Roundtable on Sustainable Palm Oil

Transcription

1 Roundtable on Sustainable Palm Oil Public Summary Report Report no.: Certification assessment against the RSPO Principles & Criteria Indonesia National Initiative 2008 Wilmar International Limited PT Kerry Sawit Indonesia Location of client s holding Jenderal Sudirman Road Km. 62, Sampit-Pangkalan Bun Seruyan District, Central Kalimantan Province, Indonesia Report prepared by: Dian S. Soeminta Malaysian office: TUV Rheinland Malaysia Sdn. Bhd. No , Jalan Perindustrian USJ 1/6, Taman Perindustrian USJ 1, Subang Jaya, Selangor Darul Ehsan, Malaysia. Tel: Fax: Indonesian office: PT TÜV Rheinland Indonesia Menara Karya 10 th Floor Jl. H.R. Rasuna Said Block X-5 Kav 1-2 Jakarta Tel : +62 (0) Fax : +62 (0)

2 TABLE OF CONTENTS 1.0 SCOPE OF CERTIFICATION ASSESSMENT National Interpretation Used Type of Assessment Location and Maps Description of Supply Base Dates of Plantings and Replanting Cycles Other Achievements and Certifications Held Organisational Information / Contact Person Description of Company History and Environment Time Bound Plan for Other Management Units Area of Plantation (Total, Planted and Mature) Approximate Tonnages Certified Recommendation for Certification Date of Certificate Issued and Scope of Certificate ASSESSMENT PROCESS Certification Body Qualifications of Lead Assessor and Assessment Team Assessment Methodology Stakeholder Consultation and Stakeholders Contacted Date of Next Surveillance Visit ASSESSMENT FINDINGS Summary of Findings Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions Noteworthy Positive Components Issues Raised by Stakeholders and Findings Pertaining to Issues Acknowledgements of Internal Responsibility and Formal Sign-Off by Client 59 APPENDICES 60 Appendix 1: Details of Certificate 60 Appendix 2: Certification Audit Plan 61 Appendix 3: List of Abbreviations 64 Appendix 4: List of Stakeholders Interviewed and Contacted 65 Appendix 5: Observations and Opportunities for Improvement 66

3 Page 3 of SCOPE OF CERTIFICATION ASSESSMENT 1.1 National Interpretation Used The operations of the palm oil mill(s) and its supply base of FFB were assessed against the Indonesia National Interpretation year 2008 of the RSPO Principles & Criteria. 1.2 Type of Assessment The main certification assessment was carried out on one mill and three (3) estates under PT Kerry Sawit Indonesia owned by Wilmar International Indonesia 1.3 Location and Maps Figure 1: Location map of PT Kerry Sawit Indonesia in Seruyan District, Central Kalimantan, Indonesia RSPO v

4 Page 4 of 68 Table 1: GPS locations for all estates and mills included in certification assessment Name of mill / estate PT KSI Mill KSI 1 Estate KSI 2 Estate KSI 3 Estate Location Danau Sembuluh I Village, Danau Sembuluh subdistrict, Seruyan district, Central Kalimantan, Indonesia Jenderal Sudirman Km. 62 Road, Sampit-Pangkalan Bun, Seruyan district, Central Kalimantan, Indonesia Jenderal Sudirman Km. 62 Road, Sampit-Pangkalan Bun, Seruyan district, Central Kalimantan, Indonesia Jenderal Sudirman Km. 62 Road, Sampit-Pangkalan Bun, Seruyan district, Central Kalimantan, Indonesia GPS locations Latitude Longtitude S E S E S E S E 1.4 Description of Supply Base PT Kerry Sawit Indonesia mill is one of the palm oil mills that is owned by Wilmar International located in Central Kalimantan. PT Kerry Sawit Indonesia Mill was established in 2009 with a production capacity of 45 tonnes/hours or 250,000 tonnes per year in accordance with the terms of their plantations business permit (Izin Usaha Perkebunan (IUP)) for the company s head office location at Jl. Madang, No. 262-Sampit, Central Kalimantan. The development of the company was approved by the State Minister of Investment Funds / Chairman of the Investment Coordinating Board and Indonesian Capital Investment Coordination Board. PT Kerry Sawit Indonesia Mill receives supplies from its 3 company-owned estates as well other estates under Wilmar International Indonesia located within the company s Central Kalimantan Project, as describe below. The scope of this assessment only covers the 3 company-owned estates under PT Kerry Sawit Indonesia, which are Kerry Sawit Indonesia (KSI) 1, 2 and 3. Table 2: FFB Supply Information for PT Kerry Sawit Indonesia for year 2009 & 2010 FFB supplied in 2009(*) FFB supplied in 2010(**) FFB Contributors MT % MT % Company owned estates: KSI 1 13, , KSI 2 6, , KSI 3 4, , Sub Total 25, ,212 Other FFB sources (under Wilmar Group): Sarana Titian Permai , Mustika Sembuluh , Sub Total ,377 Note : (*) October to December 2009 (**) January to December 2010 TOTAL 32, , RSPO v

5 Page 5 of Dates of Plantings and Replanting Cycles The company follows a replanting cycle of 25 years. Information on the dates of plantings are as per the table below. Table 3: Age and year of plantings of company estate supplying to PT Kerry Sawit Indonesia Age & Year of Plantings KSI 1 KSI 2 KSI Oil palm planted area at each estate(ha) yrs ( ) 5, yrs ( ) , TOTAL 6, , ,089.4 The company s replanting programme is still not planned yet as the first year of plantings was only in Other Achievements and Certifications Held PT Kerry Sawit Indonesia still has not obtained any certifications or other achivements. 1.7 Organisational Information / Contact Person Contacts details of the company are as follows: Company Name: Address: Contact Person: PT Kerry Sawit Indonesia Jenderal Sudirman Km. 62 Road, Sampit-Pangkalan Bun, Seruyan district, Central Kalimantan, Indonesia Mr. Tan Tong Sin Telephone: tst@wilmar.co.id 1.8 Description of Company History and Environment Company s History PT Kerry Sawit Indonesia (PT KSI) is located within the central to southern areas of Wilmar s Central Kalimantan Project (CKP) in the Seruyan Province of Central Kalimantan, Indonesia. PT Kerry Sawit Indonesia was established in year 1996 and the company has the notarial deed no. 182 and deed of establishment dated 26 November, Initially, there were 3 companies that invested their capital to open oil palm plantations in this location i.e. PT. Kerry Sawit Indonesia, PT. Salawati Makmur and PT. Rimba Harapan, based upon an approval letter from the Indonesian State Minister of Investment / Chairman of Investment Coordinating Board. Approval for investment was obtained from the Indonesian President of Foreign Investment, as per their letter dated July 25, 1996 for PT. Kerry Sawit, PT. Salawati Makmur and PT. Rimba Harapan. The first plantation, PT Salawati Makmur, had a total area of 15,000 ha based on letter dated 12 May 1998 from the Indonesian Republic s Ministry of Forestry and Plantations, regarding approval of forest land located in the Central Kalimantan province for conversion to oil palm plantations by PT Salawati Makmur. The company also received approval from the Ministry of Forestry for extension of their forest land area to ± 16,850 ha. PT Salawati Makmur finally obtained a forest land release permit (Surat Pelepasan Kawasan), from the Ministry of Forestry for a total area of 17, ha located within in the Danau Sembuluh district, East Kotawaringin province, to be used for plantations operation. RSPO v

6 Page 6 of 68 The ownership of shares of PT Salawati Makmur was transferred to PT Kerry Sawit Indonesia in June 29, On 26 February 2, 1999, the Land Department Head of East Kotawaringin issued a decree letter for the change of name of the location permit holder from PT Salawati Makmur to PT. Kerry Sawit Indonesia for areas to be used as oil palm plantation. This includes parts of areas located within Bangkal Village, Sembuluh I Village, Sembuluh II Village, and Jahitan Village, located within the Muara Dua sub-district and Danau Sembuluh sub-district of Seruyan Hilir, East Kotawaringin. The company also received a decree letter dated 26 February 1999 from the Head Office of the East Kotawaringin land department, stating approval for transfer of ownership of the location permit from PT Salawati Makmur to PT Kerry Sawit Indonesia for an area of 17,500 ha. PT KSI started carrying out land preparation of their oil palm plantation areas since 2002 for the area of 17, ha, the area stated in the letter for forest land release permit that previously was owned by PT Salawati Makmur. The location permit ( izin lokasi ) granted to PT Salawati Makmur expired at the time, so PT Kerry Sawit Indonesia applied for extension of the location permit which was approved by the Land Department Head of East Kotawaringin through their letter dated June 11, 2002 for PT KSI s oil palm plantation areas located in Bangkal Village, Sembuluh I Village, Sembuluh II Village, Jahitan Village and Muara Dua Villages within Danau Sembuluh subdistrict in East Kotawaringin. In 2002, there was a government regulation (Indonesia Republic Regulation no. 5 year 2002) stating that the Seruyan district, which was previously part of East Kotawaringin province, would be separated to form part of Central Kalimantan. As PT s KSI administration office is located in Seruyan District, the company submitted an application to the new government of the Seruyan district requesting for a revision to their location permit ( ijin lokasi) from an area of 17,500 ha to 19,200 ha. In response, on 22 December 2, 2003, the Seruyan district government issued a letter stating an amendment to the location permit for oil palm plantation development areas belonging to PT. Kerry Sawit Indonesia in accordance with the company s request. PT KSI also applied for a Business License ( Ijin Usaha Perkebunan ) and the license dated 6 July 2005 has been issued by the government of Seruyan District through. On 27 October 2005, PT KSI submitted their application for the Land Use Rights certificate ( Hak Guna Usaha -HGU) to the National Land Agency ( Badan Pertanahan Nasional - BPN). BPN assigned a team, Cadastral Land Inspection Committee "B", to measure PT KSI s area and the team produced a cadastral map of PT KSI s legal boundaries and report which stated the measurement results for an area of 18, ha belonging to PT KSI. However in 2006 there was a letter issued by the Head of BPN of the Seruyan District dated 15 August 2006 informing on the issuance of HGU certificates would be suspended and HGU processing for all applicants who applied for HGU certificates prior to September 11, 2006 would be delayed. This was because the local government is developing a spatial land management plan for the Central Kalimantan province and currently is pending approval from the Indonesian Parliament. HGU certificates for that are being studied, which includes PT KSI s area, cannot be issued until the spatial management plan is approved. PT KSI then received a letter on 2 September 2007 from the BPN of Central Kalimantan requesting the company to reapply for their land forest release letter to the Minister of Forestry, upon which the BPN of Central Kalimantan would issue the HGU certificate for the company. PT KSI s management only just began to follow up on this matter in 2009 by submitting an application letter dated October 21, 2009 to the Ministry of Forestry. From the chronological of events described above, it can be seen that PT KSI still does not have all the necessary documentation and licenses to demonstrate complete legal ownership of their land. The location permit of PT KSI has expired. Even though PT KSI has already obtained their Plantation Business License ( Izin Usaha Perusahaan - IUP) from the government of Seruyan government, PT KSI should continue to ensure they obtain all necessary legal documentation to concretely demonstrate their legal ownership of the land and ensure their long-term business activities in this area. The company is continuing to communicate with the relevant government agencies to obtain their permit of land release ( Ijin Pelepasan Kawasan ), and the company has documented letters of correspondences made. To date, the company s application for their HGU certificate is still pending due to ongoing processing for the change of company name from PT Salawati Makmur to PT Kerry Sawit Indonesia. In addition, the Spatial Management Plan for Central Kalimantan province is still not completed by the provincial government. This plan will include management of forested areas, and the company must comply with the requirements laid out in this plan. This is another reason for the delay of approval of the company s HGU. RSPO v

7 Page 7 of Description of Estate Environmental Parameters For its operation, PT. Kerry Sawit Indonesia plantation is divided into 3 estates to facilitate their plantation management, namely KSI estate 1, KSI estate 2 and KSI estate 3. The total area under PT KSI s operation is 18, ha, according to the cadastral map that was issued by the BPN of Seruyan district, with mature plantation area comprising 12, ha. All FFB produced by the 3 PT KSI s plantation estate are processed at PT Kerry Sawit Indonesia palm oil mill located in KSI 2 estate. PT KSI mill has an installed capacity of 90 tonnes per hour of FFB processed but has a permit allowing processing of only 45 tonnes per hour. Table 4: General information on PT Kerry Sawit Indonesia 1. Company Location PT Kerry Sawit Indonesia (Estate 1, 2 and 3), Jenderal Sudirman Road Km. 62, Sampit-Pangkalan Bun Seruyan District, Central Kalimantan Province, Indonesia Geographical location S, and E Location of local government admin office Seruyan District Location of plantation administration Seruyan District office 2 Surrounding stakeholders Stakeholders located at north PT Mustika Sembuluh and PT Hamparan Sawit Mas boundary of plantation Stakeholders located at east PT Rimba Harapan Sakti boundary of plantation Stakeholders located at south boundary of plantation PT Sarana Titian Permai Stakeholders located at west boundary of plantation PT Selonok Ladang Mas Sembuluh 1 Village, Sembuluh II Village 3. Total Land Area 18,994 ha 4. Land Condition Flat to undulating (0-12%) 5. Soil type Podzolic, Sandy (Serai) and Shallow Peat ( Gali) 6. Climate condition B/Wet (Schmidt & Fergusson classification) 1.9 Time Bound Plan for Other Management Units The time frame laid out below is considered to be both challenging and realistic. The company will be using the experience of this main assessment to ensure that the other management units conform to the RSPO Principles & Criteria. The audit team is satisfied that the company conforms to the RSPO requirements for partial certification as laid out in Clause of the RSPO Certification Systems document. Table 5: Time bound plan for other Management Units Name of Holding/ Plantation Location Area (ha) Time bound plan for certification/ Certification status Year of Audit PT Perkebunan Milano North Sumatra Certified PT Mustika Sembuluh Central Kalimantan 15, Certified PT Tania Selatan South Sumatra Certification approved PT Kerry Sawit Indonesia Central Kalimantan 18, Under Review by RSPO PT Kencana Sawit Indone- West Sumatra. 7, Certified RSPO v

8 sia Page 8 of 68 PT Bumi Sawit Kencana Central Kalimantan 7, Planned PT AMP Plantation West Sumatra 7, Pre-Assessment completed PT Primatama Muliajaya West Sumatra 1, Planned PT Sarana Titian Permata Central Kalimantan 14, Planned PT Buluh Canang Plantations South Sumatra Planned PT Tania (Bamboo Kuning) South Sumatra Planned PT ANI (Sambas) West Kalimantan 9, Planned PT Daya Labuhan Indah North Sumatra 5, Planned PT Milano (CDE) North Sumatra Planned PT Citra Riau Sarana Riau 2, Planned PT Gersindo Minang Plantations West Sumatra 3, Planned PT Permata Hijau Pasaman West Sumatra 2, Planned PT Mentaya Sawit Mas Central Kalimantan 7, Planned PT Asiatic Persada Jambi 15, Pre-Assessment completed PT Pratama Prosentindo West Kalimantan Planned PT Putra Indotropical West Kalimantan Planned PT Sinarsiak Dianpermai Riau. 1, Planned PT ANI (Landak) West Kalimantan Planned PT Murini Sam Sam Riau 1, Planned PT Agro Palindo Sakti South Sumatra Planned PT Musi Banyuasin Indah South Sumatra Planned PT Karunia Kencana Permaisejattan Central Kaliman- 8, Planned PT Agro Palindo Sakti West Kalimantan Planned PT Daya Landak Plantation West Kalimantan Planned PT Indoresins Putra Mandiri West Kalimantan Planned Palm Oil Mills Total Location Annual CSPO production (mt) Year of Audit Certification status PT Milano (Pinang Awan) North Sumatra 27, Certified PT Mustika Sembuluh Central Kalimantan 81, Certified PT Tania Selatan South Sumatra 12, Certification approved PT Kencana Sawit Indonesia West Sumatra. 37, Under Review by RSPO PT Kerry Sawit Indonesia Central Kalimantan 51, Certified PT Bumi Sawit Kencana Central Kalimantan 27, Planned PT AMP Plantation West Sumatra 37, Pre Assessment complated RSPO v

9 Page 9 of 68 PT Buluh Canang Plantations South Sumatra 33, Planned PT Agro Nusa Investama West Kalimantan 17, (Sambas) Planned PT Sarana Titian Permata Central Kalimantan 37, Planned PT Sinarsiak Dianpermai Riau 6, Planned PT Daya Labuhan Indah-2 North Sumatra 25, Planned PT Citra Riau Sarana (ML) 1 Riau 46, Planned PT Gersindo Minang Plantations West Sumatra Planned PT Mentaya Sawit Mas Central Kalimantan 28, Planned PT Asiatic Persada Jambi 57, Pre Assessment completed PT Agro Nusa Investama West Kalimantan 30, (Landak) Planned PT Murini Sam Sam Riau 7, Planned PT Musi Banyuasin Indah South Sumatra 35, Planned PT Karunia Kencana Permaisejattan Central Kaliman- 41, Planned PT Agro Palindo Sakti 1 West Kalimantan 19, Planned PT Citra Riau Sarana 3 Riau Planned Total 719, Area of Plantation (Total, Planted and Mature) Table 6a: Oil Palm Planted Area Summary, FFB Production and Average yield/ha for PT Kerry Sawit Indonesia for year 2010 Estate Name Total area (ha) Oil Palm Planted area (ha) Mature (Production) area (ha) Immature (Non-production) area (ha) FFB Production* (tonnes) Average yield/ ha KSI 1 7, , , , KSI 2 6, , , , , KSI 3 5, , , , TOTAL 18,994 15, , , , *Note: FFB production from January 2010 to December 2010 Table 6b: Oil Palm Planted Area Summary, Projected FFB Production and Average Yield/ha for PT Kerry Sawit Indonesia for year 2011 Estate Name Total area (ha) Oil Palm Planted area (ha) Mature (Production) area (ha) Immature (Non-production) area (ha) FFB Production* (tonnes) Average yield/ ha KSI 1 7, , , , KSI 2 6, , , , KSI 3 5, , , TOTAL 18,994 15, , By January 2011, some 2, ha or 22% of young area will come into maturity and this is anticipated to increase the yield by 47% or 74,588 tonnes more than This is attributed to palms in KSI 1 that was established between 2003 to 2005 which will be reaching their prime. RSPO v

10 Page 10 of 68 Table 7: Land use data for PT Kerry Sawit Indonesia HCV/ Land used for other purposes (ha) Oil Palm Estate Total area Planted potential Name (ha) Area (ha) HCV areas* Housing, Nursery Uncleared Non Conflict/ plantable (ha) Road, mill Area Enclave area KSI KSI KSI TOTAL 18, , Note: * Some HCV / potential HCV areas listed above are areas belonging to local communities as well, which are still in good forest condition and will be preserved by the company as HCV areas Approximate Tonnages Certified The approximate tonnages certified, based projected production in year 2011 (as per Table 6a), OER of 22.0% and KER of 4.0% (based on 2010 production data) are as follows: Crude Palm Oil (CPO) : 51,656 tonnes (OER of 22.0%) Palm Kernel (PK) : 9,392 tonnes (KER of 4.0%) 1.12 Recommendation for Certification PT Kerry Sawit Indonesia has established and maintains an effective system to ensure compliance with the RSPO principles and criteria. The audit team has confirmed through the audit process that the company s practices complies with, adequately maintains and implements the requirements of RSPO Principles and Criteria National Intrepretation Indonesia version TUV Rheinland Malaysia recommends that PT Kerry Sawit Indonesia be approved as a producer of RSPO Certified Sustainable Palm Oil Date of Certificate Issued and Scope of Certificate The scope of the certificate covers production of palm oil from PT Kerry Sawit Indonesia and its companyowned estates, which includes KSI 1, KSI 2 and KSI 3. The date of certificate issued is 18 June Further details of the certificate are as per Appendix 1. RSPO v

11 Page 11 of ASSESSMENT PROCESS 2.1 Certification Body TUV Rheinland Malaysia Sdn. Bhd. is member of Group TÜV Rheinland Group, a global leader in independent testing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 490 locations in 61 countries on all five continents. TUV Rheinland Malaysia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, SA 8000, as well as CDM Project Validations. TUV Rheinland Malaysia s office is located in Subang Jaya. 2.2 Qualifications of Lead Assessor and Assessment Team Name Position Qualifications / Experience Dian S. Soeminta Fadli Rahmawati Noor Lead Auditor Auditor Auditor Education: Bachelors Degree in Forestry - Bogor Agriculture Institute. Indonesia, (1990 to 1995). Trainings attended: ISO 9001:2000 lead assessor course Neville Clark; ISO lead assessor course - PE International; OSHAS: 2007 training, Sustainable Forest Management (SFM) - Forest Stewardship Council (FSC) system training; Chain of Custody training for FSC System. Working experience: Professional forester since 1995 to Lead Auditor for Forest Stewardship Council (FSC), Sustainable Forest Certification (SFC) and Chain of Custody (COC) Certification. Lead auditor for Environmental Management System (EMS) and Quality Management System (QMS) audits. Conducted sustainable forest management certification audits on FSC and Indonesian Ecolabel Institute (Lembaga Ecolabel Indonesia - LEI) standards for 20 companies, 50 COC FSC/LEI audits, and EMS and QMS audits at more than hundred companies for TUV Rheinland Indonesia. Instrumental in the preparation of TUV Rheinland Indonesia for Sustainable Forest Management Certification System and TUV Rheinland Malaysia for RSPO Certification. Member of Task Force for Indonesian National Interpretation (Guidance on scheme smallholder RSPO certification). Developed TUV Rheinland RSPO Gap Assessment Checklist and report template. Education: Bachelor of Anthropology, Department of Anthropology - University of Indonesia, Jakarta. Trainings attended: Sustainable Natural Production Forest Management (Pengelolaan Hutan Alam Produksi Lestari - PHAPL) assessor training (May 2003); Forest Plantation Management (August 2003) training - Indonesian Ecolabel Institute (LEI), Forest Management and Agriculture Auditor Training; ISO 9001:2008, ISO 14000:2004, OHSAS 18001:2007 trainings - Smartwood/Rainforest Alliance; SA8000 training - SA International; RSPO Lead Auditor Training -Indonesian Palm Oil Commission. Working experience: Experienced as lecturer for D3 Tourism programme, University of Indonesia. Social aspect auditor of PT. TUV International Indonesia for Sustainable Forest Management and RSPO Principles & Criteria. Researcher of stakeholder mapping for CSR Indonesia. Education: Bachelor of Chemical Engineering, Sriwijaya University Palembang and Master of Occupational Health and Safety, University of Indonesia, Jakarta. Trainings attended: RSPO Training by the Indonesian Oil Palm Commission (13-18 July 2009). Lead Auditor for ISO 9001, ISO and OHSAS since 2001 for PT. TUV International Indonesia, and has audited more than 100 companies. Involved in ISO 9001, ISO and OHSAS audits for several palm oil plantations and mills. Since 2007, involved in CDM validation projects for several palm oil mills in Indonesia. Had 5 years experience as environmental consultant for PT. Dames and Moore Indonesia, prior to working for PT. TUV International Indonesia. RSPO v

12 Carol Ng Irpan Kadir Expert Auditor Page 12 of 68 Education: Bsc. Biotechnology & Bsc. Environmental Management - Monash University. Trainings attended: RSPO Malaysian National Interpretation Requirements and Certification SIRIM; Implementation of RSPO Principles & Criteria - QA Plus; RSPO Stepwise Support Programme; 2nd Biodiversity Seminar RSPO; Certification Body Biodiversity Forum & Workshop RSPO; Environmental Quality Act 1974 (DOE) and ISO9001:2008 QMS Conversion Requirements (TUV Rheinland). Working experience: Experience in implementing sustainable practices in Sime Darby plantations to comply with RSPO requirements, performing RSPO internal audits and implementing sustainability projects. Prepared training materials and conducted several RSPO requirements trainings and workshops to plantation management teams (2008). Education: Bachelor of Agriculture, Department of Social and Economic of Agriculture, Bogor Institute of Agriculture. Trainings attended: Sustainable Natural Production Forest Management (Pengelolaan Hutan Alam Produksi Lestari - PHAPL) assessor training (May 2003); Forest Plantation Management (August 2003) training - Indonesian Ecolabel Institute (LEI). Working experience: Experienced as external auditor of PT. TUV International Indonesia for Sustainable Forest Management and RSPO Principles & Criteria. Has experience in conducting assessments of performance and social mapping for mining and forestry companies. He is a senior researcher and trainer at A + CSR Indonesia. 2.3 Assessment Methodology The certification assessment was conducted between 06 and 10 December 2010 as per the assessment programme below. The assessment was carried out in accordance with TUV Rheinland Malaysia s RSPO audit procedure as well as the RSPO Certification Systems document. During assessment, the qualified TUV Rheinland assessors used the RSPO standard as endorsed for Indonesia and recorded their findings. Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without compromising the integrity of the assessment in any way. All 3 estates and 1 mill were visited and the assessment team carried out field and document assessments of compliance to all the RSPO principles and criteria. Common systems were identified and specific evidence was recorded for individual estates. Interviews were conducted at all estates and the mill. The company proposed the correction and corrective action for all identified non conformities raised to the certification body 30 days after the closing meeting. Verification of closure of minor non-conformances was conducted 1 month after the closing meeting of the main assessment and implementation of corrective actions for minor non-conformities will be verified during the next surveillance audit. The certification assessment agenda is as explained below. RSPO v

13 Page 13 of 68 Table 8: Main Assessment Agenda for PT Kerry Sawit Indonesia Location/ Date Main activities Main sites PT KSI Opening Meeting Head Office Presentation from management of PT Kerry Sawit Indonesia Document Check for general Information (area statement, annual production KSI Estate 1 Division 1, Block 25, 24 & 23 HCV areas Sampit, Hotel Wella KSI 2 estate, Block 74 & 75, KSI 2 office KSI 2 estate KSI 3 estate for estates and mill) On-site visits to: Boundary Stone locations and & checks of legal boundaries HCV areas Workers housing area and facilities Hazardous waste store Wetland areas, Sandy areas Land areas under dispute with other parties Open Stakeholder Consultation in Sampit, Interviews with workers regarding welfare and allowance Checking warehouse in KSI 2 On-site check of POME land application at KSI 2, Document & on-site checks for: Waste water monitoring Identification and monitoring of environmental impacts On-site visits to: HCV areas of KSI 2 Wetland and riparian river protection Peat land area and subsidence monitoring plot Sandy soil areas and marginal soil areas Workers housing and facilities Water treatment facility FFB harvesting process Building construction sites Legal boundaries of estate Sembuluh 1 & 2 Village On-site visits to: Tebiku Village Enclaved production forest area HCV area KSI 2 Wetland and riparian river protection Peat land area and subsidence monitoring plot Sandy soil areas and marginal soil areas Legal boundaries of estate KSI Mill Checks of documents and relevant mill & equipment licences Interviews with mill workers Document check of mill legal documents Plant tour to the whole area of POM to checking the implementation of PPE, OHS and waste handling. Checking of chemical stores and hazardous waste stores Review all audit result and preparing for closing meeting. Closing meeting. RSPO v

14 Page 14 of Stakeholder Consultation and Stakeholders Contacted The stakeholder consultation involved both external and internal stakeholders. External stakeholders were notified to make comments on the certification assessment by placing an invitation to comment on the RSPO website. Stakeholders included those immediately linked with the operation of the company such employees, outgrowers, the local government, NGO s, trade and labour unions and local communities. Stakeholder consultation took place in the form of meetings and interviews. Meetings with stakeholders were held to seek their views on the performance of the company with respect to the sustainability practices outlined in the RSPO Principles & Criteria, and to comment on aspects where improvements could be made. Meetings with local communities were held at their respective premises within and near the company s area. A stakeholder consultation meeting was also held at Hotel Wella Sampit, Central Kalimantan on December 08, Letters inviting individual stakeholders to the stakeholder consultation meeting were prepared and sent to the individual stakeholders, while electronic mail and telephone calls were made to arrange the meetings. In all the interviews and meeting, the objectives of the RSPO and the purpose of the assessment was clarified at the outset followed by an evaluation of the relationship between the stakeholders and the company before discussion proceeded to obtain the stakeholders feedback on the company s compliance to different aspects of the RSPO Principles & Criteria. Although several stakeholders were not familiar with RSPO but they agreed with its objective and expressed their willingness to collaborate in the promotion of sustainable palm oil in North Sumatera province. In all interviews and meeting, the assessment team did not restrict discussion of both the positive and negative aspects of operations conducted by PT Kerry Sawit Indonesia estates and mill. No management representatives of the company were present during stakeholder consultation in order to prevent any forms of intimidation. The stakeholder consultation meeting held with stakeholders during the audit was extensive and productive, with an attendance of about 50 attendees. This was followed by site inspections, including visits to the local communities, interviews with land claimants and contractors, and inspections of worker amenities and infrastructure. All stakeholder issues raised were recorded and forwarded to the management for their written reponse, and this is summarized in Section 3.4.The list of stakeholders that attended the stakeholder consultation meeting and stakeholders interviewed during the assessment is included as Appendix Date of Next Surveillance Visit The next surveillance visit is planned for April ASSESSMENT FINDINGS 3.1 Summary of Findings Since the company became a member of RSPO in September 2005, the company s management has committed to comply with all RSPO Principles and Criteria in all company operations activities. As implementation of its commitment, the company applied to TUV Rheinland Malaysia to conduct the assessment of their compliance to all RSPO requirements for PT Kerry Sawit Indonesia (PT KSI) mill and the 3 estates of PT KSI which supply their FFB to PT KSI palm oil mill. A pre - assessment was conducted on May 25-28, 2010 and the company has worked hard to address all identified non conformities raised during the pre-assessment. There is evidence of a considerable effort on behalf of all staff in the preparation of manuals, standard operating procedures and other documents not only to conform to RSPO requirements, but for the company s improvement of process effectiveness and efficiency. In general, objective evidence demonstrating compliance to the RSPO requirements was obtained from each of PT Kerry Sawit Indonesia estates as well as PT Kerry Sawit Indonesia mill. The results from assessment of each site within the certification unit have been aggregated to provide an assessment of overall conformance of the company to each criterion. RSPO v

15 Page 15 of 68 Seven (7) nonconformities were assigned against minor indicators. Twenty-eight (28) observations/opportunities for improvement were identified. Details of the nonconformities are provided in section 3.2 below. The company prepared a corrective action plan for minor nonconformities that was reviewed and accepted by TUV Rheinland Malaysia within the 30 days which shall be verified during next surveillance audit. The following is a summary of findings made for the criteria listed in the RSPO Principles & Criteria Indonesian National Interpretation year Criterion 1.1: Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation in decision making. Requests for information made by stakeholders at the palm oil mill and the estates were recorded in one document together with any other requests or letters received from stakeholders, as required by company s procedure. As seen from the company s log book, there is one record of request of information with corresponding response from the company, as follows: A letter dated 5 May 2010 from the Forestry Department and Plantation Institution Office of Seruyan requesting the company s monthly production report for sales activivty of FFB, palm kernel oil, and CPO. There is a letter dated on 24 May 2010 from the company in response to this information request from Forestry Department and Plantation Institution Office of Seruyan on the company s production report. It is mentioned in PT KSI s standard operating procedure no. 04/SOP 36/CKP/(1)/0310 that the company shall maintained all records of requests for information and responses made by the company for at least 3 years. Evidence so far shows that the company maintains these records in accordance with this SOP. Compliance status: Full compliance Criterion 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. As evidence that the company makes their management documents publicly available to stakeholder, the company has sent a letter dated 6 March 2010 to their stakeholders informing them regarding documents that are publicly available. The company s documents that can be accessed by the public as stated in the company s procedure include the company s social and environmental impact assessment (AMDAL), environmental management and monitoring reports ( laporan RKL/RPL ), company annual reports, company policies, copies of licenses, monthly mill and estates operational reports, area statements, soil maps, hydrology maps, topography maps, maps of estate and village boundaries, traditional rights areas, estate and mill procedures, company organization structure, high conservation value (HCV) reports and management plans, social impact assessment (SIA) report, company magazine and bulletins, investment activity reports, estate activity reports, estate statistic monitoring reports, company worker information, expatriate information, land usage information, CPO purchasing information and company Community Development and CSR report. There are receipt slips received from stakeholder, including local community and relevant government institutions, indicating that they have received this information letter. The company has a procedure to maintain records of information requested and responded to for a RSPO v

16 Page 16 of 68 minimum of 3 years. Compliance status: Full compliance Criterion 2.1: There is compliance with all applicable local, national and ratified international laws and regulations. It was found that the company has traceable records demonstrating compliance to all applicable regulations. The company holds the licenses required under Indonesian law for mill and estates operation which were found to be valid. These include their Plantation Business Permit, certificate of company registration, Location Business Permit ( Ijin Tempat Usaha ), trading permit ( Ijin Usaha Perdagangan ) required for international investment companies, Annual Disturbance Permit ( Ijin Gangguan Tahunan ) for the mill, and approval of foreign investment from the State Minister of Investment / Chairman of the Capital Investment Coordinating Board. The company also has other licenses related to operations such as a Building Construction Permit ( Ijin Mendirikan Bangunan - IMB) for construction of worker s quarters and office buildings at KSI 2 and inside Tabiku Village, license for temporary storage of hazardous wastes (including used oil containers, used batteries, filters, petrol containers and grease trap containers), a copy of license of contractor for hazardous waste collection and storage (PT. Nazar) and valid licenses for all mill equipment, such as back pressure vessels, steam separators, vertical sterilizers, boilers, diesel engines, and steam turbine compressors. The mill has a permit to conduct land application of palm oil mill effluent (POME) for trial purposes and the mill has applied for approval for permanent land application permit, with documented evidence that approval of application by the local government is currently in progress. The company has a recommendation letter for approval of the permit from the Head of Seruyan government. It was verified that PT KSI conducts monthly sampling and analysis of POME quality in accordance to legal requirements for POME application, and bi-annual checks of land application areas are carried out by local authorities to ensure land applications meet legal requirements while approval of the permit is pending. As the company is complying with legal requirements for POME land application and the delay in approval of the permit is due to the local government (an external party), this was raised as an observation. The company has a law register document listing the expiry dates of their various licenses or permits and applicable regulations, which is used to monitor when the licenses or permits are to be renewed. There is evidence that the company complies with legal regulations pertaining to employment, such as follows: 1. Based on summary reports of employee data for period May 2010 which contains information on the age of employees, the auditors did not find evidence of any company employees under 18 years old (worker s minimum age as determined by the ILO conventions and Law No. 13 of 2003). 2. There is evidence that company complies with Indonesian employment law (Manpower Ministry regulation no. 100 year 2004 chapter 10 article 3) which states that all temporary workers who work for the company for 21 days or more continuously within 3 months must be employed as permanent workers. Evidence was seen from several company letters from KSI 1 and KSI 2 estates regarding the appointment of several temporary workers to become permanent daily workers. 3. The company applies for the work permits and extensions required for expatriate staff as required by the Manpower and Transmigration Head Office of Kalimantan Tengah Province. Evidence was seen from copies of limited residence permits cards for two expatriate Malaysian staff issued by the Immigration Office of the Republic of Indonesia. 4. The company revises the wages of their workers in accordance with changes in minimum wage as per decree letters issued by the local government. For example, as seen from sample pay slips, the wages of permanent daily workers was revised to a total of Rp. 1,520,356. This is following the new minimum wage regulation for East Kotawaringin from the governor of Central Kalimantan on November 19, 2009, stating a new minimum wage of Rp. 1,058,838 (for the plantation sector) which shall apply from 1 January 2010 onwards. There is a sand mining activity within PT Kerry Sawit s areas which is carried out by the contractor, PT Sepindo, where sand is used for the purposes of the company s internal corporate activities. The com- RSPO v

17 Page 17 of 68 pany has recently completed an environmental impact assessment including sand mining activities and this has been endorsed by the Environment Agency Seruyan District. The company has since applied for a permit for sand mining operations which as yet to be approved as the license approval process by the Indonesian government is a slow process. The company has followed the necessary procedures and meet legal requirements to obtain this license, although it was noted that the company has not paid retribution for Galian C type sand mining activities, which is important as part of contribution to local community development, and this was raised as non-conformity under CR6.11. When providing compensation for land owned by the community, the company calculates compensation based on the East Kotawaringin Regency Head regulation No. 316 year 2007 regarding basic compensation price for land and crops in East Kotawaringin. The company has a list of applicable legal requirements. The company updates their list of applicable legal requirements through communication with the government to obtain updates on legal requirements. This was viewed from examples of recently updated regulations included in the company list of applicable legal requirements, such as updates to regulations from the Ministry of Environment regarding management of water pollution control, preparation of manual of environmental impact analysis and requirements for competent authors to document the environmental impact analysis, regulation from the Ministry of Health concerning drinking water quality, and updated regulations pertaining to road traffic. The process of updating and maintaining the legal requirement register document is done by the related operational department and document control division. The company has established a mechanism for evaluation of applicable law and regulation to be done every 6 months. Evaluation results are documented in the legal requirement register document, as seen for the register of safety and health regulations which reviewed and evaluated in January The company has established an action plan to comply with certain requirements that have not been met yet. It was observed that the company s doctor has not yet been sent for Company Hygiene & Occupational health (Hyperkes) training as required under regulation from Ministry of Manpower, Transmigration and Cooperative No. 01/1976. The company already has a corrective action plan by established a training programme and plan to send the doctor as well as company paramedics for Hyperkes training as soon as such training is being conducted by the local government. Compliance status: Compliance with observations Criterion 2.2: The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights. At the time of the main assessment, the land use right certificate (HGU) for PT KSI was not yet issued by the National Land Institution as the company s application for the change of company name from PT Salawati Makmur to PT Kerry Sawit Indonesia is still ongoing. In addition, the Spatial Management Plan (RTRWP) for Central Kalimantan province is still not completed by the provincial government. This plan will include management of forested areas, and the company needs to comply with this requirement. HGU certificates for the area are only issued by the local government upon approval on the plan, hence, this has also contributed to the delay in issuance of the company s HGU certificate. However, while the company has yet to receive their HGU, the company was able to demonstrate that they had already gone through the process of application of all other necessary legal documents required to demonstrate land ownership, and this process was explained in detail under Section (Company s History). As the delay is caused by the relevant authorities, this was raised as an observation. The company has prepared a monitoring plan to continue following up on this matter and the progress shall be monitored during the next surveillance audit. The company has cases of land disputes with local communities, and maintains records of the dispute resolution process. At KSI 1 there are 4 cases of land conflicts that have not been resolved as agreements on a compensation price have not been reached with the relevant parties, but resolution of the disputes is in progress. The land claims made for KSI 1 are as follows: RSPO v

18 Page 18 of 68 - Claim for an area of 6.5 ha at blocks 2T by Maswer & Kerry, - Claim for an area of 65 ha at blocks 2T 27, 28, 29 and 3T 30 by Jaelani/ Aji - Claim for an area of 40 ha at blocks 6T by Darmani - Land acquisition in 2003, claimaint named Anang Haerun Cs (no specific area coverage). Some ongoing land conflicts at KSI 2 are as follows: - Claim for a total area of 12ha at block 2B 4 (8 ha) and block 1T 55 (4 Ha) by Kusuma Yuda - Claim for area of 2 ha at block 1T 58 by Edo - Claim for area of 70 ha at blocks 3B and 4B made by Indra Some ongoing land conflicts at KSI 3 are as follows: - Claim for an area of 30ha at block 4B by Giaynsyah/ Piyul The company has made efforts to negotiate through formal and informal approach with relevant parties (including government and community) to find a resolution that is agreeable to all parties, including compensation. Some land claims have been accepted but some other still have not been accepted. The company maintains evidence of land dispute resolution processes carried out or ongoing is as follows: 1. There is a meeting minutes of negotiations held on 2 February 2010 at PT Mustika Sembuluh I office with a land claimant, Mr.Indra claiming a land area of 38 ha located within PT KSI II, block 3B and another claim of 32 ha within PT KSI area at block 4B The land was planted by the company and the claimant was demanding compensation for the original crops. The company has yet to reach an agreement on the compensation amount, and the company has submitted Mr.Indra s request for compensation amount of IDR 190 million to the management of Wilmar International Group CKP plantation. There some documentation evidence of the negotiation process such as photographs and attendance lists. The company has an action plan for resolution of the dispute and the next scheduled meeting is December 15, There are maps showing the area of the land claim. 2. There are minutes of negotiations dated 1 December 2010 held at PT Mustika Sembuluh I office, between Wilmar s Partnership Development or Bina Mitra department (which is responsible for all land acquisition process in Wilmar s Central Kalimantan project) held with another land claimant, Mr. Ahmad Supendi and several villagers of Sembuluh II Village. The location of the land claimed is at PT KSI II, block 3B 58, total for an area of Ha which now has been planted with oil palm. For records of the negotiation process, it was seen that both parties discussed and finally agreed on a compensation price of Rp million. There is evidence of the negotiation process such photographs and attendance list. At the time of the audit, the payment had not yet been made by the company. 3. On 3 December 2010, PT KSI received a letter from community groups, chaired by Mr. Nuhranwho claimed that they are the owners of land area located in KSI II which was claimed by the villager Mr Indra from Sembuluh I Village. The group provided a list of 17 individuals claiming to be owners of the land located at blocks 3B This dispute has yet to be resolved as it was raised just prior to the audit, and the company is planning to communicate with the first land claimant to clarify on this matter. 4. There is a letter dated 27 August 2010 from a villager of Sembuluh I village, H. Nurmansyah, asking for land compensation for the land that already planted by company. But the company did not respond to this letter as the claim is not valid anymore since the company has already paid compensation. According to interviews with the village heads of Sembuluh I and Sembuluh II, H. Nurmasyah is not the owner of the land but only representative of the owner and the payment was already made by the company to the owner. 5. There are minutes of negotiations for Jaelani s land in November 28, 2010 for land in block 2T 27, 28, 29 and 3T 30 for an area of Ha. The negotiation consisted of 4 stages, where initially, the claimant demanded a price of IDR 90 million, but the company was only capable of paying IDR 65 million. At the fourth round of negotiation they reached an agreement on a compensation value of IDR 80 million. 6. The company has an official report dated 5 November 2010 on the resolution of a land dispute involving two individuals, Armani which claimed an area of ha, and Arsiun which claimed an area of 36 ha located within Armani s claimed area. In this report, it was stated that Armani released the land area of ha to PT KSI, but an area 36 Ha in this area was also claimed by another villager, Arsiun. Arsiun did not attend the meeting with the company but Armani agreed to be responsible for his decision to release the land back to the company. RSPO v