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Roundtable on Sustainable Palm Oil

Annual Surveillance Audit Report Report No : ASA3_096704

Surveillance assessment against the

RSPO Principles & Criteria Indonesia National Intepretaion (INA-NI) year 2008 and RSPO SCCS year 2011

Name of client

PT Bakrie Sumatera Plantation UNIT SUMUT I- Kisaran Palm Oil Mill

North Sumatera

Head Office : Jl. Ir. H. Juanda, Kisaran, Asahan District, North SumateraProvince, Indonesia 21202

Date of Surveillance Audit : May 6th to 8th , 2013

Report prepared by : Fadli (RSPO Lead Auditor)

Certification decision by : Manfred Herbert Lottig

(COO TUV Rheinland Malaysia)

Certification Body: TUV Rheinland Malaysia Sdn. Bhd.

No. 26 – 32, Jalan Perindustrian USJ 1/6, Taman Perindustrian USJ 1,

47600 Subang Jaya, Selangor Darul Ehsan, Malaysia.

Tel: +6 03 8024 2400 Fax: +6 03 8023 1505

www.tuv.com

TABLE OF CONTENTS

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

1.1 National Interpretation / Standard Used ............................................................................................... 3 1.2 Scope of Assessment ........................................................................................................................... 3 1.3 Certification Details .............................................................................................................................. 3 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 and project outputs. .................................................................................. 7 1.8 Dates of Plantings and Replanting Cycles ........................................................................................... 8 1.9 Area of Plantation (Total, Planted and Mature) ................................................................................... 8 1.10 Progress Against Time Bound Plan ................................................................................................... 9 1.11 Progress of associated smallholders or outgrowers towards RSPO compliance ........................... 10 1.12 Approximate Tonnages Certified ..................................................................................................... 10

2.0 ASSESSMENT PROCESS .................................................................................. 11

2.1 Certification Body ............................................................................................................................... 11 2.2 Qualifications of Lead Assessor and Assessment Team .................................................................. 11 2.3 Assessment Methodology & Agenda ................................................................................................ 11

3.0 ASSESSMENT FINDINGS ................................................................................... 13

3.1 Summary of Findings pertaining to RSPO Principles & Criteria........................................................ 13 3.2 Status of Previously Identified Non-conformities ............................................................................... 22 3.3 Identified Non-conformances against RSPO P&C Requirements, Corrective Actions Taken and

Auditors Conclusions ........................................................................................................................ 25 3.4 Description of Supply Chain Management System ........................................................................... 26 3.5 Status of Previously Identified Non-conformities .............................................................................. 29 3.6 Identified non-conformance against RSPO SCCS requirements, Corrective Actions Taken and

Auditors Conclusions ........................................................................................................................ 30 3.7 Noteworthy Positive Components ...................................................................................................... 31 3.8 Issues Raised by Stakeholders and Findings Pertaining to Issues................................................... 31

4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INT ERNAL

RESPONSIBILITY .................................... ........................................................... 34

4.1 Date of Next Surveillance Visit ........................................................................................................... 34 4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client .................................. 34

APPENDICES ............................................................................................................ 35

Appendix 1: Details of Revised Certificate ............................................................................................... 35 Appendix 2: List of Abbreviations ............................................................................................................. 36 Appendix 3: List of Stakeholders Interviewed and Contacted ................................................................. 37 Appendix 4: Observations and Opportunities for Improvement ............................................................... 37

RSPO Annual Surveillance Audit Report

- PT Bakrie Sumatera Plantation SUMUT I Kisaran Uni t

- North Sumatera, Indonesia

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1.0 SCOPE OF CERTIFICATION ASSESSMENT

1.1 National Interpretation / Standard 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 and the RSPO Supply Chain Certification Systems (SCCS) document (November 2011).

1.2 Scope of Assessment

The annual surveillance certification assessment was carried out on 1 (one) mill and 5 (five) estates (Tanah Raja estate, Kwala Piasa estate, Gurach Batu estate, Serbangan estate, and Sei Baleh estate) under PT Bakrie Sumatera Plantation by Bakrie Sumatera Plantation Group. The date of certification of this unit was June 14, 2010.

1.3 Certification Details The details of RSPO certification of PT Bakrie Sumatera Plantation SUMUT I KIsaran Unit are as per the table below : Table 1: Certification details of PT Bakrie Sumatera Plantation SUMUT I Kisaran Unit

RSPO Membership no.: 1-0036-07-000-00

RSPO Certificate no.: 18502505 001

Date of first RSPO certificate & validity: Issued : June 14, 2010 & validity : 2010-06-14 to 2015-06-13

Date of certification audit: May 25 to 29, 2010

Date of previous surveillance audit: May 10 to 12, 2012

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

Revised : April 24, 2013 & validity : 2010-06-14 t o 2015-06-13

CPO tonnages claimed: 41,816

PK tonnages claimed: 8,715




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1.4 Location and Maps

Figure 1: Location of PT Bakrie Sumatera Plantation SUMUT Kisaran Unit in North Sumatera, Indonesia

PT BSP Unit North Sumatera I Kisaran




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Figure 2 : Map of PT Bakrie Sumatera Plantation SUMUT I Kisaran Unit

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

SEI BALEH ESTATE

SERBANGAN ESTATE

TANAH RAJA ESTATE GURACH

BATU ESTATE

KUALA PIASA ESTATE

KIsaran Palm Oil




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1.5 Organisational Information / Contact Person

Contacts details of the company are as follows:

Name of mill / estate

Location GPS locations

Latitude Longtitude

Main office Jl. Ir. H. Juanda, Kisaran 21202, Asahan Regency, North Sumatera In-donesia

02º59’04.6” 099º38’12.1”

Palm Oil Mill Sei Baleh Village, Sei Baleh District, Batu Bara Regency, North Sumatra Province.

03º02’26.7” 099º34’53.2”

Tanah Raja

Sei Renggas Village, Kisaran Barat District, Asahan Regency, North Su-matra Province.

02º57’50.0” 099º35’57.7”

Gurach Batu

Gerak Tani Village, Meranti District, Asahan Regency, North Sumatra Province.

3°20’45.0” 99° 58’23.4”

Kuala Piasa

Tinggi Raja Village, Tinggi Raja District, Asahan Regency, North Su-matra Province.

02º54’04.2” 099º34’00.2”

Serbangan

Rawang Lama Village, Panca Arga District, Asahan Regency, North Su-matra Province.

03º01’29.8” 099º39’30.3”

Sei Baleh

Sei Baleh Village, District Sei Baleh, Batu Bara Regency, North Sumatra Province.

03º04’12.1” 099º35’11.0”

Company Name: PT Bakrie Sumatera Plantation Unit SUMUT I,

Address: Jl. Ir. H. Juanda, Kisaran 21202, Asahan Regency, North Sumatera Province, Indonesia

Sei Baleh Village, Sei Baleh District, Batu Bara Regency

Contact Person:

Mr. Atok Hendra Yanto

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

Email: -

Legal Permit * 1. HGU (Land use certificate) No. 66.HGU/DA/85/B/151 with area of 18,556.01 Ha, valid from 13 November 1996 for 25 years.

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

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

4. Government directives: BKPM Decision Letter No. 257/T/Pertanian/Industri/1989 and BKPM Decision Letter

5. No. 1293/T/Industri/2008 regarding Capital Investment within the State (‘Penanaman Modal Dalam Negeri’).

HGU Area includes Aek Salabat estate(not included in certification scope)




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1.6 Description of Supply Base Table 3: FFB Supply Information for Kisaran Palm Oi l Mill for period year 2012 & year 2013

FFB Contributors FFB supplied Tonnes* FFB supplied Tonnes**

Tonnes % Tonnes %

Company owned estates:

- Serbangan Estate 26,949.38 13.34 5,657.78 11.42

- Sei Baleh Estate 37,719.57 18.66 8,572.44 17.29

- Gurach Batu Estate 11,367.35 5.62 2,153.77 4.34

- Tanah Raja Estate 26,553.33 13.14 5,998.77 12.10

- Kuala Piasa Estate 51,414.41 25.44 13,020.89 26.27

Sub Total Company owned state

154,004.04 76.20 35,403.65 71.42

Other company’s area (Aek Salabat & Seed Garden)

4,977.40 2.46 1,293.35 2.61

Outgrowers 43,135.01 21.34 12,876.10 25.97

TOTAL 202,116.45 100.00 49,573.10 100.00

Note : *) Data from January to December 2012

**) Data from January to April 2013

1.7 Actual production volumes and project outputs.

Table 4 : Total CPO and PK production from Kisaran Palm Oil Mill for period of January-December 2012

and projected production for year 2013 * Data from January to December 2012, consisting of material from certified and non-certified FFB ** Data from January to December 2012, material from certified FFB only

Amount (MT)

CPO PK

Certified tonnages claimed 41,816.00 8,715.00

Certified tonnages sold 0.00 0.00

Certified tonnages purchased 0.00 0.00

Actual Production* 42,899.52 9,405.88

Actual certified product production** 32,687.58 7,166.88

Extraction Rate (%) OER : 21.23 KER : 4.65

Projected output for year 2013 57,798.88 12,472.52




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1.8 Dates of Plantings and Replanting Cycles The company follows a replanting cycle of 25 years. Information on the dates of plantings is as per the table be-low.

Table 5 : Age and year of plantings of company es tate supplying to Kisaran Palm Oil Mill

Age & Year of Plantings

Oil palm planted area at each estate(ha)

Serbangan Sei Baleh Gurach

Batu Tanah Raja

Kuala Pi-asa

0 – 5 (2008 – 2013) 658.00 671.00 497.00 1,054.00 0.00 6 - 10 (2003 – 2007) 89.00 477.00 8.00 329.00 122.00

11 - 15 (1998 – 2002) 59.00 65.00 30.00 290.00 352.00 16 - 20 (1993 – 1997) 977.00 1,027.00 452.00 277.00 1,770.00 21 - 25 (1988 – 1992) 0.00 0.00 0.00 0.00 0.00 26 - 30 (1983 – 1987) 0.00 0.00 0.00 0.00 0.00

TOTAL 1,783.00 2,240.00 987.00 1,950.00 2,244.00

Table 6: Planned and actual oil palm replanting act ivities and conversion from rubber plantation to o il palm plantation year 2012 to 2016 PT Bakrie Sumater a Plantation SUMBAGUT UNIT I Kisaran Unit*

Year

Total planned re-

planting area (ha)

Actual replanted area in year 2009 – 2011 and Plann ed replanting area in year 2012 - 2016 for each e state (ha)

Actual to-tal area

replanted up to year 2012 (ha)

Serbangan Sei Baleh Gurach Batu

Tanah Ra-ja

Kuala Piasa

2009 0 161 288 189 386 0 1,024

2010 0 292 236 158 349 0 1,035

2011 0 82 83 83 144 0 392

2012 460 13 58 0 389 0 368

2013 208 115 13 0 0 40 0

2014 77 0 0 0 0 0 0

2015 194 0 0 0 107 0 0

2016 36 0 0 0 0 0 0

Total 975 663 678 430 1,375 40 2,819

Note :

*According to Letter no. 27/HBU/III/2011 signed by Head of Business Unit Sumut I dated March 21, 2011

1.9 Area of Plantation (Total, Planted and Mature)

Table 7 : Oil Palm Planted Area Summary, FFB Produc tion and Average yield/ha for PT BSP SUMBAGUT

UNIT I Kisaran

Estate Name Total area (ha)

Oil Palm Planted

area (ha)

Mature (Produc-tion) area

(ha)

Immature (Non-

production) area (ha)

FFB Production*

(tonnes)

Average yield/ ha

Serbangan 3,334 1,783 1,525 258 28,383.22 18.61 Sei Baleh 3,955 2,240 2,063 177 39,952.56 19.37

Gurach Batu 3,562 987 888 99 13,125.42 14.78 Tanah Raja 4,107 1,950 1,593 357 28,529.12 17.91




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Oil Palm Planted

area (ha)

Mature (Produc-tion) area

(ha)

Immature (Non-

production) area (ha)

FFB Production*

(tonnes)

Average yield/ ha

Kuala Piasa 2,764 2,244 2,244 0 51,416.20 22.91 TOTAL 17,722 9,204 8,313 891 161,406.52 18.72

Note * Data from January to December 2012 (including FFB production from Seed Garden)

Table 8: Land use data for PT Bakrie Sumatera Plant ation SUMUT unit I*


Rubber

Planted Area (ha)

Oil Palm Planted

Area (ha)

Land used for other purposes (ha)

Building Road, rivers and rai lways

Other pur-poses

Serbangan 3,334 1,422 1,783 56 72 1

Sei Baleh 3,955 1,588 2,240 53 69 5

Gurach Batu 3,562 2,473 987 44 50 8

Tanah Raja 4,107 1,802 1,950 169 142 43

Kuala Piasa 2,764 450 2,244 22 35 13

TOTAL 17,722 7,735 9,204 344 368 70

Seed Garden** 681 0 582 16 36 47

BARI*** 109 0 57 7 0 45

GRAND TOTAL 18,512 7,735 9,843 367 404 162

Note : * Data from January to April 2013

** Location of Seed Garden in Serbangan estate *** Location of BARI (Bakrie Research Institute) in Tanah Raja estate

1.10 Progress Against Time Bound Plan Table 9: Time Bound Plan of the Other Management Un its

Name of Holding Location Time bound

plan for certific ation

Remarks

PT Bakrie Sumatera Plantation Kisaran (PT Agromitra Madani.)

Kisaran, North Su-matera

Certified on 16 June , 2010

-

PT Agrowiyana Plantation Jambi Certified on May 2012.

-

PT Bakrie Pasaman Plantation Pasaman, West Sumatera

Finished Final Audit

Initial planned year 2011

PT ARBV South Sumatera Initial planned 2012

Unconsolidated with BSP

PT Graha Dura Leidong Prima Riau Initial planned 2015

Initial planned year 2013, waiting for PT

Bakrie Pasaman Plantation’s issuing

certificate PT Guntung Idaman Nusa Riau 2014 Unconsolidated with

BSP PT Indogreen Central Kalimantan 2015 Unconsolidated with

BSP Note : * Certification assessment for Bakrie Pasaman Plantation and ARBV was not yet conducted due to fi-nancial crisis, and an updated time bound plan is not yet provided.




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1.11 Progress of associated smallholders or outgrow ers towards RSPO compliance

There is no smallholder scheme in PT BSP SUMUT Unit 1 that supplies to Kisaran Palm Oil Mill. Additional FFB is supplied from independent outgrowers.

1.12 Approximate Tonnages Certified The approximate tonnages certified shall be the same as per the 1st revision of the certificate, which is as fol-lows : Crude Palm Oil (CPO) : 41,816 MT Palm Kernel (PK) : 8,715 MT




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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, Malaysia.

2.2 Qualifications of Lead Assessor and Assessment Team Fadli is the lead auditor for this 3rd surveillance audit. The assessment team members of this surveillance audit that were part of the same assessment team for the certification audit are as follows: 1) Fadli 2) Hendra Fachrurozy

New assessment team members that were not part of the previous assessment team are as per the table be-low:

Name Position Qualifications / Experience

Mhd Fundy Cholis K

Technical Expert

Education: Master Degree in Natural Reseource and Environmental Manage-ment, Bogor Agriculture University Trainings attended: Environmental Impact Assessment (EIA), Ecological Risk Assessment (ERA), Internal Quality Audit Training for Quality Management Sys-tem, IRQA-QMS ISO 9001:2000, High Conservation Value (HCV), RSPO Lead Auditor Course, ISPO Auditor Course, Working experience: Experienced in Environmental Impact Assessment, Envi-ronmental Health Safety Senior Officer (EHS-Officer) in Wilmar International Plan-tation, Internal Auditor for Wilmar International Plantation, Auditor for Rountable on Sustainable Palm Oil (RSPO), Indonesian Sustainable Palm Oil (ISPO), Certi-fication for Timber Legality Verification (SVLK) in PT TUV Rheinland Indonesia since June 2012 – present.

2.3 Assessment Methodology & Agenda The surveillance assessment was conducted between May 6 – 8, 2013 as per the assessment program below. The assessment was carried out in accordance with TUV Rheinland Malaysia 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 the country in which the assessment took place 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. All 5 estates and 1 mill were visited and the assessment team carried out field and document assessments 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 certification assessment agenda is as explained below. Surveillance Audit Agenda.




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Date Location/ Main S ites

Main Actvities

May 6, 2013 08.00 – 12.00

Main Office - Opening Meeting - Document verification for previous audit findings - Document verification for legal requirement - Document checking

14.00 – 18.00

Serbangan Estate

- Document check for manuaring record, harvesting record, HCV man-agement record, spraying record, hazardous handling, chemical han-dling

- Field observation to riparian zone, HCV area - Sido Luwe emplacement - Pasar Lembu Village

14.00 – 18.00

Tanah Raja Estate

- Document check for manuring record, harvesting record, HCV manage-ment record, spraying record, record, hazardous handling, chemical handling

- Worker activities May 7, 2013 08.00 – 12.00

Kuala Piasa Estate

- Document check for manuring record, harvesting record, HCV man-agement record, spraying record, record, hazardous handling, chemical handling

- Worker activities - Afdeling 3 Emplacement

08.00 – 12.00 Sei Baleh Es-tate


- Worker activities - HR Department

14.00 – 18.00 Gurach Batu Estate


- Worker activities May 8, 2013 08.00 – 12.00 15.00 – 17.00

Palm Oil Mill - Document chek - Plant tour to the mill, waste water treatment, especially pond number 5

and 6, land application, hazardous management - SCCS surveillance audit - Closing meeting




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3.0 ASSESSMENT FINDINGS

3.1 Summary of Findings pertaining to RSPO Principl es & Criteria During this 3rd surveillance audit, 2 nonconformities were assigned which is 1 Major Compliance indicators and 1 minor nonconformities and 5 observations or opportunities for improvement were identified. Further explana-tion of the non-conformities raised and corrective actions taken by the company are provided in Section 3.2. The observations & opportunities for improvement are listed in Appendix 5. The following is a summary of findings made for the criteria listed in the RSPO Principles & Criteria Indonesian National Interpretation year 2008.

Principle 1: Commitment to transparency

Criteria assessed: CR1.1, CR1.2 Criteria not assessed: - Findings: There were no information requests from stakeholders to the company. Only other types of requests were made, such as request for contributions or permission to carry out an activity. Records and evi-dence of the requests made is available, and the company has a procedure for handling requests for information BMH-03 Rev 02, which was issued on 15 May 2009. All requests from stakeholders have been recorded in one document as required by the company procedure for handling information re-quests. Records of responses to requests for information from the company are available and record-ed on the log book. Generally, the company has commitment for transparency and give respond for the request information from the stakeholder. Every request was respond immediately. It was found some letter about the information request from the Pasar Lembur community was respond by the com-pany but this letter not communicated to related estate. This is a observation to the company for the next time every information request will be communicated to related estate. Examples are as follow : 1. Letter on February 1st, 2013 from the Head of Credit Union April 78-local financing institute, no.

15/CUA-78/I/2013 regarding to permit for using room at Serbangan estate office for their annual meeting purpose on March 17th, 2013. There is respons letter on this purpose received by the sender on March 9th, 2013 no. 070/HRD/II/2013.

2. letter on May 24th, 2012 nomor 134/SB/V/2012 from Subur Vilage regarding request for heavy equipment usage for village’s road maintaining purpose. The response letter was sent on June 1st 2012 that said that the company agree to lend the heavy equipment for this purpose.

3. letter on July 20th 2012 no. 02/PL/NJ/2012 from board of Nurul Jihad Mosque of Pasar Lembu Vi-lage regarding to request for donation for the mosque renovation purpose. The response is 10 sacks of cement sent by the company on May 7th 2013.

Compliance status: Compliance with observation

Principle 2: Compliance with applicable laws and regulations

Criteria assessed: CR2.1, CR2.2 Criteria not assessed: 2.3 Findings: The company still has a list of applicable legal and other requirements and the company regularly evalu-ates the compliance of their estates to these legal requirements according to their company procedures as documented in their SOPs. The company makes efforts to comply with changes in the regulations, for example, upon receipt of a government letter regarding a change of the worker’s minimum wage for North Sumatera province in 2012, a circular letter from PT BSP Human Resources office was issued to all es-tates to inform estate management of this change in regulations.




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The company still implements ISO 9001 and ISO 14001 management, as such, the company has a good documented system related to laws and regulations that shall be complied to. This system was estab-lished as part of the company's ISO 9001 and ISO 14001 management system and is documented in the company's procedure, BMH-01 which is regarding compliance to regulations and other requirements. The company also has a mechanism to ensure that all applicable regulations and company's working proce-dure are well implemented as required as part of their ISO 14001:2004 certification.

The company has evidence of efforts to made to comply with regulation, example: - Waste water analyzed from pond number 5 and 6, result of calibration reporting number 43/BLH.SU-

UPT.II/VII/2012 based on Decree of Ministry of Environmental Number 28/2003 about technical guidelines for land application;

- Air emission analyzed from genset, result analysis number 18/UE/BINA/IX/2012 based on Decree of Ministry of Environmental Number 13/1995 about emission standart

- Ambient air analyzed from palm oil mill and housing, result analyzed number 18/UA/BINA/IX/2012 based on Decree of Ministry of Environmental number 41/1999 about ambient standart

- The company send the application permit for utilization of surface water in the Beluru River based on application number 066/HRD/II/2013 on February 28, 2013 and was accepted by the Government on March 2, 2013, but during the 3rd surveillance audit still not progrees from the government.

When the 2nd surveillance audit it was found that the palm oil mill does not have permit of waste water usage for land application implementation from the District Head based on Decree of Environment Ministry no. 39 in 2003. And also mill and estate did not yet analyze or conduct laboratory test for land condition and measuring point for land application based on attachment of Environment Ministry Decree no. 39, 2003. In addition, there is no evidence of laboratory test or analysis of soil and measurement point condition. The company has correction action with send the letter number 221/HRD/V/2012 for land application approval to Head of permit/license affair of Batubara district on May 14, 2012.

During the 3rd surveillance audit, the company has license for land application issude by Head of Batubara Regency through the decree Number 660/0611/BLH/VIII/2012 abou the permit of waste water usage on the land of palm oil in the PT BSP, this permit valid in 3 years from the issued on August 15, 2012 on behalf of Batabara Head Regency, signed by the Head of Environmental Bodies. From the permit, the company has 120 Ha for land application in Sei baleh District of Batubara Regency. The resposibilty of the company accordance to the permit is monitored the waste water (effluent pond/outlet) number 5 and 6, soil analysis in the flat bad, between flat bad and land contro, and also monitoring for ground water. The responsibilty of the company already done by the periodically analysis and monitoring, will be explaind in the principle 4 and 5.

However, on the other hand, during the 3rd surveillance audit it was found: - For hazardous waste management, company collaborate with CV Miko to manage their hazardous

waste, but it was found that the transport permit for hazardous waste of CV Miko is not valid. - CV Miko, based on Decree of Ministry of Environmental of Indonesia Number 88/2011 about the

Hazardous Collecting Permit, state that the CV Miko is only permitted to collect oil and grease, but it was found manifest of hazardous waste transport date on February 2, 2013 the company send the accu to CV Miko.

- Spill kit used for the abosorb of the spill diesel on the floor disarded in to drainage - Diesel spills flow in to drainage from the fuel tank in the mill

There is evidence of compliance to local minimum wage as stated in the Decree of the Governor of North Sumatra Province no. 188.44/14/KPTS/Tahun 2013 as Rp. 1,530,000. For implementation guidance there is circulation lettter from HR department no. 127/HR-IR/2013 on February 16th 2013 regarding to increase of salary of daily rate workers become Rp. 1,530,000 start from january 1st 2013. And also there is circulation letter from HR Department no. 1511/HR-IR/2013 dated on January 15th 2013 regarding to increase of permanent daily based worker and monthly based worker. There is payment sheets that shows that the worker received salary compliance to applicable regulation. Example of salary for April 2013 periode is as follow : 1. Muhammad Iqbal, Islamic religion teacher as Rp. 2,003,423. 2. Purwanto, maintenance as Rp. 2,534,681 3. Selamat, maintenance as Rp. 1,583,558 4. Sunardi, harvester as Rp. 2,846,434 5. Surianti, harvester as Rp. 3,601,293




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Copies of Land Use Rights (Hak Guna Usaha – HGU) and related documents to show ownership of land in accordance with relevant laws are well maintained by the company. One of HGU document has avail-able such as HGU No. SK.66/HGU/DA/85/B/51 , dated on November 13, 1996 from National Land Agen-cy, certificate HGU No. 2/Kisaran Timur dated on May 15, 1997 with total area of 18,517.76 ha (appro-priate with measure letter No.180/1997 and map No. 36/VII/4/1997, No. 37/VII/4/1997 and 38/VII/4/1997 dated on April 30, 1997) valid for 25 years (until April 30, 2022).

Legal boundaries are also clearly demarcated using concrete boundary stones and these are maintained on site every once a year by security with the participation of local communities. Even though some boundary stones are now missing, the company knows all point of boundary locations in the field, as company has marked their boundary stones in a working area map. And they has establish working plan to maintain annually and to replace the missing boundary stones. During this 3rd surveillance audit there is no land dispute in company’s area and member of the sur-roundings community. The last conflict was between the company and Tinggi Raja community (Tinggi Raja sub district, Asahan district) which had been resolved and the result was accepted by both par-ties. BSP Estates Maps (made to appropriate scale) have been extended in order to recognize the boundary of all villages surrounding BSP area and location of customary rights and to clearly indicate the palm oil activities of the company.

Compliance status : Non-compliance

Non Conformities RSPO 2013-01 of 02 There are not evidence that the organization has compliance with relevant legal requirement, such as : - For hazardous waste management, company collaborate with CV Miko to manage their hazardous



- Spill kit used for the abosorb of the spill diesel on the floor disarded in to drainage - Diesel spills flow in to drainage from the fuel tank in the mill

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

Criteria assessed: CR3.1 Criteria not assessed: - Findings: PT BSP has established management plan in budget form and strategic plan for period of 2012-2016 consist of balance sheet, income statement, cash flow, sales volume & revenue, operating expenses, to-tal operating expenses, operating profit, EBITDA, other expenses and supporting information.

The company has replanting plan in year 2012-2016 consist of year 2012 is 460 ha, year 2013 is 115 ha, year 2014 is 77 ha, year 2015 is 194 ha and 2016 is 36 ha. The company will review its replanting pro-gram every year according to suitability with the condition and company’s capability. Replanting plan (underplanting plan) for year 2013 has been revised to 208 ha (consist of Serbangan estate is 155 ha, Sei Baleh estate is 13 ha and Kuala Piasa estate is 40 ha). The realization of replanting in year 2012 is 368 ha (planting) but has been felled is 848 ha.

In Serbangan estate has made barchart for the replanting period of year 2013 (example in Afd 3 (22 ha) where consist of activities of blanket spraying, plug of pile, making the planting hole, giving EFB, planting, planting of cover crop, weeding circle plants, etc. Compliance status : Full Compliance




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

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

The SOPs for all estates are maintained on file and includes SOPs for all main estates activities proce-dures from seeding (nursery), land preparation, maintenance, harvesting to land clearing. All SOPs are available in the estate office. The SOP for the mill is documented and most of the documents are dated Nov 2007. The SOPs for mill include receiving of FFB, sorting, and processes such as sterilizing station, digester, pressing station, clarification station, kernel silo, storage of CPO, PK and PKO and dispatch to storage tank. SOPs both in the mill and estates are well implemented as evident by observing field condi-tion especially plantation maintenance and harvesting activity and land treatment and also by observing and assessing reports of FFB received, and all processing activities in mill area.

Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield alwas done through leaf and soil analysis, this is used for issuing fertilizer recom-mendation. The company makes efforts to maintain and increase soil fertility by use of fertilizer, legume cover crops for unproductive palm tree, compost, and land applications of POME or EFB. Records of all activities are kept as well.

The company has record of operational result activity, when the record was include the all actvity in the estate and mill, example: - Work program 2013 with actual activity in Kuala Piasa Estate, i.e. the estate manual for fern handling

work program about 81 Ha, and has completed about to 81 Ha same with the work program on January 2013; collection drain maintanance work program about to 1600 m, and has completed on April about 1600 m;

- Harvesting rotation plan and actual in Afdeling I, Kuala Piasa Estate on Februari 2013 for Field P94101 with 47 Ha, based on work program harvesting will be start on date February 7 and 8, and actual har-vesting was conducted on February 7, 2013 about 8 Ha, and on February 8, 2013 about 3 Ha, the con-tinued on February 16, 2013 about 9 Ha.

- Record of FFB sortation from Division I Serbangan Estate on April 22, 2013 with total FFB netto 4,150 kg send by truck with vehicle number BK 9991 VW, and from Devision II Kuala Piasa Estate on April 22, 2013 with total FFB netto 4,930 kg send by truck with vehicle number BK 9083, with rotation result is class A, because the qualification of the FFB is higher then standart, with the criteria is un ripe, ripe, under ripe, over ripe, abnormal, empty fruit bunch.

Maps of soil types for all estates are available at the main office. The maps show that there are no mar-ginal soils within the estate area and most of the estate land consists of alluvial soils and podsoils. An the company has conducted of the leaf analysis with the evidence is record of leaf analysis PT BSP Unit Sumut 1 for 2012 with the sample send on July 10, 2012 and was send to all estate head by email on Ju-ly 26, 2012. This analysis is for manuring recommendation in 2013.

In this 3rd surveillance audit, it was found that the company has a record of effort to maintain and increase the soil fertility with EFB application and land application, example: - Field number P95101 with 40 Ha, realization of EFB application about 1283 tree on July, and 57 tree

on August, Field number P99101 realization of EFB on January about 350 tree, and continued on Feb-ruary 1364 tree, with the dosage is 450 kg per tree with 1 layer with distance from housing is 1000 m if any. Based on observation in field, the company has done their EFB application accordance with the procedure BMEOP-WI-36 Rev 0 about the EFB Application.

- For land application, the company has already in Afdeling 2 Sungai Baleh Estate with recorded were about 2,922 flat bad has already applicated 120 Ha in 4 Field with the total waste water has already applicated is 19,320.8 m3 on April 2013.

During the 3rd surveillance the company was not doing the manuring program and application, this al-ready in 2 years because there is no fertilezer on warehouse. When this problem confirmed to manage-ment, they are state that the problem is a economic reason from the Top management..

The company has already strategy to maintain the estate with the critically condition i.e. estate with slopes above a certain limit. Based on slope map, the Tanah Raja Estate has a contour flat and no slope,




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but in the Kuala Piasa Esteta has a slope. This condition has confirmed by the soil map of PT BSP, in the map state that the topography and fisiography of slope classs for Serbangan Estate, Sei Baleh Estate and Tanah Raja Estate the category is flat, and for Gurah Batu Estate, and Kuala Piasa Estate the cate-gory is un flat with slope class is 8% – 15% about 1,994.799 Ha (8.22%) and 25% - 40% about 447.133 Ha (1.84%).

Based on information above, the company has already managed the slope with terrace contour, with the evidenced work program in 2012 Form No. BME-FR-C Rev 00 on Devision I, Kuala Piasa Estate with the working type is manual weeding and recovery broken terrace contour, example: - On field number P93101, with 57 Ha, already done the terrace contour maintain on March about 1000

m - On field number P94101, with 47 Ha, already done the terrace contour maintain on March about 900 m - On field number P94102, with 18 Ha, already done the terrace contour maintain on April about 700 m

The company also has already protect their watercourses, example in the Kuala Piasa Estate in Tinggi Raja River and Silau River adjacent to their own land (HGU) with the reboization, i.e.: - Mahagony planting in the riparian zone, evidenced by map of Mahagony planting on field number

P93101 there is about 18 tree on September 14, 2010, 10 tree on September 15, 2012 - Marking in the palm oil tree to maintain the riparian zone with about 50 meter from the river is just for

manual maintain. - For continual improvement, the company also already minimize the erosion in the river with Phragmites

karka (local name is gelagah) planted, evidenced with recorded of planting in the field number P05101 on April 7, 2011 it was planting about 7 tree, in field number P093191 it was planting about 10 tree, in field number P05101 it was planting 15 tree on February 2, 2012.

For water management plan, the company has already implemented, example in the Sei Baleh Estate, water analyzed for Bluru River as a water source of palm oil mill, has conducted by the evidenced result of water analyzed number 087/IX/2012 by Ministry of Health c/q Health Agency North Sumtara Province, date of analyzed is September 24, 2012 until October 11, 2012 accrodance to Government Regulation Number 82/2001, the result is water condition still good and the parameter is under standart. The compa-ny also monitoring their BOD from the waste water periodically every month, evidenced by : - Record of analyzed number 07A/BLH.SU-UPT.LL/I/2013, the waster water is from outlet (last pond),

analyzed conducted on December 26, 2012 until January 17, 2013, with paramater analyzed is BOD5, pH, COD, Grease and Oil, Cd, Cu, Pb, Zn, accordance to Decree of Ministry of Environmental Number 28 and 29/ 2003.

- Record of analyzed number 109/BLH.SU-UPT.LL/XI/2012, the waste water is from outlet (last pond), analyzed conducted on November 21 until 26, 2012, with paramater analyzed is BOD5, pH, COD, Grease and Oil, Cd, Cu, Pb, Zn, accordance to Decree of Ministry of Environmental Number 28 and 29/ 2003.

- Record of analyzed number 06/BLH.SU-UPT.LL/XI/2012, the waste water is from outlet (last pond), analyzed conducted on October 29 until November 05, 2012, with paramater analyzed is BOD5, pH, COD, Grease and Oil, Cd, Cu, Pb, Zn, accordance to Decree of Ministry of Environmental Number 28 and 29/ 2003.

In the palm oil mill, the company has also has monitored their water use per tonne of FFB, based on recored of electricity, fossil fuel and water in 2012, recorded that the water use per tonne of FFB in 1 year 2012 average about 1.72 m3 per ton FFB. Until April 2013, water use for palm oil mill average about 1.81 m3 per tonne FFB. Accordance to the company policy, state that the water use for plam oil is 2 m3 per tonne FFB, so the actul water use of palm oil mill is still under than the company policy.

To manage their oil palm from pests, diseases and invasive organism, the companya has implemented the IPM management from the plan until the realization. During the 3rd surveillance audit, the company has a work program for 2013 for all devision, example in the Tanah Raja Estate. They area implemented the census to ensure the invasive categorized. Based on they work instruction number BMEOP-WI-22 Rev 01, in the page 2, state that the census will be conducted in every 1 week in the every field for global census. And if any invasive in high categorized, the company conducted the efective census, with the categoryzed there is 4 head of bagworm per midrib, and 8 head of nettle caterpillar per midrib, the the census will be conduct 1 – 2 per week with 5 – 6 tree/Ha. After that, the mortality census will be conduct-ed if needed after the insectiside spraying with the aim is to ensure the mortality rate and effectiveness of the IPM program. Specially for the genoderma attack the company has effort to control the invasive area by the isolated the tree was infected. Until during the 3rd surveillance the company stiil looking for han-dling management and program for genoderma. This is a obervation for the company to found the another




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program and efforts to control and handling the genoderma attack.

Accordance to work program 2013 for Devision III, the company has conducted IPM for bagworm and net-tle caterpillar, evidenced by: - Field number P01310, with 43 Ha, already censused, when the result is 3.05 Ha invasived by the nettle

caterpillar, and the company has sprayed with composistion is Bestox + Agristick with dosage about 0.9 litter + 0.135 cc. After mixing, the insectiside burnt to get the smoke, and can be applied with fog-ging

- Recorded of maintain of benefical plant i.e. Turnera subulata and Antigonon leptopus, evidenced by in-formation book about manual maintanance of beneficial plant in field number P08301 on November 20, 2012 and field number P01306 on March 9, 2013. The company also has a record of planting ben-eficial plant i.e. Turnera subulata in field number P02302 on March 4, 2013 and P02303 on March 5, 2013.

This activity is accordance to Work Instruction about control of bagworm and nettle caterpiller with docu-ment number BMEOP-WI-23 Rev 01 in page 2, state about managing step for bag worm and caterpiller, with the step is:

1. Hand picking

2. Biological steps with integrated pest management use the beneficial plant i.e. Turnera subulata, and Antigonon leptopus

3. Chemical steps with spraying based on global and effective map of invasived censused use insec-tiside, i.e. Bactospine, Dipel WP, Thuricide HP, Florbac with the dosage about 300 – 800 gr/ 400 litter water per Ha. Spraying methode also have 3 steps, first is spraying on the leaf, especially the underside of the leaves, second is spraying with mist blower, applied in the arround of the tree, and the third is fogging. This methode is a last alternative if the hand picking and biological steps can not handling the pest invasive.

The chemical used by the company already approved and registered by the Indonesia government through the green book of Registered Chemical 2011 issued by the Pesticides Comission, Directorate General of Crop and Estate, Ministry of Agriculture. The company also has register their cemical to the Ministry of Labour c/q Labour Offices in Asahan Regency evidenced by the letter application number 374/HRD/V/2013 on March 3, 2012 related to the chemical use in the workplace.

The company also implemented the occupational safety and health accordance to the company policy document number Doc.B-MSM/01 attachement 18.1b in point 13 state that the company implemented the Safety and Health Management System in all of estate operational, signed in January 10, 2011. Follow the policy, the company already has responsible person through the organization of Occupational Health and Safety Comitte (P2K3) with the responsible to implemented of safety and health in the company, evi-denced by Decree of Head of Labour Offices Batubara Regency Number 3642/IV-DTK/X/2012 about the endorsement of Comitte Structure of Occupational Health and Safety, signed on October 10, 2012. During the 3rd surveillance audit, this comitte still valid, because person in charge in the P2K3 structure still in company. OSH comitte has conducted a meeting on March 27, 2013 with agenda is performance of OSH, results of external audit, and preparing of surveillance audit where attendant list and minute of meeting available.

Some example about the implemented safety and health managemeny system in the company is : 1. For chemical workers, the company has already the regular examination, evidenced by document of

examination result PT BSP 2011. Based on Cholinestrase examination to 39 chemical workers, there is no chemical exposed.

2. For audiometric examination for mill worker, there is 3 workers has abnormality with low intensity, and the company follow the result with give the sosialization and required the all mill workers use the PPE (ear plug and ear muff). And the 3 workers required control to the companies doctor.

3. For the regular examination on 2013, the company has send requirement letter number 069/HRD/II/2013 on March 1, 2013 to Head of Health and Safety Center, North Sumatra Province, about the required regular safety will be plan on 2nd week in March, 2013.

4. The company has time tabel for inspection of emergency response infrastructure periodically, and al-ready conduct, by the evidenced of fire extingiusher and hydrant checklist update every month, but found in the palm oil mill some of hydrant was broken on the tube along about 10 cm. When this problem conform to the PIC (person in charge) this is unpredictable because when they check last month this is not happened. So this problem as a observation to the company for make the clearly timetable.




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In the implemented of safety and health management system in the field, the company have a completed all workers with the PPE based on type work. The company provided photographic evidence that a specif-ic room has been prepared for washing all agrochemical contaminated clothes used by sprayers, and the company also provided hand washing facilities in each division estate. Sign boards stating “restriction to enter sprayed area” has been provided at locations where spraying has been recently conducted. A letter stating the mechanism for cartridge replacement has been issued i.e. letter no. 119/KP/06/11 as an in-struction for all sprayers to replace their cartridge mask periodically. The company provided the pictures and copies of letter as evidence. Complience status : Compliance with observation

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

Criteria assessed : CR5.1, CR5.2, CR5.4 Criteria not assessed : CR5.3, CR5.5, CR5.6 Findings :

Environmental aspects and impact that occur from plantation and mills activities had been identified. The companys’ first document of environmental impact identification was their Environmental Evaluation Study or Studi Evaluasi Lingkungan (SEL) document created in 1993 for PT BSP which then only con-sisted of rubber plantation and rubber factories. Then the company obtained an approval letter from gov-ernment dated 22 February 2006 with permission to include oil palm plantation and palm oil mill in ther operations, and hence the company made a new environmental impact assessment, known as ‘Upaya Pemantauan Lingkungan (UPL) / Upaya Perencanaan Lingkungan (UKL)’. The company also has a letter no 685/HRD/IV/2011 dated April 18, 2011 to Asahan regent regarding request of business license permit for plantation area 9,243 ha for conversion from rubber plantation to oil palm plantation. Since 1993, company got approval of conversion to oil palm plantation base on letter no. HK.350/E.4.877/11.93 for to-tal area 5,125 ha.

The total oil palm plantation area in PT BSP UNIT I North Sumatera is now about 9000 ha, whereas stat-ed in existing regulation, plantation with more than 3000ha should make a further revised environmental impact assessment document known as ‘Analisa Dampak Lingkungan’ or AMDAL document, not just UKL & UPL. The company had not developed a AMDAL document and this was raised as a non-conformity during the RSPO certification audit in 2009. At the time of this first surveillance audit, the company still had not developed the AMDAL document, so this was raised from minor to major non-conformity.

During the 3rd surveillance audit, the company already periodically reporting on management and monitoring (RKL/RPL) every 6 month, evidenced by: 1. Report of enveironmental management and monitoring (RKL/RPL) number 477/HRD/XII/2012

addressed to Head of Environmental Bodies of Batabara Regency on December 27, 2012 for periode of January suntil Juni, 2012, the content of the report was include example : a. Report of result waste water analyzed from pond number 5 and 6 with the result number

76/BLH.SU-UPT.LL/I/2012, date of testing on January 2 – until 30, 2012 with the papramater analyzed is pH, BOD, COD, Oil and Grease, Pb, Cu, Cd and Zn accordance to Decree of Ministry of Environmental Number 28 and 29/2003

b. Report of result waste water analyzed from pond number 5 and 6 with the result number 29/BLH.SU-UPT.LL/III/2012, date of testing on February 21 – until March 03, 2012 with the papramater analyzed is pH, BOD, COD, Oil and Grease, Pb, Cu, Cd and Zn accordance to Decree of Ministry of Environmental Number 28 and 29/2003

c. Report of result waste water analyzed from pond number 5 and 6 with the result number 107/BLH.SU-UPT.LL/III/2012, date of testing on March 05 – until 14, 2012 with the papramater analyzed is pH, BOD, COD, Oil and Grease, Pb, Cu, Cd and Zn accordance to Decree of Ministry of Environmental Number 28 and 29/2003. Overall, the company have done the periodically monitoring every month to waste water in pond number 5 and 6, accordance to permit of land application.

2. Report of emission test, evidenced by result of emission test number 197/BLH.SU-UPT.LL/III/2012 with the identification sample from boiler, genset 1 and 2 and also ambient air from the palm oil mill and housing, with the testing date March 20 – 27, 2011, with the paramater is SO2, NO2, H2S, NH3, Particulate, Opacity, HF, HCL, Cl2 with the result is under than standart




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3. Report of fresh water accordance to Decree Ministry of Health Number 416/MenKes/Per/IX/1990 with the water sample is from housing, and the testing date January 20 until February 9, 2012, with the intrpretation the result of physics and chemical for all paramters is under than standart

4. Report of soil analysis for land application in the flat bad, between flat bad and the land control with the certificate result number is 624/0.1/Sert/VI/2012, with the testing date May 3 until June 13, 2012, accordance to Decree Ministry of Environmental Number 28 and 29/2003

5. Report of environmental management and monitoring with number 125/HRD/IV/2012 addresed to Head of Environmental Bodies Batubara Regency on April 18, 2013 for periode of July until December 2012.

The company has record of identification of protected species and area accordance to HCV document, with the HCV identification result is HCV 1.2 (for endangered species found in surrounding Lotus Lake (Danau Teratai), HCV 1.3 (species habitat located around Lotus Lake (Danau Teratai) and Kuala Piasa estate), HCV 4.1 (water catchment and flood control area totally 4.31 ha), and HCV 6 (area of traditional cultural identity, which is a grave area located in central plantation with total area of 7.2 ha). Because of the company is old company since the Netherland colonial, and the land use trajectory of the company is a rubber plantation, so there is little species in the company, even that, the company always efforts to manage their HCV through the management plan (year 2013), evidenced by : 1. Implementation schedule of HCV management on Afdeling 2 with the type of activity is maintaning the

signboard, keep the vegetation in along of riparian zone, maintaning the boundry markers. 2. Implementation schedule of HCV management on Afdeling 4, with the type of activity is maintaning the

signboard, keep the vegetation in along of riparian zone, maintaning the boundry markers especially for HCV 6.

3. Serbangan estate has done the installation of signboard in near P.95304 (HCV 4.1), planting of trees/vegetation in along of riparian, monitoring of HCV area, and monitoring of fauna every 6 (six) month (last of date on March 31, 2013).

The company has been appointed dedicated officer to monitor HCV management plans and activities it such as Mr Uon (number of 95301) in Serbangan estate.

For the energy use and use of the renewable energy, the company has recorded their energey use from the fossil fuel and the renewable energy, evidenced by record use of steam, electicity, fossil fuel and water. Accordance to the record in 2012 from January until December fossil fuel used is 100,361.38 (for two genset) liter, with total FFB processing is 202,427,226 tonne, with water used is 347,622 m3. On average the fossil fuel used is 0.50 liter per tonne FFB, and water used is 1.72 m3 per tonne FFB. In January until April 2013, fossil fuel used for two genset is 29,905.9 liter, with the total FFB processing is 49,374.966 tonne, with the water used is 89,308 m3. On average the fossil fuel used is 0.61 liter per tonne FFB, and water used is 1.81 m3 per tonne FFB. Accordance to policy of Quality objective, Environmental, Health and Safety 2013 state that the fossil fuel for production per tonne FFB is 0.75 liter per tonne FFB and water used is 2.00 m3 per tonne FFB. So that, the fossile fuel and water used for the production is under that the company policy. For the renewable energy, the company used the fiber and shell for subtitution their fossil fuel. Based on periode of February 2013 total fossil fuel subtituted is 35.973,80 liter from 1,653,860.00 kg fiber and shell used in the palm oil. In Serbangan estate (year 2012), the fosil fuel used is 21,469 liter. Compliance status : Complience

Principle 6: Responsible consideration of employees and of individuals and communities af-fected by growers and mills

Criteria assessed: CR6.1, CR6.2, CR6.3, CR6.5, CR6. 7, CR6.9, CR6.10, CR6.11 Criteria not assessed: CR6.4, CR6.6, CR6.8, Findings:

The company had developed a documented social impact assessment through participation of affected parties and local communities, and also a regular monitoring and management of social impacts was conducted. During this surveillance audit, it was found that the company has carried out further monitoring and identification of social impacts. Results of monitoring or social impacts combining with environment assessment report are also submitted to the local government.

BSP has a procedure for communication and consultation and to receive and resolve complaints/disputes




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in appropriate manner which is accepted by local communities and stakeholders. The procedure RSPO-01 has been established, issued on April 14, 2011. The record of community’s aspirations and the com-pany’s responses are only regarding requests for contribution and permission as mentioned under Princi-ple 1 above. As the company has no land dispute issues, the procedure is still not implemented yet. The company also has a procedure for identification, calculation and compensation, and company has in-formed their stakeholder regarding this procedure. The procedure is still not implemented yet because the company has had no land compensation case.

Pay and conditions for company’s employees and for employees of contractors meet minimum standards as required by government and are sufficient to provide decent living wages. Based on payment slip for time being periode shows that lowest ranking employees achieved payments as much as Rp. 1,583,000 which is more than the government’s minimum requirement standards which is Rp. 1.530,000 per month.

During the 3rd surveillance audit was found all contractors fulfill government regulation regarding to work health and safety and comply with all applicable legal requirements which is stated in PT BSP’s contract with with the contractor.

- Contracted worker for plantation maintenance wearing proper PPE during working activity.

- There is no underaged labourer aged 17 years old found as a worker It was sighted that there is MOU for maintenance activity, no. CA-UT/KSR/04/12/0010-AT/TMKS/KP.1 be-tween company and contractor UD. Atthariq which contains provision that the contractor must comply with work health and safety and environment requirements. During site visit it was found that all workers use appropriate PPE.

Regarding underaged laborers found during the last surveillance audit, there is warning letter sent to the UD Atthariq contractor, no. 117/KP/06/2011 dated June, 2011. By this letter the company warns UD At-thariq as a contractor to not use underaged worker anymore and will apply penalty if they still do it. During field observations and through checking of UD Atthariq manpower database

The company’s policy on sexual harassment and violence is clearly published in the company’s RSPO Management Policy and company made procedure no. RSPO-02 as general grievance procedure, includ-ing specific grievance for woman. During this 3rd surveillance audit, it was found that gender committee representatives from estates and the mill have been assigned, and company’s an organization structure of gender committee was revised accordingly based on letter no. 914/HRD/VI/2011 from the HR & GA manager for all company locations There is an official letter from HR & G Dept no. 914/HRD/VI/2011 re-garding the organization struture of Gender Committee on April, 12, 2012.

The company’s HR Department has made and sent letter to contractors stating that payment of contrac-tor’s employees must be in accordance with the Regional Minimum Wage (UMR) and this will be moni-tored by the company.

There is Worker Union which organization structure valid for 2010-2015 periode consist of Chairman, vice of chairman, secretary and treasury staff.

The company has several corporate social responsibility program to local people as a contribution for lo-cal development, such donation for school, donation for students and the teachers, donation for building houses in several villages surrounding estate area, such as in Tanah Raja, and Kuala Piasa estate, and some infrastructure in another estates. During this 3rd surveillance audit was found that the company did not provide sufficient electricity infra-structure to quarter at Serbangan estate afdeling 3. Compliance status : Non compliance

Non Conformities RSPO 2013-02 of 02 There is no electricity facilities from the company for workers housing in Sido Luwe, Serbangan Estate, Afdeling 3

Principle 7: Responsible development of new plantings




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Criteria assessed: CR7.1, CR7.2, CR7.3, CR7.4, CR7. 5, CR7.6, CR7.7 Criteria not assessed: - Findings: The company has no development of new plantings. All existing area is the area under the company’s ex-isting HGU, which is all previously planted and no planting in HCV area. The company is only carrying out expansion of their oil plam plantation inside existing HGU area from rubber plantation converson area but since issued a letter No. 27/HBU/III/2011 dated on March 21, 2011 that no further conversion activities from rubber to oil palm. The company’s total oil palm plantation area was recently getting wider from 7,226 ha in 2009 into 9,204 ha in April 2013. Compliance status : Full Compliance

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

Criteria assessed: CR8.1 Criteria not assessed: - Findings : During this 3rd surveillance audit some improvement has been done by the company, especially correction and corrective action from 2011 and 2012 surveillance audit. The company has carried out a review of all improvements. The estates and mill has a monitoring action plan performance, which includes the targets and steps to take to reduce the usage of natural resources such as water, electricity, fossil fuel (Petrol, oil and diesel) and paper documented in their Quality, Environment and Occupational Health Plan. The estates also car-ry out monitoring on achievement of targets and prepares a monthly report on review results / evaluation of quality, environmental and occupational safety and health objectives. The company already established monitoring actions plans which include plans for reduction of usage of chemicals, waste reduction. Also the company already establish report of manajement and monitoring of social impact assessment of 2012. During the 3rd surveillance the company was not doing the manuring program and application, this al-ready in 2 years because there is no fertilezer on warehouse. When this problem confirmed to manage-ment, they are state that the problem is a economic reason from the Top management. This is a potential improvement for the company when they implemented the fertilizer program. Because this program highly dependent on budget from the company. Compliance status : Full compliance

3.2 Status of Previously Identified Non-conformitie s

During the 2nd surveillance audit, a total of 5 nonconformances against the RSPO Principles & Criteria Indo-nesian National Interpretation year 2008 were identified. These consisted of 3 major non-conformities and 3 minor non-conformities. The company is given a timeframe to close all major non-conformities within 60 days and at time of first submission of this report to the RSPO.

For the minor non-conformances, the company has provided their planned corrective action against these and for those which could not be verified as closed through document checks, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as

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

Non-conformance 2012-1 of 5, Major non-conformity : The palm oil mill does not have approval for waste water usage for land application implementation from the District Head based on Decree of Environment Ministry no. 39 in 2003.

Correction action in 2012 : Application letter no. 221/HRD/V/2012 for land application approval already sent by Palm Oil Mill to the




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Head of Batubara District via Head of permit/license affair of Batubara District on May 14, 2012.

Corrective Action : The company will monitor and ensure all activities comply with all applicable regulations.

Verification result : The company already sent an application letter to the relevant authority which is Batubara District Head on May 14, 2012. At time of audit, the company just received a response letter from the Batubara District Head that stated that the approval will sent within two weeks. During the 3rd surveillance audit, this non conformance was verified, and the result is company has license for land application issued by Head of Batubara Regency through the decree Number 660/0611/BLH/VIII/2012 abou the permit of waste water usage on the land of palm oil in the PT BSP, this permit valid in 3 years from the issude on August 15, 2012 on behalf of Batabara Head Regency, signed by the Head of Environmental Bodies. From the permit, the company has 120 Ha for land application in Sei baleh District of Batubara Regency. The resposibilty of the company accordance to the permit is monitored the waste water (effluent pond/outlet) number 5 and 6, soil analysis in the flat bad, between flat bad and land contro, and also monitoring for ground water.

Auditor Conclusions : Closed

Date of closure : May 20, 2012 Criterion (2.1 (Major indicator 1) Evidence of compliance with relevant legal requirements, and 5.1 (major indicator 2) Records of regular report on environmental management in accordance with relevant regulations..

Non-conformance 2012- 2 of 5 Major non-conformity: Palm oil mill and estate have not yet analyzed or conducted laboratory test for land condition and measuring point for land application as required in attachment of Environment Ministry Decree no. 39, 2003.

Correction: Soil sample of land application area already sent to Palm Oil Reseacrh Center in Medan by letter no. 154/OPC/V/2012 on May 24, 2012.

Corrective Action: The company will monitor and ensure all activities comply with all applicable regulations.

Verification result: The company provide record of soil sample records from Palm Oil Research Center Medan. During the 3rd surveillance audit, company was conducted the soil analysis for Land Application based on letter certificate number 624/0.1/Sert/VI/2012, when the sample was accepted on May 3, 2012, and ana-lyzed on May 3 until June 13, 2012, with the number order 114-2. Sampel was taken based on Envi-ronemntal Ministry of Indonesia Number 29/2003 in flat bad, between flat bad, and control land. Which cer-tificate date on Juni 19, 2012. Isseud by Indonesian Oil Palm Research Institute, Medan. Based on land application permit, the company requirement to montoring the waste water from the outlet pond (pond num-ber 5 and 6) every month, ground water every 6 month and soil analysis every year, accordance to the De-cree Ministry of Environmental Number 28 and 29/2003. And the company has done monitoring waste wa-ter from pond number 5 and 5 every month i.e.: a. Report of result waste water analyzed from pond number 5 and 6 with the result number 76/BLH.SU-

UPT.LL/I/2012, date of testing on January 2 – until 30, 2012 with the papramater analyzed is pH, BOD, COD, Oil and Grease, Pb, Cu, Cd and Zn accordance to Decree of Ministry of Environmental Number 28 and 29/2003

b. Report of result waste water analyzed from pond number 5 and 6 with the result number 29/BLH.SU-UPT.LL/III/2012, date of testing on February 21 – until March 03, 2012 with the papramater analyzed is pH, BOD, COD, Oil and Grease, Pb, Cu, Cd and Zn accordance to Decree of Ministry of Environmental Number 28 and 29/2003

c. Report of result waste water analyzed from pond number 5 and 6 with the result number 107/BLH.SU-UPT.LL/III/2012, date of testing on March 05 – until 14, 2012 with the papramater analyzed is pH, BOD, COD, Oil and Grease, Pb, Cu, Cd and Zn accordance to Decree of Ministry of Environmental Number 28 and 29/2003

Auditor Conclusions : Closed

Date of closure : May 20, 2012




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Criterion 6.1, Indicator 1 (Minor): Regular monitoring and management of social impact, with the participation of local communities. ( NCR No. 18 of 30-2009 and no.12 of 15-2011)

Non-conformance 2012- 3 of 5 (Major non-conformity ) : There is no evidence of regular monitoring and management of social impact, with the participation of local communities. (Note: This non-conformity was raised as minor during the certification audit and then raised to major during the 1st annual surveillance audit)

Correction : Environment impact monitoring and management plant of 2012 already established and consists of so-cial impact monitoring and management with community participation.

Corrective Action : The company will monitor and ensure the implementation of this reporting activity is conducted in ac-cordance with applicable regulation.

Verification result : There is statement from the community from surroundings villages that they got involved during making social impact management and monitoring plan.

Auditor Conclusions: Closed

Date of closure: May 19, 2012

Criterion 6.1, (Indicator 3 (Minor): A regular and scheduled environmental management and moni-toring Report.

Non-conformance 2012-4 of 5 (Major non-conformity) : The company does not have report of activity regarding to a regular and scheduled environmental man-agement and monitoring report. (Note : This non-conformity was raised as minor during the certification audit and then raised to major during the 1st annual surveillance audit)

Correction: Environment impact monitoring and management report of 2012 already established consist of social im-pact monitoring and management in community participatory.

Corrective Action: The company will monitor and ensure the implementation of this reporting activity based on appliable regu-lation

Verification result: It was verified that the company has already established a regular and scheduled environmental manage-ment and monitoring report.


Date of closure: June 07, 2012 Criterion 8.1 (Major Indicator 1). A monitoring action plan based on the social environmental im-pact assessment, and regular evaluations of plantation and mill operations

Non-conformance 2012- 5 of 5 (Major non-conformity) : It was found that flat bed batch no. 16, 18 and 28 at field P.032.02 has high level sedimentation, so it can overflow in rainy season.

Correction: The sediment at batch no. 16, 18, 28, at P. 032.02 has been cleaned to ensure that there will no overflows during rainy season.

Corrective Action: The company will monitor and control the flat bed condition at least once in two weeks.

Verification result: It was sight during surveillance audit the sediment at batch no. 16, 18, 28, at P. 032.02 has been cleaned. It has conducted of cleaning on May 19, 2012. Estate has a work program to drain liquid waste from POM to Land Application area with frequency of every day where it was informed number of field and volume of liquid waste.




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Date of closure: May 21, 2012

3.3 Identified Non-conformances against RSPO P&C Re quirements, Corrective Actions Taken and Auditors Conclusions

During the 3rd surveillance assessment, a total of 2 nonconformances against the RSPO Principles & Criteria Indonesian National Interpretation year 2008 were identified. These consisted of 1 major non-conformities and 1 minor non-conformities. The company is given a timeframe to close all major non-conformities within 60 days and at time of first submission of this report to the RSPO For all the non-conformances, the company has provided their planned corrective action against these. A sum-mary of all identified non-conformances, corrective actions taken and auditor conclusions is as below:

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

Non-conformance RSPO 2013- 1 of 2 (Major non-confor mity) :

There are not evidence that the organization has compliance with relevant legal requirement, such as : - For hazardous waste management, company collaborate with CV Miko to manage their hazardous



- Spill kit used for the abosorb of the spill diesel on the floor disarded in to drainage - Diesel spills flow in to drainage from the fuel tank in the mill Correction : - Found the new hazardous collcetor with complete license to collect all hazardous type and still hace

valid licensed - Provide the container for the spillage kit used and put in the hazardous location in estate and palm oil

mill - Clean up the drainage contaminated and also clean up the tube for fuel. Closed the excisting drainage

near the fuel tank to prevent the spills flow to environmental. Corrective action: - Changed the hazardous collector from CV Miko Jaya to CV Amindy Barokah could be collect all of haz-

ardous waste type - Improve the contaner for spilage kit used with build bund, so the hazardous spills could not flow in to

environmental - Reminder the fuel operator when the fuel recharge process to be careful and immideately take the spills

use the spillage kit Verification result: - The company has change the CV Miko with CV Amindy Barokah wich can meet the regulation. Based on

Decree of Mictry of Environmental Number 33/2011 about the permit for hazardous waste collection for CV Amindy Barokah, with the type of hazardous waste could be collect is used oil and grase and dirty oil in national scale. This permit is still valid in 5 years from the date issued on February 21, 2011. This company also has a permit for hazardous waste transport. The types of hazardous waste that can be transported is lubricant, oil, grease, oil filter, cotton waste, sludge, liquid and solid phasa waste, cata-lysts, polymer, carbon block, fly ash and bottom ash, medical waste, fatty alcohol, solvent, pestiside, PCB waste and alluminum slag. This is accordance to the letter of Ministry of Environmental Number B-




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3483/Dep.IV/LH/PDAL/03/2013 date March 28, 2013 about the recommendation of hazardous waste transport. The permit is valid in 1 year from the date issued.

- The company has change CV Miko to the CV Amindy Barokah that can tranpsort of accu, accordance to the letter of Ministry of Environmental Number B-3483/Dep.IV/LH/PDAL/03/2013 date March 28, 2013 about the recommendation of hazardous waste transport.

- The company has improve the spillage kit used container and built the bund, so that the spills can not flow in to the drainage.

- Remind the operator through the information signboard to be more careful for handling diesel fuel so there is no spills on the floor.

Auditor conclussion : Closed Criterion 6.5 (Minor indicator 1) Growers and millers provide adequate housing, water supplies, me-dial, educational, and other facilities for employees where such facilities are not available or acces-sible Non-conformance RSPO 2013- 2 of 2 (Minor non-confor mity) : There is no electricity facilities from the company for workers housing in Sido Luwe, Serbangan Estate, Afdeling 3 Correction: Serbangan Estate Head already sent letter to HR& Area Head dated on May 23rd,2013 no.99 /Serb/5/2013 regarding to planning to provide electricity facility at Sidoluwe quarter of Serbangan Estate Afdeling 3

Corrective action:

• The company will provide donation for 50% of total energy consumption within one month.

• Estate Head will submit report of recapitulation of energy calculation for recent month periode

Auditor conclussion : Evidence of immediate action taken was accepted. Effectiveness of implemen-tation to verified at next surveillance audit

3.4 Description of Supply Chain Management System

Kisaran mill is Palm Oil Mills owned by PT Bakrie Sumatera Plantation Tbk Kisaran unit, that is located in Kisaran, Asahan District, North Sumatra. Kisaran Palm Oil Mill was established in 2007, based on the government directives from the Capital Investment Coordination Board (BKPM), i.e ‘Keputusan BKPM No. 257/T/Pertanian/Industri/1989’ and ‘Keputusan BKPM No. 1293/T/Industri/2008’. Currently Kisaran Mill receives FFB supply from 5 estates owned by PT Bakrie Sumatera Plantation Tbk- Kisaran Unit (Tanah Raja Estate, Gurach Batu Estate, Kuala Piasa Estate, Serbangan Estate and Sei Baleh Estate) and other company’s area (Seed Garden, BARI and Aek Salabat). Since company increase their production capacity following their approved production capacity (full capacity) and Kisaran mill receive supplies of FFB from independent outgrowers or other suppliers.

In year 2012, Kisaran mill is receiving approximately 76.20% (154,004.04 ton) of its supplies of Fresh Fruit Bunches (FFB) from 5 company-owned estates as certified FFB and the remaining 23.80% (48,112.41 ton) from other compa-ny’s area (Seed Garden, BARI and Aek Selabat) and independent outgrowers. In April 2013, total FFB received by Kisaran mill is 49,573.10 tons FBB of which is came from certified FFB is 35,403.65 ton (71.42 %) and non-certified FFB is 14,169.45 tons (28.58%). The mill produces Crude Palm Oil and Palm Kernel.

The company implements SCC-RSPO with “Mass Balance” model according to the nature of mill FBB supply condi-tion. 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 requirements. The description of supply chain management system as determined below :

1. Documented procedures

Findings:




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The facility has revised all procedures andor work instructions for implementation SCCS on July 07, 2011 such as :

- BMO-02 Procedure of Certified Palm Oil Production Process (Prosedur Tentang Pengolahan Tandan Buah Segar). Rev.03 dated July 09, 2011

- BMO-03 Procedure of Incoming Fruit Fresh Bunch Receipt and Storage (Prosedur Tentang Penerimaan Buah Segar). Rev.03 dated July 09, 2011

- BMO-04 Procedure of Certified Palm Oil Storage (Prosedur tentang penyimpanan hasil produksi (CPO dan PK)) Rev.03 dated July 09, 2011

- BMO-05 Procedure of Certified Palm Oil Sales (Prosedur Tentang Pengiriman Hasil Produksi) Rev.03 dated July 09, 2011

- BMO-06 Procedure on Solid and Liquid Waste of Palm Oil factory (Prosedur Tentang Pengolahan limbah padat dan cair PKS) Rev.03 dated July 09, 2011

- BMO-08 Procedure of CPO and PK Quality Analysis (Prosedur Analisa mutu CPO dan PK) Rev.03 dated July 09, 2011

- BMO-09 Procedure of Palm Oil Production Losses Analysis (Prosedur Analisis Lossis Produksi) Rev.03 dated July 09, 2011

- BMO-19 Procedure for reporting if projected overproduction for certified FFB, CPO and PK (Prosedur tentang pelaporan informasi proyeksi produksi TBS, CPO, dan PK Bersertifikat).

- BMM-FC-01 Flow Chart of rubber and palm oil sales and delivery contract (Flow Chart Tentang kontrak penjualan dan pembelian produk karet dan sawit) Rev.03 dated July 09, 2011

- BMM-FC-02 Flow Chart of customer complaint handling (Flow Chart tentang penyelesaian keluhan dari pelanggan) Rev.03 dated July 09, 2011

- BMM-FC-03 Flow Chart Flow Chart on customer needs and expectations (Flow Chart tentang kebutuhan dan harapan pelanggan) Rev.03 dated July 09, 2011

- BMM-FC-04 Flow Chart of Customer Communication (Flow Chart tentang komunikasi dengan pelanggan). Rev.03 dated July 09, 2011

- BMM-FC-05 Flow Chart of Customer Satisfaction Analysis (Flow Chart tentang pengukuran tingkat kepuasan pelanggan). Rev.03 dated July 09, 2011

- BMM-FC-06 Flow Chart of the sales contract and purchase of products (Flow Chart tentang kontrak penjualan dan pembelian produk). Rev.03 dated July 09, 2011.

but the organization has not procedure about entry/input data to e-trace/UTZ application. This condition is raised as non-conformities.

The existing procedure is will use also for general CPO/PK production process. All actual format being used to records both for certified and non certified product as listed on Master list of format.

The company assigned Mr. Sani as management representative having overall responsibility for and authority over the implementation of SCCS requirements and compliance with all applicable requirements. As seen on Kisaran Palm Oil Mill organization dated June 30, 2011 aproved by Mr. Nahum Pangabean as Head of Busi-ness Unit North Sumatera I. Compliance status : Non Compliance

NCR SCCS 2013-01 of 02

The organization has not procedure about entry/input data to e-trace/UTZ application

2. Purchasing and goods in

Findings:

All certified FFB are from the company’s owned estate except Aek Salabat estate which is company owned es-tate for Rubber Plantation and only has 9 ha planted with oil palm plantation, seed garden and BARI where it is not included in RSPO certification scope. Purchasing mechanism is defined under BMM-FC-04 dated February 29, 2012. This procedure only applies for FFB purchased from independent outgrowers.




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The implementation of the procedure will be recorded in the forms named Oil Palm Production Slip from estate (including wet stamp “SCCS certified” in records it if it is FFB from the company’s owned estate), “Formulir Nota Timbangan (Weight Note Form)" (BMO-FR-03), ‘Formulir Sortasi Mutu TBS (FFB Quality Sorting Form)’ (BMO-FR-05) and ‘Formulir Hasil Sortasi (Sorting Results Form)’ (BMO-FR-04).

A person has been appointed to be responsible to check and ensure the FFB quality and quantity as per pur-chase documents. When receiving certified FFB, personnel in weighbridge are to verify/ensure the origin of FFB (from company owned estate (certified) or not (non-certified)), wet stamped “SCCS certified” on Oil Palm Production Slip for FFB from company owned estate (certified), and quantity of products. The company has mechanism to inform the CB immediately if there is a projected overproduction.

Until now the mill still not announced and confirmed trades in the e-trace/UTZ Certified system (all processing facilities up). The organization decides will implement Mass Balance (MB) model. At the time of audit, the or-ganization has not claimed any palm oil as RSPO certified. Compliance status: Full Compliance

3.Records Keeping

POM Kisaran already maintain accurately, completely, keep up-to-date and accessible all records and reports covering related to certified product . The company’s SCCS system implementation is integrated with the ISO 9001:2008 standard and ISO 14001:2004 standard system. The company has procedure for records keeping i.e. BMA-03, the procedure apply for all company’s operational and company’s activities. In each procedure company explains that records shall keep properly within 5 years.

Kisaran POM has been record and balance all receipts of RSPO certified FFB and prepare for deliveries of next RSPO certified CPO & PK, everyday company always update production in “Daily production records” (BMO-FR-38), material balance has been record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO & PK such as production record on April 04, 2013, total RSPO certified FFB received 508,170 kg, carryover from previous incoming certified FFB 471,710 kg. Currently company processes 686,160 kg and total production today for CPO 149,555 kg with OER 21.80%, total PK production today is 27,565 kg with KER 4.02%, stock CPO yesterday 620,853 kg and stock PK yesterday 66,069 kg. Delivery of CPO product today 133,580 kg and PK product today 19,087 kg where one of them for PO no. 02/MO/CPO-POM/12 dan 124/MO/CPO-POM/12 to PT Multimas Nabati Asahan is 19,920 kg. All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system according to company’s product account-ing system. The company has records and balance sheets of all receipt and deliveries of RSPO certified palm oil on a monthly basis. Compliance Status : Full Compliance

E.4. Sales and goods out

Findings:

Existing procedure for palm oil sales is defined in BMM-FC-01 Flow Chart of rubber and palm oil sales and de-livery contract procedure. Until present organization has not yet sold their certified palm oil products, because the product used for local market. Verification of compliance to the requirements for sales and good out can not be done yet. The company has revised their sales and product dispatch procedure BMO-05 rev 03, dated July 09, 2011 the procedure now has been defined mechanism for certified product dispatch with Mass Balance claim. All information about CPO and PK dispatch document such as weighbridge ticket, delivery note (Form BMO-FR-26), comercial invoice, or other delivery/product transport documents includes information about Mass Balance claim. In the delivery note (Form BMO-FR-26) No. 014897 not only there are information Mass Bal-ance (MB) model then there are information such as the name of the buyer, date of issued, description of the product (CPO/PK/Shell), quantity of products delivered and reference to transport documentation also. Howev-er it is found that there is not information about address of the buyer in delivery note. This condition is raised as Non Conformities. Compliance status: Non Compliance




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NCR SCCS 2013-02 of 02

There is not information about address of the buyer in delivery note.

E.5. Training

Findings:

The organization has established and implemented the training Procedure (BMH-02 revision 03 dated July 09, 2012). The procedure covered mechanism of training needed, training report, training evaluation and compe-tencies standard.

The organization has provided and specified the Supply Chain Certification System (SCCS) training on July 2011 that was attended by 8 managers on July 2011. There was no more training conducted for 2nd surveillance audit because there is no changes on company’s supply chain system. Mill manager will provide inhouse train-ing for each new operator. Compliance status: Full Compliance

E.6. Claims

Findings:

Until present, the organization has not yet claimed their palm oil products as certified palm oil. The company will follow RSPO communication and claim when they sell certified CPO and PK. Compliance status: Not applicable

3.5 Status of Previously Identified Non-conformiti es

SCCS Non-conformance 2012 -01 of 03: Mechanism to inform the CB immediately if there is a projected overproduction Corrections : Company made production recapitulation for certified FFB, CPO and PK using format (BMO-FR-55) and make projected overproduction procedurefor certified FFB, CPO and PK i.e. (BMO-19). Corrective Action : Certified FFB,CPO and PK recapitulation report will be reported periodically to management representative us-ing (Form. No.:BMO-FR-55) the report will be distributed to relevant department. Auditor Conclusions: Closed Verification result: The Company provides new procedure of reporting if projected overproduction for certified FFB, CPO and PK (BMO-19), the procedure of determine how to make production summary and report to certification body if there is identified potential overproduction. In 3rd surveillance audit, that is procedure has available in mill and written on list of procedure. Results of interview with MR that he has understood the procedure it. SCCS Non-conformance 2012-02 of 03: The Company shall not use delivery notes format with Mass Balance claim for non certified FFB and non certi-fied product both CPO and PK.




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Correction : Deleted all information regarding Mass Balance information on weigh bridge note (Form. No. : BMO-FR-03) for non certified product. The stamp SCCS Certified only attached on certified FFB delivery note and certified CPO/PK. Corrective Action : Revise format weigh bridge note (Form. No. : BMO-FR-03) to prevent there is no mistake of implmentation of certified product identification, company will always put wet stamp for certified FFB and certified CPO/PK. Auditor Conclusions: Closed Verification result : The company provide sample of new format for weigh bridge note (Form. No. : BMO-FR-03) for certified mate-rial and non certified material, including the photographs for format implementation. In 3rd surveillance audit, the company has used a new format for weightbridge note where have deleted Mass Balance information on weightbridge note. To inform the certified product/material (FFB/CPO/PK) to put wet stamp “SCCS Certified” on weightbridge note and delivery note as example receipt FFB from Tanah Raja estate on May 08, 2013.

SCCS Non-conformance 2012-03 of 03: Company shall make information about all volumes of palm oil and palm kernel oil that are delivered are de-ducted from the material accounting system according to conversion ratio (OER & KER). Correction : Made Summary of FFB, CPO and PK production report and calculate the percentage of Mass Balance and put information about percentage content of certified material on delivery notes for certified product. Corrective Action :

Update summary of FFB, CPO and PK production and provide information about percentage of Mass Balance on delivery notes for delivery certified product. Auditor Conclusions: Closed Verification result: Company provide records of summary of production calculation about Incoiming FFB, production, product sold both for certified product and non certified product for period January to May 2012 including information about percentage of certified material/product content. In 3rd surveillance audit, the company has been used sum-mary of production calculation where there are information about incoming FFB (certified/non-certified), produc-tion, product sold and stock including information about percentage of certified material/product content for pe-riod January - December 2012 and January – 9 May 2013.

3.6 Identified non-conformance against RSPO SCCS r equirements, Corrective Actions Taken and Auditors Conclusions

NCR SCCS 2013--01 of 02 :

The organization has not procedure about entry/input data to e-trace/UTZ application

Correction Action :

Create a new procedure of entry/input data into e-trace/UTZ application

Corrective Action :

• The organization will always update information related RSPO SCCS in website of RSPO

• All Personnel in Charges (PiC) in relevant section to ensured for implementation of all activities appropriate




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procedure it. Date of closure : June 03, 2013 Verification result :

The organization has provide new procedure about entry/input data into e-trace/UTZ application (BMO-20 Rev.00, issued on June 03, 2013). Scope of this procedure is entry/input information of production/stock/mass balance CPO & PK certified (CSPO) into e-trace/UTZ application and running e-trace/UTZ application Auditor Conclusions : Closed

NCR SCCS 2013--02 of 02 :

There is not information about address of the buyer in delivery note

Correction Action :

Additional information about address of the buyer on delivery note

Corrective Action :

• The organization will ensure that there is address of the buyer on each delivery note

• The organization will coordination with marketing division about additional information about address of the buyer on the Delivery Order (DO) issued, especially for the buyer have more than one bulking location.

Date of closure : May 10, 2013 Verification result :

The organization has submitted sample of delivery note dated on May 10, 2013 (No. 013845) which has been given additional information of address of the buyer. Auditor Conclusions : Closed

3.7 Noteworthy Positive Components

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

Findings: The company has achieve gold class health and safety award from The Ministry of Labour.

3.8 Issues Raised by Stakeholders and Findings Per taining to Issues Below is a summary of issues raised by stakeholders interviewed on-site




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No. Issues Raised Management Response Audit Verification

1

According to the local communities, their grave-yard is used by BSP work-ers because BSP does not have graveyard facilities for their workers. During main assessment, auditors found a graveyard within BSP land area as HCV 6. There was no explanation about the graveyard’s tradition-al/customary status or legal rights of the graveyard in HCV document as well as the agreement for using the graveyard for both parties.

All estates provide graveyards for both local communities and BSP workers.

It was verified that the company provide grave-yards for local people such as in Kuala Piasa estate

2

BSP allows local communi-ties transportation using BSP main road or produc-tion road for transported oil subsidies and food from goverment. The BSP main and production road is reg-ularly maintained by dozer and other equipment.

PT BSP has not restricted the public to use all public roads that are located around the company’s location. Road maintenance and reconstruc-tion including brigde are the lo-cal government responsibilities. To improve security control in BSP estate only open public roads that does not facilitate the occurrence of lost production.

Communities can ac-cess the road freely.

3

Most of the local communi-ties area nearby the mill are sometimes affected by odor and dust (i.e. dry season on-ly). The local communities who live nearby drainage or waterways are also some-times affected by erosion but BSP regularly maintains their waterways with heavy equipment

A regularly monitoring of Envi-ronmental Impact as well as odor and dust caused of Mill ac-tivities, showed that the odor and dust are within the stand-ard emission quality as per goverment regulations

Monitoring of environ-mental impacts still not done for year 2010, and this was raised as a non-conformity

4

There are many grazing ac-tivities within BSP rubber plantation as well as palm oil plantation while it’s prohibit-ed according to BSP. 70 percent of local communities generated income from their cows farm. At present, local communities face difficulties finding fields for cow’s graz-ing activities. The farmers proposed to the company to have a community develop-ment programme to provide grazing areas as a solution to the problem but there has

1. According to BSP policy, grazing activities in BSP land area are not allowed. These activities would dis-turb palm oil fruit develop-ment process.

Company’s response was accepted.




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No. Issues Raised Management Response Audit Verification

not been any response from the company.




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4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INT ERNAL RESPONSIBILITY

4.1 Date of Next Surveillance Visit

The next surveillance visit is planned for May 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 Bakrie Sumatera

…………………………………………. Effendi RSPO Management Representative Date : 14 July 2013

Signed on behalf of TUV Rheinland Malaysia ……………………………. Fadli Lead Auditor Date : 14 July 2013




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APPENDICES

Appendix 1: Details of Revised Certificate

Standard: RSPO Principles & Criteria for Sustainable Palm Oil Production; Indonesian National Interpretation: 2008

Certificate Registr. No.: 18502505 001

PT TUV Rheinland Indonesia certifies:

Certificate Holder: PT Bakrie Sumatera Plantations, Tbk Unit SUMUT I, Kisaran – Palm Oil Mill Unit SUMUT I, Kisaran Jl. lr. H. Juanda , Kisaran 21202, lndonesia; and its supply base according to the annex.

Scope: Palm Oil Production and Plantation Management System

An audit was performed, Report No. 18502505. Proof has been furnished that the requirements according to RSPO Princi-ples & Criteria for Sustainable Palm Oil; Indonesian National Interpretation: 2008 are fulfilled.

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

Validity: The certificate is valid from 2013-04-24 to 2015-06-13.

Note: This certificate replaces the RSPO certificate no. 01 100 096704 dated 14th June, 2010 previously issued for this organization.

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

Name of mill / estate Location GPS locations

Latitude Longitude Bakrie Sumatera Plan-

tations Palm Oil Mill Sei Baleh Village, Sei Baleh Sub-district, Batu Bara District, Sumut.

03º02’26.7” 099º34’53.2”

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

02º57’50.0” 099º35’57.7”

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

3°20’45.0” 99° 58’23.4”

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

02º54’04.2” 099º34’00.2”

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

03º01’29.8” 099º39’30.3”

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

03º04’12.1” 099º35’11.0”




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

48,272.43 tonnes 10,940.36 tonnes 161,515.89 tonnes 64,801.70 tonnes 41,816 tonnes 8,715 tonnes

*The data of tonnages has been revised from the original certificate dated 14th June, 2010

Appendix 2: List of Abbreviations

AMDAL Analisis Dampak Lingkungan & Sosial

(Social & Environmental Impacts Assessment) CPO Crude Palm Oil DELH Dokumen Evaluasi Lingkungan Hidup (Environment Evaluation Document) EIA Environmental Impact Assessment ERTs Endangered, Rare & Threatened species ESH Environmental Safety & Health FFB Fresh Fruit Bunches EFB Empty Fruit Bunches HCV High Conservation Value IPM Integrated Pest Management LTA Lost Time Accident MSDS Material Safety Data Sheets NGO Non-Government Organization OSH Occupational Safety & Health P&C Principls & Criteria PK Palm Kernel PKO Palm Kernel Oil POME Palm Oil Mill Effluent PPE Personal Protective Equipment PT BSP PT Bakrie Sumatera Plantations (Company name) RKL Rencana Pengelolaan Lingkungan (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan (Environmental Monitoring Plan) SCCS Supply Chain Certification System SEL Studi Evaluasi Lingkungan (Environment Evaluation Study) SIA Social Impact Assessment SOP Standard Operating Procedure UKL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UPL Upaya Pengelolaan Lingkungan (Environmental Management Efforts)




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Appendix 3: List of Stakeholders Interviewed and Co ntacted

No. Name of Stakeholder

Institution – Address

Stakeholders Interviewed On-Site 1. Effendi Management Representative/Quality Center Departement 2 Toga Simamora Serbangan Estate 3. Eddy Prayitno Manager 4. Sumantri Human Resources Dept & General Affair 5. Ismanudin Finance Manager 6. Abdulah Sani Mill Manager 7. Didi Adinegara Administration & Data Department 8. A. Yakapeni N Tanah Raja Estate 9. Ms. Misnah, Ms. Su-

lastri. Contractor’s workers

10. Poniman Head of Gedongan Village 11. Sulaiman Secretary of Perhutaan Silau Village Head

12. Misnan Harvester 13. Anto Suyanto FFB transporter driver 14. Bangar Siagian Girach Batu Estate 13. Sugiartono Kuala Piasa Estate 14. Andy Mirza S Sei Baleh Estate 15. Randang Astono PNC-FD 16. M. Husni Mubaraq Centra Warehouse Bunut 17. Syafarullah Human Resource Department 18. Suriana Human Resource Department 19. Titisan Sukma Abdi W. Quality Department 20. Ms. Thatie Quality Department

Appendix 4: Observations and Opportunities for Impr ovement

No. Observations / Opportunities for I mprovement Crit eria

1 It was observed should the price of FFB information also post in outside of the mill 6.10

2

It was observed should the company ensure the information about request infor-mation from the stakeholder is communicated to related estate, example letter of in-formation request from Pasar Lembur Village community is informed to the estate manager

1.1

3 It was observed should the company more efforts to handle the invasife of Genoder-ma in the palm oil, example in Tanah Raja Estate

4.5

4 It was observed should the company ensure the hazardous waste is more effective, so that the implementation in the field it could be more better

2.1

5 It was observed should the company has a clearly timetable for fire extinguishers in-spection, because it was found only one hydrant from the all hydrant is broken on the tube along about 10 cm.

4.7

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