PT. PP London Sumatra Indonesia Plantation Tbk. - Begerpang Mill and Its Supply Bases

Transcription

1 2 nd Annual Surveillance Audit for PT. PP London Sumatra Indonesia Plantation Tbk. - Begerpang Mill and Its Supply Bases FMS40033 RSPO Member Name: PT. PP London Sumatra Indonesia Tbk. RSPO Membership Number: Audited Address: Begerpang Mill Batu Lokong Village, Galang District, Deli Serdang Regency, North Sumatera Indonesia Its supply bases: Begerpang Estate Batu Galang Village, Galang District, Deli Serdang Regency, North Sumatera Indonesia Sei Merah Estate Tanjung Morawa, Deli Serdang Regency, North Sumatera Indonesia Rambong Sialang Estate Sei Rampah District, Serdang Bedagai Regency, North Sumatera Indonesia Date of audit : 31 July 04 August 2017 Date of follow up : 22 September 2017 COMMERCIAL- IN CONFIDENCE I The contents of this report must not be disclosed to a third party without the agreement of the SAI Global Client Doc ID: 3843 / Issue Date May 2014 SAI Global Limited Copyright ABN Page 1 of 224

2 Table of contents Page Executive Overview 4 Abbreviations Used SCOPE OF THE ASSESSMENT Introduction Audit Objective Scope of Certification Location of Mill and Estates Description of Supply Base Date of Plantings Area of plantation Approximate tonnages offered for certification (CPO and PK) Organizational information/contact person Time bound plan for other management units Other certificates held Partial Certification Requirements Date of Issue of Certificate dan Date of Previous Assessment AUDIT PROCESS Certification Body Audit Methodology Qualification of the Lead Auditor and Audit Team Members Stakeholder Consultation Date of Next Surveillance Visit AUDIT FINDINGS Action taken on previous audit issues Claim and use of certification mark and or logo Description of audit findings Recommendation Environmental and social risk for this scope of certification for 189 planning of the surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Signoff of Assessment Findings 189 Audit Report List of Tables Page 1 Mill and Estates GPS Locations 9 2 Estimated FFB Production of the supply base 9 3 Age Profiles of Planted Palms 19 4 Land use description of Estates in Estates and Area Planted in Estate FFB Production Trend Mill Total CPO and PK Production of and Estimate 21 Production of Mill Production of CPO and PK derived from Estates FFB in Estimated Mill Production of CPO and PK from Estates FFB in Delivery of Certified and Non Certified Product RSPO Certification Time Bound Plan 25 WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 2 of 224

3 12 Certificates Held by Mill and Estates List of internal and external stakeholder 36 List of Figures Page 1 Map of Mill and Estates Location 11 2 Map of Begerpang Estate Location (1) 12 3 Map of Begerpang Estate Location (2) 13 4 Map of Begerpang Estate Location (3) 14 5 Map of Sei Merah Estate Location 15 6 Map of Rambong Sialang Estate Location (1) 16 7 Map of Rambong Sialang Estate Location (2) 17 8 Map of Rambong Sialang Estate Location (3) 18 List of Appendices Page A Audit Record 190 B Previous nonconformities, corrective actions and status 193 C Nonconformities, Corrective Actions and Observations 215 Summary D Stakeholder s issues and comment 218 E Definition of, and action required with respect to audit findings 223 RSPO PC F Definition of, and action required with respect to audit findings RSPO SC 224 Audit Report WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 3 of 224

4 Executive Overview This is 2 nd annual surveillance audit. SAI Global has audited Begerpang Mill, PT. PP London Sumatra Indonesia Plantation (LSIP) Tbk. and its supply bases operations comprising one mill, three palm palm estates, support services and infrastructure. There are 2 Major Non-conformities identified during this surveillance audit, one of a recurrence Major NCR of from special audit and ASA-1. Follow up audit (off-site) conducted on 22 September 2017 to review the corrective action taken to the Major Non-conformities. At the conclusion of this audit, Begerpang Mill, PT. PP. LSIP Tbk. and its supply bases operation complies with the requirements of the Indonesian National Interpretation of RSPO Principles and Criteria 2013 (Endorsed by the RSPO Board of Governors, September 2016) and the RSPO Supply Chain Certification Standard, Module D CPO Mill: Indentity Preserved, version November 2014 when the Major NCR can be closed in within due date. The recommendation from this audit is that PT. PP. LSIP Tbk. - Begerpang Palm Oil Mill continued as a producer of RSPO Certified Sustainable Palm Oil and Palm Kernel Identity Preserved Model. Estimated tonnage of certified CPO produced Estimated tonnage of certified PK produced : 54,145 MT : 13,973 MT Summary of net GHG emissions The Mill has calculated the net GHG emissions using The RSPO Palm GHG Calculator Version and that data inputs are verified to be accurate. Capturing the information about summary of net GHG emissions, summary of field emissions and sinks, and summary of mill emissions and credits. Emissions per Product tco 2e/ton Product CPO 0.5 PK 0.5 Land use ha OP planted area OP planted on peat 0 Conservation (forested) Conservation (non-forested) Total 11, Production ton/year FFB processed 227,177,65 CPO Produced 55, PK Produced 14, Extraction % OER KER 6.40 WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 4 of 224

5 Summary of field emissions and sinks Own Crop Group 3rd Party Total tco2e tco2e/ tffb tco2e tco2e/t FFB tco2e tco2e/tf FB tco2e tco2e/ tffb Emissions Land Conversion 103, *CO2 Emissions 7, from Fertilizer **N2O Emissions 12, Fuel Consumption 3, Peat Oxidation Sinks Crop Sequestration -101, Conservation Sequestration Total 25, Summary of mill emissions and credits tco 2e tco 2e/tFFB Emissions POME 9, Fuel Consumption Grid Electricity Utilization 0 0 Credits Export of Grid Electricity Sales of PKS 0 0 Sales of EFB 0 0 Total 9, Palm Oil Mill Effluent (POME) Treatment: Divert to compost 70% Divert to anaerobic digestion 30% POME Diverted to Anaerobic Digestion: Divert to anaerobic pond 100% Divert to methane capture (flaring) 0% Divert to methane capture (electricity generation) 0% WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 5 of 224

6 Abbreviations Used AK3U AMDAL AME BGE BHL BKM BLH BLRS BOD BPN COD CPO CSR DO EFB EMS EWS FFB GAPKI GPS Ha HCV HGU GHG HIPERKES HO IDN IPM ISCC ISO ISPO Jamsostek Kepmen KTU LA LD LSU LTI MCU MSDS MT NCR NGO OAD OER OHS OHSAS P2K3 P&C Occupational Health and Safety Expert (Ahli K3 Umum) Environmental Impact Analysis (Analisis Dampak Lingkungan) Area Manager Engineering Begerpang Estate Daily worker (Buruh Harian Lepas) Log book of group leader activity (Buku Kegiatan Mandor) Environmental Agency (Badan Lingkungan Hidup) Bah Lias Research Biological Oxygen Demand National Land Agency (Badan Pertanahan Nasional) Chemical Oxygen Demand Crude Palm Oil Corporate Social Responsibility Delivery Order Empty fruit bunch Environmental Management System Early Warning System Fresh Fruit Bunch Indonesian Palm Oil Association (Gabungan Pengusaha Kelapa Sawit Indonesia) Global Positioning System Hectare High Conservation Value Land Use Title (Hak Guna Usaha) Green House Gases Industrial Hygienist Head Office Indonesia Integrated Pest Management International Sustainability Carbon Certification International Standards Organisation Indonesia on Sustainable Palm Oil Man Power Social Assurance (Jaminan Sosial Tenaga Kerja) Degree of Man Power Ministry (Keputusan Menteri Tenaga Kerja) Head of Administration (Kepala Tata Usaha) Land Application Lethal Dosage Leaf Sampling Unit Loss Time Incident Medical Check-Up Material Safety Data Sheet Metric Ton Non Conformance Report Non-Government Organisation Operation Administration Department Oil Extraction Rate Occupational Health and Safety Occupational Health and Safety Assurance Services OHS Committee Principle and Criteria WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 6 of 224

7 PEL Environmental Evaluation Presentation (Penyajian Evaluasi Lingkungan) Permen/Permenaker Regulation of Man Power Ministry (Peraturan Menteri Tenaga Kerja) Permentan Regulation of Agricultural Ministry (Peraturan Menteri Pertanian) PK Palm Kernel PKB Joint Working Agreement (Perjanjian Kerja Bersama) PKWT Contracted worker (Pekerja Waktu Tertentu) POM Palm Oil Mill POME Palm Oil Mill Effluent PP Government Regulation (Peraturan Pemerintah) PP LSIP Perusahaan Perkebunan London Sumatra Indonesia Plantation PPE Personal Protective Equipment PUK Caretaker Unit (Pengurus Unit Kerja) QC Quality Control R&D Research and Development RABQSA Quality Society of Australia RSE Rambong Sialang Estate RKH Daily Work Plan (Rencana Kerja Harian) RKL Environmental Management Plan (Rencana Pengelolaan Lingkungan) RPL Environmental Monitoring Plan (Rencana Pemantauan Lingkungan) RSPO Roundtable on Sustainable Palm Oil SCCS Supply Chain Certification System SG Segregation SIA Social Impact Assessment SIO Operator Lisence (Surai Ijin Operasi) SME Sungai Merah Estate SMK3 Occupational Health and Safety Management System (Sistem Manajemen Kesehatan dan Keselamatan Kerja) SPSI Indonesian Worker Union (Serikat Pekerja Seluruh Indonesia) SOP Standard Operational Procedure UKL Environmental Management Effort (Upaya Pengelolaan Lingkungan) UPL Environmental Monitoring Effort (Upaya Pemantauan Lingkungan) Walhi (Wahana Lingkungan Hidup Indonesia) WWF World Wild Fund WWTP Waste Water Treatment Plant WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 7 of 224

8 1.0 SCOPE OF THE ASSESSMENT 1.1 Introduction SAI Global conducted the 2 nd annual surveillance audit on 31 July 04 August 2017 at PT. PP. LSIP Tbk. Begerpang Mill and its supply base. The purpose of this audit report is to summarise the degree of compliance with the relevant criteria, as defined on the cover page of this report, based on the evidence obtained during the audit of your organisation. Follow up audit (off-site) conducted on 22 September 2017 to review the corrective action taken to the Major Nonconformities. SAI Global audits are carried out within the requirements of SAI Global procedures that also reflect the requirements and guidance provided in the international standards relating to audit practice such as ISO/IEC 17021, ISO 19011, RSPO Certification System, relevant RSPO Supply Chain Certification System and other normative criteria. SAI Global Auditors are assigned to audits according to industry, standard or technical competencies appropriate to the organisation being audited. Details of such experience and competency are maintained in our records. The audit team is detailed in the attached audit record. In addition to the information contained in this audit report, SAI Global maintains files for each client. These files contain details of organisation size and personnel as well as evidence collected during preliminary and subsequent audit activities (Documentation Review and Scope) relevant to the application for initial and continuing certification of your organisation. Details of your primary contact persons and their contact details and site addresses are also maintained. Please take care to advise us of any change that may affect the application/certification or may assist us to keep your contact information up to date, as required by SAI Global Terms and Conditions. Please note that this report is subject to independent review and approval. Should changes to the outcomes of this report be necessary as a result of the review, a revised report will be issued and will supersede this report. 1.2 Audit Objective The purpose of this audit was to determine continuing compliance of your organization s management system with the audit criteria; and it s effectiveness in achieving continual improvement and system objectives in accordance with Indonesian National Interpretation of RSPO Principles and Criteria 2013 (Endorsed by the RSPO Board of Governors 2016) and RSPO Supply Chain Standard Also to verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers, and the implementation of any processing controls. 1.3 Scope of certification The scope of certification is the CPO production from one (1) Palm Oil Mill and three (3) FFB supply bases owned by PT. PP. LSIP Tbk. WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 8 of 224

9 1.4 Location of mill and estates Palm Oil Mill Begerpang Mill, PT. PP. LSIP Tbk. Location Audit Report : Batu Lokong Galang District, North Sumatera Province, Indonesia GPS Location : East ' and North ' Mill Capaity Oil Palm Estate Begerpang Estate, PT. PP. LSIP Tbk. Location : 50 MT FFB/hour : Galang District, North Sumatera Province, Indonesia GPS Location : East ' and North ' Sei Merah Estate, PT. PP. LSIP Tbk. Location : Tanjung Morawa, North Sumatera Province, Indonesia GPS Location : East ' and North ' Rambong Sialang Estate, PT. PP. LSIP Tbk. Location : Sei Rampah District, North Sumatera Province, Indonesia GPS Location : East ' and North ' Table 1: Mill and Estates GPS Locations MILL AND ESTATE EASTING RTHING Begerpang Mill ' ' Begerpang Estate ' ' Sei Merah Estate ' ' Rambong Sialang ' ' Description of supply base Table 2: Estimated FFB Production of the supply base in January December 2017 ESTATE PRODUCTION AREA (HA) ESTIMATED FFB PRODUCTION (TON/YEAR)* Begerpang 5, , Sei Merah 1, , WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 9 of 224

10 ESTATE PRODUCTION AREA (HA) ESTIMATED FFB PRODUCTION (TON/YEAR)* Rambong Sialang 4, , Total 11, , *Note: OAD PT LSIP, July 2017 WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 10 of 224

11 Figure 1: Map of Mill and Estates Location WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 11 of 224

12 Figure 2: Map of Begerpang Estate Location (1) WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 12 of 224

13 Figure 3: Map of Begerpang Estate Location (2) WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 13 of 224

14 Figure 4: Map of Begerpang Estate Location (3) WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 14 of 224

15 Figure 5: Map of Sei Merah Estate Location WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 15 of 224

16 Figure 6: Map of Rambong Sialang Estate Location (1) WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 16 of 224

17 Figure 7: Map of Rambong Sialang Estate Location (2) WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 17 of 224

18 Figure 8: Map of Rambong Sialang Estate Location (3) WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 18 of 224

19 1.6 Date of plantings Table 3: Age Profiles of Planted Palms in 2017 Year Begerpang Estate Sei Merah Estate Rambong Sialang Estate Total % of Planted Area % % % % % % % % % % , % % % % % % % 2005* % 2006* % 2007* - - 1, , % 2008* % 2009* % 2010* % 2011* % 2012* % 2013* % 2014* % Mature 5, , , , % 2014* % 2015* % Immature % Total 5, , , , % Source : OAD PT LSIP, August 2017 *) Replanting WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 19 of 224

20 1.7 Area of plantation Land use Table 4: Land use description in 2017 Begerpang Estate Sei Merah Estate Area (ha) Rambong Sialang Estate Total Mature area 5, , , , Immature area Total of planted area 5, , , , Emplacement and Mill Nursery Other area (enclave, water ponds, land with slope >30%)* Ready for planting untuk Oil Palm (Replanting) Toll road development Total of non-planted area , Total leased area 5, , , , HCV Area (included in planted area Source: OAD PT LSIP, August Table 5: Estates and Area Planted in 2017 ESTATE MATURE (HA) IMMATURE (HA) Begerpang 5, Sei Merah 1, Rambong Sialang 4, Approximate tonnages offered for certification (CPO and PK) Table 6: Estate FFB Production Trend YEAR Actual Production (MT) Begerpang Sei Merah Rambong Total Estate Estate Sialang Estate ,00 42, , , , , , , , , , , WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 20 of 224

21 YEAR Actual Production (MT) Begerpang Sei Merah Rambong Total Estate Estate Sialang Estate ,018,78 36, , , , , , , Source: OAD PT LSIP, August 2017 Table 7: Mill Total CPO and PK Production of and Estimate Production of Supply Base FFB Processed (MT) CPO Production (MT) OER (%) PK Production (MT) KER (%) Actual Production July 2016 June 2017 Begerpang Estate 99,479 24, % 6, % Sei Merah Estate 33,492 8, % 2, % Rambong Sialang Estate 98,085 23, % 6, % Total actual production 231,056 56, % 14, % Other Supply Bases Estimated Production July 2017 June2018 Begerpang Estate 94,474 23, % 6, % Sei Merah Estate 31,844 7, % 2, % Rambong Sialang Estate 92,059 22, % 5, % Total estimated production 218,378 54, % 13, % Other Supply Bases WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 21 of 224

22 Table 8: Mill Production of CPO and PK derived from Estates FFB in Month 2016 Begerpang Estate Sei Merah Estate Total FFB (MT) CPO Produced (Ton) PK Produced (Ton) Rambong Sialang Estate Total Begerpang Estate Sei Merah Estate Rambong Sialang Estate Total Begerpang Estate Sei Merah Estate Rambong Sialang Estate July 7,882 2,923 9,896 20,701 1, ,408 5, ,282 August 9,032 2,982 10,068 22,081 2, ,491 5, ,352 September 11,172 3,901 12,310 27,383 2, ,021 6, ,690 October 9,392 3,045 9,894 22,331 2, ,438 5, ,480 November 8,581 2,798 8,647 20,026 2, ,119 4, ,308 December 10,091 3,421 9,388 22,900 2, ,269 5, , January 6,775 2,417 5,473 14,664 1, ,327 3, February 6,605 2,433 5,091 14,129 1, ,240 3, March 7,614 2,425 6,307 16,346 1, ,531 3, ,086 April 6,901 2,387 5,653 14,941 1, ,368 3, May 7,724 2,506 7,151 17,381 1, ,718 4, ,093 June 7,711 2,255 8,208 18,174 1, ,010 4, ,130 Total 99,479 33,492 98, ,056 24,265 8,168 23,941 56,374 6,416 2,160 6,303 14,879 Source: OAD PT LSIP, August 2017 Total WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 22 of 224

23 Table 9: Estimated Mill Production of CPO and PK from Estates FFB in Month 2017 Begerpang Estate Sei Merah Estate Total FFB (MT) CPO Produced (Ton) PK Produced (Ton) Rambong Sialang Estate Total Begerpang Estate Sei Merah Estate Rambong Sialang Estate Total Begerpang Estate Sei Merah Estate Rambong Sialang Estate July 8,971 2,626 10,511 22,109 2, ,607 5, ,415 August 9,267 2,517 10,622 22,406 2, ,634 5, ,434 September 9,944 3,174 12,274 25,392 2, ,044 6, ,625 October 9,348 2,747 8,689 20,785 2, ,155 5, ,330 November 7,511 2,844 7,418 17,773 1, ,840 4, ,137 December 8,935 3,349 6,865 19,149 2, ,703 4, , January 5,809 2,420 4,417 12,646 1, ,094 3, February 5,446 2,048 4,505 11,999 1, ,116 2, March 6,451 2,522 5,919 14,891 1, ,468 3, April 7,282 2,279 6,325 15,886 1, ,567 3, ,016 May 7,064 2,329 6,210 15,604 1, ,539 3, June 8,446 2,989 8,304 19,739 2, ,060 4, ,264 Total 94,474 31,844 92, ,378 23,424 7,895 22,826 54,145 6,045 2,037 5,891 13,973 Source: OAD PT. LSIP, August 2017 Total WORK ITEM: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 23 of 224

24 Based on the above figures, the estimated of certified CPO and PK offered in for certification are: Estimated tonnage of certified CPO produced Estimated tonnage of certified PK produced : 54,145 MT : 13,973 MT Table 10: Delivery of Certified and Non Certified Product CPO (MT) PK (MT) Month Other Non Other Non RSPO RSPO Certified CSPO Certified CSPKO 2016 July - - 3, August - - 6, , September - - 6, , October - - 5, , November - - 5, , December - - 5, , January - - 3, , February - - 3, March - - 3, , April - - 3, May - - 3, , June - - 4, , Total , , , Organizational information/contact person PT. PP. LSIP Tbk. Jl A. Yani No.2 Medan Phone : (+62-61) Fax : (+62-61) Contact person : Mr Muhammad Waras Head of Environmental and CSR Muhammad.Waras@londonsumatra.com 1.10 Time bound plan for other management units PT. PP LSIP Tbk. committed to RSPO certification of all its Management Units located in North Sumatera, South Sumatera and East Kalimantan. Time bound plan has been developed to achieve the RSPO certification for all its Management Units and Plasma by 2016 and revised in July The plan is detailed on Table 11. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 24 of 224

25 Table 11: RSPO Certification Time Bound Plan Name of Mill Turangie Dolok Gunung Malayu Begerpang Pahu Makmur Belani Elok Arta Kencana Sei Lakitan Gunung Bais Terawas Mill Address Langkat, Sumatera Utara Batubara, Sumatera Utara Asahan, Sumatera Utara Deli Serdang, Sumatera Utara Kutai Barat, Kalimantan Timur Musi Rawas, Sumatera Selatan Lahat, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Name of Supply Base Plantation Turangie Pulo Rambong Bungara Dolok Sibulan Bah Bulian Bah Lias Gunung Malayu Sei Rumbiya Begerpang Sei Merah Rambong Sialang Pahu Makmur Isuy Makmur Kedang Makmur Belani Elok Bukit Hijau Batu Cemerlang Ketapat Bening Sei Kepayang Arta Kencana Kencana Sari Sei Lakitan Riam Indah Sei Gemang Gunung Bais Eka Sari Region (Plasma) Estate Address Langkat, Sumatera Utara Batubara, Sumatera Utara Serdang Bedagai, Sumatera Utara Simalungun, Sumatera Utara Asahan, Sumatera Utara Labuhanbatu, Sumatera Utara Deli Serdang, Sumatera Utara Serdang Bedagai Kutai Barat, Kalimantan Timur Musi Rawas, Sumatera Selatan Lahat, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Time Bound Remarks 2014 Certified on 9 January Certified on 19 August Certified on 23 July Certified on 10 August Stage Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 25 of 224

26 1.11 Other certificates held The organisation has implemented quality, environmental, and occupational health and safety management system based on ISPO certification. The details of its certification held are shown in the following table. Table 12: Certificates Held by Mill and Estates MILL/ESTATE Begerpang Mill, Begerpang Estate, Rambong Sialang Estate, and Sei Merah OTHER CERTIFICATION HELD Indonesia Sustainable Palm Oil by PT SAI Global Indonesia, Certificate Number is FMS40036, valid through in Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 26 of 224

27 1.12 Partial Certification Requirements CERTIFICATION SYSTEM/ SUMMARY OF FINDINGS Organizations 1 that have a majority 1 holding in and / or management control of more than one autonomous company growing oil palm will be permitted to certify individual management units and/or subsidiary companies only if all the following are complied with: 1 1 For groups with complex management structures the following are required: (a) A statement of the ultimate controlling shareholders and directors in the managing agency company/companies. (b) Ditto in respect of each of the operating groups. (c) Application for membership by the top asset owning company/companies. (d) Application for membership by the managing agency company/companies. a. Is the management structure of the group complex? If the answer to question a above is yes, check the following b-e check items b. Is there a statement of the ultimate controlling shareholders and directors in the managing agency company/companies c. Is there a statement of the ultimate controlling shareholders and directors in each operating group d. Is there application for membership by the top asset owning company/companies e. is there application for membership by the managing agency company/companies Annual Report PT. PP. LSIP Tbk in The management structure of the group is not complex. PT PP LSIP Tbk 59.5% owned by SIMP Tbk, 40.4% by Public, and 0.1% by IndoAgri. 2 RSPO membership a. The parent organization or one of its majority 1 owned and / or managed subsidiaries are member of RSPO. The requirements (b) to (j) will be applicable, whether the YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 27 of 224

28 CERTIFICATION SYSTEM/ registered RSPO member is the holding company or one of its subsidiaries; 1. Does the parent organisation or one Annual Report PT. PP. LSIP Tbk in of its majority 1 owned and / or managed subsidiaries is member or RSPO? 2. State organisation who is member of RSPO 3. State RSPO membership number of the above organisation(s) SUMMARY OF FINDINGS PT PP LSIP Tbk 59.5% owned by SIMP Tbk, 40.4% owned by Public, and 0.1% owned by IndoAgri. RSPO Member Name: PT PP London Sumatra Indonesia Tbk. RSPO Membership number: Audit Report 3 Time bound plan b. A challenging time-bound plan for certifying all its relevant entities 2 is submitted to the Certification Body (CB) during the first certification audit. The time-bound plan should contain a list of subsidiaries, estates and mills. The Certification Body will be responsible for reviewing the appropriateness of this plan 3, taking into account comments received from stakeholders following the public consultation process. Progress towards this plan will be verified and reported on in subsequent annual surveillance assessments (see Annex 4). Where the Certification Body conducting the surveillance audit is different from that which first accepted the time-bound plan, the later Certification Body shall accept the appropriateness of the time-bound plan at the moment of first acceptance and shall only check continued appropriateness. 1. Is there a challenging time-bound plan for certifying all its relevant entities 2 submitted to CB during the first certification audit? 2. Is the time-bound plan containing list of subsidiaries, estates and mills? 3. Are there comments received from stakeholders following the public consultation process relevant to the time-bound plan? 4. Taking into account comments in the point 3 above, are the time-bound plan appropriate/continued to be appropriate? 5. How is the progress towards this - The updated time-bound plan in April Public consultation on 28 April 2017 There was a challenging TBP for all its relevant entities. TBP was containing list of subsidiaries (estates and mills). The last update in April 2016 and progress according to plan. There was no complaint during public consultation. YES YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 28 of 224

29 CERTIFICATION SYSTEM/ plan? SUMMARY OF FINDINGS c. Any revision to the time-bound plan or to the circumstances of the company shall cause the plan to be reviewed (as provided for in the guidance on surveillance assessments, Annex 4) for whether it is still appropriate, such that changes to the time-bound plan are permitted only where the organisation can demonstrate that they are justified. The requirements will also apply to any newly acquired subsidiary from the moment that the company is legally registered with the local notary or chamber of commerce (or equivalent). 1. Is the any revision to the time-bound plan or to the circumstances of the company? 2. When there is revision as indicated in the point 1 above, has the plan reviewed whether it is still appropriate? 3. Can the organisation demonstrate that the revisions to the time-bound are justified? 4. Is there any newly acquired subsidiary that already legally registered with the local notary of chamber of commerce (or equivalent)? 5. Are the time-bound plans including the above newly acquired subsidiary? - The updated time-bound plan in April 2016 No revision of the TBP since the last audit until this audit. d. Where there are isolated lapses in implementation of a time-bound plan, a minor non-compliance is raised. Where there is evidence of systematic failure to proceed with implementation of the plan, a major non-compliance is raised. 1. Are there isolated lapses in implementation of a time-bound plan? Raise minor non-compliance if found - The updated time-bound plan in April 2016 No isolated lapses in implementation of the TBP since the last audit until this audit. YES 2. Is there systematic failure to precede implementation of the plan? Raise YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 29 of 224

30 CERTIFICATION SYSTEM/ major non-compliance if found SUMMARY OF FINDINGS 4 Requirements for uncertified management units and/or holdings e. No replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3. Any new plantings since January 1st 2010 must comply with the RSPO New Plantings Procedure (Annex 5). f. Land conflicts, if any, 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. g. Labour disputes, if any, are being resolved through a mutually agreed process, in accordance with RSPO criterion 6.3. h. Legal non-compliance, if any, are being resolved in accordance with the legal requirements, with reference to RSPO criteria 2.1 and 2.2. i. Certification bodies will assess compliance with these rules for partial certification at each and every assessment of any of the management units (see Annex 4). Assessment of compliance with requirements (e) (h) by the certification body based on self-declarations only by the Company, with no other supporting documentation, will not be acceptable a. Is there any verification compliance for uncertified management units and or holdings of requirements e-f above e.g. through self-assessment (i.e. internal audit). b. Has the verification covered all requirements of e-f above? c. Based on the result of verification in point 1 and 2 above, please indicate is there any: i. Replacement of primary forest or any area containing HCV or required to maintain or enhance HCV in line with RSPO criterion 7.3? ii. Are there new planting since January 1 st RSPO Internal Audit at Pahu Makmur Mill and its supply bases, date on March RSPO Internal Audit at Artha Kencana Mill and its supply bases, date on March RSPO Internal Audit at Belani Elok and its supply bases, date on March RSPO Internal Audit at Sei Lakitan Mill and its supply bases, date on March RSPO Internal Audit at Terawas Mill and its supply bases, date on March RSPO Internal Audit at Gunung Bais Mill and its supply bases, date in March Based on internal audit at uncertified management units (mill and its supply bases), such as Pahu Makmur Mill, Arta Kencana Mill, Sei Lakitan Mill, Gunung Bais Mill, and Terawas Mill there were found that the companies: No replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs No land conflicts No labour disputes There were new planting since January 1 st 2010 which was comply with RSPO NPP for Pahu Makmur, Kedang Makmur, and Indah Permai Estate. NPP reports approved by RSPO date on 17 June 2016 (Pahu Makmur and Kedang Makmur Estate) and 31 May 2016 (Indah Permai Estate). Several non-conformances of the RSPO internal audit were regulation compliance still in progress with other parties. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 30 of 224

31 CERTIFICATION SYSTEM/ which was not comply with RSPO NPP? iii. iv. Guidance Land conflict, which was not being resolved through a mutually agreed process in accordance with RSPO criteria 6.4, 7.5 and 7.6? Labour dispute, which was not being resolved through a mutually agreed process in accordance with RSPO criterion 6.3 v. Legal non-compliance, which are not resolved in accordance with the legal requirements, with reference to RSPO critera 2.1 and 2.2 d. Are there targeted stakeholder consultation carried out by other CB? e. Considering all the above data is there necessary to conduct further targeted stakeholder consultation or filed inspection? 2017 SUMMARY OF FINDINGS For requirements (e) (h), the approach to defining major and minor non-compliance can be applied from the relevant national interpretation. For example, if non-compliance against a major indicator in a non-certified holding/management unit is identified, the current certification assessment cannot proceed to a successful conclusion until that is addressed. Failure to address any of the requirements (e)-(h) may lead to certification suspension(s) (consistent with the RSPO Certification Systems document rules on non-compliance). Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 31 of 224

32 CERTIFICATION SYSTEM/ SUMMARY OF FINDINGS 2 Relevant entities including both the business units and parent company(ies) commitment to RSPO, membership status and involvement with palm oil for each subsidiary 1 Majority shareholding: the largest shareholding. Where the largest shareholdings are equal (e.g. 50/50) this applies to the organisation that has management control. 3 in particular, that the time scale is sufficiently challenging, taking into account circumstances around each entity Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 32 of 224

33 1.13 Date of issue of certificate and date of previous assessment Date of issue of certificate: 23 July 2015 Date of previous audit: July 2016 (ASA1) and 30 March 2017 (Special Audit) 2.1 Certification body 2.0 AUDIT PROCESS PT. SAI Global Indonesia Graha Iskandarsyah, 4 th floor Jl. Iskandarsyah Raya No. 66 C Kebayoran Baru, Jakarta 12160, Indonesia Phone : , Fax : Contact person : Ms. Inge Triwulandari Technical Manager inge.triwulandari@saiglobal.com SAI Global is one of the world s leading business providers of independent assurance. SAI Global provides organisations around the world with information services and solutions for managing risk, achieving compliance and driving business improvement. We provide aggregated access services to Standards, Handbooks, Legislative and Property publications; we audit, certify and register your product, system or supply chain; we facilitate good governance and awareness of compliance, ethics and policy issues and provide training and improvement solutions to help individuals and organisations succeed. The SAI Global business is driven by two equally important client needs - the mandated need for organisations to conform to regulations, standards and legislation in all their locations, and the operational need for organisations to improve business processes and procedures as well as corporate culture. As we are a global company, we can meet these needs for any client - those operating within one country's borders and in one language or those operating across borders and in many languages. There are three business units/divisions within SAI Global namely the Information Services Division, the Compliance Division, and the Assurance Division. The Assurance Division helps organisations manage risk, achieve process or product certification and drive improvement by providing training, registration audits and supplier management programs that can improve business performance. We provide independent audits, assessments and certification of your products or business processes to ensure they comply with industry standards or customer specific requirements. We understand how compliance with those standards can improve the efficiency, economy and profitability of your operation. With auditing and assessment staff located around the world, our clients include large global corporations as well as single site organisations. 2.2 Audit methodology The 2 nd Annual Surveillance Audit was performed on 31 July 04 August The audit programme was included in the body of report. The audit methodology for collection of objective Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 33 of 224

34 evidences is site inspection, documentation and record review and interview with staffs, workers, and other stakeholders. Objective evidences from documentation/record review in one area may also be cross checked with other objective evidences in other areas and with the evidence of implementation on site during the audit. Inputs from stakeholders via letter, , or other communication media were also considered for this certification audit. Particular attention has been paid to previous non-conformities. Area of potential environmental and social risk was concern. For detail of audit plan, can be seen on the page of Qualification of the lead auditor and audit team member R. Yosi Zainal Muhammad Lead Auditor and audited Agronomy BMP and SCCS aspects He graduated as bachelor from Department of Forest Resources Conservation and Ecotourism, Faculty of Forestry, Bogor Agricultural Institute in He has experienced in the management of sustainable palm oil (RSPO and ISPO), environment management, social impact, and safety management system at palm oil plantation. Join at SAI Global since on December 2015 as Auditor for the ISO 9001:2008, ISPO, and RSPO. It was involved in the quality management system for various the industry sectors, RSPO and ISPO. Several trainings that have been followed were Calculation of Palm Oil Footprint Carbon (2011), Safety Specialist (2013), and Social Impact Assessment (2014). He has also completed lead auditor training / course for ISO 9001:2008 (2015), ISO 14001:2015, ISPO P&C (2016), RSPO Supply Chain (2016), and RSPO P&C (2016). Daniel Sitompul Audit team member and audited Environment aspect Daniel graduated with Bachelor of Chemical Engineering degree from Indonesia Institute of Technology in He has working experience as Quality, Environment and Safety Consultant for many years. She has completed ISO (2007), OHSAS (2010), Ahli K3 Umum (2007), ISO 9001 (2009), RSPO PC Training (2013), Auditor SMK3 (2013) and ISPO Auditor Training (2013). He has also completed the training form government regarding to Safety Management System (SMK3), PROPER and AMDAL (environment). For the last 5 years she has been involved in quality (ISO 9001), Safety (OHSAS 18001) and environmental (ISO 14001) management system consultancy and audits for very broad industrial and in the palm oil sector since 2013 for several plantations and mills. Dirgantara Bayu Lazmana Audit team member and audited Processing BMP and OHS aspect Dirgantara Bayu L, owned a bachelor degree majoring in occupational health and safety from University of Indonesia. He had experienced in field of QHSE MS (Quality, Health, safety and Environment Management System) for several sectors of industry, such as: chemical manufacturing, construction and oil and gas exploration. Registered as lead auditor (ISO 9001, ISO 14001, OHSAS and ISPO) within the international professional auditor membership (IRCA & RABQSA) and also registered in local government ministry of manpower AK3U & HIMU (Safety officer & Industrial Hygienists) and ISPO Lead Training Auditor from ministry of Agriculture. He joined SAI Global Indonesia in Ahmad Furqon Audit Team Member and audited HCV and social aspects He graduated as bachelor from Department of Agronomy and Horticulture, Faculty of Agriculture, Bogor Agricultural Institute in Having work experience as Section Head of plantation in PT Astra Agro Lestari for 6 years. Having the experience in management of sustainable palm oil (RSPO and ISPO), environment management, social impact, and safety management system at palm oil plantations. Join at SAI Global since in Mei 2016 as Auditor for the ISO 9001:2015, ISPO, and RSPO. Involved in the quality management system for various the industry sectors, RSPO and ISPO. Some training that have been followed were Hazard Analysis and Critical Control Point Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 34 of 224

35 (HACCP) (2013), Industrial Relation Training (2016), ISO 9001:2015 Lead Auditor Course (2016), ISO 14001:2015 Lead Auditor Course (2016), RSPO P&C Lead Auditor Course (2016), RSPO Supply Chain Lead Auditor Course (2016) and ISPO Lead Auditor Course (2016). 2.4 Stakeholder consultation Table 13: List of internal and external stakeholder STAKEHOLDERS Internal stakeholder - SPSI and Worker cooperative head of Rambong Sialang and Bagerpang - Representative of worker at Bagerpang METHOD OF CONSULTATION Individual discussion Group Discussion estate and mill - Representative of worker at Sei Merah estate Group Discussion - Representative of worker Rambong Sialang Group Discussion External Stakeholder - Head of Village around Rambong Sialang estate Individual discussion - Head of Village around, Christian leader, Group discussion Moslem leader of Bagerpang estate and mill - Serbundo Group discussion - Local NGO Topan Individual discussion - Cooperative, transmigration and social Department of Serdang Begadai An invitation letter to comment was sent - Plantation Department of Deli Serdang An invitation letter to comment was sent - Forestry Department of Deli Serdang An invitation letter to comment was sent - Trasmigration and Labour Department of Deli Serdang An invitation letter to comment was sent - District Head (Camat) of Sei Rampah An invitation letter to comment was sent - District Head (Camat) of Pegajahan An invitation letter to comment was sent - District Head (Camat) of Sei Bamban An invitation letter to comment was sent - District Head (Camat) of Galang An invitation letter to comment was sent - District Head (Camat) of Bangun Purba An invitation letter to comment was sent - District Head (Camat) of STM Hilir An invitation letter to comment was sent - District Police of Galang An invitation letter to comment was sent - District Police of Bangun Purba An invitation letter to comment was sent - District Police of Talun Kenas An invitation letter to comment was sent Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 35 of 224

36 STAKEHOLDERS METHOD OF CONSULTATION - District Police of Firdaus An invitation letter to comment was sent - Walhi-Wahana Lingkungan Hidup Indonesia of North Sumatera An invitation letter to comment was sent - GAPKI An invitation letter to comment was sent - AMAN (Aliansi Masyarakat Adat Nusantara) An invitation letter to comment was sent - WWF Indonesia An invitation letter to comment was sent - Sawit Watch An invitation letter to comment was sent SAI Global has tried to contact RAN/OPPUK/ILRF through RSPO to ask their input relevant to the audit; however it was informed by the RSPO on 4 May 2017, RAN confirmed that the NGOs did not wish to be involved in the process for this particular audit. 2.5 Date of next audit The next audit is ASA-3 that will be conducted 8 12 months since issued certificate on 10 August AUDIT FINDINGS 3.1 Action taken on previous audits findings Several non-conformances (Major and minor) from the previous audits have been followed up by taking corrective actions. Corrective actions have been implemented and verified. Nevertheless, there was a recurrence Major NCR of from special audit and ASA Claim and use of certification mark and or logo There was no use of certification mark and or logo. Claim has been made for the RSPO certified product, PK of 3, MT and CPO of null. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 36 of 224

37 3.3 Description of audit findings RSPO Principle and Criteria PRINCIPLES 1: COMMITMENT TO TRANSPARENCY 1.1 Growers and millers provide adequate information to relevant stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making. Guidance: Growers and millers should have a Standard Operating Procedure (SOP) to respond constructively to stakeholders, including a specific timeframe to respond to requests for information. Growers and millers should respond constructively and promptly to requests for information from stakeholders. The SOP should include information on the officer, who may be contacted by the interested external parties. Growers and millers should ensure that sufficient objective evidence exists to demonstrate that the response is timely and appropriate. See Criterion 1.2 for requirements relating to publicly available documentations. See Criterion 6.2 on consultation. See Criterion 4.1 on SOPs. Definition of relevant stakeholders according to the Regulation of the Minister of Environment No. 17 year 2012 regarding Guidance for Involvement of Communities in the Process of Environmental and Social Impact Assessment (AMDAL) and Environmental Permit are. Affected communities are the communities who live within the AMDAL study boundary (social boundary), which will be beneficially or adversely affected by the operations and/or plan of activities; Environmental concerned communities are communities who are not affected by the operations and/or business plan, however they shall pay attention to the environmental and social issues of the upcoming operations and/or business plan, including the potential environmental and social impacts; Influenced communities by the decisions of AMDAL process are communities who are located outside and or directly adjacent to the boundary of AMDAL study areas relevant to the impact of operations and/or business plan. Relevant stakeholders are also NGOs that have concerns on the environmental and social issues of the upcoming operations and/or business plan, including the potential environmental and social impacts; List of information related to criterion 1.2 that can be accessed by relevant stakeholders shall be available. Specific Guidance: For 1.1.1: Evidence should be provided by growers and millers that information is received in appropriate form(s) and language(s) by relevant stakeholders. Information will include information on the RSPO mechanisms for stakeholder involvement, including information on their rights and responsibilities. a. Does the company maintain a list of stakeholders? (E.g. listed by category and stakeholders listed should be site specific) List of Stakeholders, on 21 June 2017 Procedure EMS P05 The company has maintained a list of stakeholders which listed by category, such as Statutory Bodies, Indigenous People, Local Communities, Worker Organization, and Local NGO. The YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 37 of 224

38 b. What is the frequency of updating the stakeholder list? c. Is there evidence of stakeholder verification? d. What type of information is provided? (E.g. Environmental, social and legal) e. What is the frequency and level of access to this information? f. How and where is the information disseminated? g. Who is responsible for providing & updating information? h. Is there an SOP available to describe the process (of information sharing/dissemination)? i. Are stakeholders aware of the type of information available and the procedures for accessing the information? Communication, on SPO 01 - Logbook of Record of information request and responses Interview with stakeholders date on August 2017 Attendance list date on 02 August 2017 regading dissemination of Procedure EMS-P05 Communication to stakholders stakeholders list was stored in List of Stakeholders, both at estate and mill office. The frequency of updating the stakeholder verification was annually conducted or whenever there was changed by Public Relation Department. The last updating was conducted date on 21 June Stakeholder verification has been performed by company through visiting and contacting with directly stakeholders. It was sighted that stakeholder verification has been done and evidenced. Type of the information available to the public and stakeholder are environmental, social and legal in accordance with their relevance through a written or verbal request to the company. The information provided to the public and stakeholders was directly disseminated through public information boards, info in the office, and website. All information can be accessed by interested parties. Provision of information to be known by Estate and Mill Manager. If the information is confidential trade must go through the approval of Head Office. Provision of information to the relevant agencies recorded in the Record of Information Request and Response (SPO- 01). There was SOP available to describe the process of information sharing / disseminated in Procedure EMS-P05 Communication, on 10 August Stakeholders aware of the type of information available and the procedures for accessing the information. They were made aware through verbal instructions or written notices. It was verified during public consultation and interview with stakeholder on August Socialization this procedure to employee was conducted on 01 July (M) Records of requests for information and responses to the information requested shall be available. Specific Guidance: For 1.1.2: Records of requests for information and responses are maintained for a period of time determined by the company, taking into account their importance and need. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 38 of 224

39 a. Does the company have an SOP to ensure constructive response to stakeholders? b. Who is the personnel in charge (PIC)? c. Does the SOP cover the elements under 1.1.1? d. Is there a clear time frame for response to request for information? e. Are records of requests for information and responses maintained? f. Are responses to requests for information timely and appropriate? Communication procedure (EMS-P05), date on 10 August 2009 Log Book: Notes of society and stakeholders aspirations and the information request record 2016 and 2017 Public consultation and interview with stakeholder on 6-8 June 2017 Field observation and interview with employee Organization has defined the procedure to ensure constructive response to stakeholders in Procedure Communication EMS-P05 dated 10 August Procedure described the requests for information and the aspirations of stakeholders. Requests for information can be submitted in writing to the organization, all the information and aspirations will be addressed by organization with consideration couple of things before information and aspiration was rejected or approved. Responses can be handled directly by Managers, but if necessary coordination and consideration of management, information passed on to the public. The initial response was given no later than one month after receipt of the request from stakeholders. PIC who s tasked associated with social communication are Estate manager with the daily implementing are Humas. This procedure already covers elements Clear time frame for response to request for information has been explain above; The initial response was given immediately after receipt of the request from stakeholders. Records of information requests and aspirations documented in the Log Book: Notes of society and stakeholders aspirations and the information request record. Records of requests for information and responses were well maintained by the document controller. Organization responses to requests for information can be demonstrated and archived properly. The responses to requests for information were timely and appropriate. Some example for information request and responses were verified during audit. YES 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes (M) Publicly available documents shall include, but are not necessarily limited to: a. Land titles/user rights (Criterion 2.2) b. Occupational health and safety plans (Criterion 4.7) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 39 of 224

40 c. Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8) d. HCV documentation (Criteria 5.2 and 7.3) e. Pollution prevention and reduction plans (Criterion 5.6) f. Details of complaints and grievances (Criterion 6.3) g. Negotiation procedures (Criterion 6.4) h. Continual improvement plans (Criterion 8.1) i. Public summary of certification assessment report j. Human Rights Policy (Criterion 6.13). Guidance: This concerns management documents relating to environmental, social and legal issues that are relevant to compliance with RSPO Criteria. Management documents will include monitoring reports. The auditors will comment on the adequacy of each of the documents listed in the public summary of the assessment report. Examples of commercially confidential information include financial data such as costs and income, and details relating to customers and/or suppliers. Data that affects personal privacy should also be confidential. One of legal requirements related to personal privacy is Act No. 14 year 2008 regarding Public Disclosure, clause 17 (h): Ongoing disputes (within or outside of a legal mechanism) can be considered as confidential information where disclosure could result in potential negative outcomes for all parties involved. On-going dispute (within or outside law mechanism) can be considered as confidential information if disclosure of information potentially causes negative impact to all related parties. However, affected stakeholders and parties who are working towards resolutions should have access to relevant information. Examples of information where disclosure could result in potential negative environmental or social outcomes include information on sites of rare species where disclosure could increase the risk of hunting or capture for trade, or sacred sites which a community wishes to maintain as private. Growers and millers should ensure that sufficient objective evidence exists to demonstrate that the level of measuring and monitoring of the management plan, and information, is appropriate and made available. a. How are the management documents listed in (c) below made publicly available? b. Where are the documents placed? c. Is the information provided adequate? Note: At minimum, an information summary of the document listed below should be made available. Land titles/user rights (Criterion 2.2) - Legal boundaries,land use, classification, total area, grant title, permit validity, NCR rights, Communication procedure (EMS-P05), date on 10 August 2009 Record of report form receipts 2016 and 2017 Public consultation and interview with stakeholder on August 2017 Field observation and interview with employee Documents available to the public specified in the Procedure Communication EMS-P05 dated 10 August Documents available to the public and stakeholder can be provided to stakeholders according to their relevance through a written request to the organization. List of information available in Indonesian and easily understood by stakeholder. Documents available to the public placed in the respective sections within the organization. Such as land title right/ HGU certificate placed in KTU and other Information provided adequate at minimum, an information summary of the document listed such as : YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 40 of 224

41 Occupational health and safety plans (Criterion 4.7); - risk assessment and mitigation, emergency response plan, training, accident records Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8); - main social and environmental impacts and mitigation measures, HCV documentation (Criteria 5.2 and 7.3); - identification on HCV areas, maps, management and monitoring HCV Pollution prevention and reduction plans (Criterion 5.6); - identification of pollutants, management and reduction measures Details of complaints and grievances (Criterion 6.3); - nature of complaints, parties involved, status of case Negotiation procedures (Criterion 6.4); - SOP, consultative, neutral, inclusiveness, timeframe, responsibility Continual improvement plans (Criterion 8.1); - for all elements under 8.1, Public summary of certification assessment report; - follow RSPO format Human Rights Policy (Criterion 6.13). - policy statement should comply to Land titles/user rights (Criterion 2.2) - Legal boundaries,land use, classification, total area, grant title, permit validity, NCR rights Occupational health and safety plans (Criterion 4.7); - risk assessment and mitigation, emergency response plan, training, accident records Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8); - main social and environmental impacts and mitigation measures, HCV documentation (Criteria 5.2 and 7.3); - identification on HCV areas, maps, management and monitoring HCV Pollution prevention and reduction plans (Criterion 5.6); - identification of pollutants, management and reduction measures Details of complaints and grievances (Criterion 6.3); - nature of complaints, parties involved, status of case Negotiation procedures (Criterion 6.4); - SOP, consultative, neutral, inclusiveness, timeframe, responsibility Continual improvement plans (Criterion 8.1); - for all elements under 8.1, Public summary of certification assessment report; - follow RSPO format Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 41 of 224

42 the requirements of 6.13 d. Do the management documents contain monitoring plans and reports? e. Are all monitoring reports publicly available? Human Rights Policy (Criterion 6.13). - policy statement should comply to the requirements of 6.13 Monitoring plan associated with public documents already established and available. For example for environmental documents: the management of HCV, RKL-RPL was reported every six months to BLH, reports related to the management of K3 (occupational health and safety) are reported every three months to Disnakertrans, reports LB3 and liquid waste are reported every three months to BLH, etc. Update monitoring report publicly available. Evidence of delivery of the report in the form of receipts properly documented and archived in a file Receipt Growers and millers commit to ethical conduct in all business operations and transactions. * 1 New Criteria - Growers and millers commit to ethical conduct in all business operations and transactions There shall be a written policy committing to a code of ethical conduct and integrity in all operations and transactions along with the documentation of socialisation process of the policy to all levels of the workers and operations. Guidance: All levels of the operations will include contracted third parties (e.g those involved in security). The policy of ethical conduct and integrity should include: A respect for fair conduct of business; A prohibition of all forms of corruption, bribery and fraudulent use of funds and resources; A proper disclosure of information in accordance with applicable regulations and accepted industry practices. The policy should be set within the framework of the UN Convention Against Corruption, in particular Article 12. Regulations that are related to eradication of corruption are as followings: 1. Act No. 7 year 2006 regarding Ratification of United Nations Convention Against Corruption 2. Act No.8 year 2010 regarding Prevention and Eradication of Money Laundry. 3. Act No. 13 year 1999 regarding Eradication of Corruption. 4. Presidential Instruction No.1 year 2013 regarding Action for Corruption Prevention and Eradication Normal business is the business that complies with all existing regulations. Audit Report Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 42 of 224

43 This written policy should be communicated to the affected parties. a. Is there a written policy committing to a code of ethical conduct and integrity in all operations and transactions? Pedoman Kebijakan Manajemen Berkelanjutan (Sustainability Policy Decree b. Does the policy include as a minimum: #001/DIR/IX/2014, dated 12 September 2014) A respect for fair conduct of business? A prohibition of all forms of corruption, bribery and fraudulent use of funds and resources? A proper disclosure of information in accordance with applicable regulations and accepted industry practices? c. Is the policy documented and communicated to all levels of the workforce and operations, including contracted third parties? How is it communicated? d. Are the documentation and communication done in the appropriate languages? Note to auditor: The workforce should be interviewed to determine level of understanding of policy Policy socialization record to employee, contractor and stakeholders 2016 and 2017 Public consultation and interview with stakeholder on August 2017 Field observation and interview with employee Written policy committing to a code of ethical conduct and integrity in all operations and transactions was available in Kebijakan Sustainable Perusahaan dated 12 September Ethic policy includes several aspects, such as: - Social Responsibility - Salary - Infrastructure and accommodation - Labour union - Age of worker - Indiscriminative treatment - Protection against sexual harassment and violence - Protection of reproductive rights - Receipts and provision of gifts, entertainment or assistance in job, corruption and fraud - Relation with supplier - Occupational health and safety, and environment - Employee cooperatives - Human rights The policy was well documented; latest revision dated 12 September 2014 has been communicated to all levels of the workforce and operations, including contracted third parties through socialization both active through master morning and passive by signboard. Policy socialization to contractor/third parties performed at the time of going to do the job. Documentation of policy and communication was done in the appropriate languages and easily understood by stakeholders. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 43 of 224

44 PRINCIPLE 2: WITH APPLICABLE LAWS AND REGULATIONS 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. Guidance: Implementing all legal requirements is an essential baseline requirement for all growers and millers whatever their location or size. Relevant legislation includes, but is not limited to: a. Land use period and right b. Labour c. Agricultural practices (e.g. chemical use) d. Environment (e.g. wildlife, pollution, environmental management and forestry) e. Storage f. Transportation and processing practices. It also includes laws made pursuant to a country s obligations under international laws or conventions (e.g. the Convention on Biological Diversity (CBD), ILO core Conventions, UN Guiding Principles on Business and Human Rights). Furthermore, where countries have provisions to respect customary law, these will be taken into account. Key international laws and conventions are set out in Annex 1. Legal requirements are existing laws and regulations some of which are set out in Annex (M) Evidence of compliance with relevant legal requirements shall be available. a. Is the complete list of legal requirements available? (Refer to relevant NIs or LIs for list of legal requirements) b. Does the company have copies of the legal requirements? Note to auditor: A due diligence on the company/area or management unit on legal compliance should be conducted prior to field audit. Any non-compliance should be verified during the field audit. Relevant legislation includes, but is not limited to: regulations governing land tenure and land-use rights, labour, agricultural practices (e.g. chemical use), environment (e.g. wildlife laws, pollution, environmental management and forestry laws), - List of regulation compliance (FORM 04-01); Evaluation compliance of regulation and requirement (18 th January 2017). - Form EMS IA-C5- Evaluation of Compliance with Laws and Regulations updated 30 September The list of legal requirement was registered within the form of Legal compliance evaluation (FORM 04-01) updated for each year; records were sighted for period of evaluation dated 18 th January There are several new regulation within period related to OHS, environment, labour, anf agricultural practices were registered and evaluated (e.g. Permenaker 09/2016 regarding working at height; Permenaker 37/2016 regarding pressure vessel; Permenaker 38/2016 regarding production machineries, permit of surface and ground water usage, permit of hazardous waste temporary storage, permit of land application, payment minimum, etc.) List of legal requirements was sighted on Register of SPO Regulation and Evaluation on Compliance of Regulation and Requirements EMS IA-C5) update 30 September The new environment regulation was identified, such as PerMen LHK 68/2016 domestic waste water quality standard. The organisation kept soft copies of legal requirement controlled by YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 44 of 224

45 storage, transportation and processing practices. It also includes laws made pursuant to a country s obligations under international laws or conventions (e.g. the Convention on Biological Diversity (CBD), ILO core Conventions and UN Guiding Principles on Business and Human Rights. safety officer at each unit (estate and mill) A documented system, which includes written information on legal requirements, shall be maintained. a. Is there a document system which includes the following? - List of regulation compliance; Evaluation compliance of - Personnel in charge to manage regulation and requirement - Set of legal documents (18 th January 2017) - Comprehensive list of international, - Procedure EMS P02 Legal national, sub-national and provincial laws Requirement dated 10 April which details the requirements of specific 2014 to the mill and estate operations. - Licence of hazardous - Relevant sections within the law that is temporary storage identified and linked to activities b. Are the documents available to all levels of management? - Licence of waste water land application - License of surface water utilization (SIPPA) - RKL RPL reports A mechanism for ensuring compliance shall be implemented. a. Is an internal audit for legal compliance conducted annually and documented? RSPO Sustainability internal audit report on 27 th July 2017 Established procedure described mechanism for updating latest laws and regulations and required regular access to regulatory bodies to update information of laws and regulations. Update and compliance review against change of law and regulation was conducted periodically (once a year or when there was new regulation update) by Legal, Environment and CSR Department use internet access, and/or by direct visits to the government bodies. Applicable laws and regulations were registered in Form f-02a. The evaluation of compliance was conducted together with the relevant functions between Legal, Environment and CSR team and representative from estates and mill. Evaluation result of compliance with laws and regulations was recorded in Form EMS IA-C5 last updated 30 September 2016 and 18 January The communication to relevant functions was conducted by dissemination from Legal, Environment, and CSR Department to respected persons at mill and estate. The new environment regulation was identified, such as PerMen LHK 68/2016 domestic waste water quality standard. The administrator/document control in charge at estates/mill were handled several licenses and reports as obligation on local requirements. Internal audit was conducted dated 27 th July 2017 regarding the sustainable palm oil, included the legal compliance to health and safety, social, labour, HCV, and best management practices aspects. The audit checklist covered the implementation of the all applied regulations. Status of compliance with the applicable laws and YES YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 45 of 224

46 2.1.4 A system for tracking any changes in the law shall be available and implemented. regulations were evaluated, and evaluation of compliance result indicated that compliance status was justified with reference to the objective evidence of compliance. The corrective action was followed if there are any nonconformances raised. Specific Guidance: For 2.1.4: The systems used for tracking any changes in laws and regulations should be appropriate to the scale of the organisation. a. Is there a documented methodology (e.g.: personnel in charge (PIC), source of info, frequency of update) for tracking changes and communication of changes to relevant sections of the legislation? List of regulation compliance; Evaluation compliance of regulation and requirement (18th January 2017) Procedure EMS P02 Legal Requirement dated 10 April 2014 The documented procedure was defined that the Legal, Environment, and CSR Department was conducted identification, verification and registered the all legal and other requirements. The update frequency was conducted every year that last updated in 30 September 2016 and 18 January The method of updating regulation was conducted by internet, and/or by direct visits to the government bodies. The new environment regulation was identified, such as Permen LHK 68/2016 domestic waste water quality standard. The evaluation of compliance was conducted together with the relevant functions between Legal, Environment, and CSR Department and representative from estate and mills. The communication to relevant functions was conducted by dissemination from Legal, Environment, and CSR Department to respected persons at mill and estate. 2.2 The right to use the land is demonstrated, and is not legitimately contested by local people who can demonstrate that they have legal, customary or user rights. YES Guidance: The company has SOP for Land Acquisition to ensure that there is no removal of legal, customary or user rights (see & 6.4.2) Descriptions of those rights are as follows: a. Legal Right may be in the form of Land Certificates (Ownership Right / Hak Milik, User Right /Hak Guna Usaha), Registration Letter / Surat Keterangan Terdaftar, Letter of Inheritor Right / Surat Keterangan Hak Waris, and or Letter of Girik Right/Surat Keterangan Hak Girik. b. Customary Right in the Local Regulation/Perda (based on Constitution Court Decision No. 35/PUU-X/2012 regarding Customary Forest) determined through participatory mapping of customary land by the legitimate customary law community who are recognized by the surrounding customary law community and refers to Regulation of the Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 46 of 224

47 Minister of Home Affairs (Permendagri) No. 52 year 2014 regarding Guideline of Recognition and Protection of Customary Law Community and Regulation of the State Minister of Agrarian Affairs/Head of National Land Agency (BPN) No. 5 year 1999 regarding Guidelines for the Settlement of Problems Related to the Communal Reserved Land of the Customary Law Abiding Community. c. User Right may be in the form of evidence of land leasing from the legal right holder, and/or official letter from the Village Head based upon testimony of communities or individual where their areas are adjacent to that land. Customary area is customary land, including soil, water and or waters and natural resources with certain boundaries, owned, utilized and preserved for generations and on sustainable basis to fulfill the needs of their livelihood that was acquired from their ancestor or claimed ownership of communal land or customary forest. Where there is a conflict on the condition of land use as per land title, growers should show evidence that necessary actions have been taken to resolve the conflict with relevant parties A mechanism should be in place to resolve any conflict (Criteria 6.3 and 6.4). Where operations overlap with other rights holders, companies should resolve the issue with the appropriate authorities, consistent with Criteria 6.3 and 6.4. Historical data of land ownership should be provided by the company for a minimum of one period of ownership/control. If there is a claim on customary right, this shall be legally demonstrated (M) Documents showing legal ownership or lease, history of land tenure and the actual legal use of the land shall be available. Specific Guidance: For 2.2.1: The documents required to demonstrate legal ownership, lease or control and use of land shall include those related to getting the land permit or transfer of land right and up to the operational right. a. Are there documents showing legal ownership or lease of the land available? (e.g. land titles, lease documents) b. Are there documents showing history of land tenure available? (e.g. legal documents showing land status change, SIA and EIA reports, HCV assessment reports) c. Are there documents showing the actual legal use of the land available? d. Are the documents complete? - Land use title permit: SK HGU and HGU certificate. - Decision of the Head of BPN. - State Minister for Agrarian Affairs / Head of National Land Agency. Begerpang Estate Copy of land use title (HGU) of Begerpang Estate was sighted and legally owned by PT. PP LSIP Tbk. Copy of land use title was available. Land use title of Begerpang Estate was located at Deli Serdang District, Province of North Sumatera. Based on Decree Letter of Interior Minister #Sk.17/HGU/DA/77, Begerpang Estate was Concession rightwhich consisted of Begerpang and Namo Rambei Concession, based on decision of Resident Sumatra Timur 1895 and 1900 on behalf of The United Serdang (Sumatra) Rubber Plantations Ltd and Concession Right/erfpacht based on agreement Zelf bestuur Deli on 1 st of November 1895 and legalled by decision of Resident Sumatra Timur on 7 th of December 1895 and 20 th of July 1898 on behalf of The Sialang Rubber Est. Ltd YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 47 of 224

48 and valid through 75 years. The Concessiion Right was converted to HGU based on letter of Agriculture and Agrarian Minister #Ka.13/7/1 on 1 st of March During period , the company was under authority and control of the government until availability of agreement between Government of Republic of Indonesia and Harison & Crosfield Ltd. On 20 th of March 1968, government will give HGU during 30 years implicitly on 1 st of April Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #173/Mentanhut/VII/2000, dated 10 th of June Area: 2, Ha. Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #174/Mentanhut/VII/2000, dated 2 nd of July Area: 2, Ha. Plantation Business Assessment (Penilaian Usaha Perkebunan (PUP); Class II, based on the Decree SK No. 525/038.a/F The first concession was issued by decree Minister of Internal Affairs in 1978, further extensions of the concession in 2005, according to the Decree of the Head of BPN, as follows: 1. SK HGU of BPN, no. 62/HGU/BPN/97, dated 2 nd of July 1997, covering an area of 2, ha. 2. SK HGU of BPN, no. 66/HGU/BPN/97, dated 10 th of June 1997, covering an area of 2, ha. 3. SK HGU of BPN, no. 02/HGU/BPN.12/VII/2012, covering an area of ha. 4. Certificate no. 1/Lau Rampak D.I.208 no. 320/2003, dated 20 th of January Initial rights holders on behalf of PT Karimun Aromatics Co.Ltd. Acquired in 2007 (sale deed no. 35/2007), covering an area of 945 ha. 1) The deed of establishment of PT Karimun Aromatics Co. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 48 of 224

49 Ltd., date 2 nd of November ) SK HGU dated no. 18/HGU/BPN/98 3) Deed of Giving Rights Tanggunngan no. 01/2006, date , created by TRIS DAME ERNITA TAMPUBOLON, SH PPAT Deli Serdang over book Land / Certificate of no dependents. 32/2006. Based on the decree and Certificate of HGU owned by Bagerpang Estates total area is 5, Ha, in compliance with the 'area statement in Building Permit (IMB): - 503/941/DPPWP/DS/2002 for mill /3619/BG/2014 for housing Sei Merah Estate Copy of land use title (HGU) of Sei Merah Estate was sighted and legally owned by PT. PP LSIP Tbk. Copy of land use title was available. Land use title of Sei Merah Estate was located at Deli Serdang District, Province of North Sumatera. Based on Decree Letter of Interior Minister #Sk.8/HGU/DA/78, Sei Merah Estate was Concessie right based on decision of Resident Sumatra Timur on 7 th of January 1887 #40/L and agreement Zelfbestuur Deli on 20 th of September 1895 and legally by decision of Resident Sumatra Timur on 10 th of October 1895 document #150 on behalf of N.V The United Serdang (Sumatra) Rubber Plantation Ltd and valid through 75 years. The Concessive Right was converted to HGU based on letter of Agriculture and Agrarian Minister #Ka.13/7/1 on 1 st of March During period , the company was under authority and control of the government until availability of agreement between Government of Republic of Indonesia and Harison & Crosfield Ltd. On 20 th of March 1968, government will give HGU during 30 years implicitly on 1 st of April Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 49 of 224

50 Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #HK.350/195/Bun.5/III/2001. Area: 1, Ha. Plantation Business Assessment (Penilaian Usaha Perkebunan (PUP); Class I, based on the Decree SK No. 525/5818/III/BUN.PPUP/2013. Sei Merah Estate has gained the concession, by decree of the Minister of State Agrarian / Head of National Land Agency, dated 10 th of July 1997, no. 65/HGU/BPN/97. HGU certificate no. 2/1997, dated 6 th of October 1997 and based on Surat Ukur dated 30 th of September 1997, no. 9180/1997, Sei Merah Estate covers an area of 1, ha area and in compliance with Area Statement Sei Merah Estate. Rambong Sialang Estate Copy of land use title (HGU) of Rambong Sialang Estate was sighted and legally owned by PT. PP. LSIP Tbk. Copy of land use title was available. Land use title of Rambong Sialang Estate was located at Deli Serdang District, Province of North Sumatera. Based on Decree Letter of Interior Minister #Sk.36/HGU/DA/78, Rambong Sialang Estate was Concessie right based on agreement between Zelfbestuur Deli and N.V Rubber My Sibulan and Sei Rampah Rubber en Cocoanut Plantations Co. Ltd. on 14 th of July 1910, 5 th of April 1911, 21 st of December 1908 and 1 st of May 1910 and legally by decision of Resident Sumatra Timur on 10 th of December 1910, 15 th of April 1911, 27 th of January 1909 and 29 th of September 1910 and valid through 75 years. The Concessive Right was converted to HGU based on letter of Agriculture and Agrarian Minister #Ka.13/7/1 on 1 st of March During period , the company was under authority and control of the government until availability of agreement between Government of Republic of Indonesia and Harison & Crosfield Ltd. On 20 th of March 1968, government will give HGU during 30 years implicitly on 1 st of April Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #176/Mentanhut/VII/2000 on 3 rd of November Area: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 50 of 224

51 Ha. Commodity: oil palm Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #177/Mentanhut/VII/2000. Area: Ha. Commodity: oil palm Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #Hk.350/1999/Bun.5/III/2001. Area: 4, Ha. Commodity: oil palm and cocoa. Rambong Sialang Estate has had the concession, which consists of 3 HGU certificates, that is: 1. HGU certificate 3, dated 8 th of October 1997, by decree of the Minister of Agriculture / Head of National Land Agency dated 30 th of June 1997, no. 58/HGU/BPN/97, located in the village of Firdaus Estate Subdistrict Sei Rampah, Deli Serdang district. Covering an area of hectares, in accordance with the Surat Ukur no.9183/ HGU certificate 2, dated 8 th of October 1997, by decree of the Minister of Agriculture / Head of National Land Agency dated 30 th of June 1997, no. 58/HGU/BPN/97, located in the village of Firdaus Estate Subdistrict Sei Rampah, Deli Serdang district. Covering an area of hectares, in accordance with the Surat Ukur no.9182/ HGU certificate 1, dated 8 th of October 1997, by decree of the Minister of Agriculture / Head of National Land Agency dated 30 th of June 1997, no. 58/HGU/BPN/97, located in the village of Firdaus Estate Subdistrict Sei Rampah, Deli Serdang district. Covering an area of 4, hectares, in accordance with the Surat Ukur no.9181/1997. So based on concession certificate above, total area of Rambong Sialang Estate is 5, Ha. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 51 of 224

52 2.2.2 Legal boundaries are demonstrated clearly and maintained. Specific Guidance: For 2.2.2: Grower should cease operations on land planted beyond the legally determined area and there should be specific plans in place to address such issues for associated smallholders. a. Is there a legal map showing location of boundary markers? b. Is there physical presence of boundary markers? c. Is there an SOP for boundary demarcation and maintenance? Note to auditor: Ground verification of boundary markers using GPS should be conducted. Priority should be on boundaries with other estates, community areas, protected area and rivers In the case of Associated Smallholders: d. Are there documents showing that the boundaries of associated smallholders have been recorded and verified by the mill? e. In case of boundary breach, is there proof of a mitigation plan being implemented? - Map of Land title use dated 1 January Checklist of Pegs Weekly Monitoring. - Field observation to HGU pegs Legal boundaries marker were sighted during audit and maintained along the perimeters of estate lands which were mapped with Global Positioning System (GPS). Field observation was conducted to pegs number: Sei Merah Estate 1. BPN peg No. 10, N: ; E: , the location in Division 01 - Sei Merah, bordered by Kampung Naga Timbul. 2. BPN peg No. 34, N: ; E: , the location in Division 01 Sei Merah, bordered by Kampung Bangun Rejo. Rambong Sialang Estate 1. BPN peg of 04, N: ; E: , the location in Division 01 - Egaharap, bordered by Kampung Sukarame. 2. BPN peg of NA-04, N: ; E: , the location in Division 01-Egaharap, bordered by PTPN III. Realization of pegs maintenance was sight in Weekly Checklist Monitoring which conducted by the Assistant Division and Estate Security Unit (Satpam), noted that peg monitoring is done monthly with items checked are: identity, condition and position pegs. All activities were carried out inside the legal boundaries, no activities conducted outside the boundaries In the event that there is a dispute or a dispute has occurred, adequate evidence of legitimate acquisition and compensation or compensation settlement process through conflict resolution which has been received through Free, Prior and Informed Consent by all related parties shall be provided. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 52 of 224

53 a. Are there, or have there been any land disputes? Note to auditor: Due diligence should be conducted on the management to provide evidence that there has been no historical or current land dispute b. If there are or have been disputes, are there: - Documents to proof legal acquisition? - Records of FPIC process? c. If there has been acquisition involving compensation, are there: - Records that Fair compensation has been provided and accepted by parties involved? - Records that all affected parties are consulted and represented? - Documents of negotiations/discussion available? Public consultation with stakeholders and the local community August 2017 No complaints associated with land disputes between the company and the surrounding community. This was also confirmed during the public consultation with stakeholders and the local community on August Concession area of PT. LSIP is a former concession of PT. Harrisons & Crossfield (H&C). In 1908, H&C established Harrison & Crossfiled Plantation Ltd. H&C bought Gunung Malayu Estate in At the 1928 H&C bought Tjong Ah Fie Plantation including Rambong Sialang, Egaharap, Bengambing, Tanjoeng Poteri, Bandar Teloe, Suka Radjin, Nagaga, Maligas, Bolok, Bah Lias, Bah Hilang and Mardjandi. Based on Legal entities of PT. PP LSIP Tbk. #93/1962 concession area including: Asahan Rubber Estate Limited is a Gunung Melayu Estate. The Bah Lias Rubber Estate Limited is a Bah Lias Estate Central Sumatra Rubber Estate Limited is a Turangi, Bungara and Pulau Rambung Estate. YES Note to auditor: There should be direct verification of above with the affected parties Namoe Tonga Rubber Estate Limited is a Turangi Estate The Sialang Rubber Estate Limited is a Rambong Sialang Estate The Soengei Rampah Rubber and Coconut Plantations Company Limited is a Rambong Sialang Estate The Tandjung Rubber Company Limited is a Sungai Merah Estate Toerangie (Sumatra) Rubber and Produce Estate Limited is a Turangi Estate The United Langkat Plantation Company Limited is a Turangi, Bungara and Pulau Rambung Estae The United Serdang (Sumatera) Rubber Plan Limited is Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 53 of 224

54 Bagerpang, Sungai Merah and Dolok Estate. Land acquisition was conducted prior RSPO FPIC was required (M) There shall be an absence of significant land conflict, unless requirements for acceptable conflict resolution processes (see Criteria 6.3 and 6.4) are implemented and accepted by the parties involved. a. Does the company have cases of significant land conflict? (i.e. preventing the company from operating normally) Public consultation with stakeholders and the local community 6-8 June 2017 YES b. If the company has cases of conflict, are records of the following available? - Status of conflict - SOP/ mechanism for conflict resolution - Implementation of SOP/mechanism - Acceptance of the procedures by all parties - Records of conflict resolution Pedoman Kebijakan Akuisisi Lahan dan Tanam Tumbuh February 2007 No complaints associated with land disputes between the company and the surrounding community. This was also confirmed during the public consultation with stakeholders and the local community on August The company also has implemented procedures for conflict resolution mechanism specified in Pedoman Kebijakan Akuisisi Lahan dan Tanam Tumbuh February Procedure explaining the land compensation process from identification of landowners, Input data (soil mapping), Negotiating compensation (according to the agreement and witnessed by a competent witness), payment of compensation, documentation For any conflict or dispute over the land, the evidence of the extent of disputed area is mapped out in a participatory way with involvement of affected parties (including neighboring communities and local government where applicable), shall be available. a. Is there an SOP for participatory mapping of disputed area? YES b. Is a dispute map available? c. Is there documented evidence of involvement and acceptance by the affected parties? Note to auditor: Actual ground verification showing the accuracy of the dispute map should be Public consultation with stakeholders and the local community August 2017 Procedure EMS-P05 Communication, 10 August 2009 No complaints associated with land disputes between the company and the surrounding community. This was also confirmed during the public consultation with stakeholders and the local community on August However, the company also has implemented procedures for conflict resolution mechanism between companies and land owners.. Procedure explaining the land compensation process from identification of landowners, Input data (soil mapping), Negotiating Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 54 of 224

55 conducted compensation (according to the agreement and witnessed by a competent witness), payment of compensation, and documentation (M) To avoid escalation of conflict, there shall be no evidence that palm oil operations have instigated violence in maintaining peace and order in their current and planned operations. Specific Guidance: For 2.2.6: The company policy should require the use only of legally recognized private security personnel in their operations and prohibit extra-judicial interference and intimidation by the security personnel as mentioned above (see Criterion 6.13). a. Does the company have a policy to circumvent instigated violence to maintain peace and order in current and planned operations? b. Is there any evidence of: - The use of confrontation and intimidation by the company to maintain peace and order? - Use of para-militaries and mercenaries in the plantation? Pedoman Kebijakan Manajemen Berkelanjutan (Sustainability Policy Decree #001/DIR/IX/2014, dated 12 September 2014) Public consultation with stakeholders and the local community on August 2017 Company have a policy to circumvent instigated violence to maintain peace and order in current and planned operations. It documented in Pedoman Kebijakan Manajemen Berkelanjutan (Sustainability Policy Decree #001/DIR/IX/2014, dated 12 September 2014). Organisation develops attitudes of compliance to the laws that applies in the resolution of issues between the parties and avoids the violent means. Also Develop an attitude of equality and impartiality in the relationship between the company and related parties. From the results of the public consultation and interview with stakeholders on August 2017 also confirmed that no act of violence and militaristic ways adopted by the company in solving problems with public/stakeholders. 2.3 Use of the land for oil palm does not diminish the legal, customary or user rights of other users without their free, prior and informed consent. Guidance: All indicators are applied to all oil palm plantations developed after November 2005, with exception to plantations developed prior to November 2005 that may not have records dating back to the time of decision making, in particular for compliance with Indicators and Where there are legal or customary rights over land, the grower should demonstrate that these rights are understood and are not being threatened or reduced. This Criterion should be considered in conjunction with Criteria 6.4, 7.5 and 7.6. Where customary rights areas are unclear these should be established through participatory mapping exercises involving affected parties (including neighbouring communities and local authorities). This Criterion allows for sales and negotiated agreements to compensate other users for lost benefits and/or relinquished rights. Negotiated agreements should be non-coercive and entered into voluntarily, carried out prior to new investments or operations, and based on an open sharing of all relevant information. The representation of communities should be transparent and in open communication with other community members. Adequate time should be given for customary decision making and iterative negotiations allowed for, where requested. Negotiated agreements should be binding on all parties and enforceable in the courts. Establishing certainty in land negotiations is of long-term benefit for all parties. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 55 of 224

56 Growers and millers should refer to the RSPO approved FPIC guidance (RSPO endorsed Free, Prior and Informed Consent Guide for RSPO Members, November 2015). Companies should be especially careful where they are offered lands acquired from the State by its invoking the national interest (also known as eminent domain ) (M) Maps of an appropriate scale showing the extent of recognised legal, customary or user rights (Criteria 2.2, 7.5 and 7.6) shall be developed through participatory mapping involving affected parties (including neighbouring communities where applicable, and relevant authorities). a. Does the company have an SOP on FPIC? HGU Map of Rambong Sialang N/A and Bagerpang Estate b. Is there evidence that the identification of legal, customary or user rights has been done through FPIC process? c. Is there evidence that the FPIC process has been implemented in accordance to the company SOP? Where is this evidence recorded? (E.g.: Documents, Minutes of meeting, Records, Agreements, Maps etc.) d. Is there a map of the extent of legal, customary or user rights? Is this map of appropriate scale (1: 10,000)? e. Was the map produced through participatory mapping with reference to SIA and HCV assessment? f. Does the map have a title, legend, source, scale and projections/georeference? g. Are the maps accepted by the relevant communities? Procedure EMS-P05 Communication, 10 August 2009 Interview with Estate Manager on August 2017 Interview with stakeholders date on August 2017 Maps have been developed for each estate indicating Legal demarcation and planted areas. Planted areas of the Estate are wholly on Government land, leased under HGU. It was confirmed from the group discussion with Village Head on August 2017 that until this surveillance audit, no land within Mill and Estates are encumbered by legal or customary rights Copies of negotiated agreements including the process of free, prior and informed consent (FPIC) (Criteria 2.2, 7.5 and 7.6) shall be available and these include: a. Evidence of consultation b. Statement of transfer of rights c. Evidence of compensation See specific guidance Specific Guidance: For : Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 56 of 224

57 Copies of negotiated agreements shall include at minimum: a. A plan that should be developed through consultation and discussion with all affected groups in the communities, and that information has been provided to all affected groups, including information on the steps that shall be taken to involve them in decision making; b. Evidence that the company has respected communities decisions to give or withhold their consent to the operation at the time that this decision was taken; c. Evidence that the company has ensured that affected communities have understood and accepted the legal, economic, environmental and social implications for permitting operations on their land, including the implications for the legal status of their land at the expiry of the company s title or concession. The company shall inform the legal implication based upon, but not limited to, Act No. 50 year 1960 and Government Regulation No. 40 year 1996 regarding Land-Use Right (HGU), Building-Use Right (HGB), and User Right, where the land will be owned by the state if HGU right is expired, not be extended and or updated. d. Evidence that the company has informed the plan for partnership program. a. Are copies of negotiated agreements with affected parties available? b. Is there evidence that the agreement is prepared through proper FPIC process? c. Does the agreement contain the following: - An action plan developed through consultation with affected parties, is inclusive and evidence that members of affected parties are well informed and involved in the decision making process - Evidence of options to give or withhold consent for development - Evidence that members of the affected communities understand and accept the implication involved in permitting/rejecting oil palm development on their land (E.g.: legal status, social, environmental, economic) - Evidence that the negotiated agreement was entered voluntarily without coercion by all parties - Evidence that adequate time was given for customary decision making and iterative negotiations - Clause which states that the negotiated agreement is legally binding HGU Map of Rambong Sialang and Bagerpang Estate Procedure EMS-P05 Communication, 10 August 2009 Interview with Estate Manager on July 2016 Interview with stakeholders date on July 2016 Maps have been developed for each estate indicating Legal demarcation and planted areas. Planted areas of the Estate are wholly on Government land, leased under HGU. It was confirmed from the group discussion with Village Head on July 2016 that until this surveillance audit, no land within Mill and Estates are encumbered by legal or customary rights. N/A Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 57 of 224

58 2.3.3 Relevant information shall be available in appropriate forms and languages, including analysis of impacts, proposed benefit sharing, and legal arrangements. a. Is there evidence that all the information (maps, agreement, records, impact assessment, benefit sharing and legal arrangements) is available in appropriate forms and languages, understood and accessible to affected parties? Pedoman Kebijakan Akuisisi Lahan dan Tanam Tumbuh February 2007 Procedure of social communication and complaints handling, ethic policy, social impact assessment report were available in appropriate forms and language (Indonesian language). The document can be provided to all parties by request. It was confirmed during public consultation with stakeholder on August 2017 that all related parties understood the documents. Note to auditor: this should be cross checked to a sample of the affected parties Communication procedure (EMS-P05), date on 10 August 2009 Public consultation with stakeholders and the local community on August 2017 Company also has implemented procedures for conflict resolution mechanism specified in Pedoman Kebijakan Akuisisi Lahan dan Tanam Tumbuh February Procedure explaining the land compensation process from identification of landowners, Input data (soil mapping), Negotiating compensation (according to the agreement and witnessed by a competent witness), payment of compensation, documentation (M) Evidence shall be available to show that communities are represented through institutions or representatives of their own choosing, including legal counsel. Specific Guidance: For 2.3.4: Evidence of proxy letter from the community group, individual and/or company to the institution which represents community at the negotiation process, shall be demonstrated. a. Who is the representative of the community in the negotiation process? b. Is the representative accepted by the community? c. Is the record of appointment to represent the community available and shared with other parties? Public consultation with stakeholders and the local community on August 2017 Communities are represented through institutions or representatives of their own choosing. It was confirmed that Village communities have delegated their representatives to the Village Head. Village Head are selected through local election and accepted by the community. N/A N/A Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 58 of 224

59 PRINCIPLE 3: COMMITMENT TO LONG-TERM ECOMIC AND FINANCIAL VIABILITY 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability. Guidance: Whilst it is recognised that long-term profitability is also affected by factors outside their direct control, top management should be able to demonstrate attention to economic and financial viability through long-term management planning. There should be longer term planning for plantations on peat, particularly in regards to subsidence and flooding issues (see Indicator 4.3.5). Consideration of smallholders should be inherent in all management planning where applicable (see also Criteria 6.10 and 6.11). For scheme smallholders, the company should refer to RSPO Guidance On Scheme Smallholders, July 2009 or endorsed final revision. Growers should have a system to improve practices in line with new information and techniques. For smallholder schemes, the scheme management should be expected to provide their members with information on significant improvements. This Criterion is not applicable to independent smallholders (refer to RSPO Guidance for Independent Smallholders under Group Certification, June 2010) (M) A documented management plan, a minimum of three years shall be available, including, where appropriate, plan for scheme smallholders. Specific Guidance: For 3.1.1: The business or management plan should contain: Attention to quality of planting materials; Crop projection = Fresh Fruit Bunches (FFB) yield trends; Mill extraction rates = Oil Extraction Rate (OER) trends; Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends; Forecast prices; Financial indicators. Suggested calculation: trends in 3-year running mean over the last decade (FFB trends may need to allow for low yield during major replanting programmes). a. Does the company have a documented business or management plan with a minimum planning period of 3 years? Crop projection The company has established long term management plan in several documents. The documents of management plan has included: b. Does it include the following: - Land area statement (planting years, nonplanted areas, i.e. HCV, conservation areas, fragile soils, enclaves) with updated location maps. Maps should have title, legend, source, scale and Production estimation Master plan of infrastructure needs 5 Year Plan ( ), PT. PP LSIP Tbk. - Land area statement (planting years, non-planted areas, i.e. infrastructure, HCV area) with updated location maps. Maps have included title, legend, source, scale and projection/georeferenced. - Crop projection = Fresh Fruit Bunches (FFB) yield trends Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 59 of 224

60 projections/georeferenced - Plan for management of scheme smallholders (where appropriate) - Quality of planting materials - Crop projection = Fresh Fruit Bunches (FFB) yield trends - Mill extraction rates = Oil Extraction Rate (OER) trends - Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends - Forecast prices - Financial indicators profitability forecast (income vs cost) - Projected expansion (area, mill capacity, infrastructure, social amenities) - General strategy and allocation for environmental and social management (refer to P5, P6 and P8) c. Is this management document subjected to an annual review? - Mill extraction rates = Oil Extraction Rate (OER) trends - Cost of Production = cost per tonne of Crude Palm Oil (CPO) trends - Forecast prices - Financial indicators profitability forecast (income vs cost) - Projected expansion (area, mill capacity, infrastructure, social amenities) - General strategy and allocation for environmental and social management The management plan is reviewed annually. There was no plantation on peat. The organization has a system to improve practices in line with new information and techniques. Legal, Environment, and CSR is in charge to improve practice in line with new information and techniques. New information and techniques are updated through internet or routine meeting. d. For plantations on peat, is there a long term viability plan e.g. flooding, drainability assessments and subsidence issues? (see 4.3.5) e. Does the grower have a system to improve practices in line with new information and techniques? - Has the personnel in charge (PIC) been identified? - How is the information updated? - Is there a documented SOP which requires monitoring and updating information to improve practices? - Is new information communicated to Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 60 of 224

61 workers and scheme smallholders (where appropriate)? How is it communicated? An annual replanting programme projected for a minimum of five years (but longer where necessary to reflect the management of fragile soils, see Criterion 4.3), with yearly review, shall be available. a. Is there an annual replanting programme projected for a minimum of five years? YES b. Has it been documented? c. Is the progress of implementation documented? d. How does the programme take into consideration fragile soils such as peat? Is there a longer projection period (see C4.3)? e. Is there evidence of a yearly review of the replanting programme? Replanting Program for Rambong Sialang Estate and Sei Merah Estates Projected annual replanting programme was described in the Replanting Program. Replanting Plan was exist for period Year RSE SME (ha) (ha) Total Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 61 of 224

62 PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Operating procedures are appropriately documented, consistently implemented and monitored. 4.1 Specific Guidance: For and 4.1.4: SOPs and documentations for mills should include relevant supply chain requirements (see RSPO Supply Chain Certification Standard, Nov 2011). Mechanisms to check implementations could include documentation management systems and internal control procedures. These procedures refer to the Best Management Practices for Oil Palm in Indonesia, such as Technical Guideline for Oil Palm Development, Directorate General of Estate Crops, Ministry of Agriculture, (M) Standard Operating Procedures (SOPs) for estates (land clearing to harvesting) and SOP for mills (reception of FFB to dispatch of CPO and PKO) shall be available. a. Have the SOPs for mills and plantation been documented? Standard Operating Procedure Oil Palm-Development Procedures b. Does the SOP cover key processes, harvesting, transportation, manuring, IPM, GAP, Supply Chain requirements for the mill, etc.? c. Is a copy of the SOP available on site and is it documented in an appropriate language? d. Is there evidence that SOPs are implemented and understood by workers? e. Are the SOPs appropriate and adequately cover all estate and mill processes and activities? f. How are the SOPs made available at the point of use? Standard Operating Procedures (SOPs) for Estate and mill been documented. Estates has established the procedure (SOP) for plantation cultivation best practices include land clearing, seeding, planting, maintenance, harvesting and transporting of FFB. Generally Bagerpang, Sei Merah and Rambong Sialang Estate have already implemented best management farming practices SOP that has been set. Procedures have been established in March 2008 in Oil Palm Procedure document, that is: 1. OP-1 Nursery Preparation and Upkeep 2. OP-2 Preparation and Planting (include Land Clearing) 3. OP-3 Immature Upkeep OP-3.1 OP-5.2 OP-3.3 Weeding Management Pest and Disease (Integrated Pest Management) Fertilizer Schedule for Development Oil Palm 4. OP-0.4 Harvesting (Crop Potentials, Crop Forecasting, Harvesting Task, Harvesting Standard, Fruit Handling and Transportation) 5. OP-5 Mature Upkeep (Weeding, Pest & Disease, pruning, Census & survey operation, Fertilizer Management, Empty YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 62 of 224

63 bunch & POME application). Procedures for mill have been established in March 2008 in Oil Palm Procedure document, that is: - POM-WI/01 Weighbridge Rev.5 - POM-WI/02 Loading Ramp & FFB Sorting Rev.5 - POM-WI/03 Sterilisation Rev.1 - POM-WI/04Threshing Rev.1 - POM-WI/05 Pressing Rev.1 - POM-WI/06 Clarification Rev 1 - POM-WI/07 Depericarping - POM-WI/09 Boiler Rev.1 - POM-WI/12 Effluent Treatment Rev.1 - POM-WI/16 Quality Rev. 1 - POM-WI/17 Dispatch Rev.5 - POM-WI/21 Composting Rev.0 It was verified that the SOP cover key processes, harvesting, transportation, manuring, IPM, GAP, Supply Chain requirements for the mill, mill process, etc. Work instruction for plantation and mill activities has been established and documented. Work instruction describes planting of oil palm, fertilizing, spraying, harvesting, peat land management, and integrated pest management. Work Instructions and procedures are available on site in Estate and mill made in Bahasa Indonesia. Based on interview with some workers (harvesting, spraying worker, mill operator) they were understood with procedures and work instructions, they worked based on and appropriate with procedure. Hardcopies of procedure were available onsite, controlled and Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 63 of 224

64 4.1.2 Checking or monitoring of operations procedures is conducted at least once a year. a. Is there a master list of all SOPs? Masterlist document b. How does the company keep track of revisions? c. Is there mechanism for: - Translation of SOP into work instructions in appropriate languages? - Records of training for all levels? - Internal control (e.g. audit and review, field inspection) procedure in place to monitor consistent implementation of SOPs? - Trained and competent personnel assigned to carry out internal control activities? - Implementation audits to be carried out regularly covering implementation of all the SOPs? - Procedure to address non-compliance and corrective action for continuous improvement? Report of Operational Audit #OA- 15-VIII-AMA.III-Est-015 Visiting Agent Report #RSE/VA/FULL Visiting Agent Report #BGE/VA/FULL Visiting Agent Report #SME/VA/FULL AME (Area Manager Engineering) visit report 18 th April AMA and VP Inspection in 2017 documented in appropriate language. Interviews with the employees indicated a satisfactory level of understanding and application in relation to their job function. SOPs are available at the point of use, e.g. at division office. SOPs appropriate and adequately cover all estate and mill processes and activities. Master list of all SOPs and its revision history were available and well documented. Organization keeps track of revision of the SOPs in revision history in the cover of SOPs. SOP was provided in Indonesian language. SOPs training and dissemination to all of employee has been conducted. The organization has well implemented internal control and monitoring processes that check and report on the implementation of the SOPs. These include independent checks of the Mill and Estates by the corporate internal audit. There were several internal audits, e.g. AMA visiting, AME Visiting, VP Inspection, RSPO internal audit, etc. Internal audit was conducted to check implemetation of the procedures and work instructions. Internal audit covered operational activities of plantations and mill including the maintenance of palm oil crop (upkeep, manuring, IPM), harvesting and other supporting activities such as administration, road infrastructure, FFB transport and mill process. AMA Visiting, VP Inspection, and AME from Head office yearly periodic visit. The content of the report covers evaluation of mill operational activities, Mill process and cost control. The report includes recommendation for follow up from Area Manager Engineering and progress of follow up action from the previous visit. Procedure to address non-compliance and corrective action for continuous improvement defined in procedure preventive and corrective action (P-08 and P-17). YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 64 of 224

65 4.1.3 Records of monitoring and any follow-up actions shall be available. a. Have the records been maintained on the following? - Measurements or results of internal control and monitoring activities (refer 4.1.2) - Records of corrective actions and improvement undertaken BKM (Buku Kegiatan Mandor - Log book of group leader activity) Form pengancakan panen Form of harvesting planning Form cek ancak panen Checking of harvesting area Surat pengiriman buah sawit (SPBS) FFB transportation from Estate to Mill Nursery monitoring Logsheet of every station in Mill Calibration report Field observation to Estate and Mill Corrective action of all non-conformities found has been follow up. The organisation has established procedure to address noncompliance and corrective action for continuous improvement. Record of monitoring and any action taken were maintained and available for Estate and Mill, e.g. : - BKM (Buku Kegiatan Mandor - Log book of group leader activity). - Form pengancakan panen Form of harvesting planning - Form cek ancak panen Checking of harvesting area. The checking covered number of block, name of harvester. - Nursery monitoring - Pemeriksaan mutu buah Checking of FFB quality. The checking covered number of block, name of harvester, FFB lagged, brondol lagged, midrib set out, abnormal harvested, etc - Surat pengiriman buah sawit (SPBS) FFB transportation from Estate to Mill covered name of Estate, number of block, FFB lagged, brondolan lagged, etc. - Logsheet every station from loading ramp, sterilizer, threshing, press, clarification, boiler and effluent. Record daily activity of processs in each station and process performance in each station. - Calibration reports of measuring equipement, e.g. analytical balance, weigh bridge, oven, water bath, etc. - Control of Process work program and routin maintenance and equipment repair. Records of corrective actions and improvement undertaken for all of the control and monitoring activity above has been maintained by the organization. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 65 of 224

66 4.1.4 (M) Records of the origins of all third-party FFB sourced (collector, deliver, Cooperative, Farmers Association and out-grower) shall be available. a. Is there an SOP for third-party FFB sourcing? Not Applicable This is not applicable due to all FFBs processed were received from the organizations own estates. The organization has commitment b. Is there a list of approved third-party FFB suppliers? that the Mill will not use FFB from third party FFB. c. Is there proof of observed implementation of SOP? d. Is there daily and summary records of volume and origins of third-party FFB received? e. Have these records been verified against the available document? Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. NA 4.2 Guidance: Long-term fertility depends on maintaining the structure, organic matter content, nutrient status and microbiological health of the soil. Growers should ensure that they follow the best practices. Nutrient efficiency should take account of the age of plantations and soil conditions. The nutrient recycling strategy should include any use of biomass for by-products or energy production. One of the guidance may be used as a reference to the Technical Guideline for Oil Palm Development, Directorate General of Estate Crops, Ministry of Agriculture (2006) (M) A record of SOP implementation to maintain soil fertility that ensures optimal and sustained yield, shall be available a. Are there SOPs for Good Agricultural Practices in managing soil fertility? b. Is there evidence that the SOPs have been implemented and monitored? Records of fertilizer inputs shall be available. OP-3.3 Fertilizer Schedule for Development Oil Palm Procedure Field observation of compost application Organization has been defined the SOPs for Good Agricultural Practices in managing soil fertility which documented in OP-3.3 Fertilizer Schedule for Development Oil Palm. Manuring was performed manually with dosage stated in document Fertiliser recommendation Manuring activity was reported monthly. During the audit, there was no manuring activity, only compos application at Block of Sei Merah Estate and its activity just conducted in August Based on data on manuring recommendation and realisation 2016 and 2017 (up to July), it was noted that SOPs has been implemented and monitored. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 66 of 224

67 a. Is records of fertiliser inputs maintained? b. Is there records to proof that the fertiliser program is linked to the agronomic report? c. Is there records of fertilizer usage per tonne of FFB production (>in Summary Table, specific types of fertilizers)? Fertilizing Programme Sei Merah Estate 2016 and 2017 Fertilizing Programme Rambong Sialang Estate 2016 and 2017 Records of fertiliser inputs are well maintained in document Fertiliser recommendation 2016 and Fertiliser inputs recorded each semester per tonne FFB production, as follows: Sei Merah Estate Type of Fertiliser Realization 2016 (kg / tonffb) Realization January June 2017 (kg / tonffb) Urea RP MOP Kieserite Borate Compost - - FFB production 2016 of 33, ton and 2017 of 14, ton YES Records of periodical leaf, soil and visual analysis shall be available a. Is there SOPs for tissue and soil sampling? b. Is there evidence of implementation of the SOPs, including availability of records? Leaf sampling and collection procedure (No. TT 3.2, in October 2005). Rambong Sialang Estate Type of Fertiliser Realization 2016 (kg / tonffb) Realization January June 2017 (kg / tonffb) Urea MOP RP S. Dolomite Kieserite Borate NPK NPK Compost - - FFB production 2016 of 99, ton and 2017 of 37, ton Procedure of leaf sampling (Procedure No. TT 3.2) mentioned that leaf is analysed annually two months after the first application. Method of sample taken and preparation of analysis was described in the procedure no. RTD 5.1, by Research and Technology YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 67 of 224

68 c. Is there records of tissue and soil analysis? d. Is the results of the study incorporated into the fertilizer program? Report of Leaf Sampling Unit Report of Soil Sampling Unit Development February 2006: Making Oil Palm Fertilizer Recommendations. Procedure of soil analysis mentioned that soil was analysed every 5 years. Soil and leaf sampling was analysed regularly to determine the nutritional status of soil, to assist and to be guided in the preparation of annual fertilising programme recommendation. Evidence of periodic leaf sampling analysis 2017 and soil sampling analysis in Estate Leaf sampling Soil sampling analysis (samples) analysis (samples) Sei Merah Rambong Sialang b. Does the strategy include the following? Clear objectives and time-bound targets Inventory of - EFB - POME - Fibre - Boiler ash - Kernel shell - Palm residues from replanting Biomass recycling program Implementation and monitoring records Evidence and record of periodic leaf sample analysis was sighted. Results of the study were incorporated into the fertilizer program. Soil and leaf sampling was analysed regularly to determine the nutritional status of soil, to assist and to be guided in the preparation of annual fertilising programme recommendation A nutrient recycling strategy is recorded, including use of Empty Fruit Bunches (EFB), land application, and palm residues after replanting a. Is there a nutrient recycling strategy in place? Program and realisation fertilizing monitoring (Rambong Sialang and Sei Merah). Field observation at Block of Sei Merah Estate There was no the nutrient recycling strategy performed at Rambong Sialang Estate and Sei Merah Estate during (January June), i.e. compost. Compost only applied in Begerpang Estate during those period. The location, dosage and schedule of application have been determined. Field observation conducted at Block of Sei Merah Estate to verifiy the compost application in field and its activity just conducted in August YES Note to auditor: Ground verification required Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 68 of 224

69 Practices minimise and control erosion and degradation of soils. 4.3 Guidance: Techniques that minimize soil erosion are well known and should be adopted, where appropriate. These should include practices such as ground cover management, biomass recycling, terracing, and natural regeneration or restoration instead of replanting (M) Maps of any fragile soils shall be available. a. Is there soil maps showing presence of fragile soils and problem soils (refer to 4.3.6)? b. Are maps georeferenced and of appropriate scale (1:50,000)? Maps of soil type in Sei Merah Estate were available in scale 1:40,000 Maps of soil type in Rambong Sialang Estate were available in scale 1:40,000 A management strategy shall be in place for plantings on slopes above a certain limit (this needs to be soil and climate specific). Based on the soil map and field observation there were no fragile soils in Sei Merah and Rambong Sialang Estate - PT. PP LSIP Tbk. Specific Guidance: For 4.3.2: Management strategy on areas planted with steep slope may refer to the Technical Guidance for Oil Palm Development, Directorate General of Estate Crops, Agriculture Ministry (2006). Area with slope of >40% shall be avoided a. Is there a management strategy in place for plantings on slopes? b. Does the management strategy include the following? - Identification of steep areas not suitable for planting - Policy of planting on slopes - SOPs to minimise soil erosion based on local soil and climate conditions, e.g. ground cover management, biomass recycling, terracing, and natural regeneration or restoration instead of replanting c. Is there proof of records of field inspection on SOP implementation? A road maintenance programme shall be in place. OP-2 Preparation and Planting Procedure Map slope Rambong Sialang Estate, scale 1:25,000 Map slope Sei Merah Estate, scale 1:50,000 Field observation in Sei Merah and Rambong Sialang Estate The organisation has defined the strategy for planting of slopes area in the procedure OP-2 Preparation and Planting Procedure. The procedure describes management strategy for minimising and controlling soil erosion. The organisation does not recommend plantings on slopes > 40% or > 22º. System for planting on slopes area was provided through terracing, growing of legume cover crops (LCC) and determining of planting space. Based on maps of soil and field observation in Sei Merah and Rambong SIalang Estate, there was no area with slopes > 30%. YES YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 69 of 224

70 a. Is there a road maintenance programme in place with supporting budget and resources? b. Is there road maintenance records? Road maintenance programme and actual in period Field observation in Sei Merah Estate and Rambong Sialang Estate, date on Auguts 2017 Road maintenance program has been established in Sei Merah and Rambong Sialang Estate. Road maintenance was conducted manually and mechanically using grader and compactor. Realisation of road maintenance was well recorded covering block maintained, distance of road maintained and diesel fuel consumption. During field observation all main roads and collection roads were well maintained and easily passable for vehicle. (M) Subsidence of peat soils shall be minimised and monitored. A documented water and ground cover management programme shall be in place. YES Specific Guidance: For 4.3.4: For existing plantings on peat, the water table should be maintained at an average of 50cm (between 40-60cm) below ground surface measured with groundwater piezometer readings, or an average of 60cm (between 50-70cm) below ground surface as measured in water collection drains as per the Manual Best Management Practices for existing oil palm cultivation on peat, June 2012 or as per existing regulation if equal or shallower measured through a network of appropriate water control structures e.g. weirs, sandbags, etc. in fields, and watergates at the discharge points of main drains (Criteria 4.4 and 7.4). Regulations regarding water table on peat may refer, but not limited, to: 1. Government Regulation No. 71 year 2014 regarding Protection and Management of Peat Ecosystem 2. Regulation of Minister of Agriculture No. 14 year 2009 regarding Guideline of Oil Palm Cultivation on Peat 3. Regulation of Minister of Agriculture No. 11 year 2015 regarding Guideline of Indonesia Sustainable Palm Oil Plantation (ISPO) a. Is there an SOP to provide guidance on subsidence management? b. Does the SOP make reference to the RSPO BMPs on peat? c. How is subsidence being monitored? d. Are there records of subsidence monitoring? e. How is subsidence being minimised? f. Is there a water management programme and evidence of implementation? For existing plantings on peat, the water table should be maintained at an average of 50cm (between 40-60cm) below ground surface measured with groundwater piezometer readings, or an average of 60cm (between 50 Maps of soil type in Sei Merah Estate were available in scale 1:40,000 Maps of soil type in Rambong Sialang Estate were available in scale 1:40,000 Field observation in Sei Merah and Rambong Sialang Estate Based on Semi detail Soil Map and field observation at Sei Merah and Rambong Sialang Estate there are no peat soils in the plantation. N/A Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 70 of 224

71 - 70cm) below ground surface as measured in water collection drains, through a network of appropriate water control structures e.g. weirs, sandbags, etc. in fields, and watergates at the discharge points of main drains (Criteria 4.4 and 7.4). g. Is there a ground cover management programme and is there evidence of implementation? Drainability assessments shall be required prior to replanting on peat to determine the long-term viability of the necessary drainage for oil palm growing Specific Guidance: For 4.3.5: Where drainability assessments have identified areas unsuitable for oil palm replanting, plans should be in place for appropriate rehabilitation or alternative use of such areas. If the assessment indicates high risk of serious flooding and/or salt water intrusion within two crop cycles, growers and planters should consider ceasing replanting and implementing rehabilitation. Plantations on peat should be managed at least to the standard set out in the RSPO Manual on Best Management Practices (BMPs) for existing oil palm cultivation on peat, June 2012 (especially water management, fire avoidance, fertilizer use, subsidence and ground surface management). a. Was a drainability assessment conducted before replanting on peat? N/A b. Was a flood risk map provided as a result of the drainability assessment? c. If the drainability assessment shows that an area is unsuitable for replanting, are there alternative plans in place for rehabilitation and alternative use in accordance to the RSPO BMPs? Maps of soil type in Sei Merah Estate were available in scale 1:40,000 Maps of soil type in Rambong Sialang Estate were available in scale 1:40,000 Field observation in Sei Merah and Rambong Sialang Estate A management strategy shall be in place for other fragile and problem soils (e.g. sandy, low organic matter, acid sulphate soils). a. Is there a management strategy in place for other fragile and problem soils? b. Does the management strategy include SOPs for the management of other fragile and problem soils? Maps of soil type in Sei Merah Estate were available in scale 1:40,000 Maps of soil type in Rambong Sialang Estate were available in Based on Semi detail Soil Map and field observation at Sei Merah and Rambong Sialang Estate there are no peat soils in the plantation. Based on Semi detail Soil Map and field observation at Sei Merah and Rambong Sialang Estate there are no peat soils in the plantation. N/A Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 71 of 224

72 c. Is inspection and implementation records available? scale 1:40,000 Field observation in Sei Merah and Rambong Sialang Estate 4.4 Practices maintain the quality and availability of surface and ground water. An implemented water management plan shall be in place Specific Guidance: For 4.4.1: The water management plan will: a. Take account of the efficiency of use and renewability of sources; b. Ensure that the use and management of water by the operation does not result in adverse impacts on other users within the catchment area, including local communities and customary water users; c. Aim to ensure local communities, workers and their families have access to adequate, clean water for drinking, bathing, cleaning and latrine purposes; d. Avoid contamination of surface and ground water through run-off of soil, nutrients or chemicals, or as a result of inadequate disposal of waste including Palm Oil Mill Effluent (POME). a. Is there a water management plan in place for mill and plantation with identified actions? b. Does the plan include the following? Identification of water sources Efficient use of water Renewability of water source Impacts on catchment area and local stakeholders Access of clean drinking water all year round for stakeholders Avoidance of surface and ground water contamination c. Have the identified actions in the plan been implemented? - Water analysis measurement for period by Sucofindo Medan - Records of water consumption at mill and estates for period 2016 and 2017 (April) - POM-WI-11 water treatment process work instruction - Licence of ground water usage - Water management programme 2017 The documented procedure defined the method of water management plan include water source and distribution identification, volume of water utilization, parameter/standards of water utilization, identify the impacts include water effluents/wastes and also the method to reduce and control. The main source of water for Mill activity is surface water Kali Tawang River. Permit of water abstraction from surface water has been obtained on 24 December 2016 and valid through 3 years. Flow meters were installed to monitor water usage. The volume of water usage is monitored monthly both for process and domestic usage. Water consumption data January December 2016 and January June 2017 was sighted. The organisation has program to reduce water consumption, e.g. recycle condensate water from steriliser for dilution in clarification station, and repair water pipe in boiler. Source of water for Sei Merah Estate and domestic activity is ground water. Permit of water abstraction from has been obtained on 24 December 2016 and valid through 3 years. Flow meters were installed to monitor water usage. The volume of water usage is YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 72 of 224

73 monitored monthly both for process and domestic usage. Water consumption data January December 2016 and January June 2017 was sighted. Source of water for Rambong Sialang Estate and domestic is ground water. There are 7 ground water wells. Permit of water abstraction from ground water has been obtained on 20 February Flow meters were installed to monitor water usage. The volume of water usage is monitored monthly both for process and domestic usage. Water consumption data was sighted. Surface water quality is monitored annually (Sungai Kali Tawang, Sungai Cimahi, Sungai Bah Perak, Sungai Greahan, Sungai Sialang dan Sungai Timbang Serdang both for upstream and downstream in Begerpang Estate and Sungai Panglong, hulu Sungai Bah Didua Dua I, hulu Sungai Bah Sidua Dua II, hilir Sungai Titi Payung, hulu dan hilir Sungai Firdaus in Rambong Sialang Estate) except for Sungai Kali Tawang is monitored quarterly. Monitoring result of surface water quality was review for 2nd semester 2016 against Government Regulation #82/2001 class II. Quality of river water was in line with Government Regulation #82/2001 class II. So far the results of measurement/analysis are still within the parameters/limit value. Flow meters were installed to monitor water usage. The monitoring of water volume utilization was conducted, records was also sighted that water usage was majority from Begerpang Mill and supply base as below: Site Water usage Water usage (to 2016 (m 3 ) July 2017) (m 3 ) Sei Merah Estate 66,053 34,115 Rambung Sialang 133,349 63,044 Begerpang Mill 293, ,958 Site 2016 (m 3 ) Up to May 2017 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 73 of 224

74 (m 3 ) Water 68,769 30,418 FFB process 227,025 95,785 M 3 /ton FFB The organisation has program to reduce water consumption, e.g. arranging water distribution to staff housing, reusing water from PPE and hazardous waste cleaner for spraying, reusing water from turbine for clarification, and flowmeter installation for all water utilization at mill. The measurement analysis for clean water was conducted periodically (twice a year) against the standard of Permenkes 492/2010. (M) Protection of water courses and wetlands, including securing and maintaining appropriate riparian and other buffer zones, at the time of or prior to replanting shall be demonstrated. Specific Guidance: For 4.4.2: Refer to the RSPO Manual On Best Management Practices (BMP) for management and rehabilitation of natural vegetation associated with oil palm cultivation on peat, July Growers and millers should address the effects of their use of water and the effects of their activities on local water resources. a. Is there a map identifying water courses and wetlands? b. Are the water courses and wetlands protected? c. Are the riparian and buffer zones maintained and restored in existing plantation and replanting areas? d. Is there SOP for riparian and buffer zone protection? e. Has the SOP been implemented? - Management of riparian strips procedure (SOP-OP.13) - EMS-P16 HCV Management and Monitoring Issued - Field observation Organization has identified water courses and wetland in the plantation area. Map identifying water courses and wetlands documented in Peta Areal Sempadan Sungai with scale 1: There were several rivers travers at Rambong Sialang including: Bata River, Panglong River, Batu Pihit River and Lembah River. In the Bagerpang, there was also several rivers including: Kali Tawang River, Cimahi River, Bah Perak River, Greahan River, Sialang River and Bagerpang River. The riparian and buffer zones above was well maintained and restored in existing plantation. Field observation was conducted on Riparian zone of Sialang to verify procedure implementation. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 74 of 224

75 4.4.3 Riparian zone of Sialang on Block Bagerpang Estate was preserved naturally. However, field observation observed pesticide application up to riverside on riparian zone of Lembah on Block. Moreover, upkeep of oil palm in riparian zone of Lembah (water pump of nursery) was manually conducted however intensity of upkeep was impact surface erosion to river. Riparian zone of Lembah on Block has been enriched with woody trees, such as: Gmelina arborea and Tectona grandis. The organisation has established a program to reduce water consumption, such as: repair the boiler steam outlet pipelines toward turbines by installed joint expansion to replace the elbow in order to reduce losses; to recycle the vacuum drier water discharge into kernel processes operation; steam optimization by setting the boiler main valve; recycle the sterilizer condensates for solution oil phase decanter and water dilution press in order to minimize water usage. Policy of riparian buffer zone management at or before replanting was provided in related procedure (Management of riparian strips procedure SOP-OP.13 and EMS-P16 HCV Management and Monitoring Issued). Procedure mentioned that riparian buffer zone is planted with monoculture plants (woody trees) to minimize land claim, communicate management and protection of riparian zone to employee and around community and setting up sign of riparian protection as well as manually maintenance oil palm in the riparian area. During field observation shown that the procedure regarding riparian and buffer zone protection was well implemented. Records for monitoring of effluent especially BOD (Biochemical Oxygen Demand) and efforts to comply with legal requirements, shall be available (see criteria 2.1 and 5.6) Specific Guidances: For : The references and standard may refer, but not limited to: a. Decree of the Minister of Environment No. 51 year 1995 regarding Industrial Effluent Quality b. Decree of the Minister of Environment No. 28 year 2003 regarding Technical Guidance Assessment Effluent Usage from Industry to Soil in Palm Oil Plantation. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 75 of 224

76 c. Regulation of the Minister of Environment No. 12 year 2006 regarding Requirements and Mechanism of Legal Permit to Discharge Effluent to the Sea. National regulations relate to riparian strip are, such as: 1. Government Regulation No. 38 year 2011 regarding River. 2. Government Regulation No. 37 year 2012 regarding Management of Riparian Strip. 3. Government Regulation No. 26 year 2008 regarding National Landscape, clause 56 (2) riparian strip outside settlement area is divided with following criteria: - Riparian strip of at least 5 meter width from the outer dike along the river bank with dike - Riparian strip of at least 100 meter from river side along main river bank without dike outside settlement area, - Riparian strip of at least 50 meter from river side along sub-main river bank without dike outside settlement area 4. Presidential Decree No. 32 year 1990 clause 16, regarding Criteria of Riparian Strip: a. At least 100 meter from outer main river and 50 meter from sub-main river, which is located outside settlement area. b. For river in settlement area, the riparian strip should be appropriate to build inspection path between 10 to 15 meters width. 5. Regulation of the Minister of Public Work No. 63 year 1993 regarding Riparian Strip, River Usage Area, River Authorization Area, Criteria of Riparian Strip Line. a. Is the mill effluent treatment process in place? - Waste water analysis Begerpang Mill waste water (POME) was processed through a series YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 76 of 224

77 b. Is there a process in place for checking and monitoring water discharge quality, particularly BOD? c. Is the water discharge quality in compliance with national regulations? d. Does the mill have a license for treatment, discharge or land application of mill effluent, and is the mill in compliant with the requirements of the license? Monitoring of mill water use per ton of FFB shall be recorded a. Are there procedures to measure mill water usage, and are the procedures implemented? b. Are there records of mill water use per tonne of Fresh Fruit Bunches (FFB)? measurement period 2016 and January June Site visit to WWTP ponds at Begerpang Mill - Mill monthly report - Measurement of BOD for January to June Land Application permit No.486 Tahun 2015 dated 23 March 2015 that valid for 3 (three) years from Asahan Regent. - Mill water use per tonne of FFB for 2016 and period January to June Program to reduce water consumption of waste water treatment ponds: one anaerobic pond, one facultative pond and one aerobic pond. Process parameter monitoring and maintenance of the ponds were sighted. POME is monitored monthly as required by permit of land application on 23 March The results of POME monitoring were reviewed including measurement of BOD for January to June The Environment Ministry Decree No. 29/2003 required that BOD of POME discharged is less than 5,000 mg/litre. The result of POME quality during this period was under 5,000 mg/litre (average 500 1,000 mg/litre). Company has permit of Land application from Regent of Deli Serdang #486 year 2015 dated 23 March The permit was valid through 3 years. Land application was permitted to area of 90 ha in plantation Begerpang estate. Mill water use per tonne of FFB is monitored monthly. Result of monitoring of mill water use per tonne of FFB was sighted for 2016 and period January to June It was noted that mill water use per tonne of FFB period January to June 2017 was below compared to year 2016, as follows: Water use (m 3 ) per tonne of FFB (January June) YES Mill water use comprise of usage for process, boiler and domestic usage. The organisation has program to reduce water consumption, such as: repair the boiler steam outlet pipelines toward turbines by installed joint expansion to replace the elbow in order to reduce losses; to recycle the vacuum drier water discharge into kernel processes operation; steam optimization by setting the boiler main Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 77 of 224

78 valve; recycle the sterilizer condensates for solution oil phase decanter and water dilution press in order to minimize water usage. Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management techniques. Guidance: Growers should apply recognised IPM techniques, incorporating cultural, biological, mechanical and physical methods to minimise the use of chemicals. 4.5 Native species should be used in biological control where possible. Regulations to be referred are such as: a. Guidance for Advancement of Pesticides usage, Directorate General of Infrastructure and Facilities, Ministry of Agriculture (2011) b. Technical Guidance for the Development of Oil Palm Plantation, Directorate General of Estate Crops, Ministry of Agriculture (2006) (M) Monitoring of Integrated Pest Management (IPM) plan implementation shall be available. a. Is there a documented IPM plan? b. Does the IPM plan include the following? Identification of potential pests and thresholds What are the techniques used (cultural, biological, mechanical and physical methods)? What are the native species used as part of the biological control method? Does it help in reducing the use of chemicals over a period of time? Prophylactic use of pesticides Minimization of pesticide use Review on the plans to suit the present condition such as replanting? c. Is there an SOP to implement the plan and monitor its effectiveness? d. Is there records of pest occurrence and control? OP-3.2 Pest and Disease (Integrated Pest Management) Program census of caterpillar leaf eater Program census of rat Summary census of caterpillar leaf eater Monitoring barn owl in nest box Pest and Diseases management program of oil palm plantations have been prepared in the budget The SOP describes integrated pest control (integrated pest management/ipm) plan. The SOP was established to confirm that IPM to control pests, diseases, weeds and invasive introduced species. The procedures have include: - Identification of potential pests and thresholds - The techniques were used (cultural, biological, mechanical and physical methods). - The native species was as part of the biological control method. - Reducing of the use of chemicals over a period of time. - Prophylactic use of pesticides. - Minimization of pesticide use. - Review on the plans to suit the present condition such as replanting. IPM plan was well implemented and documented, e.g.: Census of caterpillar is conducted twice a month. Based on result of caterpillar census in there were several caterpillar attacts, recommendation was census and no YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 78 of 224

79 4.5.2 Training records of Integrated Pest Management (IPM) shall be available. a. Is there records of training provided to those List of participant attendance involved in the implementation of IPM? Inteview with IPM operators Pesticides are used in ways that do not endanger health or the environment. pesticide use to handle during July 2016 June 2017 at Rambong Sialang and Sei Merah Estate. Census of rat is conducted every 3 months. To control rat, the organisation applied Tyto alba (barn owls) as predator of rat. Condition of Tyto alba is monitored periodically. Census of Oryctes is conducted in immature oil palm. Application of chemical is conducted monthly. The beneficial plant such as: Turnera subulata planted in the collection and the main road. Planting and upkeep of beneficial plants was sighted and during field observations, it was observed that beneficial plants were well maintained. And also it was verified that no evidence of trees attacked by pest or disease. Training of implementation of IPM has been conducted several times. Participant of training was staff and non staff from Estates. List of participant attendance was sighted. Training material covered IPM technique and implementation. One of the conducting training date on 23 May 2017 (Rambong Sialang Estate) and 25 March 2017 (Sei Merah Estate). YES Guidance: The RSPO has identified some examples of alternatives to pesticide use, which include those listed in the Research project on Integrated Weed Management Strategies for Oil Palm; CABI, April Pesticides application on peatland and swamp may use IPM methods, such as in the RSPO Manual on Management Practices (BMPs) for Management and Rehabilitation of Natural Vegetation Associated with Oil Palm Cultivation on Peat. (M) Documented evidence shall be available to show that pesticide used based on regulations and the use of pesticide is specific to target species with appropriate dosage which have minimal impact on non-target species. Specific Guidance: For 4.6.1: Measures to avoid resistance on target species (such as application of pesticide rotations) should be applied, which consider less harmful alternatives and IPM. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 79 of 224

80 4.6.2 a. Does the organization have a policy on safe use of chemicals? b. Does the organization have SOPs for use of selective products that are specific to target pests, weeds, or diseases and which have minimal effect on non-target species? i. Measures to avoid the development of resistance (such as pesticide rotation) should be applied. ii. Is there a list of all pesticide with target species and justification of use? iii. The justification should consider less harmful alternatives and IPM. c. Is there evidence of implementation of SOP on the ground? Management of Hazardous and Toxic Material and Waste Procedure - EMSP-14 Procedure OP Guide to safe use of pesticide, March 2008 Type of Agrochemical and active ingredient Field observation The organisation has established procedure on safe use of chemical. Procedure described on safe use of chemical, selection, use and storage of pesticide. The procedure also described use of selective pesticides that are specific to target pests, weeds, or diseases. Each type of pesticide used have been defined specific target of pest, types of weeds, application doses per hectare which have minimal effect on non-target species and a broad plan of applications specified in the annual budget. To avoid development of resistance have been implemented by pesticides rotation. Less harmfull alternatives and IPM was applied by planting of beneficial plants, building nest box and census of caterpillar and rat. Pesticides used has license and registered in the Agriculture Department as mentioned in Pesticide Commission Book Buku Komisi Pestisida : Type of Expired date of Register number pesticides register number Elang 480 SL RI December 2021 Metsulindo 20 WP RI May 2021 Lindomin 865SL RI December 2020 Starane 290 EC RI April 2019 Marshal 200 EC RI January 2018 Marshal 5 GR RI October 2017 Orthene 75 SP RI December 2021 Starthene 75WG RI October 2017 During audit it was evidence that procedure was implemented. (M) Records of pesticides use (including active ingredients used and their LD50, area treated, amount of active ingredients applied per ha and number of applications) shall be available. a. Does the company have a pesticide application program? - Annual budget 2016 b. Is record of pesticides use available? c. Do the records detail the active ingredients used and their LD50, area treated, amount of - Monitoring of Pesticides 2017 The organization has defined pesticide application program in the annual budget. Record of pestiside use realisation was well recorded and reported in monthly Estate report. Records also covered active ingredients used and their LD50, area treated, amount of active ingredients applied per ha. YES YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 80 of 224

81 active ingredients applied per ha and number of applications? Pesticides Toxicity at Rambong Sialang Estate as follows: Type of Pesticide Elang 480 SL Metsulindo 20 WP Lindomin 865 SL Starane 290 EC Orthene 75 SP LD50 Active Ingridient (gr/ L) Volume (L) Area treated (Ha) Amount of active ingredients applied (Kg) per ha , , > , , > , , , Pesticides Toxicity at Sei Merah Estate as follows: Type of Pesticide Elang 480 SL Metsulindo 20 WP Lindomin 865 SL Starane 290 EC Marshal 200 EC Marshal 5 gr Orthene 75 SP Starane 75 WG LD50 Active Ingridient (gr/ L) Volume (L) Area treated (Ha) Amount of active ingredients applied (Kg) per ha > > , Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 81 of 224

82 4.6.3 (M) Any use of pesticides shall be minimised as part of a plan, and in accordance with Integrated Pest Management (IPM) plans. There shall be no prophylactic use of pesticides, except in specific situations identified in Indonesia Best Practice guidelines. Specific Guidance: For 4.6.3: Justification of the use of such pesticides will be included in the public summary report. a. Does the company have an IPM plan? OP-3.2 Pest and Disease Integrated Pest Management (IPM) program included: b. Has that plan been implemented? (Integrated Pest Management) Visual observation (e.g. broken leafs or stems and fruit rotten) c. Is the effectiveness of the IPM plan Program census of caterpillar Conducting a census (to determine the distribution and level of monitored? leaf eater attack). Control (manual, biological or chemical), e.g hand picking, light d. Are there records showing that the use of Program census of rat trap, planting of beneficial plant (nest of natural predator for pesticides have been minimised in accordance caterpillars) with Integrated Pest Management (IPM) plan? e. Has there been prophylactic use of pesticides? If so, justification must be provided in accordance to National Best Practices. Summary census of caterpillar leaf eater Monitoring barn owl in nest box Form of Herbicide use Minimisation of pesticed use Census of evaluation (to see the effect of control) IPM plan was well implemented and documented, e.g.: Census of caterpillar is conducted twice a month. Based on result of caterpillar census in there were several caterpillar attacts, recommendation was census and no pesticide use to handle during July 2016 June Census of rat is conducted every 3 months. To control rat, the organisation applied Tyto alba (barn owls) as predator of rat. Condition of Tyto alba is monitored periodically. Census of Oryctes is conducted in immature oil palm. Application of chemical is conducted monthly. The beneficial plant such as: Turnera subulata planted in the collection and the main road. Planting and upkeep of beneficial plants was sighted and during field observations, it was observed that beneficial plants were well maintained. Based on records of pesticides use it was verified that the use of pesticides has been minimised as part of a plan, and in accordance with Integrated Pest Management (IPM) plans. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 82 of 224

83 4.6.4 It shown the company's commitment to always reduce pesticide usage and give priority to the prevention of mechanical, biological and integrated pest management. It was evidence that there was no prophylactic use of pesticides in Estates. Pesticide only used and apply for weeds and pest. The evidence shall be available to demonstrate that use of Pesticides, categorized in Class 1A or 1B by World Health Organization, or those are listed in the Stockholm and Rotterdam Conventions, and paraquat are not used, except in specific situations identified in national Best Practice guidelines. The use of such pesticides shall be minimized and eliminated as part of a plan, and shall only be used in exceptional circumstances. Specific Guidances: For 4.6.4: Use of paraquat, as one of the restricted use pesticides, shall refer to the Regulation of the Minister of Agriculture No. 24 year Operators involve in the use of restricted pesticides must be certified by Pesticide Commission (Komisi Pestisida). a. Does the company have a complete listing of WHO class 1A, class 1B, and Stockholm or Rotterdam Conventions pesticide? b. Is there a policy, procedure or management plan committing to minimise and eliminate use of these pesticides and paraquat? c. Are there records of minimisation of pesticides and paraquat use? d. Where there is the use of the above pesticides or paraquat, has justification in line with national best practice guidelines been documented? e. Does physical verification of inventory in the chemical store agree back to the inventory records? Management of Hazardous and Toxic Material and Waste Procedure - EMSP-14 Pesticide monitoring by WHO Class, Stockholm or Rotterdam Conventions. Procedure OP Guide to safe use of pesticide, March 2008 Form of pesticide use at Rambong Sialang and Sei Merah Estate in Commitment from BOD SK #038/MGT/S&P/IX/2013 regarding minimise and eliminate use of paraquat to Area Manager Agronomy, Estate Manager, R&D, Legal Department, GS and ECSR, HRD dan OAD (Operational Organization have a list of pesticides that are included in WHO class 1A, class 1B, and Stockholm or Rotterdam Conventions pesticide. The organisation has commitment to minimise and eliminate use of paraquat. Based on records of pesticides use (July 2016 June 2017) at Rambong Sialang and Sei Merah Estate and during field observation it was verified that its pesticides and paraquat has not been applied. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 83 of 224

84 4.6.5 Administration) (M) Evidence of pesticide application by trained person and in accordance with application guidelines in product label and storage guidelines shall be available. Appropriate safety equipment shall be provided and utilized. All precautions attached to the products shall be properly observed, applied, and understood by workers (see Criterion 4.7) Specific Guidance : For 4.6.5: Requirement pertaining to Personal Protected Equipment (PPE) shall refer to the Regulation of the Minister of Manpower No.8 year 2010 regarding PPE and Material Safety Data Sheet. Use of pesticides must follow guidance stated on the product s label. If there are gaps between the use of pesticides and the guidance, documented justification should be provided, a. Is there SOP for chemicals/pesticides handling? b. Is there a training plan and training records for workers who apply or handle pesticides? c. Is there evidence that training has been conducted in an appropriate language understood by the workers? d. Are pesticides handled, used or applied only by persons who have completed the necessary training? e. Are the workers involved in chemical handling or application able to demonstrate understanding of the hazards and risks related to chemicals used when interviewed? f. Are pesticides always applied in accordance with the product label? g. Are MSDS for pesticides used readily available for easy reference? h. Is appropriate safety and application equipment provided and used? i. Is PPE used appropriate according to recommendations in any risk assessments done? Management of Hazardous and Toxic Material and Waste Procedure - EMSP-14 Certificate of training Interview result during public consultation Field observation at Begerpang, Sei Merah and Rambong Sialang Estate The organisation has established procedure on safe use of chemical. Procedure described on safe use of chemical, selection, use and storage of chemicals. Spraying workers have received usage of limited pesticide training. Training was delivered by Pesticide and Fertilizer Controlling Commission of Agriculture Department Nort Sumatera Province on 3 September 2014 for spraying worker and staffs of Begerpang, Sei Merah and Rambong Sialang Estate. However some of spraying workers were not trained yet as shown in Major Non Conformities below. Training covered handling of concentrate agrochemical and spraying method including pesticide hazard. Pesticides are always applied in accordance with the product label and procedure. Pesticides storage was locked areas with limited access. The storage was ventilated. MSDS and hazard symbol label were provided nearby of pesticides. Emergency shower and eye washer were also provided to anticipate in case of an emergency of pesticides handling. The possible spill was managed. Secondary containment was provided around the pesticides storage area. Spill kit was also provided in the area. PPE for handling of pesticides were provided including boots, apron, safety glass, respiratory mask and hand gloves. PPE used was appropriate according to recommendations in any risk assessments. PPE provided and used YES (Major NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 84 of 224

85 j. Is appropriate PPE provided and used, and can it be easily replaced if damaged? k. Does the management checked the workers usage of appropriate PPEs? can be easily replaced if damaged. Personnel interviewed (sprayer workers) during public consultation can clearly explain the type of work including work methods and goals, materials used (pesticides) including the dosage and hazards and risks, personal protective equipment and first aid. All the workers used the personal protective equipment meet with the safety rules and work instruction such as: Appron, safety goggles, mask, hand gloves and safety shoes. All precautions attached to the products properly observed, applied, and understood by workers. Mandor as person in charge to check the workers usage of appropriate PPEs. PPE was replaced if damaged. Major Non-conformance : It was found that not all spraying workers have completed the necessary training, on behalf Katik, Rukiatik, and Runtah in Sei Merah Estate. Recurrence of Major NCR and (M) Storage of pesticides shall be according to recognised best practices. All pesticides containers shall be properly managed according to the existing regulations and or instructions enclosed on the containers (see criterion 5.3) Specific guidance: For 4.6.6: Some regulations regarding pesticides are: a. Government Regulation No. 18 year 1999 regarding Toxic and Hazardous Materials Management b. List of Toxic & Hazardous Materials from specific source, unspecific source, expired chemical, leaked chemical, residue, container, or product disposal which does not comply with the specification of Government Regulation No. 85 year 1999 regarding changes of Government Regulation No. 18 year 1999 regarding the Management of Hazardous and Poisoned Waste. c. FAO International Code of Conduct on the distribution and use of pesticides and it guidance and supported by relevant industrial guidance (see Annex 1). d. Regulation of the Minister of Agriculture No. 01/ Permentan/OT.140 /1/2007 regarding List of Banned and Restricted Pesticide (based on active ingredients). e. Regulation of the Minister of Agriculture No. 24/Permentan/SR.140/4/2011 regarding Requirement and Mechanism to Register Pesticide. f. Stockholm Convention regarding Consistent Organic Pollutant which had been ratified with Act No. 19 year 2009 g. Guidance for Advancement of Pesticides usage, Directorate General of Infrastructure and Facilities, Ministry of Agriculture (2011) a. Has the SOP for pesticide storage been - Procedure OP Guide to Documented procedure (OP 5.2.2) describes best practices for YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 85 of 224

86 documented and implemented? b. Are all pesticides stored according to recognised best practices? c. Is there evidence that empty pesticide containers are properly stored and disposed off and not used for other purposes? d. Is there evidence observed in the field that pesticide containers are indiscriminately disposed (in dump site) or used for other purposes,.e.g. as waste containers, flower pots? safe use of pesticide, March The training list of attendance and training material - Hazardous waste manifest records and logbook records - Field observation at Sei Merah and Rambong Sialang Estate Application of pesticides shall be by proven methods that minimise risk and negative impacts. a. Is there work instruction for pesticide application? b. Is there training provided on work instruction including risk and impacts of pesticide applications? OP-5 Mature Upkeep (Weeding, Pest & Disease, pruning, Census & survey operation, Fertilizer Management, Empty bunch & POME application). OP-3.2 Pest and Disease (Integrated Pest Management) Procedure OP Guide to safe use of pesticide, March 2008 Training and dissemination pesticides handling and storage. Pesticides were stored in the determined area separated from fertiliser and other chemicals. Pesticides storage was provided in warehouse each estate. Pesticides storage was locked areas with limited access. The storage was ventilated through cross flow ventilation. MSDS and hazard symbol label were provided nearby of pesticides. Emergency shower and eyewash were also provided to anticipate in case of an emergency of chemical handling. PPE for handling of chemicals were provided including boots, apron, safety glass, respiratory mask and hand gloves. The possible spill was managed. Secondary containment was provided around the pesticides storage area. Spill kit was also provided in the area. All empty pesticides containers were triple rinsed at specific area; some of the jerry cans were reused for spraying activities, while the others are collected in the temporary storage of hazardous waste. Pesticides containers were transported by authorised transporter, PT. Amindy Barokah. Records of pesticides containers quantity were evident. Liquid waste from pesticides was reused for the next spraying applications also there are several ex-containers jerry can that may re-use for field application. Pesticide application was described in OP-5 Mature Upkeep (Weeding, Pest & Disease, pruning, Census & survey operation, Fertilizer Management, Empty bunch & POME application) and OP- 3.2 Pest and Disease (Integrated Pest Management). Training and dissemination on work instruction including risk and impacts of pesticide applications has been performed by the organization regularly. Training and dissemination records were sighted. Personnel interviewed (sprayer workers) during field observation can clearly explain the type of work including work methods and goals, materials used (pesticides) including the dosage and hazards and risks, personal protective equipment and first aid. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 86 of 224

87 4.6.8 record (M) Pesticides may only be applied aerially where there is a documented justification. Surrounding communities shall be informed of impending aerial pesticide applications with all relevant information within reasonable time prior to application a. Has aerial spray been applied? If yes, is there documented justification? Filed observation There was no aerial spray been applied in Rambong Sialang and Sei Merah Estate. N/A b. Is the impact and risk associated with aerial application documented and made available? c. Are the identified affected communities informed of impending aerial pesticide applications with all relevant information within reasonable time prior to application? Interview with management Sei Merah and Rambong Sialang Estate Evidence of training on handling pesticide for workers and scheme smallholder (if any) shall be available a. Has the company provided information materials on pesticide handling to all employees and associated smallholders (if any) (see Criterion 4.8)? Training and dissemination record Training certificate b. Is there evidence of periodic training (in appropriate language) of employees and associated smallholders on pesticide handling? Note: Interview with workers and smallholders on their knowledge and skills in pesticides handling. Interview result during public consultatio There was no smallholder associated with Begerpang Mill and its supply bases. The organisation has provided information materials on pesticide handling to all employees. Training and dissemination on work instruction including risk and impacts of pesticide applications has been performed by the organization regularly. Training and dissemination records were sighted. Spraying workers have received usage of limited pesticide training. Training was delivered by Pesticide and Fertilizer Controlling Commission of Agriculture Department Nort Sumatera Province on 3 September 2014 and the certificate valid for 5 years ( ). Personnel interviewed (sprayer workers) during Field Observation can clearly explain the type of work including work methods and goals, materials used (pesticides) including the dosage and hazards and risks, personal protective equipment and first aid Proof that pesticide waste has been handled as per legal regulations and understood by worker and manager, shall be demonstrated YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 87 of 224

88 a. Is there an SOP for proper disposal of waste material? b. Is there training provided to workers and managers on proper waste disposal? c. Is there evidence of implementation of proper ways for waste disposal by the company? - Procedure OP Guide to safe use of pesticide, March Procedure OP 5.8 Waste Management, March The training list of attendance and training material - Field observation at Sei Merah and Rambong Sialang Estate (M) Annual medical records of pesticide operators, and follow-up treatment of medical results, shall be available a. Is there an updated list of pesticide operators? Employee data of sprayers/operators b. Is there record of annual medical surveillance of pesticide operators? c. Is there medical and treatment record of all pesticide operators? Annual medical check-up conducted on period March by Third party clinic Documented procedure (OP 5.2.2) described all empty pesticides containers were triple rinsed and collected in the temporary storage of hazardous waste. Pesticides containers can reused for spraying activities. Pesticides containers were transported by authorised transporter, PT. Amindy Barokah. Records of pesticides containers quantity were evident. Liquid waste from pesticides was reused for the next spraying applications also there are several ex-containers jerry can that may re-use for field application. Training/briefing regarding disposal of waste material has been conducted to all workers and staffs. Based on interview with workers (sprayer, harvester, warehouse clerk, hazardous waste temporary storage clerk), they understood the disposal of waste material. All empty pesticides containers were triple rinsed and collected in the temporary storage of hazardous waste. Pesticides containers were transported by authorised transporter, PT. Amindy Barokah Sumut. Records of pesticides containers quantity were evident. Liquid waste from pesticides was reused for the next spraying applications also there are several ex-containers jerry can that may re-use for field application. Hazardous waste manifests were sighted for handling of agrochemical containers on 2 February 2017 for Sei Merah Estate and 3 February 2017 for Rambong Sialang. Liquid waste from agrochemical was reused for the next spraying application. Training/briefing regarding disposal of waste material has been conducted to all workers and staffs. Based on interview with workers, they understood the disposal of waste material. The medical check-up package for each operator includes the cholinesterase testing to detect the toxin content within the bloods system. Records of annual medical surveillance of pesticide operators were sighted includes the reports at both estates conducted by third party YES YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 88 of 224

89 clinic (Anugerah Ibu). The resume of medical surveillance showed that there is no anomaly detected by the company doctor explanation. Rambong Sialang Estate Total 108 operators are conducted MCU (medical check-up) includes physical examination, bloods laboratory and cholinesterase dated 25 th March 2017 Begerpang Estate (M) Records shall be available to show that spraying is not conducted by pregnant or breast-feeding women. a. Is there a policy statement preventing pregnant and breast-feeding women from handling pesticides? Internal Memorandum No. 89/DL/INT/VI/2011 dated 13 June b. Is there a lists of female workers handling pesticides available? c. Does the company have a system to identify pregnant and breast-feeding women? d. Is there evidence showing that pregnant and breast-feeding women are not allowed to handle pesticides? Lists of workers handling pesticides 2016/2017 Interviews with sprayer workers on August 2017 Total 39 operators are conducted MCU (medical check-up) includes physical examination, bloods laboratory and cholinesterase dated 25 th March The resume shown that all of employees were in fit condition. The abnormal/suspected patient will be followed up by company doctor and monitored to ensure that the patients are proper to do the job normally. Organization has established the policy statement preventing pregnant and breast-feeding women from handling pesticides. Policies related to the prevention of pregnancy in the handling of pesticides listed in Internal Memorandum No. 89/DL/INT/VI/2011 dated 13 June In a memorandum explained that companies should not hire pregnant women to work as sprayer or relating to the use of pesticides. List of female workers handling pesticides was available and well documented. The company have system to identify pregnant and breast-feeding women. Pregnancy check-up for sprayers was done in YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 89 of 224

90 An occupational health and safety plan is documented, effectively communicated and implemented. 4.7 Guidance: Growers and millers should ensure that the workplace, machinery, equipment, transport and processes under their control are safe and without undue risk to health. Growers and millers should ensure that the chemical, physical and biological substances and agents under their control are without undue ri\sk to health, and appropriate measures are taken if needed. All indicators apply to all workers regardless of status. The health and safety plan should also refer to the Government Regulation No. 50 year 2012 regarding Application of Occupational Health and Safety Management System (M) A health and safety policy shall be in place. A health and safety plan shall be documented and implemented, and its effectiveness monitored. a. Is there a health and safety policy in place? OHS Policy Is it written in an appropriate language? OHS Management system Has the policy been approved by an manual and procedures authorized personnel and dated? Does the policy cover mitigation of risks to workers health and safety at all workplace activities? OHS Objectives and programme period 2016 and 2017 Are the workers aware of and understand the policy? b. Is there a health and safety plan in place? Does the plan include targets for improving occupational health and safety? Does the plan reflect guidance provided in the ILO Convention 184 (see Annex 1)? c. Is there evidence of implementation of the plan? d. Is the effectiveness of the health and safety plan monitored? e. Is the health and safety plan made publicly available? f. Is there an action plan if targets are not OHS records: MCU, periodic measurement and inspections, trainings and emergency drill Site visit observation to estate and mill OHS policy is established and approved by Units Managers on 05 th January 2017, consisting commitment to mitigate the risks of safety and health including prevention from injury and work related disease. Policy was displayed at strategic locations of estate and mill and communicated to employees including contractor workers. The socialization of its policy by provide banner, displayed at several area within office and buildings also by conduct induction to employees. The documented manual of OHS was established on 03rd December 2013, there were also several documented procedures to support the OHS management system, such as: OHS communication and consultation, purchasing and contractor evaluation, emergency response, OHS monitoring and measurement, employees health monitoring, etc., since the organisation are certified with SMK3 government OHS management system. The objectives and programmes related to health and safety were established within year period for each estates (Rambong Sialang and Bagerpang) and mill as below: OHS Periodical meetings Trainings Periodic MCU and fogging Emergency response plan (inspection and simulation) OHS Inspection YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 90 of 224

91 achieved? Management review and Internal audit Evidences were sighted for several OHS programmes / OHS Management system manual, such as: MCU (Medical check-up) at mill include physical examination; bloods laboratory; roentgen; audiometry and spirometry; last MCU at Bagerpang mill for 50 personnel for period 26 th October 2016 and 25 th March2017. For Kebun Rambong sialang and Bagerpang Estate; total operators are conducted MCU (medical check-up) includes physical examination, bloods laboratory and cholinesterase dated 25 th March The resume shown that all of employees were in fit condition. Working place measurement at Begerpang mill conducted within period 28 th July 2017 by third party lab (Balai K3 Medan) includes indoor air ambient (CO,, SO2, particulates, NH3, H2S, Methyl mercaptane, methyl sulphide and styrene); noise, vibration, and temperature/wbgt. The result shown within threshold limit value. Monthly safety inspection separated for General safety inspection (per station) and specific safety inspection(for whole mill); that consist of PPE inspection, emergency situations; working equipment; high risk area; warning signs; competency and ergonomics aspects. OHS Trainings Rambong sialang and Begerpang estate include Chemical Handling (14th March 2017); First aider (6th Nov 2016 and 27th March 2017). OHS Trainings at Begerpang mill include: Emergency simulation (13th March 2017); Housing fire handling by house wife (27th April 2017); Chemical handling and hazardous waste handling (14th March 2017); Housekeeping, hygiene and sanitation (11th March 2017); Basic safety (27th December 2016); Safe working at height (15th October 2016); OHS management system based on SMK3 awarenes (18th August 2016); PPE and lock out tag out / LOTO Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 91 of 224

92 4.7.2 (M) A documented risk assessment shall be available and its implementation shall be recorded. Specific Guidance: For 4.7.2: All precautions attached to products shall be properly observed, understood, and applied. a. Have risk assessments been conducted for all operations where health and safety is an issue? Risk analysis. Last revision : (R.Sialang estate) b. Does the risk assessment cover all the organization s processes and activities? c. If any accidents had occurred, were these included in the risk assessments with action plans to prevent further recurrence? d. Have the procedures and action plans been documented and implemented to address the identified issues? e. Have all precautions attached to products been properly observed and applied to the workers? 13 th March 2017 (Begerpang estate) 09 th -January-2016 (BGP mill). (15th March 2016) During audit was also conducted site observation for several activities at estates include estate routine activities such as harvesting, pesticides spraying and workshops at all estates. While at mill was also conducted observation regarding CPO processes machineries, workshop and warehouses. For general observation that several mandatory PPE are utilized by employees such as: helmet, shoes, respirators ear plugs and ear muffs. Also there were deployed several PPE symbols at the at risk area, the provision of PPE are observed in good condition such as disciplinary, standard and availability. Moreover the working equipment are properly control (e.g. blades cover / sarung egrek; mechanical protection at mill processes machineries, etc.) The quantitative method of risk analysis was conducted for all activities at Mill and Estate. The mills risk analysis was covered activities such as: transportation, weighbridge receiver, FFB sorter, loading ramp, transfer carriage, sterilizer, tippler, thresher, press, clarifier, engine room, water treatment, effluent plant, workshop, warehouse, diesel tank, laboratory, offices and traffic activities. While the estates risk analysis were covered activities such as: Loading FFB, estate maintenance, fertilizer, pesticides & herbicides, harvesting, replanting, workshop activities at traksi and also warehousing. Also supporting activities, such as: housing /building refurbishment; office, security, ganoderma control, etc. According to the procedure, at least OHS risk assessment document must be reviewed once a year and/or when incident happened will consider as review agenda. OHS risk assessment records were sighted for Mill and Estates. The analysis method were described within the documented instruction that analysis was YES (Major NCR closed) Audit Report Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 92 of 224

93 considered frequency of hazard and consequences of risks that summarized the risk level from low risk to extreme risks. Within the risk analysis was also considered the hierarchy of control to take action of risk control such as elimination, substitution, engineering, administrative and PPE. Action plan was developed as followed up the existing high risk in order to reduce to lowest residual risk analysis. Nevertheless not all precaution to address the risk identified are implemented, in such as the risk of holes of ganoderma trenches are not comprehensively controlled Non-conformance : There are observed several opened hole caused by Ganoderma excavations (±1.5 meters depth) around the estate of Begerpang (Div-5), without any barricades or prevention of falls/drown, as provision control within the risk assessment that every Ganoderma holes/trenches shall be barricade to prevent risk of falls/drown. (M) Records of Occupational Health and Safety (OHS) program (see 4.8) and Personal Protective Equipment (PPE) training in accordance with the result of hazard identification and risk analysis shall be available to all workers. Specific Guidance: For 4.7.3: Adequate and appropriate Personal Protective Equipment (PPE) shall be available to all workers at the workplace based on the result of Identification of Sources of Hazard and Risk Control including all potentially hazardous operations, such as the use of pesticides, operating machinery, land preparation, harvesting and if it is used, burning. a. Are all workers involved in the operation appropriately trained in safe working practices (see Criterion 4.8)? b. Are OSH training programs and training records available and conducted by qualified persons? c. Is adequate and appropriate protective equipment available to all workers at the place of work to cover all potentially hazardous operations, such as pesticide application, Training Programme Training attendance Licenses/certificates of trainings (licenses for boiler operator, licence for operator of generator set, licence of heavy equipment operator, pesticide training for sprayers, etc.) Site visit observation to estate OHS training has been programmed and provided appear balanced with OHS hazard and risk at Mill and Estates. Basic OHS training performed internally by safety officer in charge at mill and estate, the training record and programme related to OHS were sighted and verified during this audit includes: OHS Trainings Rambong sialang and Begerpang estate include Chemical Handling (14 th March 2017); First aider (6 th Nov 2016 and 27 th March 2017). OHS Trainings at Begerpang mill include: Emergency simulation (13 th March 2017); Housing fire handling by house wife (27 th April 2017); Chemical handling and hazardous waste handling (14 th March 2017); Housekeeping, hygiene and sanitation (11 th March 2017); Basic YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 93 of 224

94 4.7.4 machine operations, and land preparation, harvesting and, if it is used, burning? d. Is PPE provided to workers and replaced when damaged? Does the organization maintain a list of PPE distribution? Are workers observed wearing appropriate PPE? and mill safety (27 th December 2016); Safe working at height (15 th October 2016); OHS management system based on SMK3 awarenes (18 th August 2016); PPE and lock out tag out / LOTO (15 th March 2016) The organisation established the PPE needs identification standard and specification, as seems during site observation that PPE were had proper standard. The distribution list of PPE was kept by supervisors ( mandor ) and stocks of PPE are handled by central warehouse. Observation during this audit generally concluded that PPE are properly managed. Workers were interviewed during this audit and some PPE are provided by them. Only several mandatory PPE are provided by the organization to the employees and visitors such as: helmet, gloves, ear plugs, ear muffs and respirators. (M) The responsible person(s) for occupational health and safety shall be identified and there shall be records of periodical meetings on health and safety issues Specific Guidance: For : Workers shall be represented in the Advisory Committee for Occupational Safety and Health (P2K3) based on the Regulation of the Minister of Manpower No. 4 year a. Has the company identified the responsible person/persons to implement OSH? YES b. Are meetings between the responsible persons and workers conducted on a regular basis, or as required by law, if any? c. Are minutes of meeting recording attendees and issues discussed available? d. Are concerns of all parties about health, safety and welfare discussed at these meetings? Note to Auditor: Interviews with workers reflect compliance to a-d above. Approval letter from local authority (Disnaker Serdang Bedagai and Deli Serdang and Deli Serdang) regarding OHS committee (P2K3) Periodical report P2K3 to local authority (Disnaker Serdang Bedagai and Deli Serdang). The organisation was established the OHS/Occupational Health and safety committee as per national regulation requirement which usually called P2K3 (Panitia Pembina Keselamatan dan Kesehatan Kerja) that consist of Estate/mill managers as the chairman; the safety officer/ak3 Umum as the secretary and members are representative from each functions/sections. The committee was approved by local government (DISNAKER Regent) that issued approval letter as below: Rambong Sialang Estate The organisation already established the safety committee (P2K3) refer to decree No /560/489/P2K3/2017 dated 17 th March 2017 that the safety officer (Frans joseph Nst) become the secretary of the committee. Begerpang Estate The organisation already established the safety committee (P2K3) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 94 of 224

95 4.7.5 refer to decree No. 566/8139/DTK-TB/2010 dated 29 th October 2010 that the safety officer (Armansyah Siregar) become the secretary of the committee. Begerpang mill The organisation already established the safety committee (P2K3) refer to decree No. 560/3139/DTK-TR/2010 dated 29 th October 2010 that the safety officer (Zulkarnaen) become the secretary of the committee. The quarter report of safety committee are evident include the acceptance letter from the local authority (Disnaker Serdang Bedagai and Deli Serdang); the report evident for period 2016 (January December) and 2017 (January June). Reports include the monthly meeting minutes of the safety committee. The agenda discussed within the minutes of meetings e.g. emergency equipment and first aid box availability, unsafe condition at mill, PPE availability and disciplinary also the housekeeping of workplace. A procedure for emergency and work accident shall be available in Indonesian Language; and the workers, who have attended First Aids training, are available in the working areas. Specific Guidance: For 4.7.5: Assigned operatives trained in First Aid should be present in both field and other operations, and first aid equipment shall be available at worksites. Records of all accidents shall be kept and periodically reviewed. a. Are there SOPs for accidents and emergencies? Do these cover all major potential emergencies, such as, but not limited to fire, chemical spillage, and potential natural disasters specific for the region, e.g. earthquakes, volcanoes, etc.? Are accidents investigated and action taken to prevent recurrence? Are accident records provided to the local authority in accordance with local legal requirements, if any? P-10 - Emergency procedure Rev.01 dated 3 December 2013 P-12 - Incident investigation procedure Rev.01 dated 3 December 2013 List attendance of emergency procedure socialization for all estates first aid training certificate licenses Emergency respond procedure written in Bahasa Indonesia was evident and covered reporting, responsibility of all members of ERP Team, handling of ERP situation, mitigating of ERP situation, etc. Some situations were identified such as earthquake, flooding, fire, hazardous spillage, explosion etc. The procedure described the roles and responsibilities of each emergency response team include the mechanism how to conduct medical evacuation to near hospital/local health centre, the emergency contact number of each internal emergency team and external related parties such as public fire station at local area and Public health centre were also available. Incident/accident investigation procedure written in Bahasa Indonesia was evident to conduct the reporting and investigation of YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 95 of 224

96 Available in the appropriate language of the workforce? b. Are the instructions on emergency procedures clearly understood by all workers? c. Are assigned operators trained in First Aid present in both field and other operations? d. Is there records of training of the first aiders? e. Is first aid equipment available at worksites? Is the equipment available during conduct of field manual work? e. Are first aid kits adequately stocked and regularly checked in accordance with local legal requirements? f. Are records of all accidents kept and periodically reviewed for continuous improvement? Training Certificate of First Aid Officer (Paramedic Officer) Incident statistics quarter report to local authority (Disnaker Serdang Bedagai and Deli Serdang and Deli Serdang and Deli Serdang) Site visit observation to estate clinic All workers shall be provided with medical care, and covered by accident insurance (see criterion 6.5.3). a. Is there evidence that all workers are provided with medical care (refer to Criterion Monthly payment report to BPJS (July-2017) 6.5.3), and covered by accident insurance by the company? For contract workers, the Observation and interview to contract between the company and the the workers contractor shall be in compliance. b. For accidents that have occurred, is there evidence that the affected workers received appropriate medical treatment, and was able to claim and receive compensation under the accidents, which within the forms are described the accident chronology, cause and impact of the accident also to find the root causes of the accident happened and formulized the corrective and preventive action. The incident statistics were reported quarterly within a year to local authority (Disnaker Serdang Bedagai and Deli Serdang) by safety officer obtained from supervisors (mandore) and clinics. The emergency drill planed and conducted at least once in year, At Rembong Sialang and Begerpang estate the Fire emergency simulation conducted on 07 th February 2017 at housing/emplacement fire respond.while at Begerpang mill there are fire safety simulation (using hydrant) on 20 th June 2017 and also combination emergency simulation (first aid evacuation, riots) dated 13 th March Records are evident. The emergency kits such as first aid box and emergency shower/eyewash were available at mill and several locations at estate. First aid kits were regularly checked as checklist was sighted. Mill and Estate was supported with one clinic centre and first aid room at each division office. The group leader (mandore) was provided with first aid kits. Certified first aiders were also available as part of emergency team structure. Organisation was providing the central of medical aid services assist by paramedics and physician as part of medical aid from the organisation to all employees. The employees statuses were permanent labours (DRP and MRP). All of the employees at all level and statuses are covered within national insurance for labours include the incident insurance. The records of monthly payment reports for national incident insurance (BPJS) are evident includes : Rambong Sialang Estate Last report on 06 th July 2017; for percentage 0.54% for total 663 YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 96 of 224

97 insurance policy (if relevant)? personnel at Rambong Sialang Estate c. Is there evidence that the insurance policies are valid? Bagerpang Estate Last report on 13 th July 2017; for percentage 0.54% for total 822 personnel at Begerpang Estate Begerpang Mill Last Report on 13 th July 2017; for percentage 0.54% for total more than 143 personnel at Begerpang Mill. Occupational injuries shall be recorded using Lost Time Accident (LTA) metrics Specific Guidance For 4.7.7: Lost Time Accident requirements should refer to Decree of the Minister of Manpower and Transmigration No. 609 year 2012 regarding Guidance to Solve Working Accident Case and work-related Illness. a. Are occupational injuries recorded using Lost Time Accident (LTA) metrics? Incident statistics quarter report to local authority (Disnaker Serdang Bedagai and Deli Serdang) The incident statistics include man-hours, lost time accident and Frequency rate (FR) and Severity rate (SR) were reported quarterly within a year to local authority (Disnaker Serdang Bedagai and Deli Serdang) by safety officer as presented below for each units: Rambong Sialang Estate (YTD July) Total 1 accident with category: Fatality = 0; Disability = 0; lost time injury = 1; medical aid = 0 cases; first aid case = 0; Near miss = 0. There are FR = 1,1 and SR = 74,7 with 71 days lost. The incident happened because fight between security and thief, the security officer injured by the thief. Begerpang Estate (YTD July). There are total accident/incidents with 24 cases within period 2016 and 10 cases during YTD 2017-July. With category all lost time accident (FR=34.6; SR=70,8); 2017 (FR=10.9; SR=25.0). Majority are because spines, leaf stems and other sharp objects, while on 2016 majority are caused by slips, trip and falls. Begerpang Mill (YTD January) Zero accident as the organisation achieve safe man hours YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 97 of 224

98 during year period June 2016 June 2017 and obtain zero accident awards from local authority (Ministry of Manpower / Director general OHS) as received letter No.B BINWAS-PNK3/VII/2017 dated 10 th July 2017 All staff, workers, smallholders and contract workers are appropriately trained. 4.8 Guidance: Workers should be adequately trained on: the health and environmental risks of pesticide exposure; recognition of acute and long-term exposure symptoms including the most vulnerable groups (e.g. young workers, pregnant women); ways to minimise exposure to workers and their families; and international and national instruments or regulations that protect workers health. The training programme should include productivity and best management practice, and be appropriate to the scale of the organisation. Training should be given to all staff and workers by growers and millers to enable them to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of these Principles, Criteria, Indicators and Guidance. Contract workers should be selected for their ability to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of the RSPO Principles, Criteria, Indicators and Guidance. Growers and millers should demonstrate training activities for schemes smallholders who provide Fresh Fruit Bunches (FFB) on a contracted basis. Workers on smallholder plots also need adequate training and skills, and this can be achieved through extension activities of growers or millers that purchase fruit from them, This training may be conducted through smallholders organizations, or through collaboration with other institutions and organizations (See Guidance on Scheme Smallholders, July 2009) The contract workers in Indonesia refer to the Fixed Term Contract (PKWT) and Non-fixed Term Contract (PKWTT) based on the Decree of the Minister of Manpower No. 100 year 2004; and the Regulation of the Minister of Manpower & Transmigration No. 19 year 2012 regarding Requirements for Transfer of Parts of Work to Other Company(ies) (M) Records of training program related to the aspects of RSPO Principles and Criteria shall be available. a. Does the company maintain a list of staff, workers, smallholders and contract workers whom training must be provided to? Training programme b. Is there a formal training programme in place that covers all aspects of the RSPO Principles and Criteria? Does the formal training program include: Regular assessment of training needs of all staff, workers, smallholders and contract workers; Training records (attendance list and certificates) Site visit observation to estate and mill and interviews with all employees and contract workers There was established training programme that feedbacks from regulations and basic competence as training needs identification. All functions and levels included contract employees within the organisation were covered by the training programme. The training needs identified appear sufficient and complete, this including training related to OHS, environmental, social, training required by regulations, training related to operation of Mill and Estates. Training programme 2016 and 2017 were sighted, the training programme was established based on the training needs identification. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 98 of 224

99 Training for workers on smallholder plots; Documentation of all the training assessment needs, formal training conducted and the list of participants attending these formal training; Does the training for workers cover, at minimum, to the following: o The health and environmental risks of pesticide exposure; o recognition of acute and longterm exposure symptoms including the most vulnerable groups (e.g. young workers, pregnant women); o ways to minimise exposure to workers and their families; o International and national instruments or regulations that protect workers health; and o Productivity and best management practice. Note to auditor: To interview staff, workers, smallholders and contract workers to verify that the training has been conducted effectively Records of training for each employee shall be maintained. Realization of training programme 2016 were sighed for all staff, workers and contract workers, includes: Trainings Rambong Sialang estate: Chemical Handling (14 th March 2017) Sustainability and harvester best practice (18 th March 2017) FFB Loading and fertilizer (15 th February 2016) First aider (6 th Nov 2016) Spraying (6 th Aug 2016) Trainings Begerpang estate: First aider (27 th March 2017) Chemical handling and waste management (14 th march 2017) Trainings at Begerpang mill : Emergency simulation (13 th March 2017) Housing fire handling by house wife (27 th April 2017) Self-assessment, Energy performance, water and waste also procedures (SOP) socialization (02 nd May 2017) Leadership training (18 th April 2017) Chemical handling and hazardous waste handling (14 th March 2017) Housekeeping, hygiene and sanitation (11 th March 2017) Laboratory management (10 th January 2017) Basic safety (27 th December 2016) Spare parts management for screw press and sludge centrifuge (15 th December 2016) Safe working at height (15 th October 2016) OHS management system based on SMK3 awarenes (18 th August 2016) Sustainability training (28 29 March 2016) PPE and lock out tag out / LOTO (15 th March 2016) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 99 of 224

100 a. Are training records maintained for each employee? Training attendance Individual training history The system to record personal training was established-in the attendance record; the training which has been completed by each person was recorded and updated. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 100 of 224

101 PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continual improvement. Audit Report 5.1 Guidance: Report on environmental management and monitoring may be in the form of RKL & RPL reports in accordance with the provisions of AMDAL and/or other documents as required in the Environmental Management System (ISO 14000). For environmental aspects which have not yet been included in the Environmental Impact Analysis document (in accordance with government regulation), such as Greenhouse Gas, High Conservation Value, a study may be conducted separately and in accordance with the requirements of the RSPO Principles and Criteria. If there are impacts identified, that may change the on-going operations, the company should implement corrective actions on the operational practices within this specified period. Document of environment impact assessment is the environment document based on the existing regulations, such as: a. Environmental Impact Assessment (Analisis Mengenai Dampak Lingkungan Hidup/AMDAL) for plantation with areas of > 3000 Ha b. Environmental Management Effort (Upaya Pengelolaan Lingkungan Hidup/UPL) and Environmental Monitoring Effort (Upaya Pemantauan Lingkungan Hidup/UKL) for plantation with areas of < 3000 Ha. c. Environmental Management Document (Dokumen Pengelolaan Lingkungan Hidup/DPLH) d. Environmental Evaluation Document (Dokumen Evaluasi Lingkungan Hidup/DELH) e. Environmental Information Performance (Penyajian Informasi Lingkungan Hidup/PIL) f. Environmental Evaluation Performance (Penyajian Evaluasi Lingkungan Hidup/PEL) g. Environmental Evaluation Study (Studi Evaluasi Lingkungan Hidup/SEL) h. Environment Management and Monitoring Document (Dokumen Pengelolaan dan Pemantauan Lingkungan Hidup/DPPL) i. Declaration Letter for Managing and Monitoring Environment (Surat Pernyataan Kesanggupan Pengelolaan dan Pemantauan Lingkungan Hidup/SPPL) j. And others recognised by the government. Bearing in mind the potential impacts of the development activities to the environment, it is important for the following environmental characteristics to be taken into consideration: a. Environment components where their functions will be sustainably preserved and protected, particularly: Protected forest, conservation forest, and biosphere reserve; Water sources; Biodiversity; Air quality; Natural and cultural heritage; Environmental comfort; Cultural values in harmony with the environment b. Environment components which may structurally change and these changes are considered significant by the communities surrounding the operational areas, such as: Ecosystem function(s); Land ownership and tenure; Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 101 of 224

102 Job and business opportunities; Community s standard of living; Public health The company shall submit the required periodical environmental management implementation and monitoring report to the relevant authorities.the company is responsible for providing sufficient objective evidence to the audit team demonstrating full compliance to the Environmental Impact Assessment (AMDAL) requirement covering all aspects of plantation and mills operations, as well as incorporating all changes recorded over that period of time. The environmental impact assessment should cover the following activities, where they are undertaken: a. Building new roads, processing mills or other infrastructure; b. Putting in drainage or irrigation systems; c. Replanting and/or expansion of planting areas; d. Management of mill effluents (Criterion 4.4); e. Clearing of remaining natural vegetation; f. Management of pests and diseases by controlled burning (referred to clause 11 of Government Regulation No. 4 year 2001 (Criteria 5.5 and 7.7). Impact assessment can be a non-restrictive format e.g. ISO EMS and/or EIA report incorporating elements spelt out in this Criterion and raised through stakeholder consultation. Environmental impacts may be identified on soil and water resources (criteria 4.3 and 4.4), air quality (criterion 5.6), greenhouse gases calculation analysis, biodiversity and ecosystems, and people s amenity (Criterion 6.1), both on and off-site. Stakeholder consultation has a key role in identifying environmental impacts. The inclusion of consultation should result in improved processes to identify impacts and to develop any required mitigation measures. For smallholder schemes, the scheme management has the responsibility to undertake impact assessment and to plan and operate in accordance with the results (refer to Guidance on Scheme Smallholders, July 2009 or its endorsed final revision). The Strategic Environment Study Result (KLHS) by the government, shall be placed as main consideration while conducting replanting Regulations related to the environment documents, are such as: 1. Government Regulation (PP) No. 27 of 2012 regarding Environment Permit 2. Regulation of the Minister of EnvironmentNo. 13 year 2010 regarding Environment Management and Monitoring Effort (UKL-UPL) and Environment Management and Monitoring Effort (UKL-UPL) and Declaration Letter for Managing and Monitoring Environment (SPKL) 3. Regulation of the Minister of Environment No. 5 year 2012 regarding Environment Evaluation Document (DELH) 4. Regulation of the Minister of Environment No. 14 year 2010 regarding Environment Management and Monitoring Document (DPPL) 5. Regulation of the Minister of Environment No. 12 year 2007 regarding Environment Management and Monitoring Document for Business and or Activities, with Absence of Environment Management Document. 6. Regulation of the Minister of Environment No. 5 year 2012 regarding Types of Business Obliged to Have AMDAL 7. Regulation of the Minister of Environment No. 17 year 2012 regarding Involvement of Community and Information Transparency in the AMDAL Process 8. Regulation of the Minister of Environment No. 8 year 2006 regarding Guidance for AMDAL Preparation 9. Decree of the Head of Bapedal No. No. 299 of 1996 regarding Technical Guidance of Social Aspects Study in Establishing AMDAL 10. Regulation of the Minister of Environment No. 11 year 2008 regarding Competence Requirements for AMDAL Preparation Documents and Requirements for Training Institutions Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 102 of 224

103 in Conducting Training for AMDAL competence. 11. Regulation of the Minister of Environment No. 15 year 2013 regarding Measurement, Reporting and Verification for Mitigation Action of Climate Change In the Regulation of the Minister of Environment No. 14 year 2010, the environment document is a document covering environment management and monitoring, and may be in the form of AMDAL, Environment Management and Monitoring Efforts (UKL-UPL), Declaration Letter for Managing and Monitoring Environment (SPKL), Environment Management and Monitoring Document (DPPL), Study to Evaluation on the Environment Impacts (SEMDAL), Environment Evaluation Study (SEL), Environment Information Performance (PIL), Environment Evaluation Performance (PEL), Environment Management Document) (DPLH), Environment Management and Monitoring (RKL-RPL), Environment Evaluation Document (DELH), and Environment Audit (M) Environmental impact assessment document(s) shall be available. a. Has an EIA been conducted according to the scope of operation covering at minimum the following: Building new roads, processing mills or other infrastructure; Putting in drainage or irrigation systems; Replanting and/or expansion of planting areas; Management of mill effluents (Criterion 4.4); Clearing of remaining natural vegetation; Management of pests and diseased palms by controlled burning (Criteria 5.5 and 7.7). b. Has the EIA been conducted and documented according to local requirements? c. Does the assessment include consultation with relevant stakeholders to identify impacts and to develop any mitigation measures? - PEL of Begerpang Estate #RC.220/699/B/IV/1994 dated 18 April RKL RPL of Begerpang Estate #RC.220/948/B/V/1994 dated 28 May PEL of Rambong Sialang Estate #RC.220/699/B/IV/1994 dated 18 April UKL UPL of Begerpang Mill #0318/BPDL/DS/2004 dated 26 March UKL UPL of Timbang Serdang Division #09151/BPDL/DS/2008 dated 5 September Environmental aspect identification and evaluation procedure EMS-P01 - Identification and evaluation of environmental aspect and impact Initial Environmental Impact Assessment Impact assessment was documented in: Document of PEL of Begerpang Estate and Rambong Sialang Estate approved by Ministry of Agricultural on 18 April Document of RKL and RPL of Begerpang Estate and Rambong Sialang approved by Ministry of Agricutrural on 28 May Document of UKL UPL of Begerpang Mill approved by Kepala Bapedalda Kabupaten Deli Serdang on 26 March Document of UKL UPL of Timbang Serdang Division Bagerpang Estate approved by Kepala Bapedalda Kabupaten Deli Serdang on 5 September The EIA has been conducted and documented according to local requirements and include consultation with relevant stakeholders to identify impact and to develop any mitigation measures. The result of consultation and the mitigation measures were stated at DPLH. Begerpang Mill and Estates have ensured that all activities with significant environmental impacts were managed. Control measure were defined and implemented for ensuring that negative environmental impact were prevented or mitigated. The implementation of those control measures are monitored during monthly environmental patrol and also round of internal audits. The evident sighted regarding stakeholder consultations include government and public as the minutes of meeting within the documented of DPLH. YES Audit Report Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 103 of 224

104 5.1.2 For internal environmental aspect and evaluated its impact document, the information of environmental aspect and impact was reviewed and updated at least once a year based on Environmental Management System ISO 14001:2004. Last review and update of environmental aspect and impact register was performed on 24 March Document of environmental impact assessment covered: Water resources; Biological diversity; Air quality; Environment quality; Economic, social and culture; Building new roads, processing mills or other infrastructure; Putting in drainage or irrigation systems; Replanting and/or expansion of planting areas; Management of mill effluents; Clearing of remaining natural vegetation; Management of pests and diseases palms by controlled burning; Result of stakeholder consultation Environment management plan document to prevent negative impacts, its implementation report and revision (if the identification of impact requires changes in current company s practices) shall be available. The company s management shall appoint the responsible person(s) for the implementation of the document. a. Is there an environmental management plan in place? YES b. Is the environmental management plan documented to include the following: Identification of responsible person(s); Potential impacts from current practices; Measures to mitigate negative impacts; Timetable for change (where changes in current practices are required). c. Has the environmental management plan - EMS-P01 Environmental aspect identification and evaluation procedure - Environmental aspect and impact identification (EMS-F01 updated December 2016) - Environmental management plan DPLH document of Begerpang Begerpang Mill and it supply bases has ensured that all activities with significant environmental impacts were managed. Control measure were defined and implemented for ensuring that negative environmental impact were prevented or mitigated. There were several types of control measures defined: engineering control, administrative control and PPE. The implementation of those control measures are monitored during monthly environmental patrol and also round of internal audits. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 104 of 224

105 been implemented? Mill and Estates - DPLH report semester I and II 2016 Environment monitoring plan document, its implementation report, and the corrective plan (if non-conformance arised from the monitoring result) shall be available. This plan is reviewed on two-yearly basis. a. Does the plan incorporate a monitoring protocol? Begerpang Mill and Estates has established the environment monitoring plan (RKL/RPL). The plan is reviewed 6 monthly. b. Is the monitoring protocol adaptive to operational changes? c. Is the monitoring protocol implemented to monitor the effectiveness of the mitigation measures? d. Is the plan reviewed at a minimum every two years to reflect the results of monitoring and where there are operational changes that may have positive and negative environmental impacts? - Environmental management plan RKL/RPL document of Begerpang Mill and Estates - RKL/RPL report semester II and semester I 2017 The RKL/RPL was include monitoring that adaptive to operational changes and effective of the mitigation measures. The plan covered: Monitoring air ambience quality and noise annually Monitoring surface water quality every 6 months Monitoring erosion rate at area with slope >16% and sedimentation annually Potential of fire every 6 months Air emission quality from vehicle Monitoring control wheel every 6 months Monitoring society perception annually Monitoring flora and fauna The reporting RKL/RPL was conducted every semester that consist of analysis of waste water quality and flow rate, surface water quality, the air emissions measured by third party, and social aspect. The status of rare, threatened or endangered species and other High Conservation Value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and operations managed to best ensure that they are maintained and/or enhanced. Guidance: This information gathering should include checking available biological records and consultation with relevant government departments, research institutes and interested NGOs if appropriate. Depending on the biodiversity values that are present, and the level of available information, some additional field survey work may be required. YES Wherever HCV benefits can be realised outside of the management unit, collaboration and cooperation between other growers, governments and organisations should be considered. Sanctions in the protected wildlife case, may be taken through law enforcement in line with the existing regulations. The company should determine type of sanctions, based upon SOP or policy of the company, considering level of violations (capture, harm, keep, and kill) and category of the species (rare, endangered, and threatened). Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 105 of 224

106 National regulations related to the protection of habitat and species, such as: 1. Act No. 5 year 1990 regarding Conservation on Biodiversity and its Ecosystems 2. Act No. 16 year 1992 regarding Quarantine for Animals, Fish and Plants 3. Act No. 5 year 1994 regarding Ratification of the United Nations on Convention to Biodiversity 4. Government Regulation No. 13 year 1994 regarding Wildlife Hunting 5. Government Regulation No. 68 year 1998 regarding Areas of Natural Sanctuary and Natural Conservation 6. Government Regulation No. 7 year 1999 regarding Preservation of Flora and Fauna (List of Protected Flora and Fauna is on the annex). 7. Regulation of the Minister of Forestry No.: P.48/Menhut-II/2008 regarding Guideline of Conflict Resolution between Human and Wildlife 8. Presidential Decree No. 43 year 1978 regarding Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) ratification. Growers need to consider a variety of land management and tenure options to secure HCV management areas in ways that also secure local people s rights and livelihoods. Some areas are best allocated to community management and secured through customary or legal tenures in certain period. In other cases, co-management options can be considered. Where communities are asked to relinquish rights so that HCVs can be maintained or enhanced by the companies or State agencies, then great care needs to be taken to ensure that communities retain access to adequate land and resources to secure their basic needs; all such relinquishment of rights must be subjected to their free, prior, and informed consent (see Criteria 2.2 and 2.3). (M) Record(s) on the results of High Conservation Value (HCV assessment) that includes both the planted area and the relevant wider landscape-level considerations (such as wildlife corridors) shall be available Specific Guidance: This information will cover: Presence of protected areas that could be significantly affected by the grower or miller; Conservation status (e.g. IUCN status), legal protection, population status and habitat requirements of rare, threatened, or endangered (RTE) species that could be significantly affected by the grower or miller; Identification of HCV habitats, such as rare and threatened ecosystems, that could be significantly affected by the grower or miller; HCV Identification may be conducted internally (by the company, where the team leader shall be registered in the HCVRN-Assessors Licensed Scheme (ALS), through peer-review by the competent experts, prepared in accordance to the common Guidance for the identification of HCV If the company has no expert for assessing certain HCV type(s), then it may use the external assessor(s). The HCV assessor team needs to have experience in the assessed ecosystem to minimise inaccuracy risk of the HCV assessment. If possible, each external assessor who comes from outside the assessed areas should cooperate with the local or regional expert(s). The HCV report shall describe the composition and qualification of the assessor team in biological and social aspects. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 106 of 224

107 a. Has a High Conservation Value (HCV) assessment been conducted and cover the following: Presence of protected areas that could be significantly affected by the grower or miller; Conservation status (e.g. IUCN status), legal protection, population status and habitat requirements of rare, threatened, or endangered (RTE) species that could be significantly affected by the grower or miller. Identification of HCV habitats, such as rare and threatened ecosystems, that could be significantly affected by the grower or miller; b. Was the HCV assessment performed by a qualified HCV assessor? c. Was the HCV assessment performed in consultation with relevant stakeholders? d. Does the HCV assessment include checking of available biological records? - HCV Assessment Report Rambong Sialang Estate, Sei Merah Estate and Begerpang Estate Map of High Conservation Area with scale: 1:25,000 - Attendance list of HCV Public consultation Organization has performed HCV assessment collaborated with PT. SAIL consulting (PT. Siklus Alam Indonesia Lestari). Field assessment was conducted on May 2014 (Rambong Sialang and Sei Merah Estate) and May 2014 (Bagerpang Estate). HCV assessment been conducted and cover the following: Presence of protected areas that could be significantly affected by the grower or miller; Conservation status (e.g. IUCN status), legal protection, population status and habitat requirements of rare, threatened, or endangered (RTE) species that could be significantly affected by the grower or miller. Identification of HCV habitats, such as rare and threatened ecosystems, that could be significantly affected by the grower or miller. HCV Asessment performed by a qualified HCV assessor and accredited by RSPO, comprised of: - Sutopo S. Hut - M. Sayidina, Amd - Sulfan Ardiansyah, S. Hut YES e. Does the HCV assessment include both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors)? f. Was the HCV assessment performed in accordance to the latest methodology available at global and national level? g. Are identified HCVs mapped? - Gilang Prastya P, S.Hut Assessment performed with consultation with relevant stakeholders on 19 May 2014 in Bagerpang Estate (attanded 38 stakeholders) and on 26 May 2014 in Rambong Sialangand Sei Merah Estate. Attendance register and resume of public consultation was documented and could be demonstrated. It had intended to get aspiration and responses from stakeholders related identification result of HCV and its management plan. HCV assessment report has commented by accredited assessor form Forestry Faculty of IPB. Based on final report of HCV identification and analysis it was Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 107 of 224

108 5.2.2 demonstrated that the HCV assessment include checking of available biological records. HCV assessment also include both the planted area itself and relevant wider landscape-level considerations HCV assessment performed in accordance to the latest methodology available at global and national level. The method used in accordance with scientific standards and Identification Guide HCVA in Indonesia version 2 in 2008 compiled by a Indonesia consortium of HCV toolkit revision. Stages of identification activities include: - Review of the data and information that has been available - Early identification of HCV - Drafting of plans for field surveys - Secondary data collection - Field survey - Mapping and landscaping - Assessment aspect fauna - Assessment aspects of flora - Assessment aspects of social, economic and cultural - Analysis and Mapping HCVs identified were mapped in HCV map with scale 1: (M) Where rare, threatened or endangered (RTE) species or other HCVs are present or affected by the plantation and mill operations, an appropriate measures that are expected to maintain or enhance them shall be implemented through a management plan. Specific Guidance: These measures will include: a. Ensuring that any legal requirements relating to the protection of the species or habitat are met; b. Avoiding damage to and deterioration of HCV habitats such as by ensuring that HCV areas are connected, corridors are conserved, and buffer zones around HCV areas are created; c. Controlling any illegal or inappropriate hunting, fishing or collecting activities, and developing responsible measures to resolve human-wildlife conflicts (e.g. incursions by elephants) d. Improving HCV, if possible, through management options, such as habitat enrichment. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 108 of 224

109 a. Are HCVs and/or RTEs present? b. If HCVs and/or RTEs are present, has a management plan containing appropriate measures that are expected to maintain and/or enhance them been prepared? The measures should include the following: Ensuring that any legal requirements relating to the protection of the species or habitat are met; Avoiding damage to and deterioration of HCV habitats such as by ensuring that HCV areas are connected, corridors are conserved, and buffer zones around HCV areas are created; Controlling any illegal or inappropriate hunting, fishing or collecting activities, and developing responsible measures to resolve human-wildlife conflicts (e.g. incursions by elephants). c. Are the measures contained in the management plan actively implemented to maintain and/or enhance HCV values? d. Are the HCV values and the presence of RTEs periodically monitored? e. Are the field inspections conducted regularly to ensure implementation of mitigation plan (especially along areas bordering natural area)? - HCV Assessment Report Rambong Sialang Estate, Sei Merah Estate and Begerpang Estate HCV Management Planning HCV monitoring form Field Observation There were HCV area identified in HCV identified in Rambong Sialang and Sei Merah Estate consist of: a. Areas critical to water catchments (HCV 4.1) regarding: River of Bata 1,2,3 (5.00 ha), Batu Pihit river (1.35 ha), Belidaan river (0.71 ha), Lembah river (3.55 ha), Panglong river (9.14 ha), Water pond in Pondok Bundar (3.07 ha), Water resource Dedet (2.60 ha) and Water resource for Nursery (0.23 ha) b. Areas critical to religious significance (HCV 6) regarding: Cemetery of Egaharap (0.18 ha), Cemetery of emplasment (0.78 ha) and Cemetery of Firdaus (0.02 ha). HCV identified in Bagerpang estate consist of: Divisi Batu Lokong a. Areas critical to water catchments (HCV 4.1) regarding: Batu Lokong rivers (4.94 ha), Water source of housing area : Batu Lokong 1 (0.10 ha), Batu Lokong 2 (0.08 ha), Naga Timbul 1 (0.56 ha), Naga Timbul 2 (0.18 ha), Namu Rambe (0.34 ha), b. Areas critical to religious significance (HCV 6) regarding: Cemetery of Batu Lokong (0.29 ha), Naga Timbul 1 (0.15 ha), Naga Timbul 2 (0.28 ha), Namu Rambe 1 (0.09 ha), Namu Rambe 2 ( ha), Namu Rambe 3 (0.08 ha), Namu Rambe 4 (0.10 ha) Divisi Tambang Serdang a. Areas critical to water catchments (HCV 4.1): Serdang river (3.63 ha), Water source 1 (0.02 ha), Water source 2 (0.004 ha), Water source 3 (0.007 ha), Water source 4 (0.01 ha), River of BG 1 (0.98 ha), River of BG 2 (0.23 ha), River of KF 1 (0.39 ha), River of KF 2 (0.71 ha), River of KT 1 (1.14 ha), River of KT 2 (3.55 ha), Water source of BG (1.34 ha), Water source of KF (0.19), Water surce of KT (0.11 ha) YES b. Areas critical to religious significance (HCV 6) regarding: Cemetery 1(0.05 ha), Cemetery M2 (0.06), Cemetery BG (0.52 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 109 of 224

110 ha) Cemetery KF (0.36 ha). Management plan was available containing appropriate measures that are expected to maintain and/or enhance them, includes: - Maintenance of HCV marking, manual upkeep, NPK fertilization by drilling at the riparian - Replacement of warning sign - Monitoring of riparian - Erosion handling - Monitoring the presence of wildlife - Monitoring of illegal hunting - Cemetery maintenance Management plans and monitoring of HCV was breakdown in Division HCV Management Program, each Division assistant was responsible for the program and its implementation. The measure contained in the management plan was actively implemented to maintain and/or enhance HCV values. HCV values and the presence of RTEs were periodically monitored by organization. Monitoring the kinds of protected animals which include in category RTE (Rare, Threat and Endangered) and protected species was monitored monthly by HCV officer. Data monitoring and monitoring results were available and can be emostrated. There is no RTE species identified, however there are identified some protected species in appropriate to PP No.7/99 regarding Kucing kuwuk (Felis bengalensis), Raja udang (Alcedo meninting), Burung madu kelapa (Anthreptes malacensis), Burung madu belukar (Anthreptes singalensis), and Piton (Phyton morulus). Riparian monitoring also has been performed by organization, with the result: - No interference cattle - There is no interruption of people Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 110 of 224

111 No occupational community - There is no erosion of the riverbank - The condition of warning sign was good - The boundary conditions HCV was good Field observation to HCV area and document Evaluasi Program Pengelolaan HCV (Evaluation of HCV program and management) period January to Desember 2016 was available demonstrate that the measures contained in the management plan been actively implemented. Program(s) to socialize the status of protected, rare, threatened or endangered (RTE) to all workers shall be available, including records of appropriate sanction disciplinary measures to any individual working for the company who is found to capture, harm, collect or kill these species. a. Does the company have policies or rules to protect RTE species? YES b. Is there a programme to regularly educate the workforce about the status of the RTE species? c. Is there evidence or action taken to implement the rules and programs? E.g. Inspections conducted to check no traps/snares put up within or nearby areas. d. Have appropriate disciplinary measures been imposed in accordance with company rules and national law, should any individual working for the company is found to have captured, harmed, collected or killed any RTE species? - HCV Management and Monitoring procedure EMS-P HCV Programs and Realization in HCV Monitoring Form - Field observations i.e warning sign Policies and regulations related to the protection of protected species and RTE species specified in the Procedures Management and Monitoring of HCV EMS-P The company has also installed warning sign in to preserve, maintain, and protect the protected species and do do not hunt wild and those who practice hunting will be penalized in accordance with Law No Warning signs prohibition of hunting also installed at strategic locations in and around of plantation area. Company has programme to regularly educate the workforce about the status of the RTE species through socialization and awareness. Socialization HCV protection and RTE species to all employees has been conducted. The list attendance and minutes of socialization was sighted. Socialization was also performed to representatives of community in and through warning sign and campaign HCV which installed in the strategic place. Company has been establish the HCV management plan program 2016, such as : HCV 1.2 management plan : - Monitoring the existence of protected species - Monitoring the condition of warning sign Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 111 of 224

112 - Replacement of damaged warning sign - Monitoring of illegal hunting - Dissemination and awareness to all workers to conserve the HCV and protected species HCV 4.1 management plan: - Maintenance of HCV boundary markers - Upkeep oil palm trees manually and forbidden to apply pesticides / herbicides in the river border/riparian area - Replacement warning sign - Monitoring of river border/riparian area - Erosion monitoring HCV 6 management plan : - Cemetery boundary mark maintenance - Warning sign monitoring - Warning sign replacement - Shrine graves maintenance Implementation of the management plan has been performed well in the field and the record of implementation can be demonstrated. Organization has been appointed an officer to monitor any plans and activities of HCV management and monitoring program (Decision Letter of Estate Manager No. 015/RS/DIV/V12, date on 25 January 2012). Organization has a policies or rules to protect RTE species based on UU No.5 / Penalties under the UU No.5/1990 "person who deliberately capture, injure, kill, keep, possess, maintain, transport, and trade in protected animals alive or dead can shall be punished with imprisonment of 5 years and a maximum fine , - (one hundred million). Penalties were communicated directly to all employees and the local community during HCV socialization and through the HCV warnings sign boards. Based on interview with employees and public consultation with stakeholders, there was no Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 112 of 224

113 violantion case during September 2016 August Once the management plan is prepared, continuous monitoring documentation and report regarding the status of the RTE and HCVs are affected by the operations of the plantation and palm oil mill shall be available, and the results of monitoring are to be used to follow-up on the improvement of the management plan. Specific Guidance: For 5.2.4: The result of HCV monitoring may become considerations while reviewing HCV management plan. a. Does the management plan contain ongoing monitoring of status of HCV and RTE species that are affected by plantation or mill operations? - Management and Monitoring Plan HCV 2017 b. Is the status documented and reported? c. Are the outcomes of monitoring fed back into the management plan? - HCV Programs and Realization in HCV Monitoring Form in 2016 Management plan of HCV has been established based on HCV assessment in May June Ongoing monitoring of the HCV management plan is performed regularly in monthly basis. Division Assistant is the personnel in charge for conducting the monitoring of HCV. Records of HCV monitoring were available and it was observed that monitoring was performed consistently. HCV management plan is updated once a year based on the outcome of the HCV monitoring that performed regularly in monthly basis. Monitoring of management plan was conducted periodically twice in a year (January June and July December). HCV and RTE species that are affected by plantation or mill operations have been monitored, documented and reported in monthly basis. A record was available in Monitoring Keberadaan Satwa Dilindungi (Monitoring of RTE species existences). Items checked contain RTE species existence, disturbance of people hunting and warning sign condition. Outcomes of monitoring feed back into the management plan. Monitoring result has been evaluated by organization. Last evaluation for monitoring period January December Some outcomes of monitoring fed back into the management plan. Where HCV areas overlapped with an identified local community s land, there shall be evidence of a negotiated agreement that optimally safeguard their HCVs and the local community s rights Specific Guidance: For 5.2.5: If a negotiated agreement cannot be reached, there should be evidence of sustained efforts to achieve such an agreement. These could include third party arbitration (see YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 113 of 224

114 Criteria 2.3, 6.3 and 6.4). a. Is there HCV set-asides with existing rights of local communities? b. Who are the affected communities? c. Is the identified HCV areas mapped? d. Is there evidence of stakeholder consultation and negotiated agreement, in accordance to FPIC principles, with local community to optimally safeguard both the HCVs and rights of local communities? e. If a negotiated agreement cannot be reached, is there evidence of sustained efforts to achieve an agreement? Refer to specific guidance for HCV Assessment Report Rambong Sialang Estate, Sei Merah Estate and Begerpang Estate Map of High Conservation Area in Aek Loba scale: 1:25,000 - Interview with stakeholder in August 2017 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. Based on HCV map and report there was HCV 6 identified within HGU concession. HCV 6 identified in the plantation areas are public cemeteries which were made by company for employees and the surrounding communities who need graveyard. Companies allow the surrounding communities who will bury their citizens in this area. YES 5.3 Guidance: The waste management and disposal plan should include measures for: a. Identifying and monitoring sources of waste and pollution. b. Improving the efficiency of resource utilisation and recycling potential wastes as nutrients or converting them into value-added products (e.g. through animal feeding programmes). c. Appropriate management and disposal of hazardous chemicals and their containers. Surplus chemical containers should be reused, recycled or disposed of in an environmentally and socially responsible way based on best available practices (e.g. returned to the vendor or cleaned using a triple rinse method) and existing regulations. This is to prevent pollutions to the water sources and risk to human health. The disposal instructions on the manufacturer s labels should be adhered to. Use of open fire for waste disposal should be avoided. Regulations relate to waste management, such as: 1. Government Regulation No. 18 year 1999 regarding Management of Toxic and Hazardous Waste (B3) 2. Government Regulation No. 85 year 1999 regarding Amendment of Government Regulation No. 18 year 1999 regarding Management of B3 (the annex shows a list of B3 from specific and non-specific sources, expired chemicals, leakage, remaining containers and waste of unspecified products). 3. Government Regulation No. 82 year 2001 regarding Management of Water Quality and Control of Water Pollution. This includes criteria for water quality, and requirements for utilising and disposing waste water) 4. Government Regulation No. 81 year 2012 regarding Management of Domestic Waste 5. Decree of the Minister of Environment No. 51 year 1995 regarding Waste Water Standard for Industries Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 114 of 224

115 6. Decree of the Minister of Environment No. 28 year 2003 regarding Technical Guidance for Study for Utilising Palm Oil Mill Effluent (POME) on Oil Palm Plantation. 7. Decree of the Minister of Environment No. 29 year 2003 regarding Guidance for Permit Requirements and Administration for Utilising POME on Oil Palm Plantation 8. Decree of the Minister of Environment No. 112 year 2003 regarding Domestic Waste Water Standard 9. Decree of the Head of Bapedal No. 255/Bapedal/08/1996 regarding Procedure and Requirements for Storing and Collecting Used Oil 10. Guidance for Use of Pesticides, Directorate General of Infrastructure and Facilities, Ministry of Agriculture, (M) A documented identified source of all waste and pollution, shall be available. a. Is there a registry/list of waste products produced? b. Is there a registry/list of pollution sources? OP 5.8 Waste Management Procedure, March 2008 EMSP 14 Management of Hazardous and Toxic Material and Waste Procedure Environmental aspect and impact identification (EMS-F01 updated 24 March 2017) Identification of waste and pollution sources from Begerpang Mill and Estates activities was evident. The source of pollution, type and control method of waste was recorded at OP 5.8 waste management procedure. The waste products from estate generally were domestics waste and also several hazardous waste from estate operations activities as detailed below (but not limited): Ex-pesticides containers (bottles and jerry cans) Used battery from the heavy vehicles Plastics Medical waste (first aid usage) Polybag Rags and fertilizer containers Emissions from vehicles Welding materials from workshop activities Lubricants from workshop materials Contaminated rags from workshop activities Usage lamps Tires YES While at the Mill it was several hazardous waste generated from the mill operations, in detailed below (but not limited): POME Palm shell Fibre Empty bunch Boiler ash Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 115 of 224

116 5.3.2 (M) There shall be evidence that all chemicals and their empty containers are disposed of responsibly a. Is there an inventory of chemicals and their containers that are used and kept on site? - OP 5.8 Waste Management Procedure, March 2008 b. How are chemicals and their containers stored and disposed off? Is it in accordance to best practices? (as prescribed by manufacturers labels, local requirement, national or international best practice) c. Are collection and disposal records of chemicals and their containers maintained? - EMSP 14 Management of Hazardous and Toxic Material and Waste Procedure - Record of hazardous and nonhazardous waste - Hazardous waste manifests - Observation to temporary storage of hazardous waste at mill and estates - Recommendation Letter of Hazardous waste temporary storage from DLH Serdang Bedagai no /660/306/2017 for Rambong Sialang estate - License of hazardous wastes temporary storage (TPS B3) in Begerpang Mill and Estate as Chemicals jerry can and bottles Gunny sacks from chemicals materials Sacks resulted from fertiliser materials Welding materials from workshop activities Lubricants from workshop materials Contaminated rags from workshop activities Usage lamps Tires Usage batteries Usage oil filters Emissions from vehicles and other engines (generator, boilers The disposal methods (hazardous and non-hazardous) were described on documented procedure OP 5.8 Waste Management dated March 2008, detailed as follows: Waste category such as: 1. Hazardous waste (solid and liquid waste) 2. Non-hazardous waste, separated for non-organics (economic and non-economic value) and organics Hazardous waste separated for: Solid waste, such as used rags, used battery, used toner and cartridge, used lamp, used chemical/agrochemical container, medical waste Liquid waste, such as used oil, chemical expiry Hazardous waste was stored at hazardous waste temporary storage and managed by licenced vendors/transporter. Disposed methods: 1. TPA/landfill (organics and non-organics) 2. TPS B3 managed by licensed vendors 3. Reuse YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 116 of 224

117 issued from Decree Regent of Deli Serdang No. 639 year License of hazardous wastes temporary storage (TPS B3) in Sei Merah Estate as issued from Decree Regent of Deli Serdang No.499 tahun 2014 dated 1 April Permit temporary collect of hazardous waste for PT Amindy Barokah from Governor North Sumatera No /452/KPTS/2014 dated 19 June 2014 valid for 5 years - Permit of hazardous waste processor for used oil and sludge from KLH No.SK.353/MenLHK- Setjen/2015 dated 31 August 2015 valid for 3 years for CV Amindy Barokah - Permit of hazardous waste transporter recommendation for PT Amindy Barokah from KLH No.B- 9802/Dep.IV/LH/PDAL/09/2014 dated 3 September 2014 valid for 5 years 4. Burnt as boiler fuel All empty agrochemical containers were triple rinsed, the jerry can were reused to spraying activities, while bottles containers were stored in the designated area and categorized as hazardous waste (B3). Records of chemical containers quantity disposed were evident. Liquid waste from agrochemical was reused for the next spraying application. Several ex-chemicals materials containers that use at mills and estates operations such as laboratory chemicals ex-containers, boiler additive liquids, lubricants, workshop materials, use battery, medical waste, ex-agrochemical container, used filter, etc. were categorized as hazardous wastes that stored at hazardous waste temporary warehouse (TPS B3) that will be managed by licensed vendor PT. Amindy Barokah for transporter and collector. License of hazardous wastes temporary storage (TPS B3) available for: Begerpang Mill and estate License of hazardous wastes temporary storage (TPS B3) in Begerpang Mill and Estate as issued from Decree Regent of Deli Serdang No. 639 year 2017 dated 5 June 2017 valid for 5 years defined that the time limit was 180 days but if produced (less than) < 50 kg per days may store more than 180 days. Rambong Sialang Estate Licence from Decree Regent of Deli Serdang No. 440 tahun 2012 valid for 5 years. There was renewal recommendation letter from DLH Serdang Bedagai No.18-32/660/306/2017 dated 21 April 2017 and site visit was held on 17 April Sei Merah Estate License of hazardous wastes temporary storage (TPS B3) in Sei Merah Estate as issued from Decree Regent of Deli Serdang Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 117 of 224

118 5.3.3 A documented waste management plan to avoid or reduce pollution and its implementation shall be available a. Is there a documented waste management and disposal plan to avoid or reduce pollution? - OP 5.8 Waste Management Procedure, March 2008 b. Does the waste management and disposal plan, at minimum, include measures for: Identifying and monitoring sources of waste and pollution? Improving the efficiency of resource utilisation and recycling potential of wastes as nutrients or converting them into value-added products (e.g. through animal feeding programmes)? Appropriate management and disposal of hazardous chemicals and their containers? Reduction, re-use and recycle of waste? c. Is there evidence that the plan has been implemented? d. Is there evidence that waste has not been disposed off using open fire? - EMSP 14 Management of Hazardous and Toxic Material and Waste Procedure - Environmental aspect and impact identification (EMS-F01 updated 24 March 2017) - Observation at mill, estates, clinic No.499 tahun 2014 dated 1 April 2014 was valid for 5 years defined that the time limit was 90 days. Manifest of disposal were sighted for 27 July 2017 for Rambong Sialang Estate and mill and 24 July 2017 for Sei Merah estate. Others records sighted, such as Laporan pengelolaan LB3 Period July-September 2016 and October- December 2016 and January March 2017 and April-June Procedure waste handling including hazardous waste handling has been established and implemented. The procedure required waste to be segregated from point of sources. In addition Mill and Estate also established waste register, which described wastes sources from each activity/location, its classification (organic, inorganic or hazardous), and its disposal, reusing or recycling. POME was treated in waste installation to land application. EFB was used as mulch to the plantation as an organic fertilizer. Solid from decanter were used for fertiliser in Begerpang Estate and Sei Merah Estate. Fibre and Shell from Begerpang Mill was used for boiler feed. It was observed that organic and inorganic waste was segregated at point of source. Mill and Estate including housing has provided different colour of waste bin for each type of waste. Organic and inorganic wastes from Mill and Estate including housing were disposed to landfill in the Estate area. Areas of organic and inorganic wastes disposal was far from housing, in the flood-free area and not in swamp area and completed with warning sign not burning wastes. During visit to TPSA showed that all inorganic waste was in TPSA and all organic waste was placed in active pad as required by the procedure. There are evident the measurement periodical report include air ambience quality; emissions of vehicles and other engines (boilers, generators, etc.). Begerpang Mill and Estates have been implemented some action to reduce the fuel usage such as with use the fibre and shell for boiler feed. The last measurement was YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 118 of 224

119 performed on 24 May 2017 by Balai Keselamatan dan Kesehatan Kerja Medan. Boiler emission in accordance to PermenLH 7/2007, generator emission in accordance to PermenLH 13/2009, vehicle emission in accordance to PermenLH 5/2006. Hazardous wastes generated by Mill and Estate are used oil, used oil filter, used battery, medical waste, jerry can ex-pesticide, jerry can ex-chemical, and used lamp. Temporary storage of hazardous waste was available to collect hazardous waste prior to be transported by licensed vendor. Hazardous waste was reported quarterly to North Sumatera Province and Deli Serdang and Serdang Bedagai District Environmental Agency, Central of Environmental Management Regional Sumatera and Ministerial Office of Environment. Receipt note was also sighted. Last report was for period January-March 2017 and April June Efficiency of fossil fuel use and the use of renewable energy is optimised. 5.4 Guidance: Renewable energy use per tonne of Crude Palm Oil (CPO) or palm product in the mill should be monitored. Direct fossil fuel use per tonne of CPO or Fresh Fruit Bunches (FFB) should be monitored. Energy efficiency should be taken into account in the construction or upgrading of all operations. Growers and millers should assess the direct energy use of their operations, including fuel and electricity, and energy efficiency of their operations. This should include estimation of fuel use by on-site contract workers, including all transport and machinery operations. If possible, the feasibility of collecting and using biogas should be studied A plan for improving efficiency of the use of fossil fuels and to optimise renewable energy shall be in place and monitored. a. Is there a plan for improving efficiency of the use of fossil fuels and to optimise renewable energy? - Records of fossil fuel consumption 2016 and 2017 b. Has the plan been implemented and is it monitored? c. Does the monitoring system encompass the following : Renewable energy use/tcpo or palm product; - Records of renewable energy (fibre and shell) consumption 2016 and 2017 Begerpang mill and estates has been develop the programme/plan on how to conduct efficiency for utilization of fossil fuel by develop the standard to manage the consumption each of vehicles and electricity generator within litre per hours both for organization owned and contractors; the monitoring conducted by monthly and reported to technical department. Also it was developed the plan/programme regarding optimization of renewable energy known as fibre and shell as boiler fuels at mills, monitoring also conducted monthly by calculate the fibre and shell YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 119 of 224

120 Direct fossil fuel use/tcpo or tffb; Estimated fuel use by on-site contract workers and transport and machinery operations; Electricity use in operations. d. Was energy efficiency taken into account during the construction or upgrading of all operations? e. Has studies on the feasibility of collecting and using biogas been carried out? and utilize as boiler fuels whether upgrading of all operations. during the construction or There are monitoring records sighted regarding the utilization of fossils fuels and fibre shell period 2017 that presented as below: Renewable Energy Usage volume (Tonne) Shell 5,268 Fibre 12,452 Fossil fuels Volume usage (ltr) FFB Production (tonne) Diesel 105,845 95,785 Per tonnage FFB 1.10 litre/tonne FFB Fossil fuel was used for heavy equipment, diesel generator, FFB transportation, and contractor user. Unit Consumer 2016 (litre) YTD June 2017 (litre) Rambong Sialang Estate 646, ,083 Sei Merah Estate 121,176 47,301 Begerpang Mill 105,845 30,058 The trend of reduction use of fossil fuel was because the increasing of fibre and shell due to increasing of FFB production. The fibre and shell produced substituted the fossil fuel. So far there is a plan regarding feasibility of collecting and using biogas, however it still on management discussion. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 120 of 224

121 Use of fire for preparing land or replanting is avoided, except in specific situations as identified in the ASEAN guidelines or other regional best practice Guidance: Clause 11 of the Government Regulation No. 4 year 2001 regarding Control of Environmental Damage and or Pollution associated with Forest and or Land Fire, describes that the activities causing forest and or land fire are including land clearing in forestry, plantation, agriculture, transmigration, mining, tourism which are carried out through burning. Therefore, the use of fire is prohibited in those activities, unless for unavoidable circumstances or specific purposes, such as forest fire control, pest and disease control, and habitat management of flora and fauna. Implementation of restricted burning shall be authorised by the relevant agency. (M) Records of land clearing with zero burning shall be available, referring to the ASEAN Policy on Zero Burning (2003) or other recognized techniques based on the existing regulations. a. Does the company have a zero burning policy or any statement on zero burning? b. Does the company have SOPs for land preparation which mentions zero burning? c. Was land prepared using the burn method? If yes, was it based on the specific situations identified in the Guidelines for the Implementation of the ASEAN Policy on Zero Burning 2003, or comparable guidelines in other regions? d. Has the policy been implemented throughout the operations? e. Is there training programmes for associated smallholders on zero burning where appropriate? - Standard Operating Procedure OP 2.8 Land Preparation Strategies and Parameters, dated March WI OP 2.12 Preparation and Planting dated September 2013 The organisation has policy of zero burning documented in procedure of land preparation strategies and parameters No. OP 2.8 revises on March 2008 and replace on September 2006: The use any fire with any reason is strictly prohibited, such as activities in land preparation of new developments areas and replanting. Realisation of land preparation for replanting activities was well documented and reported including activities of chipping, ripping, cleaning ditch, making ditch and total area prepared. Zero burning. There was no land preparation for replanting by burning. Based on replanting report during October 2012 and 2013, land preparation for replanting was conducted by uprooting oil palm and stacking. No fire used for preparing land for replanting. YES Where fire has been used for eradication of pest during replanting, the records of the analysis of the use of fire and permit from the authorised agency shall be available Specific Guidance: Fire should be used only where an assessment has demonstrated that it is the most effective and least environmentally damaging option for minimizing the risk of severe pest and disease outbreaks, and exceptional levels of caution should be required for use of fire on peat. This should be subject to regulatory provisions under respective national environmental legislation. This should refer to the ASEAN Policy on Zero Burning (2003) and existing national environment regulations. The company shall have procedure and records of emergency response to ground fire, including the means and facilities. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 121 of 224

122 a. Where fire has been used for preparing land for replanting, is there evidence of prior approval of the controlled burning as specified in Guidelines for the Implementation of the ASEAN Policy on Zero Burning 2003, or comparable guidelines in other regions? b. What was the justification for using fire? Preamble: Field observation There was no land preparation for replanting by burning. NA Growers and millers commit to report greenhouse gas emissions from their operations. However, it is recognised that these significant emissions cannot be monitored completely or measured accurately with current knowledge and methodology. It is also recognized that to reduce or minimise these emissions is not always practical or feasible. Growers and millers commit to an implementation period until the end of December 2016 for promoting best practices in reporting to the RSPO, and thereafter to public reporting. Growers and millers make this commitment with the support of all other stakeholder groups of the RSPO. Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored. Guidance: Where practically feasible, operations should follow best management practices to measure and reduce emissions. Advice on this is available from the RSPO. (M) Document(s) assessing pollution and emission sources, including gaseous, particles, soot emissions and effluent, shall be available (see Criterion 4.4) Specific Guidance: For 5.6.1: Assessment document covers identification of pollutant and emission sources, and evaluation of potential pollution level. a. Has an assessment of all polluting activities been conducted including gaseous emissions, particulate/soot emissions and effluent (see Criterion 4.4)? - Environmental aspect and impact identification (EMS-F01 updated 24 March 2017) b. Is there a documented list of all identified polluting activities? - Report of analysis for boiler emission, generator emission, air ambience quality, noise quality from third party Identification of pollution and emission sources at Begerpang Mill activities was evident. The source of pollution, type of pollution and its control was documented, e.g. stack of boiler, electricity generator and heavy equipment, methane from WWTP, composting, and fertiliser. The information of pollution and emission sources at Begerpang mill and estates was reviewed and updated on 24 March Monitoring of pollution and emission quality of sources identified has been programmed. Monitoring and measurement results for 1 st and 2 nd semester 2016 were sighted for boiler emission against Environment Ministry Decree #07/2007, diesel electricity generator YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 122 of 224

123 against Environment Ministry Decree #Per13/Menlh/2009, vehicle and heavy equipment emission against Environment Ministry Decree #05/2006, odour emission against Environment Ministry Decree #50/Menlh/11/96, ambient noise against Environment Ministry Decree #48/Menlh/11/96, also ambient air quality against Government Regulation #41/1999. For vehicle and heavy equipment emission was held annually, last measurement on 24 May 2017 to vehicles, dump truck, backhoe loader, tractor, compactor, road grader, and flow max by Balai Keselamatan dan Kesehatan Kerja Medan Laboratory. (M) Significant pollutants and greenhouse gas (GHG) emissions shall be identified, and plans to reduce or minimise them implemented Specific Guidance: For 5.6.2: Plans will include objectives, targets and timelines. These should be responsive to context and any changes should be justified. Examples of reducing greenhouse gas emission are including empty bunch application, effluent land application, efficiency of fertilizer use, fuel efficiency, compost application and or methane capture. For and 5.6.3: The treatment methodology for POME will be recorded. a. Is there a documented list of all identified significant pollutants and GHG emissions? b. Are there plans to reduce or minimise the identified pollutants and GHG emissions? c. Do the plans include objectives, targets and timelines for reduction that are responsive to context? d. Are the plans being implemented? Was there any changes? Is it justified? e. Is the treatment methodology for POME recorded? (refer to C 4.4.3) - Environmental aspect and impact identification (EMS-F01 updated 24 March 2017) - EMS-P 13 and EMS-WI-9 GHG mitigation - Monitoring report of waste water effluent The source of greenhouse gas emission has identified on Environmental aspect and impact identification, updated on 24 March 2017, as listed below: 1. Methane from POME and composting at mill 2. Fossil fuels emissions from vehicles and engines (generator) 3. Chemical fertilizer 4. Electricity usage 5. Chemical spraying Several effort to reduce GHG emissions is prepared as follows: 1. Zero burning 2. Utilization of waste fibre and shell as boiler fuel and electricity from turbines 3. Reduce chemical fertilizer using EFB composting The program was identify the source of greenhouse gas emissions as listed below: YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 123 of 224

124 1. Methane from POME at mill 2. Fossil fuels emissions from vehicles and engines 3. Chemical fertilizer 4. Electricity usage The records of each programme were sighted as evident implementation. Begerpang Mill waste water was processed through a series of waste water treatment ponds: two acidification ponds, one anaerobic pond, and one facultative pond. Process parameter monitoring and maintenance of the ponds were sighted. Quality of waste water effluent is monitored monthly in line with the requirements. The results of monitoring of waste water effluent were reviewed including measurement of BOD, COD, oil and fat, N total result of discharge effluent conforms to the limits for parameters. A monitoring plan and results of regular reporting on emission and pollutants from estate and mill operations using appropriate methods, shall be available. Specific Guidance: For and 5.6.3: The treatment methodology for POME (Palm Oil Mill Effluent) will be recorded For (GHG): For the implementation period until December 31 st, 2016, an RSPO-endorsed modified version of PalmGHG which only includes emissions from operations (including land use practices) can be used as a monitoring tool. In addition, during the implementation period, growers will start to assess, monitor and report emissions arising from changes in carbon stocks within their operations, using the land use in November 2005 as the baseline. The implementation period for Indicator is the same implementation period for Criterion 7.8. During the implementation period, reporting on GHG will be to a relevant RSPO working group (composed of all membership categories) which will use the information reported to review and fine tune the tools, emission factors and methodologies, and provide additional guidance for the process. Public reporting is desirable, but remains voluntary until the end of the implementation period. During the implementation period the RSPO working group will seek to continually improve PalmGHG, recognising the challenges associated with measuring GHG and carbon stock. PalmGHG or RSPO-endorsed equivalent will be used to assess, monitor and report GHG emissions. Parties seeking to use an alternative to PalmGHG will have to demonstrate its equivalence to the RSPO for endorsement. Methodology for calculating GHG refers to a. Is there a system in place to monitor emission of pollutants including greenhouse gases from estate (plantation) and mill operations? b. Is there regular reporting of the monitoring and calculation of GHG RSPO calculation Year assessment 2016 reporting date 15 May 2017 The GHG emission calculation for Begerpang Mill uses. PalmGHG V As RSPO requirement. The reporting was conducted periodically to the RSPO interest (Ms. Devala Devi S) on 15 May Reports was sighted that summarized as below: YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 124 of 224

125 outcomes? How often and to whom is reporting done? c. Is the monitoring and reporting conducted using appropriate tools? What tool is being used to assess, monitor and report on GHG emissions? Please refer to specific guidance for GHG requirements. Total field emissions (tco₂e) Total mill emissions (tco₂e) Own Crop Group Out grower 25, , Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 125 of 224

126 PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLERS Aspects of plantation and mill management that have social impacts, including replanting, are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continual improvement. 6.1 Guidance: Identification of social impacts may use AMDAL as part of the process, however it is the company s responsibility to provide objective and proper evidence to the audit team that entire requirements in the social impact assessment cover all aspects of estate and mill operations, and their changes along the time. Identification of social impacts should be carried out by the grower with the participation of affected parties, including women and migrant workers as appropriate to the context. The involvement of independent experts should be sought where this is considered necessary to ensure that all impacts (both positive and negative) are identified. Participation in this context means that affected parties are able to express their views through their own representative institutions, or freely chosen spokespersons, during the identification of impacts, reviewing findings and plans for mitigation, and monitoring the success of implemented plans. Potential social impacts may result from activities such as: building new roads, processing mills or other infrastructure; replanting with different crops or expansion of planting area; disposal of mill effluents; clearing of remaining natural vegetation; changes in employee numbers or employment terms; smallholder schemes. Plantation and mill management may have social impacts (positive or negative) on factors such as: a. Access and use rights; b. Economic livelihoods (e.g. paid employment) and working conditions; c. Subsistence activities; d. Cultural and religious values; e. Health and education facilities; f. Other community values, resulting from changes such as improved transport /communication or arrival of substantial migrant labour force. g. Traditional or customary rights owned by the local community, if identifiable h. Welfare of workers/labour and women, children and vulnerable group i. Contribution to the local development, including improvement of human resources, local and customary communities. Regulations relating to identification of environmental and social key issues including indigenous rights and methodology to collect data and utilize the results, adopted from related regulations, such as: 1. Government Regulation No. 27 year 2012 regarding Environment Permit 2. Regulation of the Minister of Environment No. 17 year 2012 regarding Involvement of Community and Information Transparency in AMDAL Process 3. Regulation of the Minister of Environment No. 8 year 2006 regarding Guidance for AMDAL Preparation 4. Decree of the Head of Bapedal No. No. 299 year 1996 regarding Technical Guidance for Social Aspect Study in AMDAL Preparation 5. Regulation of Minister of Home Affairs No.52 year 2014 regarding Guidance on the Recognition and Protection of the Indigenous People 6. Regulation of the State Minister of Agrarian Affairs/Head of the Land National Agency No. 5 year 1999 on Guidelines for the Settlement of Problems Related to the Communal Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 126 of 224

127 Reserved Land of the Customary Law Abiding Community (M) A social impact assessment (SIA) including records of meetings shall be documented. a. Has an SIA been conducted? When was the SEIA Document, on 18 February last SIA conducted? 2017 PT. PP. LSIP Tbk has conducted Social-Environment Impact Assessment (SEIA) in Rambong Sialang Estate and Begerpang Estate by Sustainability Department on 18 February Some b. Is the process in conducting the SIA and the CSR Program findings in SIA has been documented both positive and negative findings documented? aspects. The SIA covered several factors, other between : c. Does the SIA cover all of the potential impact factors, including: Access and use rights; Access and use rights; Economic livelihoods and working conditions; Economic livelihoods (e.g. paid Subsistence activities; employment) and working conditions; Cultural and religious values; Subsistence activities; Health and education facilities; Cultural and religious values; Other community values. Health and education facilities; Other community values, resulting from changes such as improved transport /communication or arrival of substantial migrant labour force (M) There shall be evidence that the assessment has been conducted with the participation of affected parties a. Does the assessment involve consultation with the affected parties? Who are the affected parties? b. Is there record of how the participatory assessment has been conducted? Were the affected parties able to express their views through their own representative institutions, or freely chosen spokespersons, during the identification of impacts, review of findings and planning for mitigation? Social Impact Assessment Report PT. PP LSIP Bagerpang, 2017 Public consultation with stakeholder on August 2017 Social Impact assessment involve consultation with the affected parties in each villages around estate that was village head and public figure. All affected parties was involve in this assessment, such as workers (includes labour union and woman worers), head of village, public figure, etc. There was no migrant worker in Begerpang and Rambong Sialang Estate. SIA method is done by PRA (Participatory Rural Appraisal) through participatory discussions and interviews with villagers to dig deeper into the information and the potential that has been identified during the PRA. Attendance list and photograph of social impact assessment were available. Assessment has been done with the participation such as head of villages and public figure. (M) Plans for management and monitoring of social impacts to avoid or reduce negative impacts and promote positive ones, based on social impact assessment, through consultation with the affected parties, shall be available, documented and timetabled, including responsibilities for implementation. YES YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 127 of 224

128 Specific Guidance: For and 6.1.4: Plan for management and monitoring of social impacts shall be established to avoid or reduce negative impacts and promote the positive ones, and monitoring of identified impacts shall be developed in consultation with the affected parties, documented and timetabled, including responsibilities for implementation. Methodology to identify customary right and local community and social impacts assessment can be made with the following: a. Document review b. Field observation c. Interview d. FGD (Focus Group Discussion) e. Participatory mapping These involve participation of the community to define potential social impacts and management recommendation. The process refers to Regulation of the Minister of Environment No. 17 year 2012 regarding Community involvement and Information Transparency in the Process of Environment Impact Assessment (SEIA). a. Is there any documented record to outline the plan on mitigation, implementation and monitoring according to the SIA report? b. Have plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts been developed? c. Have these plans been documented, with clear timetables? Is the timeline reasonable? d. Have the persons responsible for implementation of the plans been identified? Social Impact Assessment Report PT. PP LSIP Bagerpang Social Impact Assessment Report PT. PP LSIP Rambong Sialang Public consultation with stakeholder on August 2017 Plans on mitigation of negative impact have been documented in Social Impact Assessment report of PT. PP LSIP Tbk, Begerpang Estate and Rambong Sialang Estate. Plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts identified has been developed and documented in table of negative and positive impact management plan and monitoring of positive and negative impact implementation in Social Assessment report. Person that responsible for implementation of the social impact plans were Estate Managers and assisted by Head of Administration (KTU) for controlling and implementing. The documented plan for management and monitoring of social impacts, shall be reviewed at least on two-yearly basis. If necessary, the plan should be updated. There shall be evidence that the review process includes participation of all affected parties. YES Specific Guidance: For and 6.1.4: Plan for management and monitoring of social impacts shall be established to avoid or reduce negative impacts and promote the positive ones, and monitoring of identified impacts shall be developed in consultation with the affected parties, documented and timetabled, including responsibilities for implementation. Methodology to identify customary right and local community and social impacts assessment can be made with the following: a. Document review b. Field observation c. Interview d. FGD (Focus Group Discussion) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 128 of 224

129 e. Participatory mapping These involve participation of the community to define potential social impacts and management recommendation. The process refers to Regulation of the Minister of Environment No. 17 year 2012 regarding Community involvement and Information Transparency in the Process of Environment Impact Assessment (SEIA). a. Is the plan reviewed every two years? b. Has the plan been updated as necessary (i.e. in cases where the review has concluded that changes should be made to current practices)? c. Have the changes to the plan been implemented? d. Is there evidence that the review has been done with the participation of the affected parties? e. Has the process been recorded/documented? Social Impact Assessment Report PT. PP LSIP Bagerpang Estate and Rambong Sialang, 2017 CSR Report 2016/ Particular attention shall be paid to the impacts of smallholder schemes (where the plantation includes such a scheme). a. Are there schemed smallholders involved? Social Impact Assessment b. Have they been considered and involved in the Report PT. PP LSIP whole process of the SIA? Bagerpang and Rambong Sialang Estate, 2017 c. What are the main impacts affecting these smallholders? Public consultation with stakeholder on August 2017 The plan of SIA in PT. PP LSIP Tbk (Rambong Sialang and Begerpang Estate) was periodically reviewed, the last review in February The review updated, such as traditional or customary rights owned by the local community; welfare of workers/labour and women, children and vulnerable group; and contribution to the local development, including improvement of human resources, local and customary communities. The changes to the plans have been implemented with the participation of affected parties. The SIA review was well documented in site. There was no smallholder scheme (plasma) in PT. PP LSIP, Bagerpang, Sei Merah, Rambong sialang Estate. There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties. YES N/A Audit Report 6.2 Guidance: Decisions that the growers or mills are planning to make should be made clear, so that local communities and other interested parties understand the purpose of the communication and/or consultation. Communication and consultation mechanisms should be designed in collaboration with local communities and other affected or interested parties. These should consider the use of appropriate existing local mechanisms and languages. Consideration should be given to the existence/formation of a multi-stakeholder forum. Communications should take into account differential access to information by women as compared to men, village leaders as compared to day labourers, new versus established community groups, and different ethnic groups. In these communications, consideration should be given to involve third parties, such as disinterested community groups, NGOs, or government (or a combination of these), to facilitate Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 129 of 224

130 smallholder schemes and communities, and others as appropriate (M) Communication and consultation procedures shall be documented a. Does the company maintain a list of local communities and other affected or interested parties? Communication procedure (EMS-P05), date on 10 August 2009 b. Is there SOP being developed by the company for communication and consultation between the company and the local communities and other affected or interested parties? c. Is the FPIC approach incorporated in the SOP for communication and consultation with the local communities and other affected or interested parties? d. Has the SOP been developed together with the local communities and other affected or interested parties using appropriate existing local mechanisms and in languages understood by these parties? e. Has the SOP been socialized with the local communities and other affected or interested parties taking into account the differential access to information by women as compared to men, village leaders as compared to day labourers, new versus established community groups, and different ethnic groups? f. Have interviews with affected parties been carried out to verify that the SOPs are effective? Minutes of socialization in October 23 th 2014 to stakeholder and attendance list Public consultation with stakeholder on August 2017 Company has maintained a list of local communities and other affected or interested parties. List of local communities and other affected or interested parties was well documented and updated once a year. Record of documentation was well maintained by document controller. Procedure for communication and consultation with public was established by organization. Stage of communication and consultation with public was described in Communication procedure (EMS-P05), date on 10 August FPIC was not applicable in PT PP LSIP Tbk due to the establishment of company since FPIC approach was incorporated in the SOP for communication and consultation with the local communities and other affected or interested parties. The existing Communication procedure (EMS-P05), date on 10 August 2009 has been designed with consideration to the use of appropriate existing local mechanisms and languages. Consideration has been given to the existence/formation of a multi-stakeholder forum. Dissemination of social communication procedure has been performed in October 23 th 2014 to stakeholder. Minutes of socialization and attendance list was sighted. The existing communication and consultation mechanisms (Communication procedure (EMS-P05), date on 10 August 2009) take into account differential access to information by women as compared to men, village leaders as compared to day labourers, new versus established community groups, and different ethnic groups. Procedures were available in Indonesian and easily too understood and it was effective. It was verified during public consultation and interview with stakeholder on August YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 130 of 224

131 6.2.2 The company shall have official(s) who is responsible for consultation and communications with parties. a. Who in the company is appointed to be Communication procedure Estate manager and Humas (public relation) have appointed as responsible for communication and (EMS-P05), date on 10 August responsible person for these issues based on the procedure of consultation with the affected parties? 2009 Communication procedure (EMS-P05), date on 10 August b. Has the position been made official with clear and proper job description? c. Have the affected parties been made aware and have access to the person in charge? Humas (public relation) and Estate manager Job description Described in Job desk Estate Manager one of the function was develop and maintain the good social relationship with community and third party include affected party. Other than that, in its implementation Estate Manager assisted by Humas. Affected parties have been aware and have access to the person in charge in accordance with Social Communication procedure. The company shall have a list of stakeholders, records of communications, including confirmation of receipt and that efforts are made to ensure understanding by affected parties, and records of actions taken in response to input from stakeholders. a. Is the following maintained? List Stakeholder update on 23 YES List of stakeholders (local communities April 2017 and other affected or interested parties etc.); Records of all communication, including confirmation of receipt or endorsement; Evidence that efforts have been made to ensure understanding by affected parties; Record of actions taken in response to input from stakeholders. Logbook communication and stakeholder aspiration 2016/2017 Public consultation with stakeholder on 1-3 August 2017 A list of stakeholder was documented and updated once a year. The document was available covers internal stakeholder, government institution of District, villages around Estate, labour union, FFB supplier, NGO (local, national and international) and general contractor/supplier. Last update was performed 23 April Record of list stakeholder can be demonstrated and well maintained. Records of all communication including confirmation of receipt or endorsement were well maintained, it documented in logbook of information request and community aspiration. Efforts were made to ensure understanding by affected parties was evident and documented in folder of information request and community aspiration as well as records of actions taken in response to input from stakeholders. Records of actions taken are already registered in the log book. There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all affected parties. YES 6.3 Guidance: See also to Criterion 1.2. Dispute resolution mechanisms should be established through open and consensual agreements with relevant affected parties. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 131 of 224

132 6.3.1 Complaints should be dealt with by mechanisms such as Joint Consultative Committees (JCC), with gender representation as necessary. Grievances may be internal (employees) or external. For scheme and independent smallholders, refer to Guidance for Independent Smallholders under Group Certification, June 2010, and Guidance on Scheme Smallholders, July Where a resolution is not found mutually, complaints can be brought to the attention of the RSPO Complaints System. This refers to United Nations Commission on Human Rights (UNCHR) document to support Guiding Principles on Business and Human Right to implement UN framework to Protect, Respect and Remedy If all the above stages of conflict resolution have been carried out but the conflict cannot be resolved, then the next process is done through legal proceedings in court. Conflict resolution process with the community is still continued although transfer of company s ownership occurs. (M) The mechanism, open to all affected parties, shall resolve disputes in an effective, timely and appropriate manner, ensuring anonymity of complainants and whistleblowers, where requested, as long as that information is supported with adequate initial evidence. Specific Guidance: For 6.3.1: The system should aim to reduce the risks of reprisal. For 6.3.2: Records can be in the form of evidence from process or end-result of the resolution a. Is there an system in place to deal with complaints and grievances for all affected parties? b. Who in the company is responsible to receive complaints and grievances? c. Is the existence of the system been made known and communicated to all parties? d. Is there evidence that the system is understood by all parties? e. Is training provided to the workers on the procedures/systems? f. Is the system effective to ensure that complaints or grievances are addressed or resolved in an effective, timely and appropriate manner? g. Does the mechanism or procedure provide a way for workers to report a grievance against a Communication procedure (EMS-P05), date on 10 August 2009 Internal Memorandum of HR Director # 028/HRD/CIR/IV/2011, on 1 April 2011 and HR Policy on 25 May 2005 Internal Complaint procedure. Job description of Estate Manager Training and socialization record to all employee 2016/2017 Interview with employee on 1 3 August 2017 Organization has defined the system to deal with complaints and grievances for all affected parties which documented in Communication procedure (EMS-P05), date on 10 August 2009, Internal Memorandum of HR Director # 028/HRD/CIR/IV/2011, on 1 April 2011 and HR Policy on 25 May 2005 Internal Complaint procedure. Person who responsible to receive complaints and grievances has assigned by organization that was Estate manager. It s also described in Job description of Estate manager. The existence of the system has been communicated and made known to all parties. It has been disseminated to all parties through stakeholder meeting on July Socialization and procedures training have been performed to all levels of employees through master morning and sign board in each division. The system was effective to ensure that complaints or grievances are addressed or resolved in an effective, timely and appropriate YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 132 of 224

133 6.3.2 supervisor to someone other than the supervisor? h. How is a complaint or grievance investigated, addressed and resolved? Are complaints dealt with by mechanisms such as JCC? i. Is there a non-retaliation or non-reprisal policy that protects complainants or whistle-blowers? j. Is the privacy of parties protected? k. Where a resolution is not found mutually, is there a process for complaints to be brought to the RSPO Complaints System? (M) There shall be records of process and outcome of dispute resolution. Public consultation with stakeholder on August 2017 Specific Guidance: For 6.3.2: Records can be in the form of evidence from process or end-result of the resolution a. Is the complaints or grievance resolution process documented? b. Are outcomes or decisions reported to the parties? c. Who has access to the documentation of the process and/or outcomes? Logbook of Complaint 2016/2017 and record of responses and dealing Procedure of Social Complaint Handling - Internal Memorandum No. 028/HRD/CIR/IV/2011 dated 01 April 2011 Interview with employee on 01- manner. Evidence that the procedures have been implemented is the logbook of complaint. Records are routinely monitored monthly. Mechanism and procedure described a way for workers to report a grievance against a supervisor to someone other than the supervisor. The system was enable resolution of disputes in an effective and appropriate manner by way of classifying complaints into internal and external, appointed the person who responsible for handling complaints, including level of officials who make decisions for complaint resolution. Non-retaliation or non-reprisal policy that protects complainants or whistle-blowers was described in sustainability policy PT PP LSIP Tbk. Privacy of parties who submitted the compliant and aspirations were protected if necessary. Where a resolution is not found mutually by means of deliberations between two parties, the problem can be resolved through third-party mediation / authorities, be resolved through the applicable law or brought the RSPO Complaints System. Complaints or grievance resolution process documented in the logbook of Complaint. Records are routinely monitored monthly however there were no complaints from stakeholder/parties since last audit until this audit performed. From the result of interview with employee and external stakeholder, it was confirmed that they feel satisfied and have no complain to company, however they express some aspiration to company. Organisation has defined the procedure for complaints and grievance handling which documented in Prosedur Penanganan Keluh Kesah Internal Memorandum No. 028/HRD/CIR/IV/2011 dated 01 April YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 133 of 224

134 August 2017 Public consultation with stakeholder on 1 3 August Outcomes or decisions as response to follow up complain will be reported to affected parties as described in procedure. Affected parties have access to the documentation of the process and/or outcomes. Any negotiations concerning compensation for loss of legal, customary or user rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions. Guidance: This criterion should be considered in conjunction with Criteria 2.2 and 2.3, and the associated Guidance (M) A procedure for identifying legal, customary or user rights, and a procedure for identifying people entitled to compensation, shall be available, referring to decision of the Constitution Court. Specific Guidance: For 6.4.1: Customary Right in the Local Regulation/Perda (based on Constitution Court Decision No. 35/PUU-X/2012 regarding Customary Forest) determined through participatory mapping of customary land by the customary law community who are recognized by the surrounding customary law community and refers to Regulation of the Minister of Home Affairs (Permendagri) No. 52 year 2014 regarding Guideline of Recognition and Protection of Legitimate Customary Community and Regulation of the State Minister of Agrarian Affairs/Head of National Land Agency (BPN) No. 5 year 1999 regarding Guidelines for the Settlement of Problems Related to the Communal Reserved Land of the Customary Law Abiding Community. a. Are procedures for identifying legal, customary or user rights in place? b. Are procedures for identifying people entitled to compensation in place? c. Are those procedures jointly developed, agreed and accepted by local communities? Pedoman Kebijakan Akuisisi Lahan dan Tanam Tumbuh February 2007 Public consultation with stakeholder August 2017 Procedure for identifying legal, customary or user rights has been established and available in Pedoman Kebijakan Akuisisi Lahan dan Tanam Tumbuh February The steps of the procedures to identification and calculation of land compensation, consist of: 1. Identification of land owner 2. Measurement 3. Data input (mapping) 4. Negotiating compensation (according to the agreement and witnessed by a competent witness) 5. Payment of compensation 6. Data documentation. Procedure for identifying people entitled to compensation has been established and available also in procedure of Identification and calculation of land compensation. The steps are as described above. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 134 of 224

135 Procedures was jointly developed, agreed and accepted by local communities It has been designed with consideration to the use of appropriate existing local mechanisms and languages. Consideration has been given to the existence/formation of a multi-stakeholder forum. The Procedure has disseminated to the stakeholder together with stakeholder meeting in July Minutes of socialization and attendance list was sighted. A procedure for calculating and distributing fair compensation shall be established, implemented, monitored and evaluated in a participatory way. Corrective actions are taken as a result of this evaluation Specific Guidance: For 6.4.2: Companies should make best efforts to ensure that equal opportunities have been provided to the heads of family, both female and male, to hold land titles in smallholder schemes if the land ownership is individual. The calculation procedure shall consider: a. Gender differences in the power to claim rights, ownership and access to land; b. Differences of transmigrants and long-established communities; c. Differences between legal ownership evidence with communal ownership of ethnical group (customary community) a. Has a procedure for calculating and distributing fair compensation (monetary or otherwise) been established and implemented? b. Are the procedures jointly developed, agreed, accepted and clearly understood by affected parties? c. Is the procedure monitored and evaluated in a participatory way? Have corrective actions been taken as a result of this evaluation? d. Does this procedure take into account the following: Gender differences in the power to claim rights; Ownership and access to land; Pedoman Kebijakan Akuisisi Lahan dan Tanam Tumbuh February 2007 Public consultation with stakeholder on August 2017 Procedure for calculating and distributing fair compensation (monetary or otherwise) has been established and available in Pedoman Kebijakan Akuisisi Lahan dan Tanam Tumbuh February Procedures was jointly developed, agreed and accepted by local communities It has been designed with consideration to the use of appropriate existing local mechanisms and languages. Consideration has been given to the existence/formation of a multi-stakeholder forum. The procedure monitored and evaluated in a participatory way, procedures will be revised if there is a reasonable request from stakeholders. This procedure take into account of the gender differences in the power to claim rights, ownership and access to land, differences of YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 135 of 224

136 Differences of transmigrants and longestablished communities; Differences in ethnic groups proof of legal versus communal ownership of land. e. Where there are schemed smallholders, is there effort to ensure equal opportunity has been provided to. transmigrants and long-established communities, differences in ethnic groups proof of legal versus communal ownership of land. There was no smallholder scheme in bagerpang Estate (M) Compensation claims, process and outcome of any negotiated agreements shall be documented, with evidence of the participation of affected parties. a. Is the process and outcome of negotiated agreements and compensation claims documented? Pedoman Kebijakan Akuisisi Lahan dan Tanam Tumbuh February b. Does this documentation include evidence of the participation of affected parties? Is there any approval/signed by effected parties? c. Was consent obtained from all parties to make the documents publicly available? Public consultation with stakeholder on August 2017 The organisation did not acquire any new land after It was noted that there was no ongoing progress of new land acquisition during group discussion with village head and local NGO. All land acquisition process was done before Pay and conditions for employees and for contract workers always meet at least legal or industry minimum standards and are sufficient to provide decent living wages. Guidance: Labor union agreement or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday, maternity leave, reasons for dismissal, period of notice, etc.) shall be available in the languages understood by the workers or explained carefully to them by a management official or Labor Union if any. Regulation related to the minimum wage such as, Regulation of the Minister of Manpower & Transmigration No. 7 year 2013 regarding Minimum Wage, shall be implemented. Definition of Decent Living Wage refers to the Act No. 13 year 2003 (Manpower Act) is a set of standard necessities that must be fulfilled by a worker in order to have a decent physical and social living for a month (M) Documentation of pay and conditions for employees based on the existing manpower regulations shall be available. a. What types of employment arrangements are there in the company? (E.g. contractual, outsourced, apprenticeships, direct hires, piecemeal basis, etc.) Northern Sumatera Governor s Decree Letter No. No /623/KPTS/2016 dated 28 October 2016 Documentation of employees pay rates was made by the organization. Workers were classified into daily worker (BHL Buruh Harian Lepas), and permanent worker (MRP Monthly Rate Person & DRP Daily rate Person). b. Is there documentation of pay and conditions Documentation of employees Evidence that the workers have received wage according regulation YES YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 136 of 224

137 for each employee? c. Is there a definition for living wage in the country? If not, how was the decision on wage for employees and contract workers made? payroll Contract workers could be demonstrated. Minimum wages payment refers to latest Letter BKSPPS No. 26/BKS-PPS/2017 date on 28 February 2017 regarding annual wage increment member of BKS-PPS in North Sumatera Province, minimum wage fixing in 2017 as much as IDR 2,369,255 + Rice accommodation (15 kg/employee + 9 Kg spouse + 7 kg children). Company releases a memorandum 001/HRD/C- SAL/III/2017 date on 17 March 2017 regarding Salary Increases of MRP and DPR in Minimum wage DRP employee fixing was IDR. 2,369,255 + Rice accommodation, Overtime = 1/73 x (Minimum wage + Rice accommodation), Minimum wage MRP employee defined based on lowest grade G with minimum work time 1 year IDR. 2,602,630, highest grade A with work time 5 years IDR. 4,268,630. There were workers level, consist of: MRP - Worker who work every day and paid monthly. Wage was paid based on grade and year was range IDR 2,602,630 4,268,630 (2017). - Overtime = 1/73 x (Minimum wage + Rice accommodation) - Calculation of absent (mangkir) = (Basic salary + Rice accommodation)/25 DRP - Worker who work every day and paid monthly. Wage was paid based on minimum payment is IDR 2,602,630 (2017). - Overtime = 1/73 x (Minimum wage + Rice accommodation) - Calculation of absent (mangkir) = (Basic salary + Rice accommodation)/25 Casual worker (BHL) - Worker who work is in accordance with company needs. Wage Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 137 of 224

138 6.5.2 was paid based on minimum paymeny is IDR 94,770 / day (2017). - Work agreement valid for 1 year. Contract worker (PKWT) - Worker who work every day and paid monthly. Wage was paid based on minimum payment is IDR 1,952,640 (2016). - Work agreement valid for 1 year. Overtime was defined based on UU No. 13 / Rice accommodation value defined based on price standard which issued by BKS-PPS (Badan Kerjasama Perusahaan Perkebunan Sumatera). Based on verification of employee payroll in Rambong Sialang Estate, Begerpang Estate, and Begerpang POM from September 2016 to August 2017, there was no employee paid below minimum wage and it has compliance with the regulation. Based on interview with worker it was noted that there was no worker wage deduction. Payments for workers were determined according to daily attendance register and over time shift. Daily attendance for workers was recorded and controlled manually by the each Assistant. Pay and conditions for employees and for contract workers always meet at least legal or industry minimum standards and are sufficient to provide decent living wages. (M) Collective Labor Agreement/Company Regulation, in accordance with the manpower regulations, shall be available in understandable language; and explained by the management or Labor Union to the workers. Specific Guidance: For 6.5.2: Collective Labor Agreement (Perjanjian Kerja Bersama/PKB) and or Company Regulation are developed by the company together with the Labor Union, if any, in the company referring to the manpower regulations, such as the Regulation of the Minister of Manpower No. 6 year 2011 regarding Procedure for Establishing and Endorsing the Company Regulation, and Developing and Registering Collective Labor Agreement. a. Is the pay and conditions of employment clearly detailed in the employment or service PKB years endorsed by the Director Pay and conditions of employment clearly detailed in the employment or service contracts. Employees contract are available YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 138 of 224

139 contracts? (E.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc.) b. Is the contract prepared in languages understood by the workers, explained carefully to workers by management officials, and signed by both the authorised signatory of the company and employee? c. Does the pay and conditions provided in labour laws, union agreements or direct contracts of employment comply with: The decent living wage as provided in the National Interpretation for the country; or The local legal requirements in meeting the minimum wage; or The industry minimum standard for a similar position or work responsibilities d. Is the pay received by the employee consistent with the terms of the contract and the law (relates to P2)? e. Have there been any cases recorded of breach by the company, or complaint made by employees against the company on unjust pay and conditions? General of Industrial Relations Labor and Social Security with the decree RI dated June 18 th, 2015 SK No.KEP.88/PHIJSK- PKKAD/PKB/VI/2015 Contract workers for permanent employees, contract labor agreement contains agreements include: working time, dependents, payroll and consent of both parties. Working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc described in PKB years which have been agreed between the employees (represented by SPSI) and company. Contract work by non-permanent employees performed in accordance with the employment contract agreement. The contract includes the amount of work, duration and value of the wage contract. The contract was signed and agreed by both parties. Contract was prepared in languages which understood by the workers, explained carefully to workers by management officials, and signed by both the authorised signatory of the company and employee. Pay and conditions provided in labour laws, union agreements and direct contracts of employment has been comply with: The decent living wage as provided in the National Interpretation for the country; or The local legal requirements in meeting the minimum wage; or The industry minimum standard for a similar position or work responsibilities Payment of salaries performed once a month in the beginning of each month (date on 5) for permanent employees. Total salaries paid are in accordance with the district minimum wage (based on BKS- PPS fixing wage upper than minimum payment). Pay received by the employee was consistent with the terms of the contract and the law. Since September 2016 August 2017 there was no complaint made by employees against the company on unjust pay and conditions. Information was based on Complaint logbook Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 139 of 224

140 Growers and millers shall provide adequate housing, water supplies, medical, educational and welfare amenities to national standards or above, where no such public facilities are available or accessible. Specific Guidance: For 6.5.3: Incentives to the employees refer to Act No. 13 year 2003 regarding Manpower. a. Have growers and millers provided adequate List of public facility in 2017 housing and other basic necessities such as that listed below to national standards or above, Interview with representative where no such public facilities are available or worker on August 2017 accessible? adequate housing; adequate electricity; clean water supplies (availability of clear water all year round); medical services (distance to health care facility i.e. clinic, hospital); children education (distance to school and schooling attendance (%) of children under 12) welfare amenities. There shall be demonstrable efforts to improve workers access to adequate, sufficient and affordable food The organization provided adequate medical, educational and welfare amenities to national standards. Public facilities were provided by the organisation with basic facilities and covered child care, kindergarten, building for prayers (Mosque and Church), sports facility (e.g. volley ball, badminton, futsal, and tennis), housing for workers and medical facilities (clinics). Housing for workers and medical facilities (clinics) were was provided by the organisation with basic facilities. List of public facilities were available for employee documented. The organization has provided adequate water supplies to national standards. Water analysis was conducted every semester based on Permenkes No. 416 / Management has been checked the clean water to the laboratory (refer to 4.4.1). Company also provides medical services for all employees freely in Plantation Clinic with the facility such as Ambulance, medicine, medical equipment, etc. All employee also covered by health insurance (BPJS) which was paid by company each month. Education facility also provided by company such as Rumah Pintar which provides some educational tools and equipment, educational book/library and etc. Company also provided school bus and school transportation. Elementary school, Junior High School and Senior High School were available around company and company support and provide the transportation (school bus) for school children. Specific Guidance: For 6.5.4: This applies if public facility is unavailable or inaccessible to provide adequate, sufficient and affordable food. The examples of the efforts are provision of transportation, employee cooperative shop, weekly market, etc. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 140 of 224

141 a. Have growers and millers made demonstrable efforts to monitor and improve workers access to adequate, sufficient and affordable food? List of facility for employee Interview with representative worker on August 2017 Field observation in Rambong Sialang and Begerpang Emplacement The organization made demonstrable efforts to monitor and improve workers access to adequate, sufficient and affordable food. There are cooperatives that provide basic needs for employees Koperasi Karyawan Perkasa PT. PP. LSIP. The location of the plantation was on near of the national road, so there is no problem for the access to the market. Based on the interview with worker representative and labor union, it was conclude that there was no problem regarding access to adequate, sufficient and affordable food. Workers also have rice catu beras 15 kg for the employee, 9 kg for the spouse and 7.5 kg for each child, up to 3 children. Employees and their dependents (children and wife) are also provided health insurance (BPJS Kesehatan) by the company. YES The employer respects the rights 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. 6.6 Guidance: The right of workers, including migrant and transmigrant workers (Angkatan Kerja Antar Daerah/AKAD) and contract workers, to form associations and bargain collectively with their employer should be respected, in accordance with The Act No. 21 year 2000 regarding Labor Union. Labour laws and collective labor agreements, or in their absence direct contracts of employment detailing payments and other conditions, should be available in the languages understood by the workers or explained comprehensively to them by a management official. Definition of Employer refers to the Act No. 13 year 2003 regarding Manpower (M) A record of the company s policy in understandable language recognising freedom of association, shall be available a. Has the company published a statement in Company Sustainability Policy local languages recognising the rights of dated 1 September 2014 employees to freedom of association? b. Are the employees, including migrant and transmigrant workers and contract workers, allowed to form associations and bargain collectively with their employer? c. Was the outcome, if any, from the collective Internal memorandum No. 006/HRD/CIR/I/2004 dated 7 January 2004 PUK-F Serikat Pekerja Perkebunan - SPSI PT PP LSIP Tbk, North Sumatera Freedom of association has been mentioned in Company Sustainability Policy dated 1 September Organizations understand that workers have the right to argued, associate and organize in a labor union. Company also issued internal memorandum No. 006/HRD/CIR/I/2004 dated 7 January 2004 regarding freedom to associate and organize in a labor union. Organization committed to provides opportunities for workers to organize in unions and express an opinion. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 141 of 224

142 bargaining process between the company and the association respected, implemented and adopted in full or partially by the company? d. Are there Labour laws and union agreements, or in their absence direct contracts of employment detailing payments and other conditions, made available in the languages understood by the workers or explained carefully to them by a management official? (covered all estate in PT PP LSIP Tbk in North Sumatera) Union workers officials ratified by the PUK F-SPSI SP.PP through Decree No. KEP.118/KEP/PC.FSP.PP- SIM/H/2017 dated 2 February Records of meetings with labor unions or workers representatives shall be available. a. Are there documented minutes of meetings between the company and main trade unions or Minutes of meetings Unions worker on 2 June 2017 and 10 February Commitment covered in the policy are: The organization recognizes workers' rights to express their opinions and organize freely and responsibly run in labor union organizations. Organizational policies related to ensure workers' rights are discussed and decided by taking into consideration the union. Ensured that the disclosure made by aspiration unions did not cause the collapse of a termination for union leaders and members. Promoting the principle of dialogue to reach consensus in addressing the aspirations from labor union to the company. Based on interview with labour union leader, the company has accommodated employee rights to argued, associate and organize in a labor union. Employees, including migrant and transmigrant workers and contract workers were allowed to form associations and bargain collectively with their employer. There were union workers represent estate and mill employee incorporated in the PUK-F Serikat Pekerja Perkebunan - SPSI PT PP LSIP Tbk, North Sumatera (covered all estate in PT PP LSIP Tbk in North Sumatera). The composition of union workers officials have been ratified by the PUK F-SPSI SP.PP North Sumatera through Decree No.118/KEP/PC.FSP.PP-SIM/H/2017 dated 2 February Labor laws, union agreements which described in PKB (Perjanjian Kerja Bersama) and direct contracts of employment detailing payments and other conditions was made available in the languages which understood by the workers and explained carefully to them by management official. Minutes of meetings with main labour unions or workers representatives been documented, e.g. meeting on 2 June 2017 meeting to discuss socializations of rice allowances for employees, YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 142 of 224

143 workers representatives? b. Are the minutes made readily available to employees upon request? Children are not employed or exploited meeting on 10 February 2017 meeting to discuss about minimum wage of employees Y2017. Minutes of meeting were available, list of attendance was sighted. The minutes were made readily available to employees upon request. 6.7 Guidance: Growers and millers clearly define the minimum working age and working hours, based on existing regulations, such as: 1. Act No. 13 year 2003 regarding Manpower. 2. Act No. 20 year 1999 regarding Ratification of International Labour Organization (ILO) Convention No. 138 year 1973 on Allowable Minimum Age for Work. 3. Regulation of the Minister of Manpower and Transmigration No. 235 year 2003 regarding Types of Work Endangering Child Health, Safety or Morale It is advisable to do socialisation to all level of operations regarding prohibition on employing children (M) There shall be documented evidence that minimum age requirements are met. a. Is the minimum working age for workers Company Sustainability Policy together with working hours clearly defined in dated 1 September 2014 the company s recruitment policy? 6.8 b. Are workers employed above the minimum school leaving age of the country or who are at least 15 years of age? c. Is there evidence that the nature of work for workers under 18 is in accordance with International Labour Organisation (ILO) Convention 138? d. Does ground verification show evidence of employment of workers below the minimum working age? List of employees which updated on June 2017 Interview with employee on August 2017 Field observation Company sustainability Policy mentioned that the organization comitted not to hire underage workers required by labor law that is at least 18 years. Companies ensure regulatory provisions governing the child labor were followed. List of employees which updated on May 2017 showed that no employee under the age of 18 years. During field observations demonstrated that there was no underage worker and no children were invited to work by their parents. This complied with UU 13/2003 and with International Labour Organisation (ILO) Convention 138. Ground verification through interview with the employee on on August 2017 could be demonstrated and evident that there were no workers below the minimum working age. And also, no workers that assisted by their children under 18 years, such as loose fruit picking. Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited. Guidance: Examples of compliance can be appropriate documentation (e.g. job advertisements, job descriptions, appraisals, etc.), and/or information obtained via interviews with relevant YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 143 of 224

144 stakeholders such as affected groups which may include women, local communities, foreign workers, and migrant workers, etc. Notwithstanding national legislation and regulation, medical conditions should not be used in a discriminatory way. The grievance procedures detailed in Criterion 6.3 apply. Positive discrimination to provide employment and benefits to specific communities is acceptable as part of negotiated agreements (M) A company s policy on equal opportunity and treatment for work shall be available and documented. a. Is there a company policy on non-discrimination Company Sustainability Policy and equal opportunities? Does it at least cover dated 1 September 2014 the items mentioned in the criteria (6.8)? b. Is the policy made publicly available for the relevant stakeholders? c. Is there evidence that the policy has been implemented? List of employees which updated on June 2017 Interview with employee on August 2017 Field observation Equal opportunities has been documented in Company sustainability policy dated 1 September 2014, the document was publicly available for employee and stakeholder. Its cover race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age. PT. PP. LSIP Tbk believe that every worker is entitled to equal treatment and not discriminate based on ethnicity, religion, race, sexual orientation and gender. PT. PP. LSIP Tbk committed to implementing anti-discrimination policy to all employees. Policy has been communicated to all employees on January 2015 to office workers, mill workers in July and August 2015, and estate workers in September and October 2015, and 5 May Policy made was publicly available for the relevant stakeholders. Based on interview with stakeholders and employee on 6-8 June 2017 could be demonstrated that the policy has implemented well by organization (M) Evidence shall be provided that employees and groups including local communities, women, and migrant workers have not been discriminated. a. Is there evidence that employees and groups Company sustainability Policy including local communities, women, and dated 1 September 2014 migrant workers have not been discriminated against? Logbook Complaint 2016/2017 b. Are the employees and groups including local communities, women, and migrant workers happy with the way the company is treating them? Public consultation on August 2017 Interview with employee August 2017 Based on public consultation on August 2017 with stakeholders and employee could be demonstrated that there was no discrimination against employees and groups including local communities, women, and migrant workers. However there was no migrant worker work to company. The employees and groups including local communities, women, and migrant workers were happy with the way the company treating them. YES YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 144 of 224

145 c. Are there complaints against the company on issues relating to discrimination? d. What is the nature of complaints employees and groups including local communities, women, and migrant workers have lodged against the company, if any? Records of evidence that equal opportunity and treatment for work shall be available Specific Guidance: For 6.8.3: Recruitment and promotion are based on skills, capabilities, qualities and health conditions a. Does the company keep and maintain a record of their employees work credentials and medical history? Public consultation on August 2017 b. Does the company explicitly state the indiscriminatory policy during the recruitment selection, hiring and promotion process? c. Is the company s indiscriminatory policy reviewed regularly? d. Are the company s employees recruited and promoted based on skills, capabilities, qualities, and medical fitness necessary for the job? How is this evidenced? Interview with employee on August 2017 SOP Recruitment (SOP HRD 02) PKB (collective labor agreement) article III Employee promotion Bagerpang Estate There is no harassment or abuse in the work place, and reproductive rights are protected. There were no complaints against the company on issues relating to discrimination based on public consultation with stakeholders and employee. Based on Logbook Complaint 2016/2017 since January December 2016 and January- June 2017 there was no complaint employee and groups including local communities, women, and migrant workers have lodged against the company. Based on public consultation on August 2017 and interview with employee it could be demonstrated that recruitment selection, hiring and promotion are based on skills, capabilities, qualities, and medical fitness necessary for the jobs available. Company was performed selection and recruitment employee based on SOP Recruitment (SOP HRD 02). Company explicitly state the indiscriminatory policy during the recruitment selection, hiring and promotion process. Recruitment process also described in PKB (collective labor agreement) article III. Company s indiscriminatory policy reviewed regularly, once a year. Company s employees was recruited and promoted based on skills, capabilities, qualities, and medical fitness necessary for the job. Recording of recruitment begun from letter of application, personal data of employees, contract and medical history are stored in the file archive employees. From the record could be demonstrated that company has implemented well the procedure and the policy. Some evidence such as employee promotion in Bagerpang Estate. Guidance: There should be a clear policy developed in consultation with employees, contract workers and other relevant stakeholders, and the policy should be publicly available. Progress in YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 145 of 224

146 implementing the policy should be regularly monitored, and the results of monitoring activities should be recorded. Notwithstanding national legislation and regulation, reproductive rights are respected. (M) A policy to prevent sexual and all other forms of harassment and violence, shall be documented, implemented and communicated to all levels of the workforce Specific Guidance: For and 6.9.2: These policies should include education for women and awareness of the workforce. There should be programmes provided for particular issues faced by women and men, such as violence and sexual harassment in the workplace. A gender committee specifically to address areas of concern to women will be used to comply with this Criterion. This committee, which should include representatives from all areas of work, will consider matters such as: training on women s rights; counselling for women affected by violence; child care facilities to be provided by the growers and millers; women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks; and women to be given specific break times to enable effective breastfeeding. a. Does the company have the policy to prohibit any form of sexual and all other forms of harassment and violence? b. Has this policy been documented, implemented and communicated clearly to all levels of the workforce? c. Is there a clear protocol for the company to deal/handle such issues/complaints received from the workforce? d. Is there a list of awareness programs or training provided to the workforce in relation to these issues? e. Has the company formed a Gender Committee to address areas of concern to women? Is there a list of the members sitting in the committee? What are the Terms of Reference of the committee? Does it include the handling of issues such as: training on women s rights; counselling for women affected by violence; Company sustainability Policy SK Direksi No.001/DIR/IX/2014 dated 1 September 2014 Interview with employee on 1-3 August 2017 Internal Memorandum HRD No. 028/HRD/CIR/IV/2011 regarding gender and sexual harassment regulation Company have the policy to prohibit any form of sexual and all other forms of harassment and violence which described in Company sustainability Policy Lampiran SK Direksi No. 001/DIR/IX/2014, dated 12 September Protection against sexual harassment and violence. PT PP LSIP guarantee and protect the reproductive rights of employees, do not hire children under the age of 18 years and protecting employees on sexual harassment by the company. Company sustainability that described prevention of sexual and all other forms of harassment and violence has been implemented and communicated to all levels of the workforce through master morning and signboard which placed in each division. Mitigation and complaint regarding gender and sexual harassment regulated and defined in Internal Memorandum HRD No. 028/HRD/CIR/IV/2011. Complaints of gender issues can be submitted a written notification to the gender commission or the company management, gender committee will studying the complaints and mediate between the complainant with the company; for sexual harassment mediation performed between the perpetrators with the victim. The Gender Committee handles some issues such as: Training on women s rights Counselling for women affected by violence YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 146 of 224

147 child care facilities to be provided by the growers and millers; women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks; and women to be given specific break times to enable effective breastfeeding. f. Is the policy regularly reviewed? Child care facilities to be provided by the growers and millers Women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks Women to be given specific break times to enable effective breastfeeding. Policy and regulation regarding sexual harassment and violence regularly reviewed once a year by central management office. (M) A policy to protect the reproductive rights, shall be documented, implemented and communicated to all levels of the workforce Specific Guidance: For and 6.9.2: These policies should include education for women and awareness of the workforce. There should be programmes provided for particular issues faced by women and men, such as violence and sexual harassment in the workplace. A gender committee specifically to address areas of concern to women will be used to comply with this Criterion. This committee, which should include representatives from all areas of work, will consider matters such as: training on women s rights; counselling for women affected by violence; child care facilities to be provided by the growers and millers; women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks; and women to be given specific break times to enable effective breastfeeding. For 6.9.2: see Indicator a. Is there a policy to protect the reproductive rights of all, especially of women? b. Has this policy been documented, implemented and communicated clearly to all levels of the workforce? c. How is this policy communicated to all levels of the workforce? Company sustainability Policy attachment SK Direksi No. 001/DIR/IX/2014, dated 1 September 2014 Interview with employee on August 2017 Minutes of dissemination, signboard and photo documentation Field observation Company has establish the policy to protect the reproductive rights of all, especially of women which described in Company sustainability Policy attachment SK Direksi No. 001/DIR/IX/2014, dated 12 September PT PP LSIP Tbk guarantee and protect the reproductive rights of employees, do not hire children under the age of 18 years and protecting employees on sexual harassment by the company. Company sustainability Policy has described the protection of the reproductive rights of all, especially of women, been implemented and communicated to all levels of the workforce. Policy has been communicated to all employees through master morning. Protection the reproductive rights of women workers also described in PKB (collective labor agreement) article VIII and XIV. Article XIV regarding Social Security and Social Assistance explain YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 147 of 224

148 6.9.3 that company provide day-care house for worker children/infants up to age 2 years with a maximum of 10 baby each caregiver/nanny. The company also provides sufficient time for women workers to breastfeed her child. Article VIII regarding menstruation, women workers in the menstrual period feel pain are not obliged to work on the first and second at the time of menstruation. Policy has been communicated to all levels of the workforce directly to employees by their respective assistants and through submission and awareness against female employees. A specific grievance mechanism which respects anonymity of complainants where requested, and as long as they are supported with adequate information, shall be documented, implemented, and communicated to all workforce. a. Does the company have a mechanism to handle employment grievances, that respects anonymity and protects complainants where requested? Prosedur Penanganan Keluh Kesah Memorandum No. 028/HRD/CIR/IV/2011 YES b. Does the mechanism provide a way for workers to report a grievance against a supervisor to someone other than that supervisor? c. Is the mechanism documented, implemented and communicated clearly to all levels of the workforce? d. Has the company identified personnel who will be responsible to receive and manage complaints received from the workforce? e. Has the company received any reports or complaints of harassment or abuse? How was it addressed or resolved? f. Is the policy reviewed regularly? Logbook of complaint 2016/2017 Public consultation on 1-3 August 2017 Field observation Company have a mechanism to handle employment grievances, that respects anonymity and protects complainants where requested which described in Prosedur Penanganan Keluh Kesah Memorandum No. 028/HRD/CIR/IV/2011. Organisation also establishes a mechanism for reporting by whistle-blowers against deviations code of conduct (Code of Conduct) and the rules and other corporate policies delivered via the internal audit division. The system was enable resolution of disputes in an effective and appropriate manner by way of classifying complaints into internal and external, appointed the person who responsible for handling complaints, including level of officials who make decisions for complaint resolution. The mechanism also provides a way for workers to report a grievance against a supervisor to someone other than that supervisor. Mechanism has been documented in procedure as explain above. It has been implemented and communicated clearly to all levels of the workforce. Evidence that the procedures have been implemented is the logbook of complaint. Records are routinely monitored monthly, no complaints during the period of January 2016 to June Company has been identified personnel who will be responsible to receive and manage complaints received from the workforce. Each respective assistants and supervisors were responsible to receive Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 148 of 224

149 and manage complaints received from the workforce. Policy regularly reviewed once a year by central management office Growers and millers deal fairly and transparently with smallholders and other local businesses. Guidance: Transactions with smallholders should consider issues such as the role of middle men, transport and storage of FFB, quality and grading. The need to recycle the nutrients in FFB (see Criterion 4.2) should also be considered; where it is not practicable to recycle wastes to smallholders, compensation for the value of the nutrients exported may be considered through the FFB price. Smallholders should have access to the grievance procedure under Criterion 6.3 if they consider that they are not receiving a fair price for FFB, whether or not middle men are involved. The need for a fair and transparent pricing mechanism is particularly important for outgrowers who are contractually obliged to sell all FFB to a particular mill. If mills require smallholders to change practices to meet the RSPO Principles and Criteria, consideration should be given to the costs of such changes, and the possibility of advance payments for FFB can be considered. Current and past prices paid for Fresh Fruit Bunches (FFB) shall be publicly available. Specific Guidance: For : FFB pricing in Indonesia refers to the Regulation of the Minister of Agriculture No. 14/Permentan/OT.140/2/2013 a. How is the price of FFB determined? Interview with Manager b. Is current and past prices paid for Fresh Fruit Bunches (FFB) publicly available? How? c. Was there any complaint on FFB pricing? d. How was the complaint handled? e. What was the solution? Public consultation with stakeholders on August 2017 Field observation 03 August 2017 Based on interview with Manager, field observation, and public consultation, there is no third party FFB received at mill (M) Pricing mechanisms for Fresh Fruit Bunches (FFB) and inputs/services shall be explained and documented (where these are under the control of the mill or plantation). a. What is the mode of recording/documenting transactions between millers with middlemen and/or smallholders? Interview with Manager Based on interview with Manager, field observation, and public consultation, there is no third party FFB received at mill b. Is there evidence that growers/millers have explained FFB pricing and pricing mechanisms Public consultation with stakeholders on August 2017 Field observation on 03 August NA NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 149 of 224

150 for FFB? c. Are there any inputs/services rendered by the millers to smallholders/middle men? Are these inputs/services having any influence to the pricing and pricing mechanisms for FFB? d. Have inputs/services been documented (where these are under the control of the mill or plantation)? e. Where it is not practicable to smallholders to recycle waste (i.e. EFB), is there compensation for the value of the nutrients of EFB given to the smallholders? Is this translated into the pricing factors of FFB? 2017 Evidence shall be available that all parties understand the contractual agreements they enter into, and that contracts are fair, legal and transparent Specific Guidance: For : Referring to Regulation of the Minister of Agriculture No. 14/Permentan/OT.140/2/2013, requirements to be considered in the contract are such as: 1. K Index, which is open and transparent to the smallholders or their institutions 2. Distributing the information about the decision of the Pricing Team to the smallholders institutions 3. Method of fruit sortation 4. Involvement of smallholders institutions on the evaluation of weigh instrument by authorised local agency. a. Is there a contractual agreement between the miller and smallholders/ middle men? b. Do all parties understand the contractual agreements they have entered into? c. Are all contractual agreements fair, legal and transparent? d. Who keeps the contractual agreements? Agreed payments shall be made in a timely manner. Interview with Manager Public consultation with stakeholders on August 2017 Field observation on 03 August 2017 Based on interview with Manager, field observation, and public consultation, there is no third party FFB received at mill NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 150 of 224

151 a. How are all payments made to the smallholders/middle men? b. What is the mode of recording/documenting transactions between millers with middlemen and/or smallholders? c. Have agreed payments been made in a timely manner? Interview with Manager Public consultation with stakeholders on August 2017 Field observation on 03 August 2017 Based on interview with Manager, field observation, and public consultation, there is no third party FFB received at mill NA Growers and millers contribute to local sustainable development where appropriate Guidance: Contributions to local development should be based on the results of consultation with local communities and social impact assessment. See also Criterion 6.2 for consultation process. Such consultation should be based on the principles of transparency, openness and participation, and should encourage communities to identify their own priorities and needs, including the different needs of men and women. Where candidates for employment are of equal merit, preference should always be given to members of local communities. Positive discrimination should not be recognised as conflicting with Criterion 6.8. Private plantations refer to the Act No. 40 year 2007 regarding Limited Company (PT), clause 74 (1&2) and their explanations; Government Regulation No. 47 year 2012 regarding Environment and Social Responsibilities, clause 5 (1) and explanation whereas social and environment responsibilities shall be executed. State plantations refer to Act No. 19 year 2003 regarding State Owned Company (BUMN) clause 9 (1) Records of Contributions to local development based on the results of consultation with local communities shall be available. a. Have the local development needs and SIA Report PT PP LSIP Tbk priorities been identified in consultation with Bagerpang Estate local communities? (refer also to C 6.2) b. What are the contributions made to local development? Are they in accordance with the results of consultation? c. Are there efforts to improve or maximise employment opportunities at the company for local communities? CSR program 2016/2017 Company sustainability Policy attachment SK Direksi No. 001/DIR/IX/2014, dated 1 September 2014 Public consultation on 1-3 August 2017 Field observation Local development needs and priorities has been identified by organization through consultation with local communities and social impact assessment. Consultation management plans and monitoring the social impact to the community has been communicated and disseminated to affected communities through stakeholder meeting on July Contribution to local development described in the Corporate Social Responsibility (CSR) programme. CSR program of was available. CSR program consists of : Education program : Contribution and assistance to school teacher YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 151 of 224

152 Cultural program : Contribution funding for the development of local wisdom Infrastructure program : Enhancement of village roads around the plantation, road drainage, and heavy equipment Public facility program : Contribution of building material for mosque, school, etc., providing clean water for community activities The entire CSR program created was in accordance with the results of consultation several records of CSR implementation were evident and could be demonstrated. Evidence of preference always been given to members of local communities where candidates for employment are of equal merit was described in Company sustainability Policy attachment SK Direksi No. 001/DIR/IX/2014, dated 1 September Based on interview with village head and public figure in Bagerpang Estate, Rambong Sialang Estate, Sei Merah Estate and Bagerpang Mill generally there were satisfied with the plantation contribution to local communities Where there are scheme smallholders, there shall be evidence that efforts and/or resources have been allocated to improve scheme smallholder productivity. a. Is there a complete registry of independent smallholders in the supply base? b. Have efforts been made to improve the farming practices of independent smallholders? c. Where there are schemed smallholders, have efforts and/or resources been allocated to improve smallholder productivity? No forms of forced or trafficked labour are used. Public consultation on 1-3 August 2017 There is no scheme smallholder in PT. PP LSIP Tbk, Bagerpang Estate. Efforts have been made to identify independent smallholders in the supply base. N/A Guidance Migrant workers should be legalised, and a separate employment agreement should be drawn up to meet immigration requirements for foreign workers and international standards. Any regulated deductions made should not jeopardise a decent living wage. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 152 of 224

153 Passports should only be voluntarily surrendered. There should be evidence of due diligence in applying these indicator and guidance to all sub-contract workers and suppliers. Definition of types of worker refers to Acts No.13 year 2003 regarding Manpower. (M) There shall be evidence that no forms of forced or trafficked labour are used Specific Guidance: For : Workers should enter into employment voluntarily and freely, without the threat of a penalty, and should have the freedom to terminate employment without penalty given reasonable notice or as per agreement. a. What is the company s policy on forced or trafficked labour? b. How does the company define forced or trafficked labour? c. What is the process of recruiting foreign/ migrant workers directly and/or through licenced outsourcing agencies/ labour suppliers? d. Who is the person responsible for selecting/ screening labour suppliers/ outsourcing agents? e. Do the foreign workers have to pay a fee to the employment recruitment agency or labour suppliers in the workers countries of origin? If yes, does it jeopardise decent living wage? f. Are there restrictions on workers from leaving the mill or estate or their housing facilities outside working hours? g. What is the process if a worker wants to terminate their employment before their contract expires? In this case, who pays for the return transportation? h. What are the penalties imposed if the workers Company sustainability Policy attachment SK Direksi No. 001/DIR/IX/2014, dated 1 September 2014 Public consultation and interview with employee on August 2017 PKB years Field observation Company s policy on forced or trafficked labour was described in Company sustainability Policy attachment SK Direksi No. 001/DIR/IX/2014, dated 1 September Based on public consultation and interview with several worker and worker union on 1-3 August 2017 it was evident that no forms of forced or trafficked labour have been used. Workers/employee entered into organization voluntarily and freely, without the threat of a penalty and they have the freedom to terminate employment without penalty given reasonable notice or as per agreement. There were no migrant workers in PT PP LSIP Tbk, Bagerpang Estate, Rambong Sialang Estate, Sei Merah Estate and Bagerpang Mill. It s verified during audit documentation list of employee, interview with employee and stakeholders. Person who responsible for selecting/screening labour suppliers was KTU (Kepala Tata Usaha) under supervision for Estate Managers. Employees work based on contract labor agreement which contains agreements include: working time, dependents, payroll and consent of both parties. Working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc. described in PKB years which have been agreed between the employees (represented by SPSI) and company. YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 153 of 224

154 were terminated or fired before their contract expires? i. Who keeps the workers passports or identity documents? j. If workers do not keep their passports or identity documents, is this legally allowed? k. What is the process for workers to hand over their passports or identity documents to the company? l. Do workers have unrestricted access to their passports or identity documents? Describe how workers are able to access their documents? It shall be demonstrated that no contract substitution has occurred. Specific Guidance: For : Contract substitution is the change of initial contract without prior consultation and agreement from the workers. a. Is there evidence of contract substitution occurring? b. Are foreign workers asked to sign a contract upon arriving in the receiving country? If yes, is that contract identical to the one signed in the country of origin? c. Are workers given a copy of their employment contracts? If yes, is the contract identical to the one signed at the time of recruitment? Company sustainability Policy attachment SK Direksi No. 001/DIR/IX/2014, dated 1 September 2014 Public consultation and interview with employee on August 2017 PKB years Field observation Based on observation of several employee contract and public consultation with stakeholders on August 2017 and interview with employee could be demonstrated that there was no contract substitution occurred. There were no migrant workers in PT PP LSIP Tbk Bagerpang Estate, Rambong Sialang Estate, Sei Merah Estate and Bagerpang Mill. It s verified during audit documentation list of employee, interview with employee and stakeholders. Employees work based on contract labor agreement which contains agreements include: working time, dependents, payroll and consent of both parties. Workers was given a copy of their employment contracts and the contract was identical to the one signed at the time of recruitment. (M) Where migrant/foreign/honorary workers are employed, a special worker policy and procedures and the evidence of implementation shall be available. Specific Guidance: YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 154 of 224

155 For : The special labour policy should include: a. Statement of the non-discriminatory practices; b. No contract substitution; c. Post-arrival orientation programme to focus especially on language, safety, labour laws, cultural practices etc.; d. Decent living conditions to be provided. a. What is the company s policy and procedures for temporary or foreign/migrant workers? Does the special labour policy include: Statement of the non-discriminatory practices? No contract substitution? Post-arrival orientation programme with emphasis on language, safety, labour laws, cultural practices etc.? The provision of decent living conditions? b. Have the policies and procedures been implemented? Growers and millers respect human rights. Public consultation and interview with employee on August 2017 Field observation There were no migrant workers in PT PP LSIP Tbk, Bagerpang Estate, Rambong Sialang Estate, Sei Merah Estate and Bagerpang Mill. It s verified during audit documentation list of employee, interview with employee and stakeholders. N/A Guidance: See Criteria 1.2, 2.1 and 6.3 All levels of operations include contracted third parties (e.g. those involved in security). Regulations related to the Human Rights refer to the Act No. 39 year 1999 regarding Human Rights (M) A policy to respect human rights shall be documented and communicated to all levels of the workforce and operations. a. Is there a company policy on human rights? b. How is this communicated to all employees, including outsourced workers, customers and suppliers? If by training, how often is the training conducted? c. Who has the task of communicating the policy internally and externally? d. Does the company have any outstanding cases of human rights violations? Company sustainability Policy attachment SK Direksi No. 001/DIR/IX/2014, dated 1 September 2014 Public consultation and interview with employee on August 2017 Field observation Policy to respect human rights has been documented in Company sustainability Policy attachment SK Direksi No. 001/DIR/IX/2014, dated 1 September Top management has commitment to respect human right refers to internationally recognised human rights set out in the International Labour Organization s Declaration on Fundamental Principles and Rights at Work. The document has been communicated to all levels of the workforce and operations based on public consultation with labour union, worker and gender committee. The policy has been communicated to all employees, including outsourced workers, customers and suppliers by YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 155 of 224

156 socialization/dissemination. Socialization was conduct regularly once a year. Dissemination of social communication procedure has been performed to stakeholder on stakeholder meeting in July Socialization to all levels of employees performed through master morning. During audit and based on verification on public consultation with stakeholders and interview with employee on August 2017 could be demonstrated that there was no cases of human rights violations in PT PP LSIP Tbk, Bagerpang Estate, Rambong Sialang Estate, Sei Merah Estate and Bagerpang Mill. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 156 of 224

157 PRINCIPLES 7: RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS A comprehensive and participatory independent social and environmental impact assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management and operations. Guidance: The result of Strategic Environment Study (Kajian Lingkungan Hidup Strategis/KLHS) conducted by the authority shall be a major consideration in the new land development and planting. 7.1 See also Criteria 5.1 and 6.1. Implementation of independent social and environment impact assessment may use AMDAL as part of the process. However, it is the company s responsibility to provide objective and appropriate evidence to the audit team that the full requirements of a Social and Environment Impact Analysis (SEIA) are met for all aspects of plantation and mill operation, and captures all changes over time. The terms of reference should be defined and impact assessment should be carried out by accredited independent experts, in order to ensure an objective process. A participatory methodology including external stakeholder groups is essential to the identification of impacts, particularly social impacts. Stakeholders such as local communities, government and NGOs should be involved through interviews and meetings, and by reviewing findings and plans for mitigation. It is recognised that oil palm development can cause both positive and negative impacts. These developments can lead to some indirect/secondary impacts which are not under the control of individual growers and millers. To this end, growers and millers should seek to identify the indirect/secondary impacts within the SEIA, and where possible work with partners to explore mechanisms to mitigate the negative indirect impacts and enhance the positive impacts. Plans and field operations should be developed and implemented to incorporate the results of the assessment. One potential outcome of the assessment process is that the development, partially or entirely, may not proceed because of the magnitude of potential impacts. For smallholder schemes, the scheme management should address this criterion. For individual smallholders this criterion does not apply For new planting with areas 3000 Ha, the assessment may be conducted internally or externally. And for new planting with areas > 3000 Ha, the assessment shall be conducted externally. For new planting with area > 3000 Ha needs a comprehensive and independent assessment which may be in the form of AMDAL (SEIA) while areas 3000 Ha requires Upaya Pengelolaan Lingkungan Hidup (UKL) Upaya Pemantauan Lingkungan Hidup (UPL). Social and Environment Assessment at minimum must cover: a. Assessment of the impacts of all major planned activities, including planting, mill operations, roads and other infrastructure; b. Assessment, including stakeholder consultation, of High Conservation Values (see Criterion 7.3) that could be negatively affected; c. Assessment of potential effects on adjacent natural ecosystems of planned developments, including whether development or expansion will increase pressure on nearby natural ecosystems; d. Identification of watercourses and wetlands and assessment of potential effects on hydrology and land subsidence of planned developments. Measures should be planned and implemented to maintain the quantity, quality and access to water and land resources; e. Baseline soil surveys and topographic information, including the identification of steep slopes, marginal and fragile soils, areas prone to erosion, degradation, subsidence, and Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 157 of 224

158 flooding; f. Analysis of type of land to be used (forest, degraded forest, cleared land); g. Analysis of land ownership and user rights; h. Analysis of current land use patterns; i. Assessment of potential social impacts on surrounding communities of a plantation, including an analysis of potential effects on livelihoods, and differential effects on women versus men, ethnic communities, and migrant versus long-term residents; j. Identification of activities which may generate significant GHG emissions. If AMDAL or UKL-UPL documents still do not cover point a to j, additional social and environment impact assessment shall be conducted. If internal assessment identifies sensitive social and environment issues or areas, then independent assessment shall be conducted. Documents of environment impact assessment are the environment documents based on the regulations, such as: a. Environmental Impact Assessment (Analisis Mengenai Dampak Lingkungan Hidup/AMDAL) for plantation with areas of > 3000 Ha b. Environmental Management Effort (Upaya Pengelolaan Lingkungan Hidup/UPL) and Environmental Monitoring Effort (Upaya Pemantauan Lingkungan Hidup/UKL) for plantation with areas of < 3000 Ha. c. Environmental Management Document (Dokumen Pengelolaan Lingkungan Hidup/DPLH) d. Environmental Evaluation Document (Dokumen Evaluasi Lingkungan Hidup/DELH) e. Environmental Information Performance (Penyajian Informasi Lingkungan Hidup/PIL) f. Environmental Evaluation Performance (Penyajian Evaluasi Lingkungan Hidup/PEL) g. Environmental Evaluation Study (Studi Evaluasi Lingkungan Hidup/SEL) h. Environment Management and Monitoring Document (Dokumen Pengelolaan dan Pemantauan Lingkungan Hidup/DPPL) i. Declaration Letter for Managing and Monitoring Environment (Surat Pernyataan Kesanggupan Pengelolaan dan Pemantauan Lingkungan Hidup/SPPL) j. And other documents required by the regulation. Regulations relate to the environment documents, such as: a. Government Regulation No. 27 year 2012 regarding Environment Permit b. Regulation of the Minister of Environment No. 13 year 2010 regarding Environmental Management and Monitoring Effort (UKL-UPL) and Declaration Letter for Managing and Monitoring Environment (SPKL) c. Regulation of the Minister of Environment No. 5 year 2012 regarding Environmental Evaluation Document (DELH) d. Regulation of the Minister of Environment No. 14 year 2010 regarding Environmental Management and Monitoring Document (DPPL) e. Regulation of the Minister of Environment No.12 year 2007 regarding Environmental Management and Monitoring Document for Business and or Activities, with No Environmental Management Document. f. Regulation of the Minister of Environment No. 5 year 2012 regarding Types of Business Obliged to Have Amdal g. Regulation of the Minister of Environment No. 8 year 2006 regarding Guidance for AMDAL preparation h. Regulation of the Minister of Environment No. 17 year 2012 regarding Involvement of Community and Information Transparency in the AMDAL Process i. Decree of the Head of Bapedal No. No. 299 year 1996 regarding Technical Guidance of Social Aspects for AMDAL preparation j. Regulation of the Minister of Environment No. 11 year 2008 regarding Competence Requirements for AMDAL preparation documents and Requirements for Training Institutions in Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 158 of 224

159 Conducting Training for AMDAL Competency (M) An independent social and environmental impact assessment (SEIA), undertaken through a participatory methodology including the relevant affected stakeholders, shall be documented. a. Is there any new planting or operations, or expanding existing ones by the company? What is the size of the new planting area? PEL of Begerpang Estate #RC.220/699/B/IV/1994 dated 18 April 1994 b. Has an independent social and environmental impact assessment (SEIA) been documented for the new plantings? c. Are the impact assessments prepared by accredited independent experts? d. Are all environmental and social impacts adequately identified? e. Is the SEIA undertaken based on the scope of operation? f. Is the SEIA undertaken in a participatory manner, including the relevant affected stakeholders? g. Does the SEIA assessment include and as a minimum: Assessment of the impacts of all major planned activities, including planting, mill operations, roads and other infrastructure? Assessment, including stakeholder consultation, of High Conservation Values (see Criterion 7.3) that could be negatively affected? Assessment of potential effects on adjacent natural ecosystems of planned developments, including whether development or expansion will increase pressure on nearby natural ecosystems? RKL RPL of Begerpang Estate #RC.220/948/B/V/1994 dated 28 May 1994 PEL of Rambong Sialang Estate #RC.220/699/B/IV/1994 dated 18 April 1994 UKL UPL of Begerpang Mill #0318/BPDL/DS/2004 dated 26 March 2004 UKL UPL of Timbang Serdang Division #09151/BPDL/DS/2008 dated 5 September 2008 HCV Assessment Report Rambong Sialang Estate, Sei Merah Estate and Begerpang Estate 2014 SEIA Document, on 18 February 2017 Statement Area Begerpang, Sei Merah and Rambong Sialang Field observation The organisation did not acquire any new land during the last audit until this audit. It was verified that there was no ongoing progress of new land acquisition during field observation and interview with stakeholders. At the time, plantation at Begerpang Estate, Sei Merah Estate and Rambong Sialang Estate have the years of planting in 1985, 1987, 1988, 1989, 1990, 1992, 1993, 1994, 1995, 1996, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, and Planting in were replanting. NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 159 of 224

160 Identification of watercourses and wetlands and assessment of potential effects on hydrology and land subsidence of planned developments. Measures should be planned and implemented to maintain the quantity, quality and access to water and land resources? Baseline soil surveys and topographic information, including the identification of steep slopes, marginal and fragile soils, areas prone to erosion, degradation, subsidence, and flooding? Analysis of type of land to be used (forest, degraded forest, cleared land)? Analysis of land ownership and user rights? Analysis of current land use patterns? Assessment of potential social impacts on surrounding communities of a plantation, including an analysis of potential effects on livelihoods, and differential effects on women versus men, ethnic communities, and migrant versus long-term residents? Identification of activities which may generate significant GHG emissions? h. What were the main findings of the assessment? i. Were secondary impacts of oil palm development identified in the SEIA? Appropriate management planning and operational procedures shall be developed and implemented to avoid or mitigate identified potential negative impacts. a. Does the finding of the SEIA uncover any negative impacts? If yes, has a management plan and operational procedures been Statement Area Begerpang, Sei Merah and Rambong Sialang There was no new planting since November 2005 in the company area. developed to mitigate the negative impacts? b. Has the management plan and operational Field observation NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 160 of 224

161 procedures been implemented? Where the development includes an outgrower scheme (skema kemitraan), the impacts of the scheme and the implications of the way it is managed shall be given particular attention. Specific guidance: For : Outgrower scheme is a farmer selling the FFB through exclusive contract to the growers and millers. Schemed smallholders (plasma) included into this scheme. a. Are any outgrowers involved in the new plantings? There was no new planting since November 2005 in the company area. b. Has management prepared a plan for the outgrower scheme? c. Does the SEIA include an assessment of impacts and the implications of the way the outgrower scheme is managed? Statement Area Begerpang, Sei Merah and Rambong Sialang Field observation Soil surveys and topographic information are used for site planning in the establishment of new plantings, and the results are incorporated into plans and operations. Guidance: These activities can be linked to the Social and Environmental Impact Assessment (SEIA) (see Criterion 7.1) but need not be done by independent experts. Soil surveys should be appropriate to identify soil suitability of oil palm cultivation for the scale of operation. Maps of Soil suitability or soil survey should be established in line with the operational scale and include information on soil types, topography, hydrology, rooting depth, moisture availability, stoniness and fertility to ensure long-term sustainability of the development. Soils requiring appropriate practices should be identified (see Criteria 4.3 and 7.4). This information should be used to plan planting programs, etc. Measures should be planned to minimize erosion through appropriate use of heavy machinery, terracing on slopes, appropriate road construction, rapid establishment of land cover, protection of riverbanks, etc. Areas located within the plantation perimeters that are considered unsuitable for longterm oil palm cultivation will be delineated in plans and included in operations for conservation or rehabilitation as appropriate (see Criterion 7.4). Assessing soil suitability is also important for smallholders, particularly where there are significant numbers operating in a particular location. Information should be collected on soil suitability by companies planning to purchase Fresh Fruit Bunches (FFB) from outgrowers scheme (skema kemitraan) in certain location. Companies should assess this information and provide information to smallholders involving in the outgrowers scheme, and/or in conjunction with relevant government/public institutions and other organizations (including NGOs) provide information in order to assist independent smallholders to grow oil palm sustainably. One of referred guidances is on the table 1 (page. 6) regarding Land Suitability Criteria for Oil Palm in the Technical Guidance for Developing Oil Palm Estate issued by Directorate General of Estate Crops, Ministry of Agriculture, NA (M) Soil suitability maps or soil surveys adequate to establish the long-term suitability of land for oil palm cultivation shall be available and taken into account in plans and operations. a. Are soil suitability/survey maps for the planted Statement Area Begerpang, There was no new planting since November 2005 in the company NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 161 of 224

162 areas available or in place? Is the map adequate to establish the longterm suitability of land for oil palm cultivation? Are the soil suitability maps or soil surveys appropriate to the scale of operation? Does the soil suitability maps or soil surveys include information on soil types, topography, and hydrology, rooting depth, moisture availability, stoniness and fertility? Do the soil suitability maps or soil surveys identify soils requiring appropriate practices? Sei Merah and Rambong Sialang Field observation area. b. Are there any areas located within the plantation perimeters that are considered unsuitable for long-term oil palm cultivation? Are such areas delineated in the plans? Are there areas set aside for conservation? Or are there plans for rehabilitation as appropriate? c. Does the company plan to purchase Fresh Fruit Bunches (FFB) from potential developments of independent suppliers in a particular location? d. If yes, the following information should be obtained: Is information on soil suitability collected and assessed? Has the company provided information on soil suitability to the independent smallholders in order to assist them to Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 162 of 224

163 grow oil palm sustainably? Topographic information adequate to guide the planning of drainage and irrigation systems, roads and other infrastructure shall be available. a. Does the area where plantings are done There was no new planting since November 2005 in the company require drainage or irrigation? area. b. If yes, is there adequate topographic information to guide the planning of drainage and irrigation systems? c. Is the topographic information and best practices taken into consideration during the development of roads and infrastructure? Statement Area Begerpang, Sei Merah and Rambong Sialang Field observation New plantings since November 2005 have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values. NA Guidance: This Criterion applies to forests and other vegetation types. This applies irrespective of any changes in land ownership or farm management that have taken place since November 2005 unless if previous owner have conducted HCV assessment. HCVs may be identified in restricted areas of a landholding, and in such cases new plantings can be planned to allow the HCVs to be maintained or enhanced.this refers to the Guidance for HCV Management and Monitoring approved by the RSPO. The HCV assessment process requires appropriate training and expertise, and will include consultation with local communities, particularly for identifying social HCVs. HCV assessments should be conducted according to the Guidance for Identifying HCV in Indonesia (HCV Toolkit Indonesia) of 2008 or its revision. Developments should actively seek to utilise previously cleared and/or degraded land on mineral soil. Plantation development should not put direct or indirect pressure on primary forests and HCV through the use of all available agricultural land in an area. Although the planned development is consistent with the landscape planning by the local and national government, the requirements of protecting HCV still shall be met. For new planting with areas 3000 Ha, assessment of HCV can be conducted internally and externally. If the assessment of HCV is conducted internally, in accordance with the scheme of HCV RSPO using ALS system, assessor team leader of HCV shall be an assessor who has obtained license of HCV Assessor from HCVRN. Peer review from the competent party shall be conducted referring to the Common Guidance for the Identification of HCV For the new planting with the area > 3000 Ha, the assessment of HCV shall be conducted by the external party who has obtained license of HCV Assessor from HVCRN. In case of small areas located either in hydrologically sensitive landscapes or in HCV areas where conversion can jeopardize large areas or species, the HCV assessment shall be conducted by independent assessor who has obtained license of HCV Assessor from HCVRN (see Guidance: Criterion 7.2). HCV areas can be very small. Once established, new development should comply with Criterion 5.2. (M) There shall be evidence that no new plantings have replaced primary forest, or any area required to maintain or enhance one or more High Conservation Values (HCVs), since November New plantings shall be planned and managed to best ensure the HCVs identified are maintained and/or enhanced (see Criterion 5.2). Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 163 of 224

164 Specific Guidance: For 7.3.1: Evidence should include historical remote sensing imagery which demonstrates that there has been no conversion of primary forest or any area required to maintain or enhance one or more HCV. HCV Assessment should apply satellite or aerial photographs, land use maps and vegetation maps should be used to inform the HCV assessment. Where land has been cleared since November 2005, and without a prior and adequate HCV assessment, it will be excluded from the RSPO certification programme until an adequate HCV compensation plan has been developed and accepted by the RSPO. a. Since November 2005, have any new plantings replaced primary forest, or any area required to maintain or enhance one or more High Conservation Values (HCVs)? If yes, was an adequate HCV assessment carried out prior to the clearing of the land? b. Where HCVs have been identified on the land that is intended for new plantings, have new plantings been planned and managed to best ensure the HCVs identified are maintained and/or enhanced (see Criterion 5.2)? c. Are there finalised HCV maps and areas endorsed/signed off by management showing type of HCV and area coverage (ha)? d. Has the company comply with NPP procedures? i.e. NPP documents was submitted and put for public notification. e. Is CB verification of NPP documents include field verification? If not, field verification of HCV is required during certification audit. f. Where land has been cleared since November 2005, and without a prior and adequate HCV assessment, is there evidence that an adequate HCV compensation plan for the affected area has been developed and accepted by the RSPO? PEL of Begerpang Estate #RC.220/699/B/IV/1994 dated 18 April 1994 RKL RPL of Begerpang Estate #RC.220/948/B/V/1994 dated 28 May 1994 PEL of Rambong Sialang Estate #RC.220/699/B/IV/1994 dated 18 April 1994 UKL UPL of Begerpang Mill #0318/BPDL/DS/2004 dated 26 March 2004 UKL UPL of Timbang Serdang Division #09151/BPDL/DS/2008 dated 5 September 2008 HCV Assessment Report Rambong Sialang Estate, Sei Merah Estate and Begerpang Estate 2014 SEIA Document, on 18 February 2017 Statement Area Begerpang, Sei Merah and Rambong There was no new planting since November 2005 in the company area. NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 164 of 224

165 Sialang Field observation (M) Reports of comprehensive HCV assessment, which involves stakeholder consultation and includes record of land-use change since November 2005, shall be available. This HCV assessment shall be conducted prior to any conversion or new planting. a. Is the prepared HCV assessment comprehensive? Was the assessment prepared in consultation with the affected stakeholders prior to any conversion or new planting? Statement Area Begerpang, Sei Merah and Rambong Sialang Field observation There was no new planting since November 2005 in the company area. NA b. Do the HCV assessments include land use change analysis to determine changes to the vegetation since November 2005? (This analysis shall be used, with proxies, to indicate changes to HCV status) Records of land preparation and clearing dates shall be available. a. Are the dates of land preparation and commencement recorded? Statement Area Begerpang, Sei Merah and Rambong Sialang Field observation There was no new planting since November 2005 in the company area. NA (M) An action plan shall be developed that describes operational actions consequent to the findings of the HCV assessment, and that references the grower s relevant operational procedures (see Criterion 5.2). a. Has the company developed an action plan that Statement Area Begerpang, There was no new planting since November 2005 in the company NA describes operational actions consequent to Sei Merah and Rambong area. the findings of the HCV assessment? Sialang b. Does the action plan reference the grower s relevant operational procedures (see Criterion 5.2)? Field observation Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 165 of 224

166 Evidence of consultation with the affected community shall be available in order to identify the area required by such community to fulfill its basic needs, by considering the positive and negative changes to the livelihood as a result of plantation operations. Such matters shall be included in the HCV analysis and management plan (see Criteria 5.2). Specific Guidance: For 7.3.5: The management plan will be adaptive to changes in HCV 5 and 6. Decisions will be made in consultation with the affected communities. Statement Area Begerpang, Sei Merah and Rambong Sialang a. Have areas required by affected communities to meet their basic needs, taking into account potential positive and negative changes in livelihood resulting from proposed operations, been identified in consultation with the communities? Field observation b. Have these areas been incorporated into HCV assessments and management plans (see Criterion 5.2)? Extensive planting on steep terrain, and/or marginal and fragile soils, including peat, is avoided. Guidance: The process of identifying fragile and marginal soil should be conducted after getting Plantation Business Permit (IUP) There was no new planting since November 2005 in the company area. Total area planting on fragile soils including peat whitin the new development shall not be greater than 100 Ha or 20% of the total area, whichever is smallest (see Criterion 4.3). Adverse impacts may include hydrological risks or significantly increased risks (e.g. fire risk) in areas outside the plantation (see Criterion 5.5). The legal aspect of compliance within this national interpretation document shall follow the changed laws and regulations but should at least meet the above minimum limit. Planting on peat soils should not be conducted on peat with 3 m depth. If planting conducted on peat with <3 m depth, then the area (as regulated by Regulation of the Minister of Agriculture No. 14 year 2009: Guidance on Peatland Utilization for Oil Palm Cultivation) shall meet the following requirements: a. Within designated cultivation area b. Whereas the proportion of 3 m depth of peat and mineral soil (if any) is minimal 70% of the total concession area c. The mineral soil below peat layer is not quartz sand or acidic sulfate soil d. The peat soils maturity level is mature (sapric) e. The fertility level is eutropic Cultivation on peatland must also comply with Government Regulation No 71 year 2014 concerning the Protection and Management of Peatland Ecosystems Excessive slope is defined as slope more than 40% referring to Regulation of the Minister of Agriculture No.11/Permentan/OT.140/3/2015 regarding Guidance of Indonesia Sustainable Palm Oil and the Regulation of the Minister of Agriculture No. 47 year 2006 regarding General Guidance for Agriculture at Mountain Area. Soil conservation measures (such as terracing, individual terrace, legume cover crops, silt pit, frond stacking, etc.) should be conducted. NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 166 of 224

167 Soil suitability should be determined using crop and environmental suitability criteria. Those identified as marginal and/or problematic should be avoided if the soil cannot be improved through agricultural cultivation. The risky and marginal soils may include sandy soils, low organic content soils, and potential or actual acid sulphate soils. Suitability of these soils is also influenced by other factors including rainfall, terrain and management practices. These areas may only be developed for new plantations which have adequate management plans based on best management practices. Failure due to extensive plantings should be avoided on these soil types. Fragile soils on which extensive planting shall be avoided include peat soils, mangrove sites and other wetland areas. This activity should be integrated with the social and environmental impact assessment (SEIA) required by Criterion 7.1. Excessive planting on fragile soil refer to Annex 2 Generic RSPO P&C, Wetland definition refers to RAMSAR (M) Indicative maps showing marginal and fragile soils, including excessive gradients and peat soils, shall be available and used to identify areas to be avoided. a. Are there maps identifying marginal and fragile Statement Area Begerpang, There was no new planting since November 2005 in the company soils, including excessive gradients and peat Sei Merah and Rambong area. soils? Sialang b. If peat is present, does the map show the extent, nature, and depth of peat? c. Are the maps used to identify areas that are inappropriate for planting? d. Have the maps been incorporated for use in the social and environmental impact assessment (SEIA)? Field observation e. Is there evidence that planting on extensive areas of peat soils and other fragile soils have been avoided? (M) Where limited planting on fragile and marginal soils, including peat, is proposed, a documented plan shall be developed and implemented to protect them without incurring adverse impacts. a. Are there plans to protect planted areas on Statement Area Begerpang, There was no new planting since November 2005 in the company NA fragile and marginal soils, including peat from Sei Merah and Rambong area. NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 167 of 224

168 adverse impacts? b. Does the plan take into consideration specific control and NI thresholds, including: Slope limits; List of soil types that need to be avoided, especially peat soil; Proportion of plantation areas that can include marginal / fragile soil. Sialang Field observation c. Has the plan been implemented? No new plantings are established on local peoples land where it can be demonstrated that there are legal, customary or user rights, without their free, prior and informed consent. This is dealt with through a documented system that enables these and other stakeholders to express their views through their own representative institutions. Guidance: This activity should be integrated with the Social and Environmental Impact Assessment (SEIA) required by Criterion 7.1. Where new plantings are considered to be acceptable by the communities, management plans and operations should minimise the adverse impacts (such as disturbing sacred sites) and promote positive ones. Agreements with indigenous people, local communities and other stakeholders should be made without coercion or other undue influence (see Guidance for Criterion 2.3). Where communities decline to release lands rights on these terms the grower or miller must explore legal alternatives such as leasing or renting or securing community land or enclaving or other mutually agreed schemes or decide not to go ahead with its proposed development. Relevant stakeholders include those affected by or concerned with the new plantings. Free, prior and informed consent (FPIC) should be applied to all RSPO members throughout the supply chain. Please refer to FPIC guidelines approved by the RSPO (RSPO endorsed Free, Prior and Informed Consent Guide for RSPO Members, November 2015). Customary and user rights shall be demonstrated through participatory mapping as part of the FPIC process. Verification evidence may be in the form of documents on socialization to the affected community, agreement or disagreement from the community, communication and consultation with the community. (M) Evidence shall be available that affected local peoples understand they have the right to say yes or no to operations planned on their lands before and during initial discussions, during the stage of information gathering and associated consultations, during negotiations, and up until an agreement with the grower/miller is signed and ratified by these local peoples (see Criteria 2.2, 2.3, 6.2, 6.4 and 7.6) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 168 of 224

169 a. Does the new planting area include local people s land? b. If yes, has the community given their consent? c. Is there evidence to demonstrate that the consent/agreement has been given? d. Has the community been given the opportunity to say no to the proposed development? Statement Area Begerpang, Sei Merah and Rambong Sialang Field observation There was no new planting since November 2005 in the company area. NA e. Are the principles of the FPIC process followed? Where it can be demonstrated that local peoples have legal, customary or user rights, they are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreements Guidance: See Criteria 2.2, 2.3 and 6.4 and associated Guidance. The requirements include indigenous people, as regulated by, such as, the Act No. 5 year 1994 regarding Endorsement of UN Convention on Biodiversity. Please refer to FPIC guidelines approved by the RSPO (RSPO endorsed Free, Prior and Informed Consent Guide for RSPO Members, November 2015). (M) Records of identification and assessment of legal, customary and user rights shall be available. Specific Guidance: For 7.6.1: This activity shall be integrated with the social and environmental impact assessment (SEIA) required by Criterion 7.1. a. Does the SEIA include the identification and assessment of legal, customary and user rights of the area? Statement Area Begerpang, Sei Merah and Rambong Sialang There was no new planting since November 2005 in the company area. b. Does the company have SOPs to identify and assess any legal, customary and user rights of the local peoples? c. Is there any known notification from the stakeholders claiming to have legal, customary and/or user rights on the land for the new planting area? d. Has the claim been identified and assess according to the protocol/sop? Does the Field observation NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 169 of 224

170 process follow and respect the FPIC principles? e. Has the process of identification and assessment been recorded/ documented and made publicly available? (M) A procedure for identifying people entitled to compensation shall be available. a. Does the company have a system in place to Statement Area Begerpang, identify people and/or community groups Sei Merah and Rambong entitled to compensation? Sialang b. Is the system documented? c. Does the system follow and respect the FPIC principles? Field observation (M) Records of calculation system and distribution of fair compensation shall be available a. Does the company have a system in place to Statement Area Begerpang, calculate and distribute fair compensation Sei Merah and Rambong (monetary or otherwise)? Sialang b. Is the system documented and publicly made available? c. Does the system follow and respect the FPIC principles? Field observation There was no new planting since November 2005 in the company area. There was no new planting since November 2005 in the company area Communities that have lost access and rights to land for plantation expansion shall be given opportunities to benefit from plantation development. Statement Area Begerpang, Sei Merah and Rambong Sialang a. Does the company provide communities that have lost access and rights to land for plantation expansion opportunities to benefit from plantation development? Field observation There was no new planting since November 2005 in the company area. NA NA NA The process and outcome of any compensation claims shall be documented and made available to the affected communities and their representatives. a. Is the process and outcome of any compensation claims documented and made publicly available? Statement Area Begerpang, Sei Merah and Rambong Sialang There was no new planting since November 2005 in the company area. NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 170 of 224

171 Field observation Evidence shall be available that the affected communities and rights holders have access to information and advice that is independent of the project proponent, concerning the legal, economic, environmental and social implications of the proposed operations on their lands. Specific Guidance: For 7.6.6: Growers and millers will confirm that the communities (or their representatives) gave consent to the initial planning phases of the operations prior to Plantation Business Permit (Izin Usaha Perkebunan/IUP) and if requested, Land Title (Hak Guna Usaha (HGU)/Hak Guna Bangunan (HGB)) to the grower and miller. There is documented evidence that communities were informed prior to being asked to release lands to growers and millers that a legal consequence of the grower or miller acquiring a HGU/HGB over their lands is that this will permanently extinguish their land rights within the same area. Related to 7.6.6, the evidences can be a company s policy to give community freedom to get information, and also socialization to the affected community. a. Is there record to show that the community and rights holders have freedom to access information and independent advisor(s) concerning the legal, economic, environmental and social implications of the proposed operations on their lands? b. Is there evidence to show that the company has sought the community and the right holders consent to the initial planning phases of the operations prior to the new issuance of a concession or land title? Statement Area Begerpang, Sei Merah and Rambong Sialang Field observation There was no new planting since November 2005 in the company area. c. Did the communities (or their representatives) give consent to the initial planning phases of the operations prior to the new issuance of a concession or land title? 7.7 No use of fire in the preparation of new plantings other than in specific situations, as identified in the ASEAN guidelines or other regional best practice. (M) Records of zero burning implementation on land clearing, referring to the ASEAN Policy on zero burning (2003) and recognised techniques based on the existing regulations shall be available. a. Is there evidence of land preparation by burning? b. (The auditors shall conduct site verification of Statement Area Begerpang, Sei Merah and Rambong Sialang There was no new planting since November 2005 in the company area. NA NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 171 of 224

172 7.7.2 the newly planted site which will include interviews with workers). c. Was land prepared using the burn method due to reasons or specific situations, as identified in the Guidelines for the Implementation of the ASEAN Policy on Zero Burnings 2003, or comparable guidelines in other regions? d. If the burn method has been used for land preparation, has the company complied with the requirements of Guidelines for the Implementation of the ASEAN Policy on Zero Burning 2003, or comparable guidelines in other regions? Field observation e. Is document showing proper justification for such activity available? In exceptional cases where fire has to be used for preparing land for planting, there shall be evidence of prior approval of the controlled burning as specified in Guidelines for the Implementation of the ASEAN Policy on Zero Burning 2003, or comparable guidelines in other regions. Specific guidance For : Fire should be used only where an assessment has demonstrated that it is the most effective and least environmentally damaging option for minimizing the risk of severe pest and disease outbreaks, and exceptional levels of caution are required for use of fire on peat. This should also refer to the ASEAN Policy on Zero Burning (2003) and respective national environment regulations. a. In exceptional cases where fire has to be used for preparing land for planting, is there evidence of prior approval of the controlled burning as specified in Guidelines for the Implementation of the ASEAN Policy on Zero Burning 2003, or comparable guidelines in other regions? b. Was the activity incorporated in the SEIA report? c. What were the mitigation measures? Was it implemented? Statement Area Begerpang, Sei Merah and Rambong Sialang Field observation There was no new planting since November 2005 in the company area. NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 172 of 224

173 Preamble It is noted that oil palm and all other agricultural crops emit and sequester greenhouse gases (GHG). There has already been significant progress by the oil palm sector, especially in relation to reducing GHG emissions relating to operations. Acknowledging both the importance of GHGs, and the current difficulties of determining emissions, the following new Criterion is introduced to demonstrate RSPO s commitment to establishing a credible basis for the Principles and Criteria on GHGs. Growers and millers commit to reporting on projected GHG emissions associated with new developments. However, it is recognised that these emissions cannot be projected with accuracy with current knowledge and methodology. Growers and millers commit to plan development in such a way to minimise net GHG emissions towards a goal of low carbon development (noting the recommendations agreed by consensus of the RSPO GHG WG2). Growers and millers commit to an implementation period for promoting best practices in reporting to the RSPO, and after December 31st 2016 to public reporting. Growers and millers make these commitments with the support of all other stakeholder groups of the RSPO. New plantation developments are designed to minimise net greenhouse gas emissions. Guidance This Criterion covers plantations, mill operations, roads and other infrastructure. It is recognised that there may be significant changes between the planned and final development area, hence the assessment may need to be updated before the time of implementation. Public reporting is desirable, but remains voluntary until the end of the implementation period. Once established, new developments should report on-going operational, land use and land use change emissions under Criterion 5.6. According to the recommendation from RSPO GHG Working Group 2, the total carbon emission (above and below ground) from new development area ideally is not bigger than carbon that can be absorbed in one rotation period of all new developments (i.e. average of oil palm trees, riparian buffer zone, and the set aside forest area). To help achieving this, the plantation should be developed in area with low carbon stock (i.e. mineral soil, area with low biomass, etc) or within area that currently is being utilized for agriculture or intensive plantation whose owner has agreed to convert the areas into oil palm. The agreed methodology to assess and report on carbon stock and emission sources as well as default number for the both estimation is now being developed by RSPO. As guidance, low carbon stock areas are defined as areas with (above and below ground) carbon stores, where the losses as a result of conversion are equal or smaller to the gains in carbon stock within the new development area, including set aside areas (non- planted area) for one rotation period. (M) The carbon stock of the proposed development area and major potential sources of emissions that may result directly from the development shall be identified and estimated. Specific Guidance: For 7.8.1: GHG identification and estimates can be integrated into existing processes such as HCV and soil assessments. The RSPO carbon assessment tool for new plantings will be available to identify and estimate the carbon stocks. It is acknowledged that there are other tools and methodologies Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 173 of 224

174 7.8.2 currently in use; the RSPO working group will not exclude these, and will include these in the review process. The RSPO PalmGHG tool or an RSPO-endorsed equivalent will be used to estimate future GHG emissions from new developments using, amongst others, the data from the RSPO carbon assessment tool for new plantings. Parties seeking to use an alternative tool for new plantings will have to demonstrate its equivalence to the RSPO for endorsement. a. Is there an assessment conducted to identify and estimate the carbon stock in the proposed development area and major potential sources of emissions that may result directly from the development? b. What are the tools and methodologies used to identify and estimate the carbon stock and potential sources of emission? c. Has the results of the carbon stock assessment been submitted and reported to RSPO according to RSPO procedures and timeline? Records of a plan to minimize net GHG emissions shall be available. Statement Area Begerpang, Sei Merah and Rambong Sialang Field observation There was no new planting since November 2005 in the company area. Specific Guidance: For 7.8.2: Growers are strongly encouraged to establish new plantings on mineral soils, in low carbon stock areas, and cultivated areas, which the current users are willing to develop into oil palm. Millers are encouraged to adopt low-emission management practices (e.g. better management of palm oil mill effluent (POME), efficient boilers etc.) in new developments. Growers and millers should plan to implement RSPO best management practices for the minimization of emissions during the development of new plantations Some efforts to minimise net GHG emissions, but not limited to: a. Avoiding high carbon stock area b. Enriching HCV c. Improving carbon sequestration d. Minimising use of fossil fuel e. Implementing zero burning a. Is there a plan to minimise net GHG emissions from new development? b. Does this plan take into account avoidance of Statement Area Begerpang, Sei Merah and Rambong Sialang There was no new planting since November 2005 in the company area. NA NA Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 174 of 224

175 land areas with high carbon stocks, sequestration options and low-emission management practices? Field observation Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 175 of 224

176 PRINCIPLES 8: COMMITMENT TO CONTINUAL IMPROVEMENT IN KEY AREAS OF ACTIVITY Growers and millers regularly monitor and review their activities, and develop and implement action plans that allow demonstrable continual improvement in key operations. Guidance: Growers should have a system to improve practices in line with new information and techniques, and a mechanism for disseminating this information throughout the workforce. For smallholders, there should be systematic guidance and training for continual improvement The minimum specific performance for key indicators is based upon the existing regulations and best plantation practices (Criteria 4.2, 4.3, 4.4, and 4.5). Several standards related to Criteria 4.2, 4.3, 4.4, and 4.5: Leaf analysis at least on yearly basis. Soil analysis should be done periodically based on company s consideration Plantable slope < 40%. BOD of effluent used forland Application is maximum 5000 ppm, and for discharging to the water body is maximum 100 ppm For planting on peat, the water table should be maintained at an average of at least 50 cm (40 60 cm) below ground surface measured with groundwater piezometer readings, or an average of 60 cm (between cm) below ground surface as measured in water collection drains as per the Manual Best Management Practices for existing oil palm cultivation on peat, June 2012 or as per existing regulation if equal or shallower measured through a network of appropriate water control structures e.g. weirs, sandbags, etc. in fields, and watergates at the discharge points of main drains (Criteria 4.4 and 7.4). Regulations regarding water table on peat may refer, but not limited, to: 1. Government Regulation No. 71 year 2014 regarding Protection and Management of Peat Ecosystem 2. Regulation of the Minister of Agriculture No. 14 year 2009 regarding Guideline of Oil Palm Cultivation on Peat 3. Regulation of the Minister of Agriculture No. 11 year 2015 regarding Guideline of Indonesia Sustainable Palm Oil Plantation (ISPO) (M) The action plan for monitoring shall be available, based on a consideration of the social and environmental impacts and routine evaluation of the plantation and mill operations. As a minimum, these shall include, but are not necessarily be limited to: Reduction in use of certain chemicals (Criterion 4.6); Environmental impacts (Criteria 4.3, 5.1 and 5.2); Waste reduction (Criterion 5.3); Pollution and greenhouse gas (GHG) emissions (Criteria 5.6 and 7.8); Social impacts (Criterion 6.1); Optimising the yield of FFB production (Criterion 4.2) a. Is there an action plan for continual improvement? b. Describe the main components of the plan. RSPO internal audit report which conducted on 27 th July 2017 The company have an action plan for continual improvement based on internal audit, external audit, visit on Area Manager Esngineering and Area Manager Agronomy, etc. Action plan described the main component of the plan and it was implemented in accordance with its YES Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 176 of 224

177 c. Has the action plan been implemented? d. Provide examples of continual improvements that have been implemented. e. Are history records available to develop the action plan? f. Are records of implementation of the action plan available? g. Does the action plan include strategies for: Reduction in use of pesticides (Criterion 4.6)? Is IPM widely implemented? Environmental impacts (Criteria 4.3, 5.1 and 5.2)? Waste reduction (Criterion 5.3)? Pollution and greenhouse gas (GHG) emissions (Criteria 5.6 and 7.8)? Social impacts (Criterion 6.1)? Optimising the yield of the supply base? h. Do growers have a system to improve practices in line with new information and techniques, and a mechanism for disseminating this information throughout the workforce? AME (Area Manager Engineering) visit report 18 th April 2017 OHS Objectives and programme period 2016 and 2017 timeline and PIC. Several continual improvement programme has been developed, such as: Environmental impacts: o o o o Waste reduction: o Use composting method to reduce use of chemical fertilizer Create the tool to open roof bolt with drilling machine Design the solar/fuel sludge reservoir at HSD oil tank Rooftop painting using gun sprayer Reuse used water from pesticide container cleaning Pollution and GHG emission o Use of fibre and shells for boiler fuel Monitoring and managing the positive and negative impact from social impact assessment (SIA) Improve and implementation the CSR program regularly Review social impact assessment every two years to improve the social relationship with stakeholders and affected parties. Internal audit was conducted on 27 th July 2017 regarding the sustainable palm oil, included the health and safety aspects. The corrective action was followed if there are any non-conformances raised. Moreover the organisation conducted monitoring and checking for mill operation performance through periodic visit of Area Manager Engineering (AME) from Head office yearly periodic visit, last visit was conducted on 18 th April The content of the report covers evaluation of mill operational activities, Mill process and objectives evaluation, such as oil losses target achievement (<1.305%). The report includes recommendation for follow up from Area Manager Engineering and progress of follow up action from the previous visit. Corrective action of all non-conformities found has Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 177 of 224

178 been follow up. The organisation has established procedure to address non-compliance and corrective action for continuous improvement. The records also sighted regarding objectives and programmes related to health and safety for each estates and mill; includes: production planning, production, power generation and utilization, consumable, process control, quality control including waste water treatment, maintenance, occupational health and safety, FFB incoming and inspection, and laboratory. Within the OHS objective and programmes was included the time frame; person in charge and cost estimation. The monitoring of each objectives and programmes were conducted periodically by the PIC. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 178 of 224

179 3.3.2 Mill Supply Chain Requirements PART A COMPANY DETAIL Company Name (covered by certification): PT. PP London Sumatra Indonesia Plantation Tbk Begerpang Mill RSPO member name: PT. PP London Sumatra Indonesia Tbk RSPO member number: RSPO IT Platform Registration number: RSPO_ PO Site Address: Batu Lokong Village, Galang District, Deli Serdang Regency, North Sumatera Province, Indonesia Management Representative: Muhammad Waras Site type: Palm Oil Mill Site capacity: 50 MT FFB/hour Certified palm product sold: There was no CSPO selling. There was selling CSPK of 3, MT. Certified palm product used: 231,056 MT FFB App/Cert No: FMS40033 Audit Type: ASA2 SAI Global Auditor/Team: R. Yosi Zainal Muhammad Audit Date: 03/08/2017 Activity/Audit No: WI Audit objectives To verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers, and the implementation of any processing controls Supply Chain Model: Pertinent record period: July 2017 to June 2018 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 179 of 224

180 Estimated tonnage of certified palm product produced: Estimated of tonnage of non-certified palm product produced String description: Outsource activity(ies) (if any): Independent third party(ies) performing outsource activity(ies): name, address and Capability 54,145 MT CPO and 13,973 MT PK None Palm Oil Mill None None Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 180 of 224

181 PART B SUPPLY CHAIN CERTIFICATION STANDARD Requirements Audit Findings / Objective Evidence CPO MILLS (IP) IDENTITY PRESERVED SUPPLY CHAIN MODELS MODULAR REQUIREMENTS D.1 Definition STATUS ( NC / AOC / C ) A mill is deemed to be Identity Preserved (IP) if the FFB used by the mill are sourced from its own supply base certified to the RSPO Principles and Criteria (RSPO P&C). Certification for CPO mills is necessary to verify the volumes and sources of certified FFB entering the mill, the implementation of any processing controls (for example, if physical separation is used), and volume sales of RSPO certified products. A mill may be taking delivery of FFB from uncertified growers, in addition to those from its own certified land base. If a mill processes certified and uncertified FFB without physically separating the material then only Module E is applicable. D.2 Explanation D.2.1. The estimated tonnage of CPO and PK products that could potentially be produced by the certified mill must be recorded by the certification body (CB) in the public summary of the P&C certification report. This figure represents the total volume of certified palm oil product (CPO and PK) that the certified mill is allowed to deliver in a year. The actual tonnage produced shall then be recorded in each subsequent annual surveillance report. a. Has the estimated tonnage of CPO and PK products (that could potentially be produced by the certified mill) been recorded by the certification body (CB) in the public summary of the P&C certification report? The estimated tonnage of CPO and PK products has been recorded by the certification body (CB) in the public summary of the P&C certification report, e.g.: Certification audit ASA1 Estimated CPO : 66, MT Estimated PK : 16, MT C ASA1 ASA2 Estimated CPO Estimated PK : 55, MT : 14, MT ASA2 ASA3 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 181 of 224

182 Requirements b. Does the figure represent the total volume of certified palm oil product (CPO and PK) that the certified mill is allowed to deliver in a year? c. Does the actual tonnage produced have to then be recorded in each subsequent annual surveillance report? Estimated CPO Estimated PK Audit Findings / Objective Evidence : 54,145 MT : 13,973 MT Yes, the figure does represent the total volume of certified palm oil product (CPO and PK) that the certified mill allowed to deliver in a year. Certified PK delivered last period was 3, MT. The actual tonnage produced has been recorded in each subsequent annual surveillance report, i.e: STATUS ( NC / AOC / C ) C C Certification audit ASA1 Actual CPO : 59, MT Actual PK : 15, MT ASA1 ASA2 Actual CPO Actual PK : 56,374 MT : 14,879 MT D.2.2. The mill must also meet all registration and reporting requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim). a. The mill must also meet all registration requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim)? b. The mill must also meet all reporting requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform or book and claim)? The mill is under PT. PP LSIP Tbk, Tbk which is registered as RSPO member, with membership number The mill has also been registered in RSPO IT Platform, with register number RSPO_PO The mill also has met all reporting requirements for the appropriate supply chain through the RSPO supply chain managing organization (RSPO IT platform and Book & Claim) as indicated in the Table 10. C C Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 182 of 224

183 D.3 Documented Procedure Requirements Audit Findings / Objective Evidence Audit Report STATUS ( NC / AOC / C ) D.3.1. The site shall have written procedures and/or work instructions to ensure the implementation of all the elements specified in these requirements. This shall include at minimum the following: a) Complete and up to date procedures covering the implementation of all the elements in these requirements; b) The role of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. This person shall be able to demonstrate awareness of the site s procedures for the implementation of this standard. a. Does the site have written procedures and/or work instructions in place to ensure the implementation of all elements specified in these requirements? b. Are procedures / work instructions completely covering the implementation of all the elements in these requirements? The site has written procedure CSPO Supply Chain (EMS-P17) dated 10 April 2014 that described the process of Supply Chain from FFB receiving to CPO and PK despatch. Internal Memorandum from President Director dated 15 May 2013 mentioned that (1) CPO produced is only coming from FFB from own estates that has been RSPO certified, (2) during process, delivery and storage is not contaminated with uncertified CPO. Procedure of CSPO Supply Chain (EMP-P17) dated 5 August 2016 described the process of: 1. FFB receiving and its recording 2. FFB processing and its recording 3. Recording of production results 4. Delivery of production result 5. Daily production results 6. Recording at Head Office Jakarta: - Daily production result upload - Stock cutting/goods delivery - Three monthly report - Contract and DO issuance C C Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 183 of 224

184 Requirements c. Have the site had the role of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements? d. Is the person able to demonstrate awareness of the site s procedures for the implementation of this standard? Audit Findings / Objective Evidence - Certification claim by buyer - Invoice issuance 7. Record keeping 8. Abnormal condition 9. Production report to certification body 10. Shipping announcement on etrace 11. PIC for SCCS The procedure has completely covers the implementation of all the elements in these requirements. The site has appointed person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. Based on the procedure CSPO Supply Chain (EMS-P17) the person is Mill Manager. The Mill Manager then appointed Shift Coordinator (Mr. Risdiyanto Ginting) as personal in charge for daily Supply Chain implementation based on appointment letter no. 040/BOM/LAB/VI/2016 dated 21 June The assigned person was able to demonstrate awareness of the site s procedures for the implementation of RSPO SCC standard. All related employees to implementation of RSPO SCC have been trained by competent persons on 30 April 2014 and August STATUS ( NC / AOC / C ) C C D.3.2. The site shall have documented procedures for receiving and processing certified and non-certified FFBs. a. Has the site had documented procedures for receiving certified FFBs? b. Has the site had documented procedures for receiving noncertified FFBs? The site has documented procedures for receiving certified FFBs, e.g.: POM-WI/01, Weighbridge, revision 5 dated 26 October POM-WI/02, Loading Ramp and FFB Sorting, revision 5 dated 26 October The site is only receive FFB from own estates; (Rambong Sialang, Sei Merah, and Begerpang Estate), therefore there is no non-certified FFBs. C C Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 184 of 224

185 Requirements c. Has the site had documented procedures for processing certified FFBs? d. Has the site had documented procedures for processing noncertified FFBs? D.4 Purchasing and Goods In Audit Findings / Objective Evidence The site had documented procedures for processing certified FFBs, e.g.: POM-WI/04, Threshing, revision 3 dated 26 October POM-WI/05, Pressing, revision 1 dated 26 October POM-WI/06, Clarification, revision 1 dated 26 October POM-WI/08, Kernel Recovery, revision 1 dated 26 October POM-WI/09, Boiler, revision 1 dated 26 October POM-WI/16, Quality, revision 1 dated 26 October POM-WI/17, Dispatch, revision 5 dated 26 October The site is only process FFB from own estates; Begerpang Estate, Sei Merah, and Rambong Sialang, therefore there is no non-certified FFBs. STATUS ( NC / AOC / C ) C N/A D.4.1. The site shall verify and document the tonnage and sources of certified and the tonnage of non-certified FFBs received. a. Is the site going to verify and document the tonnage of certified FFBs received? The site has documentation that demonstrated that FFB entering the mill are sourced from certified supply bases which are their own estate, e.g. Begerpang Estate, Sei Merah Setate, and Rambong Sialang. Record observed are: - FFB Delivery Ticket No. 8124H ; on 01 August 2017, mentioning that the FFB are coming from Begerpang Estate (Block of and ). - FFB Delivery Ticket No. 8123H , on 01 Auguts 2017, mentioning that the FFB are coming from Sei Merah Estate (Block of ). - FFB Delivery Ticket No. 8125H ; on 01 August 2017, mentioning that the FFB are coming from Rambong Sialang Estate (Block of and ). b. Is the site going to verify and document the sources of certified FFB receiving was traceable to the supply base unit. During weighing on weighbridge the FFB sources is identified; whether received from own estate C C Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 185 of 224

186 FFBs received? Requirements c. Is the site going to verify and document the tonnage of noncertified FFBs received? Audit Findings / Objective Evidence (block number and division) or from other source. The site only receive FFB from own estate and will not receive FFB from other source. Weighing slip and receiving report issued clearly stated the weight off FFB received and its source. The documented Monthly Production and Stock and document Summary Crop Oil Palm has recapitulated FFB received from Begerpang Estate, Sei Merah Estate, and Rambong Sialang Estate. It was verified that the source of FFB received were verified and documented. The site implement supply chain certification model IP therefore there is no receiving of non-certified FFB. Audit Report STATUS ( NC / AOC / C ) N/A D.4.2. The site shall inform the CB immediately if there is a projected overproduction of certified tonnage. a. Is the site going to inform the CB immediately if there is a projected overproduction of certified tonnage? Procedure CSPO Supply Chain (EMS-P17) dated 5 August 2016 chapter 3.8 has described mechanism to inform the CB immediately if there is a projected overproduction of certified tonnage. C D.5 Records Keeping D.5.1. The site shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO and PK on a three-monthly basis. a. Is the site going to record and balance all receipts of RSPO certified FFB on a three-monthly basis? b. Is the site going to record and balance all deliveries of RSPO certified CPO and PK on a three-monthly basis? The mill has records and balanced all receipts of RSPO certified FFB in daily basis, recapitulated it in monthly basis and summarized it in three-monthly basis. The site has records and balanced all deliveries of RSPO certified CPO and PK in daily basis, recapitulated it in monthly basis and balance it in three-monthly basis. C C D.6 Processing D.6.1. The site shall assure and verify through documented procedures and record keeping that the RSPO certified oil palm product is kept segregated from non-certified material including during transport and storage. a. Is the site going to assure and verify through documented The mill only processed FFB from the company s own estate, Begerpang Estate, C Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 186 of 224

187 Requirements procedures that the RSPO certified oil palm product is kept segregated from non-certified material including during transport and storage? b. The site shall assure and verify through record keeping that the RSPO certified oil palm product is kept segregated from non-certified material including during transport and storage? D.6.2. The objective is for 100 % segregated material to be reached. a. Is the objective for 100 % segregated material able to be reached? Audit Findings / Objective Evidence Sei Merah Estate, and Rambong Sialang Estate. The Mill has two CPO storage tanks and two Palm Kernel silos which is used only for Begerpang Mill product. Transportation is performed by customer or the third party transporter. When storage performed by the site, RSPO certified oil palm product is kept segregated from non-certified material until it handed over to the transporter. The mill only processed FFB from the company s own estates (Begerpang Estate, Sei Merah, and Rambong Sialang Estate, therefore 100 % of segregated material can be reached. Audit Report STATUS ( NC / AOC / C ) C Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 187 of 224

188 Supply Chain Certification System Supply Chain Certification System Has the client been made aware with necessary information concerning the RSPO Supply Chain Certification and the RSPO Rules on Communication and Claims Has the client been made aware with necessary information concerning the RSPO Supply Chain Certification and the RSPO Rules on Communication and Claims? If potential clients have any further questions concerning the RSPO these shall be directed to the RSPO secretariat. Status ( Yes / No ) Yes Has the client been made aware of the contractual agreement for certification services against the RSPO Supply Chain Standard and maintain a record of any agreement? Has the organization been informed about the following items? Yes a. Certification process Yes b. Agree logistics for the assessment and time of exit (closing) meeting. Yes c. Confirm acess to all relevant documents, field sites and personnel Yes d. Explain confidentiality and conflict of interest Have the management documentation of the organization fully met to the requirements of the RSPO Supply Chain Certification Standard? Yes Have any issues or areas of concern been clarified to the organization? N/A Have the internal audits against RSPO supply chain standard been fully planned and underway before certification is awarded? Yes Have the organization sufficiently and adequately implemented the organizational systems, the management systems and the operational systems, including any documented policies and procedures, to meet the intent and requirements of the RSPO Supply Chain Certification Standard? Have the client made aware that when there is outsourcing process to the third party after certification is granted therefor SAI Global shall be informed and SAI Global decides whether an interim visit is required for the next audit? Has certification audit reviewed pertinent RSPO Supply Chain records relating to the receipt, processing and supply of certified oil palm products? Yes Have all activities conducted by subcontractors complied with the intent and requirements of the RSPO Supply Chain Certification Standard N/A Yes Yes Yes Yes Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 188 of 224

189 Supply Chain Certification System Status ( Yes / No ) Have the client made aware that until they receive written confirmation of their RSPO Supply Chain certification registration and its expiry date that they are not certified and cannot make any claims concerning registration? Have a detail records have been compiled of the entry (opening) meeting including a list of the participants in the meeting? Yes Have the client made aware of the findings of the audit team including any deficiencies which may result in a negative certification decisions or which may require further actions to be completed before a certification decision can be taken? Have the client made aware that the findings of the audit team are tentative pending review and decision making by the duly designated representatives of the certification body? Yes Yes Yes Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 189 of 224

190 3.4 Recommendation The recommendation from this audit is that PT PP LSIP Tbk Begerpang Palm Oil Mill continue as a producer of RSPO Certified Sustainable Palm Oil and Palm Kernel, Model: Identity Preserved. Audit recommendations are always subject to ratification by RSPO. This report was prepared by: R. Yosi Zainal Muhammad, Daniel Sitompul, Dirgantara Bayu, and Ahmad Furqon. 3.5 Environmental and social risk for this scope of certification for planning of the surveillance audit Environmental risk: compliance with regulations, hazardous waste management, RKL RPL reporting Social risk: compliance with regulations OHS: prevention of hazard and risk BMP: integrated pest management and application of pesticide, includes requirements for the applicator. HCV: assessment and management and monitoring plan. 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of Assessment Findings Please sign below to acknowledge receipt of the assessment visit described in this report and confirm the acceptance of the assessment report contents including assessment findings. Signed for and on behalf of PT. PP. London Sumatra Indonesia Plantation Tbk Begerpang Palm Oil Mill Muhamad Waras Date 7/11/2017 Signed for and on behalf of PT. SAI Global Indonesia Technical Manager Date 3/11/2017 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 190 of 224

191 Appendix A Audit Record Audit Team Leader: R. Yosi Zainal Muhammad Auditors: Daniel Sitompul, Dirgantara Bayu, and Ahmad Furqon Observer: - Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts audited: # Shifts* Times* From To 31/07/2017 Day 1 Monday All Travelling Jakarta Kualanamu (GA 188) All Travelling Kualanamu Rambong Sialang /08/2017 Day 2 Tuesday All Opening meeting Rambong Sialang Estate Yosi Daniel Dirgantara Furqon Agronomy BMP and Legality Criteria: 2.2.1, Criteria: 3.1 (all indicators) Criteria: 4.1.1, and for estate, Criteria: , 4.5 all indicators Criteria: 4.6.1, 4.6.2, 4.6.3, 4.6.4, 4.6.5, 4.6.7, 4.6.8, Criteria: 6.10 Criteria: 7 (all indicators) Criteria: 8.1 Environment Criteria: 2.1 all indicators for environmental aspects Indicators: 4.4.1, 4.4.3, Criteria: 4.6.6, Criteria: 5.1, 5.3, 5.4, 5.5 and 5.6 all indicators Criteria: 8.1 Health and Safety Criteria: 2.1 all indicators for OHS aspects Criteria: Criteria: 4.7 all indicators Criteria: 4.8 all indicators Criteria: 8.1 Social and HCV Criteria: 1.1; 1.2; 1.3 all indicators Criteria: for social aspect Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicators Indicator: Criteria: Criteria: 5.2 (all indicators) Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 191 of 224

192 Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts audited: # Shifts* Times* From To Criteria: /08/2017 Day 3 Wednesday Interview with employee, gender committee, and labour union. Consultation public with external stakeholders Dirgantara Furqon Begerpang Estate Health and Safety Criteria: 2.1 all indicators for OHS aspects Criteria: Criteria: 4.7 all indicators Criteria: 4.8 all indicators Criteria: 8.1 Social and HCV Criteria: 1.1; 1.2; 1.3 all indicators Criteria: for social aspect Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicators Indicator: Criteria: Criteria: 5.2 (all indicators) Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13 Criteria: 8.1 Interview with employee, gender committee, and labour union Yosi Daniel Consultation public with external stakeholders (Begerpang Estate and Sei Merah). Sei Merah Estate Agronomy BMP and Legality Criteria: 2.2.1, Criteria: 3.1 (all indicators) Criteria: 4.1.1, and for estate, Criteria: , 4.5 all indicators Criteria: 4.6.1, 4.6.2, 4.6.3, 4.6.4, 4.6.5, 4.6.7, 4.6.8, Criteria: 6.10 Criteria: 7 (all indicators) Criteria: 8.1 Environment Criteria: 2.1 all indicators for environmental aspects Indicators: 4.4.1, 4.4.3, Criteria: 4.6.6, Criteria: 5.1, 5.3, 5.4, 5.5 and 5.6 all indicators QEF08sa.RSPO.01 / Issue Date: 2009-Apr-15 SAI Global Indonesia Copyright 2009 Page 192 of 224

193 Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts audited: # Shifts* Times* From To Criteria: /08/2017 Day 4 Thursday Begerpang Palm Oil Mill Yosi Daniel Supply Chain (Identity Preserved Module D) & RSPO Certification System Criteria: 2.2.1, Criteria: 3.1 (all indicator) Environment Criteria: 2.1 all indicators for environmental aspects Indicators: 4.4.1, 4.4.3, Criteria: 5.1, 5.3, 5.4, 5.5 and 5.6 all indicators Criteria: Dirgantara Furqon Processing BMP and Health and Safety Criteria: 2.1 all indicators for OHS aspects Criteria: 4.1.1, 4.1.2, and for mill Criteria: 4.7 all indicators Criteria: 4.8 all indicators Criteria: 6.10 Criteria: 8.1 Social Criteria: 1.1; 1.2; 1.3 all indicators Criteria: for social aspect Criteria: 2.2.3; 2.2.4; 2.2.5; 2.2.6; 2.3 all indicator Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11, 6.12, 6.13 Criteria: 8.1 Interview with employee, gender committee, and labour union All Closing meeting /08/2017 Day 5 Friday All Travelling Kualanamu Jakarta (GA 183) QEF08sa.RSPO.01 / Issue Date: 2009-Apr-15 SAI Global Indonesia Copyright 2009 Page 193 of 224

194 Appendix B Previous Nonconformities and Opportunity for Improvement Summary RSPO Principe and Criteria, Indonesian National Interpretation RSPO No Indicator Certification Audit 1 RSPO Criterion 2.1 indicator major 1 Non-conforming situation: Details Corrective Action PIC There was no evidence of compliance with relevant legal several requirements. Rambong Sialang Estate Based on list of worker per February 2014, there was main activities (harvesting) conducted by temporary worker (11 worker). It was not appropriated with Indonesian Las # 13/2003 about Employment and Transmigration and Labour Ministry Decision of Indonesian No. KEP.102/MEN/VI/2004 about over time and pay of overtime. There was no temporary worker agreement of upkeep in appropriate with Indonesian Las # 13/2003 about Employment. It was observed several first aid bags/boxes that deployed in several areas and Supervisors (e.g. harvesting mandor in Division II) were not completed as required by regulation Permen 15/2008. The fire fighter personnel were not provided with certificates training as required by the regulation (Fire fighting training basic level I and II). The competencies of fire fighter personnel are not evident based on defined within the regulation of Kep Menaker 186/1999. Permit of excavator form Dinas Tenaga Kerja has not been provided as required by Permenaker No.1/1982. Begerpang Estate There has temporary worker agreement of upkeep Rambong Sialang Estate Totally there are 11 temporary harvesters which have been promoted as permanent worker on 8 September 2014 (HR Director Letter No. 035/HRU-NS/App/IX/2014. Agreement of daily temporary worker Rambong Sialang Estate has been established and signed by worker. Such as: Work agreement No. 101/RSE/Cont-PKHL/IX/2014, date on 2 September Work agreement was listed and approved by Labour department of Nort Sumatara No.26-6/III/PKWT/IX/2014. Contents of fist aid kits have been established according to Permenaker No.15/2008 and have been distributed to Mandor. Organization has done monthly monitoring of fist aid kits contenst. It was recorded in form checklist fist aid kits Mandor. Firefighter personnel have been tained by fire OHS expert collaborate with Firefighter Department of Medan on 27 June Firefighter officer level 1 and level 2 has been established by Firefighter department of Medan. There are three firefighters for each estate and mill. Usage permit of Excapator has been approved by Labour Department of Serdang Begadai on June Permit No /560/55/PAA/2014. Begerpang Estate Work agreement of daily temporary worker of up kep has been reviewed. Rearrangement of worker agreement has been done. Work agreement has described time periode of contract for 1 year. Such as: Work agreement daily temporary worker No. 101/BGE/Cont-PKHL/IX/2014, date on 1 September 2014, time period of agreement for 1 year. Work agreement was listed and approved by Labour department of Nort Sumatara No.30-6/III/PKWT/IX/2014. The organisation reapplied extention of ground water abstraction through letter #131/GSD/G/43/IX/2014 from Department Head of Completion Date Status Estate and Mill 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 194 of 224

195 No RSPO Indicator AUDIT REPORT Details Corrective Action PIC (Pruning, wedding, manuring, spraying and maintenance of other activities), it was represented by group leader however term of the contract was not clearly described. (Indonesian Las # 13/2003 about Employment) GS to Bupati Deli Serdang on 9 September Letter was also sent to Dinas Cipta Karya dan Pertambangan Kab. Deli Serdang. Based on reply letter from Dinas Cipta Karya dan Pertambangan Kab. Deli Serdang on 17 September 2014, site visit is conducted on 18 September Completion Date Status There are 7 ground well utilised by Estate. Permit of ground well abstraction has not been valid since Application letter for extention the permit was sent to Bupati Deli Serdang on 26 November However until now, permit has not been provided. First aid bags/boxes carried out by mandor (e.g. harvesting mandor in Division V) were not completed as required by regulation Permen 15/2008. SPUP/IUPdocument of Bagerpang Estate Ha could not be shown. Based on SPUP No. 173/Mentanhut/VII/2000 Location: Kecamatan Galang, Kabupaten Deli Serdang, Propinsi Sumatra Utara, 2.539,68 Ha dan SPUP No. 174/Mentanhut/VII/2000 Location: Kecamatan Bangun Purba, Kabupaten Deli Serdang, Propinsi Sumatra Utara, 2.204,48 Ha. Total of Estate in SPUP is 4.744,16 Ha, while total area of Begerpang Estate is 5, Ha. Moreover the existing SPUP did not state permit of capacity of POM. Bagerpang Estate and Rambo Sialang Estate Determination of riparian zone in the related procedure was noncompliance with President Decision No.32/1990 about environmental management. In the related procedure was described regarding a. Width of the river is 5-10 meters, than the riparian zone is 5 meters b. Width of the river is meters, than the riparian zone is 15 meters Organization has identified all of first aid kit contents. Contents of first aid kit have been completed in appropriate to regulation on 26 April Organization has also done monthly monitoring of fist aid kit contents. Letter regarding Technical Consideration of Estate activity (Pertimbangan Teknis Usaha Perkebunan) of PT. PP LSIP Tbk. Kebun Begerpang was developed on 22 January 2014 by Department Head of GS to Kepala Dinas Perkebunan Prop. Sumatera Utara for total area 5, Ha. Recommendation letter for Technical Consideration has been provided through letter #525/199/IX/F. Letter mentioned that the organisation shall complied with UU 18/2004 regarding Plantation and Peraturan Menteri Pertanian #98/Permentan/OT.140/9/2013 regarding Manual of Plantation Permit (Pedoman Perizinan Usaha Perkebunan) Bagerpang Estate and Rambo Sialang Estate Organization has reviewed related procedure. New procedure has been established in SOP EMS-P16 HCV management and monitoring on 14 April Boundary of riparian zone was established in appropriate with related law and regulation. Begerpang Mill Report of LA Q has been sent to Dinas Pertanian Tanaman Pangan, Perkebunan dan Peternakan Kabupaten Deli Serdang dan Dinas Kehutanan Kabupaten Deli Serdang. To prevent receipt note was not found at Estate, receipt note of regular reporting was sent to Estate in soft copy. Flow meter has been installed and calibrated by CV. Sahabat Teknik on 6 June Socialisation to PIC of pump house regarding reporting all broken Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 195 of 224

196 No RSPO Indicator 2 RSPO Criterion 2.1 indicator major 2 AUDIT REPORT Details Corrective Action PIC c. Width of the river more than 25 meters, than the riparian zone is 25 meters. Begerpang Mill There was no evidence that record of Land Application Q was reported to Dinas Pertanian Tanaman Pangan, Perkebunan dan Peternakan Kabupaten Deli Serdang dan Dinas Kehutanan Kabupaten Deli Serdang as required by permit of Land Application. Flow meter to monitor surface water abstraction was broken. Permit of surface water abstraction required to install water meter and/or water debit measuring device. Sei Merah Estate Based on SPUP Kebun Sei Merah No. HK.350/195/Bun.5/III/2001 dated10 Juli 1997, 1, Ha was oil palm and crumb rubber. However based on area statement all the area was oil palm. Non-conforming situation: There was no evidence of effort made to comply with change in the several regulations Objective evidence: Rambong Sialang Estate Several regulations have not been updated, registered and evaluated their compliance, e.g. Permentan 98/Permentan/OT.140/9/2013, Per.MenLH 14/2013, Permenperind No 23/M- IND/PER/4/2013, Permenaker No. 13/2011 regarding chemical and physical factor threshold limit value, Permenaker No. 2/1980 regarding employee condition in pump house. Sei Merah Estate Application letter #108/GSD/G/43/VII/2014 on15 Juli 2014 has been sent to Kepala Dinas Pertanian Pemerintah Kabupaten Deli Serdang. Recommendation letter of change from rubber to oil palm has been issued #525/31805/IX/2014 on 16 September 2014 from Kepala Dinas Pertanian Pemerintah Kabupaten Deli Serdang. PIC of sustainability has been assigned, e.g. Rambong Sialang Estate - Akbar Arlandes (Field Assistant), Begerpang Estate - Kaslan (Field Assistant), and Begerpang Mill - Sinar Mulia Munthe (Shift Coordinator). Expire of permit was monitored through list of permit EMS F19 Monitoring of permit. Begerpang Mill and Estate 1. Updating against regulation has been done 5 August Related regulation has been listed on Form Renewed regulation regarding: Permenaker No. 2/ Pemeriksaan kesehatan, Permenaker No. 1/ pelaporan PAK, Permenaker No. 3/ Pelayanan Kesehatan Kerja, Permenaker No. 25/ Diagnose PAK 2. List of environmental regulation has covered Peraturan Daerah Kabupaten Deli Serdang 6/2006 tentang Pengendalian Dampak Lingkungan Hidup di Kab. Deli Serdang, Permentan 98/ Permentan/OT.140/9/2013, Per.MenLH 14/2013, Permenperind No 23/M-IND/PER/4/2013, RKL RPL Nomor: 660/05/SET- KOMISI/I/2009. Compliance with these regulations has been Completion Date Status Estate and Mill 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 196 of 224

197 No RSPO Indicator 3 RSPO Criterion 4.2 indicator minor 2 AUDIT REPORT Details Corrective Action PIC medical check up, Permenaker No. 1/1981 regarding occupational disease reporting, Permenaker No. 3/1982 regarding occupational health, Permenaker No. 25/2008 mengenai occupational disease diagnose. Begerpang Mill and Estate Several regulations have not been updated, registered and evaluated their compliance, e.g. Peraturan Daerah Kabupaten Deli Serdang 6/2006 tentang Pengendalian Dampak Lingkungan Hidup di Kab. Deli Serdang, Permentan 98/Permentan/OT.140/9/2013, Per.MenLH 14/2013, Permenperind No 23/M-IND/PER/4/2013, Permenaker No. 13/2011 regarding chemical and physical factor threshold limit value, Permenaker No. 2/1980 regarding employee medical check up, Permenaker No. 1/1981 regarding occupational disease reporting, Permenaker No. 3/1982 regarding occupational health, Permenaker No. 25/2008 mengenai occupational disease diagnose. Non-conforming situation: Land Aplication (Trenches) has not been conducted according to SOP no. PRS : Land Aplication. Objective evidence: Begerpang Mill Based on Effluent Flow Report in March 2014, application in block plot 1 5 Ha was 6,949 ton (1300 ton/ha) and block plot II 7 Ha was 3,526 ton (503 ton/ha) while recommended dosage was 750 ton/ha. It was observed that dept of trenches in block was 1.5 meter. SOP mentioned that dept of trenches was 60 cm. evaluated by Environmental Staff from Medan Office in August List of regulation is updated when there are new regulations or once a year. Begerpang Mill Based on Effluent Flow Report, it was observed that effluent application in April August 2014 was inline with standard 750 1,000 ton/ha/year. LA report is developed monthly and report quarterly to government. Trenches has been repaired by covering with soil and dept of trenches became 60 cm. New trenches was constructed with dept 60 cm. Completion Date Status Mill 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 197 of 224

198 RSPO No Indicator 4 RSPO Criterion 4.4 indicator major 1 5 RSPO Criterion 4.4 indicator minor 1 AUDIT REPORT Details Corrective Action PIC Completion Date Status Non-conforming situation: Rambong Sialang Estate Estate 17/09/2014 Closed It was observed that there were pesticide application up to riparian zone in some areas. Upkeep of oil palm in riparian zone of Lembah (water pump of nursery) was manually conducted however intensity of upkeep was causing surface erosion to river. Objective evidence: Rambong Sialang Estate Field observation in on Riparian zone of Bata Block and Block as well as at Riparian zone of Lembah was observed that there ware pesticide application up to riparian zone Upkeep of oil palm in riparian zone of Lembah (water pump of nursery) was manually conducted however intensity of upkeep was impact surface erosion to river. Non-conforming situation: Water management plan has not been consistently implemented. Objective evidence: Begerpang Estate It was found secondary containment was broken in two locations which can cause oil spill to land. Begerpang Mill Bulking silo was leak therefore the leakage was drained to open drainage. Contaminated water from clay bath directly drained to open drainage. Previously the contaminated water was drained to sludge pit. Boundaries of Bata River have been constructed and have done on 24 June As a preventive action, estate manager was established circular letter No. 21/RS/DIV/IV/14, date on 7 April 2014 about Prohibition chemical application in riparian zone. Protected riparian program was also communicated to worker on 27 June Organization was also conducted planting grass in open area and Switenia sp. to anticipate erosion coastral area of river. Begerpang Estate Secondary containment has been repaired on June Begerpang Mill Bulking silo has been repaired on 25 April Contaminated water from clay bath has been sent to sludge pit since 25 April PIC of sustainability has been assigned, e.g. Rambong Sialang Estate - Akbar Arlandes (Field Assistant), Begerpang Estate - Kaslan (Field Assistant), and Begerpang Mill - Sinar Mulia Munthe (Shift Coordinator). Dissemination regarding environmental awareness has been conducted. Estate and Mill 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 198 of 224

199 RSPO No Indicator 6 RSPO Criterion 4.5 indicator minor 1 AUDIT REPORT Details Corrective Action PIC Completion Date Status Non-conforming situation: Rambong Sialang Estate Estate 17/09/2014 Closed There was no evidence that the whole team (incl. the worker) had been trained regarding IPM. Objective evidence: Rambong Sialang Estate There was no evidence that IPM training has been conducted. IPM training has been conducted on 20 May 2014 by Technology Transfer from BLRS. Participants from Rambong Sialang were 12 personnel (Assistant, Mandor 1, Pest Coordinator, Diseases Mandor and IPM worker. Training is conducted annually. 7 RSPO Criterion 4.5 indicator minor 2 Non-conforming situation: Toxicity calculation has not been done on the use of agrochemicals. Objective evidence: Rambong Sialang Estate Record of calculation and monitoring of toxicity of pesticide unit use could not be shown. Rambong Sialang Estate Calculation of toxicity pesticide unit has been conducted for pesticide use in 2013: metil metsulfuron 20%, 2,4 D methylamine 865 g/l, Fluroksipir metilheptil ester 290g/l, paraquat diklorida 276 g/l, karbosulfan 5%, asefat 75%, brodifakum 0.005%. Calculation result was well recorded. Estate 17/09/2014 Closed. 8 RSPO Criterion 4.6 indicator major 1 Non-conforming situation: There was no evidence that only registered and permitted agrochemical used. Objective evidence: Rambong Sialang Estate There was no evidence that only registered and permitted agrochemical used, e.g. starane, metsulindo, topzone, gramoxone, elang, orthene 75 SP, Dipel WP, Marshal 5GR. Rambong Sialang Estate and Begerpang Estate 1. List of agrochemical recommended including their permit has been made by BLRS and has been sent to all Estates by on 30 December Copy of valid permit of agrochemicals has been provided, e.g. starane, metsulindo, topzone, gramoxone, elang, orthene 75 SP, Dipel WP, Marshal 5GR, klerat. Estate 17/09/2014 Closed Begerpang Estate Copy of valid permit has not been provided for several expired permit of agrochemical, e.g. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 199 of 224

200 No RSPO Indicator Klerat (6 October 2013). AUDIT REPORT Details Corrective Action PIC Completion Date Status 9 RSPO Criterion 4.6 indicator major 3 Non-conforming situation: Not all spraying operator has obtained training regarding agrochemical use. Objective evidence: Rambong Sialang Estate Training regarding agrochemical use was only attended by one group leader (mandor) and one spraying operator from 5 spraying operator in Division I. Begerpang Estate Training regarding agrochemical use was only attended by one group leader (mandor) and one spraying operator from 6 spraying operator in Division 5. Rambong Sialang Estate and Begerpang Estate 1. Training of restricted pesticide was conducted on 8 July 2014 by Topzone and Komisi Pestisida. Location of training was in Bahlias Estate. 2. Participants from Rambong Sialang Estate were 7 personnel 3. Participants from Begerpang Estate were 22 personnel. 4. Periodic training is conducted by Assistant when there were no spraying operator changes. Training of restricted pesticide is conducted by pesticide supplier and Komisi Pesticide based on input from Estate when there are new spraying operators and applied to BLRS and HRD. Estate 17/09/2014 Closed 10 RSPO Criterion 4.7 indicator major 1 Non-conforming situation: It was found employee that didn t use Personal Protective Equipment during working activities which is not relevant to organization Safety Policy. Objective evidence: Begerpang Mill When performing FFB unloading activities at Begerpang POM from Rambong Sialang Estate it was found two workers didn t use safety shoes. Begerpang Mill Comunication of PPE usage has been done on 29 April 2014 in appropriate to internal memo mill manager (129/BOM/EST/IV/2014, date on 8 April 2014). It was attended by FFB transport drivers and craftsman. Security also cheked PPEs driver and craftsman everytime. It was recorded in Monthly report of PPE usage obedient in mill. Estate 17/09/2014 Closed 11 RSPO Criterion 4.7 indicator Non-conforming situation: From records of insurance payment slip it was found Rambong Sialang Estate Organization has identified new worker which listed as a social Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 200 of 224 Estate 17/09/2014 Closed

201 No RSPO Indicator minor 1 that not all employees were covered for their insurance payment. Objective evidence: AUDIT REPORT Details Corrective Action PIC security. There are 5 new worker has been listed as a social security participant. It was listed to BPJS Ketenagakerjaan on April 2014 period. Completion Date Status Rambong Sialang Estate Base on Rambong Sialang Estate employee data on February 2014 there were 825 workers. However only 821 workers insurance have been paid by the organization that month. 12 RSPO Criterion 5.1 indicator major 2 Non-conforming situation: UKL UPL implementation report is not complete according to UKL UPL document. Objective evidence: Begerpang Estate UKL UPL report did not record of soil fertility. UKL UPL document required soil fertility is analysed annually. There was no measurement result of river water quality, community well quality, ground water quality and air ambient measured every six months as required by UKL UPL document. In 2013 measurement was only conducted once. Begerpang Mill UKL UPL report did not mention measurement result of WWTP inlet. UKL UPL document required that WWTP inlet is measured monthly. Begerpang Estate UKL UPL report 1 st semester 2014 has been sighted and sent to BPMP Sumatera Utara, Dinas Perkebunan Sumatera Utara, BLH Sumatera Utara, Dinas Perindustrian Kab. Deli Serdang, Dinas Pertanian Kab. Deli Serdang. UKL UPL report 1 st semester 2013 has been sighted and covered measurement result of river water quality, community well quality, ground water quality and air ambient. Begerpang Mill UKL UPL report 1 st semester 2014 has attached analysis result of soil fertility. UKL UPL report 1 st semester 2014 has been sent to BPMP Sumatera Utara, Dinas Perkebunan Sumatera Utara, BLH Sumatera Utara, Dinas Perindustrian Kab. Deli Serdang, Dinas Pertanian Kab. Deli Serdang. Receipt note was sighted. To prevent the document was not found at site during audit, receipt note was sent to site by . Estate and Mill 17/09/2014 Closed UKL UPL report has not been sent to several government institutions as required by UKL UPL document, e.g. BKPM Jakarta, Bainpro Sumatera Utara, BLH Sumatera Utara, Dinas Perindustrian Kabupaten Deli Serdang, Dinas Perkebunan Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 201 of 224

202 No RSPO Indicator 13 RSPO Criterion 5.2 indicator major 1 AUDIT REPORT Details Corrective Action PIC Kabupaten Deli Serdang sesuai yang diminta oleh Dokumen UKL UPL. Report was only sent to Bapedalda Kabupaten Deli Serdang. Non-conforming situation: Records of results of identification of any protected, rare, threatened or endangered species, and HCV habitat was not available. Objective evidence: Rambong Sialang Estate and Begerpang Estate Report of reground checking HCV which conducted in August 2008 was only contained map of HCV potential. It was no described HCV identification analyses. Rambong Sialang Estate and Begerpang Estate Organization has performed HCV assessment collaborated with PT. SAIL consulting (PT. Siklus Alam Indonesia Lestari). Field assessment was conducted on May 2014 (Rambong Sialang Estate) and May 2014 (Bagerpang Estate) by 4 HCV assessor accredited by RSPO. Public consultation was done on 19 May 2014 in Bagerpang Estate (attanded 38 stakeholders) and on 26 May 2014 in Rambong Sialang Estate. It had intended to get aspiration and responses from stakeholders related identification result of HCV and its management plan. HCV assessment report has commented by accredited assessor form Forestry Faculty of IPB. There is no RTE species identified, however there are identified some protected species in appropriate to PP No.7/99 regarding Kucing kuwuk (Felis bengalensis), Raja udang (Alcedo meninting), Burung madu kelapa (Anthreptes malacensis), Burung madu belukar (Anthreptes singalensis), and Piton (Phyton morulus). HCV identified in Rambong Sialang Estate regarding: a. Areas critical to water catchments (HCV 4.1) regarding: River of Bata 1,2,3 (5.00 ha), Batu Pihit river (1.35 ha), Belidaan river (0.71 ha), Lembah river (3.55 ha), Panglong river (9.14 ha), Water pond in Pondok Bundar (3.07 ha), Water resource Dedet (2.60 ha) and Water resource for Nursery (0.23 ha) b. Areas critical to religious significance (HCV 6) regarding: Cemetery of Egaharap (0.18 ha), Cemetery of emplasment (0.78 ha) and Cemetery of Firdaus (0.02 ha). HCV identified in Bagerpang estate regarding: Divisi Batu Lokong a. Areas critical to water catchments (HCV 4.1) regarding: Batu Lokong rivers (4.94 ha), Water source of housing area : Batu Lokong 1 (0.10 ha), Batu Lokong 2 (0.08 ha), Naga Timbul 1 (0.56 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 202 of 224 Completion Date Status Estate 17/09/2014 Closed

203 No RSPO Indicator 14 RSPO Criterion 5.2 indicator minor 1 Non-conforming situation: AUDIT REPORT Details Corrective Action PIC Evidence of dissemination of protected species to worker of Begerpang Mill was no available. Objective evidence: Begerpang Mill Dissemination of HCV potensial protection and dissemination of protected species to estate worker has been done however dissemination to worker of Begerpang mill was not done. ha), Naga Timbul 2 (0.18 ha), Namu Rambe (0.34 ha), b. Areas critical to religious significance (HCV 6) regarding: Cemetery of Batu Lokong (0.29 ha), Naga Timbul 1 (0.15 ha), Naga Timbul 2 (0.28 ha), Namu Rambe 1 (0.09 ha), Namu Rambe 2 ( ha), Namu Rambe 3 (0.08 ha), Namu Rambe 4 (0.10 ha) Divisi Tambang Serdang a. Areas critical to water catchments (HCV 4.1): Serdang river (3.63 ha), Water source 1 (0.02 ha), Water source 2 (0.004 ha), Water source 3 (0.007 ha), Water source 4 (0.01 ha), River of BG 1 (0.98 ha), River of BG 2 (0.23 ha), River of KF 1 (0.39 ha), River of KF 2 (0.71 ha), River of KT 1 (1.14 ha), River of KT 2 (3.55 ha), Water source of BG (1.34 ha), Water source of KF (0.19), Water surce of KT (0.11 ha) b. Areas critical to religious significance (HCV 6) regarding: Cemetery 1(0.05 ha), Cemetery M2 (0.06), Cemetery BG (0.52 ha) Cemetery KF (0.36 ha). HCV assessment report has been distributed to each estate. Begerpang Mill Communication and dissemination HCV management and protected plan as well as protected species to mill worker has been conducted on 30 April Its contents regarding: ecosystem and natural resource protection, environment management and monitoring, PP No.7 tahun 1999 about flora and fauna protected list. PIC of sustainability has been assigned, e.g. Rambong Sialang Estate - Akbar Arlandes (Field Assistant), Begerpang Estate - Kaslan (Field Assistant), and Begerpang Mill - Sinar Mulia Munthe (Shift Coordinator). Completion Date Status Mill 17/09/2014 Closed 15 RSPO Criterion 5.2 indicator Non-conforming situation: Evidence of competent/training record of officers to monitor any plans and activities of HCV management Rambong Sialang Estate and Begerpang Estate Organization has conducted sustainability training including protected species and HCV management to PIC Sustainability of Estate 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 203 of 224

204 No RSPO Indicator minor 2 16 RSPO Criterion 5.3 indicator major 1 and monitoring program was not available. Objective evidence: Rambong Sialang Estate AUDIT REPORT Details Corrective Action PIC Organization has been appointed water pump operator as an officer to monitor any plans and activities of HCV management and monitoring program (Decision Letter of Estate Manager No. 015/RS/DIV/V12, date on 25 January 2012). These HCV Officers have no particular background for HCV management. Evidence of competent/training record of HCV Officer was not available. Begerpang Estate Organization has been appointed Head of assistance as an officer to monitor any plans and activities of HCV management and monitoring program (Decision Letter of Estate Manager No.209/BGE/DIV/XII/2013, date on 31 December 2013). These HCV Officers have no particular background for HCV management. Evidence of competent/training record of HCV Officer was not available. Non-conforming situation: Not all waste and pollutions sources were identified and documented. Objective evidence: Begerpang Mill Waste and pollutions sources from laboratory activities have not been identified and documented. each estate on April It was done to increase awarenes and skill of PIC each estate. PIC of sustainability has been assigned, e.g. Rambong Sialang Estate - Akbar Arlandes (Field Assistant), Begerpang Estate - Kaslan (Field Assistant), and Begerpang Mill - Sinar Mulia Munthe (Shift Coordinator). Begerpang Mill Waste and pollutions sources from laboratory activities have been identified and documented on 1 Juli 2014 by Mill Manager. Completion Date Status Mill 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 204 of 224

205 RSPO No Indicator 17 RSPO Criterion 5.3 indicator major 2 18 RSPO Criterion 5.4 indicator minor 2 AUDIT REPORT Details Corrective Action PIC Completion Date Status Non-conforming situation: Rambong Sialang Estate Estate 17/09/2014 Closed Several waste management and disposal has not been implemented to avoid or reduce pollution. Objective evidence: Rambong Sialang Estate There was no evidence that contaminated rags and gloves were disposed as hazardous waste. Report of hazardous waste management Q3 and Q4 was only sent to BLH Serdang Bedagai. There was no evidence that hazardous waste management report was sent to Ministry of Environment, BLH Propinsi Sumatera Utara and Pusat Pengeloaan Ekoregion Sumatera. Begerpang Estate There was no fence at the final landfill of non hazardous waste. Report of hazardous waste management Q3 and Q4 was only sent to BLH Deli Serdang. There was no evidence that hazardous waste management report was sent to Ministry of Environment, BLH Propinsi Sumatera Utara and Pusat Pengeloaan Ekoregion Sumatera. Non-conforming situation: There was no evidence that efficiency analysis of fossil fuels use. Objective evidence: Rambong Sialang Estate, Begerpang Estate Contaminated rags have been collected as hazardous waste. Quantity of contaminated rags has been recorded in balance of hazardous waste since April Contaminated rags have not been transported by authorised institution (CV. Amindy Barokah) due to permit of transporter was due on 11 June The transportation is in progress to extend the transportation recommendation from Ministry of Environment. Socialisation regarding hazardous waste handling has been conducted on 15 April 2014 to PIC of Sustainability and Manager. PIC Sustainability has communicated to all warehouse operators. Report of hazardous waste management Q3 and Q4 has been sent to Ministry of Environment, BLH Propinsi Sumatera Utara and Pusat Pengeloaan Ekoregion Sumatera. To prevent the document was not found at site during audit, receipt note was sent to site by . Begerpang Estate The final landfill of non hazardous waste has been completed with fence on 7 July Non hazardous waste management has been included in Environmental Management Program. Report of hazardous waste management Q3 and Q4 has been sent Ministry of Environment, BLH Propinsi Sumatera Utara and Pusat Pengeloaan Ekoregion Sumatera. To prevent the document was not found at site during audit, receipt note was sent to site by . Estate has conducted analysis of fossil fuels use by comparing actual and budget with using justification of monthly cost. The data could be shown. Estate 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 205 of 224

206 No RSPO Indicator AUDIT REPORT Details Corrective Action PIC There was no evidence that efficiency analysis of fossil fuels use. Completion Date Status 19 RSPO Criterion 5.6 indicator major 2 Non-conforming situation: There was no evidence that emission of all FFB transportation vehicles was measured. Rambong Sialang Estate Emission of vehicles has been measured, e.g. BK 9206 CI, BK 8995 CI, BK 8870 CG, BK 8742 CI, BK 8701 CI, BK 9001 CN. Estate 17/09/2014 Closed Objective evidence: Rambong Sialang Estate There are 31 FFB transportation vehicles. Measurement result of emission of FFB transportation vehicles was provided in Book of Periodical Vehicle Inspection (KIR). However not all KIR stated measurement result of emission, e.g. BK 9206 CI, BK 8995 CI, BK 8870 CG, BK 8742 CI, BK 8701 CI, BK 9001 CN. Begerpang Estate Measurement result of emission was provided in Book of Periodical Vehicle Inspection (KIR). However not all KIR stated measurement result of emission, e.g. all FFB transportation vehicles BK 9675 CK, BK 8802 CI, BK 9241 CS, B 8395 CP. There was no measurement result of heavy equipment emission, e.g. traktor TR04, traktor TR05, traktor TR06, traktor TR07. Begerpang Mill Measurement result of emission was provided in Book of Periodical Vehicle Inspection (KIR). However not all KIR stated measurement result of emission, e.g. BK 9023 CA. Begerpang Estate Emission of vehicles has been measured, e.g. all FFB transportation vehicles BK 9675 CK, BK 8802 CI, BK 9241 CS, B 8395 CP. Emission of heavy equipment has been measured, e.g. traktor TR04, traktor TR05, traktor TR06, traktor TR07. Rambong Sialang Estate Emission of vehicles has been measured, e.g. BK 9023 CA. Transport staff has been assigned to manage transportation and its documents. Environmental measurement budget has included measurement of tractor emission. 20 RSPO Non-conforming situation: Rambong Sialang Estate and Begerpang Estate Estate 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 206 of 224

207 No RSPO Indicator Criterion 6.1 indicator major 1 AUDIT REPORT Details Corrective Action PIC Documentation of impact analyses covering negative and positive impact of social from mill and estate was not described clearly scope of study as well as the impact of mill and estate activities. Objective evidence: Rambong Sialang Estate Presentation of Environmental Evaluation- Penyajian Evaluasi Lingkungan (PEL) of Rambong Sialang 1993, No # RC. 220/699/B/IV/94 was not described clearly scope of study as well as the impact of mill and estate activities. Organization has been conducting social mapping on 7-13 October 2013 covering 11 villages around estate however its result was only used to arrange CSR program Organization has conducted social impact analyses based on social mapping result on 7-8 October 2013 in Rambong Sialang and October 2013 in Bagerpang as well as social survey which performed by Public relation officer and Commnunity Development Officer in July 2014 covered village around estate. Social survey was conducted involving village head around estate. Some aspects were considered during assessment such as land identities, residence, economy, social cultural and public health. Negative impacts and positive were identified during assessment. It was noted that negative and positive issues from social assessment results for all estate and mill were similar. Negative impacts were identified such as: Transport of dusting and noising originating from FFB (public health), social emvy from inequitable donation for surrounding community (social cultural). Completion Date Status Begerpang Estate Presentation of Environmental Evaluation- Penyajian Evaluasi Lingkungan (PEL) of Bagerpang 1993, No # RC. 220/699/13/IV/94 and UKL-UPL Document of PT. Karimun 2008, No # 08146/BPDL/DS/2008 (At the present, Ex PT. Karimun be able as Timbang Serdang Division Bagerpang Estate) was not described clearly scope of study as well as the impact of mill and estate activities. Positive impacts were identified such as: Regional development and increased the village economy, ease of road access, ease of information acces, reducing jobless, improved the public education and job opportunities. SIA report has been distributed to each estate Organization has been conducting social mapping on October 2013 covering 11 villages around estate however its result was only used to arrange CSR program RSPO Criterion 6.1 Non-conforming situation: Social impact monitoring which done was available in social and Estate 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 207 of 224

208 No RSPO Indicator indicator minor 1 Record of social impact monitoring with local community participation was not available. Objective evidence: AUDIT REPORT Details Corrective Action PIC Rambong Sialang Estate and Begerpang Estate Though the report of environment management and monitoring plan implementation has been arranged based on Presentation of Environmental Evaluation-Penyajian Evaluasi Lingkungan (PEL) however evidence of local community participation was not available. environmental aspect evaluation. Social mapping, social impact monitoring has been documented in environmental and social impact since During audit only social mapping could be shown. Organisation was planed to conduct social impact monitoring by community participation. Also optimizing Community Development Officer performance to conduct routinely monitoring of social mapping data and environmental and social impact updating. Completion Date Status 22 RSPO Criterion 6.2 indicator major 1 and Criterion 6.3 indicator major 1 Non-conforming situation: There was no evidence of communication procedure (EMS-P05, Communication) arranged in collaboration with local communities and other affected or interested parties. Objective evidence: Rambong Sialang Estate Begerpang Estate Organization has performed meeting with related stakeholder around estate and mill on 27 July 2014 in Rambong Sialang Estate and on 29 July 2014 in Bagerpang Estate. It was to consult the communication and complaint mechanism. At the time communication and complaint mechanism has been agreed and was recorded in minutes meeting. Stakeholders were present among other community leader and Village head around estate. Estate 17/09/2014 Closed Stakeholder meeting has been conducted on 29 July 2013 attended by 38 stakeholder (Village head, head of district-camat, BPD, District police and community leader) however it was only discussed limited issue including CSR program, dissemination and transparency sustainable palm oil (environment management, mill processes, HCV and wildlife management, environment policy and OHS policy) Begerpang Estate Meeting with stakeholder has been conducted on 27 July 2013 attended by 88 stakeholder (Village head, head of district-camat, BPD, District police, teacher of school around estate and community leader), however it was only discussed limited issue including CSR program, dissemination and Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 208 of 224

209 No RSPO Indicator 23 RSPO Criterion 6.5 indicator minor 1 AUDIT REPORT Details Corrective Action PIC transparency sustainable palm oil (environment management, mill processes, HCV and wildlife management, environment policy and OHS policy). Non-conforming situation: There was not evidence that quality of water distributed to housing was measured regularly as required by Decision of Health Ministry No.416/MEN.KES/PER/IX/1990. Objective evidence: Rambong Sialang Estate Auditee information, last water quality testing conducted in 2012, however its result was not available. Groundwater permit presuppose that the water quality testing should be conducted every semester. Begerpang Estate There was one well and 7 water sources which distributed to housing area however result of water quality analyses was not available. Rambong Sialang Estate and Begerpang Estate Water quality testing of clean water which distributed to worker housing has been done collaborate with PT. Sucofindo. Based on testing result indicated that the clean water for worker has appropriate to quality standard as required in related regulation. Testing result certificate regarding: - Bagerpang Estate and Mill: No.MDN. B Bah Lias Estate & Mill: No. MDN. B MDN. B Organization has also established routinely clean water testing plan every semester. It has also increased to each mill and estate budget. Completion Date Status Estate 17/09/2014 Closed 24 RSPO Criterion 6.5 indicator minor 2 Non-conforming situation: Agreement with contractor was not specified that contractors abide by labour laws. Objective evidence: Rambong Sialang Estate Agreement with heavy equipment contractor was not specified that contractor abide by labour laws. For example: Agreement with PT.Probesco Disatama, No. # 001/PCS.CASE.LSIP/XII/2013 date on 11 December Organisation performed Addendum contract by mentioning provisions the contractor must comply with the labor laws. Work agreement has mentioned that the contractor have responsible comply to OHS regulation, specific to labour regulation. Organisation has distribute standard agreement form and establish memo so that new contract agreement must covered the responsibile of contractor to comply against related labour regulation. Estate 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 209 of 224

210 No RSPO Indicator 25 RSPO Certification System clause Begerpang Estate AUDIT REPORT Details Corrective Action PIC Agreement with contractor of compost transport was not specified that contractors abide by labour laws. For example: Agreement with UD. Sinar Dunia, No.# 26/EP/Cont/2013, date on 1 July 2013 Non-conforming situation: There was no evidence that partial certification requirements was complied Objective evidence: There was no evidence that uncertified management unit complied with partial certification requirements regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs), land conflicts, labour disputes and legal non-compliance. The organisation conducted the internal audit and reviewing regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3, land conflict, labour disputes and legal non-compliance to all management units which have not been certified to ensure that partial certification requirements were fulfilled in July October Based on the reviewing it was concluded that: There was no new planting since January 2010 so there was no replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3. There were no land conflict and labour disputes. There was no non-compliance with regulations. Site visit was conducted to: Arta Kencana Estate on 21 July 2013 Kencana Sari Estate on 23 July 2013 Pahu Makmur Estate on 10 September 2013 Isuy Makmur Estate on 10 September 2014 Riam Indah Estate on 22 October 2013 Sei Gemang Estate on 23 October 2013 Sei Lakitan on 25 October 2013 Sei Punjung on 24 October 2013 Gunung Bais Estate on 29 October 2013 Completion Date Status Mill and Estate 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 210 of 224

211 AUDIT REPORT No RSPO Indicator Details Corrective Action PIC Annual Surveillance Audit 1 (28 July 2016) 1 RSPO PC In Communication Procedure (EMS-P05), there is no Revise SOP of Communication by setting time limits (14 days) to Sustainability time frame to respond to request for information. response on requests for information, then disseminate it to the Department Indicator interested parties. Dissemination done on 15 September 2016 at (Major) Begerpang Estate and 16 September 2016 at Rambong Sialang Estate. 2 RSPO PC Indicator (Major) 3 RSPO PC Indicator (minor) 4 RSPO PC Indicator and - Compliance with the Regulation No. 98 / 2013, the overall unmet. Estate performance reporting for the period Semseter 1 and 2 in 2015 can not be demonstrated - Vickers Hoskins boiler that operated at Begerpang mill has not been approved by local authority Disnaker. - Valid permits for Lifting equipment at Sei Merah Estate (tractor and excavator) were not available Rambung Sialang Estate - It was found oil layer from car washing in last compartement of sand trap and oil trap which flow in to the environment - Oiltrap in outlet of oil warehouse was nt standard and potentially polluted to waterway/stream and environment Bagerpang POM It was found several water faucet leaky in water treatment plant and laboratory Begerpang Estate During field observation, it was found that not all spraying worker have complete the necessary - Perform benchmarking to other units on the reporting mechanism and then disseminate the results to the personnel in the Begerpang unit. - Communicate with relevant agencies to determine the standard format and frequency of reporting so that it can be used as guidelines and put in a one of the working plan in related units. - Perform benchmarking on the cost of licensing then budgeted it in the next year based on the results of benchmarking. - Application for license / inspection conduct at least 3 months prior to expiry. Rambung Sialang Estate: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 211 of 224 Carry out 3D visualisation on the provisions of SOP so it can be easily understood by the related PIC. Conducting dissemination and training to the related PIC visually and also in writing. Begerpang POM: Checking the stock on a regular basis for certain parts that have the potential significant impacts on environment and has the potential for energy loss. Conduct training and understanding to the PIC regarding emergency action that should be done in case of the same possible impact Conduct special training to all pesticide operators and issues special permits for pesticide operators who have qualified and meet the requirements. Ensure that employees who did not have a Special Permit shall Sustainability Department Completion Date Status 27/09/2016 Closed 27/09/2016 Closed Estate and Mill 27/09/2016 Closed Estate 23/09/2016 Closed

212 No RSPO Indicator (minor) training. 5 RSPO PC Indicator (minor) 6 RSPO PC Indicator (Major) 7 RSPO PC Indicator (Major) Reoccurrence of Major NCR Rambong Sialang Estate: AUDIT REPORT Details Corrective Action PIC Spraying tools are self made, it was found potential to leakage and there are electrical wire opened. Mask used by workers with high risk hazardous operation such as operator at pesticide warehouse at all estates and mill, were not appropriate for the masks were only dust mask instead of chemical mask. Safe Working Practices (WI SMK3) Training has not been conducted to several process at Rambong Sialang and Sei Merah estate and Begerpang mill Social Impact Assessment has not involved consultation with affected parties at Rambung Sialang Estate, Begerpang Estate Special Audit (30 March 2017) 1 RSPO PC Indicator (Major) Mandor understood regarding how to handle pesticide however MSDS for pesticides was not carried out to the field during spraying activity at Rambong Sialang Estate division VII block RSPO PC Indicator (Major) and (Major) Rambong Sialang Estate 1. Area of pesticides solution was not isolated. There was a hole to sedimentation and absorption pit. 2. Record of reuse pesticide container for next spraying activity was not evident. not be employed as pesticide operator. - Dispose of the sprayer which is not in accordance with defined standards and provide additional standard sprayer. - Conduct special training to all pesticide operators and issues special permits for pesticide operators who have qualified and meet the requirements. - Ensure that employees who did not have a Special Permit shall not be employed as pesticide operator. - Conduct training on a regular basis, at a minimum, per semester. - Apply the mask purchase parameters based on the potential risks of each unit process. - Conduct training to increase competency of SIA PIC. - Perform benchmarking and made standards for assessment and reporting. - Conduct regular monitoring and review Download RSPO P&C 2013 Generic Checklist and translate to Indonesian. Share RSPO P&C 2013 Generic Checklist to Operational (Estates and Mills) for reference Rambong Sialang and Begerpang Estate 1 and 2. Make 3D visualisation for secondary containment, isolation pit and trap as required by SOP to prevent misunderstanding. 3. Make memo to confirm SOP, reuse pesticide containers is more focused on the same activities and pesticides containers is cleaned before stored in the temporary storage of hazardous Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 212 of 224 Completion Date Status Estate 27/09/2016 Closed Estate 23/09/2016 Closed Sustainability Department Sustainability Department 27/09/2016 Closed 30/05/2017 Closed Safety Officer 15/06/2017 Closed

213 No RSPO Indicator AUDIT REPORT Details Corrective Action PIC 3. It was found that pesticide containers were reused for oil at workshop. waste. Communicate memo to Checklist to Operational (Estates and Mills). Completion Date Status Begerpang Estate 1. Area of pesticides solution was not isolated. There was a hole to sedimentation pit. 2. There was no absorption pit to collect water from outer pesticide containers cleaning. 4. Create form to control 3R of waste and create hazardous waste loogbok in excel and request to IT for input the forms to Intranetbased SMIS system. 5. Refreshment training to Sustainability and EHS PIC 3. It was found at temporary storage of hazardous waste that pesticide container Lindomin and bottle Metsulindo was not rinsed. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 213 of 224

214 Mill Supply Chain Certification System AUDIT REPORT SCCS No Requirements Intial Audit 1 RSPO SCCS Clause D.6.1 (Major) 1 st Anuual Surveillance Audit None Details Corrective Action PIC There was no evidence that training was delivered to several employees. There was no evidence that training was delivered to Manager, Krani Timbang. Begerpang Mill Training has been conducted on 15 April Attendance list was sighted. PIC of sustainability has been assigned, e.g. Rambong Sialang Estate - Akbar Arlandes (Field Assistant), Begerpang Estate - Kaslan (Field Assistant), and Begerpang Mill - Sinar Mulia Munthe (Shift Coordinator). Completion Date Status Mill 17/09/2014 Closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 214 of 224

215 AUDIT REPORT Appendix C Nonconformities and Opportunity for Improvement Summary Organisation Name: PT. PP. LSIP Tbk Begerpang Mill Location: Asahan Regency, North Sumatera Province, Indonesia Date: 01/08/2017 Audit team leader: R. Yosi Zainal M. Activity/Report ID: WI License/Certificate No.: FMS40033 Organisation s acknowledgement of receipt of NCR Employee Name: Mugiyanto Date NCR Accepted: 03/08/2017 RSPO Principe and Criteria, Indonesian National Interpretation Section 1 Section 2 Section 3 Section 4 NCR Nr. Standard(s) & clause(s) Classification Details of non-conforming situation and Objective Evidence : SAI Verification (how and when) Correction : (immediate fix) Root Cause and Corrective Action : (action to prevent recurrence) SAI Global Response Review: SAI Global Verification of Corrective Action for Effectiveness: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 215 of 224

216 AUDIT REPORT Section 1 Section 2 Section 3 Section 4 NCR Nr. Standard(s) & clause(s) Classification Details of non-conforming situation and Objective Evidence : SAI Verification (how and when) Correction : (immediate fix) Root Cause and Corrective Action : (action to prevent recurrence) SAI Global Response Review: SAI Global Verification of Corrective Action for Effectiveness: RSPO PC INANI 2016 Indicator (Recurrence form ASA1 and Special Audit) Major Non-conforming situation: Not enough evidence that pesticides are only handled, used or applied by persons who have completed the necessary training. Objective evidence: Sei Merah Estate It was found that not all spraying worker have complete the necessary training, on behalf Katik, Rukiatik, and Runtah. Reoccurrence of Major NCR Due Date: 3/10/2017 SAI Follow up Method: Evidence submitted to Team Leader via yosi.zainal@ saiglobal.co m Spraying workers (Trunk Injection) on behalf Katik, Rukiatik, and Runtah were already trained on 14 August Root Cause: Attack of bag worm occurs suddenly after in the span more than 10 years from the previous attack occurred in Sei Merah Estate. Due to the emergency condition the trunk injection operator was accompanied by expert from Crop Protection BLRS (Research Station). But due to emergency condition, this action was not recorded as part of training and the related PIC did not know that the implementation should be recorded. Response: Acceptable (please see section 4 for details) Reviewer: R. Yosi Zainal M. Date: 22/09/2017 Verification of Effectiveness: Training of spraying workers (Trunk Injection) has been conducted. Other than that, training was given for BLRS experts regarding the recording of each training/dissemination activity in palm oil plantation and Sustainability Department will monitor every semiannually. The company has conducted corrective action effectively. NCR closed Name: R. Yosi Zainal M. Date: 22/09/2017 Corrective Action: Training of the BLRS experts related the recording of each training/dissemination activity in palm oil plantation date on 14 August Sustainability Department will monitor every semi-annually. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 216 of 224

217 AUDIT REPORT Section 1 Section 2 Section 3 Section 4 NCR Nr. Standard(s) & clause(s) Classification Details of non-conforming situation and Objective Evidence : SAI Verification (how and when) Correction : (immediate fix) Root Cause and Corrective Action : (action to prevent recurrence) SAI Global Response Review: SAI Global Verification of Corrective Action for Effectiveness: RSPO PC INANI 2016 Indicator Major There are observed several opened hole caused by Ganoderma excavations (±1.5 meters depth) around the estate of Begerpang (Div-5), without any barricades or prevention of falls/drown, as provision control within the risk assessment that every Ganoderma holes/trenches shall be barricade to prevent risk of falls/drown. Due Date: 3/10/2017 SAI Follow up Method: Evidence submitted to Team Leader via yosi.zainal@ saiglobal.co m Construct barrier (Fences) and warning signage to prevent accident and mitigate the risk of falling/drown, date on 28 September Root Cause: This has been identified by Safety Officer in HIRAC Document. Nevertheless, lack of awareness from P&D Supervisor and P&D Coordinator related risk control of the Ganoderma excavations hazard. Corrective Action: Estate manager issued an instruction letter (No. 150/BGE/DIV/VIII/2017) to all Ganoderma excavations P&D Supervisors and coordinator, to construct signage for Ganoderma holes excavated. The letter has been disseminated on 28 September Safety Officer will monitor the implementation every semiannually. Response: Acceptable (please see section 4 for details) Reviewer: R. Yosi Zainal M. Date: 28/09/2017 Verification of Effectiveness: The company has made barrier (Fences) and warning signage in Ganoderma holes area. Estate Manager released internal letter that all Ganoderma excavations P&D Supervisors and coordinator, to construct signage for Ganoderma holes excavated. And Safety Officer will monitor the implementation. NCR closed Name: R. Yosi Zainal M. Date: 28/09/2017 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 217 of 224

218 Mill Supply Chain Certification System None AUDIT REPORT Opportunities for improvement RSPO None Opportunities for improvement Mill Supply Chain Requirements None Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 218 of 224

219 Appendix D Stakeholder s issues and comment Date and Time : 01 & 02 August 2017 Location : PT PP LSIP Tbk Begerpang Mill and its supply bases Interviewee : Workers, labour union, gender committee, and external stakeholder (Village Representative, Chief of Village, etc.) Information gathered during consultation Date Stakeholder Observation Feedback / Comment 1 and 2 August August 2017 Union Representatives and Gender Committee Employees Representative (sprayer workers, harvester, laboratory workers, security, operator and - Union representatives have been interviewed during the audit, the focus of the interview devoted related payment of wages, discrimination, complaints, employees and communication with the company. - Organization has well relationship with union workers and gender committee (komisi perempuan). - Union members are still MRP and DRP workers, because the membership is voluntary. - The union invited organisation s management whenever there was issued to discuss. - Wage and overtime calculation has appropriately provided in line with related regulation. - Generally, no conflict found so far and the company has taken actions gradually to response issues addressed in the meeting. - Estate has established gender committee as facilitated by company which comprises members from several female workers in Mill and Estate. - Gender committee has planned activity program in Y2016 and Y2017 such as gender policy awareness, health community female group, socialisation of medicinal plants/apotik hidup, and gymnastics for employee s workers, etc. - Regular pregnancy test was also have been done monthly (January-December 2016, January-June 2017) by each estate to ensure no pregnant/breastfeeding workers endangered with agrochemical works. - Based on result from the interview to committee chief, for no indication of sexual harassment issues being reported since the committee formed. - Menstruation leave for women worker was given. - Day-care was available for employee s children. - Clean water provided and distributed from mill. - Overall medical expenses covered by Auditor comments : All observation have been reviewed with several supporting documents. There was no issue during consultation meeting Auditor comments : All observation have been reviewed with several supporting documents. There was no issue during Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 219 of 224

220 AUDIT REPORT Date Stakeholder Observation Feedback / Comment 1-3 August August 2017 mechanic) Community leaders (Begerpang Village, Bangun Rata Village, Bangun Purba Village, Naga Timbul Village, Sei Rampah Village and District, Panglong Village, Rambong Sialang Tengah Village, Sukasari Village, Pejapahan Village, Payah Itik Village, Ujung Rembe Village). Serbundo NGO (Serikat Buruh Perkebunan Indonesia) BPJS. - There was no complaint and grievance. - Given socialization HCV area protection and a ban on hunting, capture, and maintain protected animals - All workers have been equipped (free of charge) with PPE, working equipment s, housing, electricity, clean water, medical facilities, etc. - Wages including overtime hours, premium and bonus were also payed according to current regulation. - Organization has well relationship with community around estate. - KTU / (Public Relation Officer) was assigned to perform public consultation with communities. No land conflict identified where the land was previously granted by government (not taken over from local communities). - Land legality was cleared, there was no land dispute. - The company has been informed to the local community about Conservation Program. Organization has well protected to the conservation area. - As told by the leaders, there was no air or water pollution caused by the company due to continuous effort in managing the environmental risks. The company has also employed local peoples (in majority) both for Mill and Estate. Issues: - Although the company has implemented CSR in form of road improvement program, however assistance in materials, funding and training was not longer given for 3 years. - Please can be given signs related security drain which adjoining with Elementary School of Payah Itik All of the employee have been included Health insurance, however some employee have not received Health BPJS card. - The company has made improvements in terms of giving THR to casual workers since consultation meeting LSIP comments : - The site has had the CSR programme and also evaluated annually. CSR programme was adjusted with company s finance condition and community necessity in accordance with SIA. Training programmes included the Rumah Pintar Activity, such as handicraft from stem of palm oil - The company has identified the security drains that have high risk for around community, includes Elementary School of Payah Itik Risk controlling will through sign Auditor comments : All observation have been reviewed with several supporting documents. Issue during consultation meeting and has been responded and closed during follow up audit. Auditor comments : All observation have been reviewed with several supporting documents. There was no issue during consultation meeting Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 220 of 224

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