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PUBLIC SUMMARY REPORT

ANNUAL SURVEILLANCE ASSESSMENT (ASA4)

PT HINDOLI and SCHEME SMALLHOLDERS South Sumatra Indonesia

Report Author

Charlie Ross – January 2013 Tel: +61 417609026

BSi Group Singapore Pte Ltd (Co. Reg. 1995 02096-N) BSi Services Malaysia Sdn Bhd (Co.Reg. 804473 A) 3 Lim Teck Kim Road #10-02 B-08-01, Level 8, Block B, PJ8 Genting Centre No. 23, Jalan Barat , Seksyen 8 SINGAPORE 088934 46050 Petaling Jaya Tel +65 6270 0777 SELANGOR MALAYSIA Fax +65 6270 2777 Tel +03 79607801 (Hunting Line) Aryo Gustomo: [email protected] Fax +03 79605801 www.bsigroup.sg

mailto:[email protected]

http://www.bsigroup.sg/

ii

TABLE of CONTENTS Page No 1.0 SCOPE OF SURVEILLANCE ASSESSMENT ....................................................................................................................... 1–10 1.1 Identity of Certification Unit ........................................................................................................................................... 1 1.2 Production Volume ......................................................................................................................................................... 1 1.3 Certification Details ........................................................................................................................................................ 1 1.4 Description of Fruit Supply Base ..................................................................................................................................... 8 1.5 Progress against Time Bound Plan by Parent Company ................................................................................................. 9

1.6 Progress of Associated Smallholders/Outgrowers towards RSPO Compliance .............................................................. 9 1.7 Organisational Information/Contact Person................................................................................................................. 10

2.0 ASSESSMENT PROCESS ..................................................................................................................................................... 10 2.1 Assessment Team Members ......................................................................................................................................... 10 2.2 Assessment Programme ............................................................................................................................................... 10 2.3 Stakeholder Consultation ............................................................................................................................................. 10 3.0 ASSESSMENT FINDINGS ............................................................................................................................................. 10–23 3.1 Summary of Findings .................................................................................................................................................... 10 3.2 Identified Nonconformities and Noteworthy Positive and Negative Observations ...................................................... 21 3.3 Status of Nonconformities (Major and Minor) Previously Identified ........................................................................... 22 3.4 Issues Raised by Stakeholders ...................................................................................................................................... 23 4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY .......................................................... 23 4.1 Date of next Surveillance Visit ...................................................................................................................................... 23 4.2 Date of Closing Nonconformities (Major and Minor) ................................................................................................... 23 4.3 Sign-off of Surveillance Assessment Findings ............................................................................................................... 23

LIST of TABLES

1 GPS Locations of Mills ................................................................................................................................................................. 1 2 Production Tonnages .................................................................................................................................................................. 1 3a Sungai Lilin Mill Supply Base (Tonnes) ........................................................................................................................................ 8 3b Tanjung Dalam Mill Supply Base (Tonnes) .................................................................................................................................. 8 4a Age Profile of Hindoli Estates Palms ........................................................................................................................................... 8 4b Areas Planted Smallholders ........................................................................................................................................................ 8 4c Areas Planted Estates and Smallholders ..................................................................................................................................... 9 5 Time Bound Plan for Certification ............................................................................................................................................... 9 6 Status of Nonconformities ........................................................................................................................................................ 23

LIST of FIGURES

1 PT Hindoli Location Map ............................................................................................................................................................. 2 2 Mills, Estates and Smallholders Locations ................................................................................................................................... 3 3 Sungai Pelepah Estate Layout ..................................................................................................................................................... 4 4 Sungai Tungkal Estate Layout ...................................................................................................................................................... 5 5 Tanjung Dalam Estate Layout ...................................................................................................................................................... 6 6 Mukut & Penuguan Estates Layout ............................................................................................................................................. 7 7 Average Annual OER 2006 – 2012 ............................................................................................................................................. 12 8 Average Annual FFB Yields (Tonnes/ha) of Hindoli Estates and Smallholder Oil Palm 2003 – 2012 ......................................... 12 9 Monthly BOD of Sungai Lilin Treated Mill Effluent Discharge December 2011 – October 2012 ............................................... 14 10 Annual Water Usage of Mills 2006 – 2012 ................................................................................................................................ 14 11 LTAs Mills and Estates 2007 – 2012 .......................................................................................................................................... 16 12 Mills Energy Usage 2005 – 2012 ............................................................................................................................................... 17

List of Appendices

A Supply Chain Assessment

B ASA4 Programme C List of Stakeholders Contacted

RSPO Annual Surveillance Assessment (ASA4) – PT Hindoli Mills, Supply Bases and Scheme Smallholders Page 1

Prepared by BSi Group Singapore Pte Ltd for PT HINDOLI

SUMMARY

BSi has conducted the Fourth Annual Surveillance Assessment (ASA4) of PT Hindoli (Hindoli) operations comprising two Mills, five oil palm Estates, 8,797 Scheme Smallholders, support services and infrastructure. BSi concludes that Hindoli and its Scheme Smallholders’ operations comply with the requirements of RSPO Principles & Criteria : November 2007 and the Indonesian Indicators and Guidance (INA NIWG) : 2008; National Interpretation For Scheme Smallholders Republic of Indonesia : October 2009; Procedure for Annual Surveillance Assessments : October 2009; and

RSPO Supply Chain Certification Standard : November 2011 for Palm Oil Mills – Module D: Segregation Mechanism.

BSi recommends continuation of the approval of Hindoli Company Estates and Scheme Smallholders as producers of RSPO certified sustainable palm oil.

ABBREVIATIONS USED

AMDAL Environmental Impact Assessment Report BOD Biological Oxygen Demand BPN Badan Pertanahan Nasional (National Land

Agency) CPO Crude Palm Oil EFB Empty Fruit Bunch EHS Environment Health and Safety EMS Environmental Management System FFB Fresh Fruit Bunch HCV High Conservation Value HGB Hak Guna Bangunan (Building Permit) HGU Hak Guna Usaha (Site Permit Land Use Title) KKPA Koperasi Kredit Primer Anggota (Cooperative

Credit Scheme) KUD Koperasi Unit Desa (Village Cooperative Unit) LTA Lost Time Accident NGO Non-government Organisation OER Oil Extraction Rate PK Palm Kernel PPE Personal Protective Equipment QMS Quality Management System RKL Environmental Management Plan RPL Environmental Monitoring Plan SOP Standard Operating Procedure

1.0 SCOPE OF CERTIFICATION ASSESSMENT

1.1 Identity of Certification Unit

The Certification Unit is PT Hindoli operations that consist of two (2) palm oil Mills, five (5) company Estates and Scheme Smallholders (8,797). The new oil palm development at Mukut Estate commenced FFB production in mid-2011 and is included in the Sungai Lilin Mill supply base. Production from the adjoining Penuguan Estate is expected to commence late 2013. The PT Hindoli Mills, Estates and Smallholders are located in Musi Banyuasin District of South Sumatra

Province, Indonesia (Figures 1 to 6). The GPS locations of the Mills are shown in Table 1.

Table 1: GPS Locations of Mills

MILL LONGITUDE LATITUDE

Sungai Lilin

(120 t/hr) E 104° 7’ 41∙67” S 2° 36’ 46”

Tanjung Dalam

(60 t/hr) E 103° 56’ 38∙4”

S 2° 32’ 58∙56”

1.2 Production Volume

The production tonnages for CPO and PK (for both company Estates and Smallholders) for the twelve month period preceding the ASA4 of 01/12/2011 to 30/11/2012) and projected for the next twelve months are listed in Table 2. The Sungai Lilin Mill will process increasing quantities of FFB from Mukut Estate as the young palms come into production. Sg Lilin Mill also will process the crop from Penuguan Estate when it comes into production in late-2013. Over one third of the smallholders’ oil palms were planted more than 20 years ago and production is projected to remain steady over the coming year.

Table 2: Production Tonnages

Sungai Lilin Mill Supply Base

Tanjung Dalam Mill Supply Base

TOTAL Estates

Small-holders

Estates Small-

holders

At Certification

CPO 31,544 - 19,800 - 51,344 PK 7,519 - 4,603 - 12,122

Actual ASA1

CPO 33,644 60,842 20,408 28,168 143,062 PK 7,158 15,273 4,342 7,081 33,854

Actual ASA2 CPO 33,808 57,661 23,514 30,254 145,237

PK 7,468 15,834 5,197 8,258 36,757

Actual ASA3 CPO 39,631 51,656 22,126 30,162 143,575 PK 8,674 11,740 4,810 6,855 32,079

Actual ASA4 01/12/2011 – 30/11/2012 CPO 33,289 60,652 20,636 30,141 144,718 PK 8,301 18,149 4,883 8,902 40,235

Projected 01/12/2012 – 30/11/2013 CPO 48,488 60,397 23,710 27,678 160,273 PK 12,649 16,472 6,185 7,548 42,854

1.3 Certification Details

Hindoli RSPO Membership No: 100010400000 BSi RSPO Certificate No: SPO 537874 Initial Certification Assessment: 01-06/09/2008 Date of Certification: 25/02/2009



Figure 1: PT Hindoli Location Map



Figure 2: Mills, Estates and Smallholders Locations



Figure 3: Sungai Pelepah Estate Layout



Figure 4: Sungai Tungkal Estate Layout



Figure 5: Tanjung Dalam Estate Layout



Figure 6: Mukut Development (Mukut & Penuguan Estates) Layout



1.4 Description of Fruit Supply Base

Oil palm fruit is sourced from 5 company owned Estates and 8,797 Scheme Smallholders who are organised as seventeen (17) cooperatives (KUDs). The FFB production from company owned Estates and Smallholders is listed in Tables 3a and 3b.

Table 3a: Sungai Lilin Mill Supply Base (Tonnes)

Source At

Certification

Actual 01/12/11 – 30/11/12

Projected 01/12/12 – 30/11/13

Estate Sungai Tungkal Sungai Pelepah Sungai Mukut Penuguan

78,214 65,558

- -

77,566 70,818 5,801

-

83,643 83,792 43,377

-

Total Estates 143,772 154,184 210,812

Smallholder KUD Karya Makmur Suka Rezeki Mukti Jaya Jaya Usaha Mandiri Sumber Sari Suka Makmur Tunas Mekar Inti Mekar Sari Bersama Makmur Mandiri Jaya Makmur Sumber Tani Mandiri Tani Mandiri Jaya

3,665

41,826 95,447 18,816 22,967

– 36,564

– 16,112 17,224 20,791 8,101

-

25,698 88,400 22,377 25,741 19,688 30,578 12,765 18,487 21,421 24,130 8,891

-

22,930 64,218 22,989 24,756 19,248 33,755 11,488 19,481 23,014 22,633 10,019

Total Smallholders 281,513 298,176 274,529

OVERALL TOTAL 425,285 452,360 485,341

Table 3b: Tanjung Dalam Mill Supply Base (Tonnes)

Source At

Certification

Actual 01/12/11 – 30/11/12

Projected 01/12/12 – 30/11/13

Estate Tanjung Dalam/ Sri Gunung

90,617

90,851

103,084

Total Estates 90,617 90,851 103,084

Smallholder KUD Karya Makmur Suka Rezeki Mukti Jaya Jaya Usaha Mandiri Sumber Sari Sumber Barokah Barokah Jaya Sumber Jaya Lestari Tri Bakti Sentosa Bakti Mulya

31,942

31 1,985

19 17

20,838 15,640 23,250 39,504

–

39,690

- 6,573

- -

22,824 17,148 21,813 18,053 20,328

35,819

- 4,774

- -

19,048 13,401 19,395 14,988 18,381

Total Smallholders 133,226 146,429 125,806

OVERALL TOTAL 223,843 237,280 228,890

TOTAL (both Mills) 649,128 689,640 714,231

There was no change to the 17 KUDs supplying FFB to the mills. The FFB production from some of the smallholders is expected to decline in 2014/15 as the palms are due for replanting. The palms are in the first cycle and the age profile is shown in Table 4a.

Table 4a: Age Profile of Palms

Age (years) % of Planted Area

Hindoli Estates 11–15 46·70

4–10 5·70

0–3 47·60

Smallholders 21–30 34·59

11–20 65·41

4–10 –

0–3 –

The areas planted for Smallholders are shown in Table 4b.

Table 4b: Areas Planted Smallholders

Smallholder KUD Number of

Blocks Area (ha)

Karya Makmur 798 1,596

Suka Rezeki 517 1,034

Mukti Jaya 1,924 3,848

Jaya Usaha Mandiri 425 850

Sumber Sari 467 934

Suka Makmur 439 878

Tunas Mekar Inti 693 1,386

Mekar Sari 267 534

Bersama Makmur 367 734

Mandiri Jaya Makmur 429 858

Sumber Tani Mandiri 434 868

Tani Mandiri Jaya 190 380

Sumber Barokah 411 822

Barokah Jaya 305 610

Sumber Jaya Lestari 423 846

Tri Bakti Sentosa 326 652

Bakti Mulya 382 764

TOTAL 8,797 17,594



Total areas planted (Hindoli Estates and Smallholders) are shown in Table 4c. The only differences in planted areas to those reported in ASA3 are at Mukut and Penuguan where new plantings continued.

Table 4c: Total Areas Planted

Location Mature

(ha) Immature

(ha) Total

Hindoli Estates Sungai Tungkal

2,866 – 2,866

Sungai Pelepah 3,030 56 3,086

Tanjung Dalam/ Sri Gunung

3,659 – 3,659

Mukut 1,383 4,445 5,828

Penuguan – 2,804 2,804

TOTAL 10,938 7,305 18,243

Smallholders 17,594 – 17,594

OVERALL TOTAL 28,532 7,305 35,837

Supply Chain

All of the production from the Sungai Lilin and the Tanjung Dalam Mills is certified sustainable palm oil. Hindoli and its parent company Cargill have adopted Segregation for the supply chain mechanism. Hindoli has implemented a system for recording and tracking the FFB produced at the company estates as well as the Smallholders. At the Estates, information on the Block Number, Bunch Count, Date and Skip Bin Number are recorded on a Field Docket. When received at the Mill, details are transferred from the Field Docket to the Weighbridge System together with details of the Truck Driver’s Name, Truck Registration Number, Weight and Delivery Time. The same system has been implemented for recording FFB harvested by Smallholders and delivered to the Mill. Hindoli made sales of CSPO and CSPK certificates on the GreenPalm trading platform as well as sales of physical oil on the UTZ Certified system. Assessment of a sample of documents confirmed the information was recorded accurately and the production could be traced back to the origin. Details are provided in Appendix A. SGS Malaysia has audited Hindoli production and shipping facilities in Indonesia and Cargill International Trading Pte Ltd and has issued Certificate No: SGS-RSPO/SC-00726 Valid to 11 May 2017 for meeting the RSPO Supply Chain requirements. Control Union has audited the Cargill receiving and processing facilities in North America and has issued Certificate No: C817166 CU-RSPO SCCS-01.2011 Valid to 29 May 2017.

1.5 Progress against Time Bound Plan by Parent Company

PT Hindoli is owned and operated by CTP Holdings Pte Ltd, a subsidiary of Cargill, the global food company. Cargill is a member of RSPO and has been involved in the Roundtable process since inception. CTP Holdings Pte Ltd owns and operates two plantation locations in Indonesia (PT Hindoli and PT Harapan Sawit Lestari). BSi carried out a Stage I Assessment of PT Harapan Sawit Lestari in August 2010 and found that the company was not yet ready for RSPO Certification. CTP is still restructuring the four entities that have been involved in the properties in West Kalimantan in order to rationalise the management. The company restructuring will amalgamate two separate entities PT Harapan Sawit Lestari and PT Ayu Sawit Lestari into PT Harapan Sawit Lestari and RSPO Certification assessment is proposed at the end of March 2013. Some of the land belonging to PT Harapan Sawit Lestari (Kemuning Estate) will be transferred to PT ISK and will be amalgamated into a single entity PT ISK. Following the completion of the restructuring, the HGU process will be re-started for land transferred to the restructured entity. Cargill aims to carry out the Initial RSPO Certification Audit of PT ISK following the completion of the BPN cadastral survey of these properties and confirmation of the land boundaries. CTP has amended its Time Bound Plan by delaying the Certification Assessment of Harapan Sawit Lestari until the end of March 2013. BSi considers the rescheduling of the Time Bound Plan (Table 5) to be reasonable because of the administrative processes involved to achieve the restructuring of the entities and processing of the HGU. BSi contacted the local social NGO Walhi who did not raise any new issues related to the Cargill properties.

Table 5: Time Bound Plan for Certification

Plantation Company

Location Target Date

PT Hindoli S. Sumatra, Indonesia

Certified 25/02/2009

PT Harapan Sawit Lestari

W. Kalimantan, Indonesia

Assessment 31/03/2013

PT ISK W. Kalimantan,

Indonesia To Be Advised

1.6 Progress of Associated Smallholders/ Outgrowers towards RSPO Compliance

The smallholder scheme was developed as a condition of Hindoli project approval. The scheme comprises seventeen cooperatives whose smallholder members number 8,797 and have 17,594 ha planted to oil palm.



RSPO approved the Initial Certification of the Hindoli Scheme Smallholders on 04 August 2010.

Hindoli is working with a group of Independent Smallholders, organised through a farmers’ cooperative KUD Tani Maju comprising 45 growers on 90 ha, with the aim of achieving RSPO Certification. BSi carried out a baseline assessment of the KUD Tani Maju and a sample of seven (7) smallholder blocks to assess their progress towards implementation of the RSPO P&C. The baseline assessment concluded these independent smallholders had achieved approximately 60% implementation.

1.7 Organisational Information / Contact Person

The company contact details are as follows: PT Hindoli Jl Palembang – Jambi Desa Teluk Kemang Kekamantan Sungai Lilin MUBA Sumatera Selatan PALEMBANG 30755 INDONESIA

Contact Person:

Mrs Yunita Widiastuti Group Program Assurance Mgr Phone: +62 21 52896408 Fax: +62 21 52896407 Email: [email protected]

2.0 ASSESSMENT PROCESS

2.1 Assessment Team Members

Charlie Ross – Lead Assessor RSPO B.App.Sc. M.Sc (Env.Studies) Topics assessed: Legal, Environment, Agricultural

Practices, Social, Sustainability

Iman Nawireja – Assessor RSPO B.Ag.Sc. M.Sc. (Comm) Topics assessed: Legal, Environment, Agricultural

Practices, Social, Sustainability

Robyn Ross – Social Assessor RSPO Topics assessed: Legal, Social, Women and Families,

Sustainability

Dian Ekowati – Facilitator/Interviewer (Women and Families)

2.2 Assessment Program

The Fourth Annual Surveillance Assessment (ASA4) of the Mills, Estates and Smallholders was carried out between 03 and 07 December 2012. The Assessment Programme is included as Appendix B.

The Programme included assessments of the two Mills and three Estates (Sungai Pelepah, Tanjung Dalam and Mukut). Of the 17 Smallholder KUDs a sample of 5 KUDs were audited as follows: Jaya Usaha Mandiri 425 growers (sample 17 audited); Tunas Mekar Inti 693 growers (sample 25 audited); Suka Rezeki 517 growers (sample 25 audited); Tani Mandiri Jaya 190 growers (sample 12 audited); Bakti Mulya 382 growers (sample 16 audited) against all of the RSPO Principles & Criteria

and applicable RSPO indicators. The five KUDs had not previously been assessed. A baseline assessment was also carried out for the independent smallholder KUD Tani Maju comprising 45 growers (sample of 7 blocks assessed).

The assessors carried out follow-up checks on the effectiveness of corrective actions for the thirteen (13) Observations/ Opportunities for Improvement that were identified during ASA3.

The methodology for collection of objective evidence included physical site inspections, observations of tasks and processes, interviews of staff, workers and their families and external stakeholders, review of documentation and monitoring data. Checklists and questionnaires were used to guide the collection of information.

This report is structured to provide a summary for each Principle, together with details for selected indicators to demonstrate conformance. The assessment was based on random samples and therefore nonconformities may exist that have not been identified.

Mr Aryo Gustomo, BSi RSPO Scheme Manager, has reviewed this report for conformance with BSi Procedures and the RSPO Certification System requirements.

2.3 Stakeholder Consultation

Internal and external stakeholders were consulted to obtain their views on Hindoli’s environmental and social performance and any issues of concern that they may have. External stakeholders were interviewed at their premises where practical or they were invited to meet at a venue acceptable to both parties. Internal stakeholders were interviewed in groups in the workplace or at their housing. Hindoli officers were not present at any of the interviews. A list of stakeholders contacted is included at Appendix C.

3.0 ASSESSMENT FINDINGS

3.1 Summary of Findings

During ASA4 a Nonconformity was assigned to Minor Compliance Indicator 5.1.2. Nine (9) Observations/Opportunities for improvement were identified – refer Section 3.2 Page 21.

Follow-up during ASA4 confirmed corrective actions for Nonconformities identified during previous Assessments (CR01 – CR06) had been implemented effectively and all Nonconformities remained closed. In addition, the thirteen (13) observations identified during ASA3 had been actioned and the improvements were considered to be effective for addressing the issues – refer Section 3.3 Page 22.

PRINCIPLE 1: Commitment to Transparency

Hindoli has kept its policies, procedures and management plans up to date for provision of




information to the public and other stakeholders on request. District Government Departments made requests for information, which Hindoli provided in a timely manner. The Smallholder KUDs have appropriate documents that are available to their members on request. Criterion 1.1: Oil palm growers and Millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation in decision making.

Hindoli has maintained the system for receiving and responding to stakeholder requests that is an SOP of the ISO 14001 EMS. Hindoli Public Affairs Department receives requests via the Mills and Estates and compiles the response. Requests for information were received only from District Government Departments during 2012. Records confirm Hindoli replied to these in a timely manner. Criterion 1.2: Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes.

Hindoli has maintained the Policy to make documents available upon request and in accordance with Government regulations, unless the information is of commercial confidential nature.

Hindoli General Affairs Department maintains a Register of Communications that lists letters received requesting information. Inspection of records confirmed that the documents required by RSPO were held on site and were available if requested. Hindoli has supplied copies of key documents to each of the 17 Smallholder KUDs. The KUDs each hold copies of Annual Reports that include financial statements and are available to members on request. Each Hindoli department keeps records active for three years and then they are archived on site, while legal records are held indefinitely.

PRINCIPLE 2: Compliance with Applicable Laws and Regulations

Hindoli’s ISO14001 and ISO9001 management systems have continued to provide effective control of the legal compliance of the Mills and Estates with their respective permit conditions and legal requirements. Hindoli made progress with obtaining a site permit land use (HGU) and the resolution of land issues. The boundary stones were maintained at each of the Estates visited. The Scheme Smallholders’ oil palm is planted on trans-migration land and there are no land tenure issues, or legal compliance issues.

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

Hindoli has maintained legal compliance by means of the ISO 14001 EMS Procedure for assessment of compliance. Inspection of a sample of relevant records showed compliance with regulatory requirements as outlined below. The system for ensuring currency of Mill permits is a component of the “Mechanical Integrity Program” under ISO 9001.

Mill boiler emissions and ambient air quality are tested 6 monthly. Sg Lilin Boiler emissions were tested on 16 and 17 July 2012 by Kepala UPTB Environmental Laboratory, South Sumatra Province (Certificate No 660/144/SPPC-UE/VII/2012). The consultant tests confirmed the emissions from the Mill boilers and diesel gensets complied with Permit No 7 and the ambient air quality was within the prescribed standard. Sucofindo tested opacity of Tanjung Dalam Mill boiler emissions 05 November 2012 and confirmed compliance with Ministry of Environment Regulation #7 of 2007 (Certificate #51207/AAAKAF.

The independent Sucofindo laboratory conducts monthly sampling and testing of treated Mill effluent. The Sucofindo tests confirmed compliance of both Mills with all effluent discharge parameters throughout 2012, with maximum of 80 mg/L BOD recorded during the year.

The Provincial Health Department tests water quality quarterly. Laboratory tests of the water supplied to housing confirmed compliance with the Water Quality Standard (ref IT.02.02/VIII.8/485/12), sampled 03 October 2012 Tanjung Dalam and 04 October Sg Lilin housing.

The Mill laboratories test the treated water and have implemented a system of notifying the Estates of the action to adjust chemical dosing.

Observation 01 – A Nonconformity was initially assigned at Mukut Estate because the pH of treated water for domestic use was below the Indonesian limit of 6.5 units. The groundwater bore had failed several months ago and the supply was now drawn from surface water, but the water treatment had not been adjusted to neutralise the acidity – refer Section 3.2 Page 21 for full details.

Inspection of records at Sungai Pelepah Estate confirmed Hindoli maintains a copy of drivers’ licences for mini-tractors, the grader, tractors and dump trucks. The Mills hold copies on file of the Boiler Operator’s Certificate and drivers’ licenses of employees and FFB transport contractors. For example, Tanjung Dalam Boiler Operator Certificate issued 15 November 2010 and a crane operator Cert # 0201523.10 issued 01 November 2010, valid to 01 November 2014.

Each of the Mills and Estates held a copy of the Legal Requirements Register (Revision 8, 26 June 2012).

The Mills and Estates maintained continuation of the ISO 9001:2008 (Certificate No ID08/01122) valid to 28 July 2014) and ISO 14001:2004 (Certificate No ID08/75238valid to 22 July 2014) certifications. The Ministry of Environment awarded Hindoli with the Green level of Proper Certification. Criterion 2.2 – The right to use the land can be demonstrated and is not legitimately contested by local communities with demonstrable rights.



Hindoli holds a Land Use Title Hak Guna Bangunan (HGB) for Sungai Lilin Mill and housing areas - reference "HGB No 19" (Mill) 19 September 1997 and "HGB 20" (Housing) 14 July 1997; and for Tanjung Dalam Mill and housing area (2009). Hindoli holds an Izin Lokasi, a plantation operation permit Izin Usaha Perkebunan and has applied for a Site Permit Land Use Title Hak Guna Usaha (HGU). The Estates, for example, Tanjung Dalam/Sri Gunung, Sungai Pelepah, and Sungai Tungkal are in the final stage of HGU issuance by BPN – Jakarta. The split of Kecamatan Bayung Lincir into Kecamatan Bayung Lincir and Kecamatan Tungkal Jaya occurred on 1 January 2011, and all of the Tungkal Estate area now falls into the Tungkal Jaya territory. The BPN of Musi Banyuasin required the location of the certificate to be revised accordingly, which has further delayed the process of HGU issuance.

The HGU approval process for issue of the HGU has been protracted by negotiations over the land boundaries of over-planted land that occurs in two different districts - Musi Banuyasin District and Banyuasin District. Hindoli holds detailed records to confirm it has followed the administrative and legal process for acquisition of the over-planted land, which has been “released” by Forestry Department and the Cadastral Survey has been completed. The delay in the HGU process is with the Jakarta BPN Office and is beyond the control of Hindoli.

A plantation land title (HGU) of Mukut development for an area of 9,979.27 ha was issued on 23 December 2010 by BPN – Jakarta decision number 95/HGU/BPN RI/2010.

Inspection of a sample of boundary stones confirmed they were maintained so that they are clearly visible. Criterion 2.3 – Use of the land for oil palm does not diminish the legal rights of other users without their free, prior and informed consent.

Hindoli has not acquired any new land since the previous assessment (ASA3). Hindoli does not restrict local peoples’ access through the main Estate roads. PRINCIPLE 3: Commitment to Long Term Economic

and Financial Viability

Hindoli monitors and reports performance of its estates and mills against production targets. Reports were available showing the details of production quantities and costs. Hindoli has continued its commitment to sustainability by funding improvements at each of the Mills and Estates. Hindoli continues to provide substantial support to the Scheme Smallholders through the employment of full-time Farmer Development Officers who provide extension services for achieving production targets and operating effective administrative systems on behalf of the KUD members. Criterion 3.1: There is an implemented management plan that aims to achieve long-term economic and financial viability.

Hindoli has an Annual Budget 2012/13 with five-year projections for Estate and Smallholder FFB production and Mill product tonnages. In addition, Hindoli has a 5

year Business Plan with targets for production, quality and sustainability performance measures. The Mills have experienced decreasing OER since 2006 due to under-ripe bunches being delivered to the Mill. The OER reduced slightly from 20·79 in 2011 to 20·46 in 2012 at Sg Lilin Mill (Figure 7), which was indicated to be due to higher rainfall and additional moisture content of the crop received at the mill. Hindoli has trialled the use of a trash screen at Sungai Lilin Mill to remove sand during unloading and plans to implement this system for the whole of the ramp during the current year.

Figure 7: Average Annual OER (%) 2006 - 2012

Hindoli Farmer Development Assistants have continued working closely with the smallholder KUDs to implement best practices and to ensure all of the loose fruit and FFB is delivered to the Mills. The Mills indicated improved loose fruit supplied. The smallholders have achieved average FFB yields that are comparable to the Hindoli Estates (Figure 8), although this has declined slightly over the past 2 years from 25·48 to 24·76 t/t FFB.

Figure 8: Average Annual FFB Yields (Tonnes/ha) of Hindoli Estates and Smallholder Oil Palm 2003 – 2012

The majority of the smallholders have repaid their bank loans and are now putting aside savings towards replanting. The smallholders’ palms are still producing good yields and the indications are replanting will not be carried out until the palms are 25 years of age. Hindoli has been working with the KUDs on the revision of their replanting plans and costing of the work. The accumulation of savings for replanting will put the smallholders in a good financial position and they will not have to borrow the whole of the cost for replanting. The very good financial situation of the smallholders is



an outcome of Hindoli’s commitment to ensure a successful partnership.

PRINCIPLE 4: Use of Appropriate Best Practices by Growers and Millers

Hindoli has continued to operate the management systems for monitoring and control of best practice implementation at its Mills and Estates. The mills have modified the daily production report to provide more detail on variations of performance, for example water usage has been broken down into several functional areas. This includes a programme of regular internal audits by the Technical Director of Milling and the Group Technical Services Manager for maintaining and improving production. Hindoli monitors closely the palm and soil nutrients at the Estates and Smallholders. Hindoli has implemented an early warning system that is part of the integrated pest management program. Hindoli Farmer Development Assistants worked closely with the KUDs for implementing controls on the Smallholders’ use of pesticides and recycling of empty pesticide containers to a licenced contractor. Criterion 4.1: Operating procedures are appropriately documented and consistently implemented and monitored.

Hindoli SOPs for the Mills and for Agriculture are controlled documents under the integrated ISO 9001 and ISO 14001 Management Systems. The SOPs cover all aspects of oil palm management from land development through to maintenance and harvesting. The implementation of field practices is checked daily by the Assistant Managers and the Estate Manager and monthly by the General Manager.

The CTP Holdings Pte Ltd Group Technical Services Manager inspects field conditions twice yearly, and the most recent visit to Hindoli Estates was in July 2012. The BSi Assessors inspected samples of field practices and field conditions at each of the three Estates and concluded the SOPs were being implemented and improvement actions were in accordance with the Group Technical Services Manager’s recommendations.

Hindoli Farmer Development Assistants have continued working with each of the KUDs and carry out field visits to the smallholders to check on implementation of SOPs for palm upkeep.

The Mill Engineers and Mill Managers monitor implementation of SOPs daily and any abnormal operating conditions are noted on the shift log sheet. The CTP Holdings Pte Ltd Technical Director Milling audits the Mills twice yearly and the most recent visit was to Sungai Lilin Mill on 28-31 August 2012 and to Tanjung Dalam Mill on 02 and 03 September 2012. Inspection of records confirmed the Mills were making progress on implementing corrective actions recommended by the Technical Director Milling.

Hindoli has an integrated ISO 9001/14001 QMS/EMS, which is subject to twice yearly internal audits and an annual external third party audit. The Mills and Estates

were re-certified following a combined audit carried out between 25 and 29 June 2012. The ISO 9001:2008 Certificate is valid until 28 July 2014 and ISO 14001:2004 valid to 26 June 2014. Criterion 4.2: Practices maintain soil fertility at, or where possible improve soil fertility, to a level that ensures optimal and sustained yield.

Hindoli has implemented a programme of annual leaf sampling and five-yearly soil sampling. One leaf sample is taken from each 25ha block and analaysed for major and minor nutrients (N, P, K, Mg, Ca and B). Data are stored on the Oil Palm Monitoring Programme database. Foliar sampling was carried out in mid-2011 and recommendations made in August 2012 Report for adjustments of N and P fertiliser application rates.

The Crop Residue Application Programme provides a listing of the blocks within each Estate that are scheduled to receive EFB and decanter cake application. The Hindoli Technical Services Department also collects leaf and soil samples of the Smallholder oil palm and advises them of the annual fertiliser programme. Criterion 4.3: Practices minimise and control erosion and degradation of soils.

The topography of the Estates is flat to gently rolling. Inspection of field conditions showed the placement of pruned palm fronds by “T-Stacking” was being carried out consistently on sloping areas for control of rainfall runoff. In general, there was relatively good growth of Nephrolepis spp on the frond stacks as well as soft grasses along the harvesting rows, thus providing good protection from soil erosion.

Review of the annual schedule of road maintenance showed the block number and road length for grading and repairs, such as gravelling and roller compacting. At the time of the Surveillance Assessment, all of the roads inspected were trafficable, despite recent heavy rain.

Hindoli uses a system of Watergates for preventing the inundation of low-lying areas. A dedicated operator monitors water levels daily and adjusts the watergates as required in relation to river water levels.

Inspection showed the Smallholders’ blocks had relatively consistent maintenance of groundcover of mainly soft grasses. This is the result of good control of pesticide use. The herbicide glyphosate is used for spraying paths and circles and metsulfuron-methyl is used for selective weeding of broad-leaf plants. The Smallholder KUDs manage the contracts for road maintenance and the areas inspected were found to be accessible. Criterion 4.4: Practices maintain the quality and availability of surface and groundwater

The riparian buffer zones for re-establishment at replanting were clearly marked with poles painted red and the adjacent palms marked with yellow paint. Hindoli’s Watergate Operators patrol the river buffer zones weekly and check for any disturbance of the



riparian vegetation. Inspection showed the vegetation appeared well protected from disturbance. There are no significant streams flowing through the Smallholder oil palm.

The BOD of the treated Mill effluent discharge was maintained consistently less than 100 mg/L throughout 2011 (Figure 9).

Figure 9: Monthly BOD (mg/L) of Sungai Lilin Treated Mill Effluent Discharge

In April 2012, Tanjung Dalam Mill completed work on the construction of the 3 remaining oil palm blocks for expansion of the land application system capacity to 10 blocks. The additional capacity should enable recycling of all of the effluent to the palms and cessation of the treated effluent discharge. Inspection of the land application system found that the furrows were adequately maintained for containment of treated effluent.

The Mills sample and test treated effluent weekly. In addition, the independent Sucofindo Laboratory collects samples and tests the effluent discharge monthly for compliance. Review of the results for the previous 12 months confirmed both Mills complied with all effluent discharge licence parameters.

Water usage at Sungai Lilin Mill has continued to decrease from 2011/12 due to increased recycling of steriliser condensate for press dilution water and reclaiming steam turbine cooling water and recycling this back to the water treatment plant (Figure 10). Tanjung Dalam Mill water usage decreased slightly to 0·8 t/t FFB IN 2012/13 due to restricting the use of water for cleaning mill floors from daily to weekly.

Figure 10: Annual Water Usage of Mills 2006 – 2012

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

Hindoli continued the program at each of the Estates of establishing the beneficial plants Turnera subulata and Cassia cobanensis along boundaries and roadsides. Barn Owl boxes have been installed at each of the Estates but the occupancy was only slightly above 50% at the August 2012 census.

Hindoli Technical Services Department operates an early warning census programme to monitor leaf-eating pest numbers and rat damage. The census monitors numbers of nettle caterpillars, bagworm pests and rats at the Estates. There was no outbreak of leaf-eating insects that required treatment during the past year.

Hindoli has data available on pesticides usage per block since 2003. The data show a decrease in toxicity units for weed control.

Hindoli has provided training to Smallholders on IPM and they have planted Turnera subulata along roadsides that provide access to their oil palm blocks. Hindoli Technical Services Department monitors the Smallholder palms for pests. Criterion 4.6: Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives and this is documented.

Inspection of records confirmed Hindoli uses only chemicals that are registered and approved by the Department of Agriculture. Data on pesticides usage are recorded on the Hindoli Oil Palm Management database. Observation 02 – Smallholders presently carry out weed control on a 6 monthly cycle, which could be improved by using information from field inspections to schedule additional selective weeding when required – refer Section 3.2 Page 21.

Checks at the Estates showed the pesticide stores continued to be well maintained and the chemicals were labeled clearly and stored within spill containment. Observation of spray-mix preparation and spraying showed the workers were wearing PPE correctly and they were working safely and in accordance with the chemical manufacturer’s recommendations. Observation 03 – At Tani Mandiri Jaya KUD, inconsistent application of pesticides for weed control was observed in the field and when documentation was reviewed, records had not been kept of sprayer training although training was stated to have been carried out – refer Section 3.2 Page 21.

Used pesticide containers are stored in a hazardous waste store in compliance with government regulations. Hindoli has engaged the licenced contractor PT Nirmala



Tipar Sesama (Licence number 612 of 2007) for collection and removal of empty pesticide containers and other wastes, such as spent lubricating oil. Hindoli maintains copies of manifests for collection of scheduled wastes by a licensed contractor, as detailed at Criterion 5.3.

Hindoli has never used WHO Type 1A or Type IB Chemicals at the Estates. Paraquat dichloride is used for weed control in the immature palms at the Mukut and Penuguan Estates. The Smallholders use only glyphosate and metsulfuron-methyl for weed control.

Hindoli employs a full-time female doctor who operates from the main Sungai Lilin Clinic and in 2012 a full-time male doctor was hired and is based at Mukut project. The doctor visits all Hindoli Clinics on a weekly basis. The annual medical examination for sprayers was carried out by a Government Doctor July 2012. Inspection of the Medical Surveillance Report showed, for example, five sprayers at Sungai Pelepah Estate who were unfit to work with pesticides. They were subsequently transferred to other duties with regular monitoring by the Hindoli Doctor. The Company policy continued to be applied consistently for women sprayers to be transferred to other duties if confirmed pregnant and they wished to continue working.

Inspection of the KUD Pesticide Stores found good control of materials and the operations were consistent with the chemical manufacturer’s safe handling recommendations. The KUDs have established specialised teams of sprayers who carry out herbicide application on the Smallholders’ blocks. Records of pesticide stocks were accurate and up to date and there was good control of empty pesticide containers. Criterion 4.7: An occupational health and safety plan is documented, effectively communicated and implemented.

Hindoli gives high priority to safety and has implemented a Safety Management System that is integrated with the ISO 9001 and ISO 14001 Management Systems. Hindoli has prepared safe working practices for all areas of significant hazards and has implemented a Permit to Work System. Working at Height and confined Space Permits are required to be issued daily, but a Hot Work permit can be extended for 6 days.

Observation 04 – A Nonconformity initially was assigned because a maintenance department welder was doing oxy/acetylene cutting at the boiler without using the correct eye protection PPE. The Observation #2 assigned at ASA3 relating to eye protection PPE for welding was upgraded to a Nonconformity. Hindoli immediately took corrective and preventive action and the Nonconformity was downgraded to an Observation. – refer Section 3.2 Page 21 for full details.

Hindoli employs a full-time EHS Coordinator for the Mills and for the Estates. The EHS Officer at Sg Lilin Mill presently does not hold a Government National Safety Certificate, but training is planned. At each Mill and Estate there is an EHS Committee, comprising staff and worker representatives. Safety committees meet

monthly and records are held on file of the meeting minutes, for example Sg Lilin Mill met on 20 November 2012, with 23 attendees.

All workers are covered by JAMSOSTEK and an additional Company benefit is available if needed.

Since 1998, Hindoli has implemented annual physical medical check-ups for all workers and staff. A National Government Labour Department Doctor conducted the annual check-ups July 2012, which included tests of blood, urine, respiratory system and hearing.

Hindoli EHS Coordinator and EHS Committees carried out the annual review of the risk assessment for all tasks associated with each work location throughout the Mills and Estates operations. At Sg Lilin Mill, a new process is being trialed to assess the risk of Serious Injury and Fatality and also considers the residual risks associated with the current controls. Records showed the risk assessment reviews were carried out, for example at Sungai Lilin Mill (Revision 10, 28 September 2012), Tanjung Dalam Mill (Revision 10, 28 March 2012).

Hindoli carries out safety training for all workers, staff and contractors. Inspection of records showed the Mills and Estates each have a schedule showing the monthly training topics. The training records showed training was carried out as scheduled, for example, “blood-borne pathogens” for all staff, workers and contractors was carried out November 2012. Sg Lilin Mill carried out confined space training for contractors on 17 January 2012.

Hindoli has developed and implemented an Emergency Action Plan that covers the main emergencies that possibly may occur as well as personal injury. The Plan includes an “Emergency Call-Out List” and a “Site Evacuation Plan”. Hindoli reviewed the Emergency Response Plans on 13 November 2012, with a minor change at Sg Lilin Mill due to restructure of the Program Assurance Department. The Estates and Mills have carried out Emergency Response Drills. For example, Sg Lilin Mill carried out a drill to simulate a confined space accident on 07 November 2012.

Hindoli employs two full-time Doctors (one located at Sg Lilin housing area and the other at Mukut Estate) and maintains well-equipped clinics that are staffed by trained paramedics at the Estates and Mills. The paramedics are on call twenty-four hours per day, and Hindoli provides free medical treatment for workers and their families. Inspections confirmed first aid equipment was available at the Estates and Mills.

First Aid training has been carried out, for example at Sungai Lilin Mill 3-4 April by Palang Merah Indonesia (Indonesian Red Cross) for 21 participants.

Hindoli maintained its excellent safety record (Figure 11) and Sungai Lilin Mill has achieved Zero accidents since 20 July 2004. At the time of the surveillance visit the Mill had achieved 3,067 days accident free.

Tanjung Dalam Mill had achieved Zero LTA since commissioning in March 2005 but unfortunately an LTA occurred 21 September 2012 and until that time had achieved 2,719 accident free days.



Each of the Estates had a very good safety performance during 2012 and there was no LTA. For example Tanjung Dalam Estate recorded its last LTA 19 April 2011.

Observation 05 – The Smallholder KUDs records of accidents could be improved by collecting information from the Government Clinic on injuries sustained, such as thorn spikes and lacerations – refer Section 3.2 Page 21.

Figure 11: LTAs Mills and Estates 2007–2012

Hindoli Farmer Development Assistants continued to provide safety training to Smallholders and the KUDs. In addition to safe pesticide handling, the KUDs are targeting safe work practices for harvesting and upkeep and wearing of the correct PPE. Criterion 4.8: All staff, workers, smallholders and contractors are appropriately trained.

Hindoli has updated the Annual Master Training Plans for each Estate and Mill for the current 2012/13 year. The Plans list the schedule for competency-based training for staff, workers and contractors. The Training Plans include the training for safe work practices and skill development for each work-station in the Mills and each field task in the Estates. The SOPs are used as the basis for training material.

Hindoli requires all new hires and contractors to undertake an induction on the company’s safety and environment requirements. The company maintains records of all inductions and training, including details of the training topic, list of attendees and their signatures. The records of inductions of new hires and contractors include a copy of their photo ID and assessment of competence.

Hindoli’s Contractor selection process includes evaluation of competence and skill. For example, contractors hired for transport of FFB are required to pass a safety checklist and must hold a current driver’s licence.

The Hindoli Farmer Development Department continued to provide extension training to smallholders on field practices, upkeep, pesticides and harvesting. Hindoli also provided training on management aspects of smallholder scheme administration.

PRINCIPLE 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity

The Mills and Estates made progress with implementation of the Environmental Improvement Plans. The Estates continued to focus on the expansion of biological controls, such as barn owls and beneficial plants in the IPM Programme. Field inspections confirmed these improvement programmes were progressing.

The Mills are targeting 5% reduction of fossil fuel consumption through use of the steam turbines to generate electricity and through behaviour based energy management.

The protection of riparian buffer zones was maintained along the main rivers flowing through the Estates. The buffer zones for future reinstatement at replanting were demarcated along small streams.

Hindoli continued to separate recyclable materials such as scrap metal for sale to a recycler. Non-recyclables are disposed in small landfills that were maintained in accordance with Local Government sanitary landfill regulations.

Hindoli ensured that the Scheme Smallholders’ empty pesticide containers were well controlled by collecting the containers from the KUDs and transporting them to the Tanjung Dalam Mill Scheduled Waste Store for collection by the licenced recycler. Criterion 5.1: Aspects of plantation and Mill management, including replanting, that have environmental impacts are identified and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored to demonstrate continuous improvement.

Hindoli maintained the Environmental Management System that covers the full scope of its operations and is certified to the ISO 14001:2004 standard. Hindoli staff revised the environmental aspects and impacts register for the Mills and Estates, for example, for Sungai Lilin Mill Revision5 29 May 2012. Hindoli is targeting a 5% reduction in energy consumption by 2015, with 2010 taken as the baseline. An improvement plan associated with this objective is to develop a new stockpile area at each of the mills for storage of excess fibre and nut shell during peak crop for later usage.

Hindoli maintained the reporting of information monthly to Senior Management on environmental performance indicators such as water and fossil fuel usage. Hindoli reports bi-annually to Government on the AMDAL monitoring program results and the most recent RKL & RPL report was January – June 2012.

CR07 – A Nonconformity was assigned because at the time of the ASA4 visit the Mukut Plasma RKL/RPL Report had not been prepared. – refer Section 3.2 Page 21. Criterion 5.2: The status of rare, threatened or endangered species and high conservation value habitats if any, that exist in the plantation or that could



be affected by plantation or Mill management, shall be identified and their conservation taken into account in management plans and operations.

The presence of HCVs at Hindoli is limited to the riparian buffer zones along the main rivers bordering the Estates that were assigned HCV4. The buffer zones have previously been logged and consist mainly of secondary regrowth. Inspections of records confirmed the Watergate operator at each of the Estates has continued to monitor the riparian buffer zones.

At Mukut Estate, the protection of the HCV set-aside has been maintained through regular patrols and notice-boards at the entrance to the property and next to buffer zones to prohibit the capture or hunting of fauna and disturbance of vegetation. There are no HCVs at the smallholder areas, which were originally cleared for the transmigration project. Interview of Smallholders confirmed Hindoli had carried out awareness on HCVs and the farmers were able to list the protected species of birds and mammals in the local area, although these are rarely sighted. Criterion 5.3: Waste is reduced recycled, re-used and disposed of in an environmentally and socially responsible manner.

Hindoli has constructed bunkers at each of the Mills for temporary storage of each type of palm by-product and Mill solid wastes such as EFB, fibre, decanter cake, nut-shell, and boiler ash. The fibre and nut-shell are used to fuel the Mill boiler while the EFB, decanter cake and boiler ash are applied to the palms. Scrap metal from the Mills is stored in a stockpile for sale to a recycler. Hazardous wastes are segregated and stored securely in purpose-built stores. Solid waste that cannot be recycled is placed in a small landfill at each of the Estates. Inspection of the landfills showed these were well-maintained and were consistent with regulatory requirements for sanitary landfills.

Observation 06 – At Sg Lilin Mill a large stockpile of EFB had accumulated and spilled into the nearby drain, because the capacity to evacuate the by-product to the field was less than the rate produced by the mill – refer Section 3.2 Page 21.

Hindoli has built a hazardous waste store at each Estate and Mill and holds a Licence for the storage of hazardous waste, issued by the Ministry for Environment, Jakarta, licence Number 374A, dated 9 July 2009 and valid to July 2014. The small quantities of hazardous waste generated at each Estate and Tanjung Dalam Mill are transported to a central hazardous waste store at Sungai Lilin Mill. Hindoli collected empty pesticide containers from each of the KUDs and transported them to the Sungai Lilin Mill Scheduled Waste Store. Hindoli maintains records of monthly stock-take of hazardous wastes and holds copies of hazardous waste manifests, for example No 0009467 for removal of waste oil and oil filters from Sg Lilin on 27 October 2012 by PT Primanru Jaya.

Medical wastes are transferred from each of the Hindoli Clinics to the main Sg Lilin Clinic prior to collection and

transfer to Palembang Hospital for incineration. For example, Tanjung Dalam Estate transfer of wastes on 08/11/12 was among the wastes transferred to Palembang Hospital on 12/11/12. An Agreement is presently being finalised between Hindoli and Prasadha Pamunah Limbah Industri for future collection of wastes.

Rainfall runoff from the Mills is separated from Mill effluent, treated in sediment and oil traps and then transferred to the effluent ponds for treatment. At Sungai Lilin Mill the rainfall runoff is transferred to the final effluent pond before discharge, while at Tanjung Dalam Mill it is transferred to a separate pond prior to discharge.

As outlined for Criterion 4.4, Hindoli Mill Laboratories have continued to monitor the quality of the Mill effluent discharge weekly and maintained compliance with the discharge licence limits throughout 2011.

Hindoli has maintained records of the quantities of solid wastes that are recycled to the field (EFB, nutshell, fibre and boiler ash). Criterion 5.4: Efficiency of energy use and use of renewable energy is maximised.

Hindoli reports renewable and non-renewable consumption monthly to Head Office as a Key Performance Indicator. The Mills have operated the boilers for longer operating times, outside of processing hours, for example on Sundays to generate electricity and substitute renewable for fossil fuel (diesel). Figure 12 shows that the generation of electricity from diesel fuel has decreased markedly since 2006/07 due to greater use of the steam turbines.

Sg Lilin Mill overhauled all three turbines in the current year, which resulted in a slight decrease in renewable energy usage and increase in diesel fuel consumption. At Tanjung Dalam, the steam turbine was operated for longer hours, which resulted in reduction of diesel usage.

Figure 12: Mills Energy Usage 2005–12

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

Hindoli has implemented a Zero Burn Policy since the start of the oil palm development. Although replanting



has not yet been carried out, Hindoli has stated its commitment to adhere to the Zero Burn Policy during future replant. Interview of Smallholders confirmed they were aware of the zero burn policy and they will apply it at replanting.

Hindoli has a documented Emergency Procedure for responding to an outbreak of fire and land burning, should such a situation occur. Each of the Estates carried out a fire drill to test preparedness for an emergency. Inspection during the audit confirmed fire-fighting equipment is located throughout the Mill and at Estate offices, stores and workshops and also at housing. The Service Tags on the equipment confirmed it had been inspected and maintained in serviceable condition. Criterion 5.6: Plans to reduce pollution and emissions, including greenhouse gases are developed, implemented and monitored.

Hindoli has documented all emissions from stationary and mobile sources in the ISO 14001 Environmental Aspects and Impacts Register and has set performance objectives and targets. In 2012 Sg Lilin Mill completed an emission reduction initiative by replacing CFCs in air conditioners, with refrigerants of lower potential environmental impact. Tanjung Dalam Mill is yet to convert the air conditioners to non-CFC refrigerant gas.

Observation 07 – Hindoli is presently storing the CFC refrigerant recovered from air conditioners but has not yet engaged a Government approved contractor for safe disposal – refer Section 3.2 Page 21.

Tanjung Dalam Mill has completed installation of a conveyor for transfer of decanter cake to replace the “decanter cake pump” and reduce the quantity of clean water used as makeup and requiring treatment. Tanjung Dalam Mill has expanded the land application system and achieved 100% recycling of treated effluent to the palms and zero discharge of treated effluent.

The smallholders have maintained the use of speed humps at the villages to control the speed of trucks and cars and to reduce dust emissions. The KUDs manage the transport of smallholders’ FFB to the Mills and coordinate harvesting to maximise the use of transport and energy efficiency.

PRINCIPLE 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers

Hindoli has not made any changes to the scope of its operations since ASA2, therefore it was not necessary to revisit the SIA. Hindoli has continued to focus on the management of smallholder oil palm and the KUDs, which in turn benefits the smallholders.

Smallholders and local community representatives confirmed the good communication and relationship with Hindoli was being maintained through its Farmer Development Department.

Hindoli provides workers with a good standard of housing and they have access to health, education and recreation facilities for their children.

Hindoli continued to maintain a good relationship with contractors, a number of whom have worked with the company for more than 10 years. Criterion 6.1: Aspects of plantation and Mill management, including replanting, that have social impacts are identified in a participatory way and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

Hindoli has engaged the University of Sriwijaya, Palembang to carry out an SIA of the overall development. Fieldwork was completed in August 2012 and a report is expected before the end of the year.

Hindoli has continued to engage with the local communities and smallholders through its Farmer Development Department. The Department comprises a Manager plus six Farmer Development Assistants who reside in the local villages and work with the smallholder KUD members. This arrangement continues to enable Hindoli to monitor the emergence of issues that then are discussed at the weekly meetings with the 17 Smallholder KUD Managers.

Hindoli EHS Department has prepared the six-monthly RKL/RPL Report to the Provincial Government and the Ministry of Environment, Jakarta. The report includes information from Hindoli’s Human Resources, Public Affairs and Farmer Development Departments on the Community Development Programme. Criterion 6.2: There are open and transparent methods for communication and consultation between growers and/or Millers, local communities and other affected or interested parties.

Hindoli has two methods of two-way communication with the smallholders and local communities: through the network of Farmer Development Assistants and via the weekly meetings with KUD Managers. Enquiries with KUD Managers confirmed this was effective for two-way communication with Hindoli. The company updated its list of Stakeholders in 2012. The List includes National, Provincial and Local Government contacts, Village Heads and Smallholder KUD Managers, contractors and suppliers. Observation 08 – Smallholder KUDs records on communication and consultation with local communities could be improved by keeping a record of informal meetings with the Kepala Desa and other community representatives – refer Section 3.2 Page 22. Criterion 6.3: There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties.

Hindoli has maintained a complaints and grievances system. Access to the system is via copies of the Complaints Register that are available at each of the clinics as well as the offices at the Mills and Estates.



Inspection of records showed that the majority of complaints related to requests for minor repairs to houses. Hindoli also maintains a customer complaints register that is managed as part of the ISO 9001 QMS.

Smallholder KUD Managers indicated the weekly meetings with Hindoli Management are important for raising issues and reaching settlement. Criterion 6.4: Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

Hindoli did not acquire any additional land during 2012 and hence was not involved in any land compensation payments. Criterion 6.5: Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

Inspection of pay records confirmed Hindoli pay rates are above the regional minimum daily rate. Both daily-rated and piece-rated workers confirmed they are able to make savings each month. Hindoli pay and conditions are consistent with the Collective Labour Agreement and overtime was paid in accordance with government regulations.

Hindoli provides a good standard of housing for staff and workers as well as free electricity, water, elementary schooling, crèche, places of worship, and medical facilities. New houses at Mukut (260) and Penuguan (390) are now occupied. A further 200 are presently under construction at Penuguan and 70 at Mukut with expected completion May 2013. A well equipped clinic is located at each housing compound and is staffed by a full-time paramedic. In addition, Hindoli employs a doctor full-time who is based at Sungai Lilin and makes regular visits to each of the clinics for consultations. A full time doctor has recently been employed at Mukut with the new Clinic now in operation.

Observation 09 – The present system for requesting repairs to housing and having them carried out in a timely manner is not effective because repairs to a house at Sg Lilin recorded in the “complaints register” February 2012 were carried out only after this was raised by the auditor on 3 December 2012 – refer Section 3.2 Page 22.

The Smallholders engage specialised teams from the local villages to harvest their oil palm. The harvesters are paid on a piece-rate basis and when interviewed confirmed they are able to earn the minimum daily rate for a mornings work. Criterion 6.6: The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of

independent and free association and bargaining for all such personnel.

Interviews of workers confirmed they are free to join a union and many of the Mills and Estates workers were members.

Hindoli Human Resources Department maintains records of meetings with worker union representatives and union officials. Criterion 6.7: Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision and when not interfering with education programmes. Children are not exposed to hazardous working conditions.

All new hires are required to produce their National Identity Card and a copy was held on file as a check for age. Inspections of the Mills and Estates did not find any children or under-age workers at the workplace, or at the Smallholders visited. Criterion 6.8: Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation or age is prohibited.

Interviews of male and female workers confirmed Hindoli’s anti-discrimination policy was strictly enforced. They were not aware of any cases of discrimination. Inspection of pay records for the Mills and Estates did not find any evidence of discrimination. Criterion 6.9: A Policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied.

Hindoli has implemented the global Cargill Policy on prevention of sexual harassment and violence against women. The policy is prominently displayed on notice boards at the Mills and the Estates muster areas.

Interviews of female staff, workers and union representatives confirmed that Hindoli has continued to observe their rights under the Company Policies.

Female staff and workers stated they were not aware of any cases of sexual harassment and they understood the process for raising such issues through the Grievance Mechanism. Criterion 6.10: Growers and Mills deal fairly and transparently with smallholders and other local businesses.

The KUD Managers confirmed they understood the FFB price that is determined twice monthly by a Committee consisting of Provincial Government, Palm Oil Producers and Smallholder Cooperative Representatives. The KUD Managers meet with Hindoli weekly and are involved in the negotiation of prices for FFB transport and premium for FFB quality. The 17 KUDs manage all transport of smallholders’ FFB to the Hindoli Mills and the contracts for road maintenance.



Interviews of contractors at the Mills and Estates found they had worked for Hindoli for more than 5 years and considered the terms and conditions fair.

The KUD Managers and contractors stated that Hindoli makes payments in a timely manner and they had no complaints. Criterion 6.11: Growers and Millers contribute to local sustainable development wherever appropriate.

Hindoli has continued its commitment to community development that requires all employees to contribute 7 hours per year of their own time to work on community projects. Hindoli donates the materials for community projects and the employees provide the labour.

PRINCIPLE 7: Responsible Development of new Plantings

Hindoli has completed the staged development of oil palm at a location known as Mukut (Figures 1 and 6) that was reported in the Initial Certification Assessment and the ASA1, ASA2 and ASA3, but has not carried out any further new oil palm developments.

This section of the report provides an update on progress with the development on the Smallholder oil palm at Mukut and information is included for each of the applicable RSPO indicators. Criterion 7.3: New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values.

A HCV Assessment of the Smallholder development was carried out by the University of Bogor and notified to RSPO by BSi in October 2011.

The HCV assessment reported the original forest had been heavily degraded and replaced by Gelam (Melaleuca leucadendron), which covered most of the land. The condition of the Gelam forest was poor, with very few trees, but many in the pole and sapling sizes.

Hindoli has set aside a 100 m wide buffer zone along the length of Sungai Mukut to protect the remnant riparian vegetation. Field inspection confirmed Hindoli has maintained protection of the buffer zone.

Hindoli has implemented actions that are consistent with the HCV Management Plan. Hindoli has maintained signs at the access to the Mukut site and at the buffer zone to prohibit the use of fire. Criterion 7.4: Extensive planting on steep terrain, and/or on marginal and fragile soils, is avoided.

Hindoli engaged a specialist consultant, Environmental Earth Sciences, New South Wales, Australia, to make a follow-up visit to Mukut during September 2011 to monitor the effectiveness of the implementation of the Plan for the management of potential acid sulphate soil at the Mukut site.

Measurements of water quality carried out during 2012 showed that the pH of drainage had remained static, which confirmed the management of water gates was effective for maintaining water levels and minimising sulphide oxidation.

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

Mukut Plasma is being developed on ex Community land and the remainder (1,300 ha on ex forestry land). Hindoli has not acquired any new land in addition to that reported previously. The smallholder blocks will be under KKPA Scheme. Hindoli has arranged financing and the bank has approved the loan. Criterion 7.6: Local people are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreements.

Smallholders will be issued with a 2 ha land title certificate after Hindoli has opened up the land. When the development has been opened up, a ballot will be held for allotment of the location of the oil palm blocks.

The land at the Mukut development site is classified as government land that is controlled by the village. As reported in the Initial Certification Assessment, Hindoli completed the acquisition and compensation for the land during 2008. Interviews of community leaders at Mukut and Penuguan confirmed Hindoli had not made any additional land acquisition or compensation payments. Criterion 7.7: Use of fire in the preparation of new plantings is avoided other than in specific situations, as identified in the ASEAN guidelines or other regional best practice.

Inspection of the development area confirmed Hindoli has consistently implemented its zero burn policy at the plasma development.

The company has installed appropriate fire fighting equipment at the office, stores and accommodation. Mobile fire fighting equipment includes tractor drawn water tankers and portable pumps. There has been no fire outbreak since mid 2011 at the Mukut development. Principle 8: Commitment to continuous improvement

in key areas of activity

Hindoli reviewed and updated the Program Assurance three-year Plan in May 2012, which lists the improvements for the company’s strategic objectives. The company has maintained the FFB yield from its estates, although the OER for the mills continued to decline.



Hindoli has maintained the high proportion of renewable fuel used for generation of electricity for processing and standby power. The operation of the steam turbine for extended hours outside of processing resulted in a reduction of diesel consumption. Hindoli has continued to support its Smallholders through the Farmer Development Department. This has helped smallholders to improve their FFB yields as well as to maintain their RSPO Certification. Hindoli has continued its commitment to health and safety of its workforce and has maintained the excellent record of zero LTAs at Sungal Lilin Mill.

3.2 Identified Nonconformities and Noteworthy Positive and Negative Observations

A Nonconformity was assigned during ASA4 to Minor Compliance Indicator 5.1.2 and Nine (9) Observations/Opportunities for Improvement were identified with details provided as follows: CR07 – Minor Compliance Indicator 5.1.2 – Records of regular report on environmental management in accordance to relevant regulations.

A Nonconformity was assigned because at the time of the ASA4 visit the Mukut Plasma RKL/RPL Report had not been prepared.

Corrective Action:

Hindoli completed the preparation of the Mukut Plasma RKL/RPL Report on 12 December 2012. Hindoli signed a contract on 30 November 2012 for preparation of an overall AMDAL for the Estates, Plasma, a new Mill and a new Jetty, which will reduce the number of RKL/RPL reports to government.

BSi Assessment Team accepted the Corrective Action and will follow up during the next visit scheduled in December 2012.

Noteworthy Negative Observations (Company)

01 (2.1.1) A Nonconformity was initially assigned at Mukut Estate because the pH of treated water for domestic use was below the Indonesian limit of 6.5 units. The groundwater bore had recently failed and the supply was now drawn from surface water, but the water treatment had not been adjusted to neutralise the acidity.

Hindoli took immediate Corrective Action involving the Sg Lilin Mill Chemist visiting Mukut and carrying out tests on site to determine the quantity of soda ash required to raise the pH to neutral. He also carried out Jar Tests to determine the quantity of flocculant. Subsequent tests on 05 December confirmed compliance with the water quality limits.

Hindoli also took Preventive Action involving revision of the June 2012 SOP to require daily testing and reporting

of raw and treated water quality (pH, Turbidity and Residual Free Chlorine) for the domestic supply. The Nonconformity was downgraded to an Observation. 02 (4.6.3) Smallholders presently carry out weed

control on a 6 monthly cycle, which could be improved by using information from field inspections to schedule additional selective weeding when required.

03 (4.6.6) At Tani Mandiri Jaya KUD, inconsistent

application of pesticides for weed control was observed in the field and when documentation was reviewed, records had not been kept of sprayer training although training was stated to have been carried out.

04 (4.7.1) A Nonconformity initially was assigned

because a maintenance department welder was doing oxy/acetylene cutting at the boiler without using the correct eye protection PPE. The Observation #2 assigned at ASA3 relating to eye protection PPE for welding was initially upgraded to a Nonconformity.

Hindoli took immediate Corrective Action by stopping the welding until the correct eye protection was issued from stock held in the mill store.

Hindoli took Preventive action by revising the Permit to Work Checklist for “Hot Work” to include the following additional items: Check that safety goggles in good condition are

available for oxy/acetylene welding/cutting; Check that the pressure regulators are in good working

condition; Check that “flash-back” arrestors are fitted to the

pressure regulators; Check that a face shield in good condition is available

for electric arc welding; and Check that electric cables for welding sets are in good

condition and protected from water or from impact damage.

The modified “Hot Work” Permit to Work was implemented on 05 December 2012.

The Nonconformity was downgraded to an Observation. 05 (4.7.4) The Smallholder KUDs records of

accidents could be improved by collecting information from the Government Clinic on injuries sustained, such as thorn spikes and lacerations.

06 (5.3.2) At Sg Lilin Mill a large stockpile of EFB

had accumulated and spilled into the nearby drain, because the capacity to evacuate the by-product to the field was less than the rate produced by the mill.

07 (5.6.3) Hindoli is presently storing the CFC

refrigerant recovered from air conditioners but has not yet engaged a Government approved contractor for safe disposal.



08 (6.2.1) Smallholder KUDs records on communication and consultation with local communities could be improved by keeping a record of informal meetings with the Kepala Desa and other community representatives.

09 (6.5.3) The present system for requesting repairs

to housing and having them carried out in a timely manner is not effective because repairs to a house at Sg Lilin recorded in the “complaints register” February 2012 were carried out only after this was raised by the auditor on 3 December 2012.

Noteworthy Positive Components

Hindoli was presented with the Platinum Indonesian CSR Award on 16 December 2011, awarded in recognition of PT Hindoli’s successful smallholder program that resulted in a vast improvement in the living standards of the farmers and the establishment of effective cooperatives for long-term economic viability.

The Ministry of Environment awarded Sungai Lilin Mill “Green” Proper status in December 2012.

Sg Lilin Mill maintained zero LTA status and all of the Estates achieved zero LTA status in 2012.

Hindoli has continued to build the relationship with Stakeholders, particularly in Penuguan and Mukut Villages due to employment of full-time Liaison Officers and work opportunities at the newly developed Estates.

Hindoli Smallholders continue to demonstrate improved environmental performance and implementation of good agricultural practices.

260 houses at Mukut and 390 houses at Penuguan are now occupied. A further 200 are presently under construction at Penuguan and 70 at Mukut with expected completion May 2013.

The new Clinic building at Mukut is now operating with a full time male Doctor, female paramedic and female assistant in attendance.

3.3 Status of Nonconformities (Major and Minor) Previously Identified

Follow-up during ASA4 confirmed corrective actions for Nonconformities identified during previous Assessments CR01 – CR06 had been implemented effectively and all Nonconformities remained closed.

Review of Progress with Observations/Opportunities for Improvement Identified During ASA3 (Company)

The thirteen (13) Observations/ Opportunities for Improvement were followed up during ASA4 and the findings are detailed below.

01 (4.6.2) Issues identified during field inspection of spraying at Penuguan Estate indicated inadequate knowledge of chemical hazards and safe work practices. A Nonconformity was initially assigned

but Hindoli immediately carried out re-training of sprayers and mandors and implemented a regular inspection and reporting programme.

ASA4 Findings: All chemicals were separated according to the class of chemical and were stored in accordance with the manufacturer’s recommendation Observation of spray mix preparation and spraying confirmed understanding and implementation of safe work practices.

02 (4.7.1) At the Sg Lilin Mill Workshop, the eye protection PPE for oxy/acetylene welding was damaged. The Mill corrected this immediately by issuing replacement PPE.

ASA4 Findings: A maintenance department welder was doing oxy/acetylene cutting at the boiler without using the correct eye protection PPE. Initially, the observation was upgraded to a Nonconformity.

03 (4.7.1) At Sg Lilin chemical store a 200 Litre drum of isopropyl alcohol was stored with the wrong class of chemical and was not clearly marked to warn of the hazard. This was corrected immediately.

ASA4 Findings: All chemicals were separated according to the class of chemical and were stored in accordance with the manufacturer’s recommendation.

04 (4.7.1) At Tanjung Dalam Mill Engine Room, a newly engaged contractor and a staff member were not wearing hearing PPE, although it was affixed to their helmets. This was corrected immediately.

ASA4 Findings: Hearing protection was worn consistently at all of the work stations inspected.

05 (5.1.2) At the commencement of the Document Review process it was found that the RKL/RPL Reports, including environmental and social aspects, for Mukut Plasma and for the Environment Evaluation Document (DELH) of the overplanted area had not been prepared as required by Government within 6 months of the date of approval of the AMDALs. Hindoli took corrective action immediately and prepared documents for submission to Government. The documents were reviewed by the Assessor prior to the end of the Audit.

ASA4 Findings: At the time of the ASA4 visit all of the RKL/RPL Reports had been prepared except for the Mukut Plasma. The Observation was upgraded to a Nonconformity (refer Section 3.2 previous page)

06 (5.2.2) Inspection of the buffer zone at Block 06 at Sg Tungkal Estate found unnecessary slashing of vegetation in preparation for enrichment planting with native tree species.

ASA4 Findings: Inspection of buffer zones at all locations visited did not identify any signs of disturbance.

07 (5.3.2) The concrete secondary containment bund for the bulk diesel tank at the Sg Lilin Mill was cracked and did not provide adequate containment of spilled material or rainwater. This was repaired during the assessment.

ASA4 Findings: Inspection confirmed the bund was adequately maintained.



08 (5.3.2) At Tanjung Dalam Mill, the internal embankment between Cooling Pond #2 and Anaerobic Pond #1 is failing and needs repair and stabilisation.

ASA4 Findings: The internal embankment had been repaired and is subject to on-going inspection and review.

09 (5.3.2) At Tanjung Dalam Estate the hazardous waste store had reached capacity as the wastes had not been transferred to the central hazardous waste store at Tanjung Dalam Mill.

ASA4 Findings: Inspection confirmed adequate capacity was maintained.

10 (6.1.2) Hindoli has consulted local communities during the preparation of RKL/RPLs for the Mukut Plasma and the overplanted area but the reports could be improved by including details of in-depth interviews of key informants.

ASA4 Findings: Review of documents confirmed that detailed records were available of community consultation.

3.4 Issues Raised by Stakeholders and Findings with Respect to Each Issue

No issues were raised by stakeholders during ASA3 therefore no follow-up was required. Issues Raised during ASA4 Internal and external stakeholders had mainly positive comments about Hindoli but where an issue was raised details are given below together with the company’s response. A Sg Lilin Mill worker stated he had applied for a company house more than 5 years ago but was still waiting. He advised he received a monthly housing allowance but it was insufficient to cover his rent and utilities. Company Response: Hindoli will improve transparency around the housing waiting list and eligibility by making information available to workers. The housing allowance will be reviewed in the next Collective Labour Agreement. There is no programme for immunisation of children at Mukut and Penuguan Villages. Company Response: Hindoli will include this in the CSR Programme going forward. Staff and Residents at Mukut stated there was still no kindergarten or school easily accessible for their children. Company Response: Hindoli will provide transport for children of school age to attend the school located at Penuguan until a school has been built at Mukut. Staff and Residents at Mukut stated it was sometimes difficult to purchase fresh vegetables, fish, chicken, bottled water, gas as there was only one canteen and it often ran out of supplies. Company Response: Hindoli will improve the inventory at the Canteen and monitor supplies.

4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

4.1 Date of Next Surveillance Visit

The next Assessment (Re-certification) will be scheduled prior to the 24/02/2014 expiry date of the Certificate.

4.2 Date of Closing Nonconformities (Major and Minor)

Table 6: Status of Nonconformities

CAR CLASS ISSUED CLOSED

CR01 7.4.2

Minor 06/09/2008 08/02/2010

CR02 7.6.5

Minor 06/09/2008 08/02/2010

CR03 7.5.2

Major 06/02/2010 10/03/2010

CR04 4.6.4

Major S’holders

12/11/2009 08/02/2010

CR05 5.3.3

Major S’holders

12/11/2009 08/02/2010

CR06 8.1.1

Major S’holders

12/11/2009 08/02/2010

CR07 5.1.2

Minor 07/12/2012 “Open”

4.3 Sign-off of Surveillance 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 on behalf of BSi Group Singapore Pte Ltd

..................................................... Mr Charlie Ross

Lead Auditor Date: 03/01/2013

Appendix “A”

Supply Chain Assessment

APPENDIX A – SUPPLY CHAIN ASSESSMENT REPORT – PT HINDOLI – SEGREGATION Certified Mill Production – 01 December 2011 – 30 November 2012

MILL CAPACITY CPO PK

Sungai Lilin 120 t/hr 93,941 26,450

Tanjung Dalam 60 t/hr 50,777 13,785

Sales Certified CPO (GeenPalm Certificates)

01 December 2011 – 30 November 2012

Month BUYER (CSPO) TONNES/

CERTIFICATES

Dec - 11 GreenPalm 0

Jan-12 GreenPalm 2,970

Feb GreenPalm 0

Mar GreenPalm 15,728

Apr GreenPalm 0

May GreenPalm 10

Jun GreenPalm 50,000

Jul GreenPalm 0

Aug GreenPalm 0

Sep GreenPalm 0

Oct GreenPalm 0

Nov GreenPalm 0

TOTAL 68,708

Certified FFB Received Monthly - 01 December 2011 – 30 November 2012

SUNGAI LILIN MILL SUPPLY BASE TANJUNG DALAM MILL SUPPLY BASE

Month Sungai

Tungkal Sungai

Pelepah Sungai Mukut

Small- holders

Total FFB/

Month

Dec-11 6,991 6,215 153 26,706 40,065

Jan-12 6,499 5,963 261 24,079 36,803

Feb 4,220 4,128 278 23,383 32,009

Mar 5,365 4,421 352 18,158 28,295

Apr 4,524 4,082 335 20,248 29,189

May 4,705 4,457 382 19,174 28,718

Jun 4,298 4,314 362 20,230 29,204

Jul 6,181 5,146 465 20,202 31,994

Aug 5,633 4,772 366 26,024 36,794

Sep 10,507 9,600 840 32,654 53,600

Oct 9,643 9,720 1,056 34,617 55,036

Nov 9,000 8,000 953 32,699 50,652

TOTAL 77,566 70,818 5,801 298,175 452,360

Sales of CSPO (UTZ Certificates)


Company Tonnes

Cargill International Trading Pte Ltd 7,029

Asian Agri 100

TOTAL 7,129

Sales CSPK (UTZ Certificates)


Company Tonnes

TOTAL 0

Sales Certified PK (GreenPalm Certificates)


Month BUYER (CSPK) Tonnes

Dec GreenPalm 1,000

Jan-12 GreenPalm 100

Feb GreenPalm 0

Mar GreenPalm 0

Apr GreenPalm 0 May GreenPalm 0

Jun GreenPalm 0

Jul GreenPalm 0

Aug GreenPalm 0

Sep GreenPalm 2,500

Oct GreenPalm 0

Nov GreenPalm 1,200

TOTAL 8,800

Month Tanjung Dalam/

Sri Gunung

Small-holders

Total FFB/

Month

Dec-11 8,888 12,725 21,613

Jan-12 7,472 12,703 20,175

Feb 6,309 11,859 18,168

Mar 6,703 10,775 17,478

Apr 5,406 11,249 16,655

May 5,974 10,562 16,536

Jun 6,455 9,465 15,920

Jul 6,471 9,319 15,790

Aug 6,318 11,759 18,076

Sep 10,975 14,212 25,187

Oct 10,180 17,935 28,115

Nov 9,700 13,867 23,567

TOTAL 90,851 146,428 237,280

Certified Company Details

PT Hindoli Contact Person: Mrs Yunita Widiastuti Jl Palembang – Jambi Group Program Assurance Manager Desa Teluk Kemang Phone: +62 21 52896408 Kekamantan Sungai Lilin Fax: +62 21 52896407 MUBA Sumatera Selatan Email: [email protected] PALEMBANG 30755 INDONESIA

Certification Body Details

BSi Group Singapore Pte Ltd Contact Person: Mr Aryo Gustomo (Co. Reg. 1995 02096-N) BSi RSPO Scheme Manager 3 Lim Teck Kim Road #10-02 Phone: +65 6270 0777 Genting Centre Fax: +65 6270 2777 SINGAPORE 088934 Email: [email protected]

Summary

Supply Chain assessment was made for the production from Sg Lilin and Tanjung Dalam Mills that are owned and operated by PT Hindoli. The assessment included site visits to Sg Lilin and Tanjung Dalam Oil Mills, Tanjung Dalam, Sg Pelepah and Mukut Estates, five of the Smallholder KUDs, review of records and interviews of staff. Hindoli sold 68,708 GreenPalm certificates equivalent to 68,708 tonnes of CSPO and 8,800 GreenPalm certificates equivalent to 8,800 tonnes of CSPK. Hindoli also sold 7,129 UTZ certificates equivalent to 7,129 tonnes of CSPO. Hindoli maintains records for confirming compliance with the RSPO supply Chain requirements for traceability, as applicable to both palm oil mills. The Assessor concluded Hindoli has implemented an appropriate management system for controlling the purchase of certified FFB and tracking of product sales.

Conclusion

The Hindoli management system and records meet the requirements of the RSPO Supply Chain Standard : November 2011, Module D – CPO Mills : Segregation.

The CTP Marketing Department manages all sales of CPO and PK on behalf of the Hindoli Mills. The system is computerised and the RSPO Supply Chain information is available for inclusion on the despatch note and the sales invoice. Inspection of documents confirmed Hindoli maintains the appropriate documentation (quantities of FFB received and palm products despatched) required for verification of implementation of the RSPO Supply Chain Certification Standard : November 2011, Module D – CPO Mills : Segregation.

Certificate Details Background to the Report (a) Report authors

Assessor Mr Charlie Ross, BSi RSPO Lead Auditor CB Management Representative Mr Aryo Gustomo, BSi RSPO Scheme Manager

(b) Previous assessments December 2011

All of the production from the Sungai Lilin and the Tanjung Dalam Mills is certified sustainable palm oil. Hindoli and its parent company Cargill have adopted Segregation for the supply chain mechanism. Hindoli has implemented a system for recording and tracking the FFB produced at the company estates as well as the Smallholders. At the Estates, information on the Block Number, Bunch Count, Date and Skip Bin Number are recorded on a Field Docket. When received at the Mill, details are transferred from the Field Docket to the Weighbridge System together with details of the Truck Driver’s Name, Truck Registration Number, Weight and Delivery Time. The same system has been implemented for recording FFB harvested by Smallholders and delivered to the Mill.

Inspection of documents at the Estates, Smallholder KUDs and Mills confirmed that Hindoli maintains all of the records required for RSPO Supply Chain Verification of its CPO and PK production. Assessment of a sample of



documents confirmed the information was recorded accurately and the production could be traced back to the origin. SGS Malaysia has audited Hindoli production and shipping facilities in Indonesia and Cargill International Trading Pte Ltd and has issued Certificate No: SGS-RSPO/SC-00726 Valid to 11 May 2017 for meeting the RSPO Supply Chain requirements. Control Union has audited the Cargill receiving and processing facilities in North America and has issued Certificate No: C817166 CU-RSPO SCCS-01.2011 Valid to 29 May 2017.

(c) On-Site Visits Visit Itinerary

Monday 03 December 2012 – Sg Lilin Mill; Opening Meeting held at Mill Meeting Room; Weighbridge Station; examined weighbridge records; daily records of FFB deliveries, CPO and PK production; CPO Bulk Tank and PK Silo records; shipments of CPO and PK. Closing Meeting Friday 07 December 2012.

Wednesday 05 December 2012 – Tanjung Dalam Mill; Opening Meeting held at Mill Meeting Room; Weighbridge Station; examined weighbridge records; daily records of FFB deliveries, CPO and PK production; CPO Bulk Tank and PK Silo records; shipments of CPO and PK. Closing Meeting Friday 07 December 2012.

Friday 07 December – Hindoli Office, Sungai Lilin; Examined sales recorded in eTrace and associated shipping documents and sales invoices.

People consulted: Anthony Yeow (President Director, PT Hindoli); Dodi Mahadi (Mill Manager, Sg Lilin); Ahmad Arifin (Manager Mukut Estate); (Mill Manager, Tanjung Dalam); Weighbridge Operators (Sg Lilin & Tanjung Dalam Mills); KUD Managers, Cargill Sales Manager, Mrs Yunita Widiastuti (Group Program Assurance Manager).

Scope

The scope of the assessment covered the Sg Lilin and Tanjung Dalam Palm Oil Mills and the supply base of PT Hindoil owned Sungai Tungkal, Sungai Pelepah, Mukut and Tanjung Dalam Estates and Scheme Smallholders comprising 17 KUDs. The Supply Chain mechanism used is Segregated. Hindoli operations were assessed against the RSPO Supply Chain Standard : November 2011 Module D – CPO Mills : Segregation.

Description of Operation’s Management System

PT Hindoli uses the Segregation mechanism for the supply chain. Hindoli has implemented a system for recording and tracking the FFB produced at the company estates as well as the Scheme Smallholders. At the Estates, information on the Block Number, Bunch Count, Date and Skip Bin Number are recorded on a Field Docket. The same system has been implemented for recording FFB harvested by Smallholders and delivered to the Mill.

Upon arrival at the mill, the truck-driver reports to Security, who transfers details from the Field Docket to the Weighbridge System together with details of the Truck Driver’s Name, Truck Registration Number, and Delivery Time. Security issues a “chit” to the driver with a unique consecutive number. When called, the driver moves the truck onto the weighbridge and hands the “chit” to the Weighbridge Operator, who enters the “chit” number and the computer updates with a display of the delivery details. The Weighbridge Operator records the truck weight “In” to the mill and after unloading the FFB, the weight “Out”.

The delivery records are used as the basis for payment for FFB deliveries. A sample of weighbridge dockets was checked at the Mill against the summaries of FFB deliveries from Sg Tungkal Estate and Scheme Smallholders. This confirmed the details of the source and quantity of FFB were recorded accurately and could be verified by tracking. The source of the FFB can be traced back to the Estate and the oil palm block from which it was harvested. For Scheme Smallholders, the source of the FFB can be traced back to the village farmer group.

The Mill prepares a summary and reports daily to head office in Singapore: the quantity of FFB received from the Estates and Smallholders; the tonnage of FFB processed; the tonnages of CPO and PK produced; shipment tonnages; and the quantities of materials held in storage. The Mills and Estates also report the above quantities monthly to head office.

Checks of a sample of records held at each of the mills confirmed the sales of CSPO and CSPK matched the despatch quantities during the preceding 12 months (01 December 2011 to 30 November 2012). Inspection of documents confirmed that Hindoli maintains all of the documentation required for supply chain verification (RSPO Supply Chain Certification Standard : November 2011, Module D – CPO Mills : Segregation).

Certified Volume Purchased and Claimed

The following certified FFB material was received from Hindoli Estates during the 01 December 2011 – 30 November 2012 year and processed at Sungai Lilin Mill: 452,360 t/FFB and Tanjung Dalam Mill: 237,280 t/FFB.

Main Report Details

1. Documented procedures 1.1 The facility shall have written procedures and/or work instructions to ensure the implementation of all the elements

specified in these requirements. This shall include at minimum the following: a) Complete and up to date procedures covering the implementation of all the elements in these requirements.

Complies - SOPs are maintained as controlled documents in the ISO 9001 Certified Quality Management System Manual, are current and include all elements of the RSPO Supply Chain for controlling the receipt, sale and dispatch of palm products. For example, Document “HIN/MGT/011/SOP – Identification of Product and Chain of Custody, Revision #3, 05 June 2012”.

b) The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. This person shall be able to demonstrate awareness of the facilities procedures for the implementation of this standard. Complies – The Cargill Sales Manager has responsibility for the Supply Chain traceability activities – FFB receipts, planning and executing sales of CSPO and CSPK, and shipping of palm products. The Sales Manager was able to demonstrate knowledge and use of eTrace for tracking sales of products.

1.2 The facility shall have documented procedures for receiving and processing certified and non-certified FFB. Complies – the Mills Weighbridge SOP covers the receiving of FFB and recording details of the Supplier and Transporter. All deliveries of FFB are subject to verification of documentation and quality checks. For example,

TD/ADM/SOP/WEIGHBRIDGE/Revision #11, 13 June 2012. TD/PROD/11B/SOP/GRADING/Revision #15,30 November 2012-12-05

2. Purchasing and goods in 2.1 The facility shall verify and document the volumes of certified and non-certified FFBs received. Complies – the Mills

process FFB only from the Hindoli Estates and the Smallholder KUDs, all of whom are certified. The Mills record tonnages received at the weighbridge and these are reported daily to Head Office on the Production Report.

2.2 The facility shall inform the CB immediately if there is a projected overproduction. Complies – the company has a mechanism for advising the CB of production variations, which are monitored internally, using information from the Monthly Production Reports. For example, Document “SOP04-Traceability, Revision #2, 01 May 2012”.

3 Record keeping 3.1 The facility shall maintain accurate, complete, up-to-date and accessible records and reports covering all aspects of

these requirements. Complies – All records were available and inspection of a sample confirmed these were up to date and accurate.

3.2 Retention times for all records and reports shall be at least five (5) years. Complies – Records are archived and stored for 3 years in accordance with ISO 9001 QMS and > 5 years for RSPO Supply Chain.

3.3 a) The facility shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO, PKO and palm kernel meal on a three-monthly basis. Complies – these are updated monthly and reported to Head Office on the Monthly Production Report.

b) All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system according to conversion ratios stated by RSPO. Complies, the volumes are updated daily and summarised monthly.

c) The facility can only deliver Segregation sales from a positive stock. However, a facility is allowed to sell short. Complies –Sales of certified products did not exceed the Certified CPO or PK volumes during the 2011/12 year. Company policy is to only make sales of stocks of palm product held in storage.

3.4 The following trade names should be used and specified in relevant documents, e.g. purchase and sales contracts, e.g. *product name*/SG or Segregated. The supply chain model used should be clearly indicated. Complies – The company uses the prefix SG on the Product Code, for example Contract #1273/HIN/2012 includes the Commodity Code “SG”.

4. Sales and good out 4.1 The facility shall ensure that all sales invoices issued for RSPO certified products delivered include the following

information: a) The name and address of the buyer; Complies- included on invoice. b) The date on which the invoice was issued; Complies c) A description of the product, including the applicable supply chain model (Segregated or Mass Balance); Complies

uses the Commodity Code “SG” d) The quantity of the products delivered; Complies e) Reference to related transport documentation. Complies – Dispatches include details of the transport vehicle/vessel

and shipper. The information requirements are listed in “SOP04-Traceability, Revision #2, 01 May 2012”.

5 Training 5.1 The facility shall provide the training for all staff as required to implement the requirements of the Supply Chain

Certification Systems. Complies – The company maintains records of training. Interviews of Mill Staff confirmed knowledge of the Supply Chain requirements. The Sales Manager was able to demonstrate knowledge and use of eTrace for tracking sales of products.

6 Claims

6.1 The facility shall only make claims regarding the use of, or support of, RSPO certified oil palm products that are in compliance with the RSPO Rules for Communications and Claims. Complies – To the best of the Assessor’s knowledge, the company has not made claims outside of the RSPO rules for Communications and Claims.

Appendix “B”

ASA4 Programme

RSPO Annual Surveillance Assessment (ASA4) – PT Hindoli Mills, Supply Bases and Scheme Smallholders ASA4 PROGRAMME


DATE TIME ACTIVITY CR RR DE IN

Saturday December 01

AM

PM

Inspect smallholder blocks KUD #1 Jaya Usaha Mandiri (17 blocks) and interview owners/harvesters

Document Review KUD #1 Jaya Usaha Mandiri

√

√

Sunday December 02

Inspect smallholder blocks KUD Tani Maju (7 blocks) and interview

owners/harvesters

Interim Assessment Document Review KUD Tani Maju

√

√

Monday December 03 Team 1 SUNGAI LILIN MILL

AM

Combined Opening Meeting (Mill and Estates) Inspect Mill including Effluent Ponds, Stores, Workshop, Landfill,

Land Application Interview Male Workers Review Pay Documentation Interview Female Office Staff/Workers Interview Contractors/External Stakeholders

√ √

√

√

√

√ √

√ √

√ √ √ √

√

PM

Document Review including Supply Chain Visit Clinic Interview Staff Inspect Housing and Interview Residents Closing Briefing

√

√

√ √ √

√ √ √

Team 2 SUNGAI PELEPAH ESTATE AM

Inspect Estate and Work Tasks (Harvesting, Spraying, Upkeep, Fertiliser Application), Inspect Riparian Buffer Zones and Conservation Areas, Landfill, Stores, Workshop

Interview Male Fieldworkers Interview Contractors/External Stakeholders

√ √ √ √ √

PM Visit Local Communities Document Review Closing Briefing

√ √ √

Tuesday December 04 MUKUT ESTATE

AM

Opening Briefing Inspect Estates and Work Tasks (Harvesting, Spraying, Upkeep,

Fertiliser Application), Inspect Riparian Buffer Zones and Conservation Areas, Landfill, Stores, Workshop

Interview Fieldworkers Review Pay Documentation Interview Female Office Staff/Workers Interview Contractors/External Stakeholders

√ √

√

√

√ √ √

√

√ √ √ √

√ √

√

√

PM

Document Review Visit Local Communities Visit Clinic Interview Staff Inspect Housing and Interview Residents Closing Briefing

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ASA4 PROGRAMME 01 – 07 DECEMBER 2012

RSPO Annual Surveillance Assessment (ASA4) – PT Hindoli Mills, Supply Bases and Scheme Smallholders ASA4 PROGRAMME


DATE TIME ACTIVITY CR RR DE IN

Wednesday December 05 Team 1 TANJUNG DALAM MILL

AM

Opening Briefing Inspect Mill including Effluent Ponds, Stores, Workshop, Landfill,

Land Application Interview Male Workers Interview Contractors/External Stakeholders Interview Female Office Staff/Workers Review Pay Documentation

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PM Document Review including Supply Chain Visit Clinic Interview Staff Inspect Housing and Interview Residents

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Team 2 TANJUNG DALAM ESTATE

AM

Opening Briefing Inspect Estate and Work Tasks (Harvesting, Spraying, Upkeep,

Fertiliser Application), Riparian Buffer Zones and Conservation Areas

Interview Fieldworkers Inspect Stores, Workshop, Landfill Interview Contractors/External Stakeholders Contact Government Departments, NGOs, etc

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PM

Documentation Review Visit Local Communities Closing Briefing

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Thursday December 06 Smallholders

AM

Inspect smallholder blocks KUD #2 Tunas Mekar Inti (25 blocks)

and interview owners/harvesters Document Review KUD #2 Tunas Mekar Inti Inspect smallholder blocks KUD #3 Suka Rezeki (25 Blocks) and

interview owners/harvesters Document Review KUD #3 Suka Rejeki

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Friday December 07 Smallholders

AM

PM

Inspect smallholder blocks KUD #4 Tani Mandiri Jaya (12 blocks) and interview owners/harvesters

Document Review KUD #4 Tani Mandiri Jaya Inspect smallholder blocks KUD #5 Bakti Mulya (16 blocks) and

interview owners/harvesters Document Review KUD #5 Bakti Mulya Follow-up any outstanding data/clarification Collection of Supply Chain information from Sales Manager Prepare Visit Report and Closing Presentation Closing Meeting

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Appendix “C”

Stakeholders Contacted

PUBLIC SUMMARY REPORT (ASA4) STAKEHOLDERS CONTACTED


Stakeholders Contacted

INTERNAL STAKEHOLDERS SUNGAI LILIN Mill 5 Male Workers 1 Female Staff (Mill) 4 Female Staff/Workers (Main Office) Residents at Housing Clinic – Company Doctor 3 Female Guesthouse Workers

Mukut Estate 6 Palm Nursery Workers (Male and Female) 10 Fertiliser Applicators 4 Female Staff/Workers Clinic (Doctor, Female Paramedic & Female

Assistant) Residents at Housing

Sungai Pelepah Estate 4 Harvesters Clinic Paramedic Residents at housing

TANJUNG DALAM Mill 5 Male Workers 2 Female Staff/Workers Clinic Paramedic and Assistant

Tanjung Dalam/Sri Gunung Estate 6 Harvesters Residents at Housing (Mill and Estate)

EXTERNAL STAKEHOLDERS Contractors 2 General Contractors 1 FFB Transport Contractor 3 General Equipment Suppliers Scheme Smallholders Jaya Usaha Mandiri KUD Office Staff and Workers Jaya Usaha Mandiri KUD 17 Owners/Harvesters/

Sprayer Gang Tunas Mekar Inti KUD Office Staff and Workers Tunas Mekar Inti KUD 25 Owners/Harvesters/

Sprayer Gang Suka Rezeki KUD Office Staff and Workers Suka Rezeki KUD 25 Owners/Harvesters Tani Mandiri Jaya KUD Office Staff and Workers Tani Mandiri Jaya KUD 12 Owners/ Harvesters Bakti Mulya KUD Office Staff and Workers Bakti Mulya KUD 16 Owners/Harvesters

Independent Smallholder Tani Maju KUD Office Staff and Workers Tani Maju KUD 7 Owners/Harvesters

Local Community C-4 Pecahan KK Village Head and

Residents Penuguan Village (Dusun 1) Dusun

Residents Penuguan Village (Dusun 2) Residents Penuguan Village (Dusun 3) Residents Mukut Village Residents Kampung Dawas Residents

Government Departments Agriculture Office, MUBA Labour Office, MUBA Cooperative Office, MUBA BPN MUBA District Agriculture and Forestry Office NGOs and Others Labour Union (SPSI) (Serikat Pekerja

Seluruh Indonesia) - Banyuasin Walhi – South Sumatra

pt hindoli and scheme · pdf filept hindoli and scheme smallholders ... level 8, block b, pj8...

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