with the way the company is treating them?

c. Are there complaints against the company on issues relating to discrimination?

d. What is the nature of complaints employees and groups including local communities, women, and migrant workers have lodged against the company, if any?

Company sustainability Policy on 1 September 2014

Logbook Complaint 2015 / 2016

Public consultation on 26 – 27 July 2016

Interview with employee on 26 – 27 July 2016

Based on public consultation on 26 – 27 July 2016 with stakeholders and employee could be demonstrated that there was no discrimination against employees and groups including local communities, women, and migrant workers. However there was no migrant worker work to company.

The employees and groups including local communities, women, and migrant workers were happy with the way the company treating them.

There was no complaint against the company on issues relating to discrimination based on public consultation with stakeholders and employee. Based on Logbook of Complaint 2015/2016 (until June 2016), There was no complaint employee and groups including local communities, women, and migrant workers have lodged against the company.

YES

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 a record of their employees’ work credentials and medical history?

b. Does the company explicitly state the


Interview with employee on May

Based on public consultation on 26 – 27 July 2016 and interview with employees, it could be demonstrated that recruitment selection, hiring and promotion are based on skills, capabilities, qualities, and medical fitness necessary for the jobs available. Company performed selection and recruitment

YES

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COMPLIANCE (YES/NO)

indiscriminatory policy during the recruitment selection, hiring and promotion process?

c. Is the company’s indiscriminatory policy reviewed regularly?

d. Are the company’s employees recruited and promoted based on skills, capabilities, qualities, and medical fitness necessary for the job? How is this evidenced?

26 – 27 July 2016

SOP Recruitment (SOP HRD 02)

PKB (collective labour agreement) in 2015 – 2016 period, article 3

Internal Memorandum No. 012/HRD-NS/PRO/V/2016 on 25 May 2016

employee based on SOP Recruitment (SOP HRD 02). Company explicitly state the indiscriminatory policy during the recruitment selection, hiring and promotion process. Recruitment process also described in Collective Labor Agreement (PKB - Perjanjian Kerja Bersama), Article 3.

Company’s indiscriminatory policy regularly reviewed, once a year.

Company’s employees was recruited and promoted based on skills, capabilities, qualities, and medical fitness necessary for the job.

Recording of recruitment begun from letter of application, personal data of employees, contract and medical history are stored in the file archive employee. From the record could be demonstrated that company has implemented well the procedure and the policy. One of the employees promotion in Internal Memorandum No. 012/HRD-NS/PRO/V/2016 on 25 May 2016 about Promotion and Merit Increment.

6.9 There is no harassment or abuse in the work place, and reproductive rights are protected.

6.9.1

(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. Specific Guidance: 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 prohibit any form of sexual and all other forms of harassment and violence?

- Director Letter No. 001/DIR/IX/2014 on 12 September 2014

Company have the policy to prohibit any form of sexual and all other forms of harassment and violence which described in Director Letter No. 001/DIR/IX/2014, on 12 September 2014. Protection against sexual harassment

YES

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COMPLIANCE (YES/NO)

b. Has this policy been documented, implemented and communicated clearly to all levels of the workforce?

c. Is there a clear protocol for the company to deal/handle such issues/complaints received from the workforce?

d. Is there a list of awareness programs or training provided to the workforce in relation to these issues?

e. Has the company formed a Gender Committee to address areas of concern to women? Is there a list of the members sitting in the committee? What are the Terms of Reference of the committee? Does it include the handling of issues 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.

f. Is the policy regularly reviewed?

- Internal Memorandum HRD No. 028/HRD/CIR/IV/2011 regarding gender and sexual harassment regulation

- Decision Letter No. 01/BGE/SK/VII/2016, on 18 July 2016

and violence. PT. PP. Lonsum guarantees and protects the reproductive rights of employee, do not hire children under the age of 18 years and protecting employees on sexual harassment by the company. Company sustainability that described prevention of sexual and all other forms of harassment and violence has been implemented and communicated to all levels of the workforce through master morning and signboard which placed in each division.

Mitigation and complaint regarding gender and sexual harassment regulated and defined in Internal Memorandum HRD No. 028/HRD/CIR/IV/2011 and ratification of the composition and appointment of members of the gender commission No. 01/BGE/SK/VII/2016, on 18 July 2016. Complaints of gender issues can be submitted a written notification to the gender commission or the company management, gender committee will studying the complaints and mediate between the complainant with the company for sexual harassment mediation performed between the perpetrators with the victim. Policy and regulation regarding sexual harassment and violence regularly reviewed once a year by central management office.

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.

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COMPLIANCE (YES/NO)

a. Is there a policy to protect the reproductive rights of all, especially of women?

b. Has this policy been documented, implemented and communicated clearly to all levels of the workforce?

c. How is this policy communicated to all levels of the workforce?

- Director Decision No. 001/DIR/IX/2014, on 1 September 2014

- Interview with employee on 26 – 27 July 2016

- Minutes of dissemination, signboard and photo documentation

- Field observation

Company has establish the policy to protect the reproductive rights of all, especially of women which described in Company sustainability Policy attachment Director Decision No. 001/DIR/IX/2014, on 12 September 2014. PT PP Lonsum guarantee and protect the reproductive rights of employees, do not hire children under the age of 18 years and protecting employees on sexual harassment by the company.

Company sustainability Policy has described the protection of the reproductive rights of all, especially of women, been implemented and communicated to all levels of the workforce.

Policy has been communicated to all employee through master morning. Protection the reproductive rights of women workers als described in PKB (collective labour agreement) article VIII and XIV. Article XIV regarding Social Security and Social Assistance explain that company provide daycare house for worker children/infants up to age 2 years with a maximum of 10 baby each caregiver / nanny. The company also provides sufficient time for women workers to breastfeed her child. Article VIII regarding menstruation, women workers in the menstrual period feel pain are not obliged to work on the first and second at the time of menstruation.

Policy has been communicated to all levels of the workforce directly to employees by their respective assistants and through submission and awareness against female employees. It was verified during public consultation and interview with stakeholder on 26 – 27 July 2016.

YES

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.

a. Does the company have a mechanism to handle employment grievances, that respects anonymity and protects complainants where requested?

b. Does the mechanism provide a way for workers to report a grievance against a supervisor to someone other than that supervisor?

- Grievance Handling Procedure No. 028/HRD/CIR/IV/2011

- Grievance Handling Procedure of Special Women No. 86/BOM/Labour/VII/2016, on 1 July 2016

- Logbook of complaint in 2015 /

Company have a mechanism to handle employment grievances, that respects anonymity and protects complainants where requested which described in Grievance Handling Procedure No. 028/HRD/CIR/IV/2011 and Grievance Handling Procedure of Special Women No. 86/BOM/Labour/VII/2016. Organisation also establishes a mechanism for reporting by whistleblowers against deviations code of conduct and the rules and other corporate policies delivered via email the internal audit division.

The system was enable resolution of disputes in an effective and appropriate

YES

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COMPLIANCE (YES/NO)

c. Is the mechanism documented, implemented and communicated clearly to all levels of the workforce?

d. Has the company identified personnel who will be responsible to receive and manage complaints received from the workforce?

e. Has the company received any reports or complaints of harassment or abuse? How was it addressed or resolved?

f. Is the policy reviewed regularly?

2016

- Public consultation and interview with employee on 26 – 27 July 2016

- Field observation

-

manner by way of classifying complaints into internal and external, appointed the person who responsible for handling complaints, including level of officials who make decisions for complaint resolution. The mechanism also provides a way for workers to report a grievance against a supervisor to someone other than that supervisor.

Mechanism has been documented in procedure as explain above. It has been implemented and communicated clearly for all levels of the workforce. Evidence that the procedures have been implemented is the logbook of complaint. Records are routinely monitored monthly, no complaints during the period of January 2015 to June 2016.

Company has been identified personnel who will be responsible to receive and manage complaints received from the workforce. Each respective assistants and supervisors were responsible to receive and manage complaints received from the workforce. Policy regularly reviewed once a year by central management office.

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

6.10.1

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

b. Is current and past prices paid for Fresh Fruit Bunches (FFB) publicly available? How?

c. Was there any complaints on FFB

Not aplicable The FFB was procured from the organization’s own estate. Therefore there was no price of FFB received by Mill site.

N/A

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COMPLIANCE (YES/NO)

pricing?

d. How was the complaint handled?

e. What was the solution?

6.10.2 (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

control of the mill or plantation).

a. What is the mode of recording/documenting transactions between millers with middlemen and/or smallholders?

b. Is there evidence that growers/millers have explained FFB pricing and pricing mechanisms for FFB?

c. Are there any inputs/services rendered by the millers to smallholders/middle 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 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?

Not aplicable The FFB was provided from the organization’s own estate. Therefore there was no transaction and pricing mechanism of FFB between third party (i.e.: middlemen, smallholders) and the management of Mill.

N/A

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.

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COMPLIANCE (YES/NO)

a. Is there a contractual agreement between the miller and smallholders/ middle men?

b. Do all parties understand the contractual agreements they have entered into?

c. Are all contractual agreements fair, legal and transparent?

d. Who keeps the contractual agreements?

Contract agreement PT PP London Sumatera with related contractors.

The agreement/contract documents between contractor and organisation is sighted such as:


CV. Melati, as building contractor for renovation activities with contract 020/OAD/Cont-LC/SIE/IX/2015.

Sei Merah Estate

UD. Sinar Dunia, as land clearing contractor with LOI #009/INP/LoI/2014.

Begerpang Mill

PT Duta Perkasa Teknik, as boiler contractor with LOI #252/INP/LoI/VII/2014.

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 method, work requirements, force majeure, contract period, cancellation of contract, etc. The contracts were kept by both parties. All the payments have been made were executed in line with the terms of payment stated in the related contract documents.

YES

6.10.4 Agreed payments shall be made in a timely manner.

a. How are all payments made to the smallholders/middle men?

b. What is the mode of recording/documenting transactions between millers with middlemen and/or smallholders?

c. Have agreed payments been made in a timely manner?

Slip payment for several contractors A review to several payment records demonstrated that the payments have been made according to the contract agreement usually 14 days after received invoice.

Several samples were shown such as:


Slip payment could be shown on 15 December 2015 with term of payment 14 days after receiving invoice.

Sei Merah Estate

Slip payment could be shown on 2nd April 2015 with term of payment 14 days after receiving invoice.

N/A

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COMPLIANCE (YES/NO)

Bagerpang mill

Slip payment could be shown on 4 March 2016 with term of payment 30 days after receiving invoice

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

6.11.1

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 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 priorities been identified in consultation with local communities? (refer also to C 6.2)

b. What are the contributions made to local development? Are they in accordance with the results of consultation?

c. Are there efforts to improve or maximise employment opportunities at the company for local communities?

- SEIA Document, on 18 April 2016

- CSR program 2016

- Director Letter No. 001/DIR/IX/2014, on 1 September 2014

- Public consultation on 26 – 27 July 2016 and interview with employee

- Field observation

Local development needs and priorities have been identified by organization through consultation with local communities and social impact assessment. Consultation management plans and monitoring the social impact to the community has been communicated and disseminated to affected communities through stakeholder meeting.

Contribution to local development described in the Corporate Social Responsibility (CSR) programme. CSR program in 2016 was available consists of :

- Education program : Contribution and assistance to school teacher

- Cultural program : Contribution funding for the development of local wisdom

- Infrastructure program : Enhancement of village roads around the plantation, road drainage, and heavy equipment

- Public facility program : Contribution of building material for mosque, school,

YES

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COMPLIANCE (YES/NO)

etc., providing clean water for community activities

All the CSR programs were created in accordance with the results of consultation some records of CSR implementation were evident and could be demonstrated.

Evidence of preference always been given to members of local communities where candidates for employment are of equal merit was described in Company Sustainability Policy attachment Director Letter No. 001/DIR/IX/2014, on 1 September 2014.

Based on interview with village head and public figure that generally there were satisfied with the plantation contribution to local communities.

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 independent smallholders in the supply base?

b. Have efforts been made to improve the farming practices of independent smallholders?

c. Where there are schemed smallholders, have efforts and/or resources been allocated to improve smallholder productivity?

Interview with each estate manager


During discussion with estate manager and has verified in group discussion with village head and community leader around estate was indicated that there was no scheme smallholder (include independent smallholder) in Rambong Sialang Estate and Begerpang Estate.

N/A

6.121 No forms of forced or trafficked labour are used. *1 New Criteria - No forms of forced or trafficked labour are used.

6.12.1

(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

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COMPLIANCE (YES/NO)

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: 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 or trafficked labour?

b. How does the company define forced or trafficked labour?

c. What is the process of recruiting foreign/ migrant workers directly and/or through licenced outsourcing agencies/ labour suppliers?

d. Who is the person responsible for selecting/ screening labour suppliers/ outsourcing agents?

e. Do the foreign workers have to pay a 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


- Public consultation on 26 – 27 July 2016 and interview with employee

- PKB in 2015 – 2017 period

- Field observation

Company’s policy on forced or trafficked labour was described in Company sustainability Policy attachment Direktor Letter No. 001/DIR/IX/2014, on 1 September 2014.

Based on public consultation and interview with several worker and worker union on 26 – 27 July 2016, it was evident that no forms of forced or trafficked labour have been used. Workers/employee entered into organization voluntarily and freely, without the threat of a penalty and they have the freedom to terminate employment without penalty given reasonable notice or as per agreement.

There was no migrant worker in PT PP Lonsum Tbk. It verified during audit documentation list of employee, interview with employee and stakeholders.

Person who responsible for selecting/screening labour suppliers was Head of Administration (KTU - Kepala Tata Usaha) under supervision of the Estate and Mill Manager.

Employees work based on labour contract agreement which contains agreements include working time, dependents, payroll and consent of both parties, working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc. described in PKB years 2015 - 2017 which have been agreed between the employees (represented by SPSI) and company.

YES

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COMPLIANCE (YES/NO)

workers were terminated or fired before their contract expires?

i. Who keeps the workers passports or identity documents?

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 substitution occurring?

b. Are foreign workers asked to sign a contract upon arriving in the receiving 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?

List of Worker /employees PT. PP. Lonsum (Rambong Sialang Estate, Begerpang Estate, and Begerpang Mill) in June 2016 period

PKB in 2015 – 2017 period

Interview with representative worker

Interview with head of worker union on 26 – 27 July 2016

To anticipate trafficked labour, organization has been arranged personal file every workers regarding identity card, curriculum vitae, photo, work agreement and receipt working letter, marriage certificate, education certificate, family card, references letter from police. Personal file of worker was shown that no forms of forced or trafficked labour.

Interview with representative worker and head of union worker was informed there are no migrant worker in Rambong Sialang Estate, Begerpang Estate, and Begerpang Mill.

YES

6.12.3

(M) Where temporary or migrant workers are employed, a special labour policy and procedures shall be established and implemented. Specific Guidance: For 6.12.3: The special labour policy should include:

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COMPLIANCE (YES/NO)

• Statement of the non-discriminatory practices; • No contract substitution; • 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 procedures for temporary or foreign/migrant workers? Does the special labour policy include:

Statement of the non-discriminatory 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?


- Field observation

There was no migrant workers in PT PP Lonsum Tbk,– Rambong Sialang Estate, Begerpang Estate, and Begerpang Mill. It verified during audit documentation list of employee, interview with employee and stakeholders.

N/A

6.132 Growers and millers respect human rights. *2 New Criteria - Growers and millers respect human rights.

6.13.1

(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). 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.

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COMPLIANCE (YES/NO)

a. Is there a company policy on human rights?

b. How is this communicated to all employees, including outsourced workers, customers and suppliers? If by training, how often is the training conducted?

c. Who has the task of communicating the policy internally and externally?

d. Does the company have any outstanding cases of human rights violations?


- Minutes of socialization to employee on 8 April 2016 and community on 9 May 2016


- Field observation

Policy to respect human rights has been documented in Company Sustainability Policy attachment Director Letter No. 001/DIR/IX/2014. Top management has commitment to respect human right refers to internationally recognised human rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work.

The document has been communicated to all levels of the workforce and operations based on public consultation with labour union, worker and gender committee. The policy has been communicated to all employees, including outsourced workers, customers and suppliers by socialization/dissemination. Socialization was conduct regularly once a year. Dissemination of social communication procedure has been performed to stakeholder on stakeholder meeting. Socialization to all levels of employees performed through master morning.

During audit and based on verification on public consultation with stakeholders in 26 – 27 July 2016 and interview with employee, it could be demonstrated that there was no cases of human rights violations in PT PP Lonsum Tbk,– Rambong Sialang Estate and Begerpang Estate.

YES

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PRINCIPLES 7: RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS

Not Applicable, PT. PP London Sumatra Indonesia, Tbk has starts operating the palntation since 1930’s.

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




COMPLIANCE (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.

8.1.1

(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); • 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).

a. Is there an action plan for continual improvement?

b. Describe the main components of the plan.

c. Has the action plan been implemented?

d. Provide examples of continual improvements that have been implemented.

e. Are history records available to develop the action plan?

f. Are records of implementation of the action

- HCV Management plan 2016

- CSR Program 2016

- SIA Report and review 2016

- Field observation

- Agriculture visit report 2016

- RSPO Internal audit report

Continual improvement plans have been raised as corrective actions plan from RSPO internal audit and other internal audit. Below are the continual improvement plan that has been implemented by organisation, covered:

Agronomy and best practice plantation :

- Substitute chemical fertilizer to composting fertilizer

- Conduct regular census to prevent outbreak attack

- Planting Turnera subulatta and Cassia sp as a beneficial plant

- Minimize impact of erosion by terracing in contour area

- Use EFB as organic fertiliser to reduce use of non-organic fertiliser

- Using SMV (Spray Management Value) for all knapsack sprayer to decrease

YES

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COMPLIANCE (YES/NO)

plan available?

g. Does the action plan include strategies for: • Reduction in use of pesticides

(Criterion 4.6)? Is IPM widely implemented?

• 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)? • Optimising the yield of the supply

base?

h. Do growers have a system to improve practices in line with new information and techniques, and a mechanism for disseminating this information throughout the workforce?

water consumption

- Minimise use of paraquat

Mill best practise and environment :

- Replace generator set with turbine and water treatment as boiler power

- Reduce power of generator set for tray by using turbine power as supply to compost bunker

- Repair the boiler steam outlet pipelines toward turbines by installed joint expansion to replace the elbow in order to reduce losses;

- To recycle the vacuum drier water discharge into kernel processes operation;

- Steam optimization by setting the boiler main valve;

- Recycle the sterilizer condensates for solution oil phase decanter and water dilution press in order to minimize water usage.

- Reduce the utilization of electromotor by replace with ripple mill unit for kernel station processes

- Reduce the chemical fertilizer by replace with organic fertilizer (compost)

- Utilization of POME as compost raw material in order to reduce greenhouse gases

Reuse the boiler ash as compost raw material to r

Biodiversity conservation such as :

- 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

Social aspect such as :

- Monitoring and managing the positive and negative impact from social impact assessment (SIA)

- Improve and implementation the CSR program regularly

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COMPLIANCE (YES/NO)

- Review social impact assessment every two years to improve the social relationship with stakeholders and affected parties.

The Mill and continually set management objective and target which were supported by quality, environment and safety management program. Regular internal and external audit and management review meeting was held to evaluate the adequacy and effectiveness of the management system.

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 any 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.

The organisation has program monthly briefing to workers for disseminating all aspects in Estate and Mill activities, e.g. environmental, social, OHS and best practices.

Sustainability team has program to visit Mill and Estate periodically to ensure that corrective action was taken to all non-conformances to avoid reoccurrence of the non-conformances and assist in external audit preparation.

Audit Report


3.3.2 Mill Supply Chain Requirements

The FFB source is three (3) organisation owned by PT. PP London Sumatra Indonesia Tbk. and no FFB from the third party. Therefore the Model selected is Identity Preserved and RSPO Supply Chain Module D was used as audit criteria.

The detail of FFB processed in Begerpang Mill is described in Table 7, Table 8 and Table 9 presented in this report.

3.3.2.1 Supply Chain Certification Standard

PART A COMPANY DETAIL

Company Name (covered by certification): PT. PP London Sumatra Indonesia Tbk – Begerpang Mill

RSPO member name: PT. PP London Sumatra Indonesia Tbk

RSPO member number: 1-0015-04-000-00

RSPO IT Platform Registration number: RSPO_PO1000002219

Site Address: Batu Lokong Village, Galang District, Deli Serdang Regency, North Sumatera Indonesia

Management Representative: Muhammad Waras

Site type: Palm Oil Mill

Site capacity: 50 MT per hour

Certified palm product sold: Nill

Certified palm product used: 235,120.66 MT FFB

App/Cert No: FMS40033

Audit Type: ASA 1

SAI Global Auditor/Team: Mujinius Jalaraya

Audit Date: 28 July 2016

Activity/Audit No: WI-852267

Audit Report


Audit objectives

To verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers, and the implementation of any processing controls (for example, if identity preserved is used)

Supply Chain Model:

Module D - CPO Mills (IP) Identity preserved

Pertinent record period:

July 2016 to June 2017

Estimated tonnage of certified palm product produced:

55,971.57 MT CPO and 14,444.26 MT

Estimated of tonnage of non certified palm product produced

Nill

String description:

Palm Oil Mill

Outsource activity(ies) (if any):

None

Independent third party(ies) performing outsource activity(ies): name, address and Capability

None

Audit Report


PART B SUPPLY CHAIN CERTIFICATION STANDARD

Requirements Audit Findings / Objective Evidence

STATUS ( NC / AOC / C )

CPO MILLS (IP) IDENTITY PRESERVED SUPPLY CHAIN MODELS – MODULAR REQUIREMENTS

D.1 Definition

A mill is deemed to be Identity Preserved (IP) if the FFB used by the mill are sourced from its own supply base certified to the RSPO Principles and Criteria (RSPO P&C). Certification for CPO mills is necessary to verify the volumes and sources of certified FFB entering the mill, the implementation of any processing controls (for example, if physical separation is used), and volume sales of RSPO certified products. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. If a mill processes certified and uncertified FFB without physically separating the material then only Module E is applicable.

D.2 Explanation

D.2.1. The estimated tonnage of CPO and PK products that could potentially be produced by the certified mill must be recorded by the certification body (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 shall then be recorded in each subsequent annual surveillance report.

a. Has the estimated tonnage of CPO and PK products (that could potentially be produced by the certified mill) been recorded by the certification body (CB) in the public summary of the P&C certification report ?

Yes. The estimated tonnage of CPO and PK products (that could potentially be produced by the certified mill) have been recorded by the certification body (CB) in the public summary of the P&C certification report

Estimated CPO: 66,741.84 MT

Estimated PK: 16,285.00 MT

C

b. Does the figure represent the total volume of certified palm oil product (CPO and PK) that the certified mill is allowed to deliver in a year ?

Yes. The figure represents the total volume of certified palm oil product (CPO and PK) that the certified mill is allowed to deliver in a year.

C

Audit Report




c. Does the actual tonnage produced have to then be recorded in each subsequent annual surveillance report ?

Yes. The actual tonnages produced have to then be recorded in each subsequent annual surveillance report.

2014

Actual CPO: 60,827.44 MT

Actual PK: 15,740.24 MT

2015

Actual CPO: 59,442.20 MT

Actual PK:15,812.14 MT

C

D.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).

a. The mill must also meet all registration requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim)?

The mill is under PT. PP London Sumatra Indonesia, Tbk which is registered as RSPO member, with membership number 1-0015-04-000-00.

The mill has also been registered in RSPO IT Platform, with register number RSPO_PO1000002219

C

b. The mill must also meet all reporting requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim)?

Major Non Conformities:

Not enough evidence that Begerpang Mill has completely meet all reporting requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim)

Objective evidence:

- There was transaction reported for 500 MT Palm Kernel in

eTrace period May 2016, however based on delivery note

C


Audit Report




physical despatch was 497.99 MT.

- Certified product were sold through “Book and Claim”

however Begerpang Mill did not recorded the certified

volume sold through it, moreover there was no transaction

reported in eTrace regarding this.

Correction:

Make confirmation to the RSPO IT related case studies that are not covered in the eTrace manual.

Corrective Action:

Conduct training regarding eTrace management.

Revise the SOP of RSPO Supply Chain

Conduct management and monitoring regularly.

D.3 Documented Procedure

D.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; b) The role 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’s procedures for the implementation of this standard.

a. Does the site have written procedures and/or work instructions in place to ensure the

The site has written procedure CSPO Supply Chain (EMS-P17) dated 10 April 2014 that described the process of Supply Chain

C

Audit Report




implementation of all elements specified in these requirements ?

from FFB receiving to CPO and PK despatch.

Internal Memorandum from President Director dated 15 May 2013 mentioned that (1) CPO produced is only coming from FFB from own estates that has been RSPO certified, (2) during process, delivery and storage is not contaminated with uncertified CPO.

Pedoman Kerja Penerimaan TBS dan Pengiriman CPO & PK untuk PKS di Sumatera Utara.

b. Are procedures / work instructions completely covering the implementation of all the elements in these requirements?

All procedures and work instructions are completely covering the implementation of all the elements in RSPO Supply Chain requirements

C

c. Have the site had the role of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements ?

The site has appointed person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. Based on the procedure CSPO Supply Chain (EMS-P17) the person is Mill Manager. The Mill Manager then appointed Shift Coordinator (Mr. Risdiyanto Ginting) as personal in charge for daily Supply Chain implementation based on appointment letter no. 040/BOM/LAB/VI/2016 dated 21 June 2016.

C

d. Is the person able to demonstrate awareness of the site’s procedures for the implementation of this standard?

The person is able to demonstrate awareness of the site’s procedures for the implementation of RSPO Supply Chain standard

C

D.3.2. The site shall have documented procedures for receiving and processing certified and non-certified FFBs.

a. Has the site had documented procedures for receiving certified FFBs ?

The site has documented procedures for receiving certified FFBs, e.g.:

C

Audit Report




- POM-WI/01, Weighbridge, revision 5 dated 26 October 2015.

- POM-WI/02, Loading Ramp and FFB Sorting, revision 5 dated 26 October 2015.

b. Has the site had documented procedures for receiving non-certified FFBs?

The site is only receive FFB from own estates, Begerpang, Sei Merah and Rambong Sialang Estate, therefore there is no non-certified FFBs.

C

c. Has the site had documented procedures for processing certified FFBs?

The site had documented procedures for processing certified FFBs, e.g.:

- POM-WI/04, Threshing, revision 3 dated 26 October 2015.

- POM-WI/05, Pressing, revision 1 dated 26 October 2015.

- POM-WI/06, Clarification, revision 1 dated 26 October 2015.

- POM-WI/08, Kernel Recovery, revision 1 dated 26 October 2015.

- POM-WI/09, Boiler, revision 1 dated 26 October 2015.

- POM-WI/16, Quality, revision 1 dated 26 October 2015.

- POM-WI/17, Dispatch, revision 5 dated 26 October 2015.

C

d. Has the site had documented procedures for processing non-certified FFBs?

The site is only process FFB from own estates, Begerpang, Sei Merah and Rambong Sialang Estate, therefore there is no non-certified FFBs.

C

D.4 Purchasing and Goods In

D.4.1. The site shall verify and document the tonnage and sources of certified and the tonnage of non-certified FFBs received.

Audit Report




a. Is the site going to verify and document the tonnage of certified FFBs received ?

The site has documentation that demonstrated that FFB entering the mill are sourced from certified supply bases which are their own estate, e.g. Begerpang, Sei Merah and Rambong Sialang Estate. Record observed are:

- Surat Pengiriman Buah Sawit (FFB Delivery Note) - Weighbridge ticket

C

b. Is the site going to verify and document the sources of certified FFBs received ?

FFB receiving was traceable to the supply base unit. During weighing on weighbridge the FFB sources is identified; whether received from own estate (block number and division) or from other source. The site only receive FFB from own estate and will not receive FFB from other source. Weighing slip and receiving report issued clearly stated the weight off FFB received and its source. The documented “Monthly Production and Stock” and document “Summary Crop Oil Palm” has recapitulated FFB received from Begerpang, Sei Merah and Rambong Sialang Estate. It was verified that the source of FFB received were verified and documented.

C

c. Is the site going to verify and document the tonnage of non-certified FFBs received ?

The site implement supply chain certification model IP therefore there is no receiving of non-certified FFB.

NA

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

a. Is the site going to inform the CB immediately if there is a projected overproduction of certified tonnage ?

Procedure CSPO Supply Chain (EMS-P17) dated 10 April 2014 chapter 3.20 has described mechanism to inform the CB immediately if there is a projected overproduction of certified tonnage.

C

D.5 Records Keeping

Audit Report




D.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.

a. Is the site going to record and balance all receipts of RSPO certified FFB on a three-monthly basis ?

The site has record and balance all receipts of RSPO certified FFB in monthly basis, recorded in document “Monthly Production and Stock” and document “Summary Crop Oil Palm”.

C

b. Is the site going to record and balance all deliveries of RSPO certified CPO and PK on a three-monthly basis ?

The site has record and balances all deliveries of certified CPO and PK in monthly basis, recorded in document “Monthly Production and Stock” and document “Summary Crop Oil Palm”.

C

D.6 Processing

D.6.1. The site shall assure and verify through documented procedures and record keeping that the RSPO certified oil palm product is kept segregated from non-certified material including during transport and storage.

a. Is the site going to assure and verify through documented procedures that the RSPO certified oil palm product is kept segregated from non-certified material including during transport and storage ?

The site has assured and verified through documented procedure that the RSPO certified oil palm product is kept segregated from non-certified material including during transport and storage.

The mill only processed FFB from the company’s own estates (Begerpang, Sei Merah and Rambong Sialang Estate). The Mill has two weighbridges, two CPO storage tank and two Palm Kernel silo which is used only for Begerpang Mill. Transportation is performed by customer, the mill does not have any transportation unit to deliver oil palm product. Therefore, RSPO certified oil palm product is kept segregated

C

Audit Report




from non-certified material until it handed over to the customer.

Weighbridges #1 Avery Weigh Tronix / E.1205 / 094350295 capacity 40 Tonne has been calibrated by UPT Metrologi Medan with certificate number 510.3/1003/61.60-TU/XII/Met.Mdn dated 8 December 2015 and weighbridges #2 Avery Berkel / L.225 / 05160127 capacity 40 Tonne has been calibrated by UPT Metrologi Medan with certificate number 510.3/1004/61.60-TU/XII/Met.Mdn dated 8 December 2015.

All CPO storage tank and PK silo have book of Volume Table that has been calibrated by UPT Metrologi Medan.

b. The site shall assure and verify through record keeping that the RSPO certified oil palm product is kept segregated from non-certified material including during transport and storage ?

Based on record keeping and documentation, it was verified that RSPO certified oil palm product is kept segregated from non-certified material including during transport and storage

C

D.6.2. The objective is for 100 % segregated material to be reached.

a. Is the objective for 100 % segregated material

able to be reached ?

It has been demonstrated that the site only received FFB from own estates (Begerpang, Sei Merah and Rambong Sialang Estate). It has also been demonstrated that the objective for 100 % segregated material can be reached through the process of FFB receiving, security check, weighing and recording, sortation, processing, temporary storage of CPO and PK, dispatch of CPO and PK.

C

Audit Report


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? If potential clients have any further questions concerning the RSPO these shall be directed to the RSPO secretariat.

Yes

5.3.2 Has the client been made aware of the contractual agreement for certification services against the RSPO Supply Chain Standard and maintain a record of any agreement?

Yes

5.3.6 Has the organization been informed about the following items?

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 Certification Standard?

Yes

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 awarded ?

Yes

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 the RSPO Supply Chain Certification Standard?

No

Audit Report


Supply Chain Certification System

Status ( Yes / No )

5.3.8 Have the client made aware that when there is outsourcing process to the third party after certification is granted therefor SAI Global shall be informed and SAI Global decides whether an interim visit is required for the next audit ?

Yes

5.3.9 Has certification audit reviewed pertinent RSPO Supply Chain records relating to the receipt, processing and supply of certified oil palm products?

Yes

5.3.10 Have all activities conducted by subcontractors complied with the intent and requirements of the RSPO Supply Chain Certification Standard

NA

5.3.11 Have the client made aware that until they receive written confirmation of their RSPO Supply Chain certification registration and its expiry date that they are not certified and can not make any claims concerning registration?

Yes

5.3.11 Have a detail records have been compiled of the entry (opening) meeting including a list of the participants in the meeting?

Yes

5.3.11 Have the client made aware of the findings of the audit team including any deficiencies which may result in a negative certification decisions or which may require further actions to be completed before a certification decision can be taken?

Yes

5.3.11 Have the client made aware that the findings of the audit team are tentative pending review and decision making by the duly designated representatives of the certification body?

Yes

Audit Report

WORK ITEM: WI-852267

Doc ID: 3843 / Issue Date May, 2014 © SAI Global Limited Copyright 2008 - ABN 67 050 611 642 of 191

3.4 Recommendation The recommendation from this audit is your company continue as a producer of the Generic of RSPO Principles and Criteria for Sustainable Palm Oil Production, May 2013 and the RSPO Supply Chain Certification Standard, Module D – CPO Mill: Identity Preserved, November 2014.

Audit recommendations are always subject to ratification by RSPO.

This report was prepared by: Mujinius Jalaraya, Eko Purwanto, Daniel Sitompul, and R. Yosi Zainal 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

Social risk: compliance with regulations

OHS: prevention of hazard and risk 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of Assessment

Findings Please sign below to acknowledge receipt of the assessment visit described in this report and confirm the acceptance of the assessment report contents including assessment findings.

Signed for and on behalf of PT. SAI Global Indonesia

Inge Triwulandari Technical Manager Date: 02 October 2016


Appendix “A” – Audit Record

Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts

audited: Times*

From - To

25.07.2016 Day 1

All Travelling Jakarta – Kualanamu (GA188) 13.35 – 16.00

All Travelling Kualanamu – Rambong Sialang Estate 16.30 – 18.30

26.07.2016 Day 2


Opening meeting 08.00 – 09.00

Muji

Site visit and document review (Environmental Aspect):

Criteria: 2.1 all indicators for environmental aspects Criterion: 4.4.1, 4.4.2 Criterion: 4.6.6, 4.6.10 Criterion: 5.1, 5.3, 5.4, 5.5 and 5.6 all indicators Criterion: 8.1

09.00 – 17.00

Eko

Site visit and document review (Agronomy best practise and Legal Aspect):

Criteria: 2.2.1 and 2.2.2 Criteria: 4.1.1, 4.1.2, 4.1.3 Criteria: 4.2. 4.3, 4.5 all indicators Criteria: 4.6.1, 4.6.2, 4.6.3, 4.6.4, 4.6.5, 4.6.7, 4.6.8, 4.6.9 Criterion: 7.3 if applicable Criterion: 8.1

09.00 – 17.00

Daniel

Site visit and document review (OHS Aspect) :

Criteria: 2.1 all indicators for OHS aspect Criterion: 4.6.11 Criteria: 4.7 all indicators Criterion: 4.8 all indicators Criterion: 6.10 Criterion: 8.1

09.00 – 17.00

Yosi

Site visit and document review (HCV and Social Aspect):

Criteria: 1.1; 1.2; 1.3 all indicators

Criteria: 2.1.1 for social aspect and HCV Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator Criterion: 4.6.12 Criterion: 5.2 all indicators 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

09.00 – 17.00

Interview with employees, labour union and committee gender

Interview with External Stakeholder Rambong Sialang Estate

All Break 12.30 – 14.00

All Traveling to Medan (Mess Medan) 17.30 - up

27.07.2016 Day 3

Bagerpang Estate

AUDIT REPORT


Muji

Site visit and document review (Environmental Aspect):

Criteria: 2.1 all indicators for environmental aspects Criterion: 4.4.1 Criterion: 4.6.6, 4.6.10 Criterion: 5.1, 5.3, 5.4, 5.5 and 5.6 all indicators Criterion: 8.1

08.00 – 17.00

Eko

Site visit and document review (Agronomy best practise and Legal Aspect):

Criteria: 2.2.1 and 2.2.2 Criteria: 4.1.1, 4.1.2, 4.1.3 Criteria: 4.2. 4.3, 4.5 all indicators Criteria: 4.6.1, 4.6.2, 4.6.3, 4.6.4, 4.6.5, 4.6.7, 4.6.8, 4.6.9 Criterion: 7.3 if applicable Criterion: 8.1

08.00 – 17.00

Sei Merah Estate

Daniel

Site visit and document review (OHS Aspect) :

Criteria: 2.1 all indicators for OHS aspect Criterion: 4.6.11 Criteria: 4.7 all indicators Criterion: 4.8 all indicators Criterion: 6.10 Criterion: 8.1

08.00 – 17.00

Yosi

Site visit and document review (HCV and Social Aspect):


Criteria: 2.1.1 for social aspect and HCV Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator Criterion: 4.4.2, 4.6.12 Criterion: 5.2 all indicators 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

08.00 – 17.00

Interview with employees, labour union and committee gender

Interview with External Stakeholder (Bagerpang Estate and Mill, Sei Merah Estate)

All Break 12.30 – 14.00

28.07.2016 Day 4

Bagerpang Mill

Eko

Site Visit and Document review (Legal and SC aspect):

SCC Partial certification requirements Criteria: 3.1. all indicators Criteria: 2.2.1 and 2.2.2 Criterion: 7.3 if applicable Criterion: 8.1

08.00 – 12.30

Daniel

Site visit and Document Review (OHS and Best practise mill aspect):

Criteria: 4.1 all indicator Criteria: 2.1 all indicators for OHS aspect

08.00 – 12.30

AUDIT REPORT


Criteria: 4.7 all indicators Criterion: 4.8 all indicators Criterion: 8.1

Yosi

Site visit and Document Review (HCV and social aspect):


Criteria: 2.1.1 for social aspect 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

08.00 – 12.30

Muji

Document review and site visit (Envrionmental aspect):

Criteria: 2.1 all indicators for environmental aspects Criterion: 4.4.1, 4.4.3, 4.4.4 Criterion: 5.1, 5.3, 5.4 and 5.6 all indicators Criterion: 8.1

08.00 – 12.30

All Break 12.30 – 14.00

All Audit Continue 14.00 – 15.00

All Auditor Meeting 15.00 – 16.00

All Exit Meeting 16.00 – 17.00

29.07.2016 Day 5

All Travelling Medan – Jakarta (GA183) 09.00 – 11.25


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

Certification audit

No RSPO

Indicator Details Corrective Action PIC

Completion Date

Status

Reviewed during 1st surveillance audit

1 RSPO Criterion

2.1 indicator major 1

Non-conforming situation:

There was no evidence of compliance with relevant legal several requirements.


Based on list of worker per February 2014, there was main activities (harvesting) conducted by temporary worker (11 worker). It was not appropriated with Indonesian Las # 13/2003 about Employment and Transmigration and Labour Ministry Decision of Indonesian No. KEP.102/MEN/VI/2004 about over time and pay of overtime.

There was no temporary worker agreement of upkeep in appropriate with Indonesian Las # 13/2003 about Employment.

It was observed several first aid bags/boxes that deployed in several areas and Supervisors (e.g. harvesting mandor in Division II) were not completed as required by regulation Permen 15/2008.

The fire fighter personnel were not provided with certificates training as required by the regulation (Fire fighting training basic level I and II). The competencies of fire fighter personnel are not evident based on defined within the regulation of Kep Menaker 186/1999.

Permit of excavator form Dinas Tenaga Kerja has not been provided as required by Permenaker No.1/1982.

Begerpang Estate

There has temporary worker agreement of upkeep (Pruning, wedding, manuring, spraying and maintenance of other activities), it was represented by group leader however term of the contract was not clearly described. (Indonesian Las # 13/2003 about Employment)

There are 7 ground well utilised by Estate. Permit of ground well abstraction has not been valid since 2010. Application letter for extention the permit was


Totally there are 11 temporary harvesters which have been promoted as permanent worker on 8 September 2014 (HR Director Letter No. 035/HRU-NS/App/IX/2014.

Agreement of daily temporary worker Rambong Sialang Estate has been established and signed by worker. Such as: Work agreement No. 101/RSE/Cont-PKHL/IX/2014, date on 2 September 2014. Work agreement was listed and approved by Labour department of Nort Sumatara No.26-6/III/PKWT/IX/2014.

Contents of fist aid kits have been established according to Permenaker No.15/2008 and have been distributed to Mandor. Organization has done monthly monitoring of fist aid kits contenst. It was recorded in form checklist fist aid kits Mandor.

Firefighter personnel have been tained by fire OHS expert collaborate with Firefighter Department of Medan on 27 June 2014. Firefighter officer level 1 and level 2 has been established by Firefighter department of Medan. There are three firefighters for each estate and mill.

Usage permit of Excapator has been approved by Labour Department of Serdang Begadai on June 2014. Permit No. 18.14/560/55/PAA/2014.

Begerpang Estate

Work agreement of daily temporary worker of up kep has been reviewed. Rearrangement of worker agreement has been done. Work agreement has described time periode of contract for 1 year. Such as: Work agreement daily temporary worker No. 101/BGE/Cont-PKHL/IX/2014, date on 1 September 2014, time period of agreement for 1 year. Work agreement was listed and approved by Labour department of Nort Sumatara No.30-6/III/PKWT/IX/2014.

The organisation reapplied extention of ground water abstraction through letter #131/GSD/G/43/IX/2014 from Department Head of GS to Bupati Deli Serdang on 9 September 2014. Letter was also sent to Dinas Cipta Karya dan Pertambangan Kab. Deli Serdang. Based on reply letter from Dinas Cipta Karya dan Pertambangan Kab. Deli Serdang on 17 September 2014, site visit is conducted on 18 September 2014.

Organization has identified all of first aid kit contents. Contents of first aid kit have been completed in appropriate to regulation on 26

Estate and Mill

17/09/2014 Closed Closed

AUDIT REPORT


No RSPO


Completion Date

Status


sent to Bupati Deli Serdang on 26 November 2010. However until now, permit has not been provided.

First aid bags/boxes carried out by mandor (e.g. harvesting mandor in Division V) were not completed as required by regulation Permen 15/2008.

SPUP/IUPdocument of Bagerpang Estate 980.06 Ha could not be shown. Based on SPUP No. 173/Mentanhut/VII/2000 Location: Kecamatan Galang, Kabupaten Deli Serdang, Propinsi Sumatra Utara, 2.539,68 Ha dan SPUP No. 174/Mentanhut/VII/2000 Location: Kecamatan Bangun Purba, Kabupaten Deli Serdang, Propinsi Sumatra Utara, 2.204,48 Ha. Total of Estate in SPUP is 4.744,16 Ha, while total area of Begerpang Estate is 5,689.16 Ha. Moreover the existing SPUP did not state permit of capacity of POM.

Bagerpang Estate and Rambo Sialang Estate

Determination of riparian zone in the related procedure was noncompliance with President Decision No.32/1990 about environmental management. In the related procedure was described regarding a. Width of the river is 5-10 meters, than the

riparian zone is 5 meters b. Width of the river is 10-25 meters, than the

riparian zone is 15 meters c. Width of the river more than 25 meters, than the

riparian zone is 25 meters.

Begerpang Mill

There was no evidence that record of Land Application Q4 2013 was reported to Dinas Pertanian Tanaman Pangan, Perkebunan dan Peternakan Kabupaten Deli Serdang dan Dinas Kehutanan Kabupaten Deli Serdang as required by permit of Land Application.

Flow meter to monitor surface water abstraction was broken. Permit of surface water abstraction required to install water meter and/or water debit measuring device.

April 2014. Organization has also done monthly monitoring of fist aid kit contents.

Letter regarding Technical Consideration of Estate activity (Pertimbangan Teknis Usaha Perkebunan) of PT. PP London Sumatera Indonesia Tbk. Kebun Begerpang was developed on 22 January 2014 by Department Head of GS to Kepala Dinas Perkebunan Prop. Sumatera Utara for total area 5,724.22 Ha. Recommendation letter for Technical Consideration has been provided through letter #525/199/IX/F. Letter mentioned that the organisation shall complied with UU 18/2004 regarding Plantation and Peraturan Menteri Pertanian #98/Permentan/OT.140/9/2013 regarding Manual of Plantation Permit (Pedoman Perizinan Usaha Perkebunan)

Bagerpang Estate and Rambo Sialang Estate

Organization has reviewed related procedure. New procedure has been established in SOP EMS-P16 HCV management and monitoring on 14 April 2014. Boundary of riparian zone was established in appropriate with related law and regulation.

Begerpang Mill

Report of LA Q4 2013 has been sent to Dinas Pertanian Tanaman Pangan, Perkebunan dan Peternakan Kabupaten Deli Serdang dan Dinas Kehutanan Kabupaten Deli Serdang. To prevent receipt note was not found at Estate, receipt note of regular reporting was sent to Estate in soft copy.

Flow meter has been installed and calibrated by CV. Sahabat Teknik on 6 June 2014. Socialisation to PIC of pump house regarding reporting all broken condition in pump house.

Sei Merah Estate

Application letter #108/GSD/G/43/VII/2014 on15 Juli 2014 has been sent to Kepala Dinas Pertanian Pemerintah Kabupaten Deli Serdang. Recommendation letter of change from rubber to oil palm has been issued #525/31805/IX/2014 on 16 September 2014 from Kepala Dinas Pertanian Pemerintah Kabupaten Deli Serdang.

PIC of sustainability has been assigned, e.g. Rambong Sialang Estate - Akbar Arlandes (Field Assistant), Begerpang Estate - Kaslan (Field Assistant), and Begerpang Mill - Sinar Mulia Munthe (Shift Coordinator).

Expire of permit was monitored through list of permit EMS F19 –

AUDIT REPORT


No RSPO


Completion Date

Status


Sei Merah Estate

Based on SPUP Kebun Sei Merah No. HK.350/195/Bun.5/III/2001 dated10 Juli 1997, 1,854.46 Ha was oil palm and crumb rubber. However based on area statement all the area was oil palm.

Monitoring of permit.

2 RSPO Criterion



There was no evidence of effort made to comply with change in the several regulations

Objective evidence:


Several regulations have not been updated, registered and evaluated their compliance, e.g. Permentan 98/Permentan/OT.140/9/2013, Per.MenLH 14/2013, Permenperind No 23/M-IND/PER/4/2013, Permenaker No. 13/2011 regarding chemical and physical factor threshold limit value, Permenaker No. 2/1980 regarding employee medical check up, Permenaker No. 1/1981 regarding occupational disease reporting, Permenaker No. 3/1982 regarding occupational health, Permenaker No. 25/2008 mengenai occupational disease diagnose.


Several regulations have not been updated, registered and evaluated their compliance, e.g. Peraturan Daerah Kabupaten Deli Serdang 6/2006 tentang Pengendalian Dampak Lingkungan Hidup di Kab. Deli Serdang, Permentan 98/Permentan/OT.140/9/2013, Per.MenLH 14/2013, Permenperind No 23/M-IND/PER/4/2013, Permenaker No. 13/2011 regarding chemical and physical factor threshold limit value, Permenaker No. 2/1980 regarding employee medical check up, Permenaker No. 1/1981 regarding occupational disease reporting, Permenaker No. 3/1982 regarding occupational health, Permenaker No. 25/2008


1. Updating against regulation has been done 5 August 2014. Related regulation has been listed on Form-04-01. Renewed regulation regarding: Permenaker No. 2/1980 - Pemeriksaan kesehatan, Permenaker No. 1/1981 - pelaporan PAK, Permenaker No. 3/1982 - Pelayanan Kesehatan Kerja, Permenaker No. 25/2008 - Diagnose PAK

2. List of environmental regulation has covered Peraturan Daerah Kabupaten Deli Serdang 6/2006 tentang Pengendalian Dampak Lingkungan Hidup di Kab. Deli Serdang, Permentan 98/ Permentan/OT.140/9/2013, Per.MenLH 14/2013, Permenperind No 23/M-IND/PER/4/2013, RKL RPL Nomor: 660/05/SET-KOMISI/I/2009. Compliance with these regulations has been evaluated by Environmental Staff from Medan Office in August 2014.

3. List of regulation is updated when there are new regulations or once a year.

Estate and Mill


AUDIT REPORT


No RSPO


Completion Date

Status


mengenai occupational disease diagnose.

3 RSPO Criterion

4.2 indicator minor 2


Land Aplication (Trenches) has not been conducted according to SOP no. PRS-04-03-01: Land Aplication.

Objective evidence:

Begerpang Mill

Based on Effluent Flow Report in March 2014, application in block 03111001 plot 1 5 Ha was 6,949 ton (1300 ton/ha) and block 03111001 plot II 7 Ha was 3,526 ton (503 ton/ha) while recommended dosage was 750 ton/ha.

It was observed that dept of trenches in block 03111001 was 1.5 meter. SOP mentioned that dept of trenches was 60 cm.

Begerpang Mill

Based on Effluent Flow Report, it was observed that effluent application in April – August 2014 was inline with standard 750 – 1,000 ton/ha/year. LA report is developed monthly and report quarterly to government.

Trenches has been repaired by covering with soil and dept of trenches became 60 cm. New trenches was constructed with dept 60 cm.

Mill 17/09/2014 Closed Closed

4 RSPO Criterion



It was observed that there were pesticide application up to riparian zone in some areas.

Upkeep of oil palm in riparian zone of Lembah (water pump of nursery) was manually conducted however intensity of upkeep was causing surface erosion to river.

Objective evidence:


Field observation in on Riparian zone of Bata Block

05113001 and Block 11113001 as well as at

Riparian zone of Lembah was observed that there

ware pesticide application up to riparian zone

Upkeep of oil palm in riparian zone of Lembah (water

pump of nursery) was manually conducted however

intensity of upkeep was impact surface erosion to

river.


Boundaries of Bata River have been constructed and have done on 24 June 2014. As a preventive action, estate manager was established circular letter No. 21/RS/DIV/IV/14, date on 7 April 2014 about Prohibition chemical application in riparian zone. Protected riparian program was also communicated to worker on 27 June 2014.

Organization was also conducted planting grass in open area and Switenia sp. to anticipate erosion coastral area of river.

Estate 17/09/2014 Closed Closed

5 RSPO Criterion

4.4 indicator


Water management plan has not been consistently implemented.

Objective evidence:

Begerpang Estate

Secondary containment has been repaired on June 2014.

Begerpang Mill

Estate and Mill


AUDIT REPORT


No RSPO


Completion Date

Status


minor 1 Begerpang Estate

It was found secondary containment was broken in two locations which can cause oil spill to land.

Begerpang Mill

Bulking silo was leak therefore the leakage was drained to open drainage.

Contaminated water from clay bath directly drained to open drainage. Previously the contaminated water was drained to sludge pit.

Bulking silo has been repaired on 25 April 2014.

Contaminated water from clay bath has been sent to sludge pit since 25 April 2014.


Dissemination regarding environmental awareness has been conducted.

6 RSPO Criterion



There was no evidence that the whole team (incl. the worker) had been trained regarding IPM.

Objective evidence:


There was no evidence that IPM training has been conducted.


IPM training has been conducted on 20 May 2014 by Technology Transfer from BLRS. Participants from Rambong Sialang were 12 personnel (Assistant, Mandor 1, Pest Coordinator, Diseases Mandor and IPM worker. Training is conducted annually.


7 RSPO Criterion



Toxicity calculation has not been done on the use of agrochemicals.

Objective evidence:


Record of calculation and monitoring of toxicity of pesticide unit use could not be shown.

.


Calculation of toxicity pesticide unit has been conducted for pesticide use in 2013: metil metsulfuron 20%, 2,4 D methylamine 865 g/l, Fluroksipir metilheptil ester 290g/l, paraquat diklorida 276 g/l, karbosulfan 5%, asefat 75%, brodifakum 0.005%.

Calculation result was well recorded.


8 RSPO Criterion



There was no evidence that only registered and permitted agrochemical used.

Objective evidence:


There was no evidence that only registered and permitted agrochemical used, e.g. starane, metsulindo, topzone, gramoxone, elang, orthene 75 SP, Dipel WP, Marshal 5GR.

Rambong Sialang Estate and Begerpang Estate

1. List of agrochemical recommended including their permit has been made by BLRS and has been sent to all Estates by email on 30 December 2013.

2. Copy of valid permit of agrochemicals has been provided, e.g. starane, metsulindo, topzone, gramoxone, elang, orthene 75 SP, Dipel WP, Marshal 5GR, klerat.


AUDIT REPORT


No RSPO


Completion Date

Status


Begerpang Estate

Copy of valid permit has not been provided for several expired permit of agrochemical, e.g. Klerat (6 October 2013).

9 RSPO Criterion



Not all spraying operator has obtained training regarding agrochemical use.

Objective evidence:


Training regarding agrochemical use was only attended by one group leader (mandor) and one spraying operator from 5 spraying operator in Division I.

Begerpang Estate

Training regarding agrochemical use was only attended by one group leader (mandor) and one spraying operator from 6 spraying operator in Division 5.


1. Training of restricted pesticide was conducted on 8 July 2014 by Topzone and Komisi Pestisida. Location of training was in Bahlias Estate.

2. Participants from Rambong Sialang Estate were 7 personnel 3. Participants from Begerpang Estate were 22 personnel. 4. Periodic training is conducted by Assistant when there were no

spraying operator changes. Training of restricted pesticide is conducted by pesticide supplier and Komisi Pesticide based on input from Estate when there are new spraying operators and applied to BLRS and HRD.


10 RSPO Criterion



It was found employee that didn’t use Personal Protective Equipment during working activities which is not relevant to organization Safety Policy.

Objective evidence:

Begerpang Mill

When performing FFB unloading activities at Begerpang POM from Rambong Sialang Estate it was found two workers didn’t use safety shoes.

Begerpang Mill

Comunication of PPE usage has been done on 29 April 2014 in appropriate to internal memo mill manager (129/BOM/EST/IV/2014, date on 8 April 2014). It was attended by FFB transport drivers and craftsman.

Security also cheked PPEs driver and craftsman everytime. It was recorded in Monthly report of PPE usage obedient in mill.


11 RSPO Criterion



From records of insurance payment slip it was found that not all employees were covered for their insurance payment.

Objective evidence:


Organization has identified new worker which listed as a social security. There are 5 new worker has been listed as a social security participant. It was listed to BPJS Ketenagakerjaan on April 2014 period.


AUDIT REPORT


No RSPO


Completion Date

Status



Base on Rambong Sialang Estate employee data on February 2014 there were 825 workers. However only 821 workers insurance have been paid by the organization that month.

12 RSPO Criterion



UKL UPL implementation report is not complete according to UKL UPL document.

Objective evidence:

Begerpang Estate

UKL UPL report did not record of soil fertility. UKL UPL document required soil fertility is analysed annually.

There was no measurement result of river water quality, community well quality, ground water quality and air ambient measured every six months as required by UKL UPL document. In 2013 measurement was only conducted once.

Begerpang Mill

UKL UPL report did not mention measurement result of WWTP inlet. UKL UPL document required that WWTP inlet is measured monthly.

UKL UPL report has not been sent to several government institutions as required by UKL UPL document, e.g. BKPM Jakarta, Bainpro Sumatera Utara, BLH Sumatera Utara, Dinas Perindustrian Kabupaten Deli Serdang, Dinas Perkebunan Kabupaten Deli Serdang sesuai yang diminta oleh Dokumen UKL UPL. Report was only sent to Bapedalda Kabupaten Deli Serdang.

Begerpang Estate

UKL UPL report 1st semester 2014 has been sighted and sent to BPMP Sumatera Utara, Dinas Perkebunan Sumatera Utara, BLH Sumatera Utara, Dinas Perindustrian Kab. Deli Serdang, Dinas Pertanian Kab. Deli Serdang.

UKL UPL report 1st semester 2013 has been sighted and covered measurement result of river water quality, community well quality, ground water quality and air ambient.

Begerpang Mill

UKL UPL report 1st semester 2014 has attached analysis result of soil fertility.

UKL UPL report 1st semester 2014 has been sent to BPMP Sumatera Utara, Dinas Perkebunan Sumatera Utara, BLH Sumatera Utara, Dinas Perindustrian Kab. Deli Serdang, Dinas Pertanian Kab. Deli Serdang. Receipt note was sighted.

To prevent the document was not found at site during audit, receipt note was sent to site by email.

Estate and Mill


13 RSPO Criterion



Records of results of identification of any protected, rare, threatened or endangered species, and HCV habitat was not available.

Objective evidence:



Organization has performed HCV assessment collaborated with PT. SAIL consulting (PT. Siklus Alam Indonesia Lestari). Field assessment was conducted on 20-22 May 2014 (Rambong Sialang Estate) and 13-15 May 2014 (Bagerpang Estate) by 4 HCV assessor accredited by RSPO. Public consultation was done on 19 May 2014 in Bagerpang Estate (attanded 38 stakeholders) and on


AUDIT REPORT


No RSPO


Completion Date

Status


Report of reground checking HCV which conducted in August 2008 was only contained map of HCV potential. It was no described HCV identification analyses.

26 May 2014 in Rambong Sialang Estate. It had intended to get aspiration and responses from stakeholders related identification result of HCV and its management plan. HCV assessment report has commented by accredited assessor form Forestry Faculty of IPB.

There is no RTE species identified, however there are identified some protected species in appropriate to PP No.7/99 regarding Kucing kuwuk (Felis bengalensis), Raja udang (Alcedo meninting), Burung madu kelapa (Anthreptes malacensis), Burung madu belukar (Anthreptes singalensis), and Piton (Phyton morulus).

HCV identified in Rambong Sialang Estate regarding:

a. Areas critical to water catchments (HCV 4.1) regarding: River of

Bata 1,2,3 (5.00 ha), Batu Pihit river (1.35 ha), Belidaan river (0.71

ha), Lembah river (3.55 ha), Panglong river (9.14 ha), Water pond in

Pondok Bundar (3.07 ha), Water resource Dedet (2.60 ha) and

Water resource for Nursery (0.23 ha)

b. Areas critical to religious significance (HCV 6) regarding: Cemetery

of Egaharap (0.18 ha), Cemetery of emplasment (0.78 ha) and

Cemetery of Firdaus (0.02 ha).

HCV identified in Bagerpang estate regarding:

Divisi Batu Lokong

a. Areas critical to water catchments (HCV 4.1) regarding: Batu

Lokong rivers (4.94 ha), Water source of housing area : Batu

Lokong 1 (0.10 ha), Batu Lokong 2 (0.08 ha), Naga Timbul 1 (0.56

ha), Naga Timbul 2 (0.18 ha), Namu Rambe (0.34 ha),


of Batu Lokong (0.29 ha), Naga Timbul 1 (0.15 ha), Naga Timbul 2

(0.28 ha), Namu Rambe 1 (0.09 ha), Namu Rambe 2 ( 0.002 ha),

Namu Rambe 3 (0.08 ha), Namu Rambe 4 (0.10 ha)

Divisi Tambang Serdang

a. Areas critical to water catchments (HCV 4.1): Serdang river (3.63

ha), Water source 1 (0.02 ha), Water source 2 (0.004 ha), Water

source 3 (0.007 ha), Water source 4 (0.01 ha), River of BG 1 (0.98

ha), River of BG 2 (0.23 ha), River of KF 1 (0.39 ha), River of KF 2

(0.71 ha), River of KT 1 (1.14 ha), River of KT 2 (3.55 ha), Water

source of BG (1.34 ha), Water source of KF (0.19), Water surce of

KT (0.11 ha)


AUDIT REPORT


No RSPO


Completion Date

Status


1(0.05 ha), Cemetery M2 (0.06), Cemetery BG (0.52 ha) Cemetery

KF (0.36 ha).

HCV assessment report has been distributed to each estate.

14 RSPO Criterion



Evidence of dissemination of protected species to worker of Gunung Malayu Mill was no available.

Objective evidence:

Begerpang Mill

Dissemination of HCV potensial protection and dissemination of protected species to estate worker has been done however dissemination to worker of Gunung Malayu mill was not done.

Begerpang Mill

Communication and dissemination HCV management and protected plan as well as protected species to mill worker has been conducted on 30 April 2014. Its contents regarding: ecosystem and natural resource protection, environment management and monitoring, PP No.7 tahun 1999 about flora and fauna protected list.



15 RSPO Criterion



Evidence of competent/training record of officers to monitor any plans and activities of HCV management and monitoring program was not available.

Objective evidence:


Organization has been appointed water pump operator as an officer to monitor any plans and activities of HCV management and monitoring program (Decision Letter of Estate Manager No. 015/RS/DIV/V12, date on 25 January 2012). These ”HCV Officers” have no particular background for HCV management. Evidence of competent/training record of HCV Officer was not available.

Begerpang Estate

Organization has been appointed Head of assistance as an officer to monitor any plans and activities of HCV management and monitoring program (Decision Letter of Estate Manager No.209/BGE/DIV/XII/2013, date on 31 December 2013). These ”HCV Officers” have no particular background for HCV management. Evidence of competent/training record of HCV Officer was not


Organization has conducted sustainability training including protected species and HCV management to PIC Sustainability of each estate on 15-16 April 2014. It was done to increase awarenes and skill of PIC each estate.



AUDIT REPORT


No RSPO


Completion Date

Status


available.

16 RSPO Criterion



Not all waste and pollutions sources were identified and documented.

Objective evidence:

Begerpang Mill

Waste and pollutions sources from laboratory activities have not been identified and documented.

Begerpang Mill

Waste and pollutions sources from laboratory activities have been identified and documented on 1 Juli 2014 by Mill Manager.


17 RSPO Criterion



Several waste management and disposal has not been implemented to avoid or reduce pollution.

Objective evidence:


There was no evidence that contaminated rags and gloves were disposed as hazardous waste.

Report of hazardous waste management Q3 and Q4 was only sent to BLH Serdang Bedagai. There was no evidence that hazardous waste management report was sent to Ministry of Environment, BLH Propinsi Sumatera Utara and Pusat Pengeloaan Ekoregion Sumatera.

Begerpang Estate

There was no fence at the final landfill of non hazardous waste.

Report of hazardous waste management Q3 and Q4 was only sent to BLH Deli Serdang. There was no evidence that hazardous waste management report was sent to Ministry of Environment, BLH Propinsi Sumatera Utara and Pusat Pengeloaan Ekoregion Sumatera.


Contaminated rags have been collected as hazardous waste. Quantity of contaminated rags has been recorded in balance of hazardous waste since April 2014. Contaminated rags have not been transported by authorised institution (CV. Amindy Barokah) due to permit of transporter was due on 11 June 2014. The transportation is in progress to extend the transportation recommendation from Ministry of Environment.

Socialisation regarding hazardous waste handling has been conducted on 15 April 2014 to PIC of Sustainability and Manager. PIC Sustainability has communicated to all warehouse operators.

Report of hazardous waste management Q3 and Q4 has been sent to Ministry of Environment, BLH Propinsi Sumatera Utara and Pusat Pengeloaan Ekoregion Sumatera.


Begerpang Estate

The final landfill of non hazardous waste has been completed with fence on 7 July 2014.

Non hazardous waste management has been included in Environmental Management Program.

Report of hazardous waste management Q3 and Q4 has been sent Ministry of Environment, BLH Propinsi Sumatera Utara and Pusat Pengeloaan Ekoregion Sumatera.



18 RSPO Criterion


There was no evidence that efficiency analysis of fossil

Estate has conducted analysis of fossil fuels use by comparing actual and budget with using justification of monthly cost. The data could be


AUDIT REPORT


No RSPO


Completion Date

Status



fuels use.

Objective evidence:

Rambong Sialang Estate, Begerpang Estate

There was no evidence that efficiency analysis of fossil fuels use.

shown.

19 RSPO Criterion



There was no evidence that emission of all FFB transportation vehicles was measured.

Objective evidence:


There are 31 FFB transportation vehicles. Measurement result of emission of FFB transportation vehicles was provided in Book of Periodical Vehicle Inspection (KIR). However not all KIR stated measurement result of emission, e.g. BK 9206 CI, BK 8995 CI, BK 8870 CG, BK 8742 CI, BK 8701 CI, BK 9001 CN.

Begerpang Estate

Measurement result of emission was provided in Book of Periodical Vehicle Inspection (KIR). However not all KIR stated measurement result of emission, e.g. all FFB transportation vehicles BK 9675 CK, BK 8802 CI, BK 9241 CS, B 8395 CP.

There was no measurement result of heavy equipment emission, e.g. traktor TR04, traktor TR05, traktor TR06, traktor TR07.

Begerpang Mill

Measurement result of emission was provided in Book of Periodical Vehicle Inspection (KIR). However not all KIR stated measurement result of emission, e.g. BK 9023 CA.


Emission of vehicles has been measured, e.g. BK 9206 CI, BK 8995 CI, BK 8870 CG, BK 8742 CI, BK 8701 CI, BK 9001 CN.

Begerpang Estate

Emission of vehicles has been measured, e.g. all FFB transportation vehicles BK 9675 CK, BK 8802 CI, BK 9241 CS, B 8395 CP.

Emission of heavy equipment has been measured, e.g. traktor TR04, traktor TR05, traktor TR06, traktor TR07.


Emission of vehicles has been measured, e.g. BK 9023 CA.

Transport staff has been assigned to manage transportation and its documents.

Environmental measurement budget has included measurement of tractor emission.


20 RSPO Criterion

6.1


Documentation of impact analyses covering negative and positive impact of social from mill and estate was


Organization has conducted social impact analyses based on social mapping result on 7-8 October 2013 in Rambong Sialang and 29-30


AUDIT REPORT


No RSPO


Completion Date

Status


indicator major 1

not described clearly scope of study as well as the impact of mill and estate activities.

Objective evidence:


Presentation of Environmental Evaluation-Penyajian Evaluasi Lingkungan (PEL) of Rambong Sialang 1993, No # RC. 220/699/B/IV/94 was not described clearly scope of study as well as the impact of mill and estate activities.

Organization has been conducting social mapping on 7-13 October 2013 covering 11 villages around estate however its result was only used to arrange CSR program 2014.

Begerpang Estate

Presentation of Environmental Evaluation-Penyajian Evaluasi Lingkungan (PEL) of Bagerpang 1993, No # RC. 220/699/13/IV/94 and UKL-UPL Document of PT. Karimun 2008, No # 08146/BPDL/DS/2008 – (At the present, Ex PT. Karimun be able as Timbang Serdang Division Bagerpang Estate) was not described clearly scope of study as well as the impact of mill and estate activities.

Organization has been conducting social mapping on 29-30 October 2013 covering 11 villages around estate however its result was only used to arrange CSR program 2014.

October 2013 in Bagerpang as well as social survey which performed by Public relation officer and Commnunity Development Officer in July 2014 covered village around estate. Social survey was conducted involving village head around estate. Some aspects were considered during assessment such as land identities, residence, economy, social cultural and public health. Negative impacts and positive were identified during assessment. It was noted that negative and positive issues from social assessment results for all estate and mill were similar. Negative impacts were identified such as: Transport of dusting and noising originating from FFB (public health), social emvy from inequitable donation for surrounding community (social cultural). Positive impacts were identified such as: Regional development and increased the village economy, ease of road access, ease of information acces, reducing jobless, improved the public education and job opportunities.

SIA report has been distributed to each estate

21 RSPO Criterion



Record of social impact monitoring with local

community participation was not available.

Objective evidence:


Though the report of environment management and monitoring plan implementation has been arranged based on Presentation of Environmental Evaluation-Penyajian Evaluasi Lingkungan (PEL) however evidence of local community participation was not

• Social impact monitoring which done was available in social and environmental aspect evaluation.

• Social mapping, social impact monitoring has been documented in environmental and social impact since 2009. During audit only social mapping could be shown.

• Organisation was planed to conduct social impact monitoring by community participation.

• Also optimizing Community Development Officer performance to conduct routinely monitoring of social mapping data and environmental and social impact updating.


AUDIT REPORT


No RSPO


Completion Date

Status


available.

22 RSPO Criterion


and Criterion



There was no evidence of communication procedure (EMS-P05, Communication) arranged in collaboration with local communities and other affected or interested parties.

Objective evidence:


Stakeholder meeting has been conducted on 29 July 2013 attended by 38 stakeholder (Village head, head of district-Camat, BPD, District police and community leader) however it was only discussed limited issue including CSR program, dissemination and transparency sustainable palm oil (environment management, mill processes, HCV and wildlife management, environment policy and OHS policy)

Begerpang Estate

Meeting with stakeholder has been conducted on 27

July 2013 attended by 88 stakeholder (Village head,

head of district-Camat, BPD, District police, teacher

of school around estate and community leader),

however it was only discussed limited issue including

CSR program, dissemination and transparency

sustainable palm oil (environment management, mill

processes, HCV and wildlife management,

environment policy and OHS policy).

Begerpang Estate

Organization has performed meeting with related stakeholder around estate and mill on 27 July 2014 in Rambong Sialang Estate and on 29 July 2014 in Bagerpang Estate. It was to consult the communication and complaint mechanism. At the time communication and complaint mechanism has been agreed and was recorded in minutes meeting. Stakeholders were present among other community leader and Village head around estate.


23 RSPO Criterion



There was not evidence that quality of water distributed to housing was measured regularly as required by Decision of Health Ministry No.416/MEN.KES/PER/IX/1990.

Objective evidence:


Auditee information, last water quality testing conducted in 2012, however its result was not available. Groundwater permit presuppose that the


Water quality testing of clean water which distributed to worker housing has been done collaborate with PT. Sucofindo. Based on testing result indicated that the clean water for worker has appropriate to quality standard as required in related regulation. Testing result certificate regarding:

- Bagerpang Estate and Mill: No.MDN. B03.2014.0234912 - Bah Lias Estate & Mill: No. MDN. B03.2014.0234945 - MDN.

B03.2014.0234949

Organization has also established routinely clean water testing plan


AUDIT REPORT


No RSPO


Completion Date

Status


water quality testing should be conducted every semester.

Begerpang Estate

There was one well and 7 water sources which

distributed to housing area however result of water

quality analyses was not available.

every semester. It has also increased to each mill and estate budget.

24 RSPO Criterion



Agreement with contractor was not specified that contractors abide by labour laws.

Objective evidence:


Agreement with heavy equipment contractor was not specified that contractor abide by labour laws. For example: Agreement with PT.Probesco Disatama, No. # 001/PCS.CASE.LONSUM/XII/2013 date on 11 December 2013.

Begerpang Estate

Agreement with contractor of compost transport was not specified that contractors abide by labour laws. For example: Agreement with UD. Sinar Dunia, No.# 26/EP/Cont/2013, date on 1 July 2013

Organisation performed Addendum contract by mentioning provisions the contractor must comply with the labor laws.

Work agreement has mentioned that the contractor have responsible comply to OHS regulation, specific to labour regulation.

Organisation has distribute standard agreement form and establish memo so that new contract agreement must covered the responsibile of contractor to comply against related labour regulation.


25 RSPO Supply Chain

Criterion D.6.1


There was no evidence that training was delivered to several employees.

Objective evidence:

Begerpang Mill

There was no evidence that training was delivered to Manager, Krani Timbang.

Begerpang Mill

Training has been conducted on 15 April 2014. Attendance list was sighted.



26 RSPO Certification System

clause


There was no evidence that partial certification requirements was complied

Objective evidence:

The organisation conducted the internal audit and reviewing 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

Mill and Estate


AUDIT REPORT


No RSPO


Completion Date

Status


4.2.4 There was no evidence that uncertified management unit complied with partial certification requirements regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs), land conflicts, labour disputes and legal non-compliance.

fulfilled in July – October 2013. Based on the reviewing it was concluded that:

There was no new planting since January 2010 so there was 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.

There were no land conflict and labour disputes.

There was no non-compliance with regulations. Site visit was conducted to:

Arta Kencana Estate on 21 July 2013

Kencana Sari Estate on 23 July 2013

Pahu Makmur Estate on 10 September 2013

Isuy Makmur Estate on 10 September 2014

Riam Indah Estate on 22 October 2013

Sei Gemang Estate on 23 October 2013

Sei Lakitan on 25 October 2013

Sei Punjung on 24 October 2013

Gunung Bais Estate on 29 October 2013


Appendix “C” – Nonconformities and Opportunity for Improvement Summary RSPO Principe and Criteria Generic 2013

Organisation Name: PT. PP London Sumatera Indonesia Tbk Location:

Batu Lokong Village, Batu Galang Village - Galang District, Tanjung Morawa District - Deli Serdang Regency, Sei Rampah District, Serdang Bedagai Regency North Sumatera Indonesia

Date: 28 July 2016 Audit team leader: Mujinius Jalaraya Activity/Report ID: WI-852267 License/Certificate No.: FMS40033

Organisation’s acknowledgement of receipt of NCR Employee Name: Mugiyanto Date NCR Accepted: 28 July 2016

Section 1 Section 2 Section 3 Section 4

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n Details of non-conforming situation

and Objective Evidence : SAI

Verification (how and

when)

Correction :

(immediate fix)

Root Cause and Corrective Action : (action to prevent recurrence)

SAI Global Response Review:

SAI Global Verification of Corrective Action for Effectiveness:

1 RSPO PC 2013

Indicator 1.1.2

Major Non-conforming situation:

In Communication Procedure (EMS-P05), there is no time frame to respond to request for information.

Requirement:

RSPO Indicator 1.1.2 Major

Objective evidence:

Communication Procedure (EMS-P05)

Due Date:

27 September 2016

SAI Follow up Method:

Off site audit/evidence submitted

Set time limits (14 days) for responding to requests for information from stakeholders. Done 25 August 2016.

Root Cause:

The time limits in response to requests for information have not been described in the SOP of Communication because the time limits are mostly found in the letter of request for information from stakeholders and an unwritten agreement at the time of request submission.

Corrective Action:

Revise SOP of Communication by setting time limits (14 days) to response on requests for information, then disseminate it to the interested parties. Dissemination done on 15 September 2016 at Begerpang Estate and 16 September 2016 at Rambong Sialang Estate.

Response:

Acceptable (please see section 4 for details)

Reviewer:

Eko Purwanto

Date: 27/09/2016

Verification of Effectiveness:

All submitted evidence have been verified and accepted. Non Conformance consider as closed.

Major NCR2016-01 is Closed

Name

Eko Purwanto

Date:

27/09/2016

AUDIT REPORT



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Correction :

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2 RSPO PC 2013

Indicator 2.1.1


Several legal and regulation compliance was not met and not comply.

Requirement:

RSPO indicator 2.1.1 Major

Objective evidence:

- Compliance with the Regulation No. 98 / 2013, the overall unmet. Estate performance reporting for the period Semester 1 and 2 in 2015 cannot be demonstrated

- Vickers Hoskins boiler that operated at Begerpang mill has not been approved by local authority Disnaker.

- Valid permits for Lifting equipment at Sei Merah Estate (tractor and excavator) were not available

Due Date:

27 September 2016


Evidence submitted

Sending Plantation

Business progress

report to the relevant

agencies for the

reporting period has

not been sent. Done

on 22 September

2016.

Accelerating the

process of obtaining

licenses for

Begerpang POM

Boilers and Lifting

Equipment for Sei

Merah Estate.

Testing done on 23

September 2016

Root Cause:

Lack of PIC

understanding on

reporting mechanism.

No dissemination from

DISHUB (Transportation

Agency) related PUP

reporting, so that report is

only addressed to local

BPS (Statistic Agency)

every month.

No available standard

(from local Government)

related to the cost of

validation and inspection.

As well as the licensing

process takes a long

time, related to the

availability of examination

time and the queue list.

Corrective Action:

Perform benchmarking to

other units on the

reporting mechanism and

then disseminate the

results to the personnel in

the Begerpang unit.

Communicate with

relevant agencies to

determine the standard

format and frequency of

Response:


Reviewer:

Eko Purwanto

Date: 27/09/2016




Name

Eko Purwanto

Date:

27/09/2016

AUDIT REPORT



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Correction :

(immediate fix)




reporting so that it can be

used as guidelines and

put in a one of the

working plan in related

units.

Perform benchmarking

on the cost of licensing

then budgeted it in the

next year based on the

results of benchmarking.

Application for license /

inspection conduct at

least 3 months prior to

expiry.

3 RSPO PC 2013

Indicator 4.4.1

Minor Non-conforming situation:

Water management and water source protection has not been implemented consistently.

Requirement: RSPO Criterion 4.4. indicator minor 1 Objective evidence:

Rambung Sialang Estate

- It was found oil layer from car

washing in last compartment of

sand trap and oil trap which flow

in to the environment

- Oiltrap in outlet of oil warehouse

was not standard and potentially

polluted to waterway/stream and

Due Date:

Next audit


Off site audit/evidence submitted

Rambung Sialang Estate:

Clean up oil spills

and put on

Hazardous Waste

Storage. Done on 3

August 2016

Carry out renovation

to oil trap refers to

the standard (SOP).

Done on 3 August

2016

Begerpang POM:

Fix the leaking faucet

in the treatment plant

and Laboratory. Done

on 25 August 2016

Root Cause:


Lack of PIC

understanding on SOP

Lack of awareness on

environmental protection.

Begerpang POM:

At the time of leakage of

faucet, replacement

material is not available

yet in the warehouse

(Empty stock).

Corrective Action:


Carry out 3D visualisation

on the provisions of SOP

Response:


Reviewer:

Eko Purwanto

Date: 27/09/2016



Minor NCR2016-03 is Closed

Name

Eko Purwanto

Date:

27/09/2016

AUDIT REPORT



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Correction :

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environment

Bagerpang POM

It was found several water faucet leaky in water treatment plant and laboratory

so it can be easily

understood by the related

PIC.

Conducting dissemination

and training to the related

PIC visually and also in

writing.

Begerpang POM:

Checking the stock on a

regular basis for certain

parts that have the

potential significant

impacts on environment

and has the potential for

energy loss.

Conduct training and

understanding to the PIC

regarding emergency

action that should be

done in case of the same

possible impact

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Correction :

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4 RSPO PC 2013

Indicator

4.6.5 and 4.5.2


Not enough evidence that pesticides are only handled, used or applied by persons who have completed the necessary training. Reoccurrence of Major NCR 2014-09

Objective evidence:

Begerpang Estate

During field observation, it was found that not all spraying worker have complete the necessary training.

Due Date:

27 September 2016


Evidence submitted


Root Cause:

Awareness and understanding of some of the new pesticides operator are still lacking, related to the safe use of pesticides.

Corrective Action:

Conduct special training

to all pesticide operators

and issues special

permits for pesticide

operators who have

qualified and meet the

requirements.

Ensure that employees

who did not have a

Special Permit shall not

be employed as pesticide

operator.

Response:


Reviewer:

Eko Purwanto

Date: 23/09/2016




Name

Eko Purwanto

Date:

23/09/2016

5 RSPO PC 2013

Indicator 4.6.7

Minor Non-conforming situation:

Not enough evidence that pesticides application has practiced minimize risk and impact.

Objective evidence:

Rambong Sialang Estate:

Spraying tools are self-made, it was found potential to leakage and there are electrical wire opened.

Due Date:

Next audit

SAI Follow up Method: On site audit

Carry out repair or replacement to the leaking part and repair installation according to the standard. Done 9 August 2016.

Root Cause:

At the division warehouse

there are 2 from 5

spraying tools that are

self modification. That 2

unit are in bad condition

that is not eligible for

operations, and risky

when used for spraying.

Spraying worker

awareness is still lacking

regarding the impact of

Response:


Reviewer:

Eko Purwanto

Date: 27/09/2016



Minor NCR2016-05 is Closed

Name

Eko Purwanto

Date:

AUDIT REPORT



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Correction :

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unsafe pesticide use.

Corrective Action:

Dispose of the sprayer

which is not in

accordance with defined

standards and provide

additional standard

sprayer.

Conduct special training

to all pesticide operators

and issues special

permits for pesticide

operators who have

qualified and meet the

requirements.

Ensure that employees

who did not have a

Special Permit shall not

be employed as pesticide

operator.

27/09/2016

AUDIT REPORT



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6 RSPO PC 2013

Indicator 4.7.3


Several workers involved in the operation were not adequately trained in safe working practices and adequate and appropriate protective equipment were not available to all workers at the place of work to cover all potentially hazardous operations.

Objective evidence

- Mask used by workers with

high risk hazardous operation

such as operator at pesticide

warehouse at all estates and

mill, were not appropriate for

the masks were only dust mask

instead of chemical mask.

- Safe Working Practices (WI

SMK3) Training has not been

conducted to several process

at Rambong Sialang and Sei

Merah estate and Begerpang

mill

Due Date:

27 September 2016


Evidence submitted

Replace the mask

appropriate to the

potential risks.

Conduct training /

dissemination

regarding OHS Work

Instruction per unit

process.

Root Cause:

Lack of PIC and Operator

awareness

The previous training on

the OHS procedures was

done globally, not

specified in every

process activity. This is

due to minimal rate of

occupational accidents

target has been reached

(Zero Accident) so that

separated training to

each unit process is not

carried out, only appear

in the form of signboard,

Work Instruction and

others.

Corrective Action:

Conduct training on a

regular basis, at a

minimum, per semester.

Apply the mask purchase

parameters based on the

potential risks of each

unit process.

Response:


Reviewer:

Eko Purwanto

Date: 23/09/2016




Name

Eko Purwanto

Date:

23/09/2016

AUDIT REPORT



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Correction :

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7 RSPO PC 2013

Indicator 6.1.2

Major Non-conforming :

Social Impact Assessment has not involved consultation with affected parties

Objective evidence :

Rambung Sialang Estate, Begerpang Estate

SEIA Report 2016

Due Date:

27 September 2016


Evidence submitted

Conduct re-assessments by involving the public consultation into the report. Done on 20 September 2016.

Root Cause:

Competency of SIA PIC was inadequate and standard / reference related to the preparation of the SIA report was unavailable

Corrective Action:

Conduct training to

increase competency of

SIA PIC.

Perform benchmarking

and made standards for

assessment and

reporting.

Conduct regular

monitoring and review

Response:


Reviewer:

Eko Purwanto

Date: 27/09/2016




Name

Eko Purwanto

Date:

27/09/2016

AUDIT REPORT



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8 RSPO SCCS Module D Clause D.2.2


Not enough evidence that Begerpang Mill has completely meet all reporting requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim)

Objective evidence:

- There was transaction reported

for 500 MT Palm Kernel in

eTrace period May 2016,

however based on delivery

note physical despatch was

497.99 MT

Certified product were sold through “Book and Claim” however Begerpang Mill did not recorded the certified volume sold through it, moreover there was no transaction reported in eTrace regarding this.

Due Date:

27 September 2016


Evidence submitted

Make confirmation to the RSPO IT related case studies that are not covered in the eTrace manual.

Root Cause:

PIC understanding on

eTrace management is

still inadequate

Corrective Action:

Conduct training

regarding eTrace

management.

Revise the SOP of RSPO

Supply Chain

Conduct management

and monitoring regularly.

Response:


Reviewer:

Eko Purwanto

Date: 23/09/2016




Name

Eko Purwanto

Date:

23/09/2016

SELECT Onsite

SELECT


Appendix “D” – Stakeholder’s issues and comment Until on site audit, there was no comment from National/International NGO and local government in Asahan Regency. Direct interview and group discussion was conducted with local stakeholder (village head and public figure) to verify land identity, customary right, land dispute issues, environmental issues, labor issues and social issues. No negative issue found during consultation; however there were some aspiration from local stakeholder as explains below. The following as information gathered during consultation

Date Stakeholder Observation Client Clarification Auditor Verification


26 July 2016

10.00 – 11.00 local time

Head of Districts (Sei Bamban, Sei Rampah)

Head of Villages (Bahsi Dua-Dua, Rampah, Firdaus, Sukasari)

Local NGO (TOPAN RI)

- Organization has well relationship with community around estate

- Land legality was cleared, there was no land dispute

- There was no environment contamination case as an impact of organization activities

- Organization has realized CSR programs, such assistance to the poor community, road maintenance and sprinkling,

- Whenever there is job vacancy, the organisation informed the community through village head.

- Community has been given information of the protected wildlife

No clarification from company. The information from stakeholder are relevant.

Verification was done during public consultation with stakeholder and with organisation.

26 July 2016

15.00 – 16.00 local time

Worker (security and up keep),

Gender Committee

- Organization has well relationship with union workers and gender committee

- Wage and overtime calculation has appropriately provided in line with related regulation

- When there was report of the need to replace PPE and work equipment, the organisation promptly respond depend of the availability of PPE and equipment stock.

- Menstruation leave for women worker was given


Verification was done during public consultation with stakeholder and with organisation.

AUDIT REPORT




- Pregnant test for woman sprayer was routine conducted each 6 (six) months

- Gender committee collaborated with staff to conduct communication concerning social harassment handling

- There was no sexual harassment

- Clean water provided and distributed from mill

- Overall medical expenses covered by BPJS.

Begerpang Estate and Mill

27 July 2016

10.00 – 11.00 local time

Head of Villages (Naga Rejo Village, P. Itik Village, Tanjung Sporkis Village, Sialang Village, Musang Pala Village, Desa Bangun Purba, Naga Timbul Village

Head of Koramil

- Organization has well relationship with community around estate

- Land legality was cleared, there was no land dispute

- There was no environment contamination case as an impact of organization activities

- Organization has realized CSR programs, such assistance to the poor community, road maintenance and sprinkling

- Whenever there is job vacancy, the organisation informed the community through village head.

- Community has been given information of the protected wildlife

Some Issues raised during consultation :

• Road access into the garden disconnected in multiple locations, so that access to the village in the garden can not be passed, such as Naga Rejo Village, P. Itik Village, Tanjung Sporkis Village,

The closure of several roads using the portal, aims to reduce crime (theft of fruit) are rife in certain areas. However, companies have identify another access that can be used by the surrounding community. The access road is still can be used at certain hours according to the provisions company, it was to reduce the risk of losses suffered by the company. Previously the company has experienced theft of fruit. The closing process also involves related village officials, as well as community leaders.

Company's policy is reducing Charity program and replace it with community development projects to enhance the independence of community. The CSR program is also adapted to the company's financial condition, including corporate cash flow. The company remains

According to explanatioan and several reason from company, this clarification can be accepted.

AUDIT REPORT




Sialang Village, and others.

• Parcel the feast day (Eid Al-Fitr) of the year 2015-2016 no Musang Pala Village, Desa Bangun Purba, Naga Rejo Village, and others.

• Official information of labor recruitment to the public about the company is not in the Musang Pala Village, P. Itik Village, Bangun Purba Village, and others

• Watering for irrigated fields become dry Naga Timbul Village since 2014. In addition, a source of clean water (ground water) becomes difficult. It is indicated influenced by the development of oil palm PT. PP. London Sumatra

• Lighting street lights have died since 2014 on the main road into the garden through in the Naga Timbul Village so that the area becomes prone to theft at night.

committed to community development according to the ability of the company.

Information labor recruitment was conducted openly through electronic media, print media and open information. To check the validity of the information can also be made directly to the nearest unit. The Company has a communications procedure that has been disseminated either directly or through leaflets, billboards, signoards and others.

Plantation company PT PP Lonsum Tbk has been established since 1906. The company made acquisitions of French plantation company. Oil palm trees in Begerpang had also Generation II or even III, not started in 2014. The company has also been conserving riparian areas, springs and other conservation area. Decrease in water flow can be caused by many factors, one of which is global climate conditions, especially newly felt in the last 2 years.

Several lines of lighting was a government asset (PLN), so the company will continue to coordinate with PLN in order not considered doing illegal activities. company also has contributed a lot to the street lighting tax and other taxes.

27 July 2016

15.00 –

Worker (Harvester, Gender

- Organization has well relationship with union workers.

- Wage and overtime calculation has appropriately


Verification was done during public consultation with stakeholder and with

AUDIT REPORT




16.00 local time

Committee, and up keep)

Labour Union

provided in line with related regulation

- When there was report of the need to replace PPE and work equipment, the organisation promptly respond depend of the availability of PPE and equipment stock.

- Clean water provided and distributed from mill

- Informed by staff and supervisor regarding protected wildlife and conservation area in morning briefing.

- Medical check-up was annual conducted

- Overall medical expenses covered by BPJS.

- Basic daily needs easily accessible to the company around village.

organisation.

27 July 2016

Agency of Agriculture, Deli Serdang Regency

Issues raised from Agency of Agriculture, Deli Serdang Regency:

• Accordance with the regulations (No. 105 / Permentan / PD.300 / 8 / 2014) on the oil palm plantation business integration with beef cattle farming, informed that the company has to apply / follow the rules in Permentan. Considering the existence of the company itself is located in Deli Serdang regency is potential for the development of cattle or for pasture cattle in a controlled surrounding communities

• The company has not fully report on progress in the continuity of the plantation to the relevant technical offices with its obligations as a plantation business operators stipulated in regulations (Permentan No. 98 / 2013)

Related Programs Oil Palm Plantation Business Integration pursuant to Regulation No. 105 / PD.300 / 8/2014.

a. The program is not mandatory and binding

b. The Company does not prohibit grazing of cattle and goats, which conducted by people around except in the area of immature plants, as this may damage to the palm oil plants.

c. The number of cattle grazing on the company's concession area some already overpopulation. Some access to crops such as harvesting path, harvesting facilities including a bridge and also profitable crop for a natural

According to explanatioan and several reason from company, the clarification of first issue can be accepted.

However the second issue is related to the compliance of regulation so that it needs corrective action performed by organisation. It is becoming the findings of nonconformity refer to NCR # 2016 – 02.

AUDIT REPORT




pests control plant and diseases (IPM) much damaged.

d. Appropriate observations in the field, cow can be a vector of disease spread Ganoderma boninence.

The Company remains committed to continuous reporting to relevant agencies operations.


Attendance list of Public consultation

AUDIT REPORT


AUDIT REPORT


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

RSPO Principle and Criteria, Indonesian National Interpretation: 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. RSPO Supply Chain Certification System: Major Nonconformities occur when system is failing to implement and/or maintain requirements of Supply Chain

Certification System. 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. When non-conformances rose after the certification, RSPO shall be informed of these non-conformances within 7 days since non-conformance rose. A maximum of one month is given to the certified client to satisfactorily address the non-conformances. The effectiveness of the action taken for the non-conformances shall be assessed before closing o ut the non-conformances. Should the non-conformances not be addressed within the one month maximum time frame, a suspension or withdrawal of the certificate and a full re-audit may be necessary. Where objective evidence indicates that there has been a demonstrable breakdown in the supply chain caused by the certified client’s action or inactions, and that palm oil product that has been or is about to be shipped is falsely identified as RSPO certified product immediate action needs to be taken by SAI Global, and the RSPO Supply Chain certification shall be suspended until such time that it has been addressed. The RSPO shall be notified within 24 hours of this occurrence and further impacts on relevant supply chain certifications. Area of concern issued when there is an area of the system for which the client is required to investigate potential non-

conformity. Action required: SAI Global may require client to formulate preventive action plan for approval prior to next planned audit/certification decision or alternatively may follow up client’s preventive action at the next planned audit. Lack of client attention to such issues implies that a preventive action system is not working effectively. 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.

RSPO Audit Report

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