PT. SOCFIN INDONESIA, Seumanyam Mill and Its Supply Bases

Transcription

1 Audit Report 2 nd Annual Surveillance Audit for PT. SOCFIN INDONESIA, Seumanyam Mill and Its Supply Bases FMS40031 RSPO Membership number: RSPO Member Name: Socfin Group (PT Socfindo and Socfinco SA) Audited Address: Desa Simpang Deli Kilang, Kecamatan Darul Makmur, Kabupaten Nagan Raya, Aceh Province, Indonesia Date of audit: 19/09/ /09/2017 COMMERCIAL- IN CONFIDENCE The contents of this report must not be disclosed to a third party without the agreement of the SAI Global Client DOC ID: 7913 / Issue Date: Aug 2017 SAI Global Limited Copyright ABN Page 1 of 226

2 Table of contents Page Executive Overview 4 Abbreviations Used SCOPE OF THE ASSESSMENT 1.1 Introduction Audit Objective Scope of Certification Palm Oil Mill Oil Palm Estate Location of Mill and Estates Description of Supply Base Date of Plantings Area of Plantation Approximate Tonnages Offered for Certification (CPO and PK) Other Certificates Held Organisational Information/Contact Person Time Bound Plan for Other Management Units Partial Certification Requirements Date of Issue of Certificate and Date of Previous Assessment AUDIT PROCESS 2.1 Certification Body Audit Methodology Qualification of the Lead Auditor and Audit Team Members Stakeholder Consultation Date of Next Surveillance Visit AUDIT FINDINGS 3.1 Action taken on previous audit issues Claim and use of certification mark and or logo Description of audit findings RSPO Principle and Criteria Mill Supply Chain Requirements Supply Chain Certification Standard Supply Chain Certification System Recommendation Environmental and social risk for this scope of certification for planning 191 of the surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of 192 Assessment Findings Page List of Tables 1 Mill and Estates GPS Locations 9 2 FFB Production of the supply base 9 3 Estate Age Profiles of Planted Palms in Land use description of Estate in Estates and Area Planted FFB Production Trend Mill Total CPO and PK Production of September 2016 August and Estimate Production of September 2017 August Mill Production of CPO and PK derived from Estates FFB in September 15 Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 2 of 226

3 2016 August Estimated Mill Production of CPO and PK from Estates FFB in 16 September 2017 August Certificates Held by Mill and Estates RSPO Certification Time Bound Plan List of internal and external stakeholder CSPO delivery and sold Period September 2016 Until August List of Figures Page 1 Map of Mill and Estates Location 10 List of Appendices Page A Audit Record 193 B Previous nonconformities, corrective actions and status 198 C Nonconformities, Corrective Actions and Observations Summary 204 D Stakeholder s issues and comment 213 E Definition of, and action required with respect to audit findings 216 Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 3 of 226

4 Executive Overview SAI Global has conducted the second (2 nd ) annual surveillance audit on 19/09/ /09/2017 for Certified Units a. Mill : Seumanyam Mill b. Supply bases : Seumanyam Estate c. Model of Supply Chain Certification (IP/MB/SG) : IP The audit concluded with issuance of eleven (11) major non-conformances and six (6) minor nonconformances. Follow up audit to verify the correction and corrective action plan was conducted on 11 November 2017 (on site) and the Major NCR was closed out. The estimate figures of production offered based on this audit are: Estimated tonnage of certified CPO produced Estimated tonnage of certified PK produced 27, MT 4, MT The recommendation from this audit is approval as a producer of RSPO Certified Sustainable Palm Oil and Palm Kernel, Model: IP. 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. Summary of net GHG emissions Emissions per Product tco2e/tproduct CPO 0.87 PK 0.87 Land use ha OP planted area OP planted on peat 0 Conservation (forested) 0 Conservation (non-forested) 5.21 Total Production t/yr FFB processed CPO Produced Extraction % OER KER 3.99 Summary of field emissions and sinks Own Crop Group 3rd Party Total tco2 e tco2e/t FFB tco2 e tco2e /tffb tco2 e tco2e/t FFB tco2 e Emissions Land Conversion *CO2 Emissions from Fertilizer tco2e/ tffb Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 4 of 226

5 **N2O Emissions Fuel Consumption Peat Oxidation Sinks Crop Sequestration Conservation Sequestration Total Summary of mill emissions and credits tco2e tco2e/tffb Emissions POME Fuel Consumption Grid Electricity Utilization Credits Export of Grid Electricity 0 0 Sales of PKS 0 0 Sales of EFB 0 0 Total Palm Oil Mill Effluent (POME) Treatment: Divert to compost 0% Divert to anaerobic digestion 100% POME Diverted to Anaerobic Digestion: Divert to anaerobic pond 100% Divert to methane capture (flaring) 0% Divert to methane capture (electricity generation) 0% Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 5 of 226

6 Abbreviations Used AK3U BLH BOD BPJS BPN COD CPO CSR DO EFB FFB FR EHS GPS HCV HGU GAP GHG IPM ISCC ISO ISPO IUP Jamsostek KER KTU LB3 LD50 LOTO LTA MCU MT NCR NGO OER OHS P2K3 PEL PIC PLN POM POME PP PPE PK PKB RABQSA RKL RPL RSPO Safety Office (Ahli Kesehatan dan Keselamatan Kerja Umum) Environmental Agency (Badan Lingkungan Hidup) Biological Oxygen Demand Badan Penyelenggara Jaminan Sosial National Land Agency (Badan Pertanahan Nasional) Chemical Oxygen Demand Crude Palm Oil Corporate Social Responsibility Delivery Order Empty fruit bunch Fresh Fruit Bunch Frequency Rate Environmental Health and Safety Global Positioning System High Conservation Value Land Use Title (Hak Guna Usaha) Good Agriculture Practices Green House Gases Integrated Pest Management International Sustainability and Carbon Certification International Organisation for Standardisation Indonesia on Sustainable Palm Oil Plantation Permit (Izin Usaha Perkebunan) Assurance (Jaminan Sosial Tenaga Kerja) Kernel Extraction Rate Head of Administration (Kepala Tata Usaha) Hazardous Waste (Limbah Bahan Berbahaya dan Beracun) Lethal Dosage Lock Out Tag Out Lost Time Accident Medical Check Up Metric Ton Non-Conformance Report Non Government Organisation Oil Extraction Rate Occupational Health and Safety Safety Committee Environmental Evaluation Manual (Pedoman Evaluasi Lingkungan) Person in Charge National Electricity Company Palm Oil Mill Palm Oil Mill Effluent Government Regulation (Peraturan Pemerintah) Personal Protective Equipment Palm Kernel Joint Working Agreement (Perjanjian Kerja Bersama) Quality Society of Australia Environmental Management Plan (Rencana Pengelolaan Lingkungan) Environmental Monitoring Plan (Rencana Pemantauan Lingkungan) Roundtable on Sustainable Palm Oil Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 6 of 226

7 RTE SA SCCS SIA SMK3 SOP SPSI SR SY UU TPS LB3 WTP WWTP YTD Rare Threated Endangered Social Accountability Supply Chain Certification System Social Impact Assessment Occupational Health and Safety Management System (Sistem Manajemen Kesehatan dan Keselamatan Kerja) Standard Operating Procedure Indonesian Worker Union (Serikat Pekerja Seluruh Indonesia) Severity Rate Seumanyam Act (Undang-undang) Temporary storage of hazardous waste Water Treatment Plant Waste Water Treatment Plant Year to Date Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 7 of 226

8 1.0 SCOPE OF THE ASSESSMENT 1.1 Introduction SAI Global conducted an audit of PT Socfin Indonesia Seumanyam Mill and Its supply base on 19/09/ /09/2017. Follow up audit was conducted on 11 November 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. 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. 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 (for example, if segregation is used) 1.3 Scope of certification Palm Oil Mill Seumanyam Mill PT. Socfin Indonesia a) Location : Desa Simpang Deli Kilang, Kecamatan Darul Makmur, Nagan Raya Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 8 of 226

9 23662, Aceh, Indonesia b) GPS Location : East North c) Mill capacity : 23 MT FFB/hour Oil Palm Estate Seumanyam Estate PT. Socfin Indonesia a) Location : Desa Simpang Deli Kilang, Kecamatan Darul Makmur, Nagan Raya 23662, Aceh, Indonesia b) GPS Location : East North Location of mill and estates PT. Socfin Indonesia, Seumanyam mill and estate are located in Aceh Province. The geographical coordinate of the mill and estates are shown on Table 1. Table 1: Mill and Estates GPS Locations MILL AND ESTATE EASTING RTHING Seumanyam Mill E N Seumanyam Estate E N 1.5 Description of supply base The FFB source is one (1) organisation owned by PT. Socfin Indonesia and no FFB from the third party. The hectarage and FFB production of the plantation are shown on Table 2. Table 2: Estimated FFB Production of the supply base ESTATE PRODUCTION AREA (HA) ESTIMATED FFB PRODUCTION SEPTEMBER 2017 AUGUST 2018 (TON/YEAR) Seumanyam 4, , Total 4, , Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 9 of 226

10 Figure 1 Map of Mill and Estates Location Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 10 of 226

11 Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 11 of 226

12 1.6 Date of plantings Table 3: Age Profiles of Planted Palms in 2017 Estate Planted Area Year (Ha) % of Planted Area Mature Immature Mature Immature * * * * * * * * * * * Total 4, Source: Socfin Indonesia, September 2017 *) replanting 1.7 Area of plantation The areas details for organisation owned estates are shown on Table 4. Review of estate boundary maps has been done. There is no new open area since November Planting year above 2005 was replanting. The submitted estate boundary maps indicated that there are natural vegetated land has been cleared however the cleared area are within the enclave which is rubber plantation and it is open by the community who encroached to the company concession which the company do not have control. Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 12 of 226

13 Table 4: Land use description of Estates in 2017 AREA HECTARES Mature area 4, Immature area Total area planted 4, Emplacement and Mill PLN Transmission 0.32 Nursery 4.30 Effluent 3.93 Bamboo 2.35 HCV* Total area non planted Total leased area 4, Source: Socfin Indonesia, September 2017 Note: *) HCV Area (60.18 Ha) include in planted area of 4, Ha Table 5: Estates and Area Planted in 2017 ESTATE MATURE (HA) IMMATURE (HA) Seumanyam Estate 4, Total 4, Source: Socfin Indonesia, September Approximate tonnages offered for certification (CPO and PK) Approximate tonnages offered for certification is estimated based on the organisation last 6 (six) years actual FFB production of Seumanyam Estate as well as last year CPO and PK, OER and KER of Seumanyam Mill. The OER and KER of each supply bases were estimated based on laboratory analysis. Table 6: Estate FFB Production Trend YEAR Actual FFB Production (MT) , , Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 13 of 226

14 , , , , Table 7: Mill Total CPO and PK Production of September 2016 August 2017 and Estimate Production of September 2017 August 2018 Supply Base FFB Processed (MT) CPO Production (MT) OER (%) Actual Production September 2016 August 2017 PK Production (MT) KER (%) Seumanyam Estate 109, , , Sub Total Own Estate* 109, , , The third party Total actual production 109, , , Estimated Production September 2017 August 2018 Seumanyam Estate 116, , , Sub Total Own Estate* 116, , , The third party Total estimated production 116, , , Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 14 of 226

15 Table 8: Mill Production of CPO and PK derived from Estates FFB in September 2016 August 2017 Total FFB (Ton) CPO Produced (Ton) PK Produced (Ton) Month Own Estate Other Supply Bases Own Estate Other Supply Bases Own Estate Other Supply Bases 2016 September 7, n/a 1, n/a n/a October 7, n/a 1, n/a n/a November 7, n/a 1, n/a n/a December 9, n/a 2, n/a n/a 2017 January 9, n/a 2, n/a n/a February 8, n/a 2, n/a n/a March 10, n/a 2, n/a n/a April 10, n/a 2, n/a n/a May 9, n/a 2, n/a n/a June 8, n/a 1, n/a n/a July 10, n/a 2, n/a n/a August 9, n/a 2, n/a n/a Total 109, , , Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 15 of 226

16 Table 9: Estimated Mill Production of CPO and PK from Estates FFB in September 2017 August 2018 Month Own Estate Total FFB (Ton) CPO Produced (Ton) PK Produced (Ton) Other Supply Bases Own Estate Other Supply Bases Own Estate Other Supply Bases 2017 September 9, n/a 2, n/a n/a October 9, n/a 2, n/a n/a November 9, n/a 2, n/a n/a December 10, n/a 2, n/a n/a 2018 January 7, n/a 1, n/a n/a February 8, n/a 1, n/a n/a March 10, n/a 2, n/a n/a April 10, n/a 2, n/a n/a May 10, n/a 2, n/a n/a June 10, n/a 2, n/a n/a July 10, n/a 2, n/a n/a August 10, n/a 2, n/a n/a Total 116, , , Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 16 of 226

17 Based on the above figures, the estimated of certified CPO and PK offered in September 2017 August 2018 for certification are: Estimated tonnage of certified CPO produced 27, Estimated tonnage of certified PK produced 4, Other certificates held Table 10: Certificates Held by Mill and Estates MILL/ESTATE Seumanyam Mill and Estate Seumanyam Mill and Estate Seumanyam Mill and Estate OTHER CERTIFICATION HELD SMK3 (SMK SI.SK-359) by PT Surveyor Indonesia, valid through 15 May 2019 ISPO (FMS40028) by PT SAI Global Indonesia, valid through 5 December 2021 ISCC: No. EU-ISCC-Cert-DE Valid through 23 October Organizational information/contact person PT. Socfin Indonesia Jl. K.L. Yos Sudarso No. 106, Medan Phone : (+62-61) Fax : (+62-61) Contact person : Mr. Hasan Bisri Head of Sustainability Sub Department Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 17 of 226

18 hasan@socfindo.co.id 1.11 Time bound plan for other management units PT Socfin Indonesia is committed to RSPO certification of all its Management Units located in North Sumatera and Aceh. Time bound plan has been developed to achieve the RSPO certification for all its Management Units by The time bound plan is realistic and challenging. The time bound plan was revised on 5 January 2017 to amend time bound plan of non-hgu area. Progress of HGU certificate obtaining is among others: Block 52B and 69B Seunagan Estate: HGU was applied in 2014 and has been approved by Bupati Nagan Raya. Currently HGU is still in process in BPN Aceh Province. Division V Lae Butar Estate: Hand over HGU from PT JBU to PT Socfin Indonesia has been approved by BPN RI through letter #568/14.3/I/2017 on 30 January Currently HGU is still in process in BPN Aceh Province. SAI Global accepted the reason of the revision. The plan is detailed on Table 11. Table 11: RSPO Certification Time Bound Plan Mill Name Mill Address Estate Name Estate Address Tanah Gambus Bangun Bandar Negeri Lama Kecamatan Lima Puluh, Kabupaten Batu Bara KecamatanDolok Masihul, Kabupaten Serdang Bedagai Kecamatan Bilah Hilir, Stasiun Rantau Parapat, Kabupaten Labuhan Batu Tanah Gambus Bangun Bandar Negeri Lama Kecamatan Lima Puluh, Kabupaten Batu Bara KecamatanDolok Masihul, Kabupaten Serdang Bedagai Kecamatan Bilah Hilir, Stasiun Rantau Parapat, Kabupaten Labuhan Batu Time Bound for Progress Certification 2011 Certified on November 4, 2011 by SAI Global Certified in November 2016 by TUV Reinland 2011 Certified on November 11, 2011 by SAI Global Certified in November 2016 by TUV Reinland 2014 Certified on March 10, 2016 by SAI Global Mata Pao Kecamatan Teluk Mengkudu, Mata Pao Kecamatan Teluk Mengkudu, 2014 Certified on April 25, 2014 Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 18 of 226

19 Sungai Liput Aek Loba Seunagan Seumanyam Lae Butar Kabupaten Serdang Bedagai Kabupaten Serdang Bedagai by TUV Nord Certified on April 25, 2016 by SAI Global Kecamatan Kejuruan Muda, Kabupaten Aceh Tamiang Kecamatan Aek Kuasan, Kabupaten Asahan Desa Purwodadi, Kecamatan Kuala Pesisir, Kabupaten Nagan Raya Desa Simpang Deli Kilang, Kecamatan Darul Makmur, Kabupaten Nagan Raya Desa Rimo,Kecamatan Gunung Meriah, Kabupaten Aceh Singkil Sungai Liput Aek Loba Seunagan Block 52B and 69B Seunagan Seumanyam Lae Butar Kecamatan Kejuruan Muda, Kabupaten Aceh Tamiang Kecamatan Aek Kuasan, Kabupaten Asahan Desa Purwodadi, Kecamatan Kuala Pesisir, Kabupaten Nagan Raya Desa Simpang Deli Kilang, Kecamatan Darul Makmur, Kabupaten Nagan Raya Desa Rimo,Kecamatan Gunung Meriah, Kabupaten Aceh Singkil Division V Lae Butar Certified on May 5, 2014 by TUV Nord Certified on May 5, 2016 by SAI Global 2014 Certified on April 14, 2014 by TUV Nord Certified on April 15, 2016 by SAI Global 2014 Certified on November by SAI Global Certified on October 17, 2015 by SAI Global 2014 Certified on November 30, 2011 by SAI Global Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 19 of 226

20 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 Notariat Certificate #5 dated 3 May 2002 by Notary Public Ny. R. Arie Soetarjo SH. The management structure of the group is not complex. 90% of the shares PT Socfin Indonesia owned by Socfinco SA and the rest owned by Government of Indonesia. 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 registered RSPO member is the holding company or one of its subsidiaries; Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 20 of 226

21 CERTIFICATION SYSTEM/ 1. Does the parent organisation or one 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) Notariat Certificate #5 dated 3 May 2002 by Notary Public Ny. R. Arie Soetarjo SH. SUMMARY OF FINDINGS 90% of the shares PT Socfin Indonesia owned by Socfinco SA. RSPO Member Name: Socfin Group (PT Socfindo and Socfinco SA) RSPO Membership number: YES 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 timebound 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? Time bound RSPO Revision 3, January 2017 PT Socfin Indonesia is committed to RSPO certification of all its Management Units located in North Sumatera and Aceh. Time bound plan has been developed to achieve the RSPO certification for all its Management Units by The time bound plan is realistic and challenging. The time bound plan was revised on 5 January 2017 to amend time bound plan of non-hgu area. Progress of HGU certificate obtaining is among others: Block 52B and 69B Seunagan Estate: HGU was applied in 2014 and has been approved by Bupati Nagan Raya. Currently HGU is still in process in BPN Aceh Province. Division V Lae Butar Estate: Hand over HGU from PT JBU to PT Socfin Indonesia has been approved by BPN RI through letter YES Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 21 of 226

22 CERTIFICATION SYSTEM/ 5. How is the progress towards this plan? SUMMARY OF FINDINGS #568/14.3/I/2017 on 30 January Currently HGU is still in process in BPN Aceh Province. SAI Global accepted the reason of the revision. The plan is detailed on Table 11. No comments received from stakeholders following the public consultation process relevant to the time-bound plan. 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 Time bound RSPO Revision 3, January 2017 PT Socfin Indonesia is committed to RSPO certification of all its Management Units located in North Sumatera and Aceh. Time bound plan has been developed to achieve the RSPO certification for all its Management Units by The time bound plan is realistic and challenging. The time bound plan was revised on 5 January 2017 to amend time bound plan of non-hgu area. Progress of HGU certificate obtaining is among others: Block 52B and 69B Seunagan Estate: HGU was applied in 2014 and has been approved by Bupati Nagan Raya. Currently HGU is still in process in BPN Aceh Province. Division V Lae Butar Estate: Hand over HGU from PT JBU to PT Socfin Indonesia has been approved by BPN RI through letter #568/14.3/I/2017 on 30 January Currently HGU is still in process in BPN Aceh YES Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 22 of 226

23 CERTIFICATION SYSTEM/ the above newly acquired subsidiary? SUMMARY OF FINDINGS Province. SAI Global accepted the reason of the revision. The plan is detailed on Table 11. 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 2. Is there systematic failure to precede implementation of the plan? Raise major non-compliance if found Time bound RSPO Revision 3, January Requirements for uncertified management units and/or holdings SAI Global accepted the reason of the revision. YES 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 RSPO Internal Audit on August 2017 in Seunagan Estate RSPO Internal Audit on August 2016 in Lae Butar Estate Partial requirement audit, January 2017 PT Socfin Indonesia own 9 mills and 9 estates as a supply base regarding Tanah Gambus, Bangun Bandar, Negeri Lama, Aek Loba, Mata Pao, Sungai Liput, Seunagan, Seumayam and Lae Butar. All management units have RSPO certified. YES Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 23 of 226

24 CERTIFICATION SYSTEM/ 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. iii. iv. Are there new planting since January 1 st 2010 which was not comply with RSPO NPP? 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 SUMMARY OF FINDINGS In Seunagan Estate there were two blocks area still in progress land identity (HGU) regarding Block 52 B (30.63 ha) and Block 69B (21.93 ha). In the beginning, both of block in Seunagan Estate are an oil palm of independent smallholder which bought in 2004 (Block 52B) and in 2006 (Block 69B). Both of block has been replanted in 2005 (Block 52 B) and in 2007(Block 69B). Moreover, organisation has acquired Division 5 in Lae Butar Estate ( ha) from PT Jahya Bani Utama in Land title of its area was still in the name of PT Jahya Bani Utama. The organisation conducted RSPO internal audit on August 2017 at Seunagan Estate and on August 2016 at Lae Butar Estate. RSPO internal audit covered Seunagan Estate Block 52 B and Block 69B and Lae Butar Estate (Division 5) and reviewed 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 management unit of Seunagan Estate Block 52 B and Block 69B and Lae Butar Estate (Division 5) which have not been certified to ensure that partial certification requirements were fulfilled. Based on the reviewing it was concluded that: There was no new planting since November 2005 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. Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 24 of 226

25 CERTIFICATION SYSTEM/ 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? SUMMARY OF FINDINGS There were no land conflict and labour disputes Organisation has been identified and evaluated relevant regulation. There were several non-compliances with regulations based on internal gap analysis. Compliance against related regulation has been reviewed and has taken corrective action, regarding: o There were two blocks area in Seunagan Estate still in progress land legality (HGU) regarding Block 52 B (30.63 ha) and Block 69B (21.93 ha). Moreover, Plantation Business Permit (IUP-Izin Usaha Perkebunan) and Permitted Area (Izin lokasi) still in progress. HGU was applied in 2014 and has been approved by Bupati Nagan Raya. Currently HGU is still in process in BPN Aceh Province. Last progress was the organisation sent letter of request for HGU issuance, date on 24 August 2016 (No. UM/X/Bi/1781/16) to Kantor Wilayah BPN, Aceh Province. o HGU of Area Division 5 in Lae Butar Estate ( ha) has been finished on behalf of PT Socfin Indonesia acquired from PT.Jahya Bani Utama. Hand over HGU from PT JBU to PT Socfin Indonesia has been approved by BPN RI through letter #568/14.3/I/2017 on 30 January Currently HGU is still in process in BPN Aceh Province. Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 25 of 226

26 CERTIFICATION SYSTEM/ SUMMARY OF FINDINGS Guidance 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 noncompliance). 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 Activity ID: WI Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 26 of 226

27 1.13 Date of issue of certificate and date of previous assessment Date of issue of certificate: October 17 th, 2015 Date of previous audit: September 5 th 8 th, 2016 Date of special audit:16 February 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 Certification Manager/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 Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 27 of 226

28 The 2 nd Surveillance Audit was performed on September The audit programme was included in the body of report. The audit methodology for collection of objective 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 surveillance audit. During the audit, particular attention has been paid to previous non-conformities. The previous major and minor non-conformities were checked for being closed. Assessments plan has included but not be limited to areas of potential environmental and social risk. Considering previous audit findings, the mill and supply base were audited during this surveillance audit. Audit has paid special attention on some potential risks in the following areas: - All environment aspects of P&C including reporting of environmental management, waste handling (Seumanyam Mill and Estate) - All social aspects of P&C including land conflict issue (if any), customary right, labour issue, organization contribution (CSR program, empowerment of local community) (Seumanyam Mill and Estate) - All HCV aspects of P&C including identification, management and monitoring HCV (Seumanyam Estate). Audit plan/record is available in Appendix A of this report on page Qualification of the lead auditor and audit team member Ria Gloria Lead Auditor and audited Estate Operation and Mill Supply Chain Ria Gloria graduated with Bachelor of Chemical Engineering from Bandung Institute of Technology in She has working experience as Environmental Consultant for many years. She has completed ISO (1995), ISO 9001 (2004), RSPO P&C (2009) lead auditor training courses, RSPO SCCS (2010), ISPO (2012) lead auditor training courses and RSPO SCCS lead audit training courses (2016). For the last 13 years she has been involved in quality (ISO 9001) and environmental (ISO 14001) management system audits for very broad industrial and in the palm oil sector since 2003 for several plantations and mills. She has received training for good agricultural practices including integrated pest management and high conservation value ( ). Nanang Rusmana Audit Team Member and audited Environmental Aspect and HCV Nanang Rusmana, Bachelor from Faculty of Forestry, Bogor Agricultural University (IPB) in 2005, Majoring in Forest Resources Conservation. He has a working experience in Environment Consultant as Staff Division Environment/Social at PT. Studiotama Maps Konsultan ( ), in Palm Oil Plantations as SHE Assistant at PT. Astra Agro Lestari Tbk ( ), and as HSE Coordinator at PT. Kapuas Prima Coal Group ( ). He joined the SAI Global since April 2016 as Auditor ISO 9001, ISPO and RSPO. Various training has followed, such as: Lead Auditor ISO 9001:2015 Training (2016), Auditor ISPO Training (2016), Lead Auditor ISO 14001:2015 Training (2016), RSPO Supply Chain Certification Training (2016), Auditor SMK3 Training (2014), HCV Assessor Training (2010), OHS Expert/Ahli K3 Umum Training (2007), etc. Since 2016 he has had experience for audit ISO 9001 in various industries and services, include RSPO and ISPO audit for oil palm plantation companies. Eko Prastio Ramadhan Audit Team Member and audited Social Aspect and HCV Eko Prastio Ramadhan graduated as Bachelor of Forestry from Forest Conservation and Ecotourism Department, Faculty of Forestry, Bogor Institute of Agriculture (IPB) in He owned Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 28 of 226

29 working experience at NGO Birdlife Indonesia since May 2009 December 2012 as Field Officer, at PT Inoa Konsultindo since May 2013 November 2013 as Biodiversity Consultant and at PT Salim Ivomas Pratama Tbk since May 2014 November 2015 as Assistant of Sustainability Department. He has completed training courses for Social Impact Assessment (2016), Supply Chain Certification Lead Auditor (2016), LAT ISO 9001:2008 (2015), ISPO Auditor (2015), Introduction to RSPO Supply Chain Certification (2015) and HCV Assessment and Identification (2014). Daniel Sitompul Audit Team Member and audited OHS Aspect Daniel Sitompul 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. He has completed ISO (2007), OHSAS (2010), Ahli K3 Umum (2007), ISO 9001 (2009), RSPO PC Training (2013), Auditor SMK3 (2013) dan 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 he 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. 2.4 Stakeholder consultation Stakeholder consultation was performed into internal and external stakeholders. Internal stakeholders included staffs and workers. External stakeholders were selected by considering that they have an interest in the organisation activities, directly border with organisation area where the workers live. External stakeholders included NGO, governments and civil societies. Letters were also sent to external stakeholders to invite for comment or individual / group discussions. Group and Individual discussions with stakeholders were conducted during the audit, to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. Surrounding Village of estate and mill has been chosen to represent societies. Group and individual discussion were conducted for two sessions. First session was conducted especially for surrounding stakeholders directly affected on estate and mill, i.e. Head of village, farmers. Second session was conducted especially for labour union, gender committee and selected workers. Group interview was conducted for workers with similar job while others were interviewed individually in the scope to verify compliance against relevant criteria and indicator related to infrastructure facility, labour, social aspect (discrimination and sexual harassment), environment and HCV. The result of stakeholder consultation used to justify fulfilment of some indicators, e.g. criterion 2.2 indicator major 3, minor 1 and minor 2, criterion 2.3 indicator major 1, criterion 6.5 indicator minor 1, criterion 6.6 indicator minor 1, criterion 6.7 indicator minor 1, criterion 6.8 indicator minor 1, criterion 6.9 indicator minor 1, 2 and 3, criterion 6.10 indicator minor 1 and 2, criterion 6.11 indicator minor 1, etc. The result of these consultations was provided in Appendices D on page 213. Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 29 of 226

30 Table 12: List of internal and external stakeholder STAKEHOLDERS METHODS OF CONSULTATION Internal stakeholders ( mill & estates ) SPSI, Head of cooperative and gender committee of Seumanyam Estate Representative of worker and family of worker of Seumanyam Estate External Stakeholders ( mill & estates ) Villages head around Seumayam Estate (Alue Gutah, Karang Anyar, Pantun Bayu Pulo IE, Pulo Teungoh, Serba Guna, Serba Jadi, Simpang Deli Kilang, Suka Mulia and Suka Ramai) National Land Agency (Badan Pertanahan Nasional-BPN) Forestry and Plantation Local Department of Nagan Raya Environment Local Agency of Nagan Raya Social and Labour Department of Nagan Raya Military Rayon Command of Aue Bilie Military District Command of Nagan Raya District Police of Nagan Raya Sector Police of Alue Bilie and Susoh NGOs: GAPKI, AMAN (Aliansi Masyarakat Adat Nusantara), WWF Indonesia, Greenomics Indonesia, Forest Peoples Program, Greenpeace Indonesia, Wahana Lingkungan Hidup Indonesia, Tropebos International Indonesia, The Nature Conservancy, Fauna & Flor International Indonesia and Sawit Watch Group discussion Group interview Group discussion An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent 2.5 Date of next surveillance visit The next surveillance visit will be conducted around September 2018 or three months before datum month of the certification period. 3.0 AUDIT FINDINGS 3.1 Action taken on previous audits findings All non-conformances (Major and Minor) from the previous audits have been followed up by taking Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 30 of 226

31 corrective actions. Corrective actions have been implemented and verified. All corrective actions were considered as closed satisfactorily. There was recurrence of NC for major from ASA1, minor from Certification Audit and minor from Certification Audit. For NC indicator minor and minor was upgraded to NC Major 3.2 Claim and use of certification mark and or logo There was no use of certification mark and or logo. Claim has been made to 25, MT of RSPO certified CPO sold and 4, MT of RSPO certified PK sold. Other CPO was claimed in other sustainability standard scheme Table 13: CSPO delivery and sold Period September 2016 Until August 2017 CPO (MT) PK (MT) Month Non RSPO ISCC CSPO RSPO ISCC Non CSPO 2016 September 1, October 2, November 1, December 3, January February March 7, April 1, May 1, June 1, July 3, August 1, Total 25, , Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 31 of 226

32 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. Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 32 of 226

33 a. Does the company maintain a list of stakeholders? (E.g. listed by category and stakeholders listed should be site specific) 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? - List of stakeholder, last updated on 14 August Social communication procedures SOC/PSM/9:01 dated 1 st September 2014 Rev Public consultation and interview with stakeholder on 20 September Field observation Organization has defined list of stakeholder and updated once a year, last updated on 14 August Stakeholder information which was updated such as contact person, name of institution, address and phone number. Stakeholder verification has been performed by organization through visiting and contacting stakeholders directly, if there is a change then immediately will be updated but usually updated annually. It was sighted that stakeholder verification has been done and evidenced. Information provided to public and stakeholder specified in social communication procedures SOC/PSM/9:01 dated 1 st September 2014 Rev. 04. List of the information available to the public and stakeholder are: - Certificate / land use rights - Occupational health and safety plan - Plan for social and environmental impact assessment - Identification and management of HCV - Plan for the reduction and prevention of pollution - Grievance and complaints in detail - Procedure negotiations - Plan for continuous improvement - A general summary of the certification assessment - Human rights policy - Ethical policy - FFB Price Documents available to the public and stakeholder can be provided to stakeholders according to their relevance through a written request to the organization. The information most frequently requested by stakeholders are information related to the management of occupational health and safety (P2K3 report) - Disnakertrans, environmental management report (wastewater, LB3) - BLH, employment report - Disnakertrans, production data and area statements - BPS, etc. Information provided to the public and stakeholder has disseminated to the stakeholder together with public consultation of social assessment and (Minor NCR ) Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 33 of 226

34 socialization of procedures for complaints handling, also dissemination of social communication procedure has been performed on 13 January 2017 to all stakeholder. Minutes of socialization and attendance list was sighted. Procedure and communication was delivered in appropriate language and understood by stakeholder. Organization has assigned a responsible person for providing and updating information and stakeholder that was KTU (Kepala Tata Usaha). Responsibility and function was described in KTU job description. SOP to describe the process of information sharing/dissemination defined in social communication procedure SOC/PSM/9.01 dated 1 st September 2014 Rev. 04. Consultation and communication with stakeholders conducted by collecting community leaders, village heads and local community or visiting the office/the village hall to meet with the village head, village officials and community. Stakeholders aware of the type of information available and the procedures for accessing the information. All stakeholders have known and understood how they should ask for information to the organization and how to communicate with the organization. Procedures and a list of information available in Indonesian language and easily understood. It was verified during public consultation and interview with stakeholder on 20 September Minor Non-conformance: Not all stakeholder was include in stakeholder list. The company has updated its stakeholder list on 14 August 2017 but there was no BKSDA (Natural Resources Conservation Agency) in that list (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: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 34 of 226

35 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? - Social communication procedures SOC/PSM/9:01 dated 1 st September 2014 Rev Log Book: Notes of society and stakeholders aspirations and the information request record Public consultation and interview with stakeholder on 20 September Field observation Organization has defined the procedure to ensure constructive response to stakeholders in SOC/PSM/9.01 Social communication procedure. 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 the PK (Pengurus Kebun/Manager), 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 tasked associated with social communication is Estate manager with the daily implementing are KTU. This procedure already covers elements Clear time frame for response to request for information has been explain above; The initial response was given no later than one month 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. 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) 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) Audit Report YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 35 of 226

36 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, Occupational health and safety plans (Criterion 4.7); - risk assessment and mitigation, emergency response plan, training, accident records - Social communication procedures SOC/PSM/9:01 dated 1 st September 2014 Rev Record of report form receipts Public consultation and interview with stakeholder on 20 September Field observation and interview with employee and organisation management Documents available to the public specified in the Social Communication Procedures SOC / PSM / 9:01 Date 1 st September 2014 rev. 4. 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. Public document for stakeholder has been disseminated by organization in 13 January Documents available to the public placed in the respective sections within the organization. Such as land title right/ HGU certificate placed in KTU. Information provided adequate at minimum, an information summary of the document listed such as : 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, YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 36 of 226

37 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 the requirements of 6.13 d. Do the management documents contain monitoring plans and reports? 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 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. Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 37 of 226

38 e. Are all monitoring reports publicly available? 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. This written policy should be communicated to the affected parties. a. Is there a written policy committing to a - Ethics Policy No Doc: code of ethical conduct and integrity in all SOC/Dp/ , 5 operations and transactions? th Revision, dated 18 th January b. Does the policy include as a minimum: 2016 A respect for fair conduct of business? A prohibition of all forms of corruption, bribery and fraudulent use of funds and resources? - Policy socialization record to employee, contractor and stakeholders 2017 Written policy committing to a code of ethical conduct and integrity in all operations and transactions was available in Kebijakan Etika (Ethics Policy No Doc: SOC/Dp/ , 5 th Revision, dated 18 th January Ethic policy includes several aspects, such as: - Social Responsibility - Salary - Infrastructure and accommodation YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 38 of 226

39 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 - Public consultation and interview with stakeholder on 20 September Field observation and interview with employee and organisation management - 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 Ethics Policy No Doc: SOC/Dp/ , 5 th Revision, dated 18 th January 2016 has been communicated to all levels of the workforce and operations, including contracted third parties through socialization on 13 January 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. PRINCIPLE 2: WITH APPLICABLE LAWS AND REGULATIONS OBSERVATIONS & OBJECTIVE 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) Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 39 of 226

40 OBSERVATIONS & OBJECTIVE 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 landuse rights, labour, agricultural practices (e.g. chemical use), environment (e.g. wildlife laws, pollution, environmental management and forestry laws), 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 Identification and Evaluation on Compliance of Other Regulation and Requirements updated 6 June 2017 (SOC/Form/ Rev.01) Records of Implementation: Certificate of HGU Training certificate of limited pesticide List of pesticides register permit Permit register SOC/Form/ Social and labour document, regarding: Document of employment agreement, list of employees, wage, overtime record and calculation, social security, training programs, employment list, data base of employee, CSR program and its implementation. The relevant legal requirement or regulations for Seumanyam mill and estate have been established and identified. Records were sighted on Evaluation on Compliance of Regulation and Requirements SOC/Form/ ) update 6 June 2017 for environmental and other regulations and 3 July 2017 for OHS regulations. The company has maintained a copy of all licenses both in hard and soft files. An overview of Evaluation of Compliance with Laws and Regulations is mentioned below, e.g.: Operation permit: 1. Permentan 07/2007 regarding Registraion of Limited Pesticides. All spraying operators have got certificate of limited pesticide training. 2. UU 12 Year 1992 Sistem Budidaya Tanaman, has been best practices agronomy. 3. PP 40 Year 1996 HGU Environment Records was sighted on Evaluation on Compliance of Regulation and Requirements SOC/Form/ ) update 6 June 2017 include the environment regulation, the new environment regulation was identified, such as PermenLH 5/2014 waste water quality and PP 101/2014 hazardous waste management. YES (Major NCR CLOSED) Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 40 of 226

41 Business and Human Rights. OBSERVATIONS & OBJECTIVE OHS document, regarding: Notes of Meeting Safety Committee, Quarterly Safety Performance Report, Measurement Report of OHS Parameters, Valid permit of lifting equipment, machinery etc., Valid permit of boiler operator and lifting equipment operator, etc., Medical Surveillance Reports, Availability of MSDS Environment document, regarding: Valid permits (waste water land application permit, hazardous waste storage permit), Availability of MSDS, Periodic environmental parameter monitoring (stationary emission, ambient emission and ambient noise, moving source Labour SMK3 implementation, OHS committee (P2K3), freedom of worker union, labour cooperation, minimum wage (UMSK), labour law, employee social benefit, Jamsostek (Labour Insurance) for employee, medical check-up, benefits for employee (THR) and etc. OHS The safety regulations were regarding to: lifting equipment, permits of machinery, safety committee, safety officer, medical insurance, monitoring of working environment, paramedic and first aid officer, clinic for workers, handling of hazardous materials including pesticides, medical check-up, firefighting team and equipment etc. Major Non-Conformance: Based on document review, there are some regulation that have not been updated, such as: a. SK MenLHK No. 130/2017 National Peat Ecosystem Establishment. b. PermenLHK 68/2016 Quality standards of domestic wastewater A documented system, which includes written information on legal requirements, shall be maintained. Verification of Effectiveness: SK MenLHK No. 130/2017 National Peat Ecosystem Establishment and PermenLHK 68/2016 Quality standards of domestic wastewater have been registered in the list of regulation and evaluated their compliance. Based on evaluation of compliance with PermenLHK 68/2016 Quality standards of domestic wastewater, several non-compliances were identified and correction action has been planned. Based on evaluation of compliance with SK MenLHK No. 130/2017 National Peat Ecosystem Establishment, the regulation was not relevant for the organisation due to there was no peat land within organisation. Regulation is updated every six months. Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 41 of 226

42 OBSERVATIONS & OBJECTIVE a. Is there a document system which includes the following? - Personnel in charge to manage - Set of legal documents - Comprehensive list of international, national, sub-national and provincial laws which details the requirements of specific to the mill and estate operations. - Relevant sections within the law that is identified and linked to activities b. Are the documents available to all levels of management? Documented procedure (SOC/PSM/4.05 Rev.05) for identification and evaluation of legal requirement. Evaluation on Compliance of Regulation and Requirements SOC/Form/ ) updated 6 June 2017 and 3 July 2017 License of hazardous waste temporary storage (TPS B3) License of waste water discharge (IPLC) RKL/RPL (Environment monitoring and measurement reports) The documented procedure was defined that the sustainable department was conducted identification, verification and registered the all legal and other requirements include environment issues. The update frequency was conducted every 6 (six) month (first period on January and second period on July) that last updated on period of 6 June 2017 for environmental and other regulations and 3 July 2017 for OHS regulations. The method of updating regulation was conducted by internet, and/or by direct visits to the government bodies. List of applicable regulations included the resume of requirements were available and maintained. The copies of the regulations were distributed to related section according to their evaluation. The evaluation of compliance was conducted together with the relevant functions between sustainable team and representative from estate and mills. The communication to relevant functions was conducted by dissemination from sustainable team to respected persons at mill and estate. YES A mechanism for ensuring compliance shall be implemented. a. Is an internal audit for legal compliance conducted annually and documented? OHS and environment internal audit report integrated with RSPO audit on August 2017 Internal audit for legal compliance integrated with internal audit RSPO were planned annually. The last audit was on August 2017 conducted by approved internal auditor by authority. The audit checklist covered the implementation of the all applied regulations. YES Status of compliance with the applicable OHS laws and regulations were evaluated, and evaluation of compliance result indicated that compliance status was justified with reference to the objective evidence of compliance. Example: safety committee, medical check-up, and permits of transport and lifting equipment. Interview was conducted with the Safety Officer to review the implementation of regulations. For regulation regarding environment issues were evaluated and the result indicated that compliance status was justified, such as: monitoring quality of air Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 42 of 226

43 OBSERVATIONS & OBJECTIVE ambient, air emission, quality of clean water and surface water, quality of waste water, hazardous waste management A system for tracking any changes in the law shall be available and implemented. 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? Identification and Evaluation on Compliance of Regulation and Requirements updated 1 st July 2016 (SOC/Form/ Rev.01) Documented procedure (SOC/PSM/4.05 Rev.05 dated 1st June 2014) for identification and evaluation of legal requirement. Evaluation on Compliance of Regulation and Requirements SOC/Form/ ) dated 6 June 2017 and 3 July 2017 Mechanism for ensuring compliance with all applicable local, national and ratified international OHS and environment laws and regulations has been implemented by Evaluation of Compliance against the Resume of Legal Requirement twice a year. The evaluation was conducted by Safety Officer and reported to Mill and estate managers. The last review of the regulations requirements was conducted on 6 June 2017 for environmental and other regulations and 3 July 2017 for OHS regulations. The method of updating regulation was conducted by internet, and/or by direct visits to the government bodies, the new environment regulation was identified. The evaluation of compliance was conducted together with the relevant functions between sustainable team and representative from estate and mills. The communication to relevant functions was conducted by dissemination from sustainable team 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 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. Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 43 of 226

44 OBSERVATIONS & OBJECTIVE 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? Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #HK.350/829/Dj.Bun.5/XI2001, dated 23 November 2001 Plantation Business Assessment (Penilaian Usaha Perkebunan (PUP)) - Class III. Decree letter of Governor of Aceh #525/2711/IV/2013 Decree of Ministry of Agrarian/Head of BPN (National Land Agency) #30/HGU/KEM- ATR/BPN/2016 on 6 June 2016 Decree of Ministry of Agrarian/Head of BPN (National Documents showing legal ownership or lease, history of land tenure and the actual legal use of the land were available, includes: - Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #HK.350/829/Dj.Bun.5/XI2001, dated 23 November Area of permitted: 4, Ha. Permitted capacity of palm oil mill: 45 ton FFB/hour. Installed capacity of palm oil mill: 23 ton FFB/hour - Plantation Business Assessment (Penilaian Usaha Perkebunan (PUP)); Class III. Decree letter of Governor of Aceh #525/2711/IV/ Decree of Ministry of Agrarian/Head of BPN (National Land Agency) #30/HGU/KEM-ATR/BPN/2016 on 6 June Location: Desa Alue Waki and Simpang Deli Kilang, Kec. Darul Makmur, Kab. Nagan Raya, Aceh Province. Area: Ha. Land title (HGU) certificate #6 dated 7 September 2016, Desa Gunong Kong dan Darah Bate, Kec. Darul Makmur, Kab. Aceh Barat, Aceh Province. Area A: Ha and area B: 459 Ha. YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 44 of 226

45 2.2.2 Legal boundaries are demonstrated clearly and maintained. OBSERVATIONS & OBJECTIVE Land Agency) #147/HGU/BPN/1997 on 27 November 1997 Decree of Ministry of Agrarian/Head of BPN (National Land Agency) #14/HGU/BPN/1998 on 13 April Decree of Ministry of Agrarian/Head of BPN (National Land Agency) #147/HGU/BPN/1997 on 27 November 1997 Land title (HGU) certificate #29 dated 5 March 1998, Desa Seumanyam, Kec. Darul Makmur, Kab. Aceh Barat, Aceh Province. Area: 3, Ha - Decree of Ministry of Agrarian/Head of BPN (National Land Agency) #14/HGU/BPN/1998 on 13 April 1998 Land title (HGU) certificate #30 dated 23 June 1998, Desa Simpang Deli Kilang, Kec. Darul Makmur, Kab. Aceh Barat, Aceh Province. Area Ha Total HGU area: 4, Ha Audit Report 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? Peta Patok HGU scale 1 : 25,000 Checklist of EHS Patrol Field observation to HGU pegs Legal boundaries clearly demarcated and maintained along the perimeters of estate lands which were mapped with Global Positioning System (GPS). Field observation was conducted to pegs number: #22 Block 24 Division I ( N and 'E) #04 Block 93 Division IV ( N and E) #32 Block 11 Division I ( N and E) YES 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 Realisation of pegs maintenance was sight on Checklist of EHS Patrol SOC/FORM/ ), it was noted that pegs monitoring were conducted monthly with items checked were identity, condition and position of pegs. It was noted that based on monthly patrol in August 2017, peg #46 in Division III was downed and at the time of audit it has been repaired. In the case of Associated Smallholders: d. Are there documents showing that the boundaries of associated smallholders It was also noted that peg #55 was removed by the government for the expansion of the capital's offices Kecamatan Darul Makmur and the organisation appled for area expenditure from the certificate around 12 Ha in Desa Seumanyam, Kec. Darul Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 45 of 226

46 have been recorded and verified by the mill? OBSERVATIONS & OBJECTIVE Makmur, Kab. Aceh Barat. Letter #B.Umum/X/Bi/462/2001 dated 10 February Reduction of HGU during extension of HGU. e. In case of boundary breach, is there proof of a mitigation plan being implemented? All plantation activities (harvesting, upkeep, manuring, etc) 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. 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? - Handling of Social Conflict No. SOC/PSM/9.02 Revision 03 dated 1 st September Stakeholder meeting on 20 September 2017 So far there was no unprecedented conflicts/disputes with stakeholders, but only cases of stolen of fruit by people around the plantation which could be resolved by a legal officer. During the stakeholder meeting on 20 September 2017 it was confirmed that there was no land conflict found at the estate. PT. Socfin Indonesia Seumayam has established a mechanism for resolution of conflicts and disputes through Handling of Social Conflict No. SOC/PSM/9.02 Revision 03 dated 1 st September This procedure mentioned how the company solves the problem if any conflict occurred, both internal and external conflicts. This procedure also mentioned if the problem cannot be resolved by negotiation, the company will take legal action involving the related institution. YES 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? Note to auditor: There should be direct verification of above with the affected parties Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 46 of 226

47 OBSERVATIONS & OBJECTIVE Audit Report (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) 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 - Handling of Social Conflict No. SOC/PSM/9.02 Revisi 03 dated 1 st September Stakeholder meeting on 20 September 2017 So far there was no unprecedented conflicts/disputes with stakeholders, but only cases of stolen of fruit by people around the plantation which could be resolved by a legal officer. During the stakeholder meeting on 20 September 2017 it was confirmed that there was no land conflict found at the estate. PT Socfin Indonesia has established a mechanism for resolution of conflicts and disputes through Handling of Social Conflict No. SOC/PSM/9.02 Revision 03 dated 1 st September This procedure mentioned how the company solves the problem if any conflict occurred, both internal and external conflicts. This procedure also mentioned if the problem cannot be resolved by negotiation, the company will take legal action involving the related institution. YES 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? 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 conducted - Handling of Social Conflict No. SOC/PSM/9.02 Revisi 03 dated 1 st September Stakeholder meeting on 20 September 2017 PT Socfin Indonesia has established a mechanism for resolution of conflicts and disputes through Handling of Social Conflict No. SOC/PSM/9.02 Revision 03 dated 1 st September This procedure mentioned how the company solves the problem if any conflict occurred, both internal and external conflicts. This procedure also mentioned if the problem cannot be resolved by negotiation, the company will take legal action involving the related institution. So far there was no unprecedented conflicts/disputes with stakeholders, but only cases of stolen of fruit by people around the plantation which could be resolved by a legal officer. During the stakeholder meeting on 20 September 2017 it was confirmed that there was no land conflict found at the estate and the procedure was accepted by them. YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 47 of 226

48 OBSERVATIONS & OBJECTIVE (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. Audit Report 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? - Ethics Policy No Doc: SOC/Dp/ , 5 th Revision, dated 18 th January Public consultation with stakeholders and the local community on 20 September 2017 Company have a policy to circumvent instigated violence to maintain peace and order in current and planned operations. It documented in Ethics Policy No Doc: SOC/Dp/ , 5 th Revision, dated 18 th January Described in No. 1 Social Responsibility, 1.1 Ethical standard: a. Develop attitudes of compliance to the laws that applies in the resolution of issues between the parties and avoid the violent means. b. 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 dated 20 September 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. 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 ). YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 48 of 226

49 OBSERVATIONS & OBJECTIVE (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? 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.) Interview with company representative FPIC were not applicable because PT Socfin Indonesia Seumayam Estate has established / started to be planted in Land ownership before HGU was Erpacht Rights. There was no identified the existence of indigenous land within the company concession. NA 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? 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 Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 49 of 226

50 See specific guidance OBSERVATIONS & OBJECTIVE Specific Guidance: For : 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) - Interview with management - EIA and SIA reports FPIC were not applicable because PT Socfin Indonesia Seumayam Estate has established / started to be planted in Land ownership before HGU was Erpacht Rights. There was no identified the existence of indigenous land within the company concession. NA Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 50 of 226

51 - 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 OBSERVATIONS & OBJECTIVE 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? - Interview with management - EIA and SIA reports FPIC were not applicable because PT Socfin Indonesia Seumayam Estate has established / started to be planted in Land ownership before HGU was Erpacht Rights. There was no identified the existence of indigenous land within the company concession. NA Note to auditor: this should be cross checked to a sample of the affected parties (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? - Interview with management - EIA and SIA reports 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. NA Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 51 of 226

52 c. Is the record of appointment to represent the community available and shared with other parties? OBSERVATIONS & OBJECTIVE 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. Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 52 of 226

53 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 Management Plan period business or management plan with a minimum SOC/PSM/4.15 Management of Change planning period of 3 years? 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 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? d. For plantations on peat, is there a long term viability plan e.g. flooding, drainability assessments and subsidence issues? (see Management Plan for period was established in order to achieve long-term economic and financial viability. The plan was approved by the Principle Director. The parameters stated in the management plan were including revenue and profit, crop projection (FFB yield trends), CPO and PK extraction rate; estimated estate cost (upkeep, research and development, harvesting, processing, packing, transportation, depreciation) as well as mill cost (processing, repair and maintenance, overhead and depreciation). This plan was established by considering economical parameters/assumptions such as inflation, US Dollar and Indonesian Rupiah (IDR) rate, CPO price, and FFB price. The management plan achievement was reviewed annually during the management review. Last management review was conducted in Minute of management review meeting was sighted. Work programmes for the financial year had been planned for all field operation. Cost on all field operations had been recorded daily for monitoring against the budget by management staff in order to close supervision on field operation to ensure work efficiency of the workers. These include preventive maintenance of roads, vehicles, machinery etc. Based on soil map of Seumanyam Estate, there was no peat. Technical and Technology Department and Agriculture Department developed opportunity for improvement issued by Estate. Result of development and improvement was communicated to Estate and Mill through or directly site visit. Audit Report YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 53 of 226

54 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 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? Oil palm replanting program 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? Report of work progress of planting 2017 Overall replanting program project for the next 5 years was available for Seumanyam Estate. Replanting Plan was exist for period Year Division Division Division Division Total I II III IV Replanting realisation 2017: Ha in Division I. PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 54 of 226

55 Operating procedures are appropriately documented, consistently implemented and monitored 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? 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? SOC/PSM/7.10: Standard Operating Procedure for Oil Palm Plantation SOP for Mill Standard Operating Procedures (SOPs) and Work Instructions for Estate been documented. The procedures cover key processes, harvesting, transportation, manuring, IPM, GAP, Supply Chain requirements for the mill, land clearing, nursery, preparation before replanting, drainage system, maintenance of immature and mature upkeep. SOP for Estate: SOC/PSM/7.10: Standard Operating Procedure for Oil Palm Plantation SOC/PSM/ : Procedure of Soil Analysis SOC/PSM/ : Procedure of Leaf Sampling SOC/PSM/ : Procedure of Terracing SOC/PSM/ : Procedure of Drainage Ditch SOC-KKS/IK/05: Work Instruction of Planting of Oil Palm SOC-KB/IK/01: Work Instruction of Fertilising SOC-KB/IK/02: Work Instruction of Pesticide Spraying SOC-KKS/IK/01: Work Instruction of Nursery SOC-KKS/IK/07: Work Instruction of Harvesting SOC-KKS/IK/12: Work Instruction of EFB Application SOC-KKS/IK/12: Work Instruction of Weeds Controlling SOC-KB/IK/07: Work Instruction of Road Maintenance SOC-KB/IK/08: Work Instruction of Peat Land Management IPM Procedure: YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 55 of 226

56 o o o o SOC/PSM/ : Procedure of Caterpillar Control SOC/PSM/ : Procedure of Oryctes Rhinoceros Control SOC/PSM/ : Procedure of Rat Control SOC/PSM/ : Procedure of Ganoderma Control Procedure and Work instructions in local language for supporting Mill activities have been established for all of its operations from receiving of FFB, processing CPO and palm kernel, dispatch and also supply chain requirements. The procedure also describes quality control check, sampling methods including its reporting from reception of FFB up to dispatch of CPO and palm kernel. SOP for Mill: SOC-POM/IK-01 FFB receiving in loading ramp SOC-POM/IK-02 Operation of steriliser SOC-POM/IK-02 Operation of housting crane SOC-POM/IK-04 Operation of stripper SOC-POM/IK-05 Operation of digester and screw press SOC-POM/IK-06 Operation of continuous tank SOC-POM/IK-07 Operation of purifier SOC-POM/IK-08 Operation of vaccuum dryer SOC-POM/IK-09 Operation of decanter SOC-POM/IK-10 Operation of sludge separator SOC-POM/IK-11 Operation of decantation pond and fat pit SOC-POM/IK-12 Operation of silo biji SOC-POM/IK-13 Operation of riplle mill SOC-POM/IK-14 Operation of separating tank SOC-POM/IK-15 Operation of silo kernel SOC-POM/IK-16 Operation of clay bath SOC-POM/PSM/7.08: Procedure of Receiving SOC-POM/PSM/7.09: Procedure of Processing SOC-POM/PSM/7.06: Procedure of Delivery of CPO and PK SOC/PSM/4.10: Procedure of Waste Control SOC/PSM/9.10: Procedure of Supply Chain Certification Standard Identity Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 56 of 226

57 Preserve Copy of the procedures was available on site and documented in Indonesian language. Procedures were distributed by Sustainability Sub Department to all Divisions of Estate and Mill. Procedure has been disseminated periodically to all Estate and Mill employees through regular training, monthly briefing and morning circle. Interviews with the employees indicated satisfactory level of understanding and implementation in relation to their respective job function. Sample of estate operational implementation were taken in harvesting process in Block 76 Division III, manuring in Block 78 Division III, pesticide spraying in Block 23 Division I, nursery in Block 36 Division II. Mill operational implementation was conducted started from loading ramp to CPO dispatch including supporting process, e.g. maintenance and warehouse activities. It was observed that all of the activities were implemented according to procedure Checking or monitoring of operations procedures is conducted at least once a year. a. Is there a master list of all SOPs? 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 Document Revision Status Year 2017 Training record, minutes of briefing SOC/PSM/8.04 Procedure of corrective and preventive action Result of Agriculture Department site visit Result of Technology Department site visit Master list of all SOPs and work instructions and its revision history were available and well documented in Document Revision Status. Organization keeps track of revision of the SOPs in revision history in the cover of SOPs and work instructions. SOP was provided in Indonesian language. SOPs training and dissemination to all of employee has been conducted through regular training, monthly briefing and morning circle, e.g. harvesting on 20 May 2017, 8 August 2017, 18 May 2017, manuring on 28 February 2017and 5 June 2017, IPM on 9 August 2017, pesticide spraying on 6 February 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 Department of Technology and Department of Agriculture Socfin Medan Head Office. Visiting of Department of Technology and Department of Agriculture Socfin Medan Head Office was conducted to check implementation of the procedures and work instructions which covered operational activities of plantations and mill including the maintenance of palm oil crop (upkeep, manuring, IPM), harvesting, FFB receiving, YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 57 of 226

58 out regularly covering implementation of all the SOPs? - Procedure to address noncompliance and corrective action for continuous improvement? mill process and other supporting activities such as administration, road infrastructure. Corrective action of all found non-conformities have been followed up. Last visiting of Department of Technology was on 2-9 August 2017 and Department of Agriculture was on November 2016, 3-5 January 2017, 6 11 June The organisation has established procedure to address non-compliance and corrective action for continuous improvement 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 Daily work plan Log sheet of station Checking of FFB quality (Buku pemeriksaan ancak dan mutu buah) Harvesting rotation (Rotasi Panen) Calibration certificate Work performance and material use Daily FFB received Record of monitoring and any action taken were maintained and available for Estate and Mill. Estate Estate activities are programmed in annual program. Activities program are such as pest and diseases census, fertilising, spraying, cleaning of trench and road maintenance. Records of activities were sighted, e.g. Daily Work Plan, General Workgroup Task Data Collection Sheet, Work performance and material use (Prestasi kerja dan pemakaian bahan), Checking of FFB quality (Buku pemeriksaan ancak dan mutu buah), harvesting rotation. The record covered activities type, number of worker, quantity of agro chemical use, quantity of activities output and area of activities. Mill The mill maintains records of processing monitoring reports, such as shift log sheets with records of operating conditions at each of the mill work stations including: FFB receiving and grading, sterilizing, threshing, pressing and digesting, clarifying, nut and kernel, boiler, quality control (in process, CPO and PK). Also sighted several records regarding equipment calibrations, there were 1 weighbridge with capacity 40 ton, last calibration on 19 July 2017 (there was letter of knowledge No.1711/PKTN..4.9/KHPS/08/2017 dated 8 August 2017). Review operation daily reports demonstrate the consistency of procedures implementation. (M) Records of the origins of all third-party FFB sourced (collector, deliver, Cooperative, Farmers Association and outgrower) shall be available. YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 58 of 226

59 a. Is there an SOP for third-party FFB sourcing? b. Is there a list of approved third-party FFB suppliers? SOC-POM/PSM/7.08: Procedure of Receiving Daily FFB received Seumayam Mill did not receive uncertified FFB from the third party. All records have been verified and it was compliance with available procedure. There was evidence of SOP implementation such as: FFB grading process 100% in accordance with grading criteria. YES 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 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 Minor to Major a. Are there SOPs for Good Agricultural Practices in managing soil fertility? SOC-KB/IK/01: Work Instruction of Fertilising b. Is there evidence that the SOPs have been implemented and monitored? SOC-KKS/IK/12: Work Instruction of EFB Application SOC-KKS/IK/15: Work Instruction of Solid Application Manuring Booklet 2016 Organization has defined the SOPs for Good Agricultural Practices in managing soil fertility which documented in SOC-KB/IK/01: Work Instruction of Fertilising. Manuring in Seumanyam Estate was performed manually and mechanically. Based on data on manuring booklet 2016 and 2017, it was noted that manuring activities in 2016 and 1 st semester 2017 has been implemented and monitored. YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 59 of 226

60 Manuring Booklet Records of fertilizer inputs shall be available. 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)? Manuring Booklet 2016 Manuring Booklet 2017 Manuring realisation 2016 and 1 st semester 2017 Records of fertiliser inputs are well maintained in document Manuring Recommendation 2016 and 2017 Booklet Pemupukan 2016 dan Fertiliser inputs recorded each semester. Manuring recommendation in 2017 was defined based leaf sampling unit (LSU) and soil sampling unit (SSU). Record of manuring realisation in 2016 shows that the realisations are in accordance with the plan/recommendation. The realisation are: Type of Fertiliser Realisation (kg) Fertilise use/tonne of FFB production NPK 1,996, Urea 829, RP 71, KCl 893, Dolomite 465, Kieserite 37, Borax 10, TSP 12, ZA 2, YES FFB production 2016 was 99, ton 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? c. Is there records of tissue and soil SOC/PSM/ : Procedure of Soil Analysis SOC/PSM/ : Procedure of Leaf Sampling Leaf Analysis Report, 2016 Soil analysis is conducted every 6 years. Last analysis was conducted in 2015 to 62 samples by Bangun Bandar Analytical Laboratory. Leaf analysis is conducted annually at minimal 2 months after 1 st manuring program was finished. Leaf sampling analysis was conducted in September 2016 to 28 samples. Leaf analysis was conducted by Bangun Bandar Analytical Laboratory. Result of leaf sampling analysis and soil sampling analysis was incorporated into the YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 60 of 226

61 analysis? d. Is the results of the study incorporated into the fertilizer program? Soil Analysis Report, 2015 manuring program. Manuring program was developed based on leaf analysis result and soil analysis result and conducted by Agriculture Department 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? 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 Note to auditor: Ground verification required Manuring Booklet 2015 Manuring Booklet 2016 Program and realisation of EFB and solid application 2016 and 2017 There was the nutrient recycling strategy performed by organisation such as land application from Empty fruit bunch (EFB) and solid and palm residues from replanting. Uprooted oil palm trees were set and leave them decomposed. Dosage of EFB application was described in the work instruction. EFB application is conducted once in two years with dosage: Immature plant (0 year): 10 ton/ha or 70 kg/oil palm Immature plant (1 year): 20 ton/ha or 140 kg/oil palm Mature plant: 45 ton/ha or kg/oil palm EFB and solid application 2016 and 2017 (January August): Activity Total area Realisation Total area Realisation applied (Ha) (Ton) applied (Ha) (Ton) EFB , ,849 application Solid application , ,644 YES It was observed that EFB was applied in immature area in Block 23 Division I. 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. Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 61 of 226

62 4.3.1 (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)? Map of Seumanyam Estate, release by PT. Socfin Indonesia scale 1 : 25,000 The organisation has a detailed soil map showing gradients and soil types. The latest version of soil map scale 1 : 25,000 was issued by Department of Agriculture on 1 January The maps included maps of fragile soils. Based on maps of soils type, there are no fragile soils present in Seumanyam Estate. Soil characteristic is presented in table below: Type Area (Ha) Alluvial Distrik Gleisol Distrik Kambisol Distrik Kambisol Gleik Nitosol Distrik Podsolik Gleik 2, Podsolik Haplik Podsolik Ortolsik Podzolik Gleik Total 4, A management strategy shall be in place for plantings on slopes above a certain limit (this needs to be soil and climate specific). YES 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 SOC-KKS/IK/05: Work Instruction of Planting SOC/PSM/7.10: Procedure of Terracing SOC/DP/ : Manual of Handling and Monitoring of Erosion SOC/PSM/ : Procedure The organisation has management strategy for planting on slopes above certain limit such as terracing, as referred to company s SOP and work instructions. The Work instruction described preparation for planting including planting on slopes area has been developed by organisation. System for planting on slopes area is provided through terracing, levelling of terrace, planting legume cover crops and determining of planting space. Seumanyam Estate has slopes 0 to 24 %. Area with 12 24% slope is 0.29% of total area. Practices to control and minimize erosion have been applied by terracing and planting legume cover crop. YES Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 62 of 226

63 conditions, e.g. ground cover management, biomass recycling, terracing, and natural regeneration or restoration instead of replanting of Soil Erosion Control on Marginal Land at Mature Planting c. Is there proof of records of field inspection on SOP implementation? A road maintenance programme shall be in place. a. Is there a road maintenance programme in place with supporting budget and resources? b. Is there road maintenance records? SOC-KB/IK/07: Work Instruction of Road Maintenance Road Maintenance Program and Realisation 2016 Road Maintenance Program 2017 Estate has established annual programme of mechanical and manual road maintenance for government road, primary road, and secondary road. Record of manual and mechanical road maintenance realisation was sighted included block and length of road maintained. Realisation 2017 Realisation 2016 (m) Division (January August) Manual Mechanical Manual Mechanical I 14,695 50,200 45,110 32,850 II 54,720 23,000 29,340 0 III 21,725 21,665 4,500 47,200 IV 37, ,780 61,540 0 YES Road maintenance was well implemented. During field observation it was sighted that all roads, culverts and bridges were well maintained and 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 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: Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 63 of 226

64 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 50-70cm) 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? Soil Map of Seumanyam Oil Palm Estate dated 1 January 2005 issued by Agricultural Department, scale 1: Based on soil map of Seumanyam Estate, there was no peat soil in Seumanyam Estate. Audit Report NA Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 64 of 226

65 Drainability assessments shall be required prior to replanting on peat to determine the long-term viability of the necessary drainage for oil palm growing. Audit Report 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? Based on soil map of Seumanyam Estate, there was no peat soil in Seumanyam Estate. NA 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? Soil Map of Seumanyam Oil Palm Estate dated 1 January 2005 issued by Agricultural Department, scale 1: 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? Soil Map of Seumanyam Oil Palm Estate dated 1 January 2005 issued by Agricultural Department, scale 1: Based on soil map of Seumanyam Estate, there was no other fragile and problem soil in Seumanyam Estate. NA c. Is inspection and implementation records available? 4.4 Practices maintain the quality and availability of surface and ground water. An implemented water management plan shall be in place Specific Guidance: Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 65 of 226

66 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? Documented procedure (SOC/PSM/4.22 Rev.01 dated 1 st July 2015) regarding water management at mill and estate License of surface water usage No. 691/BP2T/6248/2012 dated 5 November 2012 valid until 1 August 2015 from Aceh Governor Water analysis measurement for period by Sucofindo Records of water consumption period 2016 and 2017 at mill 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 water sources at Seumanyam were from surface water (APU) which is Alue Geutah River as the license of surface water utilization No. 691/BP2T/6248/2012 dated 5 November 2012 valid until 1 August 2015 from Aceh Governor. Seumanyam Mill had reference letter from Dinas Pengairan Nagan Raya District No.610/2101/DP/2015 dated 8 July Based on this reference letter, Seumanyam mill asked the renewal licence of surface water to Aceh Governor cc BPTPM (Badan Pelayanan Terpadu dan Penanaman Modal) Nagan Raya District with letter No.SY/X/Bi/116/15 dated 8 September BPTPM Nagan Raya District response and gave the reference letter for surface water utilisation No.503/38/2015 dated 30 September Until the 2 nd ASA, the license progress is still in the local government. All the supporting documents/evidence was shown during audit. The water was utilize for mill operations (include boilers, processes and domestics usage) that through the water treatment plant (using physicals and chemicals method) and for estate operation (nursery). For estate operations (include housing, pesticides mixings and office operations) using ground water that don t need permit use. The monitoring of water volume utilization was conducted, records was also sighted that water usage was majority from Seumanyam Mill. YES Year Detail Mill Estate Water consumption (m 3 ) 136,331 7, FFB process (ton) 110, m 3 /ton FFB Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 66 of 226

67 (June) Water consumption (m 3 ) 122,005 23,611 FFB process (ton) 99, m 3 /ton FFB Water consumption (m 3 ) 72,269 19,609 FFB process (ton) 57, m 3 /ton FFB The organisation has program to reduce water consumption, e.g. reusing water from vacuum chiller condensate for digester and press station, arranging water distribution to staff housing, reusing sterilizer condensate water for press station, reusing water from PPE and hazardous waste cleaner for spraying, flowmeter installation for all water utilization at mill. The organisation also has monitored the impact all activity to catchment area and local stakeholders, the evident was shown during audit. There were evident to ensure local communities, workers, and their families have access to adequate, clean water for drinking, cooking, bathing, and cleaning purposes by report of clean water analysis annually. The measurement analysis for Alue Geutah river water was conducted against the standard of PP82/2001 by third party laboratory (Sucofindo), last checked on 8 May From the result shows that all parameter were conformed within the standard. Clean water quality measurement was planned annually, last measurement on 8 May 2017 by Laboratory of PT. Mutu Agung Lestari and in line with Permenkes 416/1990. From the result shows that all parameter were conformed within the standard. The pipe lines for clean water were separated from the processing and waste lines. The ground water locations were placed far away from the mill operations and hazardous waste locations, also the design of waste basin were made descendant while the settling basin for clean water was ascendant. (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 Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 67 of 226

68 Growers and millers should address the effects of their use of water and the effects of their activities on local water resources. Audit Report 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? HCV Assessment Report Procedure SOC/PSM/9.07 about Riparian zone management There was map identifying water courses and wetland in HCV Assessment Report. Based on the report, that found water catchments area (river) were Alue Getah (47.97 ha), Alue Jepang (2.61 ha), Alue Serdang (1.6 ha), Alue Rumbiya (5.66 ha) and Alue Raya (2.35 ha). The riparian and buffer zones maintained and restores in existing plantation. Based on field observation in the area replanting Y2016 Division I Block 29, the riparian and buffer zones has been maintained and restored in existing plantation and replanting areas. The company has SOP for riparian and buffer zone protection in SOC/PSM/9.07 about Riparian Zone Management. The SOP has been implemented that refer to HCV Management and Monitoring. For detail, please see 5.2. YES (Major NCR CLOSED) Major Non-conformance: Based on document review was found that the Program of Rencana Penanaman dan Perawatan Benficial Plan / Riparian and buffer zone protection in Division IV Block 84 (967 meter- since January 2016) and Block 91 (1,050 meter-since January 2017) not yet realized Verification of Effectiveness: Estate has revised HCV program 2017 in block 84 and block 91. The programs are: Monthly manual upkeep NPK manuring by tugal three times a year Monitor warning sign monthly Dissemination to worker Monitor condition of riparian 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 : Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 68 of 226

69 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. 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. Audit Report Doc ID: 7913 / Issue Date: Aug, 2017 SAI Global Limited Copyright ABN Page 69 of 226