OILPALM PLANTATION MANAGEMENT SURVEILLANCE AUDIT REPORT

Transcription

1 Page 1 OILPALM PLANTATION MANAGEMENT SURVEILLANCE AUDIT REPORT Project Nr: MY02203 Certificate Nr: SGS-RSPO/PM Validity Period: 23 Aug Aug 2015 Report Ref #: Client: RSPO membership #: Web Page: Address: Country: Plantation Unit being Evaluated MY Gomali Surv 01 Report IOI Corporation Bhd (O) Head office: Level 8, Two IOI Square IOI Resort, Putrajaya Malaysia. Malaysia Contact: Mr. Too Heng Liew Head of Sustainability Phone No.: hltoo@ioigroup.com Gomali oil mill and its supply base plantation in Negeri Sembilan, Pahang and Johor. Company Contact Person: Address: Mr. Too Heng Liew Gomali Palm Oil Mill 5 mile, Jln Gemas Batu Anam K.B. No 102, Batu Anam, Segamat, Johor Tel: Fax hltoo@ioigroup.com Evaluation dates: Main Evaluation August 2009 Surveillance August Surveillance 2 August 2012

2 Page 2 Table of Contents OILPALM PLANTATION MANAGEMENT SURVEILLANCE AUDIT REPORT Scope of the Surveillance Audit Certification unit background Mill and supply base Location and hectarage statement Climate Production record Organisational information/contact person Tonnages certified Time bound plan and progress made by the parent company Annual Surveillance Audit Process Annual Surveillance Audit methodology (program, site visits) Team members Certification body Stakeholder notification and consultation Annual Surveillance Audit findings Findings Chain of Custody Acknowledgement of Internal Responsibility and Formal Sign-Off of Assessment Findings APPENDIX A: CORRECTIVE ACTION REQUEST APPENDIX B: OBSERVATIONS APPENDIX C: AREA STATEMENT (AS OF JUNE ) APPENDIX D: NEW SCHEDULE OF RSPO CERTIFICATION IN IOI ESTATES APPENDIX E: LIST OF STAKEHOLDERS CONTACT... 62

3 Page Scope of the Surveillance Audit 1.1 Certification unit background An assessment of the GOM-PMU was undertaken by SGS between 10 th 14 th of August 2009 to evaluate field practices and documentation of the unit against the Roundtable on Sustainable Palm Oil (RSPO) Principles and Criteria (P&C) Malaysia National Interpretation (MYNI). The assessment resulted in the issuance of 17 Corrective Action Requests (CAR). As there was no CARs issued, the unit was then recommended for certification. The report has been reviewed by the RSPO Board which resulted in the issuance of a certificate to GOM-PMU on 23 rd August The validity of this certificate is over a period of 5 years (23 rd Aug nd Aug 2015) and subjected to annual surveillance. Following the certification, the Annual Surveillance Audit 1 (ASA1) was scheduled and conducted on August to assess the continued compliance of the GOM-PMU against the requirement of the Roundtable on Sustainable Palm Oil (RSPO) Principles and Criteria (P&C) Malaysia National Interpretation (MYNI- 26 th April 2008 ). 1.2 Mill and supply base The Gomali Oil Mill has a processing capacity of 120 tonne per hour with an annual CPO output (July 2010 to June ) of approximately 99,348 tonnes. The mill receives fresh fruit bunches from different sources. A summary of the sources is presented in Table 1 below. Table 1: Mill capacity and sources of FFB MILL: GOMALI OIL MILL Mill location Capacity FFB input CPO output PK output Gomali Estate 120 mt/hr 473,866 mt 99,348 mt 24,752 mt # Estate Status Area planted (ha) 1 Bahau GOM-PMU 2,788 2 Bukit Serampang GOM-PMU 2,557 3 Kuala Jelei GOM-PMU Paya Lang GOM-PMU 2,341 5 Regent GOM-PMU 2,142 6 Sagil GOM-PMU 2,246 7 Tambang GOM-PMU 1,900 8 Bukit Dinding GOM-PMU 1,451 9 Gomali GOM-PMU 2, Bertam GOM-PMU Jasin Lalang GOM-PMU 2,070

4 Page 4 12 Sembilan Tani GOM-PMU (Outgrower) Location and hectarage statement The IOI Corporation s Gomali Oil Mill Plantation Management Unit (GOM-PMU) comprises of eleven directly managed estates namely Bahau, Bertam, Bukit Dinding, Bukit Serampang, Gomali, Kuala Jelei, Paya Lang, Regent, Sagil, Tambang and Jasin Lalang and a 120 tonne mill identified as Gomali Oil Mill. The unit has one outgrower refered to as Sembilan Tani. The estates supplying the mill are spread out within the states of Johor, Pahang, Melaka and Negeri Sembilan. The location map of the estates is presented in Map 1. The hectarage statement for all estates is presented in Appendix A. The total planted area for the eleven directly managed estates is 21,013 ha of which 20,429 ha is oil palm and 584 ha is under other crops. The individual estate summary is presented in Table 2

5 Page 5 Table 2: Summary of estates in GOM-PMU Crop Age Paya Lang Bertam Gomali Bahau Bukit Dinding Kuala Jelei Tambang Jasin Lalang Regent Sagil Bukit Serampang Total % Area in hectares Oil palm , ,279 1,215 1, , Subtotal oil palm , , , ,053 10, < Immature (<30 months) , , ,205 2,788 1, ,900 2,070 2,142 2,158 2,557 20, Coconut Orchard Rubber RN 08 A RN 08 B RN 11 A Total planted area 2, ,358 2,788 1, ,900 2,070 2,142 2,246 2,557 21,013 Total 21,013 Note: The outgrower Sembilan Tani has 263 ha of oil palm.

6 Page 6 Map 1: Location map of Gomali region

7 Page Climate The mean monthly rainfall information (January 2010-June ) for estates in the unit is presented in Table 3. The mean monthly rainfall is recorded as ranging between 0 mm to 851 mm. Regent estate recorded the lowest total rainfall (2,526 mm) for the prescribed period while Kuala Jelei estate the highest (3,545 mm). Mean monthly rainfall histograms for all individual estates are presented in Figure 1 below. Estate Table 3: Rainfall data for individual estate (Jan 2010-June ) Lowest monthly rainfall (mm) Highest monthly rainfall (mm) Total rainfall (mm) Paya Lang June 0 January 288 2,605 Bukit June 30 January 385 2,966 Serampang Sagil February 3 January 343 3,170 Jasin Lalang February 10 June ,955 Regent October 2010/ 28 November ,526 February Bertam February November ,984 Gomali February 6 January 456 2,996 Bahau February January 335 2,948 Bukit Dinding February September ,516 Kuala Jelei February January 851 3,545 Tambang February 31 January 372 2,852

8 Rainfall (mm) Rainfall (mm) Rainfall (mm) Rainfall (mm) Rainfall (mm) Rainfall (mm) Rainfall (mm) Rainfall (mm) MY02203 Page Jan-10 Feb-10 Mar-10 Jan-10 Feb-10 Mar-10 Jan-10 Feb-10 Mar-10 Jan-10 Feb-10 Mar-10 Bahau Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Bertam Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Gomali Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Kuala Jelei Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun Jan-10 Feb-10 Jan-10 Feb-10 Mar-10 Jan-10 Feb-10 Mar-10 Jan-10 Feb-10 Mar-10 Bukit Dinding Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Bukit Serampang Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Jasin Lalang Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Paya Lang Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11

9 Rainfall (mm) Rainfall (mm) Rainfall (mm) MY02203 Page 9 Regent Sagil Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Tambang Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Figure 1: Monthly rainfall (January 2010-June ) histogram for estates in the unit

10 Page Production record The Gomali Oil Mill receives FFB from estates within the region namely Bahau, Bertam, Bukit Dinding, Bukit Serampang, Gomali, Kuala Jelei, Paya Lang, Regent, Sagil, Jasin Lalang and Tambang. The mill also receives supply from one outgrower which is Sembilan Tani. In addition, Gomali also receives FFB from other IOI Group operating units and outgrowers namely Bukit Leelau, Detas, Leepang A, Shahzan 1, Shahzan 2 and IOI Resort. However, only estates directly managed under Gomali PMU and the outgrower, Sembilan Tani, will be considered under the scope of certification. Table 4 below shows FFB production for all estates from 2006 to. Total FFB processed from July 2010 to June was 473,866 mt while the Crude Palm Oil (CPO) and Palm Kernal (PK) production during the same period are 99,348 mt (Table 5) and 24,752 mt (Table 6) respectively. The table also show the contribution from the certified supply base estates and the outgrower. Note: IOI Corporation is a partial shareholder (20%) of Jasin Lalang estate. However, it is directly managed by IOI Table 4: FFB production record (Tonne) FFB production (Tonne) (July to June) Estate 2006/ / / / / Bahau 45,816 56,807 59,847 49,688 61,587 Bertam 6,992 21,493 21,050 19,308 13,166 Bukit Dinding 28,478 36,240 36,115 36,880 30,694 Kuala Jelei 9,178 12,618 15,449 12,964 12,370 Gomali 38,513 57,932 53,607 41,290 45,120 Tambang 32,627 53,782 48,569 40,750 48,218 Bukit Serampang 58,473 67,543 63,675 55,340 62,647 Paya Lang 46,256 60,804 48,945 40,766 42,136 Regent 47,237 61,815 54,459 42,377 46,597 Sagil 53,215 40,267 54,347 45,633 56,128 Jasin Lalang 69,074 71,853 75,876 63,756 52,417 Total Certified 435, , , , ,080 Sembilan Tani (Outgrower) 2,779 2,957 2,510 2,599 2,786

11 Page 11 Table 5: CPO production record (Tonne) Estates CPO production (Tonne) (July to June) 2006/ / / / / Bahau 9,750 12,066 12,617 10,276 12,961 Bertam 1,156 4,463 4,536 4,352 2,810 Bukit Dinding 5,707 7,369 7,675 7,936 6,530 Kuala Jelei 1,853 2,640 3,209 2,782 2,576 Gomali 8,169 12,575 11,865 9,198 9,609 Tambang 6,881 11,357 10,496 8,736 9,947 Bukit Serampang 12,922 15,025 14,059 12,200 13,263 Paya Lang 9,775 12,904 10,580 8,863 8,787 Regent 9,909 11,024 11,562 8,875 9,540 Sagil 11,468 10,401 11,799 9,811 11,841 Jasin Lalang 14,916 15,121 16,359 13,516 10,933 Total certified 92, , ,757 96,545 98,797 Sembilan Tani (Outgrower) Total 93, , ,245 97,059 99,348 Table 6: Palm Kernel production record (Tonne) Estates Palm Kernel production (Tonne) (July to June) 2006/ / / / / Bahau 2,418 2,838 2,986 2,563 3,218 Bertam ,075 1, Bukit Dinding 1,440 1,700 1,863 1, Kuala Jelei Gomali 1,918 2,846 2,714 2,137 2,361 Tambang 1,596 2,659 2,437 2,096 2,519 Bukit Serampang 2,887 3,375 3,308 2,839 3,271 Paya Lang 2,356 3,023 2,529 2,090 2,204 Regent 2,492 2,464 2,014 2,185 2,434 Sagil 2,797 2,419 2,785 2,364 2,928 Jasin Lalang 3,651 3,639 3,957 3,311 2,735

12 Page 12 Total Certified 22,315 26,543 26,418 23,156 24,613 Sembilan Tani (Outgrower) Total 22,438 26,676 26,534 23,284 24,752 Note: The Company s financial year begins in July and ends in June as shown in the data presented in this report. 1.6 Organisational information/contact person Name Designation Too Heng Liew Head of Sustainability IOI Research Centre, Batang Melaka, Negeri Sembilan,Malaysia. Contacts Tel: Fax: hltoo@ioigroup.com 1.7 Tonnages certified The summary of CPO production is presented in Table 7 below. Mill: Gomali (July 2010 June ) Table 7: Summary of CPO production Mill location Capacity FFB input (mt) CPO output (mt) Gomali, Batu Anam, Segamat, Johor N E 120 mt/hr Certified : 471,080 ( 473,866 ( include outgrower) ) Certified : 98,797 ( 99,348 if include outgrower) Note: GOM-PMU also processes FFB from other IOI estates. The actual FFB input and CPO output for the PMU for July 2010 to June was 563,897 mt and 101,324 mt respectively. 1.8 Time bound plan and progress made by the parent company The progress on the time bound plan for IOI Corporation is presented in Appendix D. As tabulated, to date, at least five-certification unit has been certified and a few others have undergone assessment for certification. SGS is of the opinion that IOI has made a good progress and without any immediate undesirable circumstances, the plan is considered within reach.

13 Page Annual Surveillance Audit Process 2.1 Annual Surveillance Audit methodology (program, site visits) During the 3 days annual surveillance audit, 6 estates as well as the CPO mill were visited by the audit team. Management documents both at the group as well as the estate levels were reviewed. Standard operation procedures documented for the estate and the mill operations were also reviewed. Records of production, report, training etc were inspected. The audit team visited various operation sites such as replanting, manuring, pesticide application, harvesting, environmental sampling, fragile soil areas, etc. Discussions were held with the top estate managers as well as ground staff. Interviews were also held with workers and local communities living in and around the area. Table 8: Annual Surveillance Audit Schedule Activities Notes 23 August 24 August 25 August Opening meeting Documentation review Visit to the mill Visit to: - Bahau - Kuala Jelai - Regent Visit to: - Tambang - Paya Lang - Gomali Closing meeting Briefing by IOI Discussion on assessment schedule. Documents for review were made available. Documents were reviewed at the mill. Receipt of FFB, Mill operation, Mill design, OSH aspects, POME, EFB, CPO production Environmental monitoring records, Licensing Areas covered include harvesting area, spraying, fertilizing, chemical storage, workshop, waste management system, quarters, clinic, local communities, orang asli, bufferzone, riparian and nursery. In addition, a documentation review was conducted at each of the visited estate. Preliminary results of the surveillance audit were presented to the management. 2.2 Team members Evaluation Team Table 9: Summary of team member s experience Notes Lead Auditor Abdul Haye S , B.Sc. Abdul Haye is a forester by profession with nearly 15 years experience in forest harvesting and plywood industry. As a trained assessor, he has been involved in forest certification and chain of custody for the last 5 years. Trained by RSPO for auditing against RSPO P&C and involved in a number of plantation assessments and inspection of palm oil mill.

14 Page 14 Team Leader Auditor James Ong, a B.Agric Sc. holder and agronomist in SGS (M) Sdn Bhd. He has many years experience in agriculture sector in Malaysia having worked in estates as well in the agrochemical and fertiliser industry. He is well versed with agrochemical and fertiliser applications. Has undergone ISO and RSPO Lead Auditor training and involved in a number audits on oil palm plantations. Norashikin Rasikon, B.Sc., holds a degree in forestry, has been involved in certification for the last three years, and has trained under the ISO system and chain of custody evaluation. Currently entrusted in preparing documents for certification system and responsible for maintaining records and report in compliance to accreditation requirement under various certification schemes. 2.3 Certification body Founded in 1878, the SGS Group is the world s largest auditing, inspection, testing and verification organisation. Truly global and benefiting from a unique international network of more than 1180 offices, 321 laboratories and 50,000 full time staff, the SGS Group is able to provide its international clientele with a comprehensive range of services in more than 145 countries. SGS has no manufacturing, trading or financial interests which could compromise its independence. Its guarantee of independence, its reputation for professionalism, integrity and impartiality, as well as its remarkable international network, place the SGS Group in a unique position. The QUALIPALM Programme managed by SGS Malaysia is the SGS Group s Oil Palm Certification Programme accredited by the RSPO. Currently with about 500 staff nationwide, SGS Malaysia offers verification, inspection and certification services under various sectors such as agriculture, mineral, oil & gas, system certification as well as natural resources covering forestry and oil palm. 2.4 Stakeholder notification and consultation A wide range of stakeholders were contacted 4 weeks before the planned evaluation to inform them of the evaluation and ask for their views on relevant palm oil sustainability issues. These included environmental interest groups, local government agencies and forestry authorities, social groups and workers unions etc. See Appendix E for stakeholder s details and comments.

15 Page Annual Surveillance Audit findings 3.1 Findings Principle 1: COMMITMENT TO TRANSPARENCY 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 language & forms to allow for effective participation in decision making Records of requests and responses must be maintained. Criterion / 1.2.2/ 1.2.3/ 1.2.4/ 1.2.5/ 1.2.6/ Records of requests and responses are maintained The company maintains adequate information which is available for public. Documented procedures exist for stakeholder information request at the corporate and estate levels. Records of requests and responses are viewed at the estate level. To enhance the communication with the stakeholder, the HQ has developed the mechanism to response to the stakeholders. The established mechanism is made available to the auditing team during the audit (Observation 01 closed). Verification at the IOI s website confirmed that the website provides adequate information. In addition, the stakeholder lists also available at the Mill and Estates. The auditing team also observed that there is a mechanism to ensure that documents are publicly available, as stipulated in the individual estate management plans. 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. Land titles / user rights (C 2.2) Safety and health plan (C 4.7) Plans and impact assessments relating to environmental and social impacts (C 5.1, 6.1, 7.1, 7.3) Pollution prevention plan (C 5.6) Details of complaints and grievances (C 6.3) Negotiation procedures (C 6.4) Continuous improvement plan (C 8.1) There is a mechanism in place to ensure that documents are publicly available, as stipulated in the individual management plans covering the following documents: o Land titles / user rights o Safety and health plan o Plans and impact assessments relating to environmental and social impacts o Details of complaints and grievances o Negotiation procedures o Continuous improvement plan All relevant legal documents covering land titles and licenses have been displayed for viewing. Safety and health plan as well as environmental and social impact assessment are also available. In addition, There is adequate documentation of complaints and grievances available in each estates including those that have been resolved and the mill. The negotiation procedures are clearly presented in the individual management plans.

16 Page 16 Principle 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATION Criterion 2.1 There is compliance with all applicable local, national and ratified international laws and regulations Evidence of compliance with legal requirements. Inadequate evidence of compliance with legal requirements. Visit to the Mill observed that the Envirocarbon Sdn. Bhd., the company responsible for production or activated carbon from palm kernel shell are found to be operating without license from authority (New CAR 18). Closing out of CAR Gomali has submitted the corrective action evidence to close the CAR issued. Based on the evidence, the Envirocarbon Sdn. Bhd. has appointd Env Consultancy and Monitoring Services Sdn. Bhd. as the Consultant for Registration of the Kiln Process Chimney under the Environmental Quality (Clean Air) Regulations, Subsequently, has prepared and submitted the application for the written approval for the installation of LEV (c/w Chimney Systems) on September. The consultant also has prepared the Ambient Air Monitoring Report dated December as well as the Isokinetic & Air Emission Monitoring Report dated January The DOE also has responded to the application letter through their letter dated 15 March 2012 stating provisions and conditions that need to be comply for the installation of the LEV ( CAR 18 closed) A documented system, which includes written information on legal requirements. In sufficient documented system including written information on legal requirements. Hard copies of all relevant legal documents such as laws, licences and permits are viewed at the estate office. However, the auditing team observed that the copies of laws available at the estate office are not completed as per the list of the laws listed within the RSPO standard (New CAR 19). The company is in compliance to this requirement: N A mechanism for ensuring that they are implemented. Mechanism for ensuring the system is implemented is available. A CAR 01 was issued during the Main Evaluation regarding to lack of documented system to ensure that full legal compliance is met. The company has taken action to appoint the responsible person for monitoring any changes of laws and regulations. A copy of laws also found to be compiled at the Mill s office. ( CAR 01 closed).

17 Page A system for tracking any changes in the law. A system for tracking any changes in the law is available. There is a mechanism in place to advise the estates and mill of changes in the laws when it affects their operations. The IOI sustainability team based in IOI Research Centre in Batang Melaka, Melaka is responsible to monitor any changes to all relevant laws & regulations. Criterion 2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights Evidence of legal ownership of the land including history of land tenure. Legal ownership of the land including history of land tenure is available. Evidence of legal ownership of the land is maintained in individual estates offices. The land was purchased by IOI in 1980s and at that time, most of it was already under oil palm. A copy of occupation and premise use license was viewed: Lesen untuk menduduki atau menggunakan premis yang di tetapkan (# ) dated 24 July Seksyen 18(1) Akta Kualiti Alam Sekeliling (Environmental Quality Act, 1974) Growers must show that they comply with the terms of the land title. [This indicator is to be read with Guidance 2]. The term of condition provided evidence that the company does comply with the terms of the land title. The estates comply with the terms of the land title Evidence that boundary stones along the perimeter adjacent to state land and other reserves are being located and visibly maintained. Boundary stones along the perimeter adjacent to state land and other reserves can be located and visibly maintained. All estates have their boundary marked with boundary markers. In addition, Gomali has a special mapping team with accurate GPS equipment for boundary verification.

18 Page Where there are, or have been, disputes, proof of resolution or progress towards resolution by conflict resolution processes acceptable to all parties are implemented. CF 2.3.3, and There is no dispute reported at the time of audit. Interviews with the villagers indicate the same. No dispute evidenced. Criterion 2.3 Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent Where lands are encumbered by customary rights, participatory mapping should be conducted to construct maps that show the extent of these rights. Evidence of mapping conducted to construct maps that show the extent of the customary rights. Details of all the worshipping places have been documented and mapped in the HCV document. In addition, discussion and consultation with the effected parties agreed to earmark the area as HCV. Following to the discussion and consultation, the management documentation is developed to manage such areas (Observation 02 closed) Map of appropriate scale showing extent of claims under dispute. Evidence of appropriate scale map showing the extent of claims under dispute. Map on the disputed land by the villagers as described under with GPS points is available Copies of negotiated agreements detailing process of consent. (C2.2, 7.5 and 7.6). A copy of negotiated agreements detailing process of consent is available. Record of process covering discussion and consultation with the effected parties with regard to the earmarking and protection of worshipping places is available. Principle 3: COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY Criterion 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability Annual budget with a minimum 2 years of projection.

19 Page 19 Annual budget with a minimum 2 years of projection is available. Planning documents covering the next 5 years viewed mentioned: planting material, crop project and yield trends, mill extraction rate, and budgeted production costs. Each of the Estates and Mill have identified the items and drawn up a budget to cover their operational needs for the next 5 years. All plans are also reviewed annually Annual replanting programme projected for a minimum of 5 years with yearly review. Evidence of annual replanting programme projected for a minimum of 5 years with yearly review. The plantation management unit has a good re-planting programme. A ten year replanting programme is available in individual estates and the programme is reviewed annually. Principle 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS: Criterion 4.1 Operating procedures are appropriately documented and consistently implemented and monitored Documented Standard Operating Procedures (StOPs) for estates and mills. Evidence of documented Standard Operating Procedures (StOPs) for estates and mills. Main Evaluation resulted in the issuance of Observation 03 for the StOPs that does not cover all activities in the Estates for example the waste disposal. ASA1 evidenced that the Gomali has taken action to establish the committee to review the StOPs to cover all activities in the Estates. The revised StOPs dated 6 June including the StOPs for Tapak Penolahan Effluent is made available to the auditor during the audit (Observation 03 closed) Records of monitoring and the actions taken are maintained and kept for a minimum of 12 months. Records of monitoring and the actions taken are maintained and kept for a minimum of 12 months. During the Main Evaluation, the CAR 02 was issued due to Insufficient records of monitoring and weak mechanism to undertake such monitoring of StOPs. Verification during the ASA1 evidenced that the implementation of the StOPs is monitored and all records of implementation is kept including the monitoring as well as actions taken following the monitoring ( CAR 02

20 Page 20 closed). Criterion 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to a level that ensures optimal and sustained yield Monitoring of fertilizer inputs through annual fertilizer recommendations. Evidence of monitoring of fertilizer inputs through annual fertilizer recommendations. Based on the record, the Plantation Adviser makes two visits per year to each estate and checks fertilizer application as well as other field practices. The R&D unit collects annual foliar samples for analysis of nutrients and some trace elements, eg boron. Data captured are analysed for optimisation of FFB yield and review of the fertiliser programme. Soil sampling is conducted over 25 % of the area yearly for the same purpose. Data on the locations where EFB and mill effluent are applied is also collected. Such an area will be monitored in term of FFB production, nutrient and soil condition Evidence of periodic tissue and soil sampling to monitor changes in nutrient status. Evidence of periodic tissue and soil sampling being carried out to monitor changes in nutrient status. A programme is in place for the annual collection of nutrient samples from both leaf tissue and soil. These are used to assess the nutrient state of the palms and their soils, and used to guide subsequent fertiliser needs. Based on the record the auditing team observed that the tissue/foliar sampling is conducted yearly in all blocks while soil sampling is done on 20 % of the total hectareage in a rotational manner, in particular once every 5 years Monitor the area on which EFB, POME and zero-burn replanting is applied. Evidence of monitoring of the area which EFB, POME and zero-burn replanting is applied. Gomali practices a zero burning policy. However, because of significant losses of palms from Ganoderma infection, an official application is made to the DoE and permission received to undertake controlled burning at replanting to sterilise the fields. EFB, boiler ash and POME are applied in trenches and direct spraying to frond heaps subject to transport limitations, and records monitoring the amounts applied are available.

21 Page 21 Criterion Practices minimise and control erosion and degradation of soils Documented evidence of practices minimizing soil erosion and degradation (including maps). Documented evidence of practices minimizing soil erosion and degradation (including maps) is available. A CAR 03 was raised during the Main Evaluation relating to inconsistent implementation of the StOPs in some area resulting in chronic soil erosion. Visit during the ASA1 confirmed that all areas prone to soil erosion has been identified and documented in the StOPs. In addition, an action plans to minimize soil erosion and establishment of plant to improve the texture of fragile soil ( CAR 03 closed) Avoid or minimize bare or exposed soil within estates. Evidence of minimized bare or exposed soil within estates. Visit to the field evidenced that in general, ground is covered with soft grasses and pruned fronds. In addition, there is also evidence of historical soil erosion control area observed through terracing Presence of road maintenance programme. CAR 04 was issued during the Main Evaluation due to the road maintenance programme available but it has not been undertaken for some time in some of the estates. ASA1 evidenced that Gomali has taken action to implement the road maintenance programme at erosion prone area. In addition, there is also evidence of silt pits observed during the field visit ( CAR 04 closed) Subsidence of peat soils should be minimised through an effective and documented water management programme. Not applicable as there are not peat soil in Gomali estates. NA Best management practices should be in place for other fragile and problem soils (e.g. sandy, low organic matter and acid sulphate soils).

22 Page 22 Best management practices are in place for other fragile and problem soils (e.g. sandy, low organic matter and acid sulphate soils). Gomali has implemented various practices to protect soils that prone to erosion covering the following: leguminous cover crop applied in new planting areas; cut and stacked fronds act as physical barriers to trap run-off and eroding soils and subsequently increased soil biomass when it degrades; EFB and biomass solids in POME returned to selected fields; once the leguminous cover crop begins to die back, soft weeds and ferns are tolerated in inter-rows, and competing woody plants removed; conservation terraces where constructed at the time of planting with stop bunds; fronds are stacked on the lip of terraces, but contour stacking is not consistently implemented on other slopes; road design generally minimises water run-off and soil erosion, with wash-out drains returning nutrients and soil mass back to pits in the fields; and the banks of some waterways are vegetated to help retain soils. Criterion Practices maintain the quality and availability of surface and ground water Protection of water courses and wetlands, including maintaining and restoring appropriate riparian buffer zones at or before replanting along all natural waterways within the estate. Inadequate demonstration of the protection of water courses and wetlands, including maintaining and restoring appropriate riparian buffer zones at or before replanting along all natural waterways within the estate. Main Evaluation observed that CAR 05 was issued due to bufferzone are not identified and demarcated along most of river streams. Visit to the bufferzones during the ASA1 evidenced that Gomali has taken action to identify and demarcate most of the visited bufferzone along river streams. However, the auditing team is of the view that the process taken is insufficient to close the CAR due to a visit in one bufferzone in Bahau Estate evidenced that the Bufferzone is not properly demarcated ( CAR 05 remained outstanding). The company is in compliance to this requirement: N No construction of bunds/weirs/dams across the main rivers or waterways passing through an estate. No evidence on construction of bunds/weirs/dams across the main rivers or waterways passing through an estate. No construction of bunds, weirs and dams were observed in the estates Outgoing water into main natural waterways should be monitored at a frequency that reflects the estates and mills current activities which may have negative impacts (Cross reference to 5.1 and 8.1).

23 Page 23 Outgoing water into main natural waterways is monitored at a frequency that reflects the estates and mills current activities. Outgoing water into natural waterways is being monitored for water quality. Sample points are mapped and a schedule for sampling has been drawn up. Records showed that latest Water Monitoring was done on 9 July at 5 stations along Sg Sebaling river Monitoring rainfall data for proper water management. Rainfall data for proper water management is monitored. Rainfall data are being monitored and daily record are available in all Estates Monitoring of water usage in mills (tonnage water use/tonne FFB processed). Water usage in mills (tonnage water use/tonne FFB processed) is monitored. Water usage for the mill is being monitored. Daily record & Monthly Monitoring of water usage in mills (tonnage water ly record use/tonne FFB processed) available. Based on record the usage for untill July is 0.92m3/FFB compared to the usage for 2010 during the same period which is 0.96m3/FFB Water drainage into protected areas is avoided wherever possible. Appropriate mitigating measures will be implemented following consultation with relevant stakeholders. Not applicable. There was no drainage into protected areas. The forest reserves are located upstream of the estates Evidence of water management plans. Water management plan is available. Water management plan for all estates available. In general, the plan covers the operating units particularly the estates. The plan also identifies water management plans for the POM (water source, usage for both FFB processing and domestic, water treatment for POM and domestic, monitoring of quality, consumption, wastewater (POME) treatment and management etc) Water management plans for Gomali estates that includes soil moisture conservation programme, EFB mulching, terracing, buffer zones and rivers, sampling and water quality

24 Page 24 monitoring, sewage and septic and domestic water usage, and nursery and office. Aspects of water management are also covered under the Group Internal Environmental Management and Monitoring Plan, focusing principally on meeting legal requirements. This document covers: conserving sources for abstraction; managing riparian areas; contamination by estate and mill activities; monitoring ground and surface water quality, and consumption of water. Criterion 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques Documented IPM system. Adequate documented IPM system observed. The Main Evaluation resulted in the issuance of CAR 06 on lack of mechanism to monitoring herbicide usage. ASA1 evidenced that there is mechanism in place to monitor the usage of herbicide as follows: o Training is given to the herbicide sprayers for not to spray on the bare ground or area which has not much vegetation e.g. due to prolonged dry period; o Monitoring on the application of herbicide to ensure no spraying on the bare areas; and o Justification is established for the area requires chemical spraying. CAR 06 closed Monitoring extent of IPM implementation for major pests. IPM implementation for major pests is monitored. The estate has the procedures to monitor for the presence and location of pests and the current severity of their effects. Record on the implementation of IPM is maintained Recording areas where pesticides have been used. Recording areas where pesticides have been used is available. Records of types and dosage of pesticides used, the blocks where the pesticides have been applied, and the dates of application are maintained Monitoring of pesticide usage units per hectare or per ton crop e.g. total quantity of active ingredient (a.i.) used/ tonne of oil.

25 Page 25 Criterion 4.6 Pesticide usage is monitored. Pesticide usage is monitored and recorded based on units used per ha. The practice appears to be consistent within all areas sampled. Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented Written justification in Standard Operating Procedures (StOPs) of all agrochemicals use. Written justification in Standard Operating Procedures (StOPs) of all agrochemicals use is available. There is a written justification for the chemicals used that highlights the objective for control and the appropriate chemicals to be used Pesticides selected for use are those officially registered under the Pesticides Act 1974 (Act 149) and the relevant provision (Section 53A); and in accordance with USECHH Regulations (2000). Pesticides use are those that officially registered under the Pesticides Act, 1974 (Act 149) and the relevant provision (Section 53A); and in accordance with USECHH Regulations (2000). Chemicals used are registered. All chemicals in use have been assessed in the Chemical Health Risk Assessment (CHRA) document Pesticides shall be stored in accordance to the Occupational Safety and Health Act 1994 (Act 514) and Regulations and Orders and Pesticides Act 1974 (Act 149) and Regulations. Pesticides used in estates are not sufficiently stored in accordance to the Occupational Safety and Health Act, 1994 (Act 514) and Regulations and Orders and Pesticides Act 1974 (Act 149) and Regulations. Visit to the Bahau Estate evidenced the triple rinsing and perforated procedure is inconsistently implemented at the chemical storage area (New CAR 20) The company is in compliance to this requirement: N All information regarding the chemicals and its usage, hazards, trade and generic names must be available in language understood by workers or explained carefully to them by a plantation management official at operating unit level.

26 Page 26 Information regarding chemicals and its usage, hazards, trade and generic names is available in language understood by workers or explained carefully to them by a plantation management official at operating unit level. Main Evaluation has resulted in the issuance of CAR 07 relating to lack of evidence that information on chemicals is available in language understood by workers. Visit during the ASA1 evidenced that Gomali has established the information on chemicals and its usage, hazards, trade and generic names in language understood by the workers such as Bahasa Melayu and Bangladesh languages ( CAR 07 closed) Annual medical surveillance as per CHRA for plantation pesticide operators. Annual medical surveillance is conducted as per CHRA for plantation pesticide operators CHRA up to date. Medical examinations carried out for pesticides operators with records available for screening for the operators as per in the CHRA No work with pesticides for confirmed pregnant and breast-feeding women. No evidence of confirmed pregnant and breast-feeding women work with pesticides. Random interviews with estate hospital assistant, pesticide sprayers and mixers indicated that there are no confirmed pregnant and breast feeding women in the pesticide handling related operations Documentary evidence that use of chemicals categorised as World Health Organisation Type 1A or 1B, or listed by the Stockholm or Rotterdam Conventions and paraquat, is reduced and/or eliminated. Adoption of suitable economic alternative to paraquat as suggested by the EB pending outcome of the RSPO study on IWM. Documentary evidence that use of chemicals categorised as World Health Organisation Type 1A or 1B, or listed by the Stockholm or Rotterdam Conventions and paraquat, is reduced and/or eliminated is available. There is no evidence of usage of chemicals categorised as WHO Type 1A or 1B or those listed by the Stockholm or Rotterdam Conventions Documented justification of any aerial application of agrochemicals. No aerial spraying unless approved by relevant authorities.

27 Page 27 No evidence of aerial spraying. No use of aerial application of agrochemicals within IOI Gomali Estates Evidence of chemical residues in CPO testing, as requested and conducted by the buyers. No evidence of chemicals residues in CPO testing, as requested and conducted by the buyers. No buyers have requested for testing hence there is no evidence Records of pesticide use (including active ingredients used, area treated, amount applied per ha and number of applications) are maintained for either a minimum of 5 years or starting November Records of pesticide use (including active ingredients used, area treated, amount applied per ha and number of applications) are maintained. Records of pesticide usage are maintained for 5 years. Criterion 4.7 An occupational health and safety plan is documented, effectively communicated and implemented Evidence of documented Occupational Safety Health (OSH) plan which is in compliance with OSH Act 1994 and Factory and Machinery Act 1967(Act 139). Inconsistency in the implementation of the Personnel Protective Equipments (PPEs) as required by the Occupational Safety Health (OSH) plan which is in compliance with OSH Act 1994 and Factory and Machinery Act 1967(Act 139). CAR 08 was issued during Main Evaluation relating to lapses in implementation, and incomplete awareness and understanding of OSH matters. Observation made during the ASA1 evidenced that Gomali has taken action to organize the training on the Occupational Safety and Health in particular training on the safe working condition. The record of the training is kept ( CAR 08 closed). However, the ASA1 evidenced a non-conformance whereby there is inconsistency in the implementation of the Personnel Protective Equipments (PPEs). The auditing team observed that in some estates that the sprayers are not using goggles and long-sleeve shirt during spraying activities. (New CAR 21). The company is in compliance to this requirement: N Records should be kept of all accidents and periodically reviewed at quarterly intervals.

28 Page 28 Records of all accidents are kept and periodically reviewed at quarterly intervals. Accident records are being maintained and summarized on monthly basis in Accident Frequency Rate (AFR) for the Year form. The form consist Lost Time Accident (MC 5 Days & Above), Lost Time Accident (MC 1 4 days), First Aid Cases (No. MC), Off-Work Accident Cases (OWC) and Fatality Cases (FC). The accident records had been reviewed quarterly during the safety meeting Workers should be covered by accident insurance. Workers are adequately covered with accident insurance. All workers are covered by accident insurance under RHB Insurance Berhad. Criterion All staff, workers, smallholders and contractors are appropriately trained A training programme (appropriate to the scale of the organization) that includes regular assessment of training needs and documentation, including records of training for employees are kept. Inadequate training programme that includes regular assessment of training need and documentation, including records of training for employees. Main Evaluation resulted in the issuance of CAR 09 relating to inadequate training given to contractors to fulfill safety requirements. Visit during ASA1 evidenced that training programme is placed under the GPOM Safety and Health for the year. Besides safety training, technical training program is included such as shovel driving, striliser Operator, effluent treatment plant training. Contractors used for servicing equipment were also provided safety briefing, training and use of PPE. List of attendance is also available. Technical training attendance is also available eg Engine Operation Training In addition, there is also a training for premixing the chemicals conducted. The attendance list for the training also kept ( CAR 09 closed). Although there are various trainings conducted, there is no training assessment conducted for each of the trainings conducted. In addition, there is also evidence that the Health Assistance is not attending any proper chemical handling training (New CAR 22). The company is in compliance to this requirement: N Principle 5 : ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY Criterion 5.1 Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement Documented aspects and impacts risk assessment that is periodically

29 Page 29 reviewed and updated. Evidence of documented aspects and impacts risk assessment that is periodically reviewed and updated. Main Evaluation has resulted in the issuance of CAR 10 relating to incomplete aspect and impact assessment. Verification during the ASA1 confirmed that the Gomali has taken action to conduct the detailed environment assessment to ensure all potential impacts are included ( CAR 10 closed). Aspects are documented and verified. Based on the record, the negative and positive impacts are assessed and are reviewed annually. However in most of the aspects, the Person In Charge (PIC) is not identified (New Observation 05) Environmental improvement plan to mitigate the negative impacts and promote the positive ones, is developed, implemented and monitored. Criterion 5.2 Evidence of environmental improvement plan to mitigate the negative impacts and promote the positive ones, is developed, implemented and monitored. CAR 11 was issued during the Main Evaluation due to the Environmental improvement plan to mitigate the negative impacts and promote the positive ones is incomplete. Observation during the ASA1 evidenced that the Environmental Improvement Plan has been completed. The plan that was reviewed in June contained the management action plan and programme ( CAR 11 closed). The status of rare, threatened or endangered species (ERTs) and highly conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations Identification and assessment of HCV habitats and protected areas within land holdings; and attempt assessments of HCV habitats and protected areas surrounding landholdings. Inadequate evidence of identification and assessment of HCV habitats and protected areas within land holdings; and attempt assessments of HCV habitats and protected areas surrounding landholdings. During the Main Evaluation, a CAR 12 relating to the Macro level HCV assessment does not include the on-site assessment covering the stakeholder consultation. ASA1 confirmed that the HCV assessment has been reviewed in June. Based on the record, the auditing team was of the view that the assessment requires further identification and assessment of HCV habitats and protected area within landholding, with the participation of relevant stakeholder. ( CAR 12 is up graded to CAR 23). Closing out of the CAR Gomali has conducted a 30-day stakeholder consultation on 18 October covering various stakeholders relevant to the HCV such as the Department of Environment (DOE), Department Land and Mineral (PTG), Department of Orang Asli Development (JAKOA), Department of Wildlife and National Parks (PERHILITAN), Johor State Forestry Department (Johor FD) and the World Wide

30 Page 30 Fund for Nature (WWF). However, until the end of the 30-day period, there were no single responses received from the stakeholders ( CAR 23 closed) Management plan for HCV habitats (including ERTs) and their conservation. Evidence of management plan for HCV habitats (including ERTs) and their conservation. During the Main Evaluation, a non-conformance relating to the management plan for identified HCV habitats (macro assessment) have yet to be fully implemented ( CAR 13) was identified. Verification during the ASA1 evidenced that the management plans with time bound have been included in the HCV Assessment. However, the person-in-charge to carry-out the action has yet to be identified (refer to Observation 05) ( CAR 13 closed) Evidence of a commitment to discourage any illegal or inappropriate hunting, fishing or collecting activities, and developing responsible measures to resolve human-wildlife conflicts. Adequate evidence of a commitment to discourage any illegal or inappropriate hunting, fishing or collecting activities, and developing responsible measures to resolve human-wildlife conflicts. Field visit evidenced that the sign posts have been erected to discourage all forms of hunting. Criterion 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner Documented identification of all waste products and sources of pollution. Evidence of documented identification of all waste products and sources of pollution. Partial listing of waste products and sources of pollution were evidenced during the Main Evaluation resulting in the issuance of CAR 14. During the ASA1, all the waste products and sources of pollution have been re-identified. In addition, there is evidence of recycling demonstrated through establishment of recycling centre. Non-recyclable waste (eg. Schedule waste) was disposed through licensed agent ( CAR 14 closed) Having identified wastes and pollutants, an operational plan should be developed and implemented, to avoid or reduce pollution. Operational plan to avoid or reduce pollution is not properly implemented. There is an evidence of used Chemical containers and scheduled waste that is not

31 Page 31 disposed off in a proper manner. In addition there is also evidence of oil leaking into drainage system (New CAR 24). The company is in compliance to this requirement: N Evidence that crop residues / biomass are recycled (Cross ref. C4.2). Crop residues / biomass are recycled The auditing team observed that the palm fronds and bunch stalks are retained in the field. On the other hand, EFB and other fibres as well as mineral ash are returned to the fields subject to transport constraints. In addition there is also a POME licenced by DOE for application by shallow pans and direct spraying to frond stacks. Criterion Efficiency of energy use and use of renewable energy is maximized Monitoring of renewable energy use per tonne of CPO or palm product in the mill. Evidence of monitoring of renewable energy use per tonne of CPO or palm product in the mill. A non-conformance relating to in sufficient efforts to estimate the renewable energy used in the boiler to allow monitoring of energy used and determine trends ( CAR 15) was issued during the Main Evaluation. Visit during the ASA1 evidenced that the Gomali Palm Oil Mill has recorded the actual weight of FFB and fibers used for boiler. Trend of the renewable fuel input against the energy produced for every month is available ( CAR 15 closed) Monitoring of direct fossil fuel use per tonne of CPO or kw per tonne palm product in the mill (or FFB where the grower has no mill). Criterion 5.5 Evidence of monitoring of direct fossil fuel use per tonne of CPO or kw per tonne palm product in the mill. Records of usage of fossil fuel are available and compared to the volume of the FFB processed and the CPO output as observed in the Fossil Fuel Consumption Report. The company used it as one of the performance indicator and make effort to reduce fuel usage while increasing the productivity. In (Jan Jul) the total consumption per FFB is 1.70 lit / FFB and 8.09lit / CPO. Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN Guidance or other regional best practice No evidence of open burning. Where controlled burning occurs, it is as prescribed by the Environmental Quality (Declared Activities) (Open Burning) Order 2003.

32 Page 32 Evidence of open burning but controlled as prescribed by the Environmental Quality (Declared Activities) (Open Burning) Order There is evidence of limited open burning was practiced to sterilise fields of Ganoderma prior to replanting with rubber under conditions imposed by the DOE. Wastes including horticultural wastes are collected and transported to landfill cells Previous crop should be felled/mowed down, chipped/shredded, windrowed or pulverized/ ploughed and mulched. Previous crop is felled and chipped/shredded. Previous crop observed to be felled and is chipped and windrowed either with leguminous plants cover or buried prior to replanting No evidence of burning waste (including domestic waste). No evidence of burning waste (including domestic waste). No evidence of burning wastes that originates from estate and mill. Criterion 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored Documented plans to mitigate all polluting activities (Cross ref to C5.1). Documented plans to mitigate all polluting activities is available. The Group Environmental Impact Assessment and Management Action Plans provides plans for action for those potentially polluting activities that have been identified. Based on records, the auditing team observed that Wastewater analysis done (weekly) and submitted monthly. This include stack sampling (2 x per year) as well as ambient air monitoring (4 x per year) done by Env Consultancy & Monitoring Services Sdn. Bhd. dated 12 July There is also evidence of legal compliance for FD: BOD < 5,000ppm. It is evidenced that for 2010 and the BOD recorded was < 150ppm Plans are reviewed annually. Evidence of plans are reviewed annually An observation 04 was issued during the Main Evaluation relating to No guidelines to review pollution prevention plans. ASA1 confirmed that the EIA covering the

33 Page 33 Management Action Plans are review annually. Latest revision dated 27 th June is available that involved the IOI Sustainability team as well as the Estate management. The review process includes consultation relating to 1) identification of operations (aspect) that has environmental impact 2) Identification of waste and pollutants and implement plans to reduce the pollution 3) identification of HCVs and review 4) identification of stakeholders (Observation 04 closed) Monitor and reduce peat subsidence rate through water table management. (Within ranges specified in C 4.3). Not applicable as There was no peat soil within Gomali group of estates. NA PRINCIPLE 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND OF INDIVIDUALS AND COMMUNITIES BY GROWERS AND MILLERS Criterion 6.1 Aspects of plantation and mill management, including replanting, that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement A documented social impact assessment including records of meetings. Evidence of documented social impact assessment including records of meetings. SIA is available (reviewed on 25 th July ) and done with the participation of identified stakeholders. Records of all meetings available. The SIA is viewed as an active impact assessment document where a reasonable amount of consideration has been given to mitigate social impacts for employees and communities affected by the plantations and mill. The SIA has a social action plan with seeks resolve social issues adequately, in terms of clearly outlining the responsibilities for mitigation and monitoring. Maps delineating locations of stakeholders and social economic profiling is also provided. The company is seen to engage with identified stakeholders in a participatory manner Evidence that the assessment has been done with the participation of affected parties. Evidence that the assessment has been done with the participation of affected parties. ASA1 confirmed that there is an evidence that the company s management has conducted the stakeholders meeting to discuss on the social issue (Impact and Aspect) that was conducted on 6 July A timetable with responsibilities for mitigation and monitoring is reviewed

34 Page 34 Criterion 6.2 and updated as necessary. Evidence of A timetable with responsibilities for mitigation and monitoring that is reviewed and updated as necessary. A timetable with responsibilities for mitigation and monitoring is reviewed annually and updated from time to time. There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties Documented consultation and communication procedures. Incomplete documented consultation and communication procedures. The consultation and communication procedure is integrated in Social Impact Assessment. However, the auditing team found that the consultation and communication procedure between growers and/or miller, local communities and other affected or parties is incomplete (New CAR 25) A nominated plantation management official at the operating unit responsible for these issues. Evidence of nominated plantation management official at the operating unit responsible for these issues. Gomali had appointed Social Liaison Officer to responsible in these issues. The responsibilities of the Social Liaison Officer in the unit cover the following: Welfare and social needs of stakeholders (i.e. workers, suppliers, smallholders Kampong etc directly related to estate). Periodic visits to linesite and social amenities to ensure that buildings are in good order (through Hospital Assistant). Periodic visits to neighbouring stakeholders on a reactive manner to ensure that social issues are being taken care of (to have consultation to ensure that communication chain is available and maintained). Identification of social issues affecting stakeholders and neighbouring community/ies and to decide upon mitigation plans to solve social issues after consultation with the manager. Maintenance and monitoring of grievance issues and facilitate feedback mechanism to ensure that a line of communication is available. Monitoring of crèche and daycare centre to ensure that children are being well taken care of and adequately educated. To stakeholder s requests and ensure that requests are followed up with a response. Grievance issues (encompassing social, work, repairs, etc.) and ensuring that proper follow up is conducted (this is to be documented). Safety and health aspect of linesite / estate / workers etc. Other social issues arising / ad hoc social issues (this is situation dependent).

35 Page 35 An appointment letter of the social liaison officer is available. Example in Gomali POM, Mr. Muhammad Afiq (Assistant Manager) has been appointed on 1 st June while in Gomali Estate, Mr. Phan Tsu Han (Cadet Assistant) has been appointed as the Social Liaison Officer. The appointment letter dated 13 June is available Maintenance of a list of stakeholders, records of all communication and records of actions taken in response to input from stakeholders. List of stakeholders, records of all communication and records of actions taken in response to input from stakeholders are maintained. A comprehensive list of stakeholders is available. The list covers all stakeholders, e.g. government agencies, non-governmental organizations, village representatives and sundry shop owners. The stakeholder list also includes the names of each employee. There is documented evidence of communication with stakeholders and records of actions taken to resolve grievances of employees. Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties Documentation of the process by which a dispute was resolved and the outcome. Process by which a dispute was resolved and the outcome is documented. There is evidence that a mutually agreed documented process for dispute and conflict resolution. Worker s representative has been briefed on the procedure involved. There is also evidence of documentation of grievances which have been resolved and the outcome accepted by the workers (signature of workers obtained for every grievance resolved). The records of grievances appeared in a structured manner and viewed as adequate The system resolves disputes in an effective, timely and appropriate manner. The system to resolves disputes in an effective, timely and appropriate manner is evidenced. The records indicate that all disputes raised were resolved appropriately within the time frame accepted by parties. The mechanism for resolving disputes is enhanced by the following: 5. Estate Consultative Committee (ECC) which has representation from different level of workers who are elected by the workers. 6. There is grievance report book at all estates and the mill 7. For field workers: Report to mandore supervisor Assistant manager Manager 8. For staff: Report to manager

36 Page Report to Social Liaison Officer/Gender Representative For other stakeholders, e.g. the local communities, the following is observed: 1. Community representatives write-in to the company (applicable to other stakeholders as well); 2. Community representatives meet the manager at the estate (applicable to other stakeholders as well); 3. The Social Liaison Officer visits the community representatives 4. The company holds meetings with community representatives (minutes of meetings dated... for... estate) 5. Local community invites company representatives to their village committee meetings whenever necessary. There is evidence that company representatives, e.g. estate managers have actively participated in these meetings The system is open to any affected parties. Criterion 6.4 The system is open to any affected parties. There is evidence that the system is open to all parties and discussion with workers and stakeholders indicate that no discrimination has taken place. There is adequate evidence to demonstrate that the system is open to any affected parties (see 6.3.2). Internal complaints are dealt with mechanisms such as the Employees Consultative Committee (ECC) with gender representation (at least a designated gender representative) and a designated grievance book which is endorsed by the complainants when action has been taken to resolve a grievance. Other internal mechanisms and external mechanisms are as per Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions Establishment of a procedure for identifying legal and customary rights and a procedure for identifying people entitled to compensation. Procedures for identifying legal and customary rights and people entitled to compensation are established. Social impact evaluation was done and there was no loss of legal or customary rights to communities, indigenous people of stakeholders A procedure for calculating and distributing fair compensation (monetary or otherwise) is established and implemented. This takes into account gender differences in the power to claim rights, ownership and access to land; and long-established communities; differences in ethnic groups proof of legal versus communal ownership of land.

37 Page 37 A procedure for calculating and distributing fair compensation (monetary or otherwise) is established and implemented. Gomali has a procedure in place for calculating and distributing fair compensation. The procedures are for retrenchment of surplus workers from conversion of rubber to oil palm. Retrenchment benefits are based on the national industrial standard, National Union of Plantation Workers (NUPW) and Gomali agreement The process and outcome of any compensation claims is documented and made publicly available. Criterion 6.5 The process and outcome of any compensation claims is documented and made publicly available. There is a procedure in documenting outcome of compensation claims which also includes public consultation. So far there was no compensation payment made for loss of legal and customary rights relevant to oil palm plantation management and operation in Gomali. Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages Documentation of pay and conditions. There is evidence of documented pay and conditions. i) There is documentation of salary in the form of pay slips and payment records for contract workers and company workers detailing the basic pay, deductions, overtime, bonuses, allowance etc. In general, the workers are paid decent salaries and above industry minimum. The salary is paid on time. ii) There is documentation of legalisation of migrant workers. iii) A separate employment agreement is drawn up for foreign workers at all estates and the mill, outlining their pay and conditions Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc) are available in the language understood by the workers or explained carefully to them by a plantation management official in the operating unit. Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment are available in the language understood by the workers. Employment contract for workers (both locals and foreign workers) available in

38 Page 38 respective language i.e. Bahasa Malaysia, English Nepal and Bangladesh. There are terms of reference or signed contracts between employers and employees stipulating the position, working hours, type of work, location of work, workers responsibility, wages, allowances, holidays, rest days, annual leave, fringe benefits, levy deductions (for foreign workers), dismissal, etc. There is evidence of documentation of rates of pay, contracts of employment, terms and conditions of employment made available in languages understood by workers or explained carefully by management personnel of the individual operating unit Growers and millers provide adequate housing, water supplies, medical, educational and welfare amenities in accordance with Workers Minimum Standard of Housing and Amenities Act 1990 (Act 446) or above, where no such public facilities are available or accessible (not applicable to smallholders). Criterion 6.6 Evidence of adequate housing, water supplies, medical, educational and welfare amenities provided by the company. Workers have access to clean water, segregated sanitary and bathing facilities and electricity. All employees are given adequate housing, medical, educational and welfare amenities and waste disposal facilities in accordance with Workers Minimum Standard of Housing and Amenities Act. Facilities provided by the estates and mill are as follows: o o o o o o o o o o o o o o Ambulance Estate clinic/dispensary Creche Football field Government school Housing Community hall Shops Places of worship Clean water Electricity supply Security Clubhouse Notice boards The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel Documented minutes of meetings with main trade unions or workers representatives. Evidence of documented minutes of meetings with main trade unions or workers representatives. Trade union representatives are recognised by management. Minutes of meeting are kept at the state level head quarters of the union.

39 Page 39 Minutes of meetings of the various meetings between workers unions/representatives and employers are available at the estates and mills for example 1) A Meeting between AMESU & NUPW representatives was conducted on 21 st June, 2) Meeting of the Employees Consultative Committee was conducted on 9 June and was attended by all workers representative including contractors representative and foreign representative, and 3) Meeting with Estate Coordination Committee (ECC) was conducted on 13 July to discuss on the impact and aspect for SIA A published statement in local languages recognizing freedom of association. Criterion 6.7 A published statement in local languages recognizing freedom of association is available. A valid freedom of association policy is available in all local languages. Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions Documented evidence that minimum age requirement is met. Criterion 6.8 There is documented evidence that the minimum age requirement is met. No evidence of child labour or under age workers in mill and estate operations. The company has a clearly defined minimum working age policy of 18 years and above. Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited A publicly available equal opportunities policy. A publicly available equal opportunities policy is available. There is a publicly available equal opportunities policy which states that the company is an equal opportunity employer, whereby the company does not practice discrimination based on race, caste, national, origin, disability, gender, sexual orientation, union membership, political affiliation, or age Evidence that employees and groups including migrant workers have not been discriminated against. There is evidence that employees and groups including migrant workers have not been discriminated against.

40 Page 40 Based on the interview conducted with some workers, there are no evidence of migrant workers been discriminated against. All workers had been equally treated. Criterion 6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied A policy on sexual harassment and violence and records of implementation. A policy on sexual harassment and violence and records of implementation is available. A policy on sexual harassment exists and a mechanism for recording grievances for official review is also available A specific grievance mechanism is established. There is evidence that a specific grievance mechanism is established. CAR 16 was issued during the Main Evaluation relating to incomplete understanding of established grievance mechanism by gender representatives. Verification during the ASA1 evidenced that a meeting with all woman workers are conducted at least in 6 monthly bases. During the meeting, all workers were given training/briefing on sexual harassment awareness and discussion on any relevant topic. Records of minutes of meeting is also kept and made available to the auditor where the latest meeting was conducted on 22 April ( CAR 16 closed). Criterion 6.10 Growers and mills deal fairly and transparently with smallholders and other local businesses Pricing mechanisms for FFB and inputs/services shall be documented. Pricing mechanisms for FFB and inputs/services is documented. A transparent mechanism exists for establishing FFB prices and for input and services Current and past prices paid for FFB shall be publicly available. Current and past FFB prices paid are publicly available. Current and past FFB prices paid are made publicly available.

41 Page Evidence that all parties understand the contractual agreements they enter into, and that contracts are fair, legal and transparent. There is evidence that all parties understand the contractual agreements they enter into, and that contracts are fair, legal and transparent. All contractual agreements are legal and appear to be fair and transparent. The contractual agreements between Gomali and the outgrower i.e. Sembilan Tani also is verified and found to be fair and transparent Agreed payments shall be made in a timely manner. Agreed payments is made in a timely manner. Interviews with suppliers and contractors at the estates reveal that all payments are made in a timely manner. Criterion 6.11 Growers and millers contribute to local sustainable development wherever appropriate Demonstrable contributions to local development that are based on the results of consultation with local communities. Evidence of demonstrable contributions to local development that are based on the results of consultation with local communities. The social impact assessment has included local communities and neighbouring stakeholders. A plan of action has been drawn out to contribute to local activities. The unit management has donated money for local school activities, water supply to neighbouring villages and provides facilities for many activities. The unit has provided adequate support for a Chinese and Tamil School in Gomali estate. Provision of electricity supply to school is also facilitated by the unit. The estate and mill levels have demonstrated a budget to accommodate ad-hoc requests for donations which the examples is listed as follows: 23/06/11 Contribution to Tabung Kebajikan, Pendidikan & Warga Emas Persatuan Bekas Polis Malaysia; 12/04/11 Contribution to Chinese and Indian Temple celebration; 19/07/11 Contribution to Pertubuhan Amal Sayang Permata Malaysia; and Gomali has decided to donate 3 acre land for Tamil school building. The agreed letter dated 12/08/ is available during the audit. P7: RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS This whole Principle is not applicable to this assessment as there are no new plantings. The company is only involved in re-planting programme after felling of old palms and there is no

42 Page 42 plan for expansion. P8: COMMITMENT TO CONTINOUS IMPROVEMENT IN KEY AREAS OF ACTIVITY Criterion 8.1 Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations Minimise use of certain pesticides (C4.6). Evidence of use of certain pesticides is minimise. Gomali management has issued a memo to replace paraquat herbicide with other alternatives. Continuous planting of beneficial plant is evident to increase population of pest predators of leaf eating caterpillars/bagworms Environmental impacts (C5.1). Evidence of commitment to minimize environmental impacts. Gomali has documented records of storage and disposal that is reviewed on a monthly. Monthly scheduled waste records are sent to DOE. The scheduled waste is disposed by the authorized scheduled waste collector on a 6 monthly basis Maximizing recycling and minimizing waste or by-products generation. Evidence of maximizing recycling and minimizing waste or by-products generation. Domestic waste systematically collected at 2-3 times a week. Segregation of glass, plastic, aluminium, paper for recycling purpose is implemented at the line site Pollution prevention plans (C5.6). Evidence of commitment to implement pollution prevention plans. The Group Environmental Impact Assessment and Management Action Plans provides plans for action for those potentially polluting activities that have been identified. Based on records, the auditing team observed that Wastewater analysis done (weekly) and submitted monthly. This include stack sampling ( 2 x per year ) as well as ambient air monitoring ( 4 x per year ) done by Env Consultancy &

43 Page 43 Monitoring Services Sdn. Bhd. dated 12 July Social impacts (C6.1). Evidence of commitment to review social impact. There is a commitment to review social impacts and social management plan on an annual basis A mechanism to capture the performance and expenditure in social and environmental aspects. Evidence of commitment to establish a mechanism to capture the performance and expenditure in social and environmental aspects. Main Evaluation has resulted in the issuance of a CAR 17 relating to the mechanism exists to capture expenditure, but this does not necessarily capture the quality and effectiveness of performance (social and environment). ASA1 evidenced that Gomali has taken action to monitor the quality and effectiveness of social and environmental performance over (Jan-June) covering the following indicators: Changes of number of grievances per month; Trends for POME effluent BOD; Trends for WQI analysis; Trends for diesel usage; and Trends for pesticide usage CAR 17 closed 3.2 The ASA1 has resulted in the closing out of 15 Corrective Action Requests (CARs). 2 CARs was issued during the ASA1 of which the 1 of the CAR was upgraded from existing CAR. However, the 2 CARs were subsequently closed out within 3 months after the ASA1 audit date following submission adequate corrective action evidences. 1 CAR was maintained and another 6 CARs was issued. Details of the CAR are as listed in section Appendix A. With no outstanding CAR, the IOI Corporation Berhad s management of Gomali Mill and its plantation supply base in Negeri Sembilan, Pahang, Melaka and Johor is now recommended for maintenance of certification against the RSPO P&C MYNI requirements. The issues highlighted as CARs must be adequately addressed and the adequacy of the actions taken need to be verified during the Annual Surveillance Audit 2 to be conducted within 12 months from the date of ASA1.

44 Page 44 4 Chain of Custody Fresh Fruit Bunches (FFB) produced by the plantation are transported to and processed at Gomali Oil Mill which is located in Segamat, Johor. The mill with a capacity of 120 metric tonne FFB per hour received and processed raw materials (FFB) from the supplying estates as described in this report. From the plantation, the FFB were delivered by trucks where details on the delivery documents allow traceability of the fruits to a group of harvesting block in each district or sector. Records of FFB deliveries and input into the processing line are well maintained by the company. Similarly, records of CPO and palm kernel output are also maintained on daily basis. As far as chain of custody is concern, the mill (and the plantation) currently does not have a document standard operation procedures (StOPs) that identify the critical control points (CCPs) and described the method used in identifying, segregating and recording at each point identified. The document also need to identify the person in charge (or the management representative) responsible for the implementation and maintenance of the whole system and ensuring its integrity. 5 Acknowledgement of Internal Responsibility and Formal Sign-Off of Assessment Findings It is acknowledged that the assessments cited in this report have been carried out as stipulated and we confirm the acceptance of the assessment report contents including assessment findings. Sign on behalf of: Mr. Too Heng Liew Head of Sustainability (Malaysia/Indonesia)

45 Page 45 APPENDIX A: CORRECTIVE ACTION REQUEST CAR # Indicator CAR Detail Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance: No documented system to ensure that full legal compliance is met. The operating unit has yet to undertake monitoring of compliance. Objective Evidence: Close-out evidence: CAR # Indicator CAR Detail The company has taken action to appoint the responsible person for monitoring any changes of laws and regulations. A copy of laws also found to be compiled at the Mill s office Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance: Insufficient records of monitoring and weak mechanism to undertake such monitoring of StOPs Objective Evidence: Close-out evidence: The implementation of the StOPs is monitored and all records of implementation is kept including the monitoring as well as actions taken following the monitoring Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance: Inconsistent implementation of the estate plans and StOPs for soil conservation has resulted in chronic soil erosion in the older planting areas. Objective Evidence: Close-out evidence: all areas prone to soil erosion has been identified and documented in the StOPs. In addition, an action plans to minimize soil erosion and establishment of plant to improve the texture of fragile soil.

46 Page 46 CAR # Indicator CAR Detail Recorded> 14 August 2009 Non-Conformance: Due > Closed> 25 August Road maintenance programme available but it has not been undertaken for some time in some of the estates. Objective Evidence: Close-out evidence: Gomali has taken action to implement the road maintenance programme at erosion prone area. In addition, there is also evidence of silt pits observed during the field visit Recorded> 14 August 2009 Non-Conformance: Due > Closed> dd mmm yy Inconsistent buffer zones identification and demarcation along rivers and streams. Objective Evidence: Gomali has taken action to identify and demarcate most of the visited bufferzone along river streams. However, the auditing team is of the view that the process taken is insufficient to close the CAR due to a visit in one bufferzone in Bahau Estate evidenced that the Bufferzone is not properly demarcated ( CAR 05 remained outstanding). Close-out evidence: Recorded> 14 August 2009 Non-Conformance: Due > Closed> 25 August Guidelines on IPM in place and implementation is in progress. There is no mechanism to evaluate these actions. Objective Evidence: Close-out evidence:

47 Page 47 CAR # Indicator CAR Detail There is mechanism in place to monitor the usage of herbicide as follows: o o o Training is given to the herbicide sprayers for not to spray on the bare ground or area which has not much vegetation e.g. due to prolonged dry period; Monitoring on the application of herbicide to ensure no spraying on the bare areas; and Justification is established for the area requires chemical spraying Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance: Understanding of hazards among workers is inconsistent. There is lack of evidence that information on chemicals is available in language understood by workers. Objective Evidence: Close-out evidence: Gomali has established the information on chemicals and its usage, hazards, trade and generic names in language understood by the workers such as Bahasa Melayu and Bangladesh languages Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance: Policy and Safety Operating Procedures (SaOP) are in place. Communication and implementation is inconsistent. Operational risks assessment incomplete. Inadequate training in safe working condition. Inadequate and inconsistent use of PPE for estate workers. Minutes available. Accident and emergency procedures not clearly understood by all workers. Objective Evidence: Close-out evidence: Gomali has taken action to organize the training on the Occupational Safety and Health in particular training on the safe working condition. The record of the training is kept Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance:

48 Page 48 CAR # Indicator CAR Detail Inadequate training given for contractors to fulfill safety requirement. Objective Evidence: Close-out evidence: training programme is placed under the GPOM Safety and Health for the year. Besides safety training, technical training program is included such as shovel driving, striliser Operator, effluent treatment plant training. Contractors used for servicing equipment were also provided safety briefing, training and use of PPE. List of attendance is also available. Technical training attendance is also available eg Engine Operation Training In addition, there is also a training for premixing the chemicals conducted. The attendance list for the training also kept. Recorded> 14 August 2009 Non-Conformance: Due > Incomplete aspects and impacts assessment. Objective Evidence: Closed> 25 August Close-out evidence: Confirmed that the Gomali has taken action to conduct the detailed environment assessment to ensure all potential impacts are included Recorded> 14 August 2009 Non-Conformance: Due > Closed> 25 August Environmental improvement plan to mitigate the negative impacts and promote the positive ones is incomplete. Objective Evidence: Close-out evidence: The Environmental Improvement Plan has been completed. The plan that was reviewed in June contained the management action plan and programme Recorded> 14 August 2009 Non-Conformance: Due > Closed> Macro level HCV assessment available. However this has not been followed by an on-site assessment created through stakeholder consultation Objective Evidence:

49 Page 49 CAR # Indicator CAR Detail The HCV assessment has been reviewed in June. Based on the record, the auditing team was of the view that the assessment requires further identification and assessment of HCV habitats and protected area within landholding, with the participation of relevant stakeholder. ( CAR 12 is up graded to CAR 23). Close-out evidence: Recorded> 14 August 2009 Non-Conformance: Due > Closed> 25 August Management plan for identified HCV habitats (macro assessment) have yet to be fully implemented. Objective Evidence: Close-out evidence: Verification during the ASA1 evidenced that the management plans with time bound have been included in the HCV Assessment. Recorded> 14 August 2009 Non-Conformance: Due > Partial listing of waste products and sources of pollution. Objective Evidence: Closed> 25 August Close-out evidence: All the waste products and sources of pollution have been re-identified. In addition, there is evidence of recycling demonstrated through establishment of recycling centre. Non-recyclable waste (eg. Schedule waste) was disposed through licensed agent Recorded> 14 August 2009 Non-Conformance: Due > Closed> 25 August Efforts has been made to estimate the renewable energy used in the boiler but this estimate is not sufficient to monitor the energy used and observe trend. Objective Evidence: Close-out evidence:

50 Page 50 CAR # Indicator CAR Detail Gomali Palm Oil Mill has recorded the actual weight of FFB and fibers used for boiler. Trend of the renewable fuel input against the energy produced for every month is available Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance: Inadequate training has been provided to create awareness of women s rights as regards sexual harassment grievance procedures. Objective Evidence: Close-out evidence: A meeting with all woman workers are conducted at least in 6 monthly bases. During the meeting, all workers were given training/briefing on sexual harassment awareness and discussion on any relevant topic. Records of minutes of meeting is also kept and made available to the auditor where the latest meeting was conducted on 22 April Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance: Mechanism exists to capture expenditure, but this does not necessarily capture the quality and effectiveness of performance (social and environment). Objective Evidence: Close-out evidence: M18 Gomali has taken action to monitor the quality and effectiveness of social and environmental performance over (Jan-June) covering the following indicators: Recorded> Changes of number of grievances per month; Trends for POME effluent BOD; Trends for WQI analysis; Trends for diesel usage; and Trends for pesticide usage 25 August Due > 25 Nov Closed> 19 March 2012 Non-Conformance: Inadequate evidence of compliance with legal requirements. Objective Evidence:

51 Page 51 CAR # Indicator CAR Detail Visit to the Mill observed that the Envirocarbon Sdn. Bhd., the company responsible for production or activated carbon from palm kernel shell are found to be operating without license from authority Close-out evidence: Gomali has submitted the corrective action evidence to close the CAR issued. Based on the evidence, the Envirocarbon Sdn. Bhd. has appointd Env Consultancy and Monitoring Services Sdn. Bhd. as the Consultant for Registration of the Kiln Process Chimney under the Environmental Quality (Clean Air) Regulations, Subsequently, has prepared and submitted the application for the written approval for the installation of LEV (c/w Chimney Systems) on September. The consultant also has prepared the Ambient Air Monitoring Report dated December as well as the Isokinetic & Air Emission Monitoring Report dated January The DOE also has responded to the application letter through their letter dated 15 March 2012 stating provisions and conditions that need to be comply for the installation of the LEV Recorded> 25 August Non-Conformance: Due > S02 Closed> In sufficient documented system including written information on legal requirements. Objective Evidence: Hard copies of all relevant legal documents such as laws, licences and permits are viewed at the estate office. However, the auditing team observed that the copies of laws available at the estate office are not completed as per the list of the laws listed within the RSPO standard. Close-out evidence: Recorded> 25 August Non-Conformance: Due > S02 Closed> Pesticides used in estates are not sufficiently stored in accordance to the Occupational Safety and Health Act, 1994 (Act 514) and Regulations and Orders and Pesticides Act 1974 (Act 149) and Regulations. Objective Evidence: Visit to the Bahau Estate evidenced the triple rinsing and perforated procedure is inconsistently implemented at the chemical storage area. Close-out evidence: Recorded> 25 August Due > S02 Closed>

52 Page 52 CAR # Indicator CAR Detail Non-Conformance: Inconsistency in the implementation of the Personnel Protective Equipments (PPEs) as required by the Occupational Safety Health (OSH) plan which is in compliance with OSH Act 1994 and Factory and Machinery Act 1967(Act 139). Objective Evidence: However, the ASA1 evidenced a non-conformance whereby there is inconsistency in the implementation of the Personnel Protective Equipments (PPEs). The auditing team observed that in some estates that the sprayers are not using goggles and long-sleeve shirt during spraying activities. Close-out evidence: Recorded> 25 August Non-Conformance: Due > S02 Closed> Inadequate training programme that includes regular assessment of training need and documentation, including records of training for employees. Objective Evidence: Although there are various trainings conducted, there is no training assessment conducted for each of the trainings conducted. In addition, there is also evidence that the Health Assistance is not attending any proper chemical handling training. Close-out evidence: M Recorded> 25 August Non-Conformance: Due > 25 Nov Closed> 22 November Inadequate evidence of identification and assessment of HCV habitats and protected areas within land holdings; and attempt assessments of HCV habitats and protected areas surrounding landholdings. Objective Evidence: The HCV assessment has been reviewed in June. Based on the record, the auditing team was of the view that the assessment requires further identification and assessment of HCV habitats and protected area within landholding, with the participation of relevant stakeholder. Close-out evidence:

53 Page 53 CAR # Indicator CAR Detail Gomali has conducted a 30-day stakeholder consultation on 18 October covering various stakeholders relevant to the HCV such as the Department of Environment (DOE), Department Land and Mineral (PTG), Department of Orang Asli Development (JAKOA), Department of Wildlife and National Parks (PERHILITAN), Johor State Forestry Department (Johor FD) and the World Wide Fund for Nature (WWF). However, until the end of the 30-day period, there were no single responses received from the stakeholders. Recorded> 25 August Non-Conformance: Due > S02 Closed> Operational plan to avoid or reduce pollution is not properly implemented. Objective Evidence: There is an evidence of used Chemical containers and scheduled waste that is not disposed off in a proper manner. In addition there is also evidence of oil leaking into drainage system. Close-out evidence: Recorded> 25 August Non-Conformance: Due > S02 Closed> Incomplete documented consultation and communication procedures. Objective Evidence: The consultation and communication procedure is integrated in Social Impact Assessment. However, the auditing team found that the consultation and communication procedure between growers and/or miller, local communities and other affected or parties is incomplete. Close-out evidence: APPENDIX B: OBSERVATIONS OBS # Indicator Observation Detail Recorded> 14 August 2009 Non-Conformance: Due > Closed> Request for information via IOI Group General line was unsuccessful. 25 August Objective Evidence:

54 Page 54 OBS # Indicator Observation Detail Close-out evidence: The company maintains adequate information which is available for public. Documented procedures exist for stakeholder information request at the corporate and estate levels. Records of requests and responses are viewed at the estate level. To enhance the communication with the stakeholder, the HQ has developed the mechanism to response to the stakeholders. The established mechanism is made available to the auditing team during the audit Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance: Customary use of land for places of worship is still being practice in all the estate. These sites have not been cataloged and mapped and a consultative approach has not been taken where the management of these sites is concerned. Objective Evidence: Close-out evidence: Details of all the worshipping places have been documented and mapped in the HCV document. In addition, discussion and consultation with the effected parties agreed to earmark the area as HCV. Following to the discussion and consultation, the management documentation is developed to manage such areas Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance: Standard operating procedures for both mill and estate (StOPs) exist. This does not cover all estates activities for example waste disposal. Objective Evidence: Close-out evidence: Gomali has taken action to establish the committee to review the StOPs to cover all activities in the Estates. The revised StOPs dated 6 June including the StOPs for Tapak Penolahan Effluent is made available to the auditor during the audit Recorded> 14 August 2009 Due > Closed> 25 August Non-Conformance: No guidelines to review pollution prevention plans

55 Page 55 OBS # Indicator Observation Detail Objective Evidence: Close-out evidence: the EIA covering the Management Action Plans are review annually. Latest revision dated 27 th June is available that involved the IOI Sustainability team as well as the Estate management. The review process includes consultation relating to 1) identification of operations (aspect) that has environmental impact 2) Identification of waste and pollutants and implement plans to reduce the pollution 3) identification of HCVs and review 4) identification of stakeholders. Recorded> 25 August Non-Conformance: Due > S02 Closed> Person In Charge responsible for the assessing and reviewing the environmental aspects is not identified. Objective Evidence: Close-out evidence: Aspects are documented and verified. Based on the record, the negative and positive impacts are assessed and are reviewed annually. However in most of the aspects, the Person In Charge (PIC) is not identified.

56 Page 56 Appendix C Area statement (As of June ) Paya Bukit Kuala Jasin Bukit Category of landuse Age (yr) Bertam Gomali Bahau Tambang Regent Sagil Lang Dinding Jelei Lalang Serampang Oil palm , ,279 1,215 1, , , ,053 < Immature (<30 months) Subtotal oil palm 1, ,205 2,788 1, ,900 2,070 2,142 2,158 2,557 Coconut 54 Orchard 34 Rubber RN 08 A RN 08 B 160 RN 11 A 58 Total planted area 2, ,358 2,788 1, ,900 2,070 2,142 2,246 2,557 Rubber/ oil palm nursery Sentang Forest 0.52 Oil mill site/effluent pond Housing and building Rubber factory/office 4.07 Rubber effluent pond 5.44 Roads Segamat road River Unplanted swamp Vacant Pipeline wayleave 9.12 Powerline/TNB buffer Football field IOI Research Centre 5.82 IOI Properties Cemetery Government clinic 0.47 Government water tank 0.24 Highway interchange Garden Fish pond Agro park 2.14 Jungle park 5.51 Animal farm 2.00 Steep area Rocky area 1.65 Koperasi polis 5.71 School 1.24 Encroachment Light Industrial Area 4.82 *Housing project *Yayasan Melaka Add/Less: Rounding Adjustment Add/Less: (e.g. Government reserve land within estate/housing/road reserve) Total area 2, , , , , , , , Note: *areas not included in the total hectarage

57 Page 57 Appendix D NEW SCHEDULE OF RSPO CERTIFICATION IN IOI ESTATES (SABAH AND PENINSULAR MALAYSIA) AS AT August Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Pamol Sabah Oil Mill (Covering 6 Estates) * Sakilan Oil Mill (Covering 3 Estate) * Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Pamol Kluang Oil Mill (Covering 6 Estates) * Gomali Oil Mill (Covering 11 Estates) * Baturong Oil Mill (Covering 4 Estates) * Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Bukit Lee Lau Oil Mill (Covering 6 Estates) * Mayvin Oil Mill (Covering 5 Estates) * Pukin Oil Mill (Covering 4 Estates) * Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 Syarimo Oil Mill (Covering 9 Estates) *** Ladang Sabah Oil Mill (Covering Morisem Oil Mill (Covering 9 Estates) *** Leepang Oil Mill (Covering 7 Estates) ***

58 Page 58 8 Estates) *** IOI Corp. Bhd. Membership on RSPO being suspended * Certified Oil Mill ** Completed the Audit *** In Preparation

59 Page 59 Latest Progress Statement from the RSPO on IOI Corporation Berhad matter ( as of 3 rd May 2012 ) Case 1 - Dispute With The Long Teran Community In Sarawak, Malaysia:

60 Page 60 Case 2 - Dispute In Ketapang District, Kalimantan, Indonesia: This case was also mentioned in the website as above: