roundtable on sustainable palm oil · roundtable on sustainable palm oil 3rd annual surveillance...

Roundtable on Sustainable Palm Oil 3rd Annual Surveillance Audit &

Supply Chain Certification Main Assessment Report

Report no.: ASA3-106470

Surveillance assessment against the

RSPO Principles & Criteria National Intepretation Indonesia year 2008

Wilmar International

PT Perkebunan Milano Pinang Awan Palm Oil Mill

North Sumatera

Report prepared by: Dian S. Soeminta

(RSPO Lead Auditor)

Certification decision by: M. Bascharul Asana

(Director of TUV Rheinland Indonesia)

Certification Body: PT TUV Rheinland Indonesia

Menara Karya, 10th Floor Jl. H.R. Rasuna Said Block X-5 Kav.1-2

Jakarta 12950,Indonesia Tel: +62 21 57944579 Fax: +62 21 57944575

www.tuv.com/id

TABLE OF CONTENTS

1.0 SCOPE OF CERTIFICATION ASSESSMENT 4

1.1 National Interpretation Used 4

1.2 Type of Assessment 4

1.3 Certification Details 4

1.4 Location and Maps 4

1.5 Organisational Information / Contact Person 6

1.6 Description of Supply Base 7

1.7 Actual production volumes, tonnages and projected outputs. 8

1.8 Dates of Plantings and Replanting Cycles 8

1.9 Area of Plantation (Total, Planted and Mature) 9

1.10 Progress Against Time Bound Plan 9

1.11 Progress of associated smallholders or outgrowers towards RSPO compliance 11

1.12 Approximate Tonnages Certified 12

1.13 Recommendation for RSPO Supply Chain Certification Error! Bookmark not defined. 1.14 Date of Supply Chain Certificate Issued and Scope of Certificate Error! Bookmark not defined.

2.0 ASSESSMENT PROCESS 12

2.1 Certification Body 12

2.2 Qualifications of Lead Assessor and Assessment Team 12

2.3 Assessment Methodology & Agenda 12

3.0 ASSESSMENT FINDINGS 13

3.1 Summary of Findings 13

3.2 Status of Previously Identified Non-conformities 23

3.3 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions 28

3.4 Description of Supply Chain Management System 30

3.5 Identified Non-conformances against RSPO SCCS Requirements, Corrective Actions Taken and Auditors Conclusions 32

3.6 Noteworthy Positive Components 34

3.7 Conclusion and Recommendation for RSPO Supply Chain Certification 34

3.8. Issues Raised by Stakeholders and Findings Pertaining to Issues 34

4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL

RESPONSIBILITY 35

4.1 Date of Next Surveillance Visit 35

4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client 35

APPENDICES 36

Appendix 1: List of Abbreviations 36

Appendix 2: List of Stakeholders Interviewed and Contacted 37

RSPO 3rd

Surveillance Assessment Report

- Pinang Awan Palm Oil Mill & PT Perkebunan Milano –

- North Sumatera-

of 38

RSPO v1 2011-05-24 3

Appendix 3: Observations and Opportunities for Improvement 38

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 4

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 annual surveillance certification assessment was carried out on 1 mill and 3 estates under PT Perkebunan Milano owned by Willmar International. The date of certification of this unit was 2010-08-24 valid until 2015-08-23.

1.3 Certification Details

The details of RSPO certification of Pinang Awan Palm Oil Mill and PT Perkebunan Milano are as per the table below Table 1: RSPO Certification details of Awan Palm Oil Mill and PT Perkebunan Milano

1.4 Location and Maps

Table 2: GPS locations for all estates and mills included in annual surveillance assessment

RSPO Membership no.: 2-0017-05-000-00.

RSPO Certificate no.: 01 100 106470

Date of first RSPO certificate & validity: 2010-08-24 valid until 2015-08-23

Date of certification audit: November 19, 2009

Date of previous surveillance audit: May 07 to 09, 2012

Date of revised RSPO certificate & va-lidity (if applicable):

-

CPO tonnages claimed: 27,554 tonnes

OER for year 2012 20.59

PK tonnages claimed: 6,262 tonnes

KER for year 2012 5.10

Name of mill / es-

tate Location

GPS locations

Latitude Longtitude

Pinang Awan Mill Desa Pinang Damai, Kec. Torgamba, Kab.Labuhan Batu

1°50’34.175”

100°12’11.296”

PT Perkebunan Milano – Sungai Daun Estate

Desa Pengarungan, Kec. Torgamba, Kab. Labuhan Batu Selatan

1°52”25.93” 100°14”02.29”

PT Perkebunan Milano – Batang Saponggol Estate

Desa Batang Saponggol, Kec. Kampung Rakyat, Kab. Labuhan Batu Selatan

1°58”17.61” 100°13”20.34”

PT Perkebunan Milano – Merbau Estate

Desa Milano, Kec. Merbau, Kab. Labuhan Batu Utara

2°13”28.58” 99°52”06.43”

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 5

Figure 1: Location of PT Perkebunan Milano’s estates on map of North Sumatera, Indonesia

Merbau Estate

Batang Saponggol Estate

Sei Daun Estate

Labuhan Batu

Riau Province

Straits of Malacca

Simalungun

North Sumatera

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 6

Figure 2: Location of PT Perkebunan Milano’s Pinang Awan Mill and 3 company estates (Sei Daun Es-

tate, Batang Saponggol Estate, and Merbau Estate) within the Labuhan Batu, North Sumatera, Indonesia.

1.5 Organisational Information / Contact Person

Contacts details of the company are as follows:

Company Name: Wilmar International, PT Perkebunan Milano, PKS Pinang Awan

Address: B & G Tower , Jl. Putri Hijau No.10 Medan

PT Perkebunan Milano – Sungai Daun Desa Pengarungan, Kec. Torgamba, Kab. Labuhan Batu Selatan

Contact Person: Michael Tiwon (Assistant General Manager)

Simon Siburat (Corporate Sustainability Coordinator)

Telephone: +62- 61- 4145777 and 41027777;

Email: + 62-61-4550260 and 80010057

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 7

1.6 Description of Supply Base

Pinang Awan mill is one of the palm oil mills owned by Wilmar International in North Sumatera. Pinang Awan Mill was established in 1996 with a production capacity of 60 tons/hours. The company was initially a National Investment Company, but changed status to a Multinational Investment Company upon approval from the Indo-nesian Capital Investment Coordination Board (‘Badan Koordinasi Penanaman Modal’ - BKPM) in their BKPM decision letter no. 749/I/PMDN/1994 and BKPM decision letter no. 06/V/PMA/2002. Currently Pinang Awan Mill is receiving approximately 47.89% of its supplies of fresh fruit bunches (FFB) from 3 company-owned estates (Sei Daun Estate, Batang Saponggol Estate and Merbau Estate) and the remaining 52.11% from independent smallholders, and the mill has no smallholder schemes. Table 3: FFB Supply Information for PInang Awan Palm Oil Mill

FFB Contributors

FFB supplied from January

to December 2012

FFB supplied from

January to May 2013

Tonnes % Tonnes %

Company owned

estates:

Sei Daun Estate 65,866.287 23,300.545


48,778.061 15,710.479

Merbau Estate 25,325.021 7,766.656

Sub Total 139,969.369 47.89 46,777.680 45.14

Smallholders / out-

growers: 152,277.491 52.11 56,850.926 54.86

TOTAL 292,246.860 100 103,628.606 100

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 8

1.7 Actual production volumes, tonnages and projected outputs.

Table 4: Certified tonnages claimed, certified tonnages purchased or sold, total and projected CPO and

PK production from Pinang Awan Palm Oil Mill

**Data from May 09 2013 to June 19, 2013 including production from FFB supply from outgrowers

Until 3rd surveillance audit the milla does not sell RSPO certified product claimed due to company implement ISCC certification, all CPO sold as ISCC product claimed.

1.8 Dates of Plantings and Replanting Cycles

The company follows a replanting cycle of 25 to 30 years depend on actual plantation productivity. Information on the dates of plantings are as per the table below. Table 5: Age and year of plantings of company estate supplying to Pinang Awan Palm Oil Mill

Age & Year of Plantings

Oil palm planted area at each estate(ha)

Sei Daun Batang Saponggol Merbau

0 – 5 yrs (2009 – 2013) 497.61 - - 5-10 yrs (2003 – 2008) 76.430 86.84 82.95 10-15 yrs (1998 – 2002) 692.69 1100.82 640.15 15-20 yrs (1993 – 1997) 457.880 - 30.81 20-25 yrs (1988 – 1992) 324.71 439.84 78.36 25 - 30 yrs (1982 - 1987) 350.990 74.93

TOTAL 2405.81 1627.50 907.20

Table 6: Planned and actual oil palm replanting activities for PT Perkebunan Milano

There is changes on company’s replanting program due to actual current plantation productivitis. Average plantation productivity for year 2012 in 3 company’s estate is 28.41 ton/ha. Company decided to start replanting activities in year 2014 as describe on the table below.

Year Total planned re-

planting area (ha)

Total planned replanting area for each estate (ha) Actual total area

replanted (ha) Sei Daun

Batang Saponggol

Merbau

2014 45 - - 45 -

2015 338.90 120.26 75.20 139.10 -

2016 414.02 366.10 104.65 -

2017 165.18 - - -

Total 963.1 486.35 179.85 184.1

Amount (MT)

CPO PK

Certified tonnages claimed 27,554 6,262

Certified tonnages sold* - -

Certified tonnages purchased* none none

Actual production Juni 2012 to May 2013 ** 66,285.207 16,468.563

Actual Production January to December 2012 60,187.534 14,916.793

Projected output for next 12 months (year 2013) 64.004 15,239

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 9

1.9 Area of Plantation (Total, Planted and Mature)

Table 7: Oil Palm Planted Area Summary, FFB Production and Average yield/ha for PT Perkebunan Mi-

lano

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

Sei Daun Es-tate

2493.19 2400.31 2400.31 - 65,866.287 27.44


1749.43 1627.50 1627.50 - 48,778.061 29.97

Merbau Es-tate

974.77 907.20 907.20 - 25,325.021 27.91

TOTAL 5217.39 4935.01 4935.01 28.41

*Data from period January to December 2012, the amount of planted area reduce 5.81 ha due to company en-large nursery area from 3 ha to 8.81 ha.

Table 8: Land use data for PT Perkebunan Milano

Estate Name Total area (ha) Oil Palm

Planted Area (ha)

HCV/

Potential HCV are-

as* (ha)

Other purposes

(Road,housing, nursery etc)

Sei Daun Estate 2493.19 2400.31 0.4* 84.38 Batang Saponggol Estate

1749.43 1627.50 35.67 86.26

Merbau Estate 974.77 907.20 18.122** 67.57

TOTAL 5217.39 4935.01 54.192 238.21

Note: * include in planted area.

** the amount of planted area reduce 5.50 ha due to company enlarge nursery area from 3 ha to 8.31 ha.

1.10 Progress Against Time Bound Plan

Table 7: Time Bound Plan of the Other Management Units

Name of Holding/ Plantation Location Area (ha)

Time bound

plan for certi-fication/

Year of Audit

Certification status

PT Perkebunan Milano North Sumatra 4975 2009 Certified

PT Mustika Sembuluh Central Kali-mantan

15,897 2009 Certified

PT Tania Selatan South Sumatra 3775 2010 Certified

PT Kerry Sawit Indonesia Central Kali-mantan

18,994 2010 Certified

PT Kencana Sawit Indonesia West Sumatra. 7,728 2010 Certified

PT Bumi Sawit Kencana Central Kaliman-tan

7,266 2011 Planned

PT AMP Plantation West Sumatra 7,541 2011 Certified

PT Primatama Muliajaya West Sumatra 1,397 2011 Planned PT Sarana Titian Permata Central Kaliman-

tan 14,995 2012 Planned

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 10

PT Buluh Canang Plantations South Sumatra 223 2012 Assessment completed

PT Tania (Bamboo Kuning) South Sumatra 1800 2012 Planned PT ANI (Sambas) West Kaliman-


PT Daya Labuhan Indah North Sumatra 5,010 2013 Assessment completed

PT Milano (CDE) North Sumatra 618 2013 Assesmsnet completed

PT Citra Riau Sarana Riau 2,268 2013 Planned PT Gersindo Minang Plantations West Sumatra 3,146 2013 Assesment

completed PT Permata Hijau Pasaman West Sumatra 2,363 2013 Planned PT Mentaya Sawit Mas Central Kaliman-


PT Asiatic Persada Jambi 15,223 2013 Pre-Assessment completed

PT Pratama Prosentindo West Kaliman-tan

3423 2013 Planned

PT Putra Indotropical West Kaliman-tan

3133 2013 Planned

PT Sinarsiak Dianpermai Riau. 1,114 2013 Planned PT ANI (Landak) West Kaliman-

tan 4281 2014 Pre Assess-

ment complet-ed

PT Murini Sam Sam Riau 1,288 2014 Planned PT Agro Palindo Sakti South Sumatra 872 2014 Planned PT Musi Banyuasin Indah South Sumatra 4473 2014 Planned PT Karunia Kencana Permaisejati Central Kaliman-

tan 8,070 2014

Planned

PT Agro Palindo Sakti West Kaliman-tan

5033 2014 Planned

PT Daya Landak Plantation West Kaliman-tan

3774 2014 Planned

PT Indoresins Putra Mandiri West Kaliman-tan

3730 2014 Planned

Total 164611

Palm Oil Mills Location

Annual

CSPO production

(mt)

Year of Audit

Certification status

PT Milano (Pinang Awan) North Sumatra 27,554 2009 Certified, 3rd

surveillance audit com-

pleted

PT Mustika Sembuluh Central Kali-

mantan

81,350 2009 Certified, 3rdt


pleted

PT Tania Selatan South Sumatra 12,800 2010 Certified, 2ndt

surveillance

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 11

audit com-

pleted

PT Kencana Sawit Indonesia West Sumatra. 37,200 2010 Certified, 2ndt


pleted

PT Kerry Sawit Indonesia Central Kali-mantan

51,335 2010 Certified, 1st


pleted

PT Bumi Sawit Kencana Central Kaliman-tan

27,700 2011 Planned

PT AMP Plantation West Sumatra 37,900 2011 Certified

PT Buluh Canang Plantations South Sumatra 33,800 2012 Planned PT Agro Nusa Investama (Sambas) West Kaliman-


PT Sarana Titian Permata Central Kaliman-tan

37,800 2012 Pre Assess-ment complet-

ed PT Sinarsiak Dianpermai Riau 6,400 2013 Planned PT Daya Labuhan Indah-2 North Sumatra 25,800 2013 Planned PT Citra Riau Sarana (ML) 1 + 2 Riau 46,300 2013 Planned PT Gersindo Minang Plantations West Sumatra 35300 2013 Planned PT Mentaya Sawit Mas Central Kaliman-


PT Agro Nusa Investama (Landak) West Kaliman-tan

30,600 2014 Planned

PT Murini Sam Sam Riau 7,500 2014 Planned PT Musi Banyuasin Indah South Sumatra 35,400 2014 Planned PT Karunia Kencana Permaisejati Central Kaliman-


PT Agro Palindo Sakti 1 West Kaliman-tan

19,400 2014 Planned

PT Citra Riau Sarana 3 Riau 20000 2014 Planned Total 719,239

There are several changes on the company’s timebond plan due to some reason such as:

1. PT Bumi Kencana Sawit, some social issue still not resolved and community still not agree with the company’s proposed Memorandum of understanding regarding conflict resolution process according to RSPO criteria.

2. PT Sinarsiak Dian Permai, PT Daya Labuhan Indah-2, PT Citra Riau Sarana, PT Gersindo Minag Plan-tations, PT Mentaya Sawit Mas due to some social issue and land legality still not finished

3. PT Asiatic Persada, has been sold to other company, and nnot belong Wilmar International plantation. 1.11 Progress of associated smallholders or outgrowers towards RSPO compliance

Pinang Awan mill has 91 independent outgrowers that supplied FFB to their mill. All independent outgrowers have no permanent contract with Pinang Awan mill, and free trade market is now applied for all independent outgrowers that supplied for Pinang Awan mill. However, the company does not have a plan to identify FFB suppliers with whom they wish to have a long-term contract with, for future planning of associated smallholders to become part of the 3 year programme of compliance to the RSPO P&C. This was raised as a non-conformity.

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 12

1.12 Approximate Tonnages Certified

The approximate tonnages certified shall be the same as per the original certificate, which is as follows Crude Palm Oil (CPO) : 27,554 Palm Kernel (PK) : 6,262

2.0 ASSESSMENT PROCESS

2.1 Certification Body TUV Rheinland Malaysia Sdn. Bhd. is 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 490 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 Validations and Verifications. TUV Rheinland Malaysia’s office is lo-cated in Subang Jaya.

2.2 Qualifications of Lead Assessor and Assessment Team The assessment team members of this surveillance audit that were part of the same assessment team for the certification audit are as follows: 1) Dian S. Soeminta 2) Fadli 3) Hendra Fachrurozi

2.3 Assessment Methodology & Agenda The surveillance assessment was conducted betwen 18 to 21 June 2013 as per the 3rd Surveillance audit program below. The assessment was carried out in accordance with TUV Rheinland RSPO audit procedure as well as the RSPO Certification Systems document. During assessment, the qualified TUV Rheinland assessors used the RSPO standard as endorsed for Indonesia and recorded their findings. Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without com-promising the integrity of the assessment in anyway. The 2 sampled estates and 1 mill were visited and the assessment team carried out field and document as-sessments of compliance to all the RSPO principles and criteria. Common systems were identified and specific evidence was recorded for individual estates. Interviews were conducted at all estates and the mill. The company proposed the correction and corrective action for all identified non conformities raised to the cer-tification body 15 days after the closing meeting. Verification of closure of major non-conformances was con-ducted 2 months after the closing meeting of the surveillance and implementation of corrective actions for mi-nor non-conformities will be verified during the next suriveillance audit. The certification assessment agenda is as explained below.

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 13

Surveillance Assessment Agenda.

3.0 ASSESSMENT FINDINGS

3.1 Summary of Findings

The following is a summary of findings during this surveillance audit for the criteria listed in the RSPO Princi-ples & Criteria Indonesian National Interpretation year 2008.

Principle 1: Commitment to transparency

Criteria assessed: CR1.1, CR1.2 Criteria not assessed:

Findings:

Date Location/ Main sites

Main activities

18 June 2013

Sei Daun es-tate

Opening Meeting - Field checking for Best Practice implemenetation - Verification previous audit findings - Long term management, document checking - Field visit to Sipare-pare village - Field checking in plantation maintanance, sprayer activity and production re-

port checking. - Crop report checking - Field checking to Sei Daun estate housing area - Interviewed with villager Panggarungan Village; Sei Daun village, Sulu Village

19 June 2013

Merbau Es-tate

- Verification of previous audit findings - Good Agricultural practices Merbau estate - Interview with villager Bandar Sentosa; Dusun Leuweung Hideung - Waste management - OSH implementation in plantation - Water management - EFM application in Blok - Plantation Maintenance at blok 35, 37 and 41 - HCV and Riparia River block 35, 37 and 41 - Worker interview, wages, OSH, sexual harassment issues, first aid, housing fa-cilities, labour unions, gender issues, communication procedures, handling of complaints.

20 June 2014

Pinang Awan Mill

- Verification of previous audit findings - Incoming FFB verification - Interview with mill workers. - Good Agricultural Practices - Field visit to land application site for mill effluent - Waste management - Pollution prevention control - Water management - Visit to Pinang Damai Village checking community health to verify land apllica-

tion impact. 21 June 2013

Pinang Awan Mill

SCCS audit

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 14

During 3rd surveillance audit, there is no change on company’s policy on transparency. Company’s proce-dure pertaining to request information which has been revised on May 31, 2011 i.e. PRO-BM.GEN-002 still apllicable until now. The procedure states that information requested will be recieved by PGA (Personel and General Affair) Departement and recorded on Log Book. PGA will submitt to Estate Manager/Mill Manager for review process and follow up. Public speaker departement will make response letter after receive approval from mill/estate manager. Records for information/donation requested and responses will be maintained for 3 years for administrative requests, 1 year for quality and environment related requests, and 5 years for request made by company personnel. All incoming information is recorded on a book to record all correspondences with stakeholders including complaints, suggestions or requests for assistance, information requests through formal and informal methods (written /verbal). The source of information requested, person in charge to re-spond, and response status (closed or not closed) is also recorded. During 3rd surveillance audit, the auditor found records of information/donation requested from July 2011 to April 2012 made to the company’s estates and Pinang Awan mill. Such as recorded on Log Book, there are incoming request of donation from Koreksi Pers Training organizer dated on February 07 through letter no. 05/P.Ultah/V/MBD/PJRKT/I/2012 , 2012 and company respond for that request through letter no. 033/LN.MBE/III/2012 dated March 06, 2012 company agreed to give donation. Also incoming request of donation from Suluk house and Dominotry mosque con-struction. The company has informed to relevant stakeholders about some documents publicly available such as the company profile, general corporate policy, company license as well as the company’s social and environmen-tal impact assessment (‘Analisis Dampak Lingkungan & Sosial’ - AMDAL) document, land cultivation rights titles (‘Hak Guna Usaha’ – HGU), company activity report to the local government, social and environment survey report, planting and production report, community development activities report, and manpower report as stated on a company letter no. 044/ED-MLN/Ext/VII/09 sent to relevant stakeholders The company has a new version of documented procedure for maintenance of incoming request of docu-ments stated above which has been applied since May 31, 2011. The procedure states that records of re-quests to view these management documents shall be maintained for 5 years. Compliance status: Full Compliance

Principle 2: Compliance with applicable laws and regulations

Criteria assessed: CR2.1, CR2.2, CR2.3 Criteria not assessed: Findings: PT Perkebunan Milano stiil keep records of all legal documents required to demonstrate ownership of land which is still same with the documents that showed during main assessment, i.e: 1. HGU year 1996 for Merbau Estate and Decree Letter from the Head of the National Land Agency (‘Ba-

dan Pertanahan Nasional’ - BPN) No. 20/HGU/BPN/96 dated 31 May 1996, which is valid for 35 years for 974.77 ha.

2. HGU year 1988, for Sei Daun estate located at Panggarungan Village, with State Minister’s Decree No. 8/HGU/DA/88 for 2500 Ha, valid until 31 December 2013,

3. HGU for Batang Saponggol estate, with decree letter from the BPN Head No. 83/HGU/BPN/95 for 1749.43 Ha, valid since April 11, 1996 until April 11, 2021.

4. HGU for Pinang Awang mill located at Aek Batu Village for area 190.900 ha valid for 20 years until Feb-ruary 14, 2016, with decree from the Labuhan Batu District Land Head Office No. 460/31/1375-IL/XII/1994.

Other legal documents checked and found to be still valid include: 1. Permit for conversion of rubber plantation to oil palm plantation, permit no. 503/431/F dated 29 April 2009

for Merbau, Batang Saponggol, Sei Daun Estate 2. Approval letter from the Capital Investment Coordination Board (‘Badan Koordinasi Penanaman Modal’ -

BKPM) no. 749/I/PMDN/1994 and BKPM Approval letter No. 06/V/PMA/2002 regarding approval for PT Perkebunan Milano to change from a National Investment Company to Multinational Investment Compa-ny)

3. Industrial Business Permit (‘Ijin Usaha Perindustrian’) no. 142/T/Industri/2004. 4. Permit for extension of mill capacity from 30 ton/hour to 60 ton/hour, letter no. 90/II/PMA/2004 dated

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 15

June 09, 2004. 5. BKPM Decree letter No. 935/I/industri/2006 valid until January 2035. 6. The mill’s license no. 503.660.3/86/BLH/2010 for temporary storage of hazardous wastes is dated 29 Oc-

tober 2009 and valid for 5 years 7. The license of the company’s contractor for collection of scheduled wastes, PT Horas Miduk, is dated 22

October 2009 and valid for 5 years. 8. Company Registration for Pinang Awan Mill no. 020611500195 valid from July 13, 1993 to August 19,

2013 Another legal document for Ramp Rantau Parapat Such as - Head office license no. 503.648/410/PEM/2012 from Head of District Labuhan Batu dated march 07,

2012 - Registration Permit No 020615100017 valid since June 30, 2010 dated July 01, 2011 - Land Use Building certificate no. 491.11 Sirandorung village for area 1,978 m2 with decree from North

Sumatera Land Office (BPN North Sumatera) No. SK. 2733/HM/22.12/1997 serial no. 7 valid until May 04, 2025.

- Land Use Building certificate no. 490.10 Sirandorung village for area 2,014m2 with decree from North Sumatera Land Office (BPN North Sumatera) No. SK. 2733/HM/22.12/1997 serial no. 6 valid until May 04, 2025.

- Land Use Building certificate no. 489.09 Sirandorung village for area 1,586 m2 with decree from North Sumatera Land Office (BPN North Sumatera) No. SK. 2733/HM/22.12/1997 serial no. 5, valid until May 04, 2025

- Land Use Building certificate no. 704.08 Sirandorung village for area 2,176 m2 with decree from Labuhan Batu Land Office (BPN Labuhan Batu) No. SK. 67-520.1-2.12-2000 valid until May 04, 2025

- License from Head of Labuhan Batu District no. 503.547/358/DBM-IV/2009 regarding deep well water to PT Perkebunan Milano Ramp Rantau Parapat valid since November 18, 2009 for 3 years.

The Plantation Operation Permit or ‘Ijin Usaha Perkebunan’ (IUP) still valid until this audit such as:

1. Plantation Operation Permit (IUP-B) no. 525.26/04/PEM/2010 dated 14 January 2011 for Merbau estate for total area of 974,77 Ha.

2. Plantation Operation Permit no: 525.26/45/2010 dated 24 February 2010 for Batang Saponggol estate 3. Plantation Operation Permit No: 525.26/44/2010 dated February 2010 for Sei Daun Estate for a total area of

2,493.19 ha In the 3nd surveillance auditor team monitor other applicable requirements, company has been improve their compliance to some of applicable legal and requirements that was not comply during 2dn surveillance audit such as: 1. The company provided some evidence regarding land application such as minutes stating permanent closure

of the waste water pipe in block M8 POM Sei Daun estate signed by the estate manager and mill manager, some pictures of closed pipeline to wrong land application area dated on May 12, 2012. Visited on the site during 3rd surveillance audit the pipe line going to block 117/M8 has been disconnected and closed, while the effluent trench at block 117/M8 has been drying.

2. It was sight during 3rd verification there is no more sprayers bring their contaminated cloths to their home. It was explained by the sprayer during interviewed at the sprayed block E8/70 they are anot allowed to bring all contaminated clothing to their home as informed by the management during socialization on May 12, 2012..

3. It was sight tri-monthly report for OSH implementation to local institution e.g. for 1st report year 2013 on April 2013.

4. It was sight during audit a letter from Local Social, Manpower and Transmigration of Labuhanbatu Selatan District No. 13/P2K3/DSTKT/2012 regarding approval of revised OSH team becomes one team between Ba-tang Saponggol estate and Sei Daun estate. The new OSH team has been certified

From field inspections, it was confirmed that boundary stones are maintained to identify estate land boundaries. There are 7 boundary stones located in block M8 Sei Daun estate made in concrete located as damarcating be-tween company’s estate and outgrower plantation, and the estate office has GIS locations for each boundary stone. All boundary stones are well maintained and clearly visible. In addition the company made the trenches as a border between the estate land and publicly owned land or other existing company land around the com-pany's estates. The trench has a width of 2 meters and is 1 meter deep. There is no more identified land conflict since 2008, due to the company has undergone several cases of land conflicts with surrounding communities, but these disputes were resolved through a conflict resolution process that was acceptable to all parties (as explained in the certification audit report). The company still maintains a documented procedure on conflict resolution and compensation, document no. PRO-BM.GEN-007, applied

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 16

since 01 July 2009, which contains a flowchart on the company’s conflict resolution mechanism, as well as a sample form for recording complaints, suggestions or requests for information or assistance received from local communities (dated 1st May 2009). The company has not carried out their operations in a manner that diminished the legal or customary rights of other users especially the local community’s surrounding the company’s area. As explained in the Social Im-pact assessment document there are some existing traditional rights of local communities were identified at Merbau Estate, Batang Saponggol Estate and Sei Daun Estate, such as grazing, fishing, gathering and sale of mushrooms and vegetables, access to roads, and maintenance of graveyards. All these are activities allowed under agreed conditions between the company and the local communities, and as founded during main as-sessment audit, the company has documented meeting minutes of an event conducted by the company on Au-gust 14th 2009 at Merbau Estate in order to inform regarding the results of the company’s social impacts as-sessment as well as discuss the traditional rights of the land users. Maps of appropriate scale showing the tra-ditional rights of the land users were developed with the participation of the invited local communities. During surveillance assessment, this agreement between the company and the local communities was confirmed as still being implemented. Compliance status: Full Compliance

Principle 3: Commitment to long-term economic and financial viability

Criteria assessed: CR3.1

Criteria not assessed: - Findings: During 3rd surveillance audit company has establish management plan which included a budget and expendi-ture plan for a 5 year period i.e. year 2013-2018. The management plan includes information about planning for company’s activities and operational for mill, however the management plan still not integrated between plantation divisin and the mill planning, the document also still not include information about estimation of price CPO/PK product, profit loss analysis to ensure financial viability in the certain time at least 3 year peri-od. This is taised as non conformity. The replanting program will begin in 2014 at Merbau estate for a total of 45 ha at 2 blocks, i.e block 29 for to-tal area of 21.43 ha and block 52 for total area of 23.57 ha. Replanting for Sei Daun and Batang Saponggol estate will begin in year 2015. Total planned replanting area from 2014 to 2017 is 963.1 ha in all estates. Compliance status: Non Compliance

NCR 2013-01 of 01 The company’s management plan still not include information about revenew forecase from CPO/PK selling and not include information about analisys of profit and loss, to ensure long term financial viability

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

Criteria assessed: CR4.1, CR4.2, CR4.4, CR4.5, CR4.6, CR4.7, CR4.8 Criteria not assessed: CR4.3

Findings: SOPs for all estate and mill activities are available. The mill also carries out internal audits focused on quality, environmental and safety aspects based on ISO, RSPO, ISCC and SCCS requirements. There are records of

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 17

internal audits conducted on April 12, 2012 at Pinang Awan Mill with records of corrective actions taken by the mill. During 3rd surveillance audit found SOP for EFB application has been consistently implemented. EFB ap-plication following the guidance of good agricultures practice issued by Wilmar Agroculture Manual, i.e. one lay-er per location. The SOP-EST-003 Rev.01 valid from may 01, 2012 has been revised following Wilmar Agicul-ture manual, the implementation of EFB become I layer instead of 2 layer per line consiste of 4 trees. It was verified at block 70 EFB application has been 1 layer. According to EFM application in year 2012 total volume 47,729 ton for 1,134.54 ha. Application for may 2013 was 17,042.41 to for 440.78 ha as seen block 65 and 70. There is evidence that the estates are implementing their plan to protect watercourses and maintain river buffer zones. During site visit to Sei Daun and Batangsaponggol estate, company consistently marked trees along the field drain buffer zone (about 3 m from the drain) with yellow paint to indicate that these palms can-not be sprayed or undergo fertilizer application. Weeding at the marked palms is done manually. Based on in-terviews with chemical sprayers it was confirmed that they are aware that they are not to carry out spraying of palms located at the drain or nearby river buffer zones. The company conducts soil leaf analysis every year to make fertilizer recommendation. The last soil analysis was conducted on July 17, 2011, the result were kept maintained on estate office for year 2012 fertlizing rec-ommendation, e.g. for Sei Daun estate. A detailed soil analysis was conducted for all PT Perkebunan Milano estate by Param Agricultural Soil Surveys Sdn. Bhd. in August 2008. According to fertilizer recommendation for application of the fertilizer, NPK, shall 2.5 kg/tree for oil palm plantation with planted year 1986 and Dolo-mit 1500 gr/palm with planted year 1997. The implementation of fertilizer application has been comply to ferti-lizer recommendation such as for application for Kieserite. According to record of daily costing for May 2012 implementation of Kieserite on may 3, 2012 was 5,050 ton (6,749 sack) for 48.98 Ha, it can be seen from fer-tilizer released report from warehouse (No Bon Pengeluaran Barang Gudang (BPBG) 005223 for block 70. Accoring to leaf sampling analisys year 2012 (No. 33/Daun/VII/2012/PT MILANO dated 19 Juli 2012) fertilizer recommendation for year 2013 in Sei Daun estate are 5.25-10.37 kg/tree. For block 106 (planted year 1998) are NPK Super K (Feb) : 2.75 kg/tree (22.04 ton), kie-serite (April) : 0.75 kg/tree (6.01 ton), Urea (June) : 1 kg/tree (8.02 ton), MOP (July) : 1.75 kg/tree (14.03 ton), NPK Super K (October) : 2.75 kg/tree (22.04 ton) then total for block 106 is 9 kg/tree. Realization of fertilizer on May 2013 in Division 2 are for Kieserite 322.92 Ha / 32.02 ton (block 79, 81, 83, 84, 93, 98, 104, 106); for Borat on Mei is 195.23 Ha / 3.08 ton (block 105, 111, 77, 95, 83); for NPK Super K in January-March 2013 are 1,222.07 Ha / 415.33 ton (for all block (ke-29 blok yg ada); For Dolomite on April 2013 sby 76.77 Ha / 20.81 ton (Blok 80, 92, 105). Kieserite application at block 106 (J13 and J14) on April 9, 2013 with evidence BPBG (Bon Pengeluaran Barang Gudang) No.008038 is 6.01 ton for total area 63.08 Ha. Realization of fertilizer in Divisi 1 are for NPK Super K in Januari-March are 1,085.55 Ha / 412.30 ton (for all block); for Dolomite on is 148.36 Ha / 39.84 ton (block 101, 069, 072); for Kisierete on April is 197.38 Ha / 20.28 ton (block 062, 070, 074, 076, 085, 091); For Borate on may 2013 is 245.67 Ha / 3.73 ton (blok 086, 090, 061, 070, 071, 073, 076). As viewed from the UPL and UKL implementations report for period Semeter II 2012, it was sighted that all required environmental parameters are within the legal standard. The mill also carries out monthly monitoring of effluent BOD and reports this in their report on implementation of UPL and UKL document once every 6 months. The BOD5 analysis results for December 2012 to March 2013 are all within the legal standard for mill effluent land application, which is 3000ppm. In related to mill effort to comply with Labuhan Batu Selatan head of District No. 503.3.660/89/KLH/2009 regarding land application permit for Pinang Awan Palm Oil Mill. The company conducted soil monitoring to verify impact of land application for soil such as report from Bina Alam Laboratory dated December 08, 2011 for 3 location wells as required by related license. Monitoring of plantation productivity has been conducted for existing plantation at land application area com-pare with non land application area ther result is for period year 2012 not significant differentiation between productivity in land application area Block M6, N6, M7,N7 , L4,L5 with non-land application area Block K6,L6, D10, J12 and D8. The mill has documented Environmental Objectives, Targets and Improvement for year 2013, which includes plans for to reduce air pollution from methane capture program in cooperation with external consultant for CDM project. The methane as biogas has been captured as biogas plant fuel that generate electrical for mill and housing consumption. There is evidence of implementation of biological methods for management of common oil palm pests. During field visits to Sei Daun estate, plantings of beneficial plants such as turnera subulata and antigonen leptopus were sighted along the roads of the estates. These are plants used to attract natural predators of leaf eating

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 18

pests (nettle caterpillars and bagworms). For year 2013 there is improvement of realization for planting of bene-ficial plan in Sei daun estete such as in block 74, 85, 86, 943 etc. Sei Daun estate have installed 13 of barn own boxes for housing of barn owls (natural predators of rat pests). The estate carries out regular census of leaf eating pests and rats as well as census on barn owl box occupancy rates as seen on barn owl monitoring report on January to March 2013. There no evidence companies use chemical material for treatment of pests issued in warehouse for termite attacks. As reported the pest attack very low.. The estates conducts monitoring of pesti-cide consumtion for plantation maintenance. As viewed from data from Sei Daun estate, the estate records us-age of chemicals In Team and Glisat in active ingredient (a.i.) per hectare. Records show that usage of Glisat in a.i. per ha for year 2013 is 110.03 gr/ha, while for In Team, it ranged from 1.1 gr /ha. As seen on list of agrochemicals used in operating unit year 2013 It was sight letter of approval from local So-cial Service, Employment and Transmigration power" Labuhan Batu Selatan District revised letter No. 560/039/DSTKT/2013, regarding approval for using pesticide and rodenticide) for plantation maintenance PT Perkebunan Milano, there are 16 agrochemical material can be used in PT Perkebunan Milano such as Regent 50 SC; Bravo 50 SC; Rhodiamine 720 WSC; Glisat 480 SL; Winson 20 WG; Garlon 670 EC; Cozeb 80 WP; capture 50 EC; Petrokum 0.005 RB; In team 150 SL; Cymbush 50 EC; Dipel WP; Dithane M.45; dense 520 SC; Tiara 20 WG (Metsulfuron Methyl 20%); Agrisik.. According to pest monitoring record year 2012 level of pest attacks still low, average below 2 individu per tree. There has been no issuance of this chemical in year 2012 due to low levels of pest attacks, while at Sei Daun, it was found that that only Glisat 480SL and Winson 20WG is used for herbicide spraying. The estates are no longer using Gramoxone or other chemicals containing paraquat, and there is no evidence of usage of WHO Type 1A or 1B chemicals. The estates maintain records of amounts of pesticides used, active ingredients used, area treated, amount applied per ha and number of applications and based on sample checks, and applications do not exceed recommendations as per product label. Medical surveillance for all workers handling chemicals is conducted once a year. For example, the last check for Merbau estate workers was conducted on December 22,1012 6 sprayers and manurers, and included checks of symptoms for 25 types of diseases, physical checks of heart and liver condition, skin allergies, kidney function, reproductive system and nervous system. In January 13, 2012 medical checks has been include blood tests of the workers to check for low blood cholinesterase levels (indicator of possible poisoning) although in records of medical checks of workers, from the test result there are found two spareyer in Batang Saponggol exceed than normal condition, the company decide to changes that workers fromspayer activity to selectif weed-ing and Loose fruit Collecting activities as stated on letter no. 096/MLN.MBE/V/2013 dated march 24, 2013. Based on interviews conducted with female sprayers at Merbau estate, they are not permitted to carry out spray-ing or work with agrochemicals if they are pregnant or breastfeeding. Merbau clinic has records of pregnancy checks and a letter issued notifying if a female sprayer is found to be pregnant so she will be transferred to per-form other work. No changes on company’s occupational safety and health (OSH) policy, the implementation of this policy im-prove compare with last surveillance audit. The OSH team who is responsible for health and safety pro-grammes still exist and conduct regular meetings consistently. During 3rd surveillance audit regular meetings on-ly focus to discuss safety and welfare issues as seen on the minutes meeting records has been done including issue relating to health was discussed such as results of medical surveillance report. All safety and health cases were included on the OSH meeting agenda period January to April 2013 to define a correction plan, as seen on notulen Meeting OSH (P2K3) period January-March 2013 attended by Chairman P2K3 (OSH team). The company provides accident insurance for workers. Covered in Jamsostek accident insurance Program called “Jaminan Kecelakaan Kerja (JKK)”, Pension program called “Jaminan Hari Tua (JHT)”, Life insurance called “Jaminan Kematian (JKM)”, evidence of payment sighted for period April 2013. A documented risk assessment for Occupational Health and Safety (OHS) is available on HIRAC document us-ing format No. FRM-GEN-016, for January, 2013. The company provides and requires all workers to use Per-sonel Protective equipment to cover health risks. OSH training was done as seen on training records on April 28, 2012 by local health officer. The company has an accident and emergency preparedness procedure (PRO-GEN-013), this procedure always tested periodically as seen on emergency simulation on March 24, 2013. Evidence of OHS and first aid equipments available at worksites such as all plantation supervisors always bring first aid kit in their bag. All workers are well trained in first aid in both field and mill operations, this is make company has “Zero accident” during year 2011.

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 19

The company provide table of training program year 2013, there are 17 listed training plans on the table in-cluding information about hazardous material handling training for warehouse staff in estate and mill ware-house. Training program for year 2013 such as; - Basic OSH from new workers - Job description for CCP ISCC and Green House Gas calculation training. - Advance OSH for all woker - Emergency and preparedness training - Chemical and hazardouse waste training etc. - Oil palm plantation best practice training Training evidence was sight some e.g . list of participant, training material and photograps for several train-ing such as: - Company’s Policy training on June 15, 2013 - Training for Gender issue ( mechanism for complaint and gievances) on June 15, 2013 - OSH training on April 25, 2013 Company has provide training for hazardouse waste and chemical material handling . There are some train-ing evidence obrserved during audit such as: 1. Minutes of training (FRM;GEN-007) with title” Training for handling chemical material for warehouse staff,

laboratory and water treatment staff” on May 12, 2012, training material, photohgraps including list of partic-ipant.

2. Minutes of training for hazardouse waste handling on Chemical store, laboratory, and waste water treat-ment for staff on June 11, 2013,, including training material, photograps and list of participant.

Compliance status: Full Compliance

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

Criteria assessed: CR5.1, CR5.2, CR5.3, CR5.4, CR5.6

Criteria not assessed: CR5.5 Findings:

Pinang Awan mill still using environmental management and monitoring document i.e UKL and UPL document which was last revised on July 2011 due to company’s has new activities such as processing Biogas plant for electric generator. The new UKL/UPL document has been approved by the Head of Labuhan Batu Regional Body for Management of Environmental Impacts on September 11, 2011 by decree letter no. 660/398.a/BLH/2/2011 and decree letter no. 660/435/BLH/2/2011. The mill prepares a report on implementation of the UPL and UKL document once every 6 months, and most recent reports were prepared for July 2012 for 1st semester 2012 and January 2013 for 2nd semester 2012. The report includes the analysis results for ambient air, genset and boiler emissions quality, monthly mill effluent quality analysis results and noise quality. All re-sults were found to be within legal standards, except noise analysis results at engine room(101.8 dBA) , boiler room (93.1 dBA) and kernel room (96.7 dBA), and Sterilizer room (87.6dBA) which were found to have exceed-ed the legal standard. The mill can not avoid this condition due to characteristic of that machine. The only action only providing mill workers with ear protection, i.e. workers at engine room and kernel station wear ear muffs, while workers at boiler room wear ear plugs. There is also no change in UKL/UPL Documents for Merbau, Sei Daun and Batang Saponggol estates which was last revised on October 2008 and approved by the Head of Labuhan Batu Regional Body for Management of Environmental Impacts according to their decree letter no. 660/937/BPDL-LB/AP/2008 dated 24 November 2008. The UKL and UPL document includes details on the es-tate activities, usage of natural resources, climate, air and water quality, geography and other environmental as-pects, social aspects, potential environmental impacts, and monitoring. All estates and mill prepares their UPL and UKL implementation reports once every 6 months as per the legal requirements, and latest reports were sighted for semester II 2012 submitted on January 2013, and these includes the reports on all aspects required (including water and air quality analysis, job opportunities and total number of workers (once a year), and road damage) except no. of workers, which is reported separately to the local manpower department once a year. The mill and estates have also conducted their Identification of Environmental and Occupational Safety Aspects and Impacts (Identifikasi Aspek/Bahaya K3 dan Dampak/Resiko K3) for year 2013 conducted on March 2013.

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 20

These documents were prepared according to the company's SOP-GEN-002 pertaining to Completion of As-pects and Impacts Register (Petunjuk Pengisian Aspect-Impact Register; dated 10 Jan 2009). The document covers environmental and safety aspects and impacts for estate work activities (eg. manual treatment, mechani-cal treatment, and harvesting and tree maintenance), office activities, housing, management of scheduled wastes and domestic wastes, usage of natural resources, warehouse operations, transport, and housing etc. During 3rd surveillance audit environmental aspect and impact for the Biogas Plant Construction during time of commissioning since August 2011 to March 2012 has been done as seen on “ HIRAC and Environmen-tal Aspect Document” (FRM-GEN-018) . The nonconformity from last surveillance audit has been closed. . According to existing HCV management and monitoring plan, company still focus to protect wet land area in Batangsaponggol estate through patrol programs since that area is habitat for some bird species such as Egret (Bubulucus ibis) and Great Blue Heron (Ardea Sumatrana), patrol program not only focused on moni-toring company's assets and illegal activities now but also to monitor identified HCV areas and ensure no wildlife hunting is carried out. Records of partrol program were sighted such as for March, April and may 2013. All identified HCV 6 areas still exist and are well maintained such as grave complex in Merbau estate, and boundaries of these areas have also been maintained and visible marked. The company has taken ac-tions to protect identified HCV areas or identified potential HCV areas, yellow paint as marking for boundaries of HCV areas are visible and well maintained e,g, in Riparian river at block 35, 37 and 41 in Merbau estate. Monitoring HCV year 2013 has been established as monitoring record was sight on HCV Monitroing record year 2013 for Merbau estate and Sei Daun estate. Sign boards regarding no hunting activities were sight and well maintained still visible in all Milano estates and strategic locations such main roads. Hunting is strictly prohibited in HCV area as well as taking of fauna from the plantation and adjacent land. Posters and signs warning of the presence of protected species. The poster contains information about all protected species within PT Perkebunan Milano areas, and restrictions on hunting activities. All estates have a Standard Operating Procedure available for management of domestic wastes generated from housing & offices, plastic wastes as well as for hazardous wastes which defines the requirements for identification, handling, storage, management & verification of the wastes generated from various activities. All waste and pollutions sources are identified and documented as seen on environmental aspect and im-pacts issued on March 2013. Hazardouse waste such as used oil, filter oil, used paint can, etc was collected and recorded on document “hazardouse Waste Accounting Balance sheet (Neraca Limbah Bahan Berbahaya dan Beracun). Hazardouse waste were collected in separate location and disposed to licensed waste collec-tor i.e. PT Shali Riau Lestari( decree letter No. B-5232/Dep.IV/LH/PDAL/05/2012) and PT Horas Miduk li-censed no. 563 year 2009 valid untl October 21, 2014. Estates and mills waste management and disposal are implemented to avoid or reduce pollution. All domestic waste separated into organic (food scraps and cut grass) and inorganic waste (plastics). The wastes will be dis-posed separately through landfill process in plantation area located away from housing or rivers. Hazardous waste and medical waste are disposed to licensed supplier PT i.e. PT Wira Budi Gautama. The company also has temporary hazardous waste storage through license No. no.503.660.3/117/BLH/2010 issued on December 30, 2010 valid for 5 years. Verified on site such as in housing area at Sei Daun estate there was no more mixed waste found in all existing bins.

Document Identification of Environmental and Occupational Safety Aspects and Impacts, Pollution & emissions sources identified include gas emissions from plantation and mill activities (eg. boilers, Effluent Pod), spillage of CPO or oil, land or water contamination due to dropped EFB, etc has been updated, last updated on March 04, 2013. The mill has renewed their Environmental Objectives, Targets and Improvement for year 2013, the focus still to reduce pollution and emissions through: 1) Preventing of overflow and pollution resulting from land application of palm oil mill effluent to the field by

increasing area of land application and continuous monitoring of effluent quality, soil quality, ambient air and air emissions, installing water dam, and sludge pump, construction concreate pond at pond no. 1 & 2, replacing main pipe from outlet to land application. Desludging trench and house keeping all waste water pond.

2) Decrease maximum usage of petrol from 0.81% to 0.79% per ton FFB by using EFB as boiler fuel, having a pelleting system for EFB, reuse methane gas as a fuel, and usage of static crane to lift EFB to trucks (with-out the use of loader), etc .

CDM project for methane recovery in wastewater treatment still operate to mitigate methane gas emission from mill effluent. The project always be verified consistently every year. Last verification on July 12, 2012.. Imple-mentation of converting fibre into pellets still ongoing in order to reduces amount of space required for transport of fibre to other locations, and hence is a method to reduce utilization of fossil fuels for transport of fibre. The

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 21

company monitors all fuel consumption such as diesel oil and other fossil fuel, as recorded on recordsof calcula-tion fossil fuel consumption year 2012 and 2013 company has conduct fossil fuel efficiency analysis for year 2012, since company use biogas for electricity company can saving more than 95% saving compare with year 2011 fossil fuel cost. Compliance status: Full Compliance

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

Criteria assessed: CR6.1, CR6.5, CR6.6, CR6.7, CR6.8, CR6.9, CR6.10, CR6.11

Criteria not assessed: CR 6.2,CR6.3, CR6.4 Findings: No changes on Social Impact Assessment (SIA) document, monitoring and management plan of social im-pacts was improved including information about schedule for completion, location and person in charge for each activities, the document used still previous audit. Methods for communication and consultation between growers and/or millers, local communities and other af-fected or interested parties also not changes as well as Pinang Awan mill has a mechanism to acommodate the complaints, requests for information from employees and other stakeholders such as using a suggestion box near the security post which is scheduled to be checked once a week, between 2nd surveillance audit un-til 3rd surveillance audit there is no incoming complaint from stakeholders except request of donation. Em-ployee and workers will communicate through the SB-KBP (Workers Union of Pinang Awan Mill) for submis-sion of their complaint or grievance, as stated on working agreement and company’s regulation. There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties, as it was founded during surveillance audit. The company has recorded the im-plementation of the settlement of complaints from stakeholders. There is no more complaint regarding sewage pollution as confirmed to Pinang Damai villager. The mill con-duct monitoring to ensure that no waste pollution from mill activities every month. There is no identified payment of compensation for loss of legal or customary rights due to no more land claim settlement or land to be compensated. Salary paid and conditions for employees and for employees of contractors were found to meet at least legal or industry minimum standards, e.g. According to interview result with helper as permanent temporary worker (SKU/Syarat Kerja Umum) in Merbau Estate receive wages Rp 939,700 for 14 days. In one day, a worker will receive at least Rp. 67,045. This amount is in accordance with the minimum wage set by the government (Decree No. Governor of North Sumatra. 188.44/36/KPTS/ year 2013) for Rp1,457,000 per month and Inter-nal memo from Head of Plantation Wilmar International No. 004/HRR-MLN/INt/I/2013 . This was confirmed through checks of pay slips for the month of January February, March 2013. The number is still above the minimum wage. The company respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. The exisiting Workers Union (Serikat Pekerja-Kesatua Buruh Perjuangan or SP-KBP) still active, Company has agreement with the workers union which has been completed and approved by local manpow-er, social and transmigration Labuhan Batu. No changes on company policy on child labour, during 3rd surveillance audit there is not found more workers below 18 years found both in the millestate and rantau Parapat ramp. Data lists of workers have been com-pletely include information about names of the workers with date of birth including information about the age of workers. The agreement of cooperation between the contractor for FFB loading-unloading (PUK F. SPTI) and the mill has been included any requirements to comply with the company’s policy on minimum worker’s age. The policy against discrimination and provides equal opportunity for every employee still exist and no chang-es. The Collective Labor Agreement document in Milano Estate and a statement under article 14 regarding promotions. Promotions are open to all employees. There has been no complaint from company’s worker re-garding discrimination treatment from management of the estates or Pinang Awan mill until 3rd surveillance audit. No changes on company’s policy to prevent sexual harassment and all other forms of violence against wom-en and to protect their reproductive rights, which is implemented. There is recorded evidence that the compa-

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 22

ny has undertaken the responsibility to safeguard women's reproductive rights such as company provide for maternity leave from a female employee and allow woman workers to take menstruation leave if needed. The company still has good cooperation with with smallholders and other local businesses. Status of the business relationship between the outgrower and agents with the mill is a free sale transaction, so there is no bond for them to sell FFB only to the mill. Price becomes the deciding factor for whether suppliers sell to PT Perkebunan Milano or to another mill. While it is free sale, mill has Standard Operation Procedure for sale i.e. SOP-Mill-44 and purchase agreements to be signed by the suppliers to ensure suppliers comply with safety regulations and certainty of the origin of FFB. The company has contributed to the local communities and implements the Community Development Pro-gram. Example: the company assisted to repair public roads, repair classrooms and renovate of for the mosque. A contribution recognized by the Communication Forum (Forkas) of Panggarungan and Pinang Damai village. These activities become routine program as determined on company’s CSR program. Compliance status: Full Compliance

Principle 7: Responsible development of new plantings

Criteria assessed: - Criteria not assessed: All

Findings: There is no development of new planting in PT Perkebunan Milano, all plantations are mature plantations. Compliance status: Not Applicable

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

Criteria assessed: CR8.1

Criteria not assessed: - Findings: Overall implementation plans are defined based on risk level evaluated for identifying significant aspects. Verified & cross checked implementation of the actions such as waste management control, chemical man-agement control, efforts to eliminate hazardouse waste furthermore efforts to eliminate the use of Agrochemi-cal has been implemented the estates are no longer using Gramoxone or other chemicals containing para-quat. The mill has renewed their Environmental Objectives, Targets and Improvement for year 2013, the focus still to reduce pollution and emissions through: 1) Preventing of overflow and pollution resulting from land application of palm oil mill effluent to the field by

increasing area of land application and continuous monitoring of effluent quality, soil quality, ambient air and air emissions, installing water dam, and sludge pump, construction concreate pond at pond no. 1 & 2, replacing main pipe from outlet to land application. Desludging trench and house keeping all waste water pond.

2) Decrease maximum usage of petrol from 0.81% to 0.79% per ton FFB by using EFB as boiler fuel, hav-ing a pelleting system for EFB, reuse methane gas as a fuel, and usage of static crane to lift EFB to trucks (without the use of loader), etc .

The estates have environmental monitoring and management plans in the form of their UKL/UPL plans, which includes plans pertaining to management of of natural resources, air and water quality, and other environ-mental aspects, social aspects. Monitoring reports of implementation of this plan is prepared once every 6 months as required by Indonesian law. Aspects reported, as seen in the most recent report for January 2013 include water and air quality analysis results (twice a year), job opportunities and total number of workers (once a year), and road damage. The company has also implemented their plan to eliminate the usage of

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 23

paraquat, as found during this surveillance audit Compliance status: Full Compliance

3.2 Status of Previously Identified Non-conformities

A total of 10 nonconformances were identified during 2nd surveillance audit. These consisted of 4 major non-conformities and 6 minor non-conformities. During this surveillance assessment, it was found that there was sufficient evidence for closure of all non-conformities. The following is a description of the evidence of action taken to close the non-conformities raised during the previous surveillance, as well as auditor’s conclusions on the status of the non-conformities.

Criterion 2.1. (Major indicator 1). Evidence of compliance with relevant legal requirements.

Non-conformance 2012-01 of 10 (Major non-conformity) Correction:

Noncompliance to regulation:

1. According to the decision letter from the Government Head of South Labuhanbatu land applica-tion permit, land application is not permitted in block M8 Sei Daun estate; company shall make control well in block M8. However the company carrying out land application in area that sup-posed to be a control well.

2. Sprayer (Gang 30) still bring their contaminated cloths to their house and some of them using broken gloves.

3. There is no 3 monthly report of OSH performance i.e for June 2013 period both in Pinang Awan Mill and Batang Saponggol estate.

4. OSH team secretary has no OSH expert certificate as required by Ministry of manpower regarding OSH team.

Correction: 1. Permanently close the waste water pipe those drain to block M8 POM Sei Daun estate as de-

fined by land application permit. To follow-up land permit application that is currently still un-der review.

2. To ban all sprayers, including Gang 30, from bringing clothing that is contaminated with chemicals from spraying activities to their home by creating “prohibition notices”

3. Assign personnel in charge that is responsible to make reports OSH and submit that reports to related institutions. Send tri-monthly reports for POM and Saponggol Estate and deliver to the related institutions.

4. Revise the OSH management by combining between Batang Saponggol estate and Sei Daun Estate because both estates are in an adjacent location, so the certified OSH secretary who has OSH expert qualification could cover both estates and membership of OSH team which include both estates.

Corrective Action: 1. Carry out periodic monitoring to ensure that the case of non-permitted areas are drained

without permission will not re-occur, and always monitoring land application activities to en-sure that there is no errors.

2. Periodic review existing land applications permit and update them if necessary. 3. Re-trained the procedure for waste handling hazardouse waste to all sprayers and ensure all

sprayers understand the procedures and ensure all equipment contaminated by hazardous waste is not taken back to their homes.

4. Management representative make training program periodically for EHS team to be qualified

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 24

as certified OSH expert.

Verification result:

1.The company provided some evidence regarding land application such as minutes stating permanent closure of the waste water pipe in block M8 POM Sei Daun estate signed by the estate manager and mill manager, some pictures of closed pipeline to wrong land application area dated on May 12, 2012. Visited on the site during 3rd surveillance audit the pipe line go-ing to block 117/M8 has been disconnected and closed, while the effluent trench at block 117/M8 has been drying.

2.It was sight during 3rd verification there is no more sprayers bring their contaminated cloths to their home. It was explained by the sprayer during interviewed at the sprayed block E8/70 they are anot allowed to bring all contaminated clothing to their home as informed by the management during socialization on May 12, 2012..

3. It was sight tri-monthly report for OSH implementation to local institution e.g. for 1st report year 2013 on April 2013.

4. It was sight during audit a letter from Local Social, Manpower and Transmigration of Labuhanbatu Selatan District No. 13/P2K3/DSTKT/2012 regarding approval of revised OSH team becomes one team between Batang Saponggol estate and Sei Daun estate. The new OSH team has been certified.

Auditor Conclusions: Closed Criterion 4.2. (Minor indicator 2) Records of efforts to maintain and increase soil fertility (e.g. the use of fertilizer, legume cover crops, compost, and land applications of POME or EFB) based on the results of analysis carried out as in Point 1 above.

Non-conformance 2011-02 of 10 (Minor non-conformity) EFB application is not carried out in accordance with the guidance of good agricultures practice issued by Ministry of Agroculture Indonesia, i.e. one layer per location.

Correction: Revise SOP applications empty application SOP Estate 003 by altering the determination of empty application and turn it from 2 layers into 1 layer Corrective Action: Periodic monitoring for the implementation of EFB application in accordance with revised SOP Estate 003. Verification result: The SOP-EST-003 Rev.01 valid from may 01, 2012 has been revised following Wilmar Agiculture manual, the implementation of EFB become I layer instead of 2 layer per line consiste of 4 trees. It was verified at block 70 EFB application has been 1 layer. According to EFM application in year 2012 total volume 47,729 ton for 1,134.54 ha. Application for may 2013 was 17,042.41 to for 440.78 ha as seen block 65 and 70. Auditor Conclusions: Closed Criterion 4.1. (Minor indicator 2) Records of operational results.

Non-conformance 2012-03 of 10 (Minor non-conformity) It was found the application for Kieserite in block 81 of Sei Daun estate year 2011 is less than the fertilizer recommendation. During the time of audit, Kieserite still not fully applied yet, such as at block 70 of Sei Daun estate.

Correction: 1. Implement Kieserite Fertilization on block 81 Sei Daun according to the recommendations

set out. 2. Kieserite fertilization has been done in block 70 on May 3rd 2012.

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 25

Corrective Action: 1. Estate manager will monitor the implementation of fertilization for all types of fertilizer in

accordance with recommended dose and recommended schedule which is being set. 2. In the begining of the year estate manager will coordination with Purchasing Head Office to

ensuring the delivery of fertilizer according to the Purchasing Request that has been sent. (Actually, Purchasing Request is sent early in December for the year prior to semester one fertilization program).

Verification result: According to record of daily costing for May 2012 implementation of Kieserite on may 3, 2012 was 5,050 ton (6,749 sack) for 48.98 Ha, it can be seen from fertilizer released report from warehouse (No Bon Pengeluaran Barang Gudang (BPBG) 005223 for block 70. Accoring to leaf sampling analisys year 2012 (No. 33/Daun/VII/2012/PT MILANO dated 19 Juli 2012) fertilizer recommendation for year 2013 in Sei Daun estate are 5.25-10.37 kg/tree. For block 106 (planted year 1998) are NPK Super K (Feb) : 2.75 kg/tree (22.04 ton), kieserite (April) : 0.75 kg/tree (6.01 ton), Urea (June) : 1 kg/tree (8.02 ton), MOP (Ju-ly) : 1.75 kg/tree (14.03 ton), NPK Super K (October) : 2.75 kg/tree (22.04 ton) then total for block 106 is 9 kg/tree. Realization of fertilizer on May 2013 in Division 2 are for Kieserite 322.92 Ha / 32.02 ton (block 79, 81, 83, 84, 93, 98, 104, 106); for Borat on Mei is 195.23 Ha / 3.08 ton (block 105, 111, 77, 95, 83); for NPK Super K in January-March 2013 are 1,222.07 Ha / 415.33 ton (for all block (ke-29 blok yg ada); For Dolomite on April 2013 sby 76.77 Ha / 20.81 ton (Blok 80, 92, 105). Kie-serite application at block 106 (J13 and J14) on April 9, 2013 with evidence BPBG (Bon Penge-luaran Barang Gudang) No.008038 is 6.01 ton for total area 63.08 Ha. Realization of fertilizer in Divisi 1 are for NPK Super K in Januari-March are 1,085.55 Ha / 412.30 ton (for all block); for Dolomite on is 148.36 Ha / 39.84 ton (block 101, 069, 072); for Kisierete on April is 197.38 Ha / 20.28 ton (block 062, 070, 074, 076, 085, 091); For Borate on may 2013 is 245.67 Ha / 3.73 ton (blok 086, 090, 061, 070, 071, 073, 076). Auditor Conclusions: Closed Criterion 4.6. (Major indicator 1) Evidence of use of only approved and registered agro-chemicals permitted by the relevant authorities.

Non-conformance 2012-04 of 10 (Major non-conformity) It was found that the pesticide Regent is not included on approved pesticidre pesticide on de-cree letter no. 560/491/DSTKT/2011 from “Social. Manpower and Transmigration Office (Dinas Sosial, tenaga Kerja and Transmigrasi”) Kota Pinang dated on December 20, 2011 which lists the registered agrochemicals permitted for use at Sei Daun estate. Correction: 1. To reconfirm that the pesticide Regent is registered by the "Social Service, Employment and

Transmigration power" Labuhan Batu Selatan District and permitted for use 2. Identify types of pesticides that may be used and those which are not enrolled in a licensed

pesticide list. Corrective Action: 1. The list will be reviewed periodically by estate manager 2. Ensure all purchased pecsticides has permit the use of pesticides and has registered from

"Social, Man Power and Transmigration Office" Labuhan Batu Selatan District.

Verification result: It was sight letter of approval from local Social Service, Employment and Transmigration power" Labuhan Batu Selatan District revised letter No. 560/039/DSTKT/2013, regarding approval for using pesticide and rodenticide) for plantation maintenance PT Perkebunan Milano, there are 16 agrochemical material can be used in PT Perkebunan Milano such as Regent 50 SC; Bravo 50 SC; Rhodiamine 720 WSC; Glisat 480 SL; Winson 20 WG; Garlon 670 EC; Cozeb 80 WP; cap-ture 50 EC; Petrokum 0.005 RB; In team 150 SL; Cymbush 50 EC; Dipel WP; Dithane M.45;

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 26

dense 520 SC; Tiara 20 WG (Metsulfuron Methyl 20%); Agrisik.. Auditor Conclusions: Closed Criterion 4.6.(Minor indicator 2.) Records of the results of health check-up for those who apply agrochemicals.

Non-conformance 2012-05 of 10 (Minor non-conformity) There is no action taken when result of blood cholinesterase levels test January 13, 2013 for two sprayers in Sei Daun estate and Batang Saponggol found exceed than normal condition. Correction: Make a decision letter related to mutation/ changes of two sprayers in Sei daun and Batang Saponggol estate from spraying activities to manual plantation maintenance which is not related with chemicals. Corrective Action: Periodic monitoring to ensure all workers dealing with chemicals always healthy in accordance with the results of medical examinations. Ensuring employee medical surveillance is always carried out in accordance with the results of periodic examinations. Verification result: It was sight blood test result for sparyers from external laboratory dated December 12, 2012; there are 6 spayers with high blood cholinesterase. There is job mutation letter from personel department No. 096/MLN.MBE/V/2013 dated 24 May 2013, the workers has been mutation to loose fruit collection and selective weeding. Auditor Conclusions: Closed Criterion 4.7. (Major indicator 2.) Regular health examination by a doctor for workers in station or exposed to high risk work.

Non-conformance 2012-06 of 10 (Major non-conformity) From medical surveillance report, there is found some workers with high cholinesterase level. However, this case was not included on the OSH meeting agenda period January to April 2012 to define its correction plan. Correction: Employee health issues, including discussion of the results of periodic medical examinations regularly discussed at the meeting related to OSH in May 2012

Corrective Action: Meeting agenda will be inform in the beginning to all related section to ensure all health issue in-clude in discussion related to the Health and Safety / Workers. Verification result: The company provides meeting agenda, and minutes meeting dated May 12, 2012. It was sight-ed that meeting agenda already include on the OSH meeting. It was sight also for 1st three monthly meeting record for year 2013 on April 2013. Auditor Conclusions: Closed. Criterion 4.8 (Major indicator 2) Records of training for each employee are kept.

Non-conformance 2012-07 of 10 (Major non-conformity) No training evidence for hazardous material handling for warehouse staff both in estate and mill warehouse.

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 27

Correction: 1. Insert/ prepare schedule for training of chemicals handling and hazardous waste to Ware-

house staff both in mill and estate. 2. Provide training of chemical handling and hazardous waste for warehouse staff in mill and es-

tate.

Corrective Action: 1. Periodic monitoring for all workers whose work affects to product quality and environment im-

pacts has competency related to their jobs. 2. Ensure compliance training program implementation for employees assigned

Verification result: There are some training evidence obrserved during audit such as: 1. Minutes of training (FRM;GEN-007) with title” Training for handling chemical material for

warehouse staff, laboratory and water treatment staff” on May 12, 2012, training material, photohgraps including list of participant.

2. Minutes of training for hazardouse waste handling on Chemical store, laboratory, and waste water treatment for staff on June 11, 2013,, including training material, photograps and list of participant.

The company provide table of training program year 2013, there are 17 listed training plan on the table including information about hazardous material handling training for warehouse staff in estate and mill warehouse. Training program for year 2013 such as;

- Basic OSH from new workers - Job description for CCP ISCC and Green House Gas calculation training. - Advance OSH for all woker - Emergency and preparedness training - Chemical and hazardouse waste training etc. - Oil palm plantation best practice training

Training evidence was sight some i.e. list of participant, training material and photograps for several training such as

- Company’s Policy training on June 15, 2013 - Training for Gender issue ( mechanism for complaint and gievances) on June 15, 2013

OSH training on April 25, 2013. Auditor Conclusions: Closed.

- Criterion 5.1. (Minor indicator 1) Revisions to environmental management document if there are changes in companies operating areas or activities.

Non-conformance 2011-08 of 10 (Minor non-conformity) No record of Environmental aspect, and impact provided for the Biogas Plant Construction until Commissioning at August 2011 to March 2012. Correction: Environmental aspect and impact related to Biogas Plant Activities has been identified and filled in environmental aspect and impact document. Corrective Action: Existing environmental aspect and impact will be reviewed regularly as required by procedure or updated if there are any new activities . Ensure for new activity conducted whether by contractor or internal company shall be completed with environmental aspect and impact identification. Verification result: It was sight on the revised environmental aspects and impacts document for year 2013 Biogas plant operational has been included. While for construction activity was not inculded because the activity was over.

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 28

It was sight also environmental aspect and impact identification result for other new activity such as construction of mill roof April 2013.

Auditor Conclusions: Closed

Criterion 5.3. (Minor indicator 2) Records of waste monitoring/analysis.

Non-conformance 2012-09 of 10 (Minor non-conformity) There is found that hazardous waste is mixed with non hazardous waste at several locations in Sei Daun estate. Correction: 1. Check all existing bins to separate hazardous waste and non hazardouse that found mixed. 2. Sticking back the category and list of types of waste (hazardouse waste, Organic and Anor-

ganic) in the bins provided. Corrective Action: 1. Weekly patrol program to make sure all trash is placed separately in accordance with the

type of trash that is provided by periodic control. 2. Re-socialize to all relevant employees regarding the types of wastes and locations of bins Verification result: Training result regarding management of hazardouses waste on February 2012 attended by 13 partoicipant from all estates , there is training records such as certificates, photograps and train-ing material available in document control office. Verified on site such as in housing area at Sei Daun estate there was no more mixed waste found in all existing bins. Auditor Conclusions: Closed. Criterion 5.4. (Minor indicator 2) Records of monitoring of fossil fuels use for operational reason and its efficiency analysis.

Non-conformance 2012-10 of 10 (Minor non-conformity) The company did not conduct the usage of fossil fuel efficiency analysis. Correction: Conduct analysis the efficiency of fossil fuels both in the mill and Estate. Corrective Action: Make fossil fuel analysis every year.

Verification result: The company monitors all fuel consumption such as diesel oil and other fossil fuel, as recorded on recordsof calculation fossil fuel consumption year 2012 and 2013 company has conduct fossil fuel efficiency analysis for year 2012, since company use biogas for electricity company can saving more than 95% saving compare with year 2011 fossil fuel cost. Auditor Conclusions: closed

3.3 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions

During 3nd surveillance assessment, only 1 major nonconformancy were identified. For the major non-conformances, the company has taken the necessary corrective action to close these non-conformances with-in 60 days of completion of the assessment, and this was verified by the audit team through documentation review submitted by the company. For the minor non-conformances, the company has taken corrective action against these as well; the closure of these minor non-conformities will be assessed during the next surveil-lance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as below:

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 29

Criterion 3.1 (Major indicator 1). There is an implemented management plan that aims to achieve long-term economic and financial viability.

Non-conformance 2013-01 of 01 (Major non-conformity) The company’s management plan still not include information about revenue forecase from CPO/PK selling and not include information about analisys of profit and loss, to ensure long term financial viability Correction: Revisions have been made to the document Forecase Milano (long term plan) for the period 2013 to 2018 by adding the approximate price of CPO and profit loss by consolidating between the es-tate and the mill. Corrective Action: Ensure the long-term management plans are available equipped with the required information and are always updating the information available according to the conditions of the current year. Date of Closure : June 26, 2013

Auditor Conclusions: Closed Verification result: Company provide revised management planning document, including information regarding product price forecase revenue analisys and also information about profit loss analisys for peri-od year 2013 to 2018. It is planned of profitability plan for next 5 year (2013-2018) will increase gradually from 2013 to 2015, while for 2016 to 2018 company revenue will decrease following company’s replanting program will affect to decrease FFB production gradually.

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 30

3.4 Description of Supply Chain Management System

Pinang Awan Palm Oil Mill is producing crude palm oil (CPO) and palm kernel (PK), the the audit time has not regis-ter their transaction in the RSPO E-Trace System, because company currently sell their product without claiming it as certified sustainable palm oil (CSPO) or certified sustainable palm kernel (CSPK), all CPO produced from Pinang Awan Mill are sold as International Sustainability Carbon Certification (ISCC) certified claimed product, as company already certified according to ISCC requirement in Year 2011 . However according to explanation from mill manager, the company will follow all requirements from RSPO to support implementation of sustainability re-quirements. The following is a description of the company’s supply chain management system according to the RSPO SCCS requirements, including status of compliance of the company and their outsourced third parties to RSPO SCCS re-quirements:

1. Documented procedures

Findings: The company has list of procedures for implementation of SCCS as seen on Master list document (FRM-GEN-019) , the company establish procedure for receiving order of certified product both in sales departement and mill, there is clear explanation about how to issued Main Delivery document and partial delivery. The company has policy regarding SCCS model will used for CSPO production process, according to decree letter no. 001/MLN/SK/V/2012 regarding company decison for Supply chain model i.e. Mass Balance signed by Unit Head Pinang Awan Mill. The mill has been assigning person, i.e. mill manager that having overall responsibility for and au-thority over the implementation of SCCS requirements and compliance with all applicable require-ments. The mill manager is expected to be able to demonstrate awareness of the facilities proce-dures for the implementation of SCCS standard. The mill have documented procedures for receiving and processing certified and non-certified FFBs i.e. SOP-MILL-001 rev. 04 May 08 Incoming FFB procedure, 2011; SOP-Mill 002 FFB Sortation: SOP-MILL-001 for Weigh bridge Mill, and A set of SPO FFB processing since receiving until product dispact SOP-Mill-003 to SOP-Mill-044. The company has established standar operation procedure for Mass Balance calculation as stated on SOP-MIL-047. However mass balance format for Palm Kernel product still not established yet. This is raised as non conformity. Compliance status: Non Compliance

NCR 2013-SCCS-01 of 02 SOP-MIL-047 regarding Mass Balance calculation is not include mass balance format for Palm Ker-nel product

2. Purchasing and goods in

Findings: When receiving RSPO certified palm oil, personnel in the loading ramp are to verify physically the claimed category of the material. The mill has mechanism to receive FFB both from certified sources and non certified sources. In-coming certified FFB will have documents such as: Weighbridge slip, grading records, delivery Notes including wet stamp from the origin estate and certified code such as from Batang Saponggol, Sei Daun and Merbau estate. FFB from outgrowers are accompanied by Weighbridge slip, grading rec-ords, delivery Notes without certified stamp. The company has a mechanism to inform the certification body (CB) immediately if there is a project-ed overproduction as seen on SOP-MILL-048 “Informasi peningkatan jumlah produksi (Projected

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 31

overproduction information). The implementation will begin after company get SCCS certificate. Compliance status: Full Compliance

3. Records Keeping

Findings: No changes on company’s mechanism for control and maintenance of the data and document used in production process, as stated on SOP PRO-GEN-002 dated May 07, 2012 all records related to CSPO & CSPK Product Company will be maintained for 10 years. The mill has records balance for all receipts of RSPO certified FFB and delivery CPO on daily ba-sis. The material balance includes information about incoming FFB from company’s estate and outgrower, FFB produced, CPO result including OER, however records for PK production and monthly movement has not established. All volumes of palm oil that are delivered are deducted from the material accounting system ac-cording to actual daily conversion rate. The material balance can show deliver product sales from a positive stock. The mill will indicate product name and supply chain model in Weigh Bridge Document, including information about RSPO certiicate number as stated on SOP Mill -039 which is explain about how to put supply chain model used in trade documents such Main Delivery Order, Weigh Bridge Slip, Delivery Order. All certified CPO will be transferred to PT Wilmar Bioenergy Plintung Riau for ISCC claimed. There is no outsourced process in Pinang Awal Mill. The mill’s product CPO and palm kernel are internally processed in company’s location. Compliance status: Non Compliance

NCR 2013-SCCS-02 of 02 Company has no establish production record such as daily production nad product record and monthly movement summary report for palm kernel.

4. Sales and Good Out

Findings: The sales and goods out mechanism of the company are described in their procedure of sales of palm oil. Records of all sold RSPO certified materials are recorded in material balance sheet. All documents related product dispatch sales invoice documents to PT Wilmar Bioenergy and other customer are: - Weight bridge ticket - Delivery Order - Vehicle Control Form - Minutes meeting ( "Berita Acara” ) - Surat Pernyatan Truck/ Tanki Bersih (Cleaning Tank statement) The name of buyer has been informed on Weigh Bridge Slip and Delivery Order, including infor-mation about address of the buyer. The sales document has been include information about the date on which the invoice was issued, A description of the product, will be including the applicable se-lected supply chain model (Mass Balance)


5. Training

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 32

Findings: There is training evidence for SCCS awareness for Mill staff manager level such as attendence list FRM-HRD-020; training was conducted on May 08, 2012. All relevant staff was trained on may 10, 2012 attended by 15 operators. Evidence of training: Minutes meeting SCCS workshop for em-ployees working with Critical control Point such as Photographs of training session dated May 10, 2012.


6. Claims

Findings: The company has specific SOP for making claims regarding the use of or support of RSPO certi-fied oil palm products product according RSPO communication and claims. The implementation of SOP is after company get order for certified palm oil or palm kernel.


3.5 Status of Previously Identified Non-conformities

SCCS Non-conformance 2012-01 of 02: Pinang Awang mill still does not include the input address of buyer destination in document of delivery notes Correction: All product transport documents now include information about address of buyer destination such as in document of delivery notes, weigh bright ticket, invoice etc. Corrective Action: Mill manager will check periodically all information attached in product documents, both incoming FFB and sales or shiping documents.

Verification result: It was sight of Weigh Bridge Ticket including complete information about address of destination, supply chain model both for CPO and PK as seen on WB dated June 22, 2013.


SCCS Non-conformance 2012-02 of 02: There is no evidence of training carried out for all staff that is required to implement the requirements of the Supply Chain Certification Systems Correction: SCCS requirement training has been conducted for all relevant workers on May 10, 2012. Corrective Action: Revised year 2012 training program including SCCS training for all relavant worker especially for new

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 33

operator. Company will include SCCS requirement training as part of induction training for all new mill workers.

Verification result: It was verified training records such as: - List of training participant dated May 10, 2012 attended by 15 mill operators. - Photographs of training session dated May 10, 2012. - Revised year 2012 training program - Training program, 2013 for new workers has included SCCS RSPO training.

Auditor Conclusions: Closed 3.6 Identified Non-conformances against RSPO SCCS Requirements, Corrective Actions Taken and Auditors Conclusions

SCCS Non-conformance 2013-SCCS-01 of 02:

SOP-MIL-047 regarding Mass Balance calculation is not include mass balance format for Palm Kernel product Correction: Adding and including Format Mass Balance for Palm Kernel on SOP-ML-047 Corrective Action: Ensuring every format included on the relevant SOP Date of closure : June 24, 2013 Verification result: Company provide revised Mass Balance procedure SOP-ML-047 valid from June 22, 2013, calculation of PK mass Blance was determined on section 6.1 page 6 of 7 Auditor Conclusions: Closed SCCS Non-conformance 2013-SCCS-02 of 02: Company has no establish production record such as daily production nad product record and month-ly movement summary report for palm kernel. Correction: Making daily production record and product daily and monthly for palm kernel on specific tracebility form for Palm Kernel. Corrective Action: Ensuring that all daily production record, product daily record and monthly for palm kernel always up-dated. Date of Closure: July 03, 2013 Verification result: Company provide : 1. Daily production records for June 2013 period 2. Monthly movement summary report for palm kernel product for June 2013 period

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 34

Verified on the records above information about palm kernel production both come from certified and non certified source has been recorded.


3.7 Noteworthy Positive Components

No. Clause Comment

1 8.1. Imrpovement company’s performance, all last audit findings was closed.

2 2.2 Improvement of understanding RSPO standard, including compliance to legal regulation.

3 5.6 Very good on biogas plan to reduce fossil fuel consumption and reduce greenhouse gas emissions.as CDM project for methane capture from their palm oil mill effluent,

4 5.3 Organic and an organic waste disposal system is well implemented

5 4.6 The estates are no longer carrying out spraying of agrochemicals containing para-quat as viewed from chemical usage records and there is no stock of such chemi-cals in store.

6 4.6 There is evidence of good implementation of biological pest management methods through planting of benefical plants and barn owls, as it was seen from chemical issuance records that there is little or no usage of chemicals for treatment of pests.

3.7 Conclusion and Recommendation for RSPO Supply Chain Certification

The audit team has confirmed through the audit process that Pinang Awan Mill has established and maintains an effective system to ensure compliance with the RSPO Supply Chain Certification System requirements (dated No-vember 2011). It is also confirmed that the company’s annual volume of CPO and PK sold for the period of July 27, 2012 to May 08, 2012 has not exceeded the certified annual tonnages as claimed in the organization’s RSPO cer-tificate no. 01 100 106470 because no CSPO and CSPK claimed product sold as SCCS RSPO until 3rd surveil-lance audit. TUV Rheinland recommends that Pinang Awan Mill estate be continuing approved for certification of compliance to the RSPOP & C and Supply Chain Certification System requirements .

3.8. Issues Raised by Stakeholders and Findings Pertaining to Issues

Below is a summary of issues raised by stakeholders interviewed on-site

No. Issues Raised Audit Verification

1.

No more pollution from mill activities Company has identified source of pollution and establish environmental management program to prevent pollution. Company has monitoring program to en-sure that no community area will not pollut-ed by mill and estates activities.

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 35

4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

4.1 Date of Next Surveillance Visit

The next surveillance visit is planned for July 2014.

4.2 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 Perkebunan Milano

Simon Siburat Group Sustainability Controller Date: July 25, 2013

Signed on behalf of TUV Rheinland Dian Susanty Soeminta Lead Auditor Date: July 20, 2013

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 36

APPENDICES

Appendix 1: List of Abbreviations

AMDAL Analisis Dampak Lingkungan & Sosial

(Social & Environmental Impacts Assessment) BKPM Badan Koordinasi Penanaman Modal (Capital Investment Coordination Board) BOD Biological Oxygen Demand BPN Badan Pertanahan Nasional (National Land Agency) CDM Clean Development Mechanism COD Chemical Oxygen Demand CPO Crude Palm Oil Disnaker Dinas Tenaga Kerja (Labour Department) EIA Environmental Impact Assessment EMP ERTs

Employe Endangered, Rare & Threatened species

ESH Environmental Safety & Health EHS Environmental Health & Safety ETP Environmental Target Program FFB Fresh Fruit Bunches EFB Empty Fruit Bunches EMU Environmnetal Management Unit FORKASS GIS

Forum Komunikasi Masyarakat (Community Communication Forum) Global Information System

HCV High Conservation Value HRD Human Resources Department HGU Hak Guna Usaha (Land Use Rights) ISCC IPM

International Sustainibility and Carbob Certification Integrated Pest Management

IUP Ijin Usaha Perkebunan (Plantation Operation Permit) JHT JKK JKM K3

Jaminan Hari Tua Jaminan Kesehatan Keluarga Jaminan Kematian Keselamatan dan Kesehatan Kerja (Occupational Safety & Health)

Kadisbun Kepala Dinas Perkebunan (Head of Plantations Department) KepMen Naker Keputusan Menteri Tenaga Kerja (Workforce Minister’s Decree) LTA Lost Time Accident LRR Legal Requirements Register MSDS Material Safety Data Sheets NGO Non-Government Organization OSH Occupational Safety & Health PGA PK

Personel and General Affair Palm Kernel

PKO Palm Kernel Oil PKS Pabrik Kelapa Sawit ( Palm Oli Mill) POME Palm Oil Mill Effluent PPE Personal Protective Equipment PUK Perkembangan Usaha Kecil (Small Enterprises Development) RKL Rencana Pengelolaan Lingkungan (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan (Environmental Monitoring Plan) SCC SIA

Suply Chain Certification Social Impact Assessment

SKU SK-KBP

Satuan Kerja Unit (Daily permanent Worker) Serikat Pekerja-Kesatuan Buruh Perjuangan (Workers Union)

SOP Standard Operating Procedure SBSI Serikat Buruh Sejahtera Indonesia (Indonesian Labour Union) SPSI Serikat Pekerja Seluruh Indonesia (Indonesian Workers Union)

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 37

SPTI Serikat Pekerja Transportasi Indonesia (Indonesian Transportation Workers Union) UKL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UMP Upah Minimum Propinsi (Provincial Minimum Wage) UPL Upaya Pengelolaan Lingkungan (Environmental Management Efforts)

Appendix 2: List of Stakeholders Interviewed and Contacted

No. Name of

Stakeholder Institution - Address Remark

Staff Interviewed On-Site

1. Andi Irawan Estate Manager Batang Saponggol Wilmar 2. Alfian Staff Regional office Community De-

velopment Wilmar

3. Kartolo Ginting Environmental Health & Safety officer

Wilmar

4. Eri Endrianto Wilmar 5. Lihardo Marpaung Bina Mitra Regional Wilmar 6. Arsyad General Manager Wilmar 7. Jules Sony Sustainibility Staff 8. Ronny Hutabarat Staff FG (Finished Good) Wilmar 9. E. Simanjuntak Finance Officer Wilmar 10. T Napitupulu Personel and General Service

Regional Office Wilmar

11. Ashima Nardapdap Mill Coordinator Wilmar 12. Mardani Surahsyah Purchasing - Medan Wilmar 13. Indra Sakti Purchasing - Regional Office Wilmar 14. Wahyudi Hidayat Staff Reserach Wilmar 15. Sudiyono Field Controller Merbau Esatate Wilmar 16. Chairul Abdi Personnel and General Affair

Merbau Estate Wilmar

17. Ali Rasidan Document Control ISO & RSPO Wilmar 18. Ihsan Rahmat Secretariat Officer Wilmar 19. Hadiah Mufti Lubis Human Resources Development Wilmar 20. J Saragih Bina Mitra Sei Daun Estate Wilmar

Stakeholder Interviewed onsite

1. Kamisem worker Sei Daun estate 2. Atun worker Sei Daun estate 3. Darmayani worker Sei Daun estate 4. Atmini worker Sei Daun estate 5. Dameria Sitompul worker Sei Daun estate 6. Tujiyem worker Sei Daun estate 7. Erni worker Mill workers 8. D. Sitorus worker Mill Workers 9. Kasno worker Mill wokers 10. Poniah worker Merbau estate 11. Suryadi Worker Merbau estate 12. Eljohn Putra Worker Metrbau estate 13. Sunarso Tokoh Adat Merbau Local Community 14. M. Latif pane Sigambal 2 Village Head Local Community 15. Villager Pinang Damai Local Community

RSPO 3rd



- North Sumatera-

of 38

RSPO v1 2011-05-24 38

Appendix 3: Observations and Opportunities for Improvement

No. Observations / Opportunities for Improvement Criteria

1 Information about volume and amount stated on report of waste dis-posed is not similar with stated on waste manifest.

5.3

2 Pinang Awan mill has no information regarding capability of FFB sup-plied from out growers for consideration during replanting period.

3.1

3 Beneficial plant (Tunera subulata/Antignon)maintenance was not consistently carried out, it was found some of beneficial plant broken.

4.5.1

4 Planning for mutation all workers that has hearing problem is not consistently implemented, due to found remain 5 workers (from 9 workers) with hearing problem still waiting for new position and still working at the high risk position even they are using PPE.

4.7.2