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RSPO Principles & Criteria Annual Surveillance Assessment Report

Report Number CU821449

RSPOPC-SUM-REPORT.F01 JAN2013 Page 1 of 40

Control Union (Malaysia) Sdn. Bhd. 150-A, 1st Floor, Persiaran Raja Muda Musa, Off Jalan Sg Bertih, Teluk Gadong, 41100, Klang, Selangor. Malaysia.

Tel: +603-3377 1600 / 1700

RSPO PRINCIPLES & CRITERIA PUBLIC SUMMARY REPORT

ANNUAL SURVEILLANCE ASSESSMENT 3

Indonesia PERDANA POM

2014

Report prepared by: Simon Selvaraj (Lead Assessor)

Certification decision by: Gerben Stegeman (Certifier)

Certifying Office

Control Union (Malaysia) Sdn. Bhd. 150-A, 1st Floor, Persiaran Raja Muda Musa,

Off Jalan Sg Bertih, Teluk Gadong, 41100 Klang, Selangor, Malaysia [email protected]

Tel: +603-3377 1600 / 1700

Control Union Certifications

Control Union Certifications is a member of the Control Union World Group - an

international inspection and certification body. CUC performs assessments and

certification in many agricultural based fields such as FSC, RSPO, and Organic

production, Sustainable Textile Production, Organic Exchange, GLOBALGAP, HACCP,

BRC, GMP and GTP.

CUC is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CUC Organic

program (according to the EU regulation 2092/91) and GLOBALGAP program. When requested a copy of the accreditation certificate can be obtained from CUC.

RSPO Membership Number

8-0025-06-000-00

RSPO Approval Date 12/01/2006

Affiliate Membership http://www.rspo.org/en/member/339

mailto:[email protected]://www.rspo.org/en/member/339





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Table of Contents

PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT .............................................................. 4

1.1 COMPANY AND CONTACT DETAILS ...................................................................................................... 4 1.2 RSPO MEMBERSHIP & CERTIFICATION DETAILS .................................................................................... 4 1.3 ANNUAL SURVEILLANCE ASSESSMENT DETAILS ...................................................................................... 4 1.4 ASSESSMENT TYPE ............................................................................................................................ 4 1.5 LOCATION OF THE PALM OIL MILL ....................................................................................................... 4 1.6 PALM OIL MILL OUTPUT AND APPROXIMATE TONNAGES CERTIFIED ........................................................... 4 1.7 GENERAL DESCRIPTION OF SUPPLY BASE .............................................................................................. 5

1.7.1 Location of the Supply Base ........................................ Fout! Bladwijzer niet gedefinieerd. 1.7.2 Statistics of the Supply Base and Estimated Tonnes of FFB produced per year ........ Fout! Bladwijzer niet gedefinieerd. 1.7.3 Percentage of Planted Oil Palm by different Age Ranges ................ Fout! Bladwijzer niet gedefinieerd. 1.7.4 Calculation of the Number of Production Units (N) to Sample for the Mill .............. Fout! Bladwijzer niet gedefinieerd.

1.8 PROGRESS OF ASSOCIATED SMALLHOLDERS OR OUT-GROWERS, IF APPLICABLE TO THIS ASSESSMENT ............. 6 1.9 LOCATION MAP FOR THIS CERTIFICATION UNIT (SEE APPENDIX 1) ........................................................... 6

PART 2: PARTIAL CERTIFICATION ........................................................................................................ 7

2.1 MANAGEMENT STRUCTURE ............................................................................................................... 7 2.2 NON-COMPLIANCE IDENTIFIED WITH 2.1 ABOVE ................................................................................... 7 2.3 SUMMARY OF THE TIME BOUND PLAN ................................................................................................. 7 2.4 UN-CERTIFIED UNITS OR HOLDINGS .................................................................................................... 8 2.5 SUMMARY OF THE FINDINGS FOR PARTIAL CERTIFICATION ....................................................................... 9 2.6 PARTIAL CERTIFICATION AUDIT AGENDA .............................................................................................. 9

PART 3: AUDIT PROCESS.................................................................................................................... 10

3.1 ABOUT THE CERTIFICATION BODY ..................................................................................................... 10 3.2 AUDIT TEAM ................................................................................................................................. 10

3.2.1 Qualifications of the Lead Auditor ......................................................................................... 10 3.2.2 Qualifications of the Assessment Team ................................................................................. 11

3.3 AUDIT METHODOLOGY.................................................................................................................... 12 3.3.1 General Overview ............................................................................................................ 12 3.3.2 Assessment agenda for this Audit .................................. Fout! Bladwijzer niet gedefinieerd.

PART 4 ASSESSMENT FINDINGS ........................................................................................................ 14

4.1 LEAD ASSESSOR’S SUMMARY AND RECOMMENDATION FOR CERTIFICATION ............................................. 14 4.2 SUMMARY OF THE FINDINGS BY PRINCIPLES AND CRITERIA .................................................................... 14

Principle 1: Commitment to Transparency ..................................................................................... 15 Principle 2: Compliance with Applicable Laws and Regulations .................................................... 15 Principle 3: Commitment to Long-Term Economic and Financial Viability ..................................... 16 Principle 4: Use of Appropriate Best Practices by Growers and Millers ......................................... 17 Principle 5: Environmental Responsibility and Conservation of Natural Resources and Biodiversity ........................................................................................................................................................ 19 Principle 6: Responsible Consideration of Employees and of Individuals and Communities by Growers and Millers ........................................................................................................................ 20 Principle 7: Responsible Development of New Plantings ................................................................ 23 Principle 8: Commitment to Continuous Improvement in Key Areas of Activity ............................. 23





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4.3 NON-CONFORMITY RAISED DURING THIS AUDIT AND ANY FROM THE PREVIOUS YEAR, IF APPLICABLE .... FOUT! BLADWIJZER NIET GEDEFINIEERD.

4.3.1 Non-Conformities Identified during this Audit ................. Fout! Bladwijzer niet gedefinieerd. The following non-conformities were raised during this audit. Fout! Bladwijzer niet gedefinieerd. 4.3.2 Non-Conformity Identified during the last ASA, not applicable for MA .. Fout! Bladwijzer niet gedefinieerd. The following non-conformities were raised during the last audit. ................. Fout! Bladwijzer niet gedefinieerd. 4.3.3 Observations Raised During this Audit ............................. Fout! Bladwijzer niet gedefinieerd. The following observations were raised during this audit. ....... Fout! Bladwijzer niet gedefinieerd.

4.5 ISSUES THAT WERE RAISED DURING THE STAKEHOLDER CONSULTATION, IF ANY ........... FOUT! BLADWIJZER NIET GEDEFINIEERD.

PART 5: RSPO SUPPLY CHAIN CERTIFICATION ....................... FOUT! BLADWIJZER NIET GEDEFINIEERD.

5.1 POM INCLUDED IN THE SCOPE OF THE AUDIT .................................. FOUT! BLADWIJZER NIET GEDEFINIEERD. 5.2 CONFIRMATION OF THE COMPANY’S SUMMARY OF ANNUAL CERTIFIED VOLUME OF RSPO CERTIFIED PALM OIL AND PALM KERNEL OVER A SPECIFIED PERIOD ................................... FOUT! BLADWIJZER NIET GEDEFINIEERD. 5.3 SUMMARY REPORT INCLUDING A BRIEF DESCRIPTION OF THE SCOPE OF CERTIFICATIONFOUT! BLADWIJZER NIET GEDEFINIEERD. 5.4 FINAL CERTIFICATION DECISION BY CONTROL UNION FOR THE RSPO SCCS AUDIT OF THE POM .............. FOUT! BLADWIJZER NIET GEDEFINIEERD.

PART 6: CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY ..... FOUT! BLADWIJZER NIET GEDEFINIEERD.

6.1 DATE OF NEXT ASA ..................................................................... FOUT! BLADWIJZER NIET GEDEFINIEERD. 6.2 DATE FOR CLOSURE OF NON-CONFORMITIES ................................... FOUT! BLADWIJZER NIET GEDEFINIEERD. 6.3 SIGNING BY THE CLIENT ................................................................ FOUT! BLADWIJZER NIET GEDEFINIEERD. 6.4 SIGNING BY THE LEAD AUDITOR ..................................................... FOUT! BLADWIJZER NIET GEDEFINIEERD. 6.5 SIGNING BY THE CERTIFIER ............................................................ FOUT! BLADWIJZER NIET GEDEFINIEERD.

PART 7: APPENDICIES ............................................................ FOUT! BLADWIJZER NIET GEDEFINIEERD.

APPENDIX 1: LOCATION MAP FOR THIS CERTIFICATION UNIT ....................... FOUT! BLADWIJZER NIET GEDEFINIEERD.





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PART 1: SCOPE OF THE CERTIFICATION ASSESSMENT AUDIT

1.1 Company and Contact Details

Company Name: REA Holdings Plc

Business Address: REA Holdings 1st Floor, 32 – 36 Great Portland Street London W1W 8QX United Kingdom

Contact Person: Miss. Sophie Persey

Office Telephone: -

E-Mail: [email protected]

Web Site: www.rea.co.uk

Other Certifications Held: ISCC

1.2 RSPO Membership & Certification Details

RSPO Membership Number: 1-0045-07-000-00

Registered Client Name: REA Holdings PLC

Certificate Number: C816882CU-RSPO-01.2012

Start Date Of Certificate: 6 June 2011

End Date Of Certificate: 5 June 2016

Date Of Original Certification: 6 June 2011

Scope: Certification of the Palm Oil Mill and Supply Bases

Type Of Certification: Single site

Duration Of Certificate: 5 Years from date of certification

1.3 Annual Surveillance Assessment Details

Dates Of This Audit: 7-11 April 2014

Audit Number: ASA 3

1.4 Assessment Type

This is a RSPO Principles &Criteria Compliance assessment of the palm oil mill and its respective supply bases as listed in this report below.

1.5 Location of the Palm Oil Mill

Name Palm Oil Mill

Mill Capacity

Location GPS Reference

(POM) MT/Hour Address Longitude Latitude

Perdana POM 80

Desa Pulau Pinang, Kecamatan Kembang Janggut, Kebupaten Kutai

Kertanegara, Kalimantan Timur 116º 9' 0.5" 0˚15’ 27, 0”

http://www.rea.co.uk/





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1.6 Palm Oil Mill Output and Approximate Tonnages Certified

Figures below are from:

Only from certified supply bases (Y/N). YES

Combining certified with uncertified supply bases (Y/N). NO

If the Mill is receiving FFB from uncertified supply bases outside the audit scope, such uncertified sources is highlighted under the following sections as seen applicable:

a. PART 1, Section 1.7 – General Description of Supply Base, b. PART 2: Partial Certification, Section 2.4 – Uncertified Units or Holdings, c. PART 5: RSPO Supply Chain Certification of this report

Projected Production from the last 12 Months (MT)

Actual Production for this Audit Year 2013/2014 (MT)

Projected 12 Months (MT) Forecast Certified in this Report

FFB CPO PK FFB CPO PK FFB CPO PK

337,694 77,669 16,884 276,200 61,122 11,256 300,000 66,000 12,000

1.7 General Description of Supply Base

PT Rea Kaltim is a company carrying out oil palm cultivation and processing based in East Kalimantan province. The supply bases are as per indicated in the 1.7 below. No changes introduced in the supply base since from previous assessment and this audit has carried out to ensure full compliance with RSPO requirement. Seen more awareness programs being tabulated for the supply bases in line with RSPO continual improvement. The presence of the sustainability team at all sites has further enhanced the implementation of RSPO.

1.7.1 Location of the Supply Base





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OPP Oil Palm

Plantation Location GPS reference Area Summary (Ha)

Name Address Longitude Latitude Total Mature

OPP 1 Perdana Estate

Desa Pulau Pinang, Kecamatan Kembang Janggut, Kebupaten Kutai Kartanegara, Kalimantan Timur

116˚ 9’ 50,1” 0˚ 13’ 47, 1” 3,946 3,946

OPP 2 Sentakan

Estate

Desa Long Beleh Haloq, Kecamatan Kembang Janggut, Kebupaten Kutai Kartanegara, Kalimantan Timur

116˚ 7’ 0,8” 0˚ 18’ 7, 0” 4,008 4,008

OPP 3 Plasma

Desa Pulau Pinang, Kecamatan Kembang Janggut, Kabupaten Kutai Kartanegara, Kalimantan Timur

116º 10' 00" 0º 15' 00" 2,376 0

OPP 4 PPMD

Desa Perdana, Kecamatan Kembang Janggut, Kabupaten Kutai Kartanegara, Kalimantan Timur

116º 12'46,5” 0º 15' 36,4" 1,561 1,026

OPP 5 Tepian Estate

Desa Kelekat dan Pulau Pinang, Kecamatan Kembang Janggut, Kebupaten Kutai Kartanegara, Kalimantan Timur

116°10´00.0” 116°17´00.0”

00°13´00.0" 00°32´00.0"

4,675 4,675

TOTAL 16,566 13,655 PPDM = Program Pemberdayaan Masyarakat Desa

1.7.2 Statistics of the Supply Base and Estimated Tonnes of FFB produced per year

OPP Oil Palm Plantation Estimated FFB/Year (MT) Planting Years Cycle (Years)

OPP 1 Perdana Estate 103,866 1994-1998 25

OPP 2 Sentakan Estate 97,854 1997-1999 25

OPP 3 Plasma 0 2009-2012 25

OPP 4 PPMD 16,956 2001-2008 25

OPP 5 Tepian Estate 119,018 1998-2004 25

TOTAL 337,694

1.7.3 Percentage of Planted Oil Palm by different Age Ranges

OPP Planting Years by 5 year Ranges

1991-1995 1996 -2000 2001 – 2005 2006 – 2010 2011 – 2015

OPP 1 33.90% 66.10% - - -

OPP 2 - 100.00% - - -

OPP 3 - - - 92.70% 7.30%

OPP 4 - - - 59.90% 40.10%

OPP 5 - - - 80.80% 19.20%

OPP 6 - 33.90% 66.10% - -





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1.7.4 Calculation of the Number of Production Units (N) to Sample for the Mill

N = 0.8√Y, where “Y” is the number of units, with the result always to be rounded “up” to the next whole integer. Where only a sample of the supply base is assessed, units not previously assessed, or assessed earlier in the certification program, are to be preferred over those more recently assessed

For the Mill, how many units make up the production base?

Owned estates (Y) N = 0.8√Y Smallholders (Z) N = 0.8√Z

3 2 0 0

Explanation as to the selection of estates sampled

2 out of the 3 estates were assessed.

1.8 Progress of associated Smallholders or Out-growers, if applicable to this assessment

Progress of associated Smallholders or Out-growers towards Compliance with relevant Standards - should be in accordance to the 3 year implementation plan, if applicable to this assessment

N/A

1.9 Location Map for this Certification Unit (See Appendix 1)

PART 2: PARTIAL CERTIFICATION

The rules for partial certification allow organizations that have a majority holding in and / or management control of more than one autonomous company growing oil palm to certify individual management units and / or subsidiary companies subject to certain rules.

2.1 Management Structure

Section Criteria Yes/No If “Yes” If “No”

2.1.1 Is the certified operation (POM and supply base as detailed above) a stand-alone operation and there are no other plantations or mills owned by the same

No Section 2 is N/A

Go to 2.1.2





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company?

2.1.2 Is the certified operation part of a simple structure of operations owned by one company?

Yes Go to 2.1.5 Go to 2.1.3

2.1.3 Are there statements of the ultimate controlling shareholders and directors in the managing agency company/companies:

a. Explaining the legal relationship and the management arrangements with the subsidiary companies and / or with any operating groups?

- Go to 2.1.4

Go to 2.2.1

2.1.4 b. A statement of commitment to complying with the spirit of the RSPO for all companies and subsidiaries involved with the growing of oil palm and for the production of palm oil?

- Go to 2.4 Go to 2.2.2

2.1.5 Is there a time bound plan in place for all subsidiaries, estates and palm oil mills?

Yes Go to 2.3 2.2.3

2.1.6 Is the parent company or one of its majority owned and / or managed subsidiaries a member of RSPO.

Yes

2.2 Non-compliance Identified with 2.1 Above

Section Non-compliance findings NC raised Category

2.2.1 There is no explanation as to the company’s structure and therefore it Is not possible to conduct an effective audit against the rules for partial certification.

- Major

2.2.2 There is no statement of commitment to complying with the spirit of the RSPO for all companies within the company structure.

- Major

2.2.3 There is no time bound plan in place for the certification for all subsidiaries, estates and mills.

- Major

2.2.4 No applicable membership of the RSPO. - Major

2.3 Summary of the Time Bound Plan

Section Requirement Findings and any action required

2.3.1 Does the plan include all subsidiaries, estates and mills?

Yes, the plan includes both existing mills and estates, as well as it includes forecasted future plans of mills and estates, yet to be operational.

2.3.2 Is the time bound plan challenging? Age of plantations / Location. Mill development / Infrastructure. Compliance with applicable law.

The minor NC raised last year was successfully closed by revision of the time bound plan where the company is now on a realistic time bound plan to have their existing and new mill operations in Indonesia and supply bases certified starting from 2015 onwards.

2.3.3 Have there been any changes since the last audit? Are they justified?

Yes, there has been a change to the time bound for the Indonesian operations as mentioned above. The company has adequately justified their reasons for the changes. The audit team carried out a combination of document reviews, sighted several official correspondences between the company with the relevant Indonesian governmental bodies dating between 2011 - 2013 and interviewed the relevant government bodies, local community heads, and with the local people or “masyarakat” during the audit process.

2.3.4 If there have been changes, what circumstances have occurred?

See 2.3.2 as explained above.

2.3.5 Have there been any stakeholder No.





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comments?

2.3.6 Have there been any newly acquired subsidiaries?

No

2.3.7 Have there been any isolated lapses in the implementation of the plan?

No.

2.3.8 Has there been any systematic failure to proceed with the implementation of the plan?

No

2.3.9 General statement as to progress made since the last audit?

Monitoring by the RSPO Manager on any potential failure for the Kaltim region certification sighted.

2.4 Un-Certified Units or Holdings

NOTE: Companies may demonstrate compliance by clear evidence of a self-audit (i.e. an internal audit for all subsidiaries, estates and Palm Oil Mills)

Section Requirement Findings and any action required

2.4.1 Did the company conduct an internal audit? If so, has a positive assurance statement been produced?

Yes, an internal audit was conducted and the company has all the documents pertaining to the partial certification requirements.

2.4.2 No replacement after dates defined in NIs Criterion 7.3 of:

Primary forest.

Any area identified as containing High Conservation Values (HCVs).

Any area required to maintain or enhance HCVs in accordance with RSPO criterion 7.3.

There is a conservation team that conduct an intensive survey of the sites and identify all conservation areas. No replacement of any primary forest or HCV areas.

2.4.3 Any new plantings since January 1st 2010 must comply with the RSPO New Plantings Procedure.

Companies had already started work prior to the 1st Jan 2010.

2.4.4 Any Land conflicts are being resolved through a mutually agreed process, e.g. RSPO Grievance procedure or Dispute Settlement Facility, in accordance with RSPO criteria 6.4, 7.5 and 7.6.

No land conflicts were noted.

2.4.5 Any Labor disputes are being resolved through a mutually agreed process, in accordance with RSPO criterion 6.3.

No labour disputes noted.

2.4.6 Any Legal non-compliance is being resolved in accordance with the legal requirements, with reference to RSPO criteria 2.1 and 2.2.

No legal non-compliance found.

TIME BOUND PLAN FORECAST FOR RSPO CERTIFICATION OF ALL PALM OIL MILLS & SUPPLY BASES

Palm Oil Mill Country Supply Bases (estates,

plantations, associations) Targeted RSPO

Certification Year Current Certification

Status as per this Audit

Cakra POM Indonesia

Lestari Estate, Cakra Estate, Damai Estate, Berkat Estate, Plasma, PPMD

2011 RSPO Certified

Perdana POM Indonesia Perdana Estate, Sentakan Estate, Tepian Estate, Plasma, PPMD

2011 RSPO Certified

PT. Sasana Indonesia SYB Estates & PT Kutai 2015 Pending





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Yudha Bhakti (SYB)

Mitra Sejahtera (KMS) Estates

PT. Putra Bongan Jaya

(PBJ) Indonesia PBJ Estates 2019 Pending

PT. Cipta Davia Mandiri (CDM)

Indonesia CDM Estates 2020 Pending

2.5 Summary of the findings for Partial Certification

The audit team assessed compliance with the above requirements during this audit. Failure to address any non-compliance identified may lead to certification suspension.

In term of the system implementation, since it’s introduction in 2010, the key staff and stakeholders interviewed, understood the RSPO requirements and the implementation seen objectively achieved. The management has allocated sufficient resources to manage the system and sighted the records RSPO competence personals. With the exception of altering the time bound plan, where a minor NC was raised, the conclusion is that the company is in compliance with the rules for partial certification. Progress towards achieving the time bound plan will be reviewed again during the next surveillance audit.

2.6 Partial Certification Audit Agenda

Date Location Agenda

28/03/2013 Perdana POM-centralized

Review Partial Certification

PART 3: AUDIT PROCESS

3.1 About the Certification Body

Control Union Certifications is a member of the Control Union World Group – an international inspection and certification body. CUC performs Audits and certification in many agricultural based fields such as FSC, RSPO, and Organic production, Sustainable Textile Production, Organic Exchange, GLOBALGAP, HACCP, BRC, GMP and GTP. CUC is accredited by the Dutch Council of Accreditation (RVA) on the European quality standard EN 45011 for the inspection and certification of CUC Organic program (according to the EU regulation 2092/91) and EUREPGAP program. When requested a copy of the accreditation certificate can be obtained from CUC.

3.2 Audit Team

Lead auditor: Simon Selvaraj

Team member 1: Mohd. Rizal Md. Kassim

Team member 2: Cecep Saepulloh

Team member 3: Hasnop Putra

Team member 4: Mohd Jamalul Arif





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3.2.1 Qualifications of the Lead Auditor

Requirement Qualifications

A minimum of post high school (post-secondary school) training in either agriculture/forestry, environmental science or social sciences;

Post graduate qualification in agriculture with more than 5 years working experience in plantation.

At least 5 years professional experience in area of work relevant to the assessment (e.g., palm oil management; agriculture/forestry; ecology; social science);

More than 5 years working experience in plantation. Involved in RSPO auditing since November 2010. Fully trained in similar agriculture certification programmes such as RSPO SCCS, Global Gap, ISCC and GMP.

Training in the practical application of the RSPO criteria, and RSPO certification systems;

Involved in RSPO assessment in Malaysia and Indonesia since November 2010. Member of CUC RSPO audit team.

Completion of an ISO 9000:19011 LA course; Completed ISO 9001:2008 LA course in July 2011.

Training in the practical application of RSPO certification systems.

Member of CUC RSPO audit team since November 2010. Involved in audits conducted in Malaysia and Indonesia since November 2010 in 10 different companies in Malaysia and Indonesia.

A supervised period of training in practical auditing against the RSPO criteria or similar sustainability standards, with a minimum of 15 days audit experience and at least 3 audits at different organizations.

Post graduate qualification in agriculture with more than 5 years working experience in plantation.

RSPO endorsed lead auditors course. Completed RSPO Lead Auditor training in 2011

Signed code of conduct. Yes.

General knowledge of:

RSPO P&C standards. Yes

CUC organizational structure. Yes

CUC quality systems. Yes

Lead auditor role. Yes

Report writing. Yes

Stakeholder consultation. Yes

Certification decision process. Yes

RSPO SCCS program manual. Yes

CUC filing systems. Yes

Correct use of RSPO trademarks. Yes

History and objectives of RSPO. Yes

CV available. Yes

Completion of CUC RSPO lead auditor training. Completed & Passed RSPO Lead Auditor training in 2011

3.2.2 Qualifications of the Assessment Team

RSPO Requirement Team Member Name Qualifications

Fluent in main local languages and English.

Mohd. Rizal Md. Kassim Fluent in English, Bahasa Malaysia and Bahasa Indonesia.

Mr. Hasnop Putra Fluent in local and English

Cecep Saepulloh Fluent in English

Mohd Jamalul Arif Hamin Fluent in Local Malay and English

Field working experience in the palm oil sector, or a demonstrable equivalent.

Mohd. Rizal Md. Kassim More than 5 years working experience in forestry and manufacturing firm. Involved in FSC auditing since 2008. Involved in ISCC auditing.

Cecep Saepulloh Forestry background with many years’ experience in auditing QMS, EMS, OHSAS, ISCC,





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Bio-gas related operations, HCV assessment and RSPO.

Mohd Jamalul Arif Hamin Global GAP and agriculture auditing experience and RSPO is the prime auditing scope in CUC.

Good agricultural practices (GAP), integrated pest management (IPM), pesticide and fertilizer use.


Mr. Hasnop Putra Lead Auditor in QMS & EMS, Machineries inspection and involve in RSPO auditing since 2011.

Cecep Saepulloh RSPO / SCCS / ISCC certified auditor

Mohd Jamalul Arif Hamin Involve in RSPO auditing since Jan 2011

Health and Safety auditing on the farm and in processing facilities. (For example OHSAS 18001 or occupational. Health and safety assurance system).




Workers welfare issues and social auditing experience. (For example with SA8000 or related social or ethical accountability codes).



Environmental and ecological auditing. (For example experience with organic agriculture, ISO 14001 or environmental management systems).


Cecep Saepulloh Forestry background with many years’ experience in auditing QMS, EMS, OHSAS, ISCC, Bio-gas related operations, HCV assessment and RSPO.

Economic issues. Mohd. Rizal Md. Kassim More than 5 years working experience in forestry and manufacturing firm. Involved in FSC auditing since 2008. Involved in ISCC auditing.


3.3 Audit Methodology

3.3.1 General Overview

The Audit was carried out in conformity with the procedures as laid down in the CUC Procedure Manual and the RSPO Program Manual for the auditors and Certifier. During the Audit the qualified CUC auditors used the RSPO standard as endorsed for the country in which the audit took place and recorded their findings. Workers and local communities were interviewed and evidence sought to confirm ongoing compliance to include:

Chemical stores. Storage, MSDS leaflets, Herbicide mixing areas, PPE, Ventilation, Security.





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Field inspections. Herbicide application programs. Harvesting sites and efficiency. Fertilizing operations. SOP’s. Soil maps. Land preparation. Ground cover. IPM. First aiders and boxes. Ground cover. Soil erosion. Field observations of all operations.

Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts. Child labor. First aid. Awareness.

Re-planting sites. Zero burn.

HCV’s. Identification. Management plans. Environmental Impact Assessments. Implementation.

Riparian zones. Width. Current and future management. Non maintenance regimes.

Water management. Water courses. Water monitoring.

Road maintenance. Run off.

Social amenities. Social Impact Audits.

Local communities. Contributions made. Employment opportunities. Social impacts. Complaints procedures.

Workshops. Oil traps. Safe working environment. PPE. Diesel tanks. Environmental waste management.

Line sites. Interviews with householders. Inspection of water discharge points. Water improvement plans. Waste disposal.

Documentation review. The Palm Oil Mill audit verification included the following activities:

Mill and workshop inspections. Documentation review & worker interviews.

Mill. SOP’s. Safe working environment. Gen sets. Walk ways. Signs. EFB. POME treatment. Emissions. Mass balance. Diesel tanks. PPE. Fire extinguishers. First aiders and boxes. Fuel and water usage.

OSH. Training. Management structure. First aiders.

Full document review. Completion of the checklist. Review and documentation of evidence. All aspects of RSPO P&C’s applicable.

Worker interviews. OSH. Sexual, religious, racial harassment. Pay and contracts.

Compliance against the RSPO SCCS certification scheme. Verification: Verification of implementation was done through field observations, workshop and chemical store inspections, worker and community interviews and mill inspections as summarized above.

Proposed Assessment Agenda for this Audit

Date Location Main activities

7th April 2014 Monday

08.00am -09.00am

Opening meeting- CUC – PT. Rea Kaltim ( Centralized for Cakra&Perdana POM) Chaired by the audit team leader

Introduction by team leader

Presentation by respective managers Presentation of Palm Oil Mill source of FFB by respective managers

09.00-17.00pm Mill inspection (Perdana Palm Oil Mill)

Workshops

Stores

POM application

Document review

8th

April 2014 Tuesday

10.00-11.00am PLASMA- Smallholders Interviews

14.00-15.00pm PPMD – Smallholders Interviews

9th

April 2014 Rest Day – Indonesia Election Day





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Wednesday

10th

April 2014 Thursday

07.30am – 17.00pm

Field operations (Tepian Estate)

Worker interviews

Chemical stores

Workshops

Housing

Medical

Schools

Local communities

Environmental

Documentation Review

07.30am – 17.00pm

Field operations (SentekanEstate)

Worker interviews

Chemical stores

Workshops

Housing

Medical

Schools

Local communities

Environmental

Documentation Review

11th

April 2014 Friday

11.00pm – 12.00pm

Closing Meeting – CUC – PT. Rea Kaltim ( Centralized for Cakra&Perdana POM) Chaired by the audit team leader

Welcome and introduction by the team leader

Presentation of findings by the audit team

Questions and answers

Final summary by team leader End of assessment

PART 4 ASSESSMENT FINDINGS

4.1 Lead Assessor’s Summary and Recommendation for Certification

The mill and supply base visited (as per the above Tables 1.5 and 1.7.1) and were assessed at field, office, facilities, stores and a document review was carried out in accordance to the RSPO principles and criteria. Subsequent to concluding this assessment, the company had informed Control Union that their plans to further include new scheme smallholders could potentially affect the current certification status of the existing scheme smallholders within the certified supply bases. The subscribed RSPO management system’s documentations seen had some minor changes due to internal external influenced factors that in relation to scope of certification. Specific evidence was recorded for estate and mill. Interviews with Estate Manager, Mill Manager, members of workers union and committee took place in both formal and informal environments and worker interviews were conducted at the supply base and the mill. The management is highly committed in maintaining the RSPO system by adopting to continuous improvement programs.





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There was no complaint or feedback received during the field assessment when interviewing with the external stakeholders. For further clarification on Partial Certification, see PART 2 above. The management continually monitors the established KPI / objectives that significantly rules the achievement of company’s corporate policy on RSPO. The mill is fully verified for RSPO SCCS system verification and it is found to be in full compliance. See PART 5 below.

It is therefore the recommendation of the lead assessor that a certificate of compliance is maintained.

Signed: Name: Simon Selvaraj Date: 05-06-14

4.2 Summary of the findings by Principles and Criteria

Over the 5 year period of the life of the certificate, there will be 4 annual surveillance audits

Identified Non-Conformities and noteworthy Positive and Negative Observations.

The RSPO require that this report contain findings by each principle and some example criteria. Please see table below.

Principle 1: Commitment to Transparency

Criterion by Audit

Summary Requests made by stakeholder were responded to and all these are well documented. Relevant documents are made publicly available. A minor non-conformity and an observation were raised for Principal 1.

ASA 3 1.1 The mill and estates all have a ‘Request and Responses’ logbook that records all requests made and the corresponding action that was taken. Records are maintained and it details the date of request, person who made the request and what was the nature of the request. Record of action that has been taken to fulfill the request and acknowledgement by the person who made the request and an estate or mill executive is also recorded in the logbook. All records are kept for at least five years. Perdana POM Action have been taken by the management for all requests. And well recorded. However there are no specific time frame have been given to react on the requests made. Lestari Estate





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Response to information Action has been taken action on response for information and recorded well. However there no specific time frame given to get approval for any request

ASA 3 1.2 The following documents were made publicly available in the mill and estate offices:

Land titles / user rights

Safety and health plan

Plans and impact assessments relating to environmental and social impacts

Pollution prevention plans

Details of complaints and grievances

Negotiation procedures

Continuous improvement plan These documents are classified as:

1. Publicly available 2. Confidential 3. Publicly available on request.

All these documents were sighted in the mill and estate offices and as a SOP, are retained for a period of 5 years. All requests for documents through the estate or mill offices will have to go through the mill or estate managers. They will make the decision as to whether the information can be shared to or viewed by the person requesting the information or document.

Safety and health plan with specifically identified training requirement and training conducted is recorded and available on request. Documented continuous improvement plan has identified improvement for environment, social, OSH (Occupational Safety and Health) and waste management. The RSPO Master List of Documents stipulates the documents that can be made publicly available and documents that should be kept confidential.

Principle 2: Compliance with Applicable Laws and Regulations

Criterion by Audit

Summary

The mill and estates have demonstrated compliance to all applicable local, national and international laws. Legal ownership of land and its land use is clearly demonstrated through the respective land titles. Boundaries have been clearly demarcated. There have been no land disputes or claims involving the mill and estates.

ASA 3 2.1 The mill and estates have a register of all applicable laws and regulations and this includes among others:

UU No. 5 tahun 1960 tentang Pokok Agraria.

UU No.7/1981 tentang Wajib Lapor Ketenagakerjaan.

UU No. 5 tahun 1960 Undang-Undang Pokok Agraria.

UU No. 21 /2000 tentang Serikat Pekerja/Serikat Buruh.

UU 2/2004 tentang Penyelesaian Perselisihan Hubungan Industrial.

UU No. 20/1999 tentang Ratifikasi Konvensi ILO No. 138 mengenai Usia Minimum utk Dibolehkan Bekerja.

Konvensi Dasar ILO (Konvensi No. 98, 87, 29, 105, 100, 111, 138, 182.

Konvensi ILO No. 81 tentang Pengawasan Ketenagakerjaan dalam Industri dan Perdagangan (Labour Inspection in Industry and Commerce).

UU No. 29 Tahun 1999 Ratifikasi Convention on the Elimination of All Forms of Racial Discrimination (CERD).

UU No. 11 Tahun 2005 Ratifikasi International Covenant on Civil and Political Rights (ICCPR).





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UU No. 5 tahun 1960 Undang-Undang Pokok Agraria. All applicable permits and licenses for the mill and estates are clearly displayed in the respective offices. Records of expiry of these permits and licenses are kept in the office and monitored to ensure that they are renewed well before the expiry dates to ensure no lapses in the compliance to Indonesian government laws and regulations. The person responsible for monitoring the compliance to applicable laws and regulations are the respective estate and mill managers. They are also responsible for the tracking of the changes in the laws and regulations. All operating units will also receive an official letter from the Legal Department of the Head Office informing them regarding any changes or amendments in laws and regulations from time to time. It was determined through document review and interviews that these changes have been fully implemented in all estates and mills.

ASA 3 2.2 The mill and estates have demonstrated legal ownership of their land by having legal land titles to the land. All land titles demonstrate the right to use the land and clearly mentions the fact that the land is to be used for palm oil cultivation only. The land titles are kept in the estate office and were sighted during the audit. Evidence of annual payment of land tax to the state government is available in the form of receipts. The estate boundary is well demarcated with boundary stones surrounding the land. The boundary stone clearly states the GPS coordinate of that particular point. Maps clearly showing the estate boundary were also sighted in the estate office.

ASA 3 2.3 Procedures on land compensation is in place and it details the FPIC process. The process of handling Land Claim is documented with maps together with negotiation letter and with the amount agreed (Proses Penanganan Klaim Lahan). Company has SOP of Land Acquisition showing flow chart to make a negotiation to resolve any land conflict. The entire person received the compensation has agreed by signing the agreement with company. No case of double compensation made by company.

Principle 3: Commitment to Long-Term Economic and Financial Viability

Criterion by Audit

Summary The annual budget and 2 years projections for the mill and estate that details revenue and costs are available.

ASA 3 3.1 The annual budget is for 2014 with projections until 2018 is available and was sighted at all operating units. The budgets and projections detail the FFB, CPO and PK to be produced, revenue and operating costs involved. Replanting plans, as applicable, are included in the documented working plan and available at estate level.

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

Criterion by Audit

Summary

Soil fertility is being maintained in the fields and erosion prevention is continuously carried out. IPM is being implemented in all the estates and the use of chemicals are in accordance with the regulations. There is a comprehensive OSH policy and is being implemented throughout the estate and mill. Trainings are being carried out as per the Annual Training Plan. One minor non-conformity was raised for Principal 4.

ASA 3 4.1 The mill has all its SOPs in place and these SOP covers all mill operations from FFB reception right until mill effluent treatment. These SOPs details the procedures to run each mill operation in an efficient and safe manner. The implementation of these SOPs is done through maintenance and record keeping of forms and data for, FFB incoming records, boiler smoke density records, sterilizer temperature and time records, steam flow record, water usage records, chemical test records, process control and production report and CPO stock inventory, spare parts inventory records and so on.





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The estates have the ‘Good Agricultural Practices’ which is their guide in ensuring efficient and optimal field operations. These SOPs cover all estate operations from nursery until delivery of FFB to the mill and includes among others land clearing, land conservation, distance of planting, field maintenance, pest control, fertilizer application and harvesting. All SOPs are reviewed periodically or when there is a new technique of operation being introduced. The records for the implementation of SOPs such as checklists, forms, monthly records and data are kept for a period of seven years. Some SOPs have been revised for sustainability requirements, such as Mass Balance calculation and GHG calculation.

ASA 3 4.2 Soil surveys and foliar sampling are carried out on an annual basis. Records of these were sighted in the estate offices. Through these surveys and analysis, the optimum fertilizer to be used is recommended to cover the nutrient deficiencies that may exist for the palms. Application of EFB is also recommended to reduce the usage of inorganic fertilizers. Checks on the records of fertilizer application indicate the fertilizer application is done based on the recommendations. Soil maps such as the general soil map, slope classes map and elevation map are also available and were sighted. These maps are used to provide general recommendations for soil and water management practices and to identify solutions to overcome soil limitations.

ASA 3 4.3 Soil erosion is prevented through the following methods:

The planting of cover crops such as Mucuna bracteata and Pueraria javanica. The areas being planted with these cover crops are recorded in the monthly record books and marked on maps.

The presence of road maintenance programme. These road maintenance programme details the type of road maintenance works to be carried out in each estate block and the cost involved in doing so. Budgets and actual expenditure for road maintenance works were sighted.

The application of EFB and frond stacking on slopes. This not only minimizes erosion but also enhances soil fertility.

Control of soil erosion is in accordance with the guidance stipulated in the SOPs. Soil maps and topography maps that clearly state the elevation and types of soil are also available in the estate offices.

ASA 3 4.4 The estates have maintained the riparian buffer zones along rivers in accordance with the national and local regulations. There are no bunds, weirs nor dams that have been constructed along waterways in the estates. Field visits to the estates confirmed this fact. The effluent discharge from the mill and water quality of the in-coming and out-going water is being monitored on a regular basis. Rainfall data is collected and monitored on a daily basis. There are no water drainages into protected areas. Water management plans for the mill and estates were sighted.

ASA 3 4.5 IPM plan is documented as per the Good Agricultural Practices which includes beneficial planting and the use of biological control as opposed to chemical control of pests. Planning and realization of IPM programmes were monitored by mapping the beneficial plant to be planted with types of plant. The plans are monitored by daily completion of planting, expressed in meter of plants planted.

Trainings are given to all staff on IPM. Pesticide toxicity units monitored by each active ingredient and it is calculated based on LD 50(Mg/Kg), chemical usage, total a.i. Used, Ha planted, FFB produced, pesticide usage





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(L/Ha), L/ton and finally result shown in Pesticide toxicity units monitored (Kg/LD 50/FFB) by monthly and to date.

ASA 3 4.6 The mill and estates maintain a chemical register detailing the chemicals use, its purpose and classification. Paraquat usage has been stopped since 2010. The estates only use class 1B chemicals [Monocrotophos and Warfarin] for trunk injection to counter bagworm attack and rat attack respectively.

These chemicals are stored separately in the chemical store. The chemical stores were found to be in good condition with the appropriate spillage traps filled with charcoal and empty bunch. First aid kits as well as shower and washing facilities are available.

Audit verifed that the hazardous collection of wastes on “Waste Logbooks” for the period December 2013 – March 2014. It was an evidence of nonconformance with regards to the collection of used oil amounting to 820 Litres, which were stored in temporary house of hazardous waste B3 for more than 90 days, as accordance to the Letter of decree of The Regent (Bupati) Kutai Kartanegara No. 07 Tahun 2011, the waste can be kept at temporary house within 90 days. A minor NC raised.

Annual Medical Surveillance for 2014 was done for all the sprayers, manuring gang, storekeepers and mill laboratory workers. Medical surveillance records were sighted in the mill and estate offices. There are no pregnant workers who were handling pesticides in the estates. CHRA for the mill and estates were conducted and all recommendations of the CHRA were adhered to. The pesticides and herbicides used records are kept for at least 5 years.

ASA 3 4.7 The REA Kaltim management have developed the the OSH policy on safety, health and hygiene dated 01-02-2011, and this has been revised on 25-02-2014. The mill and estates adhere to the Safety and Health Policy of the group. The mill and estate have conducted HIRARC for their operations. The risk assessment covers all existing activities in estate. The HIRARC includes identification of the hazards, its impact, risk analysis for probability and severity, recommended risk control and person in charge for implementing the recommended controls.

Trainings for workers to ensure safe working practices for the handling of chemicals and pesticides are carried out periodically and records of these trainings are recorded with the training agenda, attendance lists and photographs. PPE issuance records for each worker were complete with the type of PPE issued, date and signature of the workers upon receipt of the PPE. These records were sighted in the mill and both estates.

Safety and health committee meetings were held once in 3 months. These meetings discussed workplace inspection, workers medical check-up, PPE usage and accident prevention, OSH policy, review of health hazards in selective operations, review of chemical health risk assessment (CHRA), annual medical surveillance as per CHRA, safety performance, training on safety and health, safety barriers, emergency and response plan. The person-in-charge of OSH is the estate and mill manager. Estate has Safety Committee with combining from representative from all levels of workers.

ASA 3 4.8 The mill and estates have a comprehensive annual training plan for its staffs and workers. The training plan for 2013 and 2014 were sighted. Trainings conducted were recorded in the various training record books and it was





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complete with attendance records, training materials and photographs of the training. The mill and estates conducted trainings, among others, for:

The appropriate use of PPEs

First aid and fire drill

The implementation of SOPs for operations such as harvesting, pruning and manuring

Safe handling of chemicals and fuels

Hazard identification, risk assessment and control (HIRARC)

There was evidence sighted during this audit that training for contractors with regards to safety and health was carried out.

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

Criterion by Audit

Summary

Environmental Impact Assessment has been carried out by the mill and estates. A comprehensive identification of all waste has been recorded and disposal of scheduled waste has been carried out by an approved and registered collector. Monitoring and analysis of waste is carried out regularly. One minor NC was raised for principal 5.

ASA 3 5.1 AMDAL report and Dokumen Pengelolaan dan pemantauan Lingkungan – DPPL (Environmental and social Impact Assessment) is available and approved by Head of Kabupaten Kotawaringin Timur. Regular reporting of every six month for both estates and mill through RKL/RPL. Latest UKL/UPL carried out for 2

nd semester of 2012. UKL/UPL assessment is carried out based on

maintenance and monitoring of environment surrounding the mill and estates with aspects and impacts determined from mill such as air quality surrounding, fire potential, impact to water course, social aspect and work accidents. Mill will generate the action plan based on result and conclusion made by the assessment.

ASA 3 5.2 A list of all local laws related to conservation is prepared and the evidence of implementation on the location is recorded. i.e. UU No. 5, 1990, Article 21 which is related to conservation of natural resource and ecosystem. Animal and habitat protection plan based on relevant law and regulation is available. The requirements by laws were matched against the action required and taken in the HCV management.

Signage’s are maintained and at some strategic locations have been erected with new signage’s to create awareness. Patrolling by the security personnel carried out regularly in high risk areas and boundaries. Regular spot checks are carried out in workers and staff quarters for presence of wildlife that is protected. HCV environment care takers are trained on HCV criteria, type of assessment details and monitoring control.

ASA 3 5.3 Mill has identified relevant waste from the operation and also was recognized source of the waste to reduce and further handling method to be taken. The identification resources are divided by operation place starting from mill office to POME site. Pollution sources identified and documented such as used oil, filter, battery etc. Record of all schedule waste is reviewed. The schedule waste collection is centralized at TPS “Tempat Penyimpanan Sementara”. Documented records of registering into the TPS observed in the Schedule Waste Activity Log Sheet. Waste management is available include sources of waste in order to avoid or reduce pollution. Estate is well implemented recycle programme in the estate by do the segregation in landfill for organic and inorganic waste. Schedule waste is collected by qualified collector for used oil, use battery, bulb, oil filter and rags. Berita Acara Pengambilan Limbah – Schedule Waste Collection sighted for used oil container, filters and empty chemical containers to waste





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collector. Empty chemical container after triple rinse is recycled for chemical usage in the field. The balance was collected by a scheduled waste collector and record of inventory is available. Practices observed were in line with the plan and instructions. Relevant documentation of agro-chemicals is well established, maintained and implemented.

ASA 3 5.4 Daily record of shell and fiber is available and the tonnage of FFB processed per day is known. Renewable energy used per tonne of CPO to date is available. At the mill, a biogas plant to capture methane has been developed and it is used for power generation. Renewable energy use and its efficiency analysis is documented. Fuel usage is monitored on a monthly basis, which includes the diesel usage (liter), FFB processing and diesel usage for processing per tonne FFB.

ASA 3 5.5 The company has a zero burning policy which explicitly prohibits open burning for land clearing or any other purpose whatsoever within plantation limits. There was no evidence that open burning takes place in the mill and estates, including in areas where replanting is taking place, and this was verified during the field visits.

ASA 3 5.6 Mill emissions source is identified at each operating station and documented such as fibre, shell, scrap iron, EFB fibre, effluent, schedule waste, waste oil from diesel tank, and emission from generator set. Boiler, boiler ash, dust from the blower. Daily and monthly summary on smoke density is available. For Gas and ambiance twice per year. Monitoring of pollution and emission has been assessed by government as mentioned above, collected emplacement waste to TPA (Tempat Pembuangan Akhir), separate waste of organic and inorganic, containment bund of waste,fuel,oil trap and pesticides store are recorded and available in place.

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

Criterion by Audit

Summary

The mill and estates have conducted the social impact assessment in a participative manner. The relevant policies are in place and are fully implemented across the board. Communication and consultation as well as complaints and grievances procedure are well communicated and adhered to. There are no evidence of workers been discriminated against in any way and all are being paid their fair wages. 2 minor non-conformities and 4 observations were raised for this principal.

ASA 3 6.1 The mill and estates have conducted their SEIA for 2014. The SIA details the impact of operations and new activities to the social well-being of the workers and the community and steps that need to be taken to reduce any negative impacts should there be any. The risk assessment based on HACCP principle, potential impact of water, air, type of impact, handling, type of action.

Summary of the assessment is at the end of the report including recommendations. Records that show the result of the impact assessments were checked. Regular monitoring and management of social impact, with the participation of local communities is carried out by using questionnaires to the local community for feedback on the impact of the company’s daily operation, is conducted twice a year.

The company makes a point to invite local people to work in the company. Twice a month, there is a mobile market for the workers and staff, where the Social Impact effectiveness is monitored through the records of input/ output data with information of input and action taken with starting and finishing date.





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ASA 3 6.2 The mill and estates have a communication and consultation procedure in place and this was sighted in their respective offices. The procedure for communication and consultation is as follows:

Receipt of communication from the stakeholder by the nominated plantation management official.

Communication will be recorded and will be attended to and resolved within 30 days.

If the matter cannot be resolved within 30 days, all the related document will be send to the company secretary for further action.

The matter will be forwarded to the Grievances Executive Committee who will decide on the action to be taken.

Action that has been decided by the Executive Committee will be carried out and outcome of the resolution will be documented and stakeholder will be informed accordingly.

Should the outcome be not resolved to the mutual satisfaction of the stakeholder and the company, it will then be dealt with under the relevant provisions of the law.

The nominated management official who is responsible for handling matters pertaining to communication and consultation with stakeholders, particularly external stakeholders are the respective estate and mill managers. Communication and consultation procedures are available in document REA OP 03 date 23 January 2009. SOP consists of requirements for handling any communication between Internal and External Stakeholder/s. However, there is no time frame has been stipulated to respond to a request from a Stakeholder. A minor NC raised

ASA 3 6.3 The mill and the estates have a complaints and grievances procedure that serves as the SOP for handling of complaints and grievances from both internal and external stakeholders. This procedure has been displayed in the offices and also on notice boards around the mill and estates.

A complaint and grievances logbook is kept in every mill and estate and it contains the details of the complaints made, the complainant or aggrieved party, the action taken to resolve the complaint or grievance and the date the action was taken. All complaints and grievances were promptly attended to and records of this were sighted in the mill and estate offices. Workers who were interviewed confirmed that they are aware of the complaints and grievances procedure and how to channel their grievances. There is evidence to show that the gender committee has been formed in the mills. This shows there is consistency in implementing a mechanism to channel complaints and grievances between the different estates and mills.

ASA 3 6.4 Procedure of negotiating includes land valuation, company set values, and negotiation protocol between two parties. The responsible party is the Humas (human Relation) Dept. When the negotiation is agreed by both parties then negotiation is sent for approval by the GM of Humas who will check, if the land title is under the claimant.

ASA 3 6.5 All mill and estate workers are being paid wages in accordance with the minimum wage set by the Kalimantan Timur provincial government. Contract of service and salary slips for workers were checked and workers were paid the same amount of minimum wages which is currently Rp1, 900,000/month. All wage rates, benefits and working conditions are stipulated in the contract of service of the workers. There is a clause in the contract of service stating that whatever is not mentioned in the contract of service will be covered by the relevant Labour





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regulations. Salary slips clearly shows the calculations of gross salary, all deductions and net salary of a worker. Workers interviewed confirmed that they are being paid more than the stipulated minimum wage and that they understand all the deductions being made.

All workers are provided with adequate housing facilities that exceeds the requirements of the law. Each unit of the quarters will be occupied by a maximum of 2 workers per room; a 3 room quarters will house a maximum of 6 workers. All quarters are provided with free electricity and treated water supply. Repairs to any damage in the quarters are done without any cost to the workers. Interview with workers have confirmed that they are indeed satisfied and comfortable with the quarters provided.

ASA 3 6.6 Mill and estate workers are free to bargain collectively by forming groupings on their own to collectively bargain with the management of the mill or estates. There are no records of meetings between the management and the workers union since 13 April 2013 in Lestari estate. There is no update on meeting, if any, which have been carried out between management and workers. There is no representative from the estate who have joined Workers union. A minor NC raised.

ASA 3 6.7 The Child Employment Policy explicitly prohibits under-aged children from working in the company. The mill and estates adhere to this policy. There are no children below age of 18 working in the mill or estates and this was proven through the checking the list of employees as well as their bio-data and through field visits.

ASA 3 6.8 The Equal Opportunity policy is clearly displayed in the office and on the notice boards around the estates and mill. Both local and foreign workers enjoy the same scale of pay and provided with equal housing and work facilities. This was confirmed though interviews with workers from both the mill and estates and also through verification of contracts of service and pay slips of workers. No evidence of discrimination based on race, skin colour, religion, gender, national origin, ancestry, disability, marital status, and sexual orientation was found in both the mill and estates.

ASA 3 6.9 The Policy on Sexual Harassment, Violence and Reproductive Rights has been displayed at all estates and mill. This policy has also been communicated to all staff and workers and this was evident through the training records. Gender committees have been established in the mill and both the estates. A specific grievance mechanism for workers to voice their grievances with regards harassment of a sexual or violent nature has been established.

Under this mechanism, the aggrieved worker will lodge a complaint or grievance directly to the Chairperson of the Gender Committee and the chairperson will then bring this matter up with management of the estate or mill and this matter will be deliberated within closed doors in a meeting. Workers interviewed were aware of the policy against Sexual Harassment and Violence, the establishment of the gender committee at every operating unit and the specific grievance mechanism.

ASA 3 6.10 Perdana mill only receives FFB from its own estates. As such there is no specific contract for the estates due to the fact that the estates will deliver 100% of its FFB to the mill. The prices of FFB paid to the estates is in accordance with the prices set by the Kalimantan Timur Provincial Government and the records of past and present prices of FFB, CPO and PK are kept by the Marketing Department.

ASA 3 6.11 The mill and estates are committed and have contributed to local development. The Response and Requests logbook and letters of contributions detailing the type, purpose and amount of contributions were sighted in both operating units.





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Principle 7: Responsible Development of New Plantings

Criterion by Audit

Summary

Oil palm plantings are from the land purchased from the local communities. These lands have been previously planted with other crops such as rubber, cash crops and shrub land. Hence there were no new plantings involving forest land.

ASA 3 7.1 AMDAL and Dokumen Pengelolaan dan pemantauan Lingkungan – DPPL is made avilable. Reporting of every six month for both estates and mill through RKL/RPL.

ASA 3 7.2 Soil and topography maps are prepared by independent consultant. The maps are used in guiding the development and implementation of the operational activities to increase productivities.

ASA 3 7.3 The company carried out HCV assessments before planting. Assessments were carried out internally and verified by independent consultant. HCV areas and riparian buffer zones have been set-aside. Management and monitoring plans of HCV areas are conducted regularly by a dedicated person who has been trained on HCV prinicples. The HCV programmes is supported by the Sustainability Department.

ASA 3 7.4 There are no fragile soils identified in the concession. Management system to minimise and control erosion according to the recommendation of soil surveys, terracing and road maintenance programme is in place.

ASA 3 7.5 Compensation of value of land cultivated is based on free, prior informed consent and records are available for inspection.

ASA 3 7.6 The negotiation of the take over of land ownership has been conducted based on FPIC and document of compensation of land owner well recorded.

ASA 3 7.7 Zero burning policy is in place and implemented. Principle 8: Commitment to Continuous Improvement in Key Areas of Activity

Criterion by Audit

Summary

All the operating units are regularly monitoring and review their activities and develop and implement action plans that allow demonstrable continual improvement in key operations such as in minimizing use of certain pesticides, environmental impacts, maximizing recycling and minimizing waste or by-products generation and pollution prevention plans.

ASA 3 8.1 The mill and estates have programmes in place to continually reduce their pesticide and herbicide usage, wastes generated and pollution. Wastes are being converted into fertilizers such as EFB for EFB mulching in the field, old tires being used for land and garden beautification projects. Environmental and social impact assessments are conducted to ensure that negative environmental and social impacts are being reduced and mitigated.





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4.3 Non-conformity Raised During this Audit and Any from the Previous Year, if applicable

This section gives an over view of new or revised non-conformities raised during this audit and of action taken to close out non-conformities raised during the previous audits, if applicable

If a minor-non-conformity raised at the last audit, is not closed out, then this will be raised to Major status and the company given 60 days to close this out.

The NC number is comprised of 2 parts to include the year in which the NC was raised as well as a sequential number.

4.3.1 Non-Conformities Identified during this Audit

The following NC’s were raised for this audit.

NC number: 01/2014

Client name: PT Rea Kaltim Plantation

Date raised: 10.04.2014

Major or Minor: Major (Closed)

Raised by: Simon

Aspect of standard: 4.7 An occupational health and safety plan is documented, effectively communicated and implemented

Evidence of non-conformity:





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Overall, the implementation of Safety and Health has not been fully covered,

There are several evidences sighted during the audit as follows:

1) The First Aid Kit available in the field with the herbicide sprayers is not sufficient for the risks

associated with the task eg. Risk of chemical touching the eye is high.

2) There are flammable materials in the workshop without danger signs.

3) In the herbicide mixing room in Lestari Estate, there is no emergency eye wash available, and the

emergency shower is locked and is not easy to access.

4) Storage of LPG and Acetylene in the workshop needs to be improved. There is no sign of

flammable, and unable to identify which tank is empty and which is new/unused.

5) In the workshop the Drum High Density PA used for diesel storage is kept on the ground and there

is a risk of contamination, as a result.

6) In the mill there is no guards on moving machinery (fibre screw)

7) The latest risk assessment dated March 2013 does not include all operations. Example: No risk

assessment carried out for PELUMAS (oil) store operator, who sits inside the store for 7 hours a day.

Work place for this operator inside the store maybe exposed to high risk of contamination.

8) No records of safety training conducted for workers level. Training is provided by HR Department

only for mandore or supervisors. Example: The workshop workers and harvesters have no training

records.

Auditors Signature

Date 10.04.2014

Evidence of conformity: The company has developed a new SOP entitled 'Prosedur Fasilitas Petolongan Pertama pada kecelakaan'. Point 6.3.2 of this SOP states that all mandors and supervisors working in the field must carry a first aid kit, the contents of which is suited to the risks associated with the type of work. The content of the first aid kits to be brought to the field is listed in Annex 2 of the SOP. Flammable signs to warn workers of the danger are now displayed at the Oxygen and Acetylene gas stored in the workshops. Eye washers have been ordered and purchase order is evident. Separate storage area has been allocated with clear identifiable labels are in place. Procedures have been revised for distributing fuel stored in large tanks to heavy machinery in the field. Once the HDPA drums have been filled with fuel they are immediately transferred to the field in a suitable vehicle, without placing the HDPA drum on the bare ground. Once re-fuelling has taken place the drum is returned to the store, where it is placed on a wooden pallet to prevent contact with the bare ground. The company has engaged 3 consultants from Qualitas Logistics Services, Malaysia, conducted a detailed OHS risk assessment for all of REA's mills and estates. All moving machinery which should have guards but which does not have guards at present was identified in a detailed report that was communicated to all relevant managers, including the new Safety Manager who joined REA on 24th April. The Hazard Identification, Risk Assessment & Determining Control (HIRADC) for all work activities and areas was updated by the new Safety Manager, with input from the QLS consultants. This now includes the risk of the fuel store operator suffering from inhalation of fumes if they spend too long inside the fuel store.





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Non Staff & Daily workers have been included in the training matrix prepared by the Human Resources Department. All workers (including sprayers, harvestors, store keepers, maintenance, workshop etc) are provided with regular, on the job safety training. A summary of the material covered is included. With all above evidence, this Major NC is now closed.

Auditors Signature

Date 04-06-2014

NC number: 02/2014



Major or Minor: Major

Raised by: Simon

Aspect of standard 5.3.2 Estates and mills waste management and disposal are implemented to avoid or reduce pollution.


It was found the hazardous waste such as empty lubricant can, thinner can disposed to final rubbish disposal (TPSA/land fill) in Sentekan estate and Organic waste and an organic waste are still mixed at TPSA/landfill in Sentekan estate Auditors Signature

Date 10.04.2014

Evidence of conformity: The company decides to review their management plan concerning domestic waste and as immediate action, separating hazardous and non-hazardous waste has been carried out and kept separated. Ensure that every housing unit/long house has a separate area for disposing of organic vs inorganic waste which is clearly marked - included in the routine maintenance schedule. This will be further evaluated on next surveillance assessment. Therefore, this Major NC is now closed.

Auditors Signature

Date 04-06-2014

NC number: 03/2014



Major or Minor: Minor

Raised by: Simon

Aspect of standard 4.1 Operating procedures are appropriately documented and consistently implemented and monitored.


The PPMD co-operatives do not have procedures for including and excluding members of the co-

operative into the scope of the RSPO certification. Auditors Signature Date 05/09/2013





Tel: +603-3377 1600 / 1700

NC number: 04/2014




Raised by: Simon

Aspect of standard - 4.6.3

Documentary evidence that usage of agrochemicals is appropriate for the target species, given at correct dosage and applied by trained personnel in accordance to the product label and storage instructions.


No record of chemical training conducted at estate for the sprayers. Evidence: Sprayer name, Darmawati is not

trained for Chemical Handling.

Auditors Signature Date

NC number: 05/2014




Raised by: Simon

Aspect of standard – 6.6

The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel


There are no records of meetings between the management and the workers union since 13 April 2013 in Lestari estate. There is no update on meeting, if any, which have been carried out between management and workers. There is no representative from the estate who have joined Workers union.

Auditors Signature Date

4.3.2 Non-Conformity Identified during the last ASA, not applicable for MA

The following NC’s were raised during the last audit and the status was reviewed as indicated below.

NC number: 2013-01

Client name: PT REA Kaltim [Perdana POM]

Date raised: 29/03/13


Raised by: Simon Selvaraj

Aspect of standard: 1.2.1 Information requests and responses must include any relevant or required documentation, in accordance with applicable national laws, such as: i) Legal: • Land titles/user rights (Site Permit Izin Lokasi), • Plantation Operation Permit (Izin Usaha Perkebunan). • Land Use Title (Hak Guna Usaha). • Or other documentation relating to application of Land Use Title in accordance with relevant procedures). ii) Environmental: • Environmental and social impact Assessment (AMDAL / UKL-UPL) and environmental management and monitoring reports. (Laporan RKL-RPL) iii) Social: • Documentation of social activities and community programs. • Health and Safety Plan. • Continuous improvement plan.





Tel: +603-3377 1600 / 1700

Evidence of non-conformity: There was an absence of a list of documents that can be made publicly available and a list of documents or information that needs to be kept confidential.

Auditors Signature

Date 29/3/2013

Evidence of conformity: During this surveillance audit, it was sighted that the list has been updated and document names are listed that can be available for public view. This includes non-confidential and confidential documents. With this the Minor is now closed.

Auditors Signature

Date 07-04-14

NC number: 2013-02




Raised by: Simon Selvaraj

Aspect of standard: 4.7.1 Evidence of a documented occupational safety and health (OSH) policy and its implementation

Evidence of non-conformity: During the mill inspection visits, it was discovered that workers were not wearing the required PPE such as safety helmets, gloves and also face masks (for welding activities).

Auditors Signature

Date 29/3/2013

Evidence of conformity: During this surveillance audit, it was sighted all workers was wearing PPE and memo on immediate action noted dated 10-04-2013 which emphasize wearing of PPE. The PPE issuance was counter checked and found to be updated and in line with worker’s interview. Therefore, this Minor NC is closed.

Auditors Signature

Date 07-04-14

NC number: 2013-03






RSPOPC-SUM-REPORT.F01 J