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Roundtable on Sustainable Palm Oil

Public Summary Report Report no.: 096704

Certification assessment against the

RSPO Principles & Criteria [NI Indonesia year 2008]

PT Bakrie Sumatera Plantation Sumut I Kisaran Unit

Report prepared by: Dian S. Soeminta

Malaysian office: TUV Rheinland Malaysia Sdn. Bhd. No. 26 – 32, Jalan Perindustrian USJ 1/6, Taman Perindustrian USJ 1, 47600 Subang Jaya, Selangor Darul Ehsan, Malaysia. Tel: +6 03 8024 2400 Fax: +6 03 8023 1505 www.tuv.com

Indonesian office: PT TÜV International Indonesia Menara Karya 10th Floor Jl. H.R. Rasuna Said Block X-5 Kav 1-2 Jakarta 12950 Tel : +62 (0)21 – 579 44 579 Fax : +62 (0)21 – 579 44 575 www.tuv.com

TABLE OF CONTENTS

1.0 SCOPE OF CERTIFICATION ASSESSMENT....................................................... 3

1.1 National Interpretation Used ........................................................................................................3 1.2 Type of Assessment ....................................................................................................................3 1.3 Location and Maps ......................................................................................................................3 1.4 Description of Supply Base..........................................................................................................6 1.5 Dates of Plantings and Replanting Cycles ...................................................................................7 1.6 Other Achievements and Certifications Held ...............................................................................7 1.7 Organisational Information / Contact Person ...............................................................................8 1.8 Description of Company History and Environment ......................................................................9 1.9 Time Bound Plan for Other Management Units and Justifications.............................................11 1.10 Area of Plantation ....................................................................................................................12 1.11 Approximate Tonnages Certified .............................................................................................12 1.12 Recommendation for Certification............................................................................................12 1.13 Date of Certificate Issued and Scope of Certificate .................................................................13 2.0 ASSESSMENT PROCESS .................................................................................. 13

2.1 Certification Body.......................................................................................................................13 2.2 Qualifications of Lead Assessor and Assessment Team ...........................................................13 2.3 Assessment Methodology..........................................................................................................15 2.4 Stakeholder Consultation and Stakeholders Contacted.............................................................17 2.5 Date of Next Surveillance Visit...................................................................................................18 3.0 ASSESSMENT FINDINGS................................................................................... 18

3.1 Summary of Findings.................................................................................................................18 3.2 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions..................32 3.3 Noteworthy Positive Components..............................................................................................42 3.4 Issues Raised by Stakeholders and Findings Pertaining to Issues............................................43 3.5 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client............................47 APPENDICES ............................................................................................................ 48

Appendix 1: Details of Certificate.....................................................................................................48 Appendix 2: Certification Audit Plan.................................................................................................48 Appendix 3: List of Abbreviations (with Translations) ......................................................................51 Appendix 4: List of Stakeholders Consulted ....................................................................................53 Appendix 5: Socio-economic Background of Local Communities ...................................................54

RSPO Certification Assessment Report

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1.0 SCOPE OF CERTIFICATION ASSESSMENT 1.1 National Interpretation Used

The operations of the palm oil mill(s) and its supply base of FFB were assessed against the National Interpreta-tion Indonesia year 2008 of the RSPO Principles & Criteria.

1.2 Type of Assessment

The main certification assessment was carried out on 1(one) mill and 5 (five) estates owned under the Sumut I Kisaran Unit of PT Bakrie Sumatera Plantation Tbk (PT BSP). PT BSP is the plantation sector of Bakrie Group, a large private company in Indonesia.

1.3 Location and Maps Maps showing the location of the plantations and mills in North Sumatera:

Figure 1: Location map of North Sumatera within South-East Asia

North Sumatera



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Figure 2: Location map of PT BSP Kisaran Unit within the Asahan and Batu Bara Districts

Asahan District

Batu Bara District



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b

Figure 3: Map of PT BSP Kisaran Unit, North Sumatera with map legend

SEI BALEH ESTATE

TANAH RAJA ESTATE

SERBANGAN ESTATE

GURACH BATU ESTATE

KUALA PIASA ESTATE

Kisaran Palm Oil Mill

Main Office



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Table 1: GIS locations for all PT Bakrie Sumatera Plantation’s Estates and Palm Oil Mill.

1.4 Description of Supply Base Kisaran Mill is owned by PT Bakrie Sumatera Plantation Tbk. (PT BSP), and is located at Kisaran, Asahan Dis-trict, North Sumatra. Kisaran Mill was established in 2007, based on the government directives ‘Keputusan BKPM No. 257/T/Pertanian/Industri/1989’ (BKPM Directive No. 257/T/Agriculture/Industry/1989) and ‘Kepu-tusan BKPM No. 1293/T/Industri/2008’ (BKPM Directive No. 1293/T/Industry/2008). Currently Kisaran Mill re-ceives FFB supply from 5 estates owned by PT BSP, which are Serbangan Estate, Kuala Piasa Estate, Tanah Raja Estate, Sei Baleh Estate, and Gurach Batu Estate. Kisaran Mill does not receive supplies of FFB from outgrowers or other suppliers.

Table 2: FFB Supply Information to PT BSP Kisaran Unit for year 2008

FFB supplied FFB Contributors

Tonnes %

Company owned estates:

Tanah Raja 25,571.160 15.98

Gurach Batu 12,450.560 7.78

Kuala Piasa 53,577.245 33.45

Serbangan Estate 33,014.170 20.62

Sei Baleh 35,478.500 22.17

Smallholders / outgrowers: 0 0

TOTAL 160,091.64 100

GPS locations Name of mill /

estate Location Latitude Longtitude

Main office Jl. Ir. H. Juanda, Kisaran 21202, Asahan District, North Sumatera, Indonesia

02º59’04.6” 099º38’12.1”

Bunut Palm Oil Mill

Sei Baleh Village, Sei Baleh Sub-district, Batu Bara District, Sumut.

03º02’26.7” 099º34’53.2”

Tanah Raja Sei Renggas Village, West Kisaran Sub-district , Asahan District, Sumut.

02º57’50.0” 099º35’57.7”

Gurach Batu Gerak Tani Village, Meranti Sub-district, Asahan District, Sumut.

3°20’45.0” 99° 58’23.4”

Kuala Piasa Tinggi Raja Village, Tinggi Raja Sub-district, Asahan District, Sumut

02º54’04.2” 099º34’00.2”

Serbangan Rawang Lama Village, Panca Arga Sub-district, Asahan District, Sumut.

03º01’29.8” 099º39’30.3”

Sei Baleh Sei Baleh Village, Sei Baleh Sub-district, Batu Bara District, Sumut.

03º04’12.1” 099º35’11.0”



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1.5 Dates of Plantings and Replanting Cycles Several areas of the estates supplying to Kisaran Mill were planted with oil palm more than 20 to 25 years ago, and several areas are undergoing replanting (second cycle, one cycle is 25 years). The age profile of the es-tates supplying to PT BSP Kisaran Mill are as Table 3 below. Table 3: Age and year of plantings of PT BSP oil palm estates supplying to Kisaran Mill

Oil palm planted area (ha) Age & Year of Plantings

Tanah Raja Gurach Batu Kuala Piasa Serbangan Sei Baleh

0 – 5 yrs (2004 – 2009) 554 246 122 207 406

5-10 yrs (1999 – 2004) 333 30 97 148 382

10-15 yrs (1994 – 1999) 223 407 1852 889 905

15-20 yrs (1989 – 1994) 47 45 57 124 123

20-25 yrs (1984 – 1989) 0 0 0 0 0

TOTAL 1,157 728 2,128 1,368 1,816

Source: Company Letter No. 87/AD/5/2009 issued May 7, 2009 regarding Status Report of Planted Area (Ha) April 2009 (1-30 April 2009)

Table 4: Planned and actual oil palm replanting activities for PT Bakrie Sumatera Plantation Tbk- Kis-aran Unit

Total planned replanting area for each estate (ha) Year

Total planned re-

planting area (ha)

Tanah Raja

Gurach Batu

Kuala Piasa Serbangan Sei

Baleh

Actual total area replanted

(ha)

2008 562 256 71 - 130 105 439 2009 1097 342 197 - 250 308 1013 2010 1278 414 159 - 432 273 - 2011 750 408 88 - 203 51 - 2012 - - - - - - -

Source: PT BSP Kisaran Unit’s Area Statement for May 2009

1.6 Other Achievements and Certifications Held

Table 5: Details of other certifications or awards held by PT BSP Kisaran Unit. Name of mill /

estate Certification Standard

/ Award achieved Certification Body /

Awarder Date Achieved

ISO 9001:2000, ISO 14001:2004, OSHAS 18001:2007, SMK3

TUV Rheinland ISO 9001 since 2009 ISO 14001 since 2007 OSHAS since 2007

Bunut Palm Oil Mill

SMK3 Sucofindo 2008

ISO 9001:2000, ISO 14001:2004, OSHAS 18001:2007, SMK3


Tanah Raja Estate

SMK3 Sucofindo 2008

ISO 9001:2000, ISO 14001:2004, OSHAS 18001:2007, SMK3


Gurach Batu Estate

SMK3 Sucofindo 2008



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Name of mill / estate

Certification Standard / Award achieved

Certification Body / Awarder Date Achieved

ISO 9001:2000, ISO 14001:2004, OSHAS 18001:2007, SMK3


Kuala Piasa Estate

SMK3 Sucofindo 2008

ISO 9001:2000, ISO 14001:2004, OSHAS 18001:2007, SMK3


Serbangan Estate

SMK3 Sucofindo 2008

ISO 9001:2000, ISO 14001:2004, OSHAS 18001:2007, SMK3

TUV Rheinland ISO 9001 since 1996 ISO 14001 since 2005 OSHAS since 2007 Sei Baleh Estate

SMK3 Sucofindo 2008

Note: SMK3 (System Manajamen Kesehatan dan Keselamatan Kerja) is an Occupational Safety and Health Management System required under Indonesian national regulation.

1.7 Organisational Information / Contact Person Contacts details of the company are as follows:

Company Name: PT Bakrie Sumatera Plantation, SUMUT I, Kisaran Unit

Jl. Ir. H. Juanda, Kisaran 21202, Asahan District, North Sumatera, Indone-sia

Address:

Sei Baleh Village, Sei Baleh Sub-District, Batu Bara District

Contact Person: Mr. Efdy Ruzaly

Telephone: +62-623- 41434, +62-623-348614 ; Fax : +62-623-41066

Email: [email protected]

Legal permits 1. HGU No. 66.HGU/DA/85/B/151 with area of 18,556.01 Ha, valid from 13 November 1996 for 25 years.

2. HGU No. 020.HGU/1991 with area of 2,714 Ha valid from 7 De-cember 1991 until 31 December 2020.

3. HGU No. 026/HGU/BPN/1999 with area of 952 ha valid since 19 March 1999 for 35 years.

4. Government directives: ‘Keputusan BKPM No. 257/T/Pertanian/Industri/1989’ and ‘Keputusan BKPM No. 1293/T/Industri/2008’ regarding Capital Investment within the State (‘Penanaman Modal Dalam Negeri’).

mailto:[email protected]�



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1.8 Description of Company History and Environment 1.8.1 Company’s History PT Bakrie Sumatera Plantation’s Kisaran Unit is one of the oil palm plantations under PT Bakrie Sumatera Plantation Tbk. (PT BSP). PT BSP is a holding of Bakrie Group, a large national private company in Indonesia which runs several other types of businesses including coal, oil and gas, telecommunications, property, metal, and infrastructure. PT Bakrie Sumatera Plantation Tbk. is the only oil palm plantation business sector under Bakrie Group, and PT BSP runs 6 other plantations in the Sumatera and Kalimantan Islands as listed in the time bound plan for RSPO certification described in Section 1.9 below. The name of PT Bakrie Sumatera Plan-tation Tbk. has changed several times, following changes of the ownership. The company was founded in 1911 by NV. Hollandsch Amerikanse Plantage Maatschappij (NV.HAPM) which was originally a tobacco plantation. But due to increase in demand for other commodities such as rubber and palm oil, gradually the area was con-verted to rubber and palm oil plantations. In 1957, the company was taken over by Uniroyal Inc., and the name was changed to United States Rubber Sumatera Plantation. In 1970 the name changed again to PT Uniroyal Sumatera Plantation and obtained the status of a foreign investment company (Perusahaan Modal Asing - PMA) with ownership remaining under Uni-royal Inc. In 1986, Bakrie Group took over ownership of the company and the company name was changed to PT. United Sumatera Plantations. The company obtained a business license from the Capital Investment Coordination Body (‘Badan Koordinasi Penanaman Modal’) No. 257/5/pertanian/industri/1989. This change resulted in an expansion of Bakrie Group’s business into plantation business, making it one of the main actors in the agribusi-ness sector in Indonesia. By the end of 1989, the company had obtained permission to offer 30% of its share to the public on the Jakarta Stock Exchange (Bursa Efek Jakarta - BEJ) and Surabaya (Bursa Efek Surabaya - BES). The company name was changed again to PT Bakrie Sumatera Plantation Tbk, having received approval of the change of name from the plantation directorate in letter no. HK.350/E.4.877/11.93 dated 11 November 1993. The article of association of the company was first published in the state Gazette of the Republic of Indonesia No. 14 dated February 18, 1941, Supplement No. 101. The article of the company was amended several times, the most recent being the notarial deed No. 2 of Aulia Taufani, S.H dated October 31, 2007 to increase the au-thorized capital stock from 4.144 billion share to 15 billion share. The changes are still in the approval process from the Ministry of Justice and Human Rights. The land area covered by PT BSP Kisaran Unit’s palm oil estates is located in several different sub-districts of the Asahan and Batu Bara Districts, as follows: 1. Meranti Sub-District, (Asahan District) 2. East Kisaran Sub-District, (Asahan District) 3. West Kisaran Sub-District (Asahan District) 4. Rawang Panca Arga Sub-District (Asahan District) 5. Pulau Bandring Sub-District (Asahan District) 6. Air Joman Sub-District (Asahan District) 7. Sei Baleh Sub-District (Batu Bara District) PT BSP Kisaran Unit can be reached by land from Medan city to Kisaran town. Travel time is 3-4 hours through the Eastern Sumatra highway. PT BSP Kisaran Unit currently operates on three extended Land Cultivation Rights Titles (Hak Guna Usaha – HGU): 1. HGU No. 66.HGU/DA/85/B/151 with total area of 18,556.01 ha valid since 13 November 1996 for 25 years 2. HGU No. 020.HGU/1991 with total area of 2,714 ha valid since December 7, 1991 until 31 December 2020. 3. HGU No. 026/HGU/BPN/1999 with area of 952 ha valid since March 19, 1999 for 35 years The total area of the 3 HGUs above is 22,222,01.ha, of which 49 ha is dedicated as land for the local govern-ment office and excluded from management by the company. As such, the plantation land area under man-agement of PT BSP Kisaran Unit totals 22,173 ha. Out of this, the area of 18,556.01 ha under HGU No. 66.HGU/DA/85/B/151 includes the area of a seed garden and 5 estates, i.e. Serbangan Estate, Tanah Raja Estate, Gurach Batu Estate, Kuala Piasa Estate, Gurach Batu Estate, Serbangan Estate, Sei Baleh Estate, while the area of 2,714 ha and 952 ha under the remaining two HGUs makes up the area of Aek Salabat Estate. Initially, all these areas of PT BSP Kisaran Unit consisted of rubber estates, but since the company obtained a government decree of approval for expansion of business (letter no. 222/II/PMDN/1997), the company began converting their rubber estates into oil palm estates, except Aek Salabat estate. Therefore, out of the 6 rubber estates, only 5 estates were converted to palm oil estates, while only Aek Salabat estate remains as a rubber



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plantation. As such, Aek Salabat estate is not included in this RSPO certification assessment scope. This con-version was based on the company’s need to diversify its business. The 5 estates which PT BSP Kisaran Unit has one palm oil mill located within Sei Baleh estate, Kisaran. It was founded in the year 2007 upon a decree from the Capital Investment Coordination Board (Badan Koordinasi Penanaman Modal - BKPM), decree decision No. 257/T/Pertanian/Industri/1989 and BKPM No. 1293/T/Industri/2008 on Domestic Investment with permitted capacity of 41.7 tons per hour. PT BSP became a member of RSPO in May 2007. As a member of the RSPO, the company’s management has made a commitment to comply to all RSPO Principles and Criteria in all the company’s operations and ac-tivities. During the certification assessment, there was evidence of a considerable effort made by the staff in the preparation of manuals, standard operating procedures and reports, not only to comply with the RSPO re-quirements, but also for continuous improvement of the company in terms of effectiveness and efficiency.

1.8.2 Description of Estate Environmental Parameters

Table 6: Summary of Environmental Parameters of PT BSP Kisaran Unit Oil Palm Estates Estate Parameter Tanah Raja Gurach Batu Kuala Piasa Serbangan Sei Baleh

Hydrology/ River Basin Asahan, Merbau Merbau Asahan Asahan,

Merbau Merbau

Total Area 4,199 Ha 3,580 Ha 2,655 Ha 3,704 Ha 3,975 Ha Topography Flat Undulating

(hilly) Undulating (hilly) Flat Flat

Soil type Aluvial Hidromorphic (sandy clay)

Yellowish – Red Podsolic

(sandy clay)

Organosol (sandy clay)

Brown – Grey Clay Regosol

Brown – Grey Clay Regosol

Soil type Based on USDA classification, the oil palm estates of PT BSP Kisaran Unit consists of several types of soils, which are classified as alluvial soils, organosols, regosols and podzols. These groups of soil types are consid-ered to be mature and fertile soils. The overall soil distribution and USDA classification of soil at each estate out of the total land area of the company can be seen in the following table: Table 7: Soil Distribution and USDA Classification at PT BSP Kisaran Unit Oil Palm Estates

Estate Soil Group (USDA) Soil Order Total Area (Ha)

% of estate area

Tanah Raja Dystrandepts,Eutrandepts, Hydrandepts Inceptisols 4631.696 98.29 Tanah Raja Dystropepts, Dystrandepts,

Haplorthox Inceptisols Oxisols

34.282 0.73

Tanah Raja Tropaquepts, Eutropepts Tropofluvents

Inceptisols Entisols

46.218 0.98

Gurach Batu Dystrandepts,Eutrandepts, Hydrandepts Inceptisols 3881.835 92.51 Gurach Batu Dystropepts,Dystrandepts


314.368 7.49

Kuala Piasa Dystropepts,Dystrandepts Tropudults

Inceptisols Ultisols

447.133 15.63

Kuala Piasa Dystropepts,Dystrandepts Haplorthox

Inceptisols Oxisols

1994.799 69.74

Kuala Piasa Tropaquepts, Eutropepts Tropofluvents,

Inceptisols Entisols

418.363 14.63

Serbangan Dystrandepts,Eutrandepts, Hydrandepts Inceptisols 4200.049 100.00 Sei Baleh Dystrandepts,Eutrandepts, Hydrandepts Inceptisols 4140.615 98.52 Sei Baleh Dystropepts,Dystrandepts


62.165 1.48

Source: AMDAL document dated 28 February 1994



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Note: Total area according to this table is 20,173.52 ha, which is more than the current land area of the 5 estates (18,556 ha). This is because the HGU area owned by company in 1994 was more than their current HGU area, and since then some of the area was allocated to the local government, and therefore is no longer under management of the company. Topography and Physiography Estate land located in the Serbangan, Sei Baleh and Tanah Raja estates generally consist of flat areas. Gurach Batu and Kuala Piasa estate land mainly consist of hilly areas as shown in the following table: Table 8: Slope Classification Table for PT BSP Kisaran Unit Oil Palm Estates

Estate Slope (%) Area (ha) Percentage of total area (%) Tanah Raja 0-8 4371.581 21.67 Gurach Batu 0-8 3881.835 19.24 Gurach Batu 8-15 314.368 1.56 Kuala Piasa 0-8 418.363 2.07 Kuala Piasa 8-15 1994.799 9.89 Kuala Piasa 25-40 447.133 2.22 Serbangan 0-8 4200.049 20.82 Sei Baleh 0-8 4140.615 20.53 Sei Baleh 8-15 402.780 1.99

Source: AMDAL document dated 28 February 1994 Hydrology In overall there are two major watersheds in PT BSP Kisaran Unit estates, which are the Asahan watershed and Merbau watershed. The main rivers running through five BSP estates into the two main watersheds are Si-lai River, Baleh River, and Bunut River. The estates in which the river tributaries flow through and the area in-cluded in each watershed are as follows: Table 9: Watersheds of PT BSP Kisaran Unit and estates with river flow.

Name of Watershed Estate Watershed Area (ha) Kuala Piasa 2860.298 Serbangan 2485.937

Asahan Watershed

Tanah Raja 1157.412 Gurach Batu 4196.204

Sei Baleh 4202.780 Serbangan 1714.109

Merbau Watershed

Tanah Raja 3554.785 Source: AMDAL document dated 28 February 1994

1.9 Time Bound Plan for Other Management Units and Justifications The time frame laid out below is considered to be both challenging and realistic. The company will be using the experience of this main assessment to ensure that the other management units conform to the RSPO Princi-ples & Criteria.The audit team is satisfied that the company conforms with the RSPO requirements for partial certification as laid out in the Final Certification System document. Table 10: Time bound plan for RSPO certification of PT BSP management units

Name of Holding Location Time bound plan for certification

PT BSP Kisaran Kisaran, North Sumatera 2009 Agrowiyana Jambi 2010

Bakrie Pasaman Plantation Pasaman, West Sumatera 2011 ARBV South Sumatera 2012

Graha Dura Leidong Prima North Sumatera 2013 Guntung Idaman Nusa Riau 2014

Indogreen Kalteng 2015



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1.10 Area of Plantation The land area of estates under PT BSP Kisaran Unit are used for plantings of both rubber and oil palm. De-tailed information on the land use of PT BSP Kisaran Unit, as well as oil palm planted area summary, FFB production and average yield are provided in the following tables:

Table 11: Land use data for PT BSP Kisaran Unit

Land used for other purposes (ha)

Estate Name Total area (ha)

Rubber Planted

Area (ha)

Oil Palm

Planted Area (ha)

HCV/ Potential

HCV areas*

(ha)

Local Government

office Nursery Cleared

Area Other Land

Tanah Raja 4,199 (+ 49)** 2,370 1,157 3.5/ 45.73 49 - 330 342

Gurach Batu 3,580 2,714 728 0/ 66.48 - 6 28 104

Kuala Piasa 2,655 450 2,128 6.31/ 343.13 - - - 77

Serbangan 3,704 1,947 1,368 0.2/ 44 - - 265 124 Sei Baleh 3,975 1,869 1,816 1.5/ 131.16 - 29 139 122 Seed garden 394 - 394 - Total *** 18556 Source: Land status data for estates listed, dated May 2009 * HCV areas and potential HCV areas are included in the estate areas ** 49 hectares are used for the local government office and have been excluded from the company’s operation area *** Data from Land Cultivation Rights Title (Hak Guna Usaha – HGU) No. 66.HGU/DA/85/B/151

Table 12: Oil Palm Planted Area Summary, FFB Production and Average yield/ha for PT BSP Kisaran Unit Oil Palm Estates

Estate Name Total area (ha)

Oil Palm Planted area

(ha)

Mature (Production)

area (ha)

Immature (Non-production)

area (ha)

FFB Production*

(tonnes)

Average yield/ ha

Tanah Raja 4,199 1,157 889 268 7,076,370 7,898 Gurach Batu 3,580 728 482 246 3,435,660 7,128 Kuala Piasa 2,655 2,128 2,128 0 12,810,295 5,709 Serbangan 3,704 1,368 1,161 207 8,974,470 7,730 Sei Baleh 3,975 1,816 1,571 245 9,816,020 6,232 TOTAL 18,113 7,197 6,231 966 - -

Source: Letter No. 87/AD/5/2009 issued May 7, 2009 regarding Report of Planted Area (Hectares) April 2009 status (1-30 April 2009 period)

1.11 Approximate Tonnages Certified

The approximate tonnages certified, based on average annual output, are as follows: Crude Palm Oil (CPO): 36,438 tonnes Palm Kernel (PK) : 7,436 tonnes

1.12 Recommendation for Certification PT Bakrie Sumatera Tbk. Kisaran Unit has established and maintains an effective system to ensure compli-ance with the RSPO principles and criteria. The audit team has confirmed through the audit process that the company’s practices complies with, adequately maintains and implements the requirements of RSPO Princi-ples and Criteria National Intrepretation Indonesia version 2008. As such, TUV Rheinland Malaysia recommends that PT Bakrie Sumatera Tbk. Kisaran Unit be approved as a producer of RSPO Certified Sustainable Palm Oil.



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1.13 Date of Certificate Issued and Scope of Certificate

The scope of the certificate covers production of palm oil from PT Bakrie Sumatera Plantation Tbk. - Kisaran Palm Oil Mill and its supply base, which includes Serbangan estate, Sei Baleh estate, Gurach Batu estate, Tanah Raja Estate, and Kuala Piasa Estate.

The date of certificate is 14 June 2010 and is valid until 13 June 2015. Further details of the certificate are to be included in Appendix 1.

2.0 ASSESSMENT PROCESS 2.1 Certification Body

TUV Rheinland Malaysia Sdn. Bhd. is a member of Group TÜV Rheinland Group, a global leader in independent testing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 360 locations in 62 countries on all five continents. TUV Rheinland Malaysia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, SA 8000, as well as CDM Project Validation and Verification. TUV Rheinland Malaysia’s office is located in Subang Jaya, Selangor, Malaysia.

2.2 Qualifications of Lead Assessor and Assessment Team

Name Position Qualifications / Experience

Dian S. Soeminta

Lead Auditor

Education: Bachelors Degree in Forestry - Bogor Agriculture Institute. Indonesia, (1990 to 1995). Trainings attended: ISO 9001:2000 lead assessor course 1996 - Neville Clark; ISO 14001 lead assessor course - PE International; OSHAS: 2007 training, Sustainable Forest Management (SFM) - Forest Stewardship Council (FSC) system training; Chain of Custody training for FSC System. Working experience: Professional forester since 1995 to 2000. Lead Auditor for Forest Stewardship Council (FSC), Sustainable Forest Certification (SFC) and Chain of Custody (COC) Certification, Lead auditor for Environmental Management System (EMS) and Quality Management System (QMS) audits. Conducted sustainable forest management certification audits on FSC and Indonesian Ecolabel Institute (Lembaga Ecolabel Indonesia - LEI) standards for 20 companies, 50 COC FSC/LEI audits, and EMS and QMS audits at more than hundred companies for TUV Rheinland Indonesia. Instrumental in the preparation of TUV Rheinland Indonesia for Sustainable Forest Management Certification System and TUV Rheinland Malaysia for RSPO Certification. Member of Task Force for Indonesian National Interpretation (Guidance on scheme smallholder RSPO certification). Developed TUV Rheinland RSPO Gap Assessment Checklist and report template.

Susetiya-ningsih Auditor

Education: Bachelor of Agriculture Social Economics – Universitas Pem-bangunan Nasional (UPN) ‘Veteran’ Yogyakarta (1986); Master of Science in Natural Resources and Environmental Management - Bogor Agriculture Insti-tute Indonesia (1992); Faculty of Forestry & Environmental Science - Albert Ludwig University of Freiburg Germany, (2003). Trainings attended: Community Development and Participatory Forest Management trainings conducted in Nepal, India and Thailand; Gender, Ag-riculture and Leadership training - Wageningen University Netherland; EIA (Environmental Impact Assessment) training - Anutech Australian National University Canberra; Forestry, Market and Society summer school - Albert Ludwig University of Freiburg; ISO 9001:2000 and ISO 9001:2008 training - TUV Rheinland, HCVF (High Conservation Value Forest) Auditor training; CoC and SFM FSC system training. Working experience: Field work experience in social and environmental is-sues for more than 18 years. 15 years experience in forestry and plantation social issues, conducting audits and assessments for social accountability



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certification systems and management systems, as well as conducting or fa-cilitating trainings on management of social issues. Experienced in conduct-ing assessments for forestry and palm oil companies for compliance to WWF Indonesian PFTN (Producers Forest and Trade Network) standard, FSC standard and RSPO standards respectively. Active in the Working Group for PAN-ASEAN Timber Certification Initiative in Philippine, Thailand, Vietnam, Myanmar and Brunei. Member of Forest Stewardship Council (FSC) Interna-tional organization based in Bonn Germany since 2005.

Fadli Auditor

Education: Bachelor of Anthropology, Department of Anthropology - Univer-sity of Indonesia, Jakarta. Trainings attended: Sustainable Natural Production Forest Management (Pengelolaan Hutan Alam Produksi Lestari - PHAPL) assessor training (May 2003); Forest Plantation Management (August 2003) training - Indonesian Ecolabel Institute (LEI), Forest Management and Agriculture Auditor Train-ing; ISO 9001:2008, ISO 14000:2004, OHSAS 18001:2007 trainings - Smartwood/Rainforest Alliance; SA8000 training - SA International; RSPO Lead Auditor Training -Indonesian Palm Oil Commissions. Working experience: Experienced as lecturer for D3 Tourism program, Uni-versity of Indonesia. Social Aspect Auditor of PT. TUV International Indone-sia for Sustainable Forest Management and RSPO Principles & Criteria. Re-searcher of Stakeholder Mapping With CSR Indonesia.

Agus Salim Alfat Auditor

Education: Bachelor Degree of Chemistry - Bandung Institute of Technol-ogy, Indonesia (1988 to 1993); Master Degree of Quality, Safety and Envi-ronment - Otto Von Geuricke, Magdeburg University, Germany (2001 - 2002). Trainings attended: ISO 9000:2000 Series Auditor / Lead Auditor Training - PE International (Jakarta), IEMA Advanced EMS Auditor (IEMA / EARA ISO 14001) Auditor / Lead Auditor Training Course - PE International (Jakarta), OHSAS 18001 Lead Auditor Training Course - PE International (Jakarta). Working experience: Experienced in Quality Control from 1994-2004. Audi-tor for Quality Management System since 2004 – present. Auditor for Envi-ronmental Management System since 2005 – present. Auditor for OHSAS 18001 since 2007 - present. Conducted over 100 Quality Management Sys-tem audits since 2004, over 50 Environmental Management System audits since 2006 , and over 25 OHSAS audits since 2007

Carol Ng Expert

Education: Bsc. Biotechnology & Bsc. Environmental Management - Monash University. Trainings attended: RSPO Malaysian National Interpretation Requirements and Certification – SIRIM; Implementation of RSPO Principles & Criteria - QA Plus; RSPO Stepwise Support Programme; 2nd Biodiversity Seminar – RSPO; Certification Body Biodiversity Forum & Workshop – RSPO; Envi-ronmental Quality Act 1974 (DOE) and ISO9001:2008 QMS Conversion Re-quirements (TUV Rheinland). Working experience: Experience in implementing sustainable practices in Sime Darby plantations to comply with RSPO requirements, performing RSPO internal audits and implementing sustainability projects. Prepared training materials and conducted several RSPO requirements trainings and workshops to plantation management teams (2008).



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2.3 Assessment Methodology The assessment was carried out in conformance with the procedure as per the RSPO Certification Systems document approved by the RSPO Executive Board on June 2007, and with TUV Rheinland Malaysia’s RSPO certification procedure for the assessor and the certifier. During the assessment, the qualified TUV Rheinland assessors conducted the assessment against the Indonesian National Interpretation (INA-NI) of the RSPO Principles and Criteria (May 08), checked for compliance to the requirements and recorded their findings. Due to the location and proximity of the estates, combined with common management systems and information derived during the gap assessment, it was possible to carry out both field and office assessments of all 5 es-tates within the time frame without compromising the integrity of the assessment in any way. All 5 estates and the 1 mill were visited and the assessment team carried out field and document assessments for compliance for against the RSPO Principles and Criteria INA-NI. Common findings were identified and spe-cific evidence was recorded for individual estates and the mill. Interviews of workers and other stakeholders were conducted at all estates and at the mill. Main Assessment Agenda.

Date Location/ Main sites Main activities

Megasari Hotel, Kis-aran

Stakeholder Meeting Focus Group Discussion

Bakrie Club Kisaran

Opening Meeting. Introduction by team leader. Introduction of team members and assessment agenda

May 25,2009

PT BSP Kisaran Unit Head Office

Document Review of Environmental and Social Aspects Social aspects: EIA, SIA, OSH, communication of company procedures, conflict resolution procedure, procedure of handling complaints, HCV’s, wages, list of stakeholders, list of contractors. Environmental aspects: Environmental management plan, Company’s management plan: Long term plan and replanting plan.

Serbangan Estate Local Communities

Maps of Estate and Land boundaries Worker Interviews: Wages, OSH, sexual harassment, first aid, Housing facili-ties, labour unions, gender issues, communication procedures, handling of com-plaints. Contractor interviews: Legal agreements, payment, contractor worker wages, OSH. Clinic: Medical staff, medical facilities, documentation Chemical stores: Storage, MSDS leaflets, herbicide mixing areas, PPE, ventila-tion, security. Field inspection: Herbicide application programmes, harvesting sites and effi-ciency, fertilizing operations, SOP’s, soil maps, land preparation, ground cover. Housing amenities: Facilities, sanitation, water supply, and other facilities. Environmental aspect: Field check of HCV areas, environmental management plan.

May 26,2009

Tanah Raja Estate & Local Communi-ties (Sei Rengas, Karang An-yer)

Maps of Estate and Land boundaries Chemical stores: Storage, MSDS leaflets, herbicide mixing areas, PPE, ventila-tion, security. Field inspection: Herbicide application programmes, harvesting sites and effi-ciency, fertilizing operations, SOP’s soil maps, land preparation, ground cover. Community interviews: Social impacts, environmental impacts. Interviews with households: Inspection of water discharge points, water im-provement plan, waste disposal, document inspection and assessment. Field Inspections: Land boundaries, land use Riparian Zone: Field check, river width, current and future management, non-maintenance regimes. Water management: Water courses, water monitoring. Road maintenance: Run off Social amenities: Social Impact Assessment, facilities and housing Local contribution. Contributions made, employment opportunities, social im-pacts, complaints procedure.



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Workshops: Oil traps, safe working environment, PPE, diesel tanks, waste management

Kuala Piasa Estate Local Communi-ties (Tinggi Raja, Suka-damai)

Maps of Estate and Land boundaries Clinic: Medical staff, faciities, handling patients Worker interviews: Wages, OSH, first Aid, gender issue, insurance, retired worker. Contractor worker interviews: Wages, OSH, housing facilities, sexual har-assment, complaints resolution mechanism, health care. Riparian zone. Field check, river width, current and future management, non-maintenance regimes, HCV 4.1 Water management: Water courses, water monitoring. Road maintenance: Run off. Social amenities: Social Impact Assessment, facilities and housing Local contribution. Contributions made, employment opportunities, social im-pacts, complaints procedure. Workshops: Oil traps, safe working environment, PPE, diesel tanks, environ-ment waste management HCV areas

May 27,2009

Gurach Batu Estate Local Communi-ties

Document review: Contractor agreement, contractor evaluation, wages, sexual harassment, worker age, gender issue, records of information requests and re-sponses, disputes resolution mechanism. Road maintenance: Run off. Social amenities: Social Impact Assessment, facilities and housing Riparian zone. Field check, river width, current and future management, non-maintenance regimes, HCV 4.1 Field inspection : Drain/waterways

Sei Baleh Estate Local Communities (Lolotan, Perkebunan Sei Baleh)

Contractor interviews: Documentation of workers age, insurance, wages. Contracted worker interviews: Wages, OSH, work equipment, sexual harass-ment, handling complaints Worker interviews: Wages, housing facilities, female handling, female entitle-ment, others. Riparian zone. Field check, river width, current and future management, non-maintenance regimes. Water management: Water courses, water monitoring. Road maintenance: Run off. Social amenities: Social Impact Assessment, facilities and housing Local contribution. Contribution made, employement opportunities, social im-pacts, complaints procedure. Workshops: Oil traps, safe working environment, PPE, diesel tanks, environ-ment waste management

Bunut Palm Oil Mill

Document review: Checks of documents pertaining to all RSPO Principles & Criteria Worker Interviews: Wages, OSH, sexual harassment issues, first aid, housing facilities, labour unions, gender issues, communication & complaints procedures Contractor interviews: Legal agreements, payment, contractor worker wages, OSH. Housing amenities inspection: Facilities, sanitation, water supply, and other facilities. Mill inspection: Mill operations, chemical laboratory, scheduled wastes store, chemical stores, effluent treatment ponds, PPE, environmental management

May 28,2009

PT BSP Kis-aran Unit Head Office

Document review: Compensation mechanism, resolution of conflicts, communi-cation & consultation procedure, management plan, working agreement (PKB), worker unions documents (SPSI, SBSI).

May 29,2009

BSP Sports Club

Closing Meeting



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Agenda for Verification of Closure of Major Non-conformities To verify closure of major non-conformities and some minor non-conformities, a verification audit was con-ducted at the company’s site by two of the audit team members on 23 July 2009. Additional document checks were conducted at the TUV Rheinland office by 2 audit team members on 28 August 2009 to verify documented evidence of corrective actions taken on the remaining minor non-conformities. For these minor non-conformities, on-site assessment of effective implementation of the corrective actions will carried out during the next surveil-lance audit.

Date Location/Main sites Auditor Main activities

23 July 2009

Tinggi Raja Village and Terusan Tengah Village, Kuala Piasa

Estate, PT BSP Kisaran Main Office

Fadli and Agus Salim Alfat

Verification of closure of Major Non-conformities (Field Checks

and Document Checks)

28 August 2009

TUV Rheinland Office Dian S. Soeminta and Fadli

Verification of evidence of correc-tive actions taken on Minor Non-conformities (Document checks)

2.4 Stakeholder Consultation and Stakeholders Contacted

Based on a list of stakeholders prepared by PT BSP, all identified stakeholders of PT BSP Kisaran Unit were invited for written comment and open stakeholder consultation. Stakeholders present at the open stakeholder meeting provided input about the performance of the company through interviews or by filling questionaires. The stakeholders present were selected based on their representation of relevant institutions interested or af-fected by activities carried out at PT BSP Kisaran Unit, such as local organizations (NGO’s, the press, and local communities surounding the estates and mill). For stakeholders who attended the open stakeholder consulta-tion, the participants were invited by invitation letters made by TUV Rheinland that were distributed to the par-ties concerned. During the main assessment, part of the assessment team also visited villages surrounding the 5 estates and the mill which were included on certification scope in order to obtain input and verify all issues raised pertaining to the company during the open stakeholder meeting. PT BSP Kisaran Mill and its supplying estates maintain documented lists of their stakeholders listed by catego-ries, including the name of contact persons, name of organization and address, and relationship to PT BSP. Stakeholder categories include Village Communities, Social Organizations, Worship organizations, Govern-ment Organizations, Non-Government Organizations, Suppliers, Contractors, Buyers, Universities or educa-tional institutions, Labour Unions, Company Labour Cooperations, and Outgrowers. For the RSPO assess-ment, stakeholders representing all categories were invited independently by the auditors to attend the stake-holder consultation held on 25 May 2009 at Kisaran Hotel, Asahan district. The mechanism used to receive in-formation, responses and comments from stakeholders was through providing questionnaires to be filled by stakeholders as well as focus group discussions. A public announcement of the main assessment was also made available at the RSPO website and TUV Rheinland Malaysia website as well. Questions asked during the stakeholder consultation included, but were not limited to, the following:

o Are you aware of the RSPO standard? o Do you have any relationship with the palm oil plantation & mill company? o What kind of relationship is this? o Have you attended stakeholder meetings with the company before? What was the purpose of the

meeting? o How often does the company conduct stakeholder meetings? o Are you aware of the company’s legal boundaries? o Are there any environmental impacts resulting from the company’s activities that affect you? o Are there any social impacts resulting from the company’s activities that affect you? o Are there any conflicts or disputes between you and the company? o Have you had any experience having to resolve the problems through conflict resolution? o Have you had any communication and consultation with stakeholders set up by the company? o Are you aware of any HCV areas within the company’s area? o What are the positive and negative aspects of the company? o Do you have any comments on the company? o Do you have any comments on the auditing team? o Do you need a specific meeting with the auditor team after this event?

The list of stakeholders consulted and stakeholders contacted during the assessment are listed in Appendix 4.



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2.5 Date of Next Surveillance Visit The next surveillance visit is planned for April 2011.

3.0 ASSESSMENT FINDINGS 3.1 Summary of Findings

The following is a summary of findings for each the criteria listed in the RSPO Principles & Criteria Indonesian National Interpretation (INA-NI) May 2008.

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.

Findings: Evidence of requests for information to the company is available, and the company has a procedure for handling requests for information, which was issued on 15 May 2009. However, requests for in-formation made by stakeholders was not recorded in one document as required by the company procedure for handling information requests and PT BSP management commitment to transparency. Records of responses to requests for information from the company are available, but not main-tained in one document as required by the company’s procedure for handling information requested and PT BSP management commitment to transparancy. PT BSP Kisaran Unit implements a quality management system ISO 9001 that requires control of records for a specified time, which is defined in their procedure for handling requests for information. Compliance status: Non-compliance See NCR No 1 of 30 and 2 of 30

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 en-vironmental or social outcomes.

Findings: PT BSP Kisaran Unit makes publicly available their licenses and documents which pertain to legal issues, environmental and social impacts, and environmental management and monitoring. How-ever, the company does not produce any general documents for public communication of company information, such as a public summary document that contains information about the company’s le-gal compliance, company’s general performance, management of environmental impacts, CSR, Health & Safety programs and so on. The company maintains their available documents and records of all requested information for a period of at least 3 years, depending on the importance of the documents. Compliance status: Non-Compliance See NCR No. 3 of 30

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

Findings: The company has a list of applicable legal and other requirements and the company regularly evalu-ates the compliance of their estates to these legal requirements according to their company procedures as documented in their SOPs. The company makes efforts to comply with changes in the regulations, for example, upon receipt of a government letter dated 17 November 2008 regarding a change of the worker’s minimum wage for North Sumatera province to IDR 905,000, a circular letter from PT BSP Human Resources office was



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issued to all estates to inform estate management of this change in regulations. PT BSP Kisaran Unit has a documented system related to laws and regulations that shall be com-plied to. This system was established as part of the company's ISO 9001 and ISO 14001 manage-ment system and is documented in the company's procedure, BMH-01 which is regarding compli-ance to regulations and other requirements. The company also has a mechanism to ensure that all applicable regulations and company's working procedure are well implemented as required as part of their ISO 14001:2004 certification. Compliance status: Full Compliance

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

Findings: Copies of all Land Cultivation Rights Titles (Hak Guna Usaha – HGU) and related documents to show ownership of land in accordance with relevant laws are well maintained by the company. Legal boundaries are also clearly demarcated using concrete boundary stones and these are main-tained on site every once a year with the participation of local communities. There is an ongoing land dispute in which an area of land under the company has being claimed by a member of the Tinggi Raja community (Tinggi Raja sub-district, Asahan district) since the year 2006. This conflict is progressing towards resolution, however the company‘s process for conflict resolution is still not yet accepted by the affected parties. Since the company was founded, the management has not carried out any land aquisition from com-munities land surrounding company's location. The company also has a documented procedure to re-solve conflicts, however there is lack of evidence that this procedure is accepted and approved by all parties and this was raised as an observation. Compliance status: Non Compliance See NCR No 4 of 30

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

Findings: It was explained by the company's staff that the local communities have no traditional rights within their area, however the company has not proven this as they still have not conducted identification of land belonging to traditional land owners and their traditional rights. As such, the company has no records of negotiated agreements with traditional landowners and no maps of appropriate scale showing extent of recognized customary or traditional rights. PT BSP Kisaran Unit also does not have copies of negoti-ated agreements detailing process of consent. Compliance status: Non Compliance See NCR 5 of 30; 6 of 30; 7 of 30

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

Findings: An documented integrated working plan for all activities carried out by PT BSP Kisaran Unit has not been established, but plans for conversion of rubber to palm oil are in the document, ‘Summary Oil palm Projection 2009-2014’. This includes information on total tonnes per hectare, a 6-year working plan for the palm oil mill for 2009 until 2014 for incoming FFB, FFB production, production capacity for CPO and kernel and yield of CPO and PK, including product quality to be achieved. However, a plan that is comprehensively integrated with environmental and social aspects has not yet been es-tablished. Even in the palm oil mill, there is no available 5 year long term plan (from 2008 to 2012). Separate details of a long-term plan are contained in different documents and file, and these be compiled so it could be a documented as an integrated long term management plan and this should be controlled under the same control mechanisms as for ISO documents.



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The company has developed an annual replanting program for the next 5 years, where the program will always be reviewed for feasibility every year, as described in an internal company letter dated November 17, 2008 regarding their Palm Oil Conversion Program for the period of 2008 to 2017. It is mentioned in their working plan that the area to be replanted with oil palm for 2008 will be 562 ha, in 2009 will be 1097 ha, in 2010 will be 1278 ha, in 2011 will be 750 ha, in 2012 ha will be in 676, and in 2017 will be 455 ha (with no replanting activities planned for years 2013 to 2016). However, the replanting programme for 2009 to 2012 was revised in May 2009 as per the new replanting pro-gramme shown in Table 4 above. Compliance status: Non-Compliance NCR No. 8 of 30

Criterion 4.1: Operating procedures are appropriately documented and consistently imple-mented and monitored.

Findings: The company is already certified and implementing a quality management system, environmental management system and occupational health and safety management system. As such, all SOPs of plantation and mill are well documented and established The SOPs for all estates are maintained on file and includes SOPs for all main estates activities pro-cedures from seeding (nursery), land preparation, maintenance, harvesting to land clearing. Most sections in the copy located at the plantation main office and Serbangan estate are dated Oct 2003. However, a more recent version of the SOP dated 2009 was prepared on 15 May 2009 (as a response to the RSPO Gap Assessment conducted prior to audit) but this document was also not available at Serbangan estate and the main office. This is evidence that not all sites are updated with the latest version of the SOP, and this was raised as an observation. As the updated SOPs were only produced prior to the audit and were not properly distributed, not all staff and personnel have been trained on the changes in the SOP, but had been trained in the previous SOPs. The company has plans to train their staff on the updated SOPs and this will be evaluated during surveillance. According to management, the review of the SOP is carried out every year, but there have been no changes to the SOP due to no changes in operations. However, there are no records of when the last review of SOP from the management was conducted, and this was also raised as an observation. The SOP for the mill is documented and most of the documents are dated Nov 2007. The SOPs for mill include receiving of FFB, sorting, and processes such as sterilizing station, digester, pressing station, clarification station, kernel silo, storage of CPO, PK and PKO and dispatch to storage tank. It was observed that work instructions are displayed at machines throughout the mill area and mill workshop, in Indonesian language. The company conducts checking or monitoring of operations through internal audits carried out at all estates, mill and other departments. Records of the last internal audit are available at the main office and respective estates, dated 12 January 2009. However, the form used for recording non-conformities does not have a space for Root Cause Analysis and Corrections. The estate has taken action to improve this form by adding these new sections. The company also has comprehensive annual monitoring records refering to established quality plan and quality objectives. Monitoring of operations is conducted monthly to monitor achievement of quality objectives. Records of operational results from the estates and mill are available and documented through monitoring records and kept by the personnel in charge at each department. Monitoring activities at the mill are conducted based on their document ‘Quality Plan of Production Process’ where records of monitoring activities for all mill processes such as reception of FFB, sterilization, crude oil tank, clarifier tank, oil tank, oil furifier, vacuum dryer, sludge tank, sludge separator, and storage tank are maintained. Compliance status: Compliance with observations

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

Findings: Records of leaf analysis carried out in 2006 by PT London Sumatra and in 2007 by Cirad-Persyst,



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together with soil analysis conducted in 2006 by Asian Agri for all estates are available at the main office. A leaf analysis was also carried out in 2009 by the Indonesian Oil Palm Research Institute for all estates, which produced a report including fertilizer recommendations. The company has also carried out mineral nutritional trials with annual reports available for August 2008 and 2007. The company has efforts to maintain and increase soil fertility through the use of fertilizer, legumi-nous cover crops for unproductive palm tree, compost, and land applications of POME or EFB. Re-cords of all activities are kept. For example, records of fertilizer recommendations for the year 2007 and 2008 for all estates are available at the main office and estate offices. A fertilizer programme is available for all estates based on the fertilizer recommendations (dated 19 May 2009 and prepared by a Senior Research Assistant). Records of actual fertilizer applications carried out monthly are maintained and compared with the programme to ensure recommendations are met. Sample re-cords from Sei Baleh estate shows that actual fertilizer applications are within the recommended lim-its. Records of actual plantings of leguminous cover crops at all estates are also documented on file at the main office. Compliance status: Full compliance

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

Findings: Maps of soil types for all estates are available at the main office. The maps show that there are no marginal soils within the estate area and most of the estate land consists of alluvial soils and podsoils. However, the maps available are not up to date as these were prepared in 1977. New maps being prepared by a consultant have yet to be received. Work instructions for planting on slopes are documented and describes methods to reduce soil erosion on slopes through the use of ‘tapak kuda’ (horseshoe) methods, contouring, and harvesting steps at areas of mature oil palm plantings. While all estates consist mainly of flat lands, in Kuala Piasa estate, a small area of high slope (>30%) was identified, and this area was classified as a potential HCV 4 area. To minimize soil erosion as this area, this area was not developed by the company. Road maintenance programs for all estates are available at the main office. Checks at the estates show that a road maintenance program for the whole of 2009 is available and includes desilting of drains, closing potholes and grading. When maintenance works are completed, the work program is marked accordingly to show that the work has been completed. From field visits, it was observed that roads did appear well maintained with no evidence of excessive erosion. There are no peat soils or fragile or problem soils located within the estates, therefore requirements for an effective documented water management programme for peat soils and management strategy for problem or fragile soils are not applicable. Compliance status: Compliance with observations

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

Findings: Site visits to Kuala Piasa estate river shows that there is a sign at the river to mark it as a HCV area, however, no delineation of the riparian buffer zones has been carried out. The company has pre-pared a work plan for this and already begun the process of delineation of the buffer zones. Records of water usage for all estates for the month of December 2008 is available at the main office, including targets for water usage and percent achievement, however there are no records of water usage for other months. Work instructions on management of water usage and water sources are also documented at the main office, but this is only for the estates and not the mill. The estate also maintains records of targets and plan to reduce usage of natural resources, including water, for each division. For example, at Serbangan estate, the records also include documented steps to achieve these objectives, work schedules and responsible persons. The estate also monitors whether or not targets for water usage has been achieved and prepares a monthly report to review achievement of their quality, environmental and occupational safety and health objectives. At Tanah Raja estate, monthly water usage is also recorded on file.



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Monitoring of effluent BOD from the mill is conducted every month and effluent analysis results are maintained in a report prepared by the Environmental Lab of the Department of Management of Environmental Impacts. The mill effluent is used for application to the field and it was found from analysis reports that the effluent BOD is within government standards of 5000ppm. Analysis samples were taken from Pond V and Pond VI, both of which are Secondary Anaerobic Ponds. The mill has a documented plan and target to reduce their usage of natural resources, including water, electricity, fossil fuel, and paper. These records have been maintained since 2007. Records of daily water usage at the mill are maintained at the mill and main office and these records have been maintained since August 2007 until April 2009. The data also includes calculations of water usage per tonne of FFB every month. Compliance status: Compliance with observations

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

Findings: Documented program of IPM activities for all estates for the year 2009 are available at the main of-fice and respective estates, which includes work instructions for monitoring of ganoderma and the method for conducting census of caterpillars and rhinoceros beetles. Methods in the work instruction for reducing the population of pests include hand picking, usage of bioinsecticides and chemical ap-plication (as a last resort). The estate SOPs also includes work instructions for handlings of rat pests, tiratabha, orcytes rhinoceros, nettle caterpillars and bagworms. Plantings of the beneficial plant turnera subulata (a plant species which attracts natural parasitoid predators of oil palm leaf pests – nettle caterpillars and bagworms) were observed in the field, but there are no records of ar-eas of these plantings. These maps should be made available. Records of IPM implementation are maintained at the estate division office. For example, Sei Baleh estate has records of census conducted for oryctes rhinoceros conducted in March and April 2009 for Divison No. 3 where there are areas of immature plantings. There are also monthly reports on treatment of pests or diseases and monthly chemical weeding and lalang eradication, where the amount and costs of pesticides used are recorded, along with the field number. There are records of training on IPM techniques conducted for sprayers (all of which are company workers and not con-tracted workers) in March 2009, however there are no records of trainings for mandors on tech-niques for conducting pest census. Records of pesticide toxicity units (a.i. /LD 50 per tonne of FFB or per hectare) are not available. Compliance status: Non-compliance See NCR No. 9 of 30 ; 10 of 30

Criterion 4.6: Agrochemicals are used in a way that does not endanger health or the envi-ronment. 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 Con-ventions, growers are actively seeking to identify alternatives, and this is documented.

Findings: The company uses only approved and registered agrochemicals permitted by local regulations and use of pesticides are documented. Records of all pesticides used including active ingredients used, area treated, amount applied per ha and number of applications are well kept. Records show that the agrochemicals used are appropriate and in accordance with product label recommendations for tar-get species. Waste materials from agrochemicals are properly stored in a hazardous waste store and sold to an organization that has a permit from the government to collect the hazardous waste in accordance with legal requirements. Handling of hazardous waste also includes packaging of fertilizers and ag-rochemicals, and work instructions for this is available under document number BME-WI-01/21 about handling and usage of solid waste. The company no longer using agrochemicals categorised as World Health Organization Type 1A or 1B, or listed by the Stockholm or Rotterdam Conventions, but is still using the agrochemical



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Gramoxone, which contains paraquat, in addition to safer agrochemicals that contain glyposate. Ac-cording to management, Gramoxone is only used for immature plantations, and the company has a documented spraying schedule which shows plans to reduce usage. Checks of chemical usage re-cords show that usage of Gramoxone is below the recommended usage according to the agro-chemical label. The rodenticide Klerat found in the chemical store at Tanah Raja estate has the ac-tive ingredient brodifacoum, which is one of the chemicals listed as WHO Type IA. However, accord-ing to management, the chemical has not been used as there have been no problems of rat infesta-tions. Pesticide issuance records show that no Klerat has been issued. Annual medical checkups for the mill operators and plantation workers are conducted by the Work-force Occupational Safety and Health Department and records are maintained. Checks of medical records and interviews with female pesticide sprayers confirm that no chemical spraying work for breast-feeding or pregnant woman is allowed. The company also maintains records of trainings conducted for all sprayers and personnel handling chemicals. The trainings are conducted by OHS personnel, nurses and mandors for each division. The content of these trainings cover information about chemicals used and toxicity and hazards, how to handle remaining chemicals after spraying is complete, and also storage of equipment. Sprayers are trained to avoid spraying at riparian zones, drains and slopes, and to inform OHS Personnel of any accidents as well as visit the clinic in the event of accidents or injuries. Compliance status: Full Compliance

Criterion 4.7: An occupational health and safety plan is documented, effectively communi-cated and implemented.

Findings: The Occupational Safety and Health policy of the company is documented and implemented in all estate. However, consistency on implementation of OSH policy needs to be improved, due to several observations made on site as describe further below. The company has appointed an OSH team leader, with evidence in the form of an appointment letter from the Kisaran Official Workforce Head dated 07 April 09. An Occupational Safety and Health work program for Year 2009 is available and meetings to discuss health, safety and welfare issues are conducted once a month. The organization provides insurance for workers under Jamsostek (workers insurance required under Indonesian law), which cover accidents, pension, and death. The company also has its own medical care facility (Kartini Hospital) which provides inpatient and outpatient treatment for employ-ees and their families (including their wives and children). A risk assessment on Occupational Health and Safety has been conducted and results recorded us-ing the form BMR-FR-03/07. The risk assessment was performed by all departments and units of PT BSP Kisaran unit, including estate divisions, offices, warehouses, and transportation. There are records of health examination for employees exposed to high risk work, conducted by the Occupational Safety and Health Department on 27 April 2009 with evidence in the form of a report dated 25 May 2009. Workers examined included sprayers, electricians and fertilizer applicators. The sprayers are also fully trained in the hazards and risks associated with pesticide use. However, through interviews with female sprayers at Kuala Piasa estate, it was found that some experienced chest pains and eye pain, but they were not given a thorough health inspection by the medical staff. The checks are conducted once every 6 months and includes a blood test and urine test, however, when the sprayers experience pain, they claim that sometimes no medication is provided. This was raised as an observation. The management has informed the workers that they are required to wear personal protective equipment to prevent pesticide poisoning. From field checks, it was found that PPE is provided to pesticide sprayers at Kuala Piasa, including face masks, eye goggles, gloves, safety boots and aprons. However, the condition of the PPE is not good, for example, some of the masks were torn with holes and were too loose and ill-fitting. Some sprayers had worked more than 15 years for the company, but they were only provided with PPE within the past one year. It was found that sprayers keep herbicide containers at the warehouse of Sei Baleh estate, however the workers' PPE is brought home by the workers for washing, which increases the risk of pesticide contamination among the workers. At the mill, it was also found that some workers are not using PPE as required, for example, contractor workers that collect empty bunch at the mill do not use safety shoes and gloves, and some workers working at noisy areas do not use ear plugs. It was observed at several locations within the mill that the fire extinguishers were not properly



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charged, even though routine checks of the fire extinguishers had been carried out and records of checks maintained. At least two first aid kits were observed at the mill, one at the workshop and one at the analysis lab. The mill has records of usage of items from the first aid box, however there is no checklist used to check the contents of the first aid kit periodically. These were raised as observations. Workers trained in first aid are present at locations under their responsibility, and some personnel have been trained to cover all shifts at the palm oil mill and the oil palm estates. Records of work accidents are kept by the hospital and OHS personnel and documented. Supervi-sors at all locations are responsible for identifying and investigating accidents and reporting these to the hospital and OHS supervisor. Compliance status: Non-compliance NCR No. 11 of 30

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

Findings: PT BSP Kisaran Unit has a training program for employees based on their job competency con-ducted every once a year, as well as a training budget. Company also conducts training for local communities as part of the company's CSR program (‘Training Budidaya Kelapa Sawit, dll’). Training performance for employees is documented by the Human Resources department, although it was observed that a plan for training on the RSPO Principles & Criteria has not yet been established. Documented training records for each employee or personnel are available at the Human Resources Department. Evidence that the company uses experienced or trained contractors is not sufficient. The company has a mechanism for selection of contractors and on the documented contractual agreement be-tween the compand and contractors, it is clearly stated at Article 5 that contractors shall use only trained personel. However, there is lack of evidence that contractor companies are using trained personnel/workers because based on interviews conducted with female workers of one of the con-tractor companies hired at Sei Baleh estate, CV Aulia, who have been working between 2 to 30 years, they have not had any formal training, although they can demonstrate competence in their job function. Compliance status: Non Compliance See NCR No.12 of 30

Criterion 5.1: Aspects of plantation and mill management, including replanting, that have envi-ronmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

Findings: Environmental aspects and impacts that occur from plantation and mills activities have been identi-fied. The first documents of on identification of environmental impacts were developed in 1993 for the company’s rubber plantation and rubber factories. The company has since revised their environmental impact assessment to improve on the previous document, upon receipt of an approval letter from government (letter of approval no. 017/012/II/AS/UKL/UPL/2006) dated 22 February 2006 which includes activities in the oil palm plan-tation and palm oil mill. However, these revisions have not covered impacts pertaining to wildlife is-sues resulting from company’s activities. The company has implemented an environmental management system both in the estates and in the mill. In line with implementation of environmental management systems the company has made several environmental management programs to reduce the environmental impact that occur, how-ever the company has yet to develop and implement environmental management programs to pro-mote positive impacts arising from company’s activities in the plantations and palm oil mill, as it was found during the assessment time that there are some positive aspects resulting from plantation ac-tivities to local communities, such as generation of new business opportunities from the use of palm leaves to make brooms which can then be sold.



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The company has no records of regular report on environmental management in accordance with relevant regulations. There has been no revision to the company’s environmental management document for any changes in relevant regulations or requirements, such as RSPO requirements, especially pertaining to the company’s identified HCV areas. Compliance status: Non Compliance See NCR No. 13 of 30; 14 of 30

Criterion 5.2: The status of rare, threatened or endangered species (ERTs) and high conser-vation 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 man-agement plans and operations.

Findings: The company has completed an identification of possible protected species, endangered species and HCV areas within their estates. The results of these assessments are that there were 4 types of HCV areas identified in the 5 estates. For example:

HVC 1.2 , pertaining to areas containing endangered species, of which some were found in the area surrounding Lotus Lake, located at Division 3 of Kuala Piasa Estate. According to location studies, several species of protected wildlife were found, including species of birds such as the Sunda Fork-tail (Enicurus velatus), Black-capped Kingfisher (Halcyon pileata), Brahminy Kite (Haliastur indus), Spangled Drongo (Dicrurus hottentorus), Woodpeckers, Blue Rock Thrush (Monticola solitarius), as well as the Clouded Leopard (Neofelis nebulosa), and Asian Palm Civent (Paradoxurus hermaprodi-tus).

HCV 1.3, pertaining to species habitats. The area around Lotus Lake (‘Danau Teratai’), Kuala Piasa estate, block compartment no. P96301, is a natural habitat for the endangered species or protected species identified above.

HCV 4.1, pertaining to water sources and natural flood control areas. This HCV covers a total area of 4.31 hectares around the Lotus Lake in Kuala Piasa estate. This HCV also overlaps with the ar-eas identified as HCV 1.2 and HCV 1.3 in block compartment no. P.9630.

HCV 6, pertaining to traditional or cultural identity. A grave area located in a central area of the es-tates covers a total area of 7.2 hectares and is spread across several estates, such in Serbangan estate (0.2 ha located at block P.95102 and P.94401), Sei Baleh estate (1.5 ha at Block P.06501, P.95501 and P.96401), Tanah Raja estate (3.5 ha located at block P.04401, P.05302 and P.01301), and Kuala Piasa estate (2 ha located at blocks P.96101 and P.99102).

Besides the areas designated as HCV areas as mentioned above, there are also some areas des-ignated as potential HCV areas. These are areas that are no longer forest areas and these areas no longer support dynamic ecological processes as required in the HCV guidelines. These areas can be designated as HCV areas if the company manages and improves the areas following existing standards, such as RSPO or other standards. The potential HCV areas that were identified are po-tential HCVs 1 and 4 covering a total area of approximately 630.5 ha within the 5 estates. The area of potential HCV in Serbangan Estate is 44 ha, Sei Baleh is 131.16 ha, Gurah Batu is 66.48 ha, Tanah Raja is 45.73 ha and in Kuala Piasa is 343.13 ha.

The company’s documented management plan for identified HCV areas is insufficient due to lack of evidence of participation of all parties concerned in the assessment, including the local communi-ties, and the plan has not been reviewed by a relevant technical expert. Also, no socialization of the HCV management plan to stakeholders has been conducted. In addition, the company has no re-cords of monitoring of identified HCV areas. There have been several actions taken to protect the rare species that have been identified above, in accordance with applicable legal requirements. The company also maintains records on monitor-ing of illegal hunting of birds and other species. Posters and sign boards warning that hunting and livestock grazing is prohibited within estate areas is available in many places in the estates area, and locations with identified HCV have clearly visible signs indicating this.



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The company has trained several staff to manage and monitor the HCV areas, although these have not yet officially been defined in the organization's structure. Compliance status: Non Compliance See NCR No. 15 of 30

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

Findings: Serbangan estate has a list of all non-scheduled wastes documented in their register of incoming and outgoing wastes. However a list of identified domestic wastes has yet to be prepared. The estates have also prepared an Environmental Aspects and Impacts Assessment which includes identification of scheduled wastes, non-scheduled wastes and domestic wastes from the office. The estates and mill has documented SOPs for management of scheduled wastes (including solid and liquid scheduled wastes), solid wastes and non-scheduled wastes by workers. The date of issue of the SOP for estates is 10 Nov 1999. For the mill, the SOPs for management of solid scheduled wastes and liquid scheduled waste are dated 6 Dec 2008 while the SOP for solid wastes is dated 30 Nov 2007. According to the management, there have been no changes in operations, therefore there was no revision to the SOPs. In addition, Sei Baleh estate also has an Environmental Management Program which was carried out in year 2009, which includes actions to be taken, parameters, costs, target date and responsible persons. During the site visit at the mill, used battery containers were found at the general store room which should have been stored at a designated scheduled waste store. Other scheduled wastes such as used oil contained in unlabelled containers were also found to be kept at open areas with soil, and not in a proper scheduled wastes store. However, immediate corrective action was taken with submission of evidence and the oil containers are now being kept in a proper store. Estates also conduct monitoring of wastes produced. For example, at Serbangan and Sei Baleh, the number of old containers and scheduled wastes (eg. battery containers, old polybags, oil containers and empty containers, etc) being sold to a contractor is recorded in their register of incoming and outgoing wastes. The mill has a Report on Environmental Monitoring and Management (UPL/UKL) with identification of scheduled wastes, which includes inventory records of the amount of scheduled wastes produced and sold. The types of scheduled wastes being monitored include lubricant containers, battery cases and metal pieces. However records of waste analysis carried out at both estates are still not well maintained. Also, it was found that for storage and collector license of hazardous waste for PT Wiraswasta Gemi-lang Indonesia has not been renewed since its expiry on 3 November 2008, and the contractor also does not have a transportation license for hazardous waste, which is a required of the Government Regulation PP No.18 Year 1999. Compliance status: Non Compliance See NCR No. 16 of 30

Criterion 5.4: Efficiency of energy use and use of renewable energy is maximized.

Findings: Sources of renewable energy used for mill operations are fiber and shell. The company has regularly monitored and maintained calculations for how much energy/ton CPO or energy per ton palm oil product is produced from fibre and shell consumption since year 2008. The mill prepares monthly reports on data for usage of electricity, fossil fuel and water. In this docu-ment, renewable energy produced by the mill boiler is recorded each day with calculations of the monthly energy use per tonne FFB (eg. for the month of March 09, renewable energy production was calculated to be 31.75 kWH/tonne FFB). However, these calculations are not recorded in a graph for more effective monitoring. The estates have a documented target to reduce fossil fuel consumption (gasoline, diesel oil and lu-bricant oil) recorded on document BMA-FR-06: 'Planning for quality, environmental, OSHAS.’. Diesel oil is still used in limited amounts at the mill for start up and shut down of the genset and boiler. The company also maintains monthly reports of fuel consumption.



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The estates and mill have records of targets and a plan to reduce the usage of natural resources, which includes fossil fuels (gasoline, petrol and oil) and other resources such as water, electricity and paper, in a documented Quality, Environment and Occupational Safety and Health Plan. This plan has been prepared annually by each estate and mill since 2007. If targets in the plan are not met, this will be justified in a report and corrective actions will be taken by the respective estate or mill. Mills and estates, however, do not record their fossil fuel usage in a graph for more effective monitoring. Compliance status: Compliance with observations

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

Findings: The company has a zero burning policy stated in their document "RSPO Policy and SOP Land Preparation".The use of fire is not allowed for any land preparation or for replanting. There is no evidence that the company uses fire for field or replanting activities. The company has no records of implementation of zero burning policy and operation procedure as the company has yet to carry out any replanting program. This is because their first planting was established on 1993, and has yet to complete the first planting cycle, which is 20 years. The company is developing plans for their replanting progam to be carried out in the year 2013. The company has standard operating procedure as guidance during emergency situations such land burning. Procedures for emergency responses to land burning have been established and are documented. At the time of audit, there has been no occurrence of emergency situations. The fire extinguisher facilities made available at the mill and estate are sufficient. Each month, routine checks on the condition of the fire extinguishers are conducted, and results of the checks are recorded in the maintenance card kept at each fire extinguisher. Compliance status: Full Compliance

Criterion 5.6: Plans to reduce pollution and emissions, including greenhouse gases, are de-veloped, implemented and monitored.

Findings: The mill has a report on Environmental Monitoring and Management (UKL/UPL), with the latest re-port prepared for July to Dec 2008, which includes results of identification and monitoring of pollution and emission sources from the mill. data in this report includes an analysis of effluent parameters (pH, BOD, COD, Oil & Grease), air emissions from 2 gensets and boiler II (SO2, NO2, H2S, NH3, Particulates, HCl dan Opacity), and analysis of the ambient air in front of the mill and worker's hous-ing. Comparison of air emission readings with the government standards set in the state minister's environmental regulation on boilers shows that the emissions are within the government standards. In line with efforts to reduce pollution, the estates have a documented Quality, Environment and Oc-cupational Safety and Health Plan for the year 2008 and 2009, with targets and steps to reduce the usage of natural resources, including water, electricity, fossil fuel (petrol, oil and diesel) and paper. The estate carried out monitoring of achievement of targets and produces a monthly report to review achievement of objectives. The estate also has a documented SOP for management of air emissions. Similar to the estate, the mill has a plan for monitoring of objectives and targets to reduce the usage of natural resources. This document also includes a work schedule and responsible persons. The mill has records of monthly analysis conducted on the POME from their effluent pond V and pond VI and analysis results are documented on file together with analysis results for air emissions. This analysis is carried out by the Regional Department for Management of Environmental Impacts UPT Environmental Laboratorium ('Badan Pengendalian Dampak Lingkungan Daerah UPT Laboratorium Lingkungan') The mill also has documented work instructions for a Long Bed Land Application System used for application of POME. The mill obtained their recommendation letter for land application of POME from the Batu Bara regional head on 4 January 2008. An extension for one year for the recommendation letter was provided on 17 March 2009.



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Compliance status: Full Compliance

Criterion 6.1: Aspects of plantation and mill management including replanting that have so-cial 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 con-tinuous improvement. Findings: A documented participatory SIA is not available. The company was unable to show documented evi-dence that their environmental and social impact assessment was prepared with the participation of affected parties and local communities. Because a documented participatory SIA is not available, the company has no records of regular monitoring and management of social impacts with the participation of local communities. The company is unable to demonstrate that results of revisions to the environmental management document that encompasses social impact assessments are in accordance with existing RSPO re-quirements. A regular and scheduled environmental management and monitoring report is available, however the report does not include social, economic and cultural aspects, which is required as part of social im-pact management. PT BSP Kisaran mill has no outgrower schemes, therefore it is not required for the company’s social impact assessment to include the impacts of outgrower schemes, and this requirement is not appli-cable. Compliance status: Non Compliance See NCR No. 17 of 30; 18 of 30; 19 of 30; 20 of 30

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.

Findings: A documented procedure for communication and consultation with the communities and the stake-holders is available. PT BSP Kisaran Unit has compiled and documented a comprehensive list of stakeholders. Stake-holders categories recorded in their document include village heads, local community heads, NGOs, government organizations, suppliers, contractors, and others. The company maintains records of meetings held with the stakeholders. Aspirations and requests raised by the local communities are recorded together with follow-up actions and responses of the company to these requests. The signatures of all stakeholders who raised requests were kept. A dedicated person responsible for consulting and communicating with local communities has been appointed by the company but this person is not recognised by the local communities. The local communities in Sei Rengas village and Karang Anyer village interviewed stated that company offi-cials never informed the villagers or village head on who is the company representative in charge and responsible for communications with the local communities. Compliance status: Non Compliance See NCR No. 21 of 30 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. Findings: PT BSP Kisaran Unit has a procedure to receive and resolve complaints/disputes. However, there is lack of evidence that the open system used to receive complaints from stakeholders or local community is accepted by all parties. The company also has a procedure for handling complaints and disputes between the community and company, and records of complaints are available, however records of handling of complaints were not available.



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Procedures for the identification and calculation of fair compensation for the loss of legal or custom-ary right of the land, with involvement of local community representatives and relevant agencies, are also not available Compliance status: Non Compliance See NCR No. 22 of 30; 23 of 30; 24 of 30 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. Findings: PT BSP Kisaran Unit has procedure for handling and resolution of disputes, However, procedures for the identification, calculation and compensation for the loss of legal or customary rights of the land, with the involvement of local community representatives and relevant agencies have not been established. There are no records of identification of people entitled to receive compensation. Records of negotiations processes and/or the details of compensation settlements are available, e.g there is evidence that a person received compensation for the death of his father due to an accident in-volving one of the company’s drivers. Records of the implementation of compensation payment are available and well maintained. Compliance status: Non Compliance See NCR No. 25 of 30; 26 of 30 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. Findings: The company maintains documentation of employees’ pay rates included copies of pay receipts given to workers. Pay for employees meet the legal minimum wage standard as per government regulations (Keputusan Gubernur SUMUT 561/4213/K-2008) dated 17 November 2008 and according to the mini-mum wage standard of Sumatera Utara in 2009. The company’s working regulations and works contracts are in accordance with the existing regula-tions, with evidence in the form of a the contractual agreement between the management and labour union (Perjanjian Kerja Bersama - PKB) produced in year 2008. The company provides the following facilities for their employees: Housing facilities for employees at all estate, medical facilities (Kartini hospital); clinics in every estate and palm oil mill, educational facilities, worship areas, sportshall, and sportsclub. PT BSP Kisaran Unit has a requirement for contractors who make a contract with the company. The agreement between the company (as the first party) and their contractors (as second party) stated in clause 5 of the Agreements specify that contractors must abide by labor laws pertaining to OSH, in-surance, wages, experience worker. However, there is lack of consistent control of the contractors by the company to ensure that they abide by the requirements. Compliance status: Non Compliance See NCR No. 27 of 30 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 col-lective bargaining are restricted under law, the employer facilitates parallel means of inde-pendent and free association and bargaining for all such personnel. Findings: The company respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. There are two trade unions, the Indonesian Workers Union (Serikat Pekerja Se-luruh Indonesia - SPSI) and the Indonesian Labour Union (Serikat Buruh Sejahtera Indonesia - SBSI) in the company. Interviews with worker from the SBSI confirm that PT BSP Kisaran Unit is im-plementing their policy of freedom of association.



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Minutes of meeting with labor union are documented and maintained. Compliance status: Full Complaince 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. Findings: The company has a documented and published a company policy which is in accordance with na-tional laws pertaining to worker age. The policy is available in the company’s contractual agreement between management and labour union (Perjanjian Kerja Bersama – PKB) and there is sufficient evidence that is it being implemented. For example, no child labour was found in the company’s es-tates and mill. The company also maintains a list of all employed workers in the estates, which in-cludes information on the age of workers. Checks of records show that workers employed meet the minimum age requirements. Compliance status: Full Compliance Criterion 6.8: Any form of discrimination based on race, caste, national origin, religion, dis-ability, gender, sexual orientation, union membership, political affiliation, or age, is prohib-ited. Findings: PT BSP Kisaran Unit has an equal opportunities policy available, which is well implemented. There was no evidence of any form of discrimination in relation to work opportunities. In fact, there is evi-dence that the company makes efforts to implement equal opportunities for workers. For example, a consultation regarding issued wages and health of retired workers was held between the company and workers, and was attended by all representative parties. Compliance status: Full Compliance

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.

Findings: A documented company policy on sexual harassment and violence is available as part of the man-agement's RSPO Policy dated 12 January 2009. The sexual harassment policy is also a part of the Working Agreement ("Perjanjian Kerja Bersama") with the Workers Union Federation (Federasi Seri-kat Pekerja - FSP), the Indonesian Labour Union (Serikat Buruh Sejahtera Indonesia - SPSI) and the Plantation Companies Cooperative Body (Badan Kerjasama Perusahaan Perkebunan - BKS PPS) as stated in the Worker Agreement document. However, proof of implementation of sexual harass-ment policy in the field is insufficient. There is no documented evidence that the management has in-formed and conducted socialisation of the policy to all workers. The company has a documented policy on protection of reproductive rights as documented in their PKB document dated 10 July 2008, and this policy complies to Indonesian Republic Legal Regula-tion (‘Undang-undang Republic Indonesia’) number 13 year 2003 clause 81, which states that women with menstruation pain are not required to work on the first and second day of work. The company maintains evidence of implementation of this policy, for example, documentation of mater-nity and menstruation leave taken by female workers is maintained at the estate clinics. The company has yet to set a specific grievance mechanism such a gender committee to handle gender-related issues. Compliance status: Non Compliance See NCR No. 28 of 30; 29 of 30

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



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Findings: PT BSP Kisaran mill receives FFB supply only from their company-owned plantations, and they re-ceive no FFB supply from smallholders or outgrowers. Therefore they are not required to make their prices for FFB publicly available and are not required to document their pricing mechanism. The company’s contractors interviewed on site had a clear understanding of the contractual agree-ments they enter into. The contract was clearly explained to them and signed by both parties as a sign of understanding and acceptance. The company makes payments to their contractors in a timely manner. This was verified through checks of the Contractor Work Completion Report documents. Compliance status: Full Compliance

Criterion 6.11: Growers and millers contribute to local sustainable development wherever ap-propriate.

Findings: Documentation of the company's contributions to local development is available. Contributions made to local communities and local development carried out through CSR programs are documented. The CSR budget was about IDR 1,016,245,000 on 2007 and on 2008 about IDR 853,728,400. The company's budget for local communities is allocated for education, economic, social and health, sports, environment, worship, infrastructure programme. With regards to the company’s facilities, the company also permits local communities to using their company facilities as well as the sport club, production road for emergency purposes i.e. to transport injured or ill individuals, fertilizer and oil subsidy transportation. There is also evidence that the company contributes annual tax payments to local government development, as part of the legal requirement. Compliance status: Full Compliance

Principle 7: Responsible development of new plantings

Findings: The company is not carrying out any development of new plantings, therefore Principle 7 is not ap-plicable. Compliance status: Not applicable Criterion 8.1: Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key opera-tions. Findings: The estates and mill has a monitoring action plan for the year 2008 and 2009, which includes the targets and steps to take to reduce the usage of natural resources such as water, electricity, fossil fuel (Petrol, oil and diesel) and paper documented in their Quality, Environment and Occupational Health Plan. The estates also carry out monitoring on achievement of targets and prepare a monthly report on review results / evaluation of quality, environmental and occupational safety and health ob-jectives. However, the monitoring actions plans do not include plans for the following aspects: Re-duction in use of certain chemicals (criterion 4.6), Environmental impacts (criterion 5.1), Waste re-duction (criterion 5.3) and Social impacts (6.1). The company does not have a monitoring action plan based on the social environmental impact as-sessment, and regular evaluations of plantation and mill operations. The company has no records of follow-up actions taken against RSPO audit findings as this is the first RSPO audit conducted for PT BSP, therefore this requirement is not applicable. Compliance status: Non Compliance See NCR No. 30 of 30



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3.2 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions A total of 30 nonconformances were identified during the main certification assessment. These consisted of 15 major non-conformities and 15 minor non-conformities. For the major non-conformances, the company has taken the necessary corrective action to close these non-conformances within 60 days of completion of the assessment, and this was verified by the audit team through an on-site verification audit conducted on 23 July 2009 by two members of the audit team as well as checks of documents submitted by the company. For the minor non-conformances, the company has taken corrective action against these as well, and for those which could not be verified as closed through document checks, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as below:

Criterion 1.1, Indicator 1 (Major): Records of information requests

Non-conformance: 01 of 30 Requests for information made by stakeholders are not recorded in one document as required by the company’s procedure for handling information requests (BMH-03 rev.02) and the company’s RSPO Management Commitment to transparency. Corrective Action: The company is to maintain up-to-date records of information requested in one documented record for consistency and evidence. A form for these records was established in line with the company’s procedure for internal and external communication and consultation. Auditor Conclusions: Closed Evidence: Through an on-site verification audit and document checks, it was confirmed that the Standard Operating Procedure (SOP) on the company’s procedure for internal and external communication and consultation, document no. BMH-03, rev. 03 was revised and reissued on 18 June 2009, and includes as an attachment, the form to record external information requested and a form to record responses made by the company. Criterion 1.1, Indicator 3 (Major): The records mentioned in 1 and 2 must be maintained for a period of time determined by the company, taking into account their relative importance. Non-conformance: 02 of 30 Records of responses to requests for information from PT BSP Kisaran Unit are not maintained in one document as required by BMH-03 rev.02 (procedure for handling information requested) and the company’s RSPO Management Commitment to transparancy. Corrective Action: The company is to maintain up-to-date records of all responses made by the company to requests for information made by stakeholders in one documented record for consistency and evidence. The form for records of information requested and responses was established in line with the company’s procedure for internal and external communication and consultation, doc: BMH-03 Auditor Conclusions: Closed Evidence: Through an on-site verification audit and document checks, it was confirmed that the Standard Operating Procedure (SOP) on the company’s procedure for internal and external communication and consultation, doc: BMH-03, rev. 03 was issued on 18 June 2009, and includes as an attachment, the form to record external information requested and a form to record responses made by the company. Criterion 1.2, Indicator 1 (Major): Information and responses must include any relevant or re-quired documentation, in accordance with applicable national laws, such as: • Legal: Land titles/user rights (Site Permit (Izin Lokasi), Plantation Operation Permit (Izin Usaha Perkebunan), Land Use Title (Hak Guna Usaha) or other documentation relating to ap-plication for Land Use Title in accordance with relevant procedures)



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• Environmental: Environmental and Social Impact Assessment (AMDAL /UKL-UPL) and envi-ronmental management and monitoring reports (Laporan RKL-RPL) • Social: Documentation of social activities and community programs. • Health and Safety Plan • Continuous improvement plan Non-conformance: 03 of 30 PT BSP Kisaran Unit does not produce any management document for public communication of company information, such as a public summary document that contains information about the com-pany’s legal compliance, company’s general performance, management of environmental impacts, CSR, Health & Safety programs and so on. Corrective Action: PT BSP Kisaran Unit has established and made publicly available a company document presenting information about the company’s legal compliance, best practices implemented in their palm oil plan-tations, environmental impacts management, CSR, and Health & safety program. As per the com-pany’s procedure, BMH-03, the record will be maintained for at least 3 years. Auditor Conclusions: Closed Evidence: Through an on-site verification audit and document checks, it was confirmed that the company has prepared a company profile which includes a brief company history, information on their plantations, products, marketing and customer services, legal issues, corporate social respon-sibility, and so on. The company also has available an SOP (BMH-03 revision 03) which is their pro-cedure for internal& external communications. Criterion 2.2, Indicator 3 (Major): Where there are, or have been, disputes, proof of resolution or progress towards resolution by conflict resolution processes acceptable to all parties are implemented. Non-conformance: 04 of 30 There is an ongoing land dispute between Kuala Piasa Estate and a villager of Tinggi Raja Village, District Tinggi Raja, Asahan since 2006 over a land area of 200 ha. The company has a conflict resolution procedure, RSPO-01 issued on 15 May 2009. However, the company’s conflict resolution mechanism is not accepted by the parties making claim to the land. Corrective Action: The company’s management held a meeting with villager making the land claim and the Tinggi Raja Village Government, and came to an agreement between the affected parties to resolve the conflict by taking the matter to court. Auditor Conclusions: Closed. Evidence: The company has records of minutes of a meeting held between them and the family of the villager making the land claim, in which an agreement was reached that both parties will bring the tenurial case to court. This was verified through an on-site verification audit and interviews of the affected villagers. Criterion 2.3, Indicator 1 (Major): Records of any negotiated agreements between traditional owners of land and plantation companies (if any), supplemented with maps in appropriate scale.



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Non-conformance: 05 of 30 There is no evidence that the company has identified existing legal rights, customary rights of other users in the company’s land. As such, there are no documented negotiated agreements between traditional land owners and the management of PT BSP Kisaran Unit. Corrective Action: The management of PT BSP Kisaran Unit held a negotiation with members of the surrounding local communities, as well as members of the local group called the Tani Al Ikhlas group (consisting of 9 members), and in order to establish the customary rights of other users within the company’s area. Negotiated agreements with the local communities were documented, and a map of appropriate scale was prepared. Auditor Conclusions: Closed. Evidence: Through a verification audit on-site, it was confirmed that the company has a documented agreement, dated August 3rd 2009, between the company and community members who use the company’s concession area (about 12 m2 in area) to build a house under certain terms and condi-tions. This agreement includes a map of appropriate scale and is valid untul August 3rd 2010. There is also a documented agreement made on 24 July, 2009 between the company and the leader of Tani Al Ikhlas Group, West Kisaran, a group of 9 members, to use a canal about 250m in length for fishing purposes. This agreement is valid for one year and a map of appropriate scale was prepared. Criterion 2.3, Indicator 2 (Major): Maps of an appropriate scale showing extent of recognised customary rights. Non-conformance: 06 of 30 The company has no map of appropriate scale showing extent of recognised customary rights. Corrective Action: The company designed a map of an appropriate scale indicating the villages surrounding the com-pany’s estates. Auditor Conclusions: Closed Evidence: Through an on-site verification audit and document checks, it was confirmed that the company has produced a map of appropriate scale showing surrounding villages and also set up signboards on site to indicate areas belonging to the villagers according to their customary rights. Criterion 2.3, Indicator 3 (Major): Copies of negotiated agreements detailing process of con-sent. Non-conformance: 07 of 30 There are no negotiated agreements detailing process of consent pertaining to the customary rights of others users within or surrounding the area of PT BSP Kisaran Unit. Corrective Action: PT BSP Kisaran Unit prepared a documented agreement with other users in order to establish the customary rights of other users within the company’s area. Auditor Conclusions: Closed. Evidence: Through an on-site verification audit and document check, it was confirmed that the com-pany has a documented agreement, dated August 3rd 2009, between the company and community members who use the company’s concession area (about 12 m2 in area) to build a house under cer-tain terms and conditions. This agreement includes a map of appropriate scale and is valid untul Au-gust 3rd 2010. There is also agreement made on 24 July, 2009 between the company and the leader of Tani Al Ikhlas Group, West Kisaran, a group of 9 members, to use a canal about 250m in length for fishing purposes. This agreement is valid for one year and a map of appropriate scale was pre-pared.



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Criterion 3.1, Indicator 1 (Major): A documented working plan of the company for a minimum of 3 years period. Non-conformance: 08 of 30 A documented integrated working plan of the company for a minimum of 3 years period has not been established. An integrated management plan should be prepared to demonstrate the sustainability of each company’s activities from economical, environmental, social and legal perspectives. Corrective Action: The company developed a strategic plan for 5 years to demonstrate the sustainability of each com-pany’s activities in terms of economical, environmental, social and legal perspectives, and this plan will be reviewed annually. Auditor Conclusions: Closed with observations Evidence: PT BSP Kisaran Unit has developed a documented Strategic Plan for 5 years (year 2009 to 2013) and this document was reviewed by the auditing team. The document includes long-term plans of the company's activities related to human resources, health and safety, social and environ-mental responsibility, financial conditions and long term business prospects. However, with regards to financial aspects, a budget for activities related to environmental and social management has still not been determined. Improvement required: The company should include a cost analysis for environmental and social management programs, not only for production aspects, as part of the company’s responsibility.

Criterion 4.5, Indicator 1 (Minor): Monitoring extent of IPM implementation including training

Non-conformance: 09 of 30 There is no record of training of mandors on how to conduct census of pests for IPM implementation. Corrective Action: The company carried out training on Integrated Pest Management for all estate supervisors (man-dor) and deputy estate managers. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of the cor-rective action to be verified during surveillance audit. Evidence: The company provided evidence on the IPM training conducted, including training invita-tions, photographs, training certificates provided to participants, list of participants, and training ma-terials. The training was conducted on August 4, 2009 at the company’s main office. It was attended by 26 supervisors and deputy estate managers. Criterion 4.5, Indicator 2 (Minor): Monitoring of pesticide toxicity units (a.i. /LD 50 per tonne of FFB or per hectare). Non-conformance: 10 of 30 There is no record of monitoring of pesticide toxicity units (a.i. /LD 50 per tonne of FFB or per hec-tare). Corrective Action: The company has prepared monitoring records on pesticide toxicity units of agrochemicals used since January to July 2009. Auditor Conclusions: Closed Evidence: The company provided evidence in the form of records of chemical usage for each estate since January until July 2009, which include calculations of pesticide toxicity units. From these re-cords, it was found that the highest amount of active ingredient being applied in the estates is paraquat from Gramoxone (approximately 64.22 gram per ha or 69.94 gram per ton FFB) and the LD 50 for Gramoxone is 283 mg/kg. The company’s management has commited to reduce paraquate consumption and is making efforts to use alternative chemicals of less toxicity. The com-



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pany has a documented spraying schedule which shows plans to reduce usage of paraquat. Checks of chemical usage records show that usage of Gramoxone is below the recommended usage ac-cording to the agrochemical label. Criterion 4.7, Indicator 6 (Minor): Evidence of OHS and first aid equipments available at work-sites Non-conformance: 11 of 30 Implementation of the company’s Occupational Safety and Health policy requires improvement. There is lack of consistency in OSH implementation, due to lack of availability of Safety & Health equipment or facilities at worksites and observations that workers are not using sufficient PPE, for example: • There is no designated area to store the sprayer’s personal protective equipment (PPE). Sprayers

bring their PPE home for washing. • PPE worn by sprayers do not appear to be in good condition (eg. mask is worn out with holes, gog-

gles provided are too loose) Corrective Action: The company has developed a standard operating procedure on proper storage of personal protec-tive equipment (PPE). All equipment, such as the spraying knapsack, must be stored in warehouses in each estate. The company will conduct regular monitoring to ensure that all equipment is stored in the warehouse estate after use as defined in the related standard operation procedure. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of the cor-rective action to be verified during surveillance audit. Evidence: The company has developed an SOP on measures to prevent accidents and prevent ill-ness (BMEP-WI-01), which includes proper usage and storage of PPE. The company also has re-cords (in the form of attendance lists and photographs) that a training on methods of agrochemical handling and how to use PPE for sprayers was conducted and attended by sprayers from all estates. Criterion 4.8, Indicator 3 (Major): Evidence that the company uses experienced or trained contractors. Non-conformance: 12 of 30 There is lack of evidence that contractors working for the company are using trained or experienced workers. Corrective Action: Contractors used by the company have received official government letters, such as the Permit for Trade (‘Surat Izin Usaha Perdagangan’) from the Ministry of Trade, Republic of Indonesia, and the company has obtained copies of these letters. Auditor Conclusions: Closed Evidence: The company provided copies of the Business Permist (‘Surat Izin Usaha Perdagangan’) of the contractors, as evidence that the contractors meet and comply with existing government regu-lations, including requirements to use trained or experienced workers. As it was found on-site that contracted workers were competent in performing their work although they had only received infor-mal (undocumented) training, this was taken as sufficient to close this non-conformity. Criterion 5.1, Indicator 2 (Major): Records of regular report on environmental management in accordance with relevant regulations. Non-conformance: 13 of 30 Records of regular report on environmental management in accordance with relevant regulations. Corrective Action: The company has begun monitoring of environmental parameters such as waste water, exhaust emissions, noise, odor and the monitoring reports has been submitted to the relevant local govern-



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ment institution. Auditor Conclusions: Closed The company provided evidence in the form of their environmental management and monitoring re-ports for the period of January to March 2009 and period of April to June 2009. Criterion 5.1, Indicator 1 (Minor): Revisions to environmental management document if there are changes in companies operating areas or activities. Non-conformance: 14 of 30 The company’s environmental management document has not been revised in accordance to changes in relevant regulation, for example, those related to identified HCV areas. Corrective Action: The company’s documented environmental management plan has been revised. The document was revised due to the company’s conversion program from rubber plantation to palm oil plantation, and the document is currently under review and waiting for approval from Asahan Regional Body for Management of Environmental Impacts (‘Bapedalda Kabupaten Asahan’) Auditor Conclusions: Closed Evidence: The company provided a copy of their documented HCV management plan and revised environmental management plan to the audit team. Criterion 5.2, Indicator 2 (Major): If, rare, threatened or endangered species, or high conserva-tion value habitats are present, appropriate measures to preserve them are to be taken.

Non-conformance: 15 of 30 The company’s HCV management plan is insufficient as it was not made with the participation of in-terested parties and has not been reviewed by a technical expert. No socialization of the HCV man-agement plan to stakeholders has been conducted. Records of monitoring of identified HCV areas are also still not available. Corrective Action: The company has developed a new documented management plan for identified HCV areas. A competent technical expert from WWF was engaged to assist in the development of this document. Monitoring activities for identified HCV areas have also been conducted and the company will con-tinue to conduct these monitoring activities regularly. Auditor Conclusions: Closed Evidence: The company provided their revised HCV management plan dated August 1, 2009, which includes a report on monitoring activities being carried out in HCV areas and photographs. The document also includes recommendations to manage and monitor HCV conditions that should be conducted to maintained and improve HCV areas. Criterion 5.3, Indicator 1 (Minor): Estates and mills waste management and disposal are im-plemented to avoid or reduce pollution. Non-conformance: 16 of 30 The license for storage and collection of hazardous waste for the contractor, PT Wiraswasta Gemi-lang Indonesia (PT WGI), has not been renewed since its expiry on 3 November 2008, and the con-tractor also does not have a transportation license for hazardous waste, which is a requirement as stated in the Government Regulation PP No.18 Year 1999. Corrective Action: The company sent a letter to the Ministry of Environment requesting for an extension of their con-tractor’s licence for temporary storage and collection of hazardous wastes. Also, the company has requested PT WGI to obtain a license for transportation of hazardous wastes.



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Auditor Conclusions: Closed Evidence: The company provided copies of a letter no. 637/HRD-legal/VI/2009 from the Ministry of Environment, copies of PT WGI’s renewed licence for as waste storage and collection, as well as copies of their license for transportation of hazardous wastes i.e. no 912 year 2008, received from the Ministry of Environment. Criterion 6.1, Indicator 1 (Major): Documented environmental and social impact assessment, including details of positive and negative social effects that may be caused by plantations and mills, and documented participation of affected parties and local communities. Non-conformance: 17 of 30 A documented social impact assessment, including details of positive and negative social effects that may be caused by plantations and mills and conducted with the participation of affected parties and local communities, is not available. Corrective Action: A social impact assessment, which includes an assessment of the positive and negative social im-pacts of the company’s estate and mill operations was completed with the involvement of affected parties and local communities. Auditor Conclusions: Closed Evidence: The company provided a copy of the completed social impact assessment report with evi-dence of participation of local communities. The company has records of socialization activities con-ducted for stakeholders concerning the social impact assessment on August 21, 2009, including meeting minutes, presentation materials, photographic documentation and attendance lists. There are also records of socialization activities of social impact assessment conducted throughout the communities of surroundings villages. Through an on-site verification audit and interviews with the local communities, it was confirmed that the local communities had participated in these socialization activities. Criterion 6.1, Indicator 1 (Minor): Regular monitoring and management of social impact, with the participation of local communities. Non-conformance: 18 of 30 Regular monitoring and management of social impacts, with the participation of local communities and affected parties is not being carried out. Corrective Action: Regular monitoring of social impacts is scheduled and results of the social impact assessment report have been socialized to commmunity. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of correc-tive action to be verified during surveillance audit. Evidence: During socialization of the social impact assessment report to stakeholders, the company produced a written statement that the company will monitor their social impacts and conduct social impact assessments periodically as required. Implementation of the company’s activities to monitor and manage their social impacts will be verified during the next surveillance audit. Criterion 6.1, Indicator 2 (Minor): Results of revisions to the environmental management document that encompasses social impact assessments in the event there are changes to company’s operational scope, in accordance with existing regulations. Non-conformance: 19 of 30 There is no evidence that company made revisions to the environmental management document in accordance with existing regulations (related to criterion 5.1). Corrective Action: The company has revised their environmental management document to now cover social impact management and monitoring. Monitoring of environmental and social impacts and reporting of moni-



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toring results will be conducted regularly in accordance with local regulations. Auditor Conclusions: Closed. Evidence: The company provided the revised copy of their environment management document conducted for PT BSP Kisaran Unit, which includes a social impact assessment. Criterion 6.1, Indicator 3 (Minor): A regular and scheduled environmental management and monitoring Report.

Non-conformance: 20 of 30 A regular and scheduled social management and monitoring report is available but only includes a report on environmental parameters, not social aspects. Corrective Action: The company has revised their environment management and monitoring report to include a report on social aspects and this was sent to the related government authorities. Auditor Conclusions: Closed. Evidence: There is an official letter from the Human Resources & General Affairs Manager of the company, which states that the company has sent the environmental management and monitoring report prepared for the period of April to June 2009 to the Head of the Batubara Region Environ-mental Office (‘Kepala Kantor Lingkungan Hidup Kabupaten Batubara’), North Sumatera on August 4, 2009. A copy of this revised report was also provided to the audit team and it was verified that the documents includes a report on social aspects as well as environmental aspects. Criterion 6.2, Indicator 3 (Minor): A dedicated person responsible for consulting and commu-nicating with local communities. Non-conformance: 21 of 30 There is no evidence that the company’s dedicated person responsible for consulting and communi-cating with local communities at all estate is recognized by the community and stakeholders. Corrective Action: The company has made a procedure for consultation and communication with the local communities (BMH-03) which explicitly states that there is a dedicated responsible person to consult and commu-nicate with local communities. The responsible person is a Division Assistant who will transfer any issues found to the management. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of correc-tive action to be verified during surveillance audit. Evidence: The company has developed a Standard Operating Procedure (SOP) for internal and ex-ternal communication & consultation, which contains information on the person responsible for con-sulting and communicating with local communities. The level of recognition of the dedicated com-pany representative among the local communities and stakeholders, and extent of activities carried out by this dedicated person to communicate and consult with the stakeholders will be verified at the next surveillance audit Criterion 6.3, Indicator 1 (Major): An open system, which is accepted by affected parties, to receive complaints and to resolve dispute in an effective, timely and appropriate manner.

Non-conformance: 22 of 30 There in no open system to receive complaints and to resolve disputes in an effective, timely and appropriate manner which is accepted by affected parties and stakeholders of PT BSP Kisaran Unit. Corrective Action: An open system to receive complaints and to resolve disputes in an effective, timely from stake-holder has established and socialized.



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Auditor Conclusions: Closed. Evidence: The company has developed a Standard Operating Procedure for handling and respond-ing to grievances from stakeholders. This was verified during the follow-up on site verification audit and through document checks.

Criterion 6.3, Indicator 1 (Minor): Records of handling of the complaints

Non-conformance: 23 of 30 There is no evidence that handling of complaints was recorded in an appropriate manner and sum-marized in specific document as required by the company’s related procedure. Corrective Action: A form to record stakeholder complaints and responses has been established and monitoring is scheduled based on need. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of correc-tive action to be verified during surveillance audit. Evidence: The company has developed a procedure accepted by stakeholders for handling and re-cording of complaints. Records on future complaints received and handling of these complaints will be checked at the next surveillance audit. Criterion 6.3, Indicator 2 (Minor): Procedures for the identification and calculation of fair com-pensation for the loss of legal or customary right of the land, with the involvement of local community representatives and relevant agencies and made publicly available. Non-conformance: 24 of 30 Procedures for the identification and calculation of fair compensation for the loss of legal or custom-ary right of the land (if any), with the involvement of local community representatives and relevant agencies are not available. Corrective Action: The company has established a procedure for identification of any person or party entitled to com-pensation. Socialization of this procedure was conducted and it was accepted by stakeholders. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of correc-tive action to be verified during surveillance audit Evidence: The company provided a copy of their procedure to parties identified as entitled to fair compensation, issued 15 May 2009. This was verified through an on-site verification audit and inter-views of local community representatives. Effective implementation of this procedure to identify per-sons or parties entitled to compensation, if any, will be verified at the next surveillance audit. Criterion 6.4, Indicator 1 (Major): Procedures for the identification, calculation and compensa-tion for the loss of legal or customary rights of the land, with the involvement of local com-munity representatives and relevant agencies. Non-conformance: 25 of 30 There is no evidence that the company has established a procedure for the identification, calculation and compensation for the loss of legal or customary rights, with the involvement of local community representatives and relevant agencies. Corrective Action: The company has conducted socialization on their procedures for identification, calculation and compensation for the loss of legal or customary rights with involvement of local community represen-tatives and relevant agencies. Additional socialization activities will be carried out as required. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of correc-tive action to be verified during surveillance audit. Evidence: Records of socialization process of the new procedure, including photographic evidence



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and an attendance list, are available for a socialization event carried out on August 21, 2009 at Bak-rie Club, Kisaran. Effective implementation of the new procedure will be verified at the next surveil-lance audit. Criterion 6.4, Indicator 1 (Minor): Records of identification of people entitled to receive com-pensation.

Non-conformance: 26 of 30 There are no records of identification of people entitled to receive compensation. Corrective Action: The company has prepared flow chart of identification of any entitled person for fair compensation. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of correc-tive action to be verified during surveillance audit. Evidence: The company provided a copy of their flow chart for identifying people entitled for fair compensation due to loss of legal or customary rights, and will implement their flow chart to identify local people entitled to compensation, when necessary. This will verified during the next surveillance audit. Criterion 6.5, Indicator 2 (Minor): Agreements entered into with contractors are to specify that contractors abide by labor laws. Non-conformance: 27 of 30 An agreement entered into with contractors working for the company specifies that contractors are to abide by labour laws (ie. OHS equipment, Social Security or work insurance and Minimum Wages), however, there is lack of consistent control of the contractors by the company to ensure that the con-tractors abide by the requirements. Corrective Action: The company’s HR Department has made and sent letter to contractors stating that payment of con-tractors must be in accordance with the Regional Minimum Wage (Upah Minimum Regional - UMR) and this will be monitored by the company. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of correc-tive action to be verified during surveillance audit. Evidence: The company provided a copy of their letter sent to all contractors to ensure their contrac-tors make payments for employees according to the requirements of local government regulations (UMR). The actions taken by the company to ensure contractors abide by these requirements will be assessed during the next surveillance audit.

Criterion 6.9, Indicator 1 (Minor): Proof of implementation of sexual harassment policy.

Non-conformance: 28 of 30 There is no evidence that the company’s policy on sexual harassment and violence has been social-ized to all female workers. Corrective Action: The company’s Human Resource Department has produced a letter regarding their policy on sexual harassment and this will be monitored. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of correc-tive action to be verified during surveillance audit. Evidence: The management of PT BSP Kisaran unit produced a letter to all estate managers on Au-gust 26, 2009, informing them to carry out socialization of their policy on sexual harassment and vio-lence to all workers. This letter was accompanying the contractual agreement between management and workers (Perjanjian Kerja Bersama - PKB). Awareness and understanding of the company’s fe-male employees on the company’s sexual harassment policy will be verified during the next surveil-



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lance audit.

Criterion 6.9, Indicator 3 (Minor): Specific grievance mechanism is available.

Non-conformance: 29 of 30 The company has set up a grievance mechanism procedure. But the company has yet to set a spe-cific grievance mechanism for gender-related issues. Corrective Action: The company has revised their grievance procedure as per document RSPO-02 to include a specific grievance mechanism for gender-related issues. Auditor Conclusions: Evidence of immediate action taken accepted. Effectiveness of correc-tive action to be verified during surveillance audit. Evidence: The company provided a copy of their revised grievance procedure, which includes a spe-cific grievance mechanism for gender-related issues. The company maintains records of socializa-tion of this procedure in the form of photo documentation and attendance lists. Implementation of the grievance procedure for gender-related issues will be verified at the next surveillance audit. Criterion 8.1, Indicator 1 (Major): A monitoring action plan based on the social environmental impact assessment, and regular evaluations of plantation and mill operations. As a minimum, these must include, but not necessarily be limited to: • Reduction in use of certain chemicals (criterion 4.6). • Environmental impacts (criterion 5.1). • Waste reduction (criterion 5.3). • Pollution and emissions (criterion 5.6). • Social impacts (6.1). Non-conformance: 30 of 30 There is no monitoring action plan based on the social environmental impact assessment, and regu-lar evaluations of plantation and mill operations. The company’s current monitoring plans do not in-clude plans for the following aspects: • Reduction in use of certain chemicals (criterion 4.6). • Environmental impacts (criterion 5.1). • Waste reduction (criterion 5.3). • Social impacts (6.1). Corrective Action: The company has revised their environmental and social monitoring action plan to include the as-pects above. Monitoring on progress is being carried out by the company through internal audits as well as management review of these aspects and the RSPO audit findings in order to discuss the findings and methods to improve all operations at the estates and mill to meet the RSPO require-ments. A management review was conducted on July 13, 2009. Auditor Conclusions: Closed Documented evidence of the review meeting conducted in July 13, 2009 was provided, such as, meeting minutes, list of participants and recommendations for improvement received from the par-ticipants. A copy of the revised environmental and social monitoring plan was also provided.

3.3 Noteworthy Positive Components

Criterion 2.1. There is compliance with all applicable local, national and ratified international laws and regulations. Findings: Records of evaluation of the company’s compliance to legal requirements are very well documented



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and maintained and integrated in compliance to the RSPO Principles & Criteria.

Criterion 2.2: The right to use land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights. Findings: The company can demonstrate land ownership and the right to use their land, as copies of all rele-vant documents, including Land Cultivation Rights Titles (Hak Guna Usaha) are available in accor-dance with relevant laws and well maintained.

3.4 Issues Raised by Stakeholders and Findings Pertaining to Issues

Issues Raised by Workers

Issues: 1) Workers’ monthly wages of IDR 930,600 is less than the standard of the Provincial Minimum

Wage (‘Upah Minimum Propinsi’– UMP) for the Asahan district set for year 2009, which is IDR 935,000.

2) Basic wages provided are as per the Regional Minimum Wage (’Upah Minimum Regional’ - UMR) of IDR 868,634. However, one worker has worked for the company for 15 years, and in his payslip, his payment was stated as IDR 1,351,243 but an amount as much as IDR 11,124 was deducted and stated as a ’discount’.

3) The workers have Jamsostek (worker’s insurance), however the medical treatment given at the clinic is still a burden to the workers as their pay is deducted to pay for the treatment.

4) PT BSP’s management deducts the workers housing allowance from their pay 5) Workers’ pension money can be claimed as soon as workers begin their pension. There is no

explaination on the calculation of the workers pension amount. 6) PT BSP pensioners to not get access to hospital treatment, even though in the company’s regu-

lations it is stated that that pensioners have the right to obtain hospital treatment.

Auditor’s Findings: 1) This issue is not valid. According to the government letter (SUMUT Governor’s decree

561/4213/K-2008 dated 17 November 2008), the UMP for the Sumut region for year 2009 is IDR 905,000 per month, and not IDR 935,000, as claimed. Hance, the worker’s salary meets the minimum wage standard set for 2009.

4) This issue is not valid. Checks of worker payslips show that the payslips include the worker’s wages as well as housing allowance provided, which is not deducted from the worker’s salary. The company responses for other issues raised was accepted, as per their responses described below.

Company’s Response: 1) PT BSP has a company letter No. 150/HRD/II/2009, which states that the worker’s minimum

wage is more than the Provincial Minimum Wage (UMP), which is IDR 905,000 while workers wages are IDR 930,680.

2) The deduction of up to IDR 11,126 is a contribution towards maintenance of workers’ housing and actually is not deducted from the worker’s salary, it is only for accounting purposes that this is stated under the ’discount’ column. Under the wages column of the payslip, this amount is also attached, so the fact is that there is no deduction of this amount or ’discount’ (Worker payslips was provided as evidence).

3) The deduction stated in the payslip for medical treatment is also is for accounting purposes only, because on the wages column, the cost of medical treatment is attached as a balance since the company bears the costs of medical treatments for workers.

4) The company does not deduct the workers housing allowance from the worker’s salary, but the housing allowance amount is provided by the company and this amount is stated in the worker’s payment slip.

5) Every worker who qualifies to receive a pension will have the pension settled through the



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pension fund. 6) In line with the working agreement between the management and labour union (Perjanjian Kerja

Bersama – PKB), clause XVI, it is stated that once workers have claimed the full pension amount, the company no longer bears their hospital treatments, unless the workers do not claim the full pension amount (the pension is paid every month for a specific time frame).

Issues Raised by Local Communities / Native People

Issues: 1. The company’s Community Development programme is limited 2. A graveyard for employees of PT BSP Kisaran Unit not available 3. Road and infrastructure maintenance by the company is limited 4. Animal grazing is prohibited by the company 5. Environmental impacts (dust, odour, erosion) are resulting from the company’s activities 6. Frequent flooding results due to damaged drains that are not well-maintained by the company Auditor’s Findings:

1. The company has annual Community Development (CD) programs that have been conducted

since the year 2006. PT BSP Kisaran Unit’s CD programs include providing allocations for school aid (scholarships, stationery, etc.), training for oil palm farmers (smallholders), places of worship, development assistance, child health programs and other assistance programs. How-ever, the company’s community development still does not focus on empowerment of local communities, as expenditure of funds is only based on incoming proposals. Research results from Gadah Madah University also showed that the company’s CD programs have not been ef-fective because funding assistance has not been given based on actual community needs

2. According to the local communities, their graveyard is used by PT BSP Kisaran Unit’s workers because the company does not have graveyard facilities for their workers. During the main as-sessment, auditors found a graveyard within the company’s land area which was designated as a HCV 6 area. There was no explanation given on the traditional/customary or legal rights of the graveyard in company’s HCV document, and there is no agreement by both parties to use the graveyard area.

3. PT BSP Kisaran Unit management allows local communities to use the company’s main roads or production roads for transporting subsidized oil and food from the government. The com-pany’s main and production road is regularly maintained.

4. There were many grazing activities being carried out within the company’s rubber and palm oil estates, which are prohibited according to the company’s management. According to economic studies, 70% of the local communities generate income from their cattle farms. At present, local communities face difficulties in obtaining land for grazing. The farmers proposed a solution to this issue through the company’s community development programme but there has been no response from the company.

5. Most of local communities living nearby the mill are affected by increased levels of odour and dust during the dry season only. Local communities living nearby drainage or waterways are also affected by high erosion. However the company regularly maintains their waterways with heavy equipment.

6. The Village Heads of Tamansari, Meranti, Sukadamai, Lolotan, Perhutaan Silo, Gedangan, Kisaran, Sukamakmur villages complained that their villages often flood because the com-pany’s drainage or waterways are not well maintained. During the assessment, it was found that some of drains are blocked by domestic wastes generated from the villagers’ housing area. However, the company has a regular maintainance program for their drains, and this was rec-ognized by the local communities.

Company’s Response: 1. The company helps surrounding communities through road maintenance, and provision of

schools facilities. The company implements their Community Development program based on the needs of villagers (education, economics, etc.) which was assessed thorugh questionaires distributed to local community. The company has a special department based at the Kisaran Head office to handle donations for social activities.



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2. All estates provide graveyards for both the local communities and their workers. 3. The company does not restrict for public use all public roads that located within the company

area, but to improve security, the estate closes certain roads to prevent the occurrence of FFB thefts. Road maintenance and reconstruction, including bridges, are the responsibility of the local government.

4. According to the company’s policy, cattle grazing activities within the company’s land area are not allowed. These activities would disrupt the palm oil fruit development process.

5. Records of regular monitoring of environmental impacts as well as odour and dust caused by mill operations shows that the level of odour and dust produced are still within the government’s emission quality standards.

6. Drains and waterways have been built by the company in order to minimize impacts of floods and reduce illegal harvesting of palm oil fruits by others.

Issues Raised by Worker Organizations / Trade Unions

Issues: 1. Housing facilities provided at Pondok Ladang are inadequate 2. Working equipment provided by the company is limited 3. Regulations pertaining to female reproductive health, eg. Provision of menstruation leave, are

not implemented by the company Auditor’s Findings: 1. Housing for workers in Serbangan II (Pondok Ladang) are in very bad condition due to problems

such as leaky tin roofs, rotted wooden roofs, moldy wall boards, and lack of toilets. The housing for workers at Pondok Ladang housing area consists of a heritage cottage from Dutch era. Ap-proximately 60 homes are in damaged and unsanitary condition.

2. According to some workers, work equipment provided such as harvesting sickes are inadequate. The process to replace broken equipment is very long, and this reduces productivity.

3. Female employees are permitted to take menstruation leave. Therefore, this issue raised by the worker union( SBSI) is not valid since at the time of asessment, documentation of menstruation leave approved for female employees is available at the clinic in Serbangan Estate (January 2007 data to May 2009) and at the Sei Baleh Estate office.

Company Responses: 1. A housing renovation programme for the worker’s housing at Pondok Ladang will be done ac-

cording to priority and and based on job ticket provided. 2. The company will develop an effective mechanism on replacement of broken working equip-

ment. 3. Female workers are permitted to take menstruation leave as required by the local regulation (UU

No 13 clause 81) and as stated in the contractual agreement with the worker unions, PKB Clause VIII sentence d.

Issues Raised by Non-Government Organizations

Issue: 1. There is an ongoing land dispute at Sei Kopas. 2. There is an ongoing dispute over the Tinggi Raja land boundaries. 3. The working regulations document “PKB” contains limited information on workers rights. 4. Socializaton of the PKB to all workers is limited. 5. The company is not in compliance to the regulation from the Workforce Minister (Kepmen

Naker 100/95) pertaining to hiring of daily paid employees for temporary work. 6. First Aid kits are not available at working areas. 7. Rain shelters are not available in the field. 8. Socialization of OSHAS is limited. 9. Wages provided do not meet minimum legal requirements. Auditor’s Findings:



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1. Sei Kopas is part of PT BSP’s Aek Salabat Estate, which is a rubber estate. As such, this area was not included in the RSPO certification assessment.

2. Mr. Sinurat from Tinggi Raja sub-district located in Asahan district has been claiming 200 ha of PT BSP’s land area since 2006 and conflict has not been solved by the company through free, prior and informed consent. During the main assessment, it was found that the company sug-gested to Amsyah Sinurat to state his claims to the justice court at Asahan. According to the company’s management, this conflict should be solved by the court and village head. A con-flict resolution mechanism through free, prior and informed consent is not in place even though the company has already developed a procedure for conflict resolution. However, since the time of the main assessment, the claimant has yet to make a claim for the land through the court, but is the company is currently holding discussions with the claimant to resolve this is-sue amicably through free, prior and informed consent.

3. The PKB working regulations are currently set up by the worker union (SPSI) centre and rep-resentatives of all plantation companies in Indonesia. The mechanism of setting up the PKB is not the company’s responsibility, but the responsibility of SPSI and SBSI in Sumatera Utara at district as well as provincial level upon consultation with SPSI and SBSI representatives at plantation level.

4. There are two labour organisations that are represented within the company, which are SPSI and SBSI. PKB documents are shared between the SPSI and SBSI committees. All company workers who are members of SPSI and SBSI are not well informed on the PKB by SPSI and SBSI committee.

5. According to the Workforce Ministry regulation (KepMen Naker 100/95) daily-paid workers or ‘Buruh Harian Lepas’ (BHL) are only allowed only to conduct temporary work. At the time of the assessment, there were no BHL workers working for the company. Temporary work is car-ried out by hired contractors.

6. First Aid is available at every estate division office as well as at the medical polyclinic. 7. Rain shelters in the estate area are not needed by workers because the housing complexes

are not too far from the palm oil estates. 8. Socialialization of OSHAS is carried out by the Mandor Head and also the estate division as-

sistant manager every day during the morning briefing for the workers. 9. During main assessment, it was found that all wages for all employees meet the minimum re-

quirements as defined in worker regulations. (Note: The UMP for the Sumut region is IDR 905,000 while the minimum wage provided by the company to their wokers is IDR 930,680.)

Company Responses: 1. Sei Kopas is located at Aek Salabat Estate and excluded from the RSPO certification process. 2. Tinggi Raja village is located at a different management unit under PT BSP, and therefore ex-

cluded from RSPO certification process of the Kisaran Unit. 3. The PKB document is documentation of regulations for workers, which the company devel-

oped based on negotiations with the labour union (SPSI), representatives from the Branch, Regional and Central Directors Board (DPC, DPD, DPP) and the Plantation Companies Coop-erative Body (BKS PPS).

4. The Labour Union committees are responsible to communicate or socialize the PKB document to all of the company’s workers, with a company representative present.

5. PT BSP Kisaran Unit’s estate consisted of only rubber estates before the 1980’s. The com-pany only hires a ratio of 8 workers for every 100 ha of palm oil estate. Based on this ratio, BSP hires permanent (SKU) workers rather than daily-paid workers or BHL. As such, the com-pany complies with the government regulation (KepMen Naker No 100 tahun 1995.)

6. First Aid records are available at the district office. 7. Rain shelters are not required according to palm oil estate best practices. 8. OSHAS socialisation has been carried out by the management through coordination with the

Asahan Workforce Agency (Evidence: Documented attendance lists) 9. The company complies with government regulation on local wages, with evidence in that the-

company’s top management sent a letter to all their estate offices (letter no. 150/HRD/II/2009), informing that worker wages are IDR 930,680 per month (higher than the Minimum Wages Standard of Sumatera Utara Province, which is IDR 905,000)



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3.5 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client It is acknowledged that the assessment visit was carried out as described in this report and we accept the as-sessment findings and report content. Signed on behalf of PT Bakrie Sumatera Plantations …………………………………………. Efdi Ruzaly Management Representative – RSPO Bakrie Sumatera Plantations Group Date: 01 October 09

Signed on behalf of TUV Rheinland Malaysia …………………………………………. Dian S. Soeminta Lead Auditor Date: 01 October 09



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APPENDICES Appendix 1: Details of Certificate Standard: RSPO Principles & Criteria for Sustainable Palm Oil Production; Indonesian

National Interpretation: 2008

Certificate Registr. No.: 01 100 096704

TUV Rheinland Malaysia Sdn. Bhd. certifies: Certificate Holder: PT Bakrie Sumatera Plantations, Tbk

Unit SUMUT I, Kisaran – Palm Oil Mill Unit SUMUT I, Kisaran Jl. lr. H. Juanda , Kisaran 21202, lndonesia;

Scope: Palm Oil Production and Plantation Management System

An audit was performed, Report No. 096704. Proof has been furnished that the requirements according to RSPO Principles & Criteria for Sustainable Palm Oil; Indonesian National Interpretation: 2008 are fulfilled.

The due date for all future audits is 14-04 (dd.mm).

Validity: The certificate is valid from 2010-06-14 to 2015-06-13.

The palm oil mill and supply base covered in certification scope are:

CPO Tonnage Total Productions: PK Tonnage Total Productions: Company Estates FFB Tonnages: Outgrowers FFB Tonnages: CPO Tonnage claimed for certification: PK Tonnage claimed for certification:

36,438 tonnes 7,436 tonnes 160,091.64 tonnes - 36,438 tonnes 7,436 tonnes

GPS locations Name of mill / estate Location Latitude Longitude

Bakrie Sumatera Plan-tations Palm Oil Mill

Sei Baleh Village, Sei Baleh Sub-district, Batu Bara District, Sumut.

03º02’26.7” 099º34’53.2”

Tanah Raja Estate Sei Renggas Village, West Kisaran Sub-district , Asahan District, Su-mut.

02º57’50.0” 099º35’57.7”

Gurach Batu Estate Gerak Tani Village, Meranti Sub-district, Asahan District, Sumut.

3°20’45.0” 99° 58’23.4”

Kuala Piasa Estate Tinggi Raja Village, Tinggi Raja Sub-district, Asahan District, Sumut

02º54’04.2” 099º34’00.2”

Serbangan Estate Rawang Lama Village, Panca Arga Sub-district, Asahan District, Sumut.

03º01’29.8” 099º39’30.3”

Sei Baleh Estate Sei Baleh Village, Sei Baleh Sub-district, Batu Bara District, Sumut.

03º04’12.1” 099º35’11.0”



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Appendix 2: Certification Audit Plan

Date / Time

(1) Organizational Unit and

Processes Auditor / Abbrev. Interviewee

Procedure - EM/QM Element -

Standard Chapter Sunday, May 24, 2009

Traveling Jakarta to Medan to Site By GA. Traveling to Kisaran,

Dian S. Soeminta (DSS), Suseti-yaningsih (SS), Fadli (FA), Agus Salim Alfat (AS), Carol Ng (CN)

Monday, 25 May 2009 09.00-12.00

Stakeholder Consultation All Auditor Invited stake-holders

13.00-15.00

• Opening Meeting • Introduction by team leader. • Presentation of estates by re-spective managers. • Presentation of Oil Mills source of FFB by respective managers

All Auditor Top Management & Related Man-ager

15.00-17.00

HGU legal requirement , all re-lated legal requirement & documentation checking

All Auditor Plantation and Palm Oil manager

Principle 1 Criteria 1.1; 1.2; Principle 2 Criteria 2.1;2.2;2.3; Principle 3 Criteria 3.1;

17.00 End of 1st day audit Tuesday, 26 May 2009

Environment, Economic and Legal Issues • Field operations. • Worker interviews. • Riparian zones. • HCV

DSS Plantation Man-ager

Principle 4 Criteria 4.1; 4.2;4;3 Principle 2 Criteria Principle 3 Principle 5 Criteria 5.1 to 5.6 Principle 8

Environment and Legal Is-sues • Chemical stores • Workshops. • Legal Aspect

CN& AS Plantation Man-ager

Principle 2 Criteria 2.1 Principle 4 Criteria 4.6,4.7, 4.8 Principle 8

08.00-12.00 Serbangan Estate

Social issues • Housing. • Medical. • Schools. • Local communities • HCV

SS & FA Plantation Man-ager

Principle p 2 Criteria 2.2, 2.3 Principle 6 Criteria 6.1 to 6.11 Principle 8

12.00 Lunch and Break 13.30-17.00 Tanah Raja Estate

Environment, Economic and Legal • Field operations. • Worker interviews.


Principle 4 Criteria 4.1; 4.2;4;3 Principle 2 Criteria



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Date / Time




Standard Chapter • Riparian zones. • HCV

Principle 3 Principle 5 Criteria 5.1 to 5.6 Principle p 8


CN& AS Principle 2 Criteria 2.1 Principle 4 Criteria 4.6,4.7, 4.8 Principle 8

Social issues. • Housing. • Medical. • Schools. • Local communities • HCV

SS & FA Principle 2 Criteria 2.2, 2.3 Principle 6 Criteria 6.1 to 6.11 Principle 8

17.00 End of 2nd day asessment Wednesday, May 27, 2009

Environement, Economic and Legal Issues • Field operations. • Worker interviews. • Riparian zones. • HCV


Principle p 4 Criteria 4.1; 4.2;4;3 Principle 2 Criteria Principle 3 Principle 5 Criteria 5.1 to 5.6 Principle p 8


CN& AS Plantation Man-ager

Principle 2 Criteria 2.1 Principle p 4 Criteria 4.6,4.7, 4.8 Principle 8

08.00-12.00 Kuala Pi-asa Estate

Social issues • Housing. • Medical. • Schools. • Local communities • HCV

SS & FA Plantation Man-ager

Principle 2 Criteria 2.2, 2.3 Principle 6 Criteria 6.1 to 6.11 Principle 8

12.00-13.30 Lunch & Break Environment, Economic and Legal Issues • Field operations. • Worker interviews. • Riparian zones. • HCV

DSS & AS Plantation Man-ager

Principle 4 Criteria 4.1; 4.2;4;3 Principle 2 Criteria Principle 3 Principle 5 Criteria 5.1 to 5.6 Principle 8


CN & FA Plantation Man-ager

Principle 2 Criteria 2.1 Principle 4 Criteria 4.6,4.7, 4.8 Principle 8

13.30-17.00 Gurach Batu Estate

Social issues • Housing.

SS Plantation Man-ager

Principle 2



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Date / Time




Standard Chapter • Medical. • Schools. • Local communities • HCV

Criteria 2.2, 2.3 Principle 6 Criteria 6.1 to 6.11 Principle 8

17.00 End of 3rd day Thursday, 28 May 2009

Economic Issue & Legal • Mill inspection • Workshops. • Stores. • POME application. • Document review.

DSS & AS Manager Principle 1 Principle 2 Principle 3 Principle 4 Principle 5 Principle 8

08.00-12.00 Bunut Mill

Environmental Issue • Mill inspection • Workshops. • Stores. • POME application. • Document review.

CN Manager Principle 1 Principle 2 Principle 3 Principle 4 Principle 5 Principle 8

Social Issue • Mill inspection • Worker • Document review.

SS & FA Manager Principle 2 Principle 6 Principle 8

12.00 Lunch & Break 13.00 Audit of documentations.

• Principles 1, 2 and 3. • Principles 4 and 7. • Principles 5 and 6. • Principle 8.

All Auditor Manager

17.00 End of 4th Audit Friday, 29 May 2009 July 18, 2008 08.00

Audit of documentations. • Principles 1, 2 and 3. • Principles 4 and 7. • Principles 5 and 6. • Principle 8. Preparation for Closing Meeting

ALL Manager

10.00 • Presentation of findings by the audit team.

• Questions and answers. • Final summary by team leader

ALL Manager

11.00 End of Audit 11.00-15.00 Traveling to Medan ALL 17.30 Traveling to Jakarta & KL (CN)

Appendix 3: List of Abbreviations (with Translations)

AMDAL Analisis Dampak Lingkungan & Sosial (Social & Environmental Impacts Assessment) BEJ Bursa Efek Jakarta (Jakarta Stock Exchange) BES Bursa Efek Surabaya (Surabaya Stock Exchange) BHL Buruh Harian Lepas (Temporary Daily Workers) BKPM Badan Koordinasi Penanaman Modal (Capital Investment Coordination Board) BKS PPS Badan Kerjasama Perusahaan Perkebunan (Plantation Companies Cooperative

Body)



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CPO Crude Palm Oil EIA Environmental Impact Assessment ERTs Endangered, Rare & Threatened species ESH Environmental Safety & Health FFB Fresh Fruit Bunches FSP Federasi Serikat Pekerja (Workers Union Federation) EFB Empty Fruit Bunches HCV High Conservation Value HGU Hak Guna Usaha (Land Cultivation Rights Titles) HIP Hubungan Industri Pancasila (Pancasila Industrial Relations) IDR Indonesian Rupiah (Indonesian currency) INA-NI Indonesian National Interpretation IPM Integrated Pest Management KepMen Naker Keputusan Menteri Tenaga Kerja (Workforce Minister’s Decree) LTA Lost Time Accident MSDS Material Safety Data Sheets NGO Non-Government Organization OSH Occupational Safety & Health PKB Perjanjian Kerja Bersama (Contractual Working Agreement) PKO Palm Kernel Oil PKWT Perjanjian Kerja Waktu Tertentu (Contracted workers agreement) POME Palm Oil Mill Effluent PPE Personal Protective Equipment PT BSP PT Bakrie Sumatera Plantations Tbk. RKL Rencana Pengelolaan Lingkungan (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan (Environmental Monitoring Plan) SBSI Serikat Buruh Sejahtera Indonesia (Indonesian Labour Union) SIA Social Impact Assessment SKU Syarat Kerja Umum (General Work Conditions) SMK3 System Manajamen Kesehatan dan Keselamatan Kerja (Occupational Safety &

Health Management System) SOP Standard Operating Procedure SPSI Serikat Pekerja Seluruh Indonesia (Indonesian Workers Union) UMP Upah Minimum Propinsi (Provincial Minimum Wage) UMR Upah Minimum Regional (Regional Minimum Wage) UKL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UPL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) USDA United States Department of Agriculture UU Undang –undang (Regulation)



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Appendix 4: List of Stakeholders Consulted

Name Address/Status Position/Remark LOCAL COMMUNITIES Ruslin Rawang Pasar IV, Kecamatan Rawang

Panca Arga Village Head

Jumari Punggulan Dusun 1 Kecamatan Rawang Panca Arga

Religious Leader

Risman Punggulan Dusun 1 Kecamatan Rawang Panca Arga

Youth Leader

Abdul Rauf Fadilah Sinaga

Sei Renggas Village Village Head

Zaidin Karang Anyer Village Village Head M. Samin Sitorus Terusan Tengah Village Village Head Rusmanto Siagian Terusan Tengah Village Head of Lembaga Pemberdayaan

Masyarakat (Community Empower-ment Institution)

Aliaman Sinaga Tinggi Raja Village Head of Lembaga Pemberdayaan Masyarakat (Community Empower-ment Institution)

Tukino Suka Damai Village, Kecamatan Pulo Bandring

Village Head

Pardiman Parhutaan Siau Village Head of BPD, Head of SMA Taman Siswa Cabang Suka Damai School

Junaidi Dusun Sumber Sari, Sei Baleh Plantation Village

Head of Community (Tokoh Masyara-kat)

Suliyo SPd Sei Baleh Plantation Village Village Secretary Siti Erpita Pondok Ladang Villager Idris Efendi Palem Sei Rengas Village Community Leader Anhar Nasution Sei Rengas Village Al-Ikhlas religious leader Junedi Sei Rengas Village Al-Ikhlas religious group member

EMPLOYEES Mursika Suryadi -

19071 Syarat Kerja Umum PT BSP FFB Harvestor – SR

Marsito Syarat Kerja Umum PT BSP FFB Harvestor - SR Kushaeri Syarat Kerja Umum PT BSP Harvestor (SBSI) Misli Syarat Kerja Umum Serikat Pekerja Seluruh Indonesia (In-

donesian Workers Union) Pungki F. Nugroho Assistant Estate SR Jahri Nasution Syarat Kerja Umum SR Legiman Syarat Kerja Umum Head Mandor SR Ernilawati Hubungan Industri Pancasila (HIP) Nurse Clinic SR Hartono *) Syarat Kerja Umum Harvesting SB Sri Herlina Hubungan Industri Pancasila (HIP) Nurse Clinic KP Darto Clinic staff KP Gemek Syarat Kerja Umum Harvesting KP II Abdullah Gumi Syarat Kerja Umum Mandor KP Paiman Jatisari Pensioner SKU Sarijan Syarat Kerja Umum Daily paid worker Sarijo Syarat Kerja Umum John Deer truck driver Abdul Wahab Syarat Kerja Umum Mandor SR



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Darwin Batubara Syarat Kerja Umum ISO clerk Un name Syarat Kerja Umum SR

CONTRACTORS & SUPPLIERS Sadikun UD Salijaya - Owner Weeding, Fertilizing, Nursery etc.

Sugiyanti UD SM Along - Mandor Weeding, Fertilizing

Sumiyati, Iyem, Marsini, Dahlia, Saminem, Yuni

UD SM Along - Workers Weeding, Fertilizing

Syahrizal, Azhari UD Aulia - Supervisor

Bakri UD Aulia - Finance

Nursery, Fertilizing, Prunning, Clean weeding, Circle weeding, Cover crops planting, Strip weeding plant, etc.

Uli, Rial, UD Aulia - Field Staff Nursery

Siti Hadijah UD AUlia - Mandor Nursery

Riwen; Tukini UD Aulia - Workers Nursery

WORKER UNIONS Misli Serikat Buruh Seluruh Indonesia (SBSI) -

BSP Organization Committee

Kushaeri SBSI - BSP Organization member Lukman Saragih SBSI - BSP Organization member Edison SBSI - BSP Organization member NON-GOVERNMENT ORGANIZATIONS Gindo KPS – NGO - Sumut Organization member Manginar Situmorang

KPS – NGO- Sumut Organization member

Erwin KPS – NGO- Sumut Organization member Aida Harahap KPS – NGO - Sumut Organization member

Appendix 5: Socio-economic Background of Local Communities General Overview This section describes the local communities that reside inside and surrounding the land area of PT BSP’s Kis-aran Unit. According to a stakeholders list report produced in 2008, PT BSP’s Kisaran Unit is located within two districts (‘kabupaten’), which are the Asahan and Batubara Districts located in the North Sumatera Province. The Asahan district covers 13 sub-districts (‘kecamatan’) dan the Batubara district covers 7 sub-districts. The area of PT BSP’s Kisaran Unit covers 7 sub-districts of which 6 sub-districts contain 38 villages within Asahan area and one sub-district consists of 7 villages located in Batubara. The sub-districts that are covered by PT BSP’s Kisaran Unit are namely Meranti, East Kisaran, West Kisaran, Buntu Pane, Air Joman, BP Mandoge in Asahan district, and Sei Balai in Batubara district. The total population of the local communities living within the Asahan district is documented in the company’s Environmental Impact Assessment Document (UKL and UPL) February 2006, which states that about 75,450 households or approximately 357,508 people are living in this area. Based on documentation by the govern-ment and statistics from the Asahan District, North Sumatera Province agency, the total population in Asahan district was about 935,855 people in the year 2000. With an annual growth of 1.75% in 2000-2007 the popula-tion was expected to reach approximately 1,038,554 people in year 2007. The percentage of males in the re-gion was calculated to be 50.32% and females, about 49.68%. The highest population density is 1,600 indi-viduals per square kilometre in West Kisaran and East Kisaran sub-districts. The total population in Batubara district was about 374,765 peoples in year 2007. Current statistical data of the local community population in the company’s surrounding areas was not readily available. Dependency ratio in the Asahan district based on comparisons between number of individuals of non-working age (below 15 years old and above 65 years old) and those of working age (aged between 15 and 65 years old)



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is considered high at 59.76% . This means that for every 100 people employed, there are approximately 60 people who are unemployed. There were about 10,539 unemployed people, consisting of 4,369 males and 6,170 females in 2007. Most of the population in both Asahan and Batubara districts have a relatively formal education. Playgroups or kindergardens, as well as primary schools are available in almost each village, or at a neighbouring village. There are about 655 primary schools, 118 secondary schools, 56 general high schools and 34 practical high schools in the Asahan district. Islamic schools (Madrasah) are also available in almost all sub-districts, including 103 units of Madrasah Ibdidaiyah, 113 units of Madrasah Tsanawiyah and 50 units of Madrasah Aliyah. Due to increased educational awareness and facilities, many students continue their studies at Asahan local universi-ties. Table 13: Stakeholders Located at Respective Boundaries of PT BSP’s Kisaran Unit Oil Palm Estates

Stakeholders located at estate boundaries Boundary Tanah Raja Gurach Batu Kuala Piasa Serbangan Sei Baleh

North Sei Baleh Estate Village

Sei Baleh Estate Village, Tanjung Rapuan Village, Pulo Bandring Village

Tinggi Raja Village

Rawang Pasar IV, V Village

Small Holder, Sukarame Village

East Siumbut-Umbut Village Sidodadi Village Tinggi Raja

Village Pasar Lembu Village

Pondok Bungur Village

South Tinggi Raja Village

Tanah Rakyat Village

Prapat Janji Village

Subur, Siumbut-Umbut Village

Pulo Bandring Village

West Gerak Tani Village

Suka Dame Village, Perhutaan Silau Village, Persiapan Taman Sari Village, Silau Maraja Village.

Terusan Tengah Village

Karang Anyer Village, Sidomukti, Village, Bunut Seberang Village.

Suka Makmur Village

Community Background Muslim communities of Javan and Malay origin have settled in and around PT BSP’s Kisaran area. They mainly consist of second or third generations who came during the time when the company was still named NV Hol-landesch Amerikanse Plantage Mastchappij of Holland in the 1911s. In the year 2007, the Muslim communities made up about 86.96% of the communities in this area. The Catholics made up about 1.48%, the Protestants were about 10.38% and the Buddhists were about 1.12%. In terms of ethnicity, the communities that have set-tled consist mainly of the Javanese (51.89%) and Batak (25.68%). Malays make up 17.2% of the population and the remaining 5.31% consists of Minang, Banjar and Aceh ethnicities. During the main assessment visit, however, it was found that villagers of Sei Rengas, Terusan Tengah, Tinggi Raja settled in the area before the Holland company developed rubber plantation on 1911s. Other vilages such as Pungulan have been in the area since 1940, and Rawang Pasar IV, part of Rawang Lama village, settled in 1965. Most of the populations of those villages are of Javanese origin (60%) and Batak ethnicity. Economic Activities & Land Use Most of the communities have access to facilities and carry out a number of economic activities for their subsis-tence. They use water from their own pumps for household purposes and water from PT BSP’s drainage wa-terways or “parit beco” to irrigate their rice fields. Intensive agricultural cultivation is common among local com-munities. Irrigated rice and dryland rice, corn, peanuts, sweet potatoes, and vegetables are the main agriculture products that are produced by them. The annual production of irrigated rice was about 211,729 tons with a pro-ductivity of about 5.08 tonnes per ha in 2006. The highest amount of irrigated rice was produced from the Mer-anti, Air Putih, Lima Puluh, Sei Balai sub-districts in Asahan. Production of dryland rice fields in 2006 was about 2,972 tons and highest production was from the BP. Mandoge, Bandar Pulau and Buntu Pane sub-districts. In 2007, the Asahan district produced about 67,160 tons of rice for the North Sumatera region. Rubber, palm oil, and cacao are important products of both the Asahan and Batubara districts. The most re-cent type of land use that is quite attractive to local communities has been palm oil plantations, which resulted in competition for land use. In 2006, there was a significant expansion of land use for palm oil plantations to



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46.82% compared to year 2005. These palm oil plantations were planted by local communities, smallholders, private companies and government companies. The land area used for palm oil plantations were about 61,997 ha by local communities and 108,038,035 ha by private or government companies. Other land uses included rubber plantations by companies (29,184,87ha), coconut plantations by local communities (35,357ha) and ca-cao plantations. Based on records from the Asahan Statistical Agency, the communities and smallholders es-tate have been produced 490,120.42 tonnes of palm oil fruits in 2007, which is a significant increase from a production of only 53,629 tonne of palm oil fruits in 2003. Meanwhile, government palm oil companies such as PT Perkebunan Nusantara produced 747,825.54 tonnes of palm oil fruits within the same year.

During the main assessment visit, it was found that most people of Terusan Tengah and Sei Baleh villages ac-tually own their own palm oil and rubber plantations of approximately 2 ha per household and they sell their palm oil fruits to PT SEMA, another palm oil mill located in Kisaran (not part of PT BSP). Meanwhile, almost 60% of Rawang Pasar communities have worked for PT BSP Kisaran Unit since 1999, but today the numbers have decreased to 20% due to PT BSP’s strict policy on worker competency. Since 2007, the management of PT BSP developed an MOU with the Tinggi Raja communities on a production sharing scheme in which 60% of profts earned goes to PT BSP while 40% goes to the local communities. The company’s management agreed to share 4 ha of land with these communities.

Although most of the people surrounding the company actually own their own palm oil plantation, documented company reports on illegal harvesting and sale of palm oil fruits showed that there have been increase in the level of palm oil fruits loss since 2006 to 2008. The estimated amount of fruit loss for 2007 and 2008 were 61,132 kg and 95,701 kg. The total loss of palm oil fruits was valued at about IDR 71,832,890 in 2007 (2007 price was IDR 1,500/kg) and about IDR 145,586,810 in 2008 (2008 price was IDR 1,670/kg). The high rate of illegal FFB harvesting appears to reflect the local community’s need for access to resources, but at another level the cash that can be earned through the harvesting and sale of palm oil fruits provides a in-centive and is seen as an importand source of revenue for the communities. It was mentioned that there seems to be an organised mafia working within the local communities sourcing for fruit sources to be sold to other palm oil mills (although no evidence of this was noted during the assessment). Documented company statistics showed that the highest palm oil fruits illegal harvesting activities were done on January, February, April, May, July and December 2008. Some stakeholders informed that during those months, more revenue for school payment is needed. Pertaining to land boundaries, the local communities do recognize the land boundaries of PT BSP’s Kisaran Unit, which has been marked with boundary stones by the National Land Certification Agency. The community leaders and heads of villages require that the company invites them or local communities who live nearby the boundaries when maintenance of the boundary stones are being carried out. Development of maps with the participation of local communities shall be conducted to improve communication and respect for all parties. Based on a statement made by the Rawang Pasar village head, it was found that there has been no land ac-quisition carried out by PT BSP. On the other hand, PT BSP allocated 4 ha of their land area be used by the Rawang Pasar IV village for community settlements. Recently, the 4 ha of PT BSP’s land area was used to de-velop settlements for 100 households for 9 sub-villages of Pisang Village. However, there was a land dispute involving Tinggi Raja village since 2006 between the family of Amsyah Sin-urat and the management of PT BSP’s Kisaran Unit over a land area of about 200 ha. The land area was used by Amsyah Sinurat’s family for swidden durian cultivation and the land dispute arose when part of this area was converted to oil palm by PT BSP in 2006, as the company has a HGU which includes this area. Although Mr, Sinurat has no documented ownership of this land, he claimed it was used by his family for durian cultivation. At the time of the main assessment, there was lack of progress towards resolution of this dispute through a conflict resolution mechanism a mechanism was yet to be set up, and the documents related to this case were not available at the village head office. However, the company has since carried out discussions with Mr. Sinurat to resolve this conflict through free, prior and informed consent, and progress to resolve this case is underway. Community Development During the main assessment, the auditors visited at least 12 villages, and found that the company’s represen-tative dedicated to liase with the villages or communities is not recognized by them. Regular open discussions and meetings between villagers and company have not been held by PT BSP. The communities only attend PT BSP’s meetings when they are invited to Corporate Social Responsibility (CSR) programmes, as well as events pertaining to palm oil community trainings, public health improvement efforts (eg. circumcision, village health post or ‘posyandu’), donations for school facilities and buildings, provision of scholarships to local stu-



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dents, donation for worship facilities, and donations for national day’s celebrations, and sport facilities. A dona-tion would be allocated to local communities based on a requirements proposal submitted by village heads, community institutions or other organizations. Since 2006, the management of PT BSP’s Kisaran Unit started to develop community development programmes for the local communities. Through research conducted by Gadjah Mada University in 2007, it was found that welfare aid was mainly needed in areas of improving econ-omy and education. When implemented in a proper manner, such activities will have a positive impact on the relationships of the company with local communities and stakeholders. PT BSP’s CSR budget for their Kisaran Unit was about IDR 1,016,245,000 in 2007 and IDR 1,138,194,400 in 2008. The budget for local communities was allocated for education, economic, social and health, sports, environment, worship, and infrastructure pro-grammes. The company also permits the local communities to use their company facilities such as the sport club and their production roads for emergency purposes such as to transport injured villagers, as well as for transportation of fertilizer and subsidized oil. Worker Conditions According to a documented summary of company workers, the total number of workers in PT BSP’s Kisaran Unit by 13 May 2009 was about 6,350 people. Workers were divided into several categories, which are the Special Pancasila Industrial Relations (Hubungan Industri Pancasila – HIP) workers, consisting of about 3 peo-ple, HIP workers consisting of about 836 people, daily paid workers (Syarat Kerja Umum – SKU) made up of about 3,272 people and workers under agreement to work certain hours (pekerja Perjanjian Kerja Waktu Ter-tentu – PKWT) consisted of about 5 people. Casual labour consisting of about 51 people and contractor work-ers consisted of about 2,183 people. Worker’s minimum age is 18 years old and maximum age is 58 years old. The types of workers at PT BSP Kisaran Unit consists of: 1. Employees that are managed and controlled by the company’sHead Office in Jakarta. 2. Special HIP, which are monthly-paid employees that have specialized work 3. HIP, which are monthly-paid employees 4. SKU, which are daily-paid employees

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