Roundtable on Sustainable Palm Oil

Transcription

1 Roundtable on Sustainable Palm Oil Annual Surveillance Audit Report Report no.: ASA4_14013 Surveillance assessment against the RSPO Principles & Criteria (Generic) year 2013 and RSPO SCCS year 2014 Name of client Wilmar International Limited PT Kerry Sawit Indonesia Head Office : Multivision Tower 12 th floor, Jl. Kuningan Mulia Kav.9B, Guntur, Setiabudi Village, Kuningan Sub District, South Jakarta District, DKI Jakarta Province, Indonesia Representative Office : Jl. Jenderal Sudirman Km. 62, Sampit-Pangkalan Bun, Seruyan District, Central Kalimantan Province, Indonesia Date of assessment : June 08 to 12, 2015 Report prepared by : Hendra Fachrurozy (RSPO Lead Auditor) Certification decision by : Abdul Qohar (Director of PT TUV Rheinland Indonesia) Certification Body: PT TUV Rheinland Indonesia Menara Karya, 10 th Floor, Jl. H.R Rasuna Said Blok X-5 Kav.1-2 Jakarta 12950, Indonesia Tel : Fax :

2 TABLE OF CONTENTS 1.0 SCOPE OF ANNUAL SURVEILLANCE AUDIT National Interpretation Used Type of Assessment Certification Details Location and Maps Organisational Information / Contact Person Description of Supply Base Actual production volumes, tonnages and projected outputs Dates of Plantings and Replanting Cycles Area of Plantation (Total, Planted and Mature) Progress Against Time Bound Plan Compliance to Rules for Partial Certification Progress of associated smallholders or outgrowers towards RSPO compliance Approximate Tonnages Certified ASSESSMENT PROCESS Certification Body Qualifications of Lead Assessor and Assessment Team Assessment Methodology & Agenda ASSESSMENT FINDINGS Summary of Findings Status of Previously Identified Non-conformities Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions Description of Supply Chain Management System Status of Previously Identified Non-conformities Identified Non-conformances against RSPO SCCS Requirements, Corrective Actions Taken and Auditors Conclusions Noteworthy Positive Component Conclusion and Recommendation for RSPO P & C and Supply Chain Certification Issues Raised by Stakeholders and Findings Pertaining to Issues CERTIFIED ORGANISATION S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY Date of Next Surveillance Visit Acknowledgements of Internal Responsibility and Formal Sign-Off by Client APPENDICES Appendix 1: List of Abbreviations Appendix 2 : List of Stakeholders Interviewed and Contacted Appendix 3: Observations and Opportunities for Improvement... 64

3 Page 3 of SCOPE OF ANNUAL SURVEILLANCE AUDIT 1.1 National Interpretation Used The operations of the palm oil mill(s) and its supply base of FFB were assessed against the RSPO Principles & Criteria (Generic) year 2013 and the RSPO Supply Chain Certification Systems (SCCS) document (November 2013). 1.2 Scope of Assessment The annual surveillance assessment was carried out on 2 (two) mills and 3 (three) estates under PT Kerry Sawit Indonesia owned by Wilmar International Limited. The date of certification of this unit was June 18, 2011 valid until June 17, Since 3 rd surveillance audit, there are extension scope i.e 1 mill (PT Kerry Sawit Indonesia POM 2) 1.3 Certification Details The details of RSPO certification of PT Kerry Sawit Indonesia area as per the table below : Table 1: RSPO Certification details of PT Kerry Sawit Indonesia RSPO Membership no. : RSPO Certificate no.* : on behalf Wilmar International Limited Date of first RSPO certificate & validity : June 18,2011 & validity : to Date of certification audit : December 06 to 12, 2010 Date of previous surveillance audit : May 19-22, 2014 Date of revised RSPO certificate & validity (if applicable) : CPO tonnages claimed : PK tonnages claimed : June 16, 2014 & validity until June 17, , tonnes 18, tonnes Note : *).Certificate no dated 18 th June 2011 previously issued by TUV Rheinland Malaysia Sdn. Bhd is no longer valid Refer to Appendix 1 for further details of the RSPO certificate. Table 2: GPS locations for all estates and mills included in annual surveillance assessment Name of mill / estate PT KSI Mill 1 PT KSI Mill 2 KSI 1 Estate KSI 2 Estate KSI 3 Estate Location Danau Sembuluh I Village, Danau Sembuluh Subdistrict, Seruyan Sistrict, Central Kalimantan, Indonesia Tabiku Village, Seruyan Raya Subdistrict, Seruyan District, Central Kalimantan, Indonesia Tabiku Village, Seruyan Raya Subdistrict, Seruyan District, Central Kalimantan, Indonesia Danau Sembuluh I Village, Danau Sembuluh Subdistrict, Seruyan Sistrict, Central Kalimantan, Indonesia Tabiku Village, Seruyan Raya Subdistrict, Seruyan District, Central Kalimantan, Indonesia GPS locations Latitude Longitude S E S E S E S E S E

4 Page 4 of Location and Maps Figure 1: Location map of PT Kerry Sawit Indonesia in Seruyan District, Central Kalimantan, Indonesia PT KSY Estate 1 & Mill 2 PT KSY Estate 2 & Mill 1 PT KSY Estate 3

5 Page 5 of Organisational Information / Contact Person Contacts details of the company are as follows: Company Name: Address: Contact Person: PT Kerry Sawit Idonesia Jenderal Sudirman Km. 62 Road, Sampit-Pangkalan Bun, Seruyan District, Central Kalimantan, Indonesia Mr. Ali Musthofa Telephone: / ali.musthofa@wilmar.co.id 1.6 Description of Supply Base Table 3.a : FFB Supply Information for PT Kerry Sawit Indonesia Mill (POM1 & POM2), year 2014 and year 2015 FFB Contributors PT Kerry Sawit Indonesia Mill 1 FFB supplied Year 2014* FFB supplied Year 2015** Tonnes % Tonnes % Company owned estates : Kerry Sawit Indonesia 1 estate 3, Kerry Sawit Indonesia 2 estate 97, , Kerry Sawit Indonesia 3 estate 71, , Sub Total 172, , Other Wilmar estate : Rimba Harapan Sakti 1 estate Rimba Harapan Sakti 2 estate Sub Total Total 173, , PT Kerry Sawit Indonesia Mill 2 Company owned estates : Kerry Sawit Indonesia 1 estate 120, , Kerry Sawit Indonesia 2 estate 5, , Kerry Sawit Indonesia 3 estate 3, Sub Total 128, , Other Wilmar estate : Rimba Harapan Sakti 1 estate 1, Rimba Harapan Sakti 2 estate Sub Total 2,

6 Page 6 of 64 FFB Contributors FFB supplied Year 2014* FFB supplied Year 2015** Tonnes % Tonnes % Note : Total 130, , *). January to December 2014 (after grading) **). January to May 2015 (after grading) Table 3.b : FFB Supply Information (cerified and non-certified) for PT Kerry Sawit Indonesia Mill (POM1 & POM2), year 2014 and year 2015 FFB Contributors FFB supplied Year 2014* FFB supplied Year 2015** Tonnes % Tonnes % PT Kerry Sawit Indonesia Mill 1 FFB certified sources : Kerry Sawit Indonesia 1 estate 3, Kerry Sawit Indonesia 2 estate 97, , Kerry Sawit Indonesia 3 estate 71, , Sub Total 172, , FFB non-certified sources : Rimba Harapan Sakti 1 estate Rimba Harapan Sakti 2 estate Sub Total Total 173, , PT Kerry Sawit Indonesia Mill 2 FFB certified sources : Kerry Sawit Indonesia 1 estate 120, , Kerry Sawit Indonesia 2 estate 5, , Kerry Sawit Indonesia 3 estate 3, Sub Total 128, , FFB non-certified sources : Rimba Harapan Sakti 1 estate 1, Rimba Harapan Sakti 2 estate Sub Total 2, Total 130, , Note : *). January to December 2014 (after grading) **). January to May 2015 (after grading)

7 Page 7 of Actual production volumes, tonnages and projected outputs. Table 4 : Certified tonnages claimed, certified tonnages purchased or sold, total and projected CPO and PK production from PT Kerry Sawit Indonesia CPO Amount (MT) PK Certified tonnages claimed 92, , Certified tonnages sold* , Certified tonnages purchased Actual Production** 78, , Conversion Factor year 2014 (average) OER : KER : 4.35 Projected output year 2015 *** 110, , Projected output year 2016 **** 104, , Note : *) Data from January to December year 2014 in KSY POM 1 & POM 2. The sold product to PT WINA unit Bagendang, **) Realization of CPO & PK production in year 2014 from both of mill (POM 1 (CPO : 38, Ton, PK : 6, ton) and POM 2 (CPO = 39, tonnes and PK = 8, tonnes)) ***) Budget of CPO & PK production in year 2015 for both of mill (POM 1 : CPO = 52,806 tonnes and PK = 10,656 tonnes; POM 2 : CPO = 57,490 tonnes and PK = 11,601 tonnes) with their extraction rate are 22.3% (OER) and 4.5% (KER). ****) Budget of CPO & PK production in year 2016 for both of mill (POM 1 : CPO = 44,952 tonnes and PK = 8,429 tonnes; POM 2 : CPO = 59,184 tonnes and PK = 12,947 tonnes). 1.8 Dates of Plantings and Replanting Cycles The company follows a replanting cycle of 25 years. Information on the dates of plantings is as per the table below. Table 5 : Age and year of plantings of company estate supplying to PT Kerry Sawit Indonesia Age & Year of Plantings Oil palm planted area at each estate (ha)* KSY 1 KSY 2 KSY 3 Total 12 & & , , & , , & , , , , & , , & & & & & **

8 Age & Year of Plantings Note : Oil palm planted area at each estate (ha)* KSY 1 KSY 2 KSY 3 Total 2 & & & TOTAL 6, , , , Page 8 of 64 *) There are revision of hectare statement based on the results of GIS survey (minute of revision no.kg21/5/2014 on May 2014) **) year planted 2012 in KSY1 estate as mature areas. Company has no replanting plan because all plantation in PT KSI still young, as seen on the above information. 1.9 Area of Plantation (Total, Planted and Mature) Table 6 : Oil Palm Planted Area Summary, FFB Production and Average yield/ha for PT Kerry Sawit Indonesia Estate Name Total area (ha) Oil Palm Planted area (ha) Mature (Production) area (ha) Immature (Nonproduction) area (ha) FFB Production* (tonnes) Average yield/ ha KSY 1 7, , , , KSY 2 6, , , , KSY 3 5, , , , TOTAL 18, , , , Note : * Period of January to December Table 7: Land use data for PT Kerry Sawit Indonesia year 2015 (per May) Estate Name Total area (ha) Oil Palm Planted Area (ha) HCV/Pot ential HCV areas* (ha) Housing, Road, Drainage, Nursery Land used for other purposes (ha) Not plantable area*** Mill Enclave**** KSY1 7, , ** KSY 2 6, , KSY 3 5, , TOTAL 18, , , Note : *) Include of additional areas as HCV areas amount 90 ha where it has been enclaved as company initiative. **) Include of nursery area amount of Ha ***) Consist of sand, swamp, pond, burial area, HCV and production forest areas and land clearing ****) such as encroachment & native settlement 1.10 Progress Against Time Bound Plan Table 8 : Time Bound Plan of the Other Management Units Name of Holding Location Time bound plan for certification Status

9 Indonesia Name of Holding Location Time bound plan for certification Page 9 of 64 Status PT Milano (Pinang Awan) North Sumatra 2009 Certified PT Mustika Sembuluh I Central Kalimantan 2009 Certified PT Kencana Sawit Indonesia West Sumatra Certified PT Kerry Sawit Indonesia I Central Kalimantan 2010 Certified PT Tania Selatan South Sumatra 2010 Certified PT AMP Plantation West Sumatra 2011 Certified PT Agro Nusa Investama (Sambas) West Kalimantan 2012 Certified PT Buluh Cawang Plantations 1 South Sumatra 2012 Certified PT Bumi Sawit Kencana Central Kalimantan 2012 Certified PT Gersindo Minang Plantations West Sumatra 2012 Certified PT Sarana Titian Permata Central Kalimantan 2012 Certified PT Daya Labuhan Indah-2 North Sumatra 2013 Certified PT Mustika Sembuluh 2 Central Kalimantan 2014 Certified PT Mentaya Sawit Mas Central Kalimantan 2014 Certified PT Kerry Sawit Indonesia 2 Central Kalimantan 2014 Certified PT Agro Palindo Sakti 1 South Sumatra 2014 Full Assessment on 14/11/2014 PT Musi Banyuasin Indah South Sumatra 2014 Full Assessment on 28/11/2014 PT Murini Sam Sam Riau 2014 Full Assessment on 02/11/2015 PT Sinarsiak Dianpermai Riau 2014 Gap Assesment on 19/09/2014 PT Karunia Kencana Permaisejati Central Kalimantan 2016 Full Assessment on 09/04/2015 PT Rimba Harapan Sakti Central Kalimantan 2016 Full Assessment on 27/03/2015 PT. Bumi Pratama Khatulistiwa West Kalimantan 2016 PT Agro Nusa Investama (Landak) West Kalimantan 2016 PT Agro Palindo Sakti 2 West Kalimantan 2016 PT Buluh Cawang Plantation West Kalimantan 2015 PT Agrindo Indah Persada 2 Bangko - Jambi 2016 PT. Putra Indotropical West Kalimantan 2016 PT. Pratama Prosentindo West Kalimantan 2016 PT. Indoresin Putra Mandiri West Kalimantan 2016 PT Asiatic Persada Jambi 2013 Not classified, company sold PT Citra Riau Sarana 1 Riau 2014 Not classified, shares are being divested PT Citra Riau Sarana (ML) 3 Riau 2014 Not classified, shares are being divested PT Citra Riau Sarana 2 Riau 2014 Not classified, shares are being divested Malaysia Sapi Palm Oil Mill Labuk, Sandakan Certified

10 Page 10 of 64 Name of Holding Sabah Location Time bound plan for certification Reka Halus Palm Oil Mill Labuk, Sandakan Certified Sabah Sabahmas Palm Oil Mill Lahad Datu, Sabah Certified Saremas 1 Palm Oil Mill Miri, Sarawak Certified Saremas 2 Palm Oil Mill Miri, Sarawak Certified Terusan Palm Oil Mill Ribubonus Palm Oil Mill Sri Kamusan Palm Oil Mill Labuk, Sandakan Sabah Telupid, Sandakan, Sabah Sugut, Sandakan Sabah Certified Certified Certified Status Table 9 : New Development Area under Wilmar International Name of Holding Location Total area NPP Status according to RSPO NPP procedure PT Agro Indah Persada Merangin. Jambi 1,200 ha Approved PT Agro Nusa Investama Sambas Sambas, West Kalimantan 1,024 ha Approved Biase Plantations (Ibiae Estate) Calabar, Nigeria 5594 ha Approved Biase Plantations (Calaro Extension) Calabar, Nigeria 3066 ha Not submitted (Pending HCV/HCS study Eiyup Industry (Oban Estate) Calabar, Nigeria 2986 ha Not submitted (Pending HCV/HCS study Biase Plantations (Biase estate) Calabar, Nigeria 8029 ha Overlapping boundaries 1.11 Compliance to Rules for Partial Certification Compliance of the uncertified management units of Wilmar Plantation Limited against the rules for partial certification according to RSPO Certification System clause was assessed by submission self assessment report. A summary of findings is as stated below. Partial Certification Requirements (a) The parent organization or one of its majority owned and / or managed subsidiaries is a member of RSPO. (b-d) A challenging time-bound plan for certifying all its relevant entities is submitted to the Certification Body (CB) during the first certifica- Audit Findings PT AMP Plantation is subsidiary of Wilmar International Indonesia is RSPO member with membership number See table above, some changes on company s time bound plan due to several reason explained above.

11 Page 11 of 64 Partial Certification Requirements tion audit. The time-bound plan should contain a list of subsidiaries, estates and mills. Any revision to the time-bound plan or to the circumstances of the company shall cause the plan to be reviewed. for whether it is still appropriate, such that changes to the time-bound plan are permitted only where the organisation can demonstrate that they are justified (e) No replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3. Any new plantings since January 1st 2010 must comply with the RSPO New Plantings Procedure (f) Land conflicts, if any, are being resolved through a mutually agreed process, e.g. RSPO Grievance procedure or Dispute Settlement Facility, in accordance with RSPO criteria 6.4, 7.5 and 7.6. Audit Findings There are some newly developed plantation areas under Wilmar International such as in Jambi province, West Kalimantan province Indonesia and Nigeria as explained on the table 10 above. Some areas have undergone the New Planting Procedure (NPP) and been approved while some areas are still undergoing the NPP, as shown in Table 10 above. PT Asiatic Persada, which was previously a subsidiary of Wilmar had a significant land conflict issue but has been sold to other plantation company and is now no longer a subsidiary of Wilmar Plantation. Wilmar International carried out the New Planting Procedure for BIASE Plantation Limited (Ibiae estate) in Nigeria with an announcement made on the RSPO website on 9 November During this NPP process, a complaint was submitted by the Rainforest Resource & Development Centre (RRDC) on behalf of the Ibiae Land Lord Community. The complaint covered infringements to several aspects of Principle 1 and Principle 2 of the RSPO P&C. The case was taken up and investigated by the RSPO Complaints Panel, with decision made for RSPO to a lawyer well acquainted with Nigerian laws to review and give an authoritative opinion on whether the company had complied with the legal requirements of Nigeria. The legal opinion was received by the RSPO on 27 August 2014, and based on this opinion, the RSPO confirmed that BIASE Plantations was in compliance with legal requirements and closed the case. However, the result was not accepted by RRDC as well as the NGO, Friends of the Earth and the issue remains ongoing with no resolution. As the company has complied with requirements to attempt to resolve the dispute through the RSPO grievance procedure, this is noted by the TUV Rheinland audit team as an observation and progress of the case will be monitored. Further details on this case is available here: There is also on ongoing land dispute at PT Gersindo Minang Plantation (GMP), West Sumatra under Wilmar, which has been ongoing since year 1997 with the village of Jaorang Rantau. This company has been RSPO certified by another certification body who is monitoring the status of the dispute with the RSPO.

12 Page 12 of 64 Partial Certification Requirements (g) Labour disputes, if any, are being resolved through a mutually agreed process, in accordance with RSPO criterion 6.3. (h) Legal non-compliance, if any, are being resolved in accordance with the legal requirements, with reference to RSPO criteria 2.1 and 2.2. Audit Findings A previously ongoing labour conflict in Tania Selatan regarding employee bonus was temporarily resolved, however based on new information received from the Manpower and Transmigration Department, the dispute is still ongoing. The dispute is still being managed according to the company s conflict resolution mechanism with status being monitored during annual surveillance audit by TUV Rheinland. Some of Wilmar s other management units have not complied with certain legal requirements, for example in PT Sarana Titian Permai, PT Kerry Sawit Indonesia, PT Mustika Sembuluh estate under another Wilmar International management unit, there is an issue with the land area stated in the land use right certificate (HGU). However, the company is taking action by inviting the National Land Agency (BPN) to remeasure the land and resolve the issue. The process is still ongoing. In addition, there were non-compliances raised in June 2015 by the Environmental Department of Agam against PT AMP Plantation, another subsidiary of Wilmar. The non-compliances raised were that: - The company continued to carry out land application after their license for land application had expired on 14 March The company was carrying out POME treatment using an adsorption system which had not been studied or approved as per the company s environmental management document - There was no follow up by the company s management on the results of the evaluation by the Agam district on PT AMP mill s wastewater treatment facility in Sample analysis results of wastewater discharged from the mill was found to have exceeded the legal limits for BOD and COD. At time of this audit, the company was still making efforts to close these legal non-compliances Progress of associated smallholders or outgrowers towards RSPO compliance Based on incoming FFB data and clarification from mill manager, PT Kerry Sawit Indonesia Mills are no received FFB from smallholder or outgrower. This requirement is not applicable for PT Kerry Sawit Indonesia Approximate Tonnages Certified The tonnages certified have been revised from the previous amount stated in the previous RSPO certificate due to FFB production has increased. Current volume certified is based on projection of the volume of FFB production from company owned estate (Kerry Sawit Indonesia 1-3 estate) year 2016 where FFB supplied to Kerry Sawit Indonesia POM (POM 1 & 2) amount of 414,600 tonnes with extraction rate are 22.30% (OER) and 4.50% (KER). Approximate tonnages certified are as follows : Crude Palm Oil (CPO) : 92, tonnes Palm Kernel (PK) : 18, tonnes

13 Page 13 of ASSESSMENT PROCESS 2.1 Certification Body PT TUV Rheinland Indonesia is member of Group TÜV Rheinland Group, a global leader in independent testing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 500 locations in 65 countries on all five continents. PT TUV Rheinland Indonesia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, SA 8000, RSPO (RSPO-ACC-013) and ISPO (LS-P&K-005-ISPO). PT TUV Rheinland Indonesia office is located in Jakarta, Indonesia. 2.2 Qualifications of Lead Assessor and Assessment Team The assessment team members of this surveillance audit that were part of the same assessment team for the certification audit are as follows: 1) Hendra Fachrurozy 2) Harso Yuli Antena New assessment team members that were not part of the previous assessment team are as per the table below : Name Position Qualifications / Experience Riswan Monang Lingga Auditor Auditor Education : Magister of Natural Resource and Environment Management University of North Sumatera and Bachelors Degree in Forestry Bogor Agriculture University. Trainings attended: ISPO Auditor course, HCV training Working experience: Experienced as profesional consultant in environmental and conservation sector and HCV assesor, Education : Bachelor of Forestry, Gadjah Mada University. Training attended : ISPO Auditor, Quality Management System (QMS) Auditor/Lead Auditor (ISO 9001:2008) by IRCA, Environmental Management Systems Auditor/Lead Auditor Conversion Training by IRCA (ISO ), Lead Auditor RSPO Training, and HCVA Training Working experience : Field Assistant PT Sapta Karya Damai ( ), Auditor in PT Sucofindo ( ), and Auditor in PT TUV Rheinland Indonesia (2015-present) 2.3 Assessment Methodology & Agenda The surveillance assessment was conducted from June 08 th to 12 th, 2015 as per the assessment program below. The assessment was carried out in accordance with PT TUV Rheinland Indonesia s RSPO audit procedure as well as the RSPO Certification Systems document. During the assessment, the qualified TUV Rheinland assessors used the RSPO standard as endorsed for the country in which the assessment took place and recorded their findings. Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without compromising the integrity of the assessment in anyway. All 3 estates and 2 mill were visited and the assessment team carried out field and document assessments of compliance to all the RSPO principles and criteria and RSPO SCCS year Common systems were identi-

14 Page 14 of 64 fied and specific evidence was recorded for individual estates. Interviews were conducted at all estates and the mill. The company proposed the correction and corrective action for all identified non conformities raised to the certification body 30 days after the closing meeting. Verification of closure of major non-conformances was conducted 2 months after the closing meeting of the main assessment and implementation of corrective actions for minor non-conformities will be verified during the next surveillance audit. The certification assessment agenda is as explained below. Surveillance Audit Agenda. Location/ Date Main sites 08 June 2015 KSI main Office KSY1 POM 09 June 2015 KSY 1 POM KSY office 10 June 2015 KSI 1 & 3 Estate Main activities Opening Meeting Verification for Previous audit findings Verification of document about RSPO P&C (INA-NI) Verification of document and verification of field relate of : SCCS POME Hazardous waste management Processing (FFB receipt until dispath of product) Water treatment plant OHS Wage of worker/employee Verification of field, relate of : Water management & chatment at back of mill 2 HCV management & monitoring Nursery in KSY 1 Intersection of river Boundary stone Harvesting, spraying & fertilizing activities Workshop station Hazardous & toxic waste storage Emplasment Land application in KSY 2 estate Planted areas which peat land in KSY3 EFB application Water management / protecte of surface Manuring activity (circle spraying) Tabiku village 11 June 2015 KSY 2 POM Verification of document and verification of field relate of : SCCS POME Hazardous waste management Processing (FFB receipt until dispath of product) Water treatment plant OHS Wage of worker/employee 12 June 2015 KSI 1 & 3 Estate Verification of field Closing meeting

15 Page 15 of ASSESSMENT FINDINGS During 4 th surveillance audit, there are 23 (twenty three) nonconformities were assigned against 12 (twelve) nonconformities Major Compliance (9 major findings against RSPO P&C and 3 major finding against RSPO SCCS) and 11 (one) nonconformities Minor Compliance Indicator. Futher explaination of the non-conformities raised and corrective actions taken by the company are provided in Section 3.3 & 3.6. The observations & opportunities for improvement are listed in Appendix Descriptiion of RSPO P&C The following is a summary of findings during this surveillance audit for the criteria listed in the RSPO Principles & Criteria Generic year 2013 and RSPO SCCS November 2014 was explained in below :. Principle 1: Commitment to transparency Criteria assessed : CR1.1, CR1.2 Criteria not assessed : - Findings : The company has been maintained a list of stakeholder and keep the information up to date every year. Legal, land, PR and CD officers conducted visiting to strategic stakeholder at least 1 time in a month especially for government stakeholders in every level. The list of stakeholder has been documented still become a static document because of no stakeholder analysis on it. This situation rise as observation. An appropriate stakeholder analysis output could produce a stakeholder mapping as the considerate document to develop stakeholder engagement program in order to improve company s social sustainability. There was no specific information request from stakeholder. Incoming letters that has registered in logbook showed that most of them were regular communication process such as invitations, invoice, requesting support, etc. On the other hand, Company has provide information to relevant stakeholder such as: a. Plantation Report to district Office of Plantation and Forestry, b. Worker Health and safety report to district Office of Workforce and Transmigration c. Environmental report to District Body of Environment. The shelf life of the document request and response information set forth in SOP 36/CKP/ (1)/0310 rev 01, effective date of March 1, 2010, which states the record is saved for 3 years, and moved to the filing room for the next 3 years. Company s officer responsible in providing information for stakeholder has determined according to each division. Company showed evidences regarding their visiting activities to stakeholder introducing company s officer responsible to open communication and consultation with them according to its jobs descriptions. It activities, they also communicate some procedures regarding publicly available documents. Provision of information to external parties is set using SOP 47/PR / (2) / 0312 effective since March Documents and information available includes: EIA, annual report, HGU permits and other related permits, monthly reports of estate production, the company's operational area, river maps, organizational structure, company policy, HCV report, SIA report, labor data CPO sales data, the area statement, CSR Program report, SOP and Procedure. In the past year, the period April 2012-April 2013, there were no requests for information from stakeholders relating to publicly available documents. As for the shelf life of information request responses determined for 3 years. Company as part of WILMAR Corporation, has already documented a policy regarding Code of Ethical Conduct that published by Wilmar International. This policy still written in English, not yet translated to Bahasa, and not yet being ratified as Wilmar Indonesia nor PT KSY official policy. Communication and socialization to all level workers and contractor has not been conducted yet. This situation rise as non-conformity (NCR No of 23). Compliance status: Non Compliance.

16 Page 16 of 64 NCR No of 23 (indicator minor) Company has policy regarding Code of Ethical conduct, but still in English, not yet translated to Bahasa and not yet communicate and socialized to all level worker and contractors. Principle 2: Compliance with applicable laws and regulations Criteria assessed: CR2.1, CR2.2, CR2.3 Criteria not assessed: - Findings: PT Kerry Sawit Indonesia s estates and mills have a list of applicable legal and other requirements documented under Law & Regulation Register for OSH, Environmental, Plantation & Workforce Section ( Daftar Peraturan & Perundangan Bidang Lingkungan Hidup, Keselamatan dan Kesehatan Kerja, Perkebunan dan Ketenagakerjaan ) (Form No. 02/SOP 08/CKP/(2)/0111 rev.9 dated on 1 May 2015). The law & regulation for workforce aspect was prepared by Human Resources Region, was checked by legal officer, and was approved and signed by General Manager, the law & regulation for OSH & environment aspect was prepared by OSH & environment officer, was checked by legal officer and was approved and signed by General Manager, and the law & regulation for Plantation aspect was prepared Legal Officer, was checked by head of legal and was approved and signed by General Manager. It would be updating or reviewing in November, The law & regulation register consist of Government Regulation, President Decree, Ministry Regulations, Ministry Decree, and Governor Decree. Futhermore, it was included are document change history (contains the latest regulatory updates), list any legislation, aspect to be done, article/paragraph of the laws as the reference, compliance status and person in charge. Procedure no. SOP 08 / CKP / (2) / 0111 was include of evaluating law compliance or ensuring license requirements have been complied with laws and regulations too. Monitoring and socializing legal compliance by company in two ways/mechanism : 1. Internal audit conduct in every six months, the last audit proved with Minutes of the Meeting on discussion and coordination of internal audit findings dated March 14, Sections meeting to evaluate the company's compliance with all regulations in every six months. The last meeting proved by Minutes of Meeting on April 2015 to evaluate the regulation of Permentan No. 11 / Permentan / OT.140 / 3/2015 concerning ISPO, and Addition of Central Kalimantan Governor Regulation No. 41 year of 2014 on HCVA management on plantation business in the Province of Central Kalimantan. Verification conducted during audit according to regulations such as minimum wage payment, overtime, worker status, and worker minimum age requirement. Company shows compliance to those regulations except one of regulations according to overtime, especially payment for working on Sunday and holyday. This situation will be showed at P&C 6.5 in this report. There made several effort to comply with legal requirements such as : - The company has been processing revision of occupancy warthiness permit no /859/HER/KPPT/V/2014 on May 23, 2014 from Integration License Service Office of Seruyan District for PT Kerry Sawit Indonesia with location on Sembuluh I Village (POM1) and Tabiku Village (POM2), Danau Sembuluh Sub District, Seruyan District where it relate of compliance to Ministry of Home Affairs decree no.27 year 2009 article The company has been processing one of land use right (HGU) so that the permanent business permit from investment coordinator board can be issued. where it has complied to Coordinator Invesment Board decree no. 1/p/ The company had plantation bussiness permit (IUP) where it has complied to Ministry of Agriculture decree no. 357 year 2002 jo 26 year 2007 jo no. 98 year This permit has been extended with no /386/2014 dated on November 25,2014 covering plantation areas is 18,994 Ha and capacity mill of 180 tonnes/hour. - Permit of the utilization of effluent for POM 1 No /354/2014 dated on November 3 rd, 2014 in order to get permit for land application where it has complied to State Minister for The Environmental decree no. 29 year 2003, and this permit is a revision of the old permit No, 367/ 2011 that will expired on November 21, 2014.

17 Page 17 of 64 - Permit of the utilization of effluent for POM 2 No /179/2015 dated on April 27 rd, 2015 complied to State Minister for The Environmental decree no. 29 year The company (KSY 2 POM) has got approval of Building Construction Permit / Izin Mendirikan Bangunan (IMB) no 979.3/42/KPPT/V/2012 dated on Mei 1 st, 2012 and No 640/73/IMB/CK.PU/2008 dated on Desember 13 rd, 2008 for KSY 1 mill from Head of Seruyan District where it has complied to law no. 28 year 2002 and Government Regulation No.36 year The company revises the wages of their workers in accordance with changes in minimum wage as per decree letters issued by the local government where it has complied to Central Kalimantan Governot decree no.29 of year 2014 on regional and sectoral minimum wages 2015 in Central Kalimantan. - Environmental permit for KSI Estate 1 Estate 2 Estate 3 and POM 1 and Approval of EIA documents (ToR of EA, EA, Environmental Management and Monitoring) and Executive Summary issued by the Head of Local Development Planning Agency of Kotawaringin Timur District on June 28th, Whereas, Environmental permit for POM 2 and approval of EIA issued by Head of Seruyan District No 320 of Year 2012 dated on June 29th, It has complied to State of Minister for The Environment regulation no. 13 year To ensure of all boiler operators on duty has certificate where it has complied to Ministry of Manpower and Transmigration decree no. PER.09/MEN/VII/ The company has started the development process of smallholder plantation. Existing condition is the company has apllied request to land agency regarding land use right on behalf the Cooperative of Danau Sejahtera and the Cooperative of Tabiku Makmur. Moreover, the company has applied request of the exchange of forest areas where it has complied to Ministry of Forestry decree no.p.32/menhut- II/2010 jo P.41/Menhut-II/2012 jo P.27/Menhut-II/2014. The company has made progress regarding the development of smallholder plantations, the company has made a MOU with several cooperatives (4 cooperatives) with a total area of hectares. In accordance with the provisions of IUP that the company will build a plasma of 20% of the IUP area, which means an area of 3800 Ha. Currently the definitive cadastral measurements still in progress for an area of 13, Ha, and further acreage in exsisting IUP will be revised to adjust the total area of the concession. - Permit Use of Chemical Pesticides issued by Tourism Manpower and Transmigration Agency No. 566/517/Disnakertranspar / IV / 2015 dated on 30 April 2015 and shall be valid for one year. - etc. The company also complies with the rules and reporting obligations contained in the licenses are granted, among others: - - Plantation Business Report has been submitted every three months to the Plantation Affair Agency of Seruyan District, Central Kalimantan Province with evidenced by first quarter reports and receipt on 27 April 2015, - Investment Activity on Stage Development Report in 2014 to BKPM (investment agency) on January 14th, Report on the implementation of Environmental Managament and Monitoring PT KSI Period Semester II 2014 No. 03 / MSG / ADM / BM / III / 2015 dated April 23rd, 2015 to the Environmental Agency of Seruyan District. - UKL-UPL implementation report of POM 2 Period Semester II 2014 No. 04 / KSI POM2 / ADM / BM / III / 2015 dated March 12, 2015 to the Environmental Agency of Seruyan District However during 4 th surveillance audit there is several issues relating inconsistency to legal compliance were checked and found such as : - Conditions of temporary storage of hazardous and toxic waste in POM 2 do not meet the standards as stipulated in Government Regulation No. 101 of year 2014 on the Management of Hazardous and Toxic Waste. - Boiler operators namely Andi Amarullah (POM1) and Haidi (POM2) is not equipped with SIO license as stipulated in the Regulation of the Minister of Manpower No. 01 of year 1988 on Qualifications and Requirements Steam Engines Operator. Condition above is raised as a Non-Conformity (NCR No of 23). In 4 th surveillance audit regarding land use right where the land use right (HGU) for PT KSI was not yet issued by the National Land Agency where based on letter No VIII/2012 dated on August from the regional office of National Land Agency in Central Kalimantan Province that the petition had been submitted previously in year 2006 have been returned back by National Land Agency head office with reason is 1). Consideration of the status of region and revision of spatial plan in Central Kalimantan Prov-

18 Page 18 of 64 ince has not been finished, 2). Government regulation No. 13 year 2010 about tariff of service applicable at National Land Agency, 3). Minister of forestry decree No. SK.292/Menhut-II/2011 about changes in forest areas to be not in the forest area in Central Kalimantan Province, and 4). Overlaping area with PT Salonok Ladang Mas area. The latest progress for Land Use Right (HGU) process is that the Provincial National Land Agency has sent a letter to the Central National Land Agency on February 5th, 2015 to report that PT Kerry Sawit Indonesia has complied with the requirements for landuse right license. Requirements that are already completed among others : 1. Revision of cadastral map based on field measurement No dated on May 5th, 2014 with area of 13, Ha in Sembuluh I, Sembuluh II and Tabiku, Kecamatan Danau Sembuluh sub district and Seruyan Raya sub district, Seruyan District. Smallholder (plasma) estate exluded from the core estate as many of H. Based on this measurement, the total area of PT KSY will be reduced from ha to ,14 Ha. 2. Field Checking Minutes No.11/BA-PL/HGU/VI/2014 conducted on June 4th, Conducted land inspection, remeasurement and overlay area between map of field and release of forest area with map of land use right PT PT Salonok Ladang Mas 4. Auditee has submitted letter no. 03/KSI/Adm/BM/III/2014 dated on 11 March 2014 to Head of Land Agency in Central Kalimantan Province regarding request of to revisi area map no because there are PT Kerry Sawit Indonesia s areas on forest areas amount of Ha. 5. Consultation to Land agency in Central Kalimantan Province regarding result of overlay between forest areas release map (appendix decree no. 130/Kpts-II/2000) with map of forest areas in Central Kalimantan Province (Ministry of Forestry no. 529/Menhut-II/2012) that there are still KSY areas on convertion of forest areas (HPK). Result of consultation it further Land Agency was submitted letter no. 13/ /I/2014 on January 13, 2014 to the Forest Agency regarding request of clarification 6. Minister of Forestry decree No. 130/Kpts-II/2000 dated May 22nd, 2000 on Release of part of forest area in Danau Sembuluh Forest Area with area of 17, ha for PT Salawati Makmur, and followed by a statement letter deed No.9 dated September 4th, 2014 from the Director of PT Salawati concerning on handover of the location of the released forest area to PT KSY. 7. PT. KSY sent a request letter to the Provincial Forest Planology Agency Region XXI on April 29th, 2015 concerning recommendation to have an APL (non forest purposes area) for area of 13, ha that has been released by Minister of Forestry on previous PT Salawati s land. This letter submitted in order to revise Forest Area Designation of Central Kalimantan No. SK.529/Menhut-II/2012 which is a part of PT KSY area designated as Convertible Forest Area with number of 12 Ha. 8. Notarial deed no. 81 dated on February 25, 2013 by Notary of Aryanti Artisari,SH. M.Kn regarding agreement of planted cost compensation between PT Kerry Sawit Indonesia with PT Salonok Ladang Mas. 9. Partnership agreement between PT KSY and Koperasi Serba Usaha Danau Sejahtera Desa Sembuluh I, Koperasi Sejahtera Bersama Desa Sembuluh II and Koperasi Tabiku Makmur Desa Tabiku dated December 23rd, The Provincial National Land Agency has checked and recommended that PT KSI sould be granted with HGU licence with area of 13, Ha, and request for HGU license has been forwarded officially to the Central National Land Agency on February 5th, 2015 and received by March 4th, Monitoring on boundary pillars are regulary conducted for minumum once a year and every three months with normal condition. Procedure to boundry pillars is SOP 001 /SOP/GIS/2014 dated 01 July The latest monitoring conducted on May 2015, and reported to Estate Manger with content of ID Pillar, date, block number, photos, type of pillar, condition of pillar, coordinat posistion, maintenance needed. There is 59 pillars installed in KSY1 estate, 22 pillars in KSY2 estate and 50 pillars in KSY3 estate. All the pillars are drawn in map completed with the condition of existing pillars explanation. There is an updated Land Compensation List of PT KSI. The list records transaction from June 2003 to april The list describe details of name, TTL, address, job, land identity number, persil ID, reference number, nlok number, wide, compensation values, date of payment, periode of payment, estate, village, sub district and district detail location. The list shows that there are 1713 transactions/compensation for total 10, Ha. The latest agreement regarding land acquisition as planted tree/crop compensations detail as follow:

19 Page 19 of 64 Doc Number No Date Location Width (Ha) 1703 May 13 th 2014 Estate II May 13 th 2014 Estate II April 23 rd 2014 Estate I April 23 rd 2014 Estate I June 5 th 2014 Estate I June 12 th 2014 Estate III June 12 th 2014 Estate III June 24 th 2014 Estate II February 20 th 2014 Estate III February 20 th 2014 Estate III February 20 th 2014 Estate III Compensated parties has been met during audit, they all stated that compensation has been conducted in a fair way. No intimidations from the company and the values of loss compensation have been negotiated. Legal and land officer of Kerry Sawit (CKP) meet them continuously communicating and informing the expectation and company s affordability. There were records showed during audit reflected the FPIC process, such as doc no as follow : a. Declaration Letter of No Conflict According to the land, November 4 th 2014, b. Meeting Note: Agreement of Compensations Value, November 4 th c. Meeting Note: Measurement and Coordinate Survey, November 11 th d. Declaration Letter for related Boundary, November 11 th 2014 e. Land Sketch of Giyansah, November 11 th f. Record of GRTT Measurement, November 11 th g. Meeting Note: Measurement and Coordinate Pointing Survey, November 11 th h. Meeting Note: Vegetation inventory in related land, December 17 th 2014 i. Declaration Letter From owner, February 20 th 2015 regarding A Will for not sue any other compensation regarding the compensated land. j. Payment records, February 20 th k. Declaration of land hand over, February 20 th 2015 l. Map regarding compensated land, signed by affected party and local head of village, February m. Photo documentation for hand over, payment and compensation measurement process. The Company recognized customary rights and legal rights of land and stated in the SOP 43/PR/(2)/0510 applicable on May 17, Under the SOP, for lands that are claimed as traditional rights of community has been enclave. List of identified enclave with the owner identities and detail condition about the areas is not available. The company has made the list of enclave area in the Estate 1, 2 and 3 and map area spreading. According to interview result with affected party, company has gift them freedom to determine the compensation values, and company communicate their affordable value to them. If the price has not meet, the company still let affected party to conducted their activities in related land. They just asked company to enclave/demarcate their land. They know that if the land has been compensated, it would be use as palm oil plantations. The affected parties has been interviewed stated that the long of negotiation process was because of the compensation values. When the number has deal, company follow up the negotiation process with payment implementations. Compliance status : Non Compliance NCR No of 23 (Indicator major) There is several issues relating inconsistency to legal compliance such as : - Conditions of temporary storage of hazardous and toxic waste in POM 2 do not meet the standards as stipulated in Government Regulation No. 101 of year 2014 on the Management of Hazardous and Toxic Waste. - Boiler operators namely Andi Amarullah (POM1) and Haidi (POM2) is not equipped with SIO license as stipulated in the Regulation of the Minister of Manpower No. 01 of year 1988 on Qualifications and Requirements Steam Engines Operator.

20 Page 20 of 64 Principle 3: Commitment to long-term economic and financial viability Criteria assessed: CR3.1 Criteria not assessed: - Findings: There is no revision in company long years term management plan which is established since year 2014, company only revised budget for year 2014 and PT KSI s 5 years plan consist information about company activities such profit and loss information from Total Revenue and Total Operating Cost, including information about gross operating cost, profit/loss before tax and profit and loss after tax. The company has a financial schedule for yearly budget. Information on document consist of general routine operational activities such plantation maintenance, harvesting, fertilizer, investment plans such enrichment planting (planting of various plant species to enhance biodiversity), mill activities such FFB processed, projected oil extraction rate (OER) and kernel extraction rate (KER) i.e 21% & 4.5%, projected crude palm oil (CPO) and palm kernel (PK) production, CSR programmes and environmental monitoring, HCV management plan and other activities to fulfil RSPO requirements. While for company s 3 years budget plan only focus to company s expenditure for each activity (including activities for environmental management programmes and all CSR related expenses, legal compliance and RSPO P & C compliance) and revenue from company's production including all company's liabilities. The amount of profit estimated to be achieved each year was clearly calculated, and all information is clearly explained in PT KSI s projection plan for a period of 5 years from 2014 to Since 2014 company has been earned profit. Documentation of cost projection for estates and mill are integrated, and the projected financial feasibility of the company for next 5 years based from the current FFB price can be seen from these documents. In KSY1 POM have summary of budget or summary of expenditure for the year 2015 consist of FFB process, OER, KER, CPO production, PK production, number of shift, number of workers, working hours/day, mill throughput, mill running hours, number of working days, capital expenditure, total production cost (total fixed cost and total variable cost). The company implements a replanting cycle every 25 years, and the company s plan for a replanting activities will begin in 2028, because the first plantings in PT KSI were in year 2003 for an area of ha, while in year 2004 the planted area was 2, ha, and in year 2005, the planted area was 1, ha. The total planted area year 2006 to 2013 is 10, ha. Compliance status: Full Compliance Principle 4: Use of appropriate best practices by growers and millers Criteria assessed : CR4.1, CR4.2, CR4.3, CR4.4, CR4.5, CR4.6, CR4.7, CR4.8 Criteria not assessed : - Findings: The company (estate and mill) has a standard operating procedure activities include land survey, nurseries, preparation of land clearing, planting LCC, upkeep, harvesting, pest, replanting, receipt TBS, TBS processing until sales of CPO. Some evidences the company has not complied with their procedures are : In the harvesting procedure set about harvesting rotation is maintained between 7-10 days, 5 brondolan in the circle for crop less than 7 years old and 2 brondolan in the circle for crop more than 7 years, maximum 2.5 cm long stalks, fresh fruit bunches must be transported in within 24 hours. During visit to the field, harvesting conducted in the Estate KSY-3 Block 024. Company has not been able to comply the standards specified in the harvesting procedure whereby the actual conditions of harvesting rotation in Block 024 is 22 days while the procedures is set to keep the harvesting rotation 7-10 day. This becomes a Major non conformity (NCR No of 23). The company also has standard safety procedures transporting fresh fruit bunch (FFB Loading) with document number PSKK 17 / CKP / (1) / 1209 revision 1 effective date December 1, In the procedure arranged that the net already installed safely and banded before transport leaving to the mill.

21 Page 21 of 64 During visit to POM 2 in a loading ramp, conducted sampling to be done sorting fresh fruit bunches. The company has not made the installation of nets on the truck as set out in safety standard procedure transporting fresh fruit bunches (FFB Loading). For example, a truck with KH 9967 P transported FFB of Estate KSI-1 Division A Block 025 is not installed nets truck. This becomes a Major non conformity (NCR No of 23). Environment and OSH corecction programmes for the results of risk assessment at KSY 1 mill as high categories not available so that it is not consistent with risk assessment procedure. This becomes a Major non conformity (NCR No of 23). Accident investigation has not conducted by personil have capability or qualify in KSY estate so that it is not consistent with accident investigation procedure. This becomes a Major non conformity (NCR No of 23). There are accidents in KSY 2 POM but the mill does not accident investigation so that it is not consistent with accident investigation procedure. This becomes a Major non conformity (NCR No of 23). The company (estate and POM) has a mechanism to check the consistency of the implementation of the procedure by conducting an internal audit. Implementation of internal audit set in the Internal Audit procedures with document number SOP 65 / CKP / (0) / 0811 revision 0 effective date August 1, KSY POM 1 and POM 2 has conducted internal audits 10 to11 March For POM 1 there are 14 findings of the internal audit findings which 5 are still in the process of improvement and 9 findings have been corrected and closed. For POM 2 there are 16 findings of the internal audit findings of which 6 are still in the process of improvement and 10 findings have been corrected and closed. Overall internal audit findings included in the form of verification results and corrective actions Continuous improvement (FRM 03 / SOP 63 / CKP / (0) / 0811 revision 0 expiry date August 1, 2011). All of internal audit findings have been verified dated 5-9 May Internal audit Estate (KSY-1, KSY-2, KSY-3) has been conducted in March For Estate KSY-1, there are 13 findings of the internal audit findings of which 2 are still in the process of improvement and 11 findings have been corrected and closed. For KSY-2 there are 8 internal audit findings which 4 findings are still in the process of improvement and 4 findings have been corrected and closed. For KSY-3 there are 9 internal audit findings in which three findings are still in the process of improvement and 6 findings have been corrected and closed. All of internal audit findings have been verified dated 5-9 May The company (estate and POM) recorded all the results of the work carried out both estate operations and mill operations. Records maintained included in daily reports and monthly reports. Reports the estate operations contained information about the types of work, result of the work, the cost and the materials used. For mill operational activities contained fresh fruit bunches information is received and processed FFB, CPO Production and Despatch, Shell Production and Despatch and mill working hours. KSY mills (POM 1 and POM 2) was recorded relate of fresh fruit bunches (FFB) receipt from all sources. Currently the mill only receives fresh fruit bunches from the base estate and estate in one group. Mill does not make purchases from third party sources. All of the fresh fruit bunches received at the mill is recorded in a monthly report. The company (estate) has fertilization procedures contained in the Agriculture Manual and Standard Operating Procedure for Oil Palm in The company has made the management of soil fertility by fertilization, which refers to the fertilizer recommendation issued by the Section EMU (Eco Management Unit). The company also has the empty fruit bunches application procedures contained in the Agriculture Manual and Standard Operating Procedure for Oil Palm in In the procedure specified application doses empty fruit bunches by tons / ha / year. The company has a fertilization program for 2015 which is based on the results of fertilizer recommendation by part of EMU. Records of implementation of fertilization were well maintained including daily reports and monthly reports. During visit to the field in KSY-2 estate (Block 018) were carried out SOA application of fertilizer with a dose of 1.5 kg / tree with the amount of fertilizer as much as 3,900 kg and labor as much 5 people. For a dose of fertilizer in compliance with fertilizer recommendations, but the company should also ensure the implementation time of fertilization according with the recommendations issued where the fertilizer recommendations SOA is planned in May 2015 and was finally set up in June This is condition was categories as observation. The company could not show the certainty of follow-up of the findings last year related to the amount of fertilizer applied in blocks that have riparian where fertilizer used was the same as the total num-

22 Page 22 of 64 ber of plants. Example: Estate 1 Block 018: ha, SOA Applications with the 5,600 kg of fertilizers, total of trees: 2,486 trees. This becomes a Major non conformity because it is excalation of previous audit (NCR No of 23). The company carries out the leaves and soil sampling at regular intervals. The Company has conducted sampling of leaf in Sampling of leaves for all Estate was conducted on 10 to 13 March From the analysis of the leaf has been published fertilizer recommendation for 2015 for each estate. The company also conducted soil analysis done by the EMU in The company carries empty bunches application as an effort to increase soil fertility. As an example for KSY-1 estate, according to a report application of empty fruit bunches have not been applied starting in March 2015 including blocks 007, 025, 029 and there are also applications that do not match the specified dose of 40 tons/ha including block 046 realization 1 ha = 56 tons, block 047 realization 1 ha = 24 tons. Based on field trips, KSY-1 estate (Block 007) is still a pile of empty bunch that has not been applied. This becomes a Minor non conformity (NCR No of 23). The company also conducts land applications to improve soil fertility. KSY-1 POM conduct drainage POME to land application as much as 112,943 m 3 in year 2014 and KSY-2 POM conduct drainage POME to land applications as much as 170,702 m 3 in year In year 2015 (January to May) that KSY-1 POM conduct drainage POME to land application as much as 41,560 m 3 and KSY-2 POM conduct drainage POME to land applications as much as 95,000 m 3. The company (estate) has marginal soil maps include a map of the depth of peat and sand land maps. The company (estate) has procedures for planting slope steepness that have passed a certain limit. The activity was organized in the preparation and land clearings procedures where areas with slopes of 22 degrees or 40% does not conducted the land clearing and areas with slopes of degrees, or 40% conducted terracing system. Based on topographic maps and field observations, the condition of the area is an area of flat undulating (0-6 degrees) so that the company does not undertake terracing. The company has a program and a realization for the repair of roads in The company has realized the maintenance of January to May 2015 along the 3,558 meters with details KSY-1 estate along the 1,238 meter, KSY-2 estate along the 2,000 meters and KSY-3 estate along 320 meter. The company carries out the water management by monitoring the peat water level at regular intervals. From the data of regular monitoring can be seen that the company maintain water level an average of 60 cm from the soil surface. The company also conducts monitoring and peat subsidence measurements every 6 months. Results of measuring and monitoring water level and peat subsidence are good documented. The company has conducted a survey conducted by the soil suitability Soil Survey Param Agricultura (M) Sdn Bhd in This activity aims to determine the suitability of land both of the type of soil and nutrient content for planting palm oil. The company has a strategy for managing the fragile soils including the construction of drainage (dimensions: 1.2x0.9x0.6 m, 1.8x1.2x0.9 m, and 1.2x1.0x0.6 m) and the use of empty bunch for the sandy soil. The company also hoards the circle with organic materials in sandy soil. Some of PT. KSY areal is peat swamp then water management has been implemented through water level management and subsidence monitoring. Water management procedure is available SOP No. SA 03EMU/(3)0811 dated on August, 2011 on Managemeny and Peat Soil Monitoring for Best Palm Oil Cultivation. Twenty weirs installed in the peat land areas and map of the weirs is available to ease position checking and monitoring, but there is three physiometers only installed in Estate 3. It is observation to install physiometers and subsidence gauge in other estate which is found peatland and water level of soil monitored everday Water level monitoring on subsidence gauge carried out every 6 months in the first year of installed and the next in once in year, meanwhile measurement of water level in canal conducted everyday. Water level set to 75 cm in minimum above the soil surface during the dry season, 50 cm in minimum on normal climate, and set to cm during the wet season. On May 2015, water level reached cm in average, and on April is at in average. PT Kerry Sawit Indonesia has maintained all water sources routinely and treated as a conservation area. The total area of rivers and river bank area are Ha, water reservoir of Ha (Estate 1), swampy area of 1.73 Ha (Estate 1), swampy area of ha in Estate 2, water catchment area of ha in Estate 3. Operational procedure of riparian areas management (SOP 020/HCV/(1)/0115) stated that fertilizer and chemical activity is prohibited 5 meters wide along the rivers bank.this procedure replaces the old procedure that still allow fertilizing in the riverbanks with buried system. The rivers bank boundary is set vary depend on width of the river and age of plants as follows :

23 Rivers width of < 5 m will have river bank area of 5 m Rivers width of 5-10 m will have river bank area of 10 m Rivers width of m will have river bank area of 50 m Rivers width of >30 m will have river bank area of 100 m Page 23 of 64 When the riverside area has been planted under 4 years, oil palm tree should be cleared or moved, otherwise for plants are over 4 years, then the plant is left with no maintenance. PT Kerry Sawit Indonesia has a plan for protection of river riparian buffer zones for year 2015 including planting of various tree species along riparian river zones and water cathment, including water reservoir, swampy area and pond. Some signs is installed to mark the area that should be no fertilization nor chemical. However, based on fertilizer utilization log, it is still the same treatment given to the areas that have river banks in 2014 and 2015 eventhugh there is new procedure that prohibiting fertilizing activitiy.for example, the implementation of fertilizer in Block 018, Division D (KSI 1) with total number of trees as 2486, the number and dosage of fertilizer used is same in year 2014 and 2015 which means there is still fertilizing activity occurred in the riverbanks areas. The company has failed to demonstrate the good implementation of SOP 20/HCV/(1)/0115 dated on January There is no system that shows or proves the reduction of fertilizer on the riverbanks area as part of protect the water source. This was raised as non-conformity (NCR No of 23). Two mills have been checked during the audit session, POM 1 and POM 2. POM 1 has 14 ponds and POM 2 has 13 ponds for effluent treatment consist of cooling pod, mixing pond, anaerobic pond, aerobic pond and facultative pond, before flowed into Land Application area with standard quality of BOD < 5000 mg/l and ph 5.9. The land application as a waste distribution area is determined by taking into account aspects of soil and topography in accordance with the requirements of Environmental Ministry Decree No. 28 of 2003 on the assessment guidelines for utilization of industrial waste water on the palm oil land. Land Applications area to accommodate waste from POM 1 located at KSY Estate 2 with area of Ha and has already outfitted with license from Seruyan Regent No. 367 Year 2011, meanwhile POM 2 just has licence from the local Environmental Agency of Seruyan District No /2014 dated on November 3 rd, The company has been monitoring of effluent BOD with monthly test based on Ministry of environmental decree No. 28 year Testing conductd by certified external laboratory, PT Unilab Perdana. Some results of monitoring as follows: POM 1 effluent monitoring results : Soil water quality on Land Application area : BOD is 36 mg/l and ph is 5.62 (taken on October 22nd, 2014) Effluent quality on the facultative (outlet) pond : BOD is 170 mg/l and ph is 8.5 (taken on January 19th, 2015) Effluent quality on the facultative (outlet)pond : BOD is 169 mg/l and ph is 8.5 (taken on February 28th, 2015) Effluent quality on the facultative (outlet)pond : BOD is 213 mg/l and ph is 8.5 (taken on March 18th, 2015) Effluent quality on the inlet pond : BOD is 35,801 mg/l and ph is 5 (taken on May 5th, 2015) POM 2 effluent monitoring results : Soil water quality on Land Application area : BOD is 31 mg/l and ph is 5,95 (taken on October 23nd, 2014) Effluent quality on the outlet pond : BOD is 378 mg/l and ph is 7.02 (taken on April 29th, 2015) Effluent quality on the outlet pond : BOD is 373 mg/l and ph is 7.17(taken on April 10th, 2015) Effluent quality on the outlet pond : BOD is 316 mg/l and ph is 7.11 (taken on March 13th, 2015) Effluent quality on the inlet pond : BOD is 21,694 mg/l and ph is 3.96 (taken on April 29th, 2015) Effluent quality on the inlet pond : BOD is 18,790 mg/l and ph is 4.85 (taken on April 10th, 2015) Effluent treatment standard procedure WIP / POM / SOP / 01 / released on February 1st, 2014 men-

24 Page 24 of 64 tioned that the type of pool in the POME treatment installation including an mini pond acidification that serves to process acidification for one day, before it is pumped to the anaerobic pond. Based on field checking there is no such acidification pond installed and mill management was not aware of this system mentioned in the procedure. This condition is raised as Non-Conformity (NCR No of 23). During field checking to the POME ponds, auditor found the condition of some ponds are not good, and it is an observation for the company to fix the dike of mixing pond and anaerobic pond to avoid overflow of waste water and the cessation of the production process. Utilizaton of water for oil palm processing in the mills has been monitored routinely. In year 2014, 274,563 m 3 of water consumed by POM 1 with details for processing 80,143 m 3, boiler operation 138,996 m 3 and domestic use 55,554 m 3. Water consumption for FFB processing is 1.25 m 3 /ton for year 2014 FFB in average. In year 2015 (until May), 54,500 m 3 of water utilized for processing 19,233 m 3, boiler operation 22,223 m 3 and domestic use m 3. Water consumption for FFB processing is 1.25 m 3 /ton FFB from January- May POM 2 consumed water as much of 259,387 m 3 in year 2014 with details for processing 115,624 m 3, boiler operation 103,833 m 3 and domestic use 39,930 m 3. Water consumption for FFB processing is 1.23 m 3 /ton for year 2014 FFB in average. In year 2015 (until May), 136,398 m 3 of water utilized for processing 65,708 m 3, boiler operation 52,409 m 3 and domestic use 18,281 m 3. Water consumption for FFB processing is 1.42 m 3 /ton FFB from January-May The company has a detection and census pests and diseases procedure with the document number: SA 02 / EMU / (01) / 0710 revision 1 effective date July 1, The company has a program and a realization of pests and diseases related to the year The company conducted a census of pests and diseases are conducted every two months. From the results of the census conducted, the level of pest infestation is still below the limit. The entire recording census saved well. The company has a team of census for each estate. The company has conducted training of pests and diseases. The training material is socialization pests and diseases procedures, how to detect and census pest, damages caused by pests and diseases limit attacks and control ling to the attack. Training of pests and diseases conducted on 9 April 2015 (in KSY-3), dated 12 April 2015 (in KSY-3) and on 15 April 2015 (in KSY-1). Documentation related training activities such as photo of training activities and and participant attendance kept well. The Wilmar Central Kalimantan region (on behalf PT KSY) have list of pesticide year 2015 where it is covering four section I,e herbisides, insectisides, fungisides and rodenticides. Each section has information about merk, active ingredient, WHO category, characteristic, shape, goal, production number and registration number from pesticides it. All pesticide inside the list of pesticide will be apllied not aerially. The record of used pestisides year 2014 and 2015(till May) where it is covering name of active ingredient (A.I) and their LD50, total areas was apllied and total of active. In year 2014, pesticides was used in KSY1 estate are Glisat is 16,109.5 litter with total areas applied is 33, ha (0.49 litter/ha and A.I is 3.57 g/l per ha), Inteam is 20 litter with total areas applied is 46 ha (0.43 litter/ha and A.I is 0.24 g/l per ha), Agristik is 468 litter with total areas applied is 8, ha (0.06 litter/ha and A.I is g/l per ha), Spreader is litter with total areas applied 7, ha (0.11 litter/ha and A.I is 0.04 g/l per ha), Tiara is kg with total areas applied 7, ha (0.02 kg/ha and A.I is %/ha) and Garlon is 44 litter with total areas applied Ha (0.078 litter/ha and A.I is g/l per ha). Pesticide has been used majority/dominan for circle spraying, path spraying, selective spraying, road side spraying and control of thatch. Whereas, it was used by minority for handling pest amount 14 litter with Glisat (for thinning) and Garlon is 1 litter, type of insectisides was used pheromone is 25 pcs and type of surfactant is 468 litter (Agristic 400L). In year 2015, pesticides was used in KSY1 estate are Glisat is 7, litter with total areas is 16, ha (0.43 litter/ha and A.I is 0.24 g/l per ha), Spreader is litter with total areas is 6,201 ha (0.09 litter/ha and A.I is g/l per ha), Tiara is kg and total areas is 15, ha (0.015 litter/ha and A.I is %/ha), Garlon is 38 litter and total areas is ha (0.078 litter/ha and A.I is g/l per ha) and Starlon is 7 litter and total areas is ha (0.078 litter/ha and A.I is g/l per ha). Pesticide has been used majority/dominan for circle spraying, path spraying, selective spraying, control of thatch, landscaping and road side spraying. Whereas, it was used for handling pest not available. In year 2014, pesticides has used at KSY2 estate are Glisat is 22, litter and total areas is 48, ha (0.47 litter/ha and A.I is 0.47 g/l per ha), Spreader is 1, litter and total areas is 19, ha (0.096 litter/ha and A.I is g/l per ha), Tiara is kg and total areas is 35, ha (0.019 kg/ha and A.I is %/ha), Garlon is 186 litter and total areas is ha (0.26 litter/ha and A.I is 0.26 g/l per ha), Agristic is litter and total areas is 12, ha (0.067 litter/ha and A.I is g/l per ha), Inteam is 540 litter and total areas is ha (5.11 litter/ha and A.I is g/l per ha), Petrokum is 33 kg and

25 Page 25 of 64 total areas is ha (0.50 kg/ha). Pesticide has been used majority/dominan for circle spraying, path spraying, selective spraying, control of thahch, landscaping and road side spraying. Whereas, it was used for handling rat pest by petrokum. Based on figure above that the company has been minimizing the use of agrochemicals as planned IPM and there are not use pesticide/agrochemical preventively for prevent pest. In year 2014 & 2015 that pesticides has not been included WHO 1a or 2a category or listed by the Stockholm or Rotterdam conventions and paraquat except Petrokum (active ingredient : broadifacoum) which it is WHO 1a category. The company has used potrekum period year 2008 to 2012 and September to November 2014 but rat attack on October 2014 amount of 10% and the result of last two months is under threshold and normal condition. It condition was raised as non-conformity (NCR No of 23). The company uses trained sprayers to prevent impacts and health risks that occur during chemical application. Spraying activities has appropriated for the target species, given at correct dosage and applied by trained personnel in accordance with product label and storage instructions. They have understood and could be demonstrated about pesticide and waste pesticide handling (material and container/storage) because KSY estates has carried out simple coaching before start spraying activities. Waste material from agrochemicals including pesticides containers are properly disposed in accordance with laws and regulations following internal Procedure as defined in Agriculture Manual Chapter 6: Upkeep and Maintenance of oil Palm and Standard Operating Procedure : SOP 51/EHS/(0)/0909 dated on September 2009 regarding Pencucian Kemasan Bekas Racun dan Bekas Pupuk Serta Pengelolaan air Limbah Bekas Pencucian or Poisoned Packaging and used Fertilizer Laundering and It s waste water Management, in accordance with Law no 18/1999 regarding Handling of Hazardous Waste. Regular medical check-up for chemical sprayer and chemical warehouse keeper, including blood test of cholinesterase enzyme percentage, that check-up conducted yearly. The last medical check-up was conducted in year 2014 where there is normal condition. Pregnant and breastfeeding women was not allowed to work with chemical exposed, therefor regular check of pregnant test conducted three moths based Safety and health policy refer to safety and health on behalf Wilmar Group of Companies which has signed by Chairman and chief executive officer. It has provided dual laguanges (Indonesian and English) and has available at POM offices where it is one of the forms of socialization to employees. The company has provided correction of environment and OSH programmes year 2015 from the results of assessment about aspect of environment and OSH impact and working plan for EHS officer year 2015 (reporting, monitoring and training) so that health and safety plan/program year 2015 not available. If the health and safety plan/program not available so that implementation not available too. It was raised as non-conformity (NCR No of 23). Risk assessment about aspect and environment and OSH impact year 2015 at KSY1 POM for section of security sortation, office, electric, maintenance, POM emplastment, weightbridge, kernel, sterilizer, thresher, boiler, enginee room, water treatment plan, loading ramp. Clarification, sounding, dispatch PK and laboratory. KSY estates has carried out risk assessment year 2015 covering all operations on estates but results of verification documents and fields that there are risk/danger sources not available i.e fosil fuel shop in front of house/emplasment and using electric not secure. It was raised as non-conformity (NCR No of 23). Whereas, risk assessment in KSY2 POM not available. It was raised as nonconformity (NCR No of 23). Procedures to address the results of risk assessment has documented example safe SOP (WIP/POM/SOP/01/02-14 Vol.1 & 2), PROS-SD Rev.01 (identification of aspect and EHS impact), PROS-SD Rev.01 (safety committee), PROS-SD Rev.01 (arranging improvement EHS program), PROS-SD Rev.01 (management review), etc. Action to address the results of risk assessment has implemented in KSY1 & KSY2 POM example socialization of procedures, provide of fire extinguisher, safety patrol, checking hydrant box and pump and PPE but in KSY estates was not implemented example harvesting workers in KSY3 (2 persons) & KSY1 (1 person) estates not using helmet when working because the company has not been provided since first work (1 yeas ago) and the company has not been provided replacement after the accident occurred. It was raised as non-conformity (NCR No of 23). Preventive action for minimize of risk has provided by company and implemented by workers example oil palm chisel (dodos), oil palm sickle (egrek), oil palm litter (tonjok), knapsack, nozzle, agrochemical, welding tools but except condition it (as non-conformity above). Some training was conducted to fulfil competency requirement of employee regarding OHS Policy example re-socialization of working procedures to employees and contractor/third party on 13 March 2014 in KSY1 POM and refresh/updating knowledge about safe working practies on morning meeting to harvesting work-

26 Page 26 of 64 ers, FFB loading and unloading workers, sprayers and mantainenance workers in KSY estates. KSY1 & KSY2 POM has provided or hand over PPE for workers such as helmet, safety shoes, cotton gloves, mask, ear muff/ear plug and face shield. Evidence about hand over PPE to workers was available. Whereas, in KSY estate that PPE has provided/hand over to workers example apron, mask, gloves and glases for sprayer, gloves and glasess for welding for workshop worker, mask and gloves for warehouse workers and helmet, booth shoes, cover of sickle and cover of chisel for harvesting workers but implementation in field still not consistent because the company has not provided PPE (helmet) for three harvesters where it condition was issued as non-conformity above and one welder not using safety shoes adequate where he have worked at workshop-ksy2 POM during 3-4 months. It was raised as non-conformity (NCR No of 23). KSY1 POM, KSY estates and KSY2 POM has OSH committee where it has approved by local government (head of manpower, transmigration and tourism decree in Seruyan District no.560/580/kep/disnakertranspar/v/2015, no.560/579/kep/disnakertranspar/v/2015 and 560/581/KEP/DISNAKERTRANSPAR/V/2015 dated on 12 May 2015). OSH committee has carried out regular meeting every month where period of January to March 2015 in KSY1 POM with topic is unsafe condition, in KSY estates with topic are accident and environment condition at emplasment and in KSY2 POM with topic are domestic waste, PPE, worker using hose reel for outside main function, house keeping, first aid box, check of fire extinguisher, simulation of fire and disiplinly. Whereas, bipartite cooperation institutes has discusses about welfare issues. Based on it that the company (POM and estates) has not discussed about health, inconsistently for use of PPE, safety at workshop, occupational illness, result of OSH inspection and accident issues (especially at KSY2 POM) in regular meetings. It was raised as nonconformity (NCR No of 23). OSH committee report period of January to March 2015 has submitted to local government on April 27, The company have accident and emergency condition procedure (WIP/POM/SOP/01/02-14 sub section appendix 5), SOP 55/HRD/(0)/0810 Rev.0, PRO/KSYPOM-EHS-016 Rev.0 and PRO/KSYPOM- EHS-017 Rev.0 where it is Indonesian language and it has socialized to employees. Based on interview with supervisors and workers (harvester) that they have understood about step by step if any accident and emergency condition. Supervisor/foreman in POM and estates has trained about first aid training and they are stay/present in working location/field/operation. Evidence of training was available in mill and estate except KSY2 POM so that it was raised as non-conformity (NCR No of 23). Estate supervisor/foreman has brought first aid bag which their content was complete according to the regulation. Whereas, first aid box was available in both mills (security, office, first aid room, laboratory, warehouse of hazardous and toxic waste, sortation and workshop). Records of accident has available in company clinic inform of Laporan Kasus Karyawan yang Berobat di seluruh Klinik Perusahaan Karena Kecelakaan document and regularly reported to management, and compile in OHS Committee were reported to authorized government side. Accident report year 2014 and 2015 (till March) in estates and POM was available but accident report year 2014 in KSY1 POM not update or real condition because accident on 22 July 2014, 23 January 2014, 6 June 2014, 10 June 2014, 4 February 2014 and 20 October 2014 was not written/recorded. It was raised as non-conformity (NCR No of 23). Futhermore, accident report in KSY2 POM and KSY estate has not been reviewed regularly so that it was raised as non-conformity too (NCR No of 23). Mill and estate has carried out accident investigation and workers has covered by worker health insurance and there is evident of insurance payment (April 2015). There are 33 accident in KSY estate and inside accident report has included their LTA information but in KSY1 and KSY2 POM not available. It was raised as non-conformity (NCR No of 23). The company (estate and POM) has a matrix of a training program for 2015 according with the training needs for each part. The training programs for 2015 that have been made include : 1. POM-1: the operation of the boiler training, decanter operation training, training LOTO, socialization of standard operating procedure grading, socialization waste and LB3, socialization of standard operation procedure Lab and Stores, simulation hydrant and fire drill, socialization spill emergency response, RSPO-SCCS training, water management training, health education, sterilizer operator training, fire extinguisher socialization, ISCC-SCCS training and training P3K. Mill also conducted socialization and training of employees of the contractor for the construction project site and frame wall of the boiler on March 12, The materials given them about the use of PPE, an explanation of the siren alarm, permission to work at heights and confined spaces. 2. POM-2: housekeeping concept training, K3 and environmental risk assessment, management of B3, K3 Fire (use APAR), K3 Fire (use of hydrant and emergency simulation), K3 handling chemical, spill emer-

27 Page 27 of 64 gency response training, LOTO system, the socialization of APD contractor, water management training, socialization of standard operation procedure weight bridge / logistics, socialization of standard operation procedure grading, socialization of standard operation procedure loading ramp, socialization of standard operation procedure sterilizer, socialization of standard operation procedure tresser, socialization of standard operation procedure digester, socialization of standard operation procedure fibrating, socialization of standard operation procedure crude oil tanks, socialization of standard operation procedure methane capture plant, socialization of standard operation procedure Kernel. Mill also conducted awareness training for employees and contractors to use PPE on March 24, The materials given them about the use of PPE, an explanation of the siren alarm, permission to work at heights and confined spaces. 3. Estate (KSY-1, KSY-2, KSY-3): manuring best practices training, best practices spraying, harvesting best practices, best practice agrochemical handling, training of high conservation value, induction K3 employees and staff, fire extinguisher use, prevention drugs, B3 management, pests and diseases, simulated fires, waste, HCV socialization for employees POM, socialization of accident emergency response program, socialization of fire emergency response program, socialization of sexual violence harassment, socialization of occupational diseases, contractor training, training K3 warehouse employees and K3 operator training. The company (estate and POM) have training records for each activity including the minutes of training, documentation of activities (photo, attendance of participants) and certificate training participants. POM 1 and POM 2 have made plans and realization of training programs that have been scheduled but not yet evaluated the effectiveness of the training of the trainees to determine the participants' understanding of the training provided (FRM 02 / SOP 38 / HRD / (0) / 0409) and complements record of competence and training (FRM 03 / SOP 38 / CKP / (0) / 0409) as stated in SOP Training and Training with the document SOP 38 / HRD / (0) / 0409 revision 0 expiry date of April This becomes a Minor non conformity (NCR No of 23). Estate (KSY-1, KSY-2, KSY-3) have made plans and realization of training programs that have been scheduled but not yet evaluated the effectiveness of the training of the trainees to determine the participants' understanding of the training provided (FRM 02 / SOP 38 / HRD / (0) / 0409) and complements record of competence and training (FRM 03 / SOP 38 / CKP / (0) / 0409) as stated in SOP Training and Training with the document SOP 38 / HRD / (0) / 0409 revision 0 expiry date of April This becomes a Minor non conformity (NCR No of 23). Compliance status: Non Compliance NCR No of 23 (indicator Major) Some evidences the company has not complied with their procedures are : In the harvesting procedure set about harvesting rotation is maintained between 7-10 days, 5 brondolan in the circle for crop less than 7 years old and 2 brondolan in the circle for crop more than 7 years, maximum 2.5 cm long stalks, fresh fruit bunches must be transported in within 24 hours. During visit to the field, harvesting conducted in the Estate KSY-3 Block 024. Company has not been able to comply the standards specified in the harvesting procedure whereby the actual conditions of harvesting rotation in Block 024 is 22 days while the procedures is set to keep the harvesting rotation 7-10 day. The company also has standard safety procedures transporting fresh fruit bunch (FFB Loading) with document number PSKK 17 / CKP / (1) / 1209 revision 1 effective date December 1, In the procedure arranged that the net already installed safely and banded before transport leaving to the mill. During visit to POM 2 in a loading ramp, conducted sampling to be done sorting fresh fruit bunches. The company has not made the installation of nets on the truck as set out in safety standard procedure transporting fresh fruit bunches (FFB Loading). For example, a truck with KH 9967 P transported FFB of Estate KSI-1 Division A Block 025 is not installed nets truck. Environment and OSH corecction programmes for the results of risk assessment at KSY 1 mill as high categories not available so that it is not consistent with risk assessment procedure.

28 Page 28 of 64 Accident investigation has not conducted by personil have capability or qualify in KSY estate so that it is not consistent with accident investigation procedure. There are accidents in KSY 2 POM but the mill does not accident investigation so that it is not consistent with accident investigation procedure.. NCR No of 23 (indicator Major (as excalation of previous audit)) The company could not show the certainty of follow-up of the findings last year related to the amount of fertilizer applied in blocks that have riparian where fertilizer used was the same as the total number of plants. Example: Estate 1 Block 018: ha, SOA Applications with the 5,600 kg of fertilizers, total of trees: 2,486 trees. NCR No of 23 (indicator Minor) KSY-1 estate, according to a report application of empty fruit bunches have not been applied starting in March 2015 including blocks 007, 025, 029 and there are also applications that do not match the specified dose of 40 tons/ha including block 046 realization 1 ha = 56 tons, block 047 realization 1 ha = 24 tons. Based on field trips, KSY-1 estate (Block 007) is still a pile of empty bunch that has not been applied. NCR No of 23 (indicator Major) The company has failed to demonstrate the good implementation of SOP 20/HCV/(1)/0115 dated on January There is no system that shows or proves the reduction of fertilizer on the riverbanks area as part of protect the water source. NCR No of 23 (indicator Minor) Effluent treatment standard procedure WIP / POM / SOP / 01 / released on February 1st, 2014 mentioned that the type of pool in the POME treatment installation including an mini pond acidification that serves to process acidification for one day, before it is pumped to the anaerobic pond. Based on field checking there is no such acidification pond installed and mill management was not aware of this system mentioned in the procedure. NCR No of 23 (indicator Minor) The company has used potrekum period year 2008 to 2012 and September to November 2014 but rat attack on October 2014 amount of 10% and the result of last two months is under threshold and normal condition NCR No of 23 (indicator Major) The company has provided correction of environment and OSH programmes year 2015 from the results of assessment about aspect of environment and OSH impact and working plan for EHS officer year 2015 (reporting, monitoring and training) but health and safety plan/program year 2015 not available NCR No of 23 (indicator Major) KSY estates has carried out risk assessment year 2015 covering all operations on estates but results of verification documents and fields that there are risk/danger sources not available i.e fosil fuel shop in front of house/emplasment and using electric not secure. risk assessment in KSY2 POM not available KSY estates was not implemented results of risk asseeement example harvesting workers in KSY3 (2 persons) & KSY1 (1 person) estates not using helmet when working because the company has not been provided since first work (1 yeas ago) and the company has not been provided replacement after the accident occurred NCR No of 23 (indicator Major) The one welder not using safety shoes adequate where he have worked at workshop-ksy2 POM during 3-4 months. NCR No of 23 (indicator Major) the company (POM and estates) has not discussed about health, inconsistently for use of PPE, safety at workshop, occupational illness, result of OSH inspection and accident issues (especially at KSY2 POM) in regular meetings. NCR No of 23 (indicator Minor)

29 KSY2 POM can not shown evidence of first aid training Page 29 of 64 Accident report year 2014 in KSY1 POM not update or real condition because accident on 22 July 2014, 23 January 2014, 6 June 2014, 10 June 2014, 4 February 2014 and 20 October 2014 was not written/recorded. Accident report in KSY2 POM and KSY estate has not been reviewed regularly NCR No of 23 (indicator Minor) LTA information on accident report on behalf KSY1 and KSY2 POM not available NCR No of 23 (Indicator Minor) POM 1 and POM 2 have made plans and realization of training programs that have been scheduled but not yet evaluated the effectiveness of the training of the trainees to determine the participants' understanding of the training provided (FRM 02 / SOP 38 / HRD / (0) / 0409) and complements record of competence and training (FRM 03 / SOP 38 / CKP / (0) / 0409) as stated in SOP Training and Training with the document SOP 38 / HRD / (0) / 0409 revision 0 expiry date of April The company has not been evaluated the effectiveness of the training of the trainees to determine the participants' understanding of the training provided (FRM 02 / SOP 38 / HRD / (0) / 0409) and complements record of competence and training (FRM 03 / SOP 38 / CKP / (0) / 0409). Principle 5: Environmental responsibility and conservation of natural resources and biodiversity Criteria assessed : CR5.1, CR5.2, CR5.3, CR5.4; CR5.5; CR5.6 Criteria not assessed : - Findings: PT. Kerry Sawit Indonesia Mill (POM 1) and estate Indonesia has an approved Environmental Impact Assessment (EIA) or AMDAL document based on the decision of the Minister of Agriculture as per letter no. 357/Kpts/HK.350/2002 dated May 23, 2002, approved for an area of 19,200 ha of approval of Location Decision and for Factory capacity 45/90 tonnes on 28 June 2008, so does the KSY POM 2 which has UKL and UPL document (document of environmental monitoring and management) which was made in This environmental document covers mill with capacity of 90 tonnes/hour and licensed by the Environmental Agency of Seruyan District No, 750/004/BLH/VII/2012 on July 11 th, EIA POM 2 document identify impact sources from all activities that could possible cause impact in construction phase, operational and pasca operasional phase. In the operational phase activities that possible cause impact are a). FFB transportation from field to mill frelated to job opportunities, revenue, and traffic accidents, b). CPO processing related to air quality, emission, noise, water quality, aquatic biota, job opportunity, public unrest, pravelence of desease, c). Effluent management related to air quality, water quality,aquatic biota, pravelence of desease, public unrest and d). the transport of CPO related to air quality, employment, income, potential accidents. The company also has an environmental management and monitoring plan ( Rencana Pemantauan Lingkungan - RPL / Rencana Pengelolaan Lingkungan - RKL) prepared based on the EIA (AMDAL) document as required by Indonesian law. Development of the second plant has finished and has been operated. Reports on implementation of the RKL and RPL documents are prepared and reported to Environmental Body of Seruyan District once every 6 months as required by law. As seen on-site, reports on implementation of the RKL and RPL were available for Semester 2 period July-December 2014 which is submitted on March 10, Whereas, POM 2 s environmental report was submitted on April 11, Environmental Management and Monitoring Plan (RKL-RPL) contains recommendations of environmental management and environmental monitoring on various sources of activity. Some environmental impacts are managed at the stage of the operation are : Air quality: management by planting different types of trees in the open space, the chimney installation is equipped with a dust collector, waste management appropriate quality standard Noise: planting different types of trees in open places, the use earplug for mill workers, maintain the machine regularly

30 Page 30 of 64 Water quality: control of the POME ponds, collate and implement the SOP for equipment maintenance, recording material that potential as hazardous and toxic waste, provide representative warehouse for material with hazardous risk and its circulation, collecting hazardous and toxic waste B3 and distribute to the licensed collector the pengmpul official. Plankton / Benthos / Necton: manage POME ponds carefully, control the quality of the waste that will be distributed to the Land Application, collect hazardous and toxic waste B3 on the special room and distribute officially the licensed collector. Actually, POM2 mill does not conduct appropriate environmental management programs recommended in the EIA (UKL-UPL) on the impact of pollution during CPO process, which requires providing of representative and standard warehouse for hazardous and toxic waste. This condition is raised as Non-Conformity (NCR No of 23). As an observation, the company should conduct evaluation or analysis of soil water quality because the existence of land application and effluent management in POM 2. Environmental monitoring carried out regulary, air quality has been monitored and every six months for ambient, chimney emission and odour parameters as well as emission from the power engine (engine) monitored every year, and rivers quality in every 6 months. Some of the impact monitoring result as follows: Emission from the boiler chimney with parameters of particulat 98 mg/m3, SO2 11 mg/m3, NO2 186 mg/m3, HCl < 0.01 m/m3, Cl2 < 0.01 m/m3, NH mg/m3 and HF < 0.01 m/m3. (testing taken on November 4th,2014) Emission from Generator (power engine) with parameters of NO2 662 mg/nm3, CO 293 mg/nm3. (testing taken on April 28th to May 16th, 2014) Noise in mill area as 51.3 db and settlement as 48.1 db Water surface quality with some parameters amongs other are: N, Zn, Cd, Pb, Fat and oil, TDS, TSS, Mn, H2S, Cu, NO3N, NO2N, Fe and BOD, COD. All the monitored paramaters above are still below the limit standard as regulated by government. Evaluation of impact carried out by compare the previous impact magnitude and the present magnitude of impact. Air quality tends to stabil from time to time in not in critical level then current treatment still maintain. HCV assessment report is available which is made by Malaysian Environmental Consultants Sdn. Bhd (MEC) on February HCV document covered the whole concession and around with landscape analysis overview including orangutan distribution and the existence of Tanjung Puting National Park. This HCV study recommended Ha of HCV area should be managed by PT KSY. Since this document was too rought and general, the company conducted re-identification and re-assessment of protected, rare and endangered species flora and fauna including their habitat and High Conservation Value (HCV) areas in PT Kerry Sawit Indonesia on May 4th, Based on result of HCV re-identification and re-assessment, the HCV area are revised with total of HCV areal is ha consist of riparian ( ha), HCV area ( ha), swamp ( ha), water cathment (92.68 ha), water reservoir (23.62 ha) and HCV3 and HCV4 (9.5 ha). There is a letter from Environmental Agency in Seruyan District (No. 660/271/BLH/VI/2012 dated on June 05, 2012) about an area of ha (HCV area) will be used as a conservation area where will managed by the company and will not be used for the benefit of others. KSY s areas has overlapping with other company areas and production forest (HP) so that the company has carried out the checking and assessment of the HCV areas where the result of checking and assessment is a reduction on the HCV areas amount of Ha (KSY1 estate consist of block 001 : Ha, riparian on block 003, 004, 006 to 012, 018 : 3.97 Ha, block 220 : 3.90 Ha; KSY2 estate consist of riparian on block 001, 005 to 013, 201, 210, 411 : 7.96 Ha and KSY3 estate consist of riparian on block 001 : 0.20 Ha and HCV areas on block 003 to 009, 014, 111 : 8.65 Ha). Finally, existing condition for total of HCV area is Ha. Revision of HCV areas has stated in statement letter regarding revision of HCV areas on December 27, There are some records of implementation of the company s management and monitoring HCV program were sighted, such as instalation and maintenance of signboard on river, instalation and maintenance of signboard about prohibition of burn land, repair water level stick, maintain of boundary stone for water reservoir and location of water sample, rapid survey to monitoring HCV and wildlife, illegal logging and fishing patrol, routine patrols, to ensure that signboard is still in good condition, no spraying in near riparian, no illegal activities occur within the riparian belt area and the forest is not destroyed example in block 5B03/5B04, 3B07, 3B08. There is a personal which was appoint dedicated and trained to monitor any plans and activities. It is available an evidence of signboard maintenance and patrol of HCV area by

31 minutes of Management Plan and Monitoring on April 6th, Page 31 of 64 PT KSY has programme to educate and sosialize the existence of HCV and protected species to staff and the surround community. Delivered education material include prohition of capture, harm, collect or kill the species, HCV and conservation policy, prohibition of HCV area destruction. PT KSY shows the evidence of this activity by minutes of meeting on April 19th, 2014 at Desa Sembuluh I and Desa sembuluh II, and on April 21st, 2014 at Desa Tabiku. Socialization also delivered to PT KSY staff and worker on September 27th, 2014 and September 27th, 2014 with topic of HCV and Wildlife Protection. Last socialization conducted on April 21st, PT KSY has a policy by SOP of Wildlife Protection No 18/HCV/(1)/0615 dated on June 1st, 2015 which contains list of IUCN, CITES and National protected flora fauna completed with the sanction details to anyone who kills, collects or captures the species. Staff or workers will be punished with the warning letter even firing if they violate this procedure. Wildlife monitoring is done regularly through rapid survey, the last survey conducted on 2013 and will be updated on August PT KSY has records of wildlife that exist in the concession and around since There are some HCV area set-asides with existing rights of local community, namely HCV 5 in form of enclave area specifically : Estate 1 : Block 018 owned by Mr. Maman (Desa Sembuluh I) with area of 3.92 ha Block 019 owned by Mr. Tepak/Junaidi (Desa Sembuluh II) with area of 5.95 ha Block 028 owned by Mr. Muksin and Tepak (Desa Sembuluh II and Tabiku) with area of 0,71 ha EState 2: Block 016 owned by Mr. Junaidi/Ejon (Desa Sembuluh I) with area of 1.11 ha PT KSY able to demonstrate the existence of a memorandum of understanding between PT KSY with villagers for traditional right management and HCV management. The MOU signed by the village head and some the local public figure, obiter : PT KSY with Desa Sembuluh-I on Maret 29th, 2010 PT KSY with Desa Tabiku on April 9th, 2010 PT KSY with Desa Sembuluh-II on April 1st, 2010 Eventough MOU between PT KSY and those villages, but PT KSY is still has no agreement with the owner to manage the HCV 5 area. The process of making the MOU with village officer does not involve the land owners in direct. This condition is raised as Non-Conformity (NCR No of 23). All waste and pollutions sources are identified and documented such as used oil, air emissions, decanter cake, empty shell, liquid waste, used chemical containers (for laboratory chemicals such as phenolphathalein indicator, oxalic acid, sodium hydroxide, hexane, isopropyl alcohol, ethanol, etc). Whereas, results of the identify of GHG (Greenhouse Gas) emissions has recorded in form no. 01/SOP72/EHS/(0)/0813. The auditee has mitigation of GHG program such as reducing usage of fossil fuel, usage of biofuel, reducing chemical fertilizer, etc; wastes produced as part of the company s activities are identified as part of the company "Environmental Aspects and Impacts Identification document (forn no.01/sop72/ehs/(0)/0813). The company has waste management and disposal as determined on SOP waste management (SOP 22/EHS/(2)/0711 rev 02 July 2011), SOP regarding storage of pesticide and used packaging (SOP17/EHS/(2)/0711) and SOP regarding storage oil and used oil (SOP19/EHS/(0)/0409). As required by law, monitoring and analysis or identified sources of pollution is performed once every 6 months and analysis results are reported to the environmental agency and plantation institution as evidence of implementation of the company s environmental management and monitoring (RKL/RPL) document. Waste management plan where has included for hazardous waste and instruction of the disposal of agrochemicals has available. Domestic wastes from housing and offices are separated into recyclables wastes and non-recyclable/organic materials. Non-recyclables and organic waste are sent to landfills which are available in each estate, while recyclables and hazardous wastes are collected by contractor and the company maintains records of amounts collected. List of agrochemical stock was available in warehouse and log book or material balance of hazardous and toxic waste was available in temporary storage. Consumption of agrochemical information with log book hazardous and toxic waste has appropriated. Handle of waste has appropriated (reduced, reused and disposed off) an environmentally and socially responsible i.e hand over to third parties who have lisence.

32 Page 32 of 64 Licence for temporary storage of hazardous wastes which was issued by the Seruyan Government through letter No. 301 year 2010 (POM 1) and No. 181 year 2013 (POM 2) still valid for 5 years. The company also sends reports of their hazardous waste inventories to the Seruyan Environmental Department once every three months. Record of renewable energy usage and it is efficiency analysis (energy/ton CPO, or energy/ton product) was available. All fibre and shell used for boiler as biomass. Whereas, the company was recorded all fossil fuel usage for operational including for vehicle, powerplant, and other usage to be compare every year as baseline for improvement program. Based on results of waste and GHG emission identification that the company was monitored environmental performance by measure parameters as ambient air, emission from boiler, vehicle emission. This measurement result was reported in environmental management report six monthly. Efforts and strategies employed to reduce pollution and emission by reuse ex-fertilizer packaging for loose fruit container, gallons for the same agrochemical, others way by conduct preventive maintenance for machine/equipment to reduce their emissions. Palm Oil Mill Effluent was managed by open pond system, and final result process was applied to land application. Daily check was performed during process regarding BOD, COD, ph and temperature, also monthly check performed by third party as part of environmental management report. The mill has records of monitoring POME application levels to block 074, 087, 088, and 089. The mill has conducted sampling and analysis of the discharge point of field drains at land applications sites to ensure water quality does not exceed legal standards (location of sample is block 074 (land application area), block 058 (control) and block 275 (housing of employee)). From checks of the land application field drains, the rainwater discharged from these fields is contained in the estate drains and would not enter any main waterways. The company has a land clearing and preparation procedures. The procedures set about land clearing with Green Stacking (Zero burning). The company carries out land clearing by using a mechanical device and not burning. It can be seen from the daily reports excavator machine for the land stacking activities. Based on verification of document and field that the company does not undertake burning during land clearing. Compliance status : Non Compliance NCR No of 23 (indicator Minor) POM2 mill does not conduct appropriate environmental management programs recommended in the EIA (UKL-UPL) on the impact of pollution during CPO process, which requires providing of representative and standard warehouse for hazardous and toxic waste. NCR No of 23 (indicator Minor) Eventough MOU between PT KSY and those villages, but PT KSY is still has no agreement with the owner to manage the HCV 5 area. The process of making the MOU with village officer does not involve the land owners in direct. Principle 6: Responsible consideration of employees and of individuals and communities affected by growers and mills Criteria assessed : CR6.1, CR6.2, CR6.3, CR6.4, CR6.5, CR6.6, CR6.7, CR6.8, CR6.9, CR6.10, CR6.11 Criteria not assessed : - Findings: Company has conducted Social Impact Assessment and has also developed Social Impact management Plan This document s scope has covering Mill and all estates. The Social Impacts assessments have involving affected parties by two approaches, meeting/discussion and data collections with questionnaires. Social impacts management plan for has developed as the part of SIA document but not yet been reviewed. This situation rise as non-conformity (NCR No of 23). During audit found that company in the middle process of Smallholder scheme development. This process

33 Page 33 of 64 has involving related stakeholders such as local customary/community leader, local head of village, related district office and head of District. This program has not yet mentioned as part of social impact assessments. This situation rise as non-conformity (NCR No of 23). There are some procedure has developed and held by the company regarding stakeholder consultation and communication. All procedures has documented as SOPs such as: a. SOP44/PR/3/0213, issued in May 5 th 2015, regarding Dedicated officer responsible for consultation and communication with stakeholder. b. SOP 47/PR/3/0414, issued in May 5 th 2015, regarding Transparency. c. SOP 35/PR/1/0614 rev. 02, issued in May 5 th 2015, regarding Mechanism of Stakeholder communication and Consultation. All of documents completed with detail information regarding procedures, flowcharts and officer who responsible in communication process has been communicated to stakeholders. The company also has a schedule for planned meetings with surrounding communities in Sembuluh I, Sembuluh II and Tabiku. There is evidence that the meeting was conducted every once a year with the main agenda is introducing new officers to stakeholders. All of communication process has recorded and maintained by the company. Local community leader from 2 villages (Tabiku and Sembuluh I) has been interviewed during recertification audit. They gift confirmation that Kerry management has always conduct routine meeting with them discussing any kind of social issues especially introducing the new officer for PR and CD/CSR. The company has been maintained their procedures regarding openess to all affected parties for grievances, complaints and dispute resolutions process. The procedure documented as SOP 34/PR/1/0614 rev. 02, issued in May 5 th 2015, regarding Mechanism of Complaints and Grievance Acceptance, and conflict/dispute Resolutions. This document has also communicated to stakeholders at the same time with other procedure socializations. Officers responsible for this mechanism has specifically appointed as mentioned in SOP44/PR/3/0213, rev 5, issued in May 5 th 2015 and has been gift a specific social impact mitigation training for them. The officers are: a. Public relation Officers: - Senior Manager: Juatku Antono S.HUT - Staff: Ari Wibowo, Rahmad SG, Jhoni S, Yulius P, Ahmad J N, Immanuel PAB, Ahmad Fauzi, Engkai Kurnianto b. Legal and land acquisitions Officers: - Manager: Andy Ayyub - Staff: M Taufiq, Rambet, Bayan ME, Supardi, Ratnue, Kamseno, Joko AS. This procedure only covers complaints and grievance from external stakeholder but not internal stakeholder. As mentioned in Company s regulations, internal stakeholder (workers) could deliver their aspirations by two channels, directly to their supervisor and trough Bipartite Associations Body (LKS Bipartite). These two channels has effectively use by internal stakeholder to speak up their aspirations. There are evidences showed during audit, a logbook of complaint that writen the grievances and the LKS meeting result according to the grievances. Company still maintain a procedure for identifying legal, customary or user rights and a procedure for identifying people entitled to compensations. Both procedures has documented on some document such as : a. SOP 34/PR/1/0614 rev. 02, issued in May 5 th 2015, regarding Mechanism of Complaints and Grievance Acceptance, and conflict/dispute Resolutions (outside legal actions). This SOP define some key process such as : - All complaints in written form deliver to Estate/Mill manager and forward to regional Office. - Complaints will register and categorized based on subject matters. - Coordinated with related department to identify the problems, then open communications with related stakeholders - Conducted mediations and legal actions if only there are no agreements between company and related stakeholders b. SOP 30/BM/(0)/0409, issued April 13 th 2009, regarding Land Dispute Resolutions. This SOP define some key process such as: - Main issues causes to land dispute - Land Dispute as latent problem for every plantation

34 Page 34 of 64 - Land dispute characteristics, categorized into to kind, customary land dispute and villages land and land dispute with incomer - Guidance for Conflict resolutions. c. SOP 29/BM/(0)/0409, issued April 13 th , regarding Technical Guidance for Land Acquisitions. This SOP define some key process such as: - The origin of the related land - Land title - RSPO P&C as guidance - Definition of land use, and land acquisitions - Mechanism of land acquisitions and compensation payment Company has shown their archives documents and records regarding agreements and compensations process. The documents are well maintained by PR and Legal department. The sample compensations agreement result has been stated at P&C 2.2 of this report. There some payment and conditions scheme for workers in PT Kerry Sawit Indonesia. Based on Company Regulations 2015, article 5, company : a. Permanent Worker (PKWTT Working Contract Agreement with un-defined Duration) - Staff - Payroll or monthly rate worker - Daily rate Worker b. In-Permanent Worker (PKWT Working Contract Agreement with specific duration). - Contract worker - Migrant worker (Expatriate) Company has developed payment structures and scales for every kind of worker and always responds to local governance regulation regarding minimum wage payment. There were evidences showed during audit such as: a. Governor of Central Kalimantan Official Letter regarding minimum wage payment, state that the minimum wage for plantation 2015 is IDR ,- b. Pay slips for PKWTT and PKWT workers of Mill and Estates. Cross check to these documents and records found that company still comply with regulations (for monthly rate and daily rate worker), regarding minimum wage payment sectoral for district (UMSK). Every PKWTT and PKWT worker has hold contract agreement with company and part of scope of company regulations. The company regulations that has been registered to Local Office of Social and Manpower in April 2015 determined all workers obligations and rights that has refer to local and national labor regulations, such as : a. Working relations b. Paid and un-paid Day off and Leave permit c. Payment d. Worker facilities e. Layoffs termination f. Complaints and Grievance mechanism Document check into overtime forms and payment calculations for daily rate worker found that company shows their compliance to regulations. During document check regarding overtime issues, there is an evidences showed that consist piece rate workers norms (Mature Field Operation, Contract and labor Rate 2014 and 2015). Based on this document, Company doesn t apply any piece rate differentiations between regular day and holiday. This norm is not complying with national regulations regarding overtime payments. Checking into harvester workers diaries found that some of them have work in Sunday (holiday) but paid in the same rate as they work in regular day. This finding rise as non-compliance (NCR No of 23). Company Regulations 2015 article 21 mentions about company s facilities for worker. The points regarding facilities as mentioned are: a. Company provides housing, electricity and water for workers and family members (nuclear family) that live in the plantations area b. Company provides worker public facilities such as clinic, worshipping houses, sport areas etc. Check into documents and records found that PT KSY has built adequate housing facilities for worker, and provide adequate electricity and water. Field check and interview with worker s spouse found that company routinely maintain the facilities keep in order. Every complaint from housing residents regarding worker fa-

35 Every local housing has an officer who responsible for maintenance man- cilities is responded properly. agement. Page 35 of 64 KSY estate areas are not too far from local economic center (market etc.). Small shop supplying workers everyday needs of consumptions are available in every emplacement. Food is adequately, sufficiently and affordably supplied by these local shops, there is no restriction from the company for worker to build a shop in housing facilities areas. To improve worker access to adequate food supplier, company has built Workers Cooperation that could accessed by all workers, member or non-member. The shop owned by the Cooperation is available in every Estate office. The company still maintain the policy for worker s freedom association. During this surveillance audit evidences collected regarding policy s socializations. Printed document policy of worker s Freedom of Associations, the hardcopies has attached to every board in Estate and Mill Offices. This is one of effective way to socialize the policy to staffs and workers. There is no official labor union in the mill and estates. Workers use Bipartite Cooperation Institutions (LKS Bipartite) to organize among them and open grievances, complaint, negotiations and agreement with Management of PT KSY. A log book of meeting note showed during audit that records some meeting result, such as : a. April 30 th 2015, Security suggest that all operator must own standard relevant licensed. The Bipartite response that the committee will conduct check to all operators and would support by securities. b. April 30 th 2015, Head of West Neighborhood Association (Rukun Tetangga), requesting of pick up travel for students of west emplasments. The transportation cannot reach to west area as determined by the working schedule. As solutions, worker will give extra break time to pick up their child to FC (Field Conductor). Document check and field check found that there is no presence of child workers found in this company. Child worker restrictions has documented in Company s Policy. It Also has strictly mentioned in Company Regulations 2015, article 3, point 2, that state Company has commitment to not recruit workers under 18 years old. This regulations also documented in recruitment procedures. There is no evidence of discrimination in this company. Workers come from various ethnic groups in Indonesia such as Java, Dayak, Malay, Batak, and others. The workers also come from various religions. Interview with maintenance worker and harvester worker confirmed that there is no indication found in working areas and emplacement areas showing discrimination issues among worker and staffs. This policy has also clearly stated at Company Regulation 2015, article 3, point 7, Company open equal opportunity to each individual person with respects, dignity, free from discriminations based on gender, race, ethnic, religion and believe backgrounds. Audit evidences regarding recruitment procedure and process shows that company still keeps their commitment. Company maintains policy against sexual harassment and violence, the printed documents attached at boards in every office, estates and Mill. This policy has also clearly stated at Company Regulation 2015, article 3, point 3, Company supporting (encourage) efforts to prevents, reports and actions over sexual harassment and violence. As implementations of the policy, company showed documents and records of Gender Committee Structure and activities (meeting and socializations). Special procedure has developed to accommodate complaints and grievances regarding these issues. There is evidence of information provided to workers during morning row call regarding the company s policy against sexual harassment and violence. Interview result with maintenance workers (women) found that they already know the policy, and where to reports if there s any case happens in fields. Interview result with office workers found that they know person incharge regarding gender committee and they know and utilize their reproductive rights. Evidences such as filled H1 form (Leave for period) and H2 form (maternity leave) has showed during audit. FFB Prices of KSY determines by marketing manager/officer of Head Office. The manager formulate the FFB prices based on CPO and FFB market prices and local the prices issued by FFB Prices Board. The buying price information then, distribute to mills (by ) and suppliers (by SMS). The current FFB prices also attached (sign board) at Mills. During audit, company shows their buying prices for 2 past months detail for each days and each planting year. Every FFB supplier holds contractual agreement with company. There is evidences shown during audit regarding administrative requirement for FFB Supplier, such as: a. FFB Supplies Contractual Agreement (with IWS); b. List of grower detailed with areas and production forecast; c. Supplier Invoice to company; d.

36 Page 36 of 64 Payment slip. Interview result with the supplier found that company always distributes the FFB prices information routinely. There is no problem regarding FFB unloading and calculation process. As stated at Company Regulations 2015, article 3, point 5, company has commitment to contribute to local development by developing Community Development Program. Audit evidences such as Document of CD/CSR Program 2014 and 2015, records of implementations, meeting records and payments slips. The CD/CSR program has considered SIA Documents, company s operation areas as group and stakeholder consultation result. CD/CSR program activities that has implemented in 2015 are: a. Education (Incentives for In-permanent Teachers) b. Socials ( c. Religious (Rehabilitation of Local Public Facilities) d. Economic For all those 4 kind of activities, company has contributed around 498 million to local community development in 2014, and 129 million in Random records regarding event and project has been asked as verification by the auditor, and has been showed. The contribution to local development program has conducted as the reports. PT KSY (CKP) only recruit migrant worker for managerial positions (staff up expatriate), there s no migrant worker that work at low level positions. All of harvester and maintenance worker (permanent and inpermanent) are Indonesian, thus there s no trafficked labor are use. There s also no substitute contract occurred. Human Rights policy has clearly state by the company In Company Regulation 2015 article 3. Human Right policy as state by UN guiding principle on Business and Human Rights has detailed into 7 points. This statement has cover issues such as : a. Commitment to provide comfortable working environment b. Commitment to employ worker over 18 years old c. Prevent, report, and handling sexual harassment and violence cases (if any). d. Commitment to transparency e. Commitment to contribute to local development f. Commitment to environment sustainability g. Commitment to equal opportunity Freedom for associations has state as special documented policies. All of this commitment regarding human rights has been communicated to all level of workers. Compliance status : Non Compliance NCR No of 23 (Indicator Minor) Social impacts management plan for has developed as the part of SIA document, but not yet been reviewed NCR No of 23 (Indicator Minor) The plan of Smallholder Scheme development has not been part of Social Impact Assessment report. NCR No of 23 (Indicator Major) During document check regarding overtime issues, there is an evidences showed that consist piece rate workers norms (Mature Field Operation, Contract and labor Rate 2014 and 2015). Based on this document, Company doesn t apply any piece rate differentiations between regular day and holiday. This norm is not complying with national regulations regarding overtime payments. Principle 7: Responsible development of new plantings Criteria assessed : CR7.1, CR7.2, CR7.3, CR7.4, CR7.5, CR7.6, CR7.7 Criteria not assessed : - Findings:

37 Page 37 of 64 Based on hectare statement (table 5) that there are planting activities year 2014 & 2015 or total areas are Ha (year 2011 to 2015). This is not new development areas because all new planted area is inside company location permit. It is areas has included in scope of social and environmental impact assessment (SIA & AMDAL), management and monitoring plan (RKL/RPL) and soil map. Based on attachment of Ministry of Forestry decree regarding forest areas in Central Kalimantan and HCV assessment report that block 271 or other blocks with year planted 2010 to 2013 not within virgin forest or HCV areas. Whereas, based on soil map that it is areas not included fragile or marginal soil. Record of socialization program and proof of payment to land owners has available include records of compensation process cause has carried out on first development plantations last year ago. Based on verification in field (block 271) that the company has implemented zero burning in land clearing activities. The company has emergency responses to land burning procedure and fire extinguishers and facilities. Compliance status: Full Compliance Principle 8: Commitment to continuous improvement in key areas of activity Criteria assessed: CR8.1 Criteria not assessed: - Findings: The company (estate and POM) has a continuous improvement action plan. The continuous improvement action plan for estate is to the reduction of herbicide, LB3 reduction, reduction in fuel consumption, reforestation, reduction in the use of fertilizers containing N, P 2 O 5, K 2 O, CaO, MgO, Na and prevention and control of fires. POM 1 has a management and monitoring plan for 2015 contained in the RKL / RPL and POM 2 has a management and monitoring efforts for 2015 are listed in the UKL / UPL. The company reported RKL-RPL and UKL / UPL regularly every 6 months. RKL-RPL and UKL / UPL last reported is the second semester of 2014 (July-December 2014). POM 1 and POM 2 have done the analysis and testing of environmental effects include ambient air testing, boiler emissions, emission generators, odor testing, testing of vehicle emissions, noise testing, illumination testing work environment, vibration testing, testing soil, surface water testing, testing waste water quality, water quality testing soil, erosion, fire potential, natural vegetation, wildlife reported in RKL-RPL. The company has developed questionnaire and conducted surveys (every year) for collecting data from local communities. The questionnaire contained questions regarding social issues impacted by Company such as working opportunity, income, perceptions, grievances, local norm and values, social process and community health status. Data collected has been analyzed as inputs for the formulation process of Social Impact Monitoring and Evaluation Report. The company could show evidences that they have routine meeting with stakeholders (Pondok Damar, Tanah Putih and Bangal). As mentioned in meeting records, the agenda was introducing new procedure, new officer and socialization regarding environmental and social impacts monitoring activities. By this meeting, stakeholders could continuously update information according to the dynamic of company s activities and its impacts. Social impact management not yet mentions about local workforce market (as observation). An analysis of supply and demand that calculated related variable (competitor, wage rate etc.) could be opportunity to improve worker sustainability. If local workforce supply is proven low, company could consider a workforce supply for Other area of Indonesia. In a report of RKL-RPL and UKL / UPL also reported about the social impact about work opportunities and the implementation of CSR programs to the local community (community empowerment in the fishery and handicraft) Compliance status: Compliance with observation

38 Page 38 of Status of Previously Identified Non-conformities for RSPO P&C A total of 4 nonconformances were identified during the previous assessment all categorized as major and minor non-conformities. During this surveillance assessment, it was found that there was sufficient evidence for closure of all non-conformities, and these have been raised to Major Non-conformities under Section 3.3. The following is a description of the evidence of action taken to close the non-conformities raised during the previous assessment, as well as auditor s conclusions on the status of the non-conformities. Criterion 2.1. (Major indicator 1) Evidence of compliance with relevant legal requirements. NCR No of 04 There is several issues relating inconsistency to legal compliance such as : - Auditee has occupancy warthiness permit (hinder ordonantie) and company registration no /552/KPPT/IX/2011 but it is not include Kerry Sawit Indonesia (KSY) POM 2 so that auditee not complied to Ministry of Home Affairs decree no.27 year 2009 article KSY POM 2 has been operated comersially but principle permit has not been revised be permanent business permit (Izin Usaha Tetap). Verification audit : The company was provide evidence a revision of occupancy warthiness permit no /859/HER/KPPT/V/2014 on May 23, 2014 from Integration License Service Office of Seruyan District for PT Kerry Sawit Indonesia with location on Sembuluh I Village (POM1) and Tabiku Village (POM2), Danau Sembuluh Sub District, Seruyan District. Moreover, auditee has provide a letter from land agency that the committee of the measurement and assement of land (Panitia B) will be verification to field on 4 June Auditor Conclusions: Closed Criterion 4.1. (Major indicator 1) Standard Operating Procedures (SOPs) for estates from land clearing to harvesting NCR No of 04 Some implementation in field not compliance with procedure, i.e : - Result of the site visit (May 21, 2014) that found loose fruit and some FFB are not transported while based on the data, the last harvest in the block (block 057, KSY 2) was conducted on 12 May 2014 and transported May 17, It is not compliance with the Harvesting procedure (PSKK 1/CKP/(1)/1209) and also inconsistencies to Instruction GEM on March 2014, which stated that each Estate perform rehabilitation field to control significant oil palm trees/oil palm seedling/volunteer oil palm seedling (VOPS) in the field. - Calibration of spray equipment are carried at KSI 1, 2 and 3, there is no recommendation / justification of the calibration results, while, based on the procedure of the agrochemical equipment calibration (SA 06/EMU/0/0811) stated if the nozzle flowrate showed deviations 30 % of the specifications set, so the nozzle should be replaced. For example, Calibration Results in Division 1 (KSI 2) showed, some spray equipment using PB nozzle 16 Green, its actual flow rate was 0.8 L / min, while the recommended specification was 1.3 L L / min (deviation 30%). Verification audit : Company was provided evidence such as : - Spraying equipment calibration data sheet for all spraying equipment in Division I - KSY2 estate (11 units). The results of calibration has available on comment column where comment for spray equip-

39 Page 39 of 64 ment no.04, 07, 13, 05, 03, 02 and 06 are measurement time too fast and no. 14 & 08 is pump pressure needs to be checked. The final conclusion is all nozzles shall be take the pressure controller. - The records of calibration training have available such as attendant list and minutes meeting. - Rehabilitation field record in the form photograph and workseet activities in each estates. - Internal letter no. 013/KSI-Group/IOM/V/2014 on May 26, 2014 from Group Estate Manager to all Estate Manager regarding monitoring of FFB transport. All estate managers shall monitoring result of transport so that nothing FFB and brondolan left in FFB collection point (TPH). - FFB delivery letter from Division I KSY2 estate (block 031, 057 & 044) to KSY2 POM, weightbridge ticket no. KGD and form OPH 1 for block 031, 057 and 044 where it is evidence that FFB and brondolan still in FFB collection point has transported by auditee. - Auditee has performed retrieval FFB and brondolan which left in corridor road (between block ) with using DT03 (evidence is a photograph), re-socialization of FFB transport procedure to supervisor of transport & loader/field conductor (evidence are minute meeting of socialization and attendant list) and give sanction to PiC which is responsible for block 057 (evidence are 1 st sanction letter no.010/hrd/kry-estii/sps/v/2014 on May 28, 2014 for employee as supervisor with ID number : KG/KRY2/1210/3103 and no. 011/HRD/KRY-EstII/SPS/V/2014 on May 28, 2014 for employee as field conductor with ID number : 076KSY ). All information above has stated in state letter on May 22, Some weightbridge ticket, FFB delivery letter and Form OPH 1 from KSY1, KSY2 and KSY3 estate as evidence that auditee has implemented corrective action. From KSY2 estate is weightbridge ticket no.kgds & KGDS to KSY1 POM, FFB delivery letter on June 8, 2014 & May 26, 2014 for block 077 & 076 and 086 and their Form OPH 1, from KSY3 estate is FFB delivery letter on June 18, 2014 for block 003 to KSY2 POM and their Form OPH 1 and from KSY1 estate is FFB delivery letter on June 16, 2014 for block 033 dan 035 to KSY2 POM and their Form OPH 1. Auditor Conclusions : Closed Criterion 4.2. (Minor indicator 2) Records of efforts to maintain and increase soil fertility (e.g. the use of fertilizer, legume cover crops, compost and land applications of POME or EFB) based on the results of analysis carried out as in point 1 above NCR No of 04 The volume of fertilizer requested is not appropriate with the application of fertilizer in the field example fertilizing of NPK (doses of 2.5 kg/tress) on January 2014 at block 047 (KSY3) that volume of fertilizer was applied for total of trees in block it (5,128 trees). Whereas, actual in field that some trees on riparian zone/belt not done fertilizing Verification result : KSY3 estate has revised recommendation of fertilizer year 2014 because it has been excluded riparian areas include block 047 and has inventoried oil palm trees in riparian areas. Based on request of material inventory stock year 2014 that volume of fertilizer has apllied appropriate with revision of recommendation. During surveillance, auditor has found that fertilizer application not exclude riparian areas at block 018- KSY1 estate so that it condition was raised as non-conformity. Auditor Conclusions : Open (NCR No of 23). Criterion 5.3. (Major indicator 2) Estates and mills waste management and disposal are implemented to avoid or reduce pollution NCR No of 04 Waste is not reduced, recycled, re-used and disposed off in an environmentally and socially responsible manner since found Inner container of fertilizer was disposed under palm front staking in block. Verification audit : Company was provided evidence such as : Photograph from worker taking inner of plastic on field and hand over inner of plastic and fertilizer bag

40 to PiC. The next, PiC will be sent to warehouse of old fertilizer bag. Page 40 of 64 State letter and attendant list for re-socialization to all manuring workers in Divisi III KSY2 estate regarding manuring agronomi procedure point where old fertilizer bag must be collection again (include their inner of plastic). Moreover, other the topic in re-socialization is OHS aspect in manuring activities and collecting inner of plastic which still in field. Re-socialization has carried out on May 25, Material requisition & issue slip in KSY2 estate on May 30, 2014 for NPK amount of 8,300 kg (166 sacks). It request for manuring operational in block 117 (26.12 Ha). All old fertilizer bag (include inner plastic), it has receipt by warehouse officer on May 30, Auditor Conclusions : Closed 3.3 Identified Non-conformances against RSPO P&C Requirements, Corrective Actions Taken and Auditors Conclusions During this surveillance assessment, a total of 20 (four) non-conformances were identified for RSPO P&C. These consisted of 9 (nine) major non-conformities and 11 minor non-conformities. For the major nonconformances, the company has taken the necessary corrective action to close these non-conformances within 60 days of completion of the assessment, and this was verified by the audit team through checks of documents submitted by the company. For the minor non-conformances, the company has taken corrective action against these as well, and for those which could not be verified as closed through document checks, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as belows : Criterion 1.3.( Minor indicator 1). There shall be a written policy committing to a code of ethical conduct and integrity in all operations and transactions, which shall be documented and communicated to all levels of the workforce and operations NCR No of 23 Company has policy regarding Code of Ethical conduct, but still in English, not yet translated to Bahasa and not yet communicate and socialized to all level worker and contractors Correction : Publish Documented policy regarding Code of Ethical Conduct officially in Bahasa. Corrective Action : Conduct socialization regarding the policy to all level workers, staff and third parties. Auditor Conclusions: Closed Date of closure: July 30, 2015 Verification audit : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit. Criterion 2.1. (Major indicator 1) Evidence of compliance with relevant legal requirements. NCR No of 23 There is several issues relating inconsistency to legal compliance such as : - Auditor found all found all hazardous & toxic waste was not placed on location which was provided on the temporary storage warehouse for hazardous & toxic waste, sign of dangerous and type of PPE shall used in around the temporary storage warehouse for hazardous & toxic waste not available and there are not grouping all hazardous & toxic waste according to the type and character when placed in the temporary storage warehouse for hazardous & toxic waste so that the conditions requirement regarding temporary storage of hazardous and toxic waste in KSY2 POM not appropriate with regulation (Government Regulation No. 101 of year 2014 on the Management of Hazardous and Toxic Waste).

41 Page 41 of 64 - Boiler operators namely Andi Amarullah (POM1) and Haidi (POM2) is not equipped with SIO license as stipulated in the Regulation of the Minister of Manpower No. 01 of year 1988 on Qualifications and Requirements Steam Engines Operator. Correction : Hazardous and Toxic Waste Storage issue: - Assessing at Hazardous and Toxic Waste Storage/Warehouse in POM 2 with standard criteria based on Government Regulation PP 102/ Implement improvements based on the findings of the assessment. - Create a report improved results. SIO operator issue: - Submit proposal for SIO training for employees which working in boiler. - Change operator who does not have the SIO. Corrective Action : Hazardous and Toxic Waste Storage issue: Regular monitoring to ensure the condition of warehouse/storage is always in accordance with the standard Government Regulation PP 102/ SIO operator issue: Conduct periodic monitoring to ensure that the boiler operators are actively working has had SIO license. Auditor Conclusions: Closed Date of closure: July 1, 2015 Verification audit : The company has release a minute of the management of hazardous and toxic waste in POM 2 on June 26th, This minute signed by Mill Manger and EHS staff and explained the corrective action has been done. The company has provided photograph the current condition for the temporary storage warehouse for hazardous & toxic waste where the sign of dangerous and type of PPE shall used has available, all hazardous & toxic waste has placed on location which has provided and there are grouping for all hazardous & toxic waste according to the type and character when placed. CKP as main group of PT KSY has conducted competency training of boiler operator on 7-11 July Seven operators has participated and passed the training exam. An evidence showed by PT KSY in form of minute signed by Head of Manpower and Transmigration Agency of Seruyan District and the instructor/trainer from PT Elbana Industrial Supply. Whereas, issuing SIO license in-process so that KSY1 & KSY2 POM has issued decree letters that temporary relocation for boiler operator it until the SIO license issued. Criterion 4.1. (Major indicator 1) Standard Operating Procedures (SOPs) for estates from land clearing to harvesting NCR No of 23 Some evidences the company has not complied with their procedures are : - In the harvesting procedure set about harvesting rotation is maintained between 7-10 days, 5 brondolan in the circle for crop less than 7 years old and 2 brondolan in the circle for crop more than 7 years, maximum 2.5 cm long stalks, fresh fruit bunches must be transported in within 24 hours. During visit to the field, harvesting conducted in the Estate KSY-3 Block 024. Company has not been able to comply the standards specified in the harvesting procedure whereby the actual conditions of harvesting rotation in Block 024 is 22 days while the procedures is set to keep the harvesting rotation 7-10 day. - The company also has standard safety procedures transporting fresh fruit bunch (FFB Loading) with document number PSKK 17 / CKP / (1) / 1209 revision 1 effective date December 1, In the

42 Page 42 of 64 procedure arranged that the net already installed safely and banded before transport leaving to the mill. During visit to POM 2 in a loading ramp, conducted sampling to be done sorting fresh fruit bunches. The company has not made the installation of nets on the truck as set out in safety standard procedure transporting fresh fruit bunches (FFB Loading). For example, a truck with KH 9967 P transported FFB of Estate KSI-1 Division A Block 025 is not installed nets truck. - Environment and OSH corecction programmes for the results of risk assessment at KSY 1 mill as high categories not available so that it is not consistent with risk assessment procedure. - Accident investigation has not conducted by personil have capability or qualify in KSY estate so that it is not consistent with accident investigation procedure. - There are accidents in KSY 2 POM but the mill does not accident investigation so that it is not consistent with accident investigation procedure. Correction : - Evaluating the condition of the current Harvesting rotation - Accelerate the harvest rotation - Recruitment the harvest - Assistance the harvest labor from the other Estate is rotation harvest under control - Starting early to processing - Evaluation results and the latest harvest rotation as an evidence that the harvest rotation in accordance with the SOP 7-10 days. - The clerks transport ensures the installation of nets before transported TBS. - The mill security ensures incoming vehicle had been wearing a safety net. Vehicles is not equipped with nets could not enter to the mill. - Create of correction program for risk assessment with high category - Create of the implementation of OSH correction program report every month - Annual training program has include investigation of accopation accident training - KSY2 POM will conduct investigation of accopation accident training for EHS officer and investigation officer. Corrective action: - Conducting evaluation and corrective action when harvest rotation is higher than 7-10 days. - Re-awarness again to driver and team regarding important of nets - KSY1 POM will evaluation and review about OSH correction program least 1 year - EHS will checking result of investigation for to ensure that investigation result has appropriated with their procedure. - KSY2 POM will ensure create of occupation accident investigation report and it has appropriated Auditor Conclusions : Closed Date of closure: July 24, 2015 Verification audit : Company was provided evidence such as : - The company has made additional harvester as much as four people in June The company attaches data about the requirements of harvester in June 2015 where the total planted area is hectares with the harvester needs of 271 people and the number of harvesters that exists today is 284 people. This shows that the calculation of harvester needs compared with the mature acreage are still insufficient. - The company has been attaching the harvesting rotation in Estate KSI-3 Block 024 where the harvaesting rotation period of July 2015 was 13 days. - The Company has conducted safety meeting, APD and Handling of FFB on Saturday, July 11, 2015 are equipped with the Minutes signed by the document control, security, EHS and Mill Head. - Documentation of photos where every truck that enters the mill has been wears the net and checked by the security section. - Minutes of handover the net to the Truck Operator (Mr. Ariadi) division 1A KSY-1 on June 15, 2015, signed by the operator and Division Manager and be equipped with a photo documentation of the handover and in-

43 Page 43 of 64 stallation of nets in the truck before TBS transported to the factory. - KSY1 mill has provided revision of Environment and OSH corecction programmes where all high categories has available. - KSY estate has provided EHS training year 2015 where one of training is accident investigation. KSY estate has carried out accident investigation traning on 22 June 2015 for field conductor RSPO KSY estate with topic are step by step investigation if any accident to workers, mechanism of fill in form notification and investigation if any accident, and mechanism of provide/issue review and recommendation which correct so that can be learn to next time and has provide their preventive action. - KSY2 POM has provided recapitulation of accident report year 2014 where there are 6 accidents and every accident has carried out their investigation accident. The record of accident investigation report for all accident in year 2014 was available. Criterion 4.2. (Minor indicator 2) Records of efforts to maintain and increase soil fertility (e.g. the use of fertilizer, legume cover crops, compost and land applications of POME or EFB) based on the results of analysis carried out as in point 1 above NCR No of 23 (as escalation of previous audit to major) The company could not show the certainty of follow-up of the findings last year related to the amount of fertilizer applied in blocks that have riparian where fertilizer used was the same as the total number of plants. Example: Estate 1 Block 018: ha, SOA Applications with the 5,600 kg of fertilizers, total of trees: 2,486 trees. Correction : - Conducting census of trees in riparian zones - Reduction demand of fertilizers in manuring program - Conducting socialization the procedure to the Field Conductor, foreman, and warehouse personnel and employees of fertilization. - Division Manager (DM) ensures MRIS to be issued does not include fertilizer to the trees in the riparian zone. - Evidence of improvement is minute of socializatiton, list of block with the amount of trees that has been reduce of trees in the riparian zone which will use as a guide for MRIS fertilizier and the latest MRIS. Corrective Action : DM check on MRIs and reports of actual fertilization Auditor Conclusions : Closed. Date of closure: July 24, 2015 Verification result : The Company has provided evidence of improvement include : 1. The minutes of socialization procedure about HCV and riparian and protected wildlife on Wednesday, June 8, 2015 in the meeting room estate KSY-1. Participant s socialization is GEM, EM, DM, EHS and FC RSPO. The minutes of socializing accompanied by photos documentation and list of participants attending the socialization of KSY-1, 2 and The minutes of socialization procedure about protected wildlife (SOP 18/EHS/(1)/0615), riparian management (riparian belt) (SOP 20/EHS/(1)/0115, PSKK 02/CKP/(2)/1111 about spraying and PSKK 03/CKP/(2)/1209 about application of manuring on Thursday, June 9th,2015 at KSY-1. Participants of socialization is manuring and spraying employee sub division A, division III (sub division E and F), sub division B, division II (sub division B and C). The minutes of socializing accompanied by photos documentation. 3. The minutes of socialization procedure about protected wildlife (SOP 18/EHS/(1)/0615), riparian management (riparian belt) (SOP 20/EHS/(1)/0115, PSKK 02/CKP/(2)/1111 about spraying and PSKK 03/CKP/(2)/1209 about application of manuring on Thursday, June 10th,2015 at KSY-1. A participant of socialization is maintenance foreman, PIC of warehouse, FC Maintenance, Field Officer and Division Manager. The minutes of socializing accompanied by photos documentation. 4. The result data of palm oil trees census in the riparian of KSY-1 has trees (19,16 hectare) 5. Data of trees that will be conducted manuring is amount of palm oil trees will be conducted manuring is trees (3.483,2 ha) and the data census of palm oil trees in the riparian zone is trees (39,16 ha). The total of palm oil trees will be conducted manuring after reduce trees of palm oil in the ri-

44 parian zone is trees (3.444,04 ha). Page 44 of The program of manuring of 2015 Estate KSY-1 was convertion because reduced amount of palm oil trees in the riparian zone. Criterion 4.2. (Minor indicator 4) A nutrient recycling strategy shall be in place, and may include use of Empty Fruit Bunches (EFB), Palm Oil Mill Effluent (POME), and palm residues after replanting NCR No of 23 KSY-1 estate, according to a report application of empty fruit bunches have not been applied starting in March 2015 including blocks 007, 025, 029 and there are also applications that do not match the specified dose of 40 tons/ha including block 046 realization 1 ha = 56 tons, block 047 realization 1 ha = 24 tons. Based on field trips, KSY-1 estate (Block 007) is still a pile of empty bunch that has not been applied. Correction: - Conducting evaluation of plan and realization of EFB - Conducting EFB aplication to block area where there was EFB - Evidence: result of evaluation, correction result of application in the block 047 and 046 or the other block which does not accordance. Corrective Action: FO conducting monitoring and reporting result of EFB application Date of closure: July 24, 2015 Auditor Conclusions : Evidence of corrective action plan accepted. Effectiveness of implementation to be verified at next audit Criterion 4.4. (Major indicator 2) Protection of water courses and wetlands, including maintaining and restoring appropriate riparian and other buffer zones (refer to national best practice and national guidelines) shall be demonstrated NCR No of 23 The company has failed to demonstrate the good implementation of SOP 20/HCV/(1)/0115 dated on January There is no system that shows or proves the reduction of fertilizer on the riverbanks area as part of protect the water source. Correction: - Conducting a census of palm oil tree in riparian zones - Reducing the request of fertilizers in Manuring Program on blocks that exist riparian zones - To disseminate the procedure to FC, foreman, warehouse keepers and fertilization workers. - DM will always check and ensure the MRIS document that will be issued does not include fertilizer to the riparian zones. - Evidence of socialization on improvement minutes completed with a block list and trees within a riparian zones and will be new the MRIS fertilizer guide Corrective Action: DM section will check on the MRIS document and reports the actual fertilization activity Date of closure: July 15, 2015 Auditor Conclusions : Closed Verification result : The company has developed and provided a new MRIS which is contains a list of block with riparian zones and number of tree that prohibited to fertilizing. This document also completed with fertilizing schedule and number of tree within the riparian zones. Some socialization has been made to ensure this new document should be implemented in field. One of the evidence showed is minutes of socialization on the reduction of fertilize on the riparian zones based on July 9 th, 2015 to all fertilizing workers and field staff

45 Page 45 of 64 Criterion 4.4. (Minor indicator 3) Appropriate treatment of mill effluent to required levels and regular monitoring of discharge quality, especially Biochemical Oxygen Demand (BOD), shall be in compliance with national regulations (Criteria 2.1 and 5.6) NCR No of 23 Effluent treatment standard procedure WIP / POM / SOP / 01 / released on February 1st, 2014 mentioned that the type of pool in the POME treatment installation including an mini pond acidification that serves to process acidification for one day, before it is pumped to the anaerobic pond. Based on field checking there is no such acidification pond installed and mill management was not aware of this system mentioned in the procedure. Correction: - Provide socialization on safe Standard Operation Procedure mills. WIP / POM / SOP / 01 / February Adding an acidification pond to treat effluent before entering the anaerobic pond - To monitoring the height of solid effluent every 1 week, the solid height should not be more than 20%. If it exceeds the dredging program to be carried out - To provide the evidence of ponds improvement in POME installation in form of minute of SOP socialization, evidence to build an acidification pond, and the weekly report of solid height monitoring. Corrective Action: Mill Manager ensures that the Safe Standard has been implemented Date of closure: July 15, 2015 Auditor Conclusions : Evidence of corrective action plan accepted. Effectiveness of implementation to be verified at next audit Criterion 4.6. (Minor indicator 4) Pesticides that are categorised as World Health Organisation Class 1A or 1B, or that are listed by the Stockholm or Rotterdam Conventions, and paraquat, are not used, except in specific situations identified in national Best Practice guidelines. The use of such pesticides shall be minimised and eliminated as part of a plan, and shall only be used in exceptional circumstances NCR No of 23 The company has used potrekum period year 2008 to 2012 and September to November 2014 but rat attack on October 2014 amount of 10% and the result of last two months is under threshold and normal condition Correction: - The company will be evaluating for Petrokum application/implementation on block it (total areas is ha). - Carry out sensus and detection again to ensure attack level update Corrective Action: Following to RSPO P&C requirement (year 2013) if using agrochemical with WHO class 1a & 1b status. Date of closure: July 15, 2015 Auditor Conclusions : Evidence of corrective action plan accepted. Effectiveness of implementation to be verified at next audit Criterion 4.7. (Major indicator 1) A health and safety policy shall be in place. A health and safety plan covering all activities shall be documented and implemented, and its effectiveness monitored

46 Page 46 of 64 NCR No of 23 The company has provided correction of environment and OSH programmes year 2015 from the results of assessment about aspect of environment and OSH impact and working plan for EHS officer year 2015 (reporting, monitoring and training) but health and safety plan/program year 2015 not available Correction: The company will be create of OSH program/plan integration between estate & mill Corrective Action: OSH program will available The company will be create of realization and evaluation of OSH program Date of closure: July 15, 2015 Auditor Conclusions : Closed Verification result : The company (KSY estate) has provided safety plan/program (in form of annual OSH program) where majority programmes such as celebration OSH day, campaign of OSH and preventive of occupation illness program. Annual OSH program has signed by Group Estate Manager and mill manager. The company has submitted evidence of realization from program too example minute of installing OSH poster infront of KSY1 estate on 10 July 2015, socialization of OSH on 12 February 2015, minute of fire simulation on 4 June 2015 in KSY1 and KSY 3 estate, socialization of HIV on 21 April Whereas, KSY1 POM has submitted annual OSH program too but evidence of implementation it has not been submitted. Criterion 4.7. (Major indicator 2) All operations where health and safety is an issue shall be risk assessed, and procedures and actions shall be documented and implemented to address the identified issues. All precautions attached to products shall be properly observed and applied to the workers. NCR No of 23 KSY estates has carried out risk assessment year 2015 covering all operations on estates but results of verification documents and fields that there are risk/danger sources not available i.e fosil fuel shop in front of house/emplasment and using electric not secure. risk assessment in KSY2 POM not available KSY estates was not implemented results of risk asseeement example harvesting workers in KSY3 (2 persons) & KSY1 (1 person) estates not using helmet when working because the company has not been provided since first work (1 yeas ago) and the company has not been provided replacement after the accident occurred Correction: - The company will be re-assessment with scope of assessment more extensive so that can see potensial of risk outside estate and mill operations. - The company will be action and monitoring to minimizing risk based on mitigation program/environment and OSH correction program. - The company will be carry out risk assessment in KSY2 POM Corrective Action: Estate and mill manager to ensure risk assessment was available and has covered activity more extensive. Date of closure: July 15, 2015 Auditor Conclusions : Closed Verification result :

47 Page 47 of 64 The company has provided some documents/records, such as : Revision of risk assessmsnt report (FRM 01/SOP 11/EHS/(1)/0909 rev.1) on 17 June 2015 where it has included type of danger is keep & sell of fosil fuel in emplasment/worker house with total of volume very much. The result of risk analyst is moderate and recommendation of risk control. The company has carried out socialization of risk assessment, types of danger and potensial risk which is likely to occur when at home on July 9-10, 2015 to womens (wife s worker) at emplasment of KSY3 estate, worshop workers in KSY3 estate, workers in KSY1 estate,. The KSY 2 POM has carried out risk assessment with covering all operation in mill and risk assessment report on behalf KSY2 POM was available. Minute of hand over PPE on 15 June 2015 for helmet and booth shoes between company with harvester I/C at KSY3 estate, on 15 June 2015 for helmet between company with harvester 2/D at KSY1 estate and on 15 June 2015 for helmet and booth shoes between company with harvester I/C at KSY3 estate. Check list of PPE condition on June 25, 2015 and June 18,2015 for harvesters (28 persons) at KSY3 estate where all PPE (helmet, gloves, booth shoes and cover of sickle and chisel) good condition. Check list of PPE condition on 1-18 June 2015 and June 2015 for harvesters at KSY2 estate (Division B) where all PPE (helmet, gloves, booth shoes and cover of sickle and chisel) good condition. Check list of PPE condition on July 2015 for harvesters (20 persons) at KSY1 estate (Division D) where all PPE (helmet, gloves, booth shoes and cover of sickle and chisel) good condition. Criterion 4.7. (Major indicator 3) All workers involved in the operation shall be adequately trained in safe working practices (see Criterion 4.8). Adequate and appropriate protective equipment shall be available to all workers at the place of work to cover all potentially hazardous operations, such as pesticide application, machine operations, and land preparation, harvesting and, if it is used, burning. NCR No of 23 The one welder not using safety shoes adequate where he have worked at workshop-ksy2 POM during 3-4 months Correction: - The company will be carry out provisions giving PPE adequate to workers - The company will be give new safety shoes to one of workshop worker. Corrective Action: The mill will be checking proper of PPE condition annualy Date of closure: July 15, 2015 Auditor Conclusions : Closed Verification result : The company has provided minute of hand over PPE (safety shoes) on 12 June 2015 between the company with one of workshop worker and one of sortation worker where used period is 6 months. Futhermore, the company has provided photograph of two workers changing safety shoes from old to new shoes. Criterion 4.7. (Major indicator 4) The responsible person/persons shall be identified. There shall be records of regular meetings between the responsible person/s and workers. Concerns of all parties about health, safety and welfare shall be discussed at these meetings, and any issues raised shall be recorded. NCR No of 23 the company (POM and estates) has not discussed about health, inconsistently for use of PPE, safety at workshop, occupational illness, result of OSH inspection and accident issues (especially at KSY2 POM) in regular meetings Correction: - Next OSH committee regular meeting will be additional topic/issues (health, consistentcy of use PPE,

48 Page 48 of 64 safety in workshop, occupational illness, result of OSH inspection and accident). - The results of meeting will be fill in OSH committee report 2 nd triwulan year 2015 Corrective Action: OSH committee will be ensure that OSH regular meeting discuss about health, consistentcy of use PPE, safety in workshop, occupational illness, result of OSH inspection and accident. Date of closure: July 15, 2015 Auditor Conclusions : Closed Verification result : KSY estate has provided minute of meeting for OSH committee 2 nd triwulan year 2015 on 6 July 2015 at KSY1 estate where it has discussed about occupation accident, occupational illness and results of medical check up. KSY2 POM has provided minute of meeting regarding OSH, health, PPE and handling of chemical on 26 June In meeting has discussed regarding mechanism of efesien work so that workers can avoid the diseases caused by dust material and other aspects so that workers will be blind, respiratory infection, infected, etc. KSY1 POM has provided minute of meeting for OSH committee on 26 June 2015 which has discussed regarding review of previous meeting result, review of working plan, result of OSH inspection, consistency of use PPE, occupation accident and results of medical check up. Criterion 4.7. (Minor indicator 5) Accident and emergency procedures shall exist and instructions shall be clearly understood by all workers. Accident procedures shall be available in the appropriate language of the workforce. Assigned operatives trained in First Aid should be present in both field and other operations, and first aid equipment shall be available at worksites. Records of all accidents shall be kept and periodically reviewed. NCR No of 23 KSY2 POM can not shown evidence of first aid training Accident report year 2014 in KSY1 POM not update or real condition because accident on 22 July 2014, 23 January 2014, 6 June 2014, 10 June 2014, 4 February 2014 and 20 October 2014 was not written/recorded. Accident report in KSY2 POM and KSY estate has not been reviewed regularly Correction: - KSY2 POM will conduct first aid training to supervisor or foreman each station. - The company will be revision of accident report in KSY1 POM where will fill in data/information occupation of accident from clinical. - KSY estate and KSy2 POM will review of occupation accident and the result of review will fill in OSH report 2 nd triwulan year Corrective Action: EHS officer shall ensure that occupation accident available, reviewed and reported in OSH report. Date of closure: July 15, 2015 Auditor Conclusions : Evidence of corrective action plan accepted. Effectiveness of implementation to be verified at next audit Criterion 4.7. (Minor indicator 7) Occupational injuries shall be recorded using Lost Time Accident (LTA) metrics NCR No of 23 LTA information on accident report on behalf KSY1 and KSY2 POM not available

49 Correction: - KSY2 POM will create of occupation accident statistic on board and covering LTA information Corrective Action: EHS officer shall know calculated it and occupation accident statistic available Page 49 of 64 Date of closure: July 15, 2015 Auditor Conclusions : Evidence of corrective action plan accepted. Effectiveness of implementation to be verified at next audit Criterion 4.8. (Minor indicator 2) Records of training for each employee shall be maintained NCR No of 23 POM 1 and POM 2 have made plans and realization of training programs that have been scheduled but not yet evaluated the effectiveness of the training of the trainees to determine the participants' understanding of the training provided (FRM 02 / SOP 38 / HRD / (0) / 0409) and complements record of competence and training (FRM 03 / SOP 38 / CKP / (0) / 0409) as stated in SOP Training and Training with the document SOP 38 / HRD / (0) / 0409 revision 0 expiry date of April The company has not been evaluated the effectiveness of the training of the trainees to determine the participants' understanding of the training provided (FRM 02 / SOP 38 / HRD / (0) / 0409) and complements record of competence and training (FRM 03 / SOP 38 / CKP / (0) / 0409). Correction: - Pretest and posttest must be conducted before training as source of training evaluation - Corrective evidence: training evaluation form or pretest and posttest result Corrective Action: DC ensured result of training evaluation available Date of closure: July 15, 2015 Auditor Conclusions : Evidence of corrective action plan accepted. Effectiveness of implementation to be verified at next audit Criterion 5.1. (Minor indicator 2) Where the identification of impacts requires changes in current practices, in order to mitigate negative effects, a timetable for change shall be developed and implemented within a comprehensive management plan. The management plan shall identify the responsible person/persons. NCR No of 23 POM2 mill does not conduct appropriate environmental management programs recommended in the EIA (UKL-UPL) on the impact of pollution during CPO process, which requires providing of representative and standard warehouse for hazardous and toxic waste. Correction: - The company will be carry out compliance assessment about temporary storage warehouse for hazardous & toxic waste to Government Regulation No.102 year 2014 as criterion/standard. - The company will be correction action based on result of assessment - The company will be report of correction action Corrective Action: The company will be monitor of temporary storage warehouse for hazardous & toxic waste by regularly so that the condition usually compliance to Government Regulation No.101 year Date of closure: July 15, 2015 Auditor Conclusions : Evidence of corrective action plan accepted. Effectiveness of implementation to

50 Page 50 of 64 be verified at next audit Criterion 5.2. (Minor indicator 5) Where HCV set-asides with existing rights of local communities have been identified, there shall be evidence of a negotiated agreement that optimally safeguards both the HCVs and these rights NCR No of 23 Eventough MOU between PT KSY and those villages, but PT KSY is still has no agreement with the owner to manage the HCV 5 area. The process of making the MOU with village officer does not involve the land owners in direct. Correction: - to provide a list of the land owner that set asides with the HCV5 - to provide and arrange a MoU of Management of HCV with the land owner Corrective Action: To provide a records and map regarding to the MoU between the company and the land owner Date of closure: July 15, 2015 Auditor Conclusions : Evidence of corrective action plan accepted. Effectiveness of implementation to be verified at next audit Criterion 6.1. (Minor indicator 4) The plans shall be reviewed as a minimum once every two years and updated as necessary, in those cases where the review has concluded that changes should be made to current practices. There shall be evidence that the review includes the participation of affected parties NCR No of 23 Social impacts management plan for has developed as the part of SIA document, but not yet been reviewed Correction: - Conduct review toward Social Impact Management Plan Make sure that the review of Social Impact Management Plan result would be documented Corrective Action: To provide a records and map regarding to the MoU between the company and the land owner Date of closure: July 15, 2015 Auditor Conclusions : Evidence of corrective action plan accepted. Effectiveness of implementation to be verified at next audit Criterion 6.1. (Minor indicator 5) Particular attention shall be paid to the impacts of smallholder schemes (where the plantation includes such a scheme) NCR No of 23 The plan of Smallholder Scheme development has not been part of Social Impact Assessment report Correction: Conducting Social Impact Assessment of Smallholder Development Plan Corrective Action: Make sure that Social Impact Assessment of PT KSY Smallholder scheme has conducted and the result

51 Page 51 of 64 would be documented Date of closure: July 15, 2015 Auditor Conclusions : Evidence of corrective action plan accepted. Effectiveness of implementation to be verified at next audit Criterion 6.5. (Major indicator 2) NCR No of 23 During document check regarding overtime issues, there is an evidences showed that consist piece rate workers norms (Mature Field Operation, Contract and labor Rate 2014 and 2015). Based on this document, Company doesn t apply any piece rate differentiations between regular day and holiday. This norm is not complying with national regulations regarding overtime payments. Correction: Company will formulate and issued a policy regarding wage payment system for piece rate worker that considering the differentiation between regular and Sunday/holiday Corrective Action: Ensuring that a memo regarding incentive for piece rate worker that considering overtime of working in Sunday and/or national holiday would be published and applied Date of closure: July 15, 2015 Auditor Conclusions : Closed Verification result : Company has issued an internal memo regarding piece rate incentive for Sunday/Holiday. This memo stated that worker who work in Sunday/holiday will accept incentives, as follow: a. If the piece rate equal and/or over to UMK (daily), then the worker will accept incentive equal to UMK. b. If the piece rate under UMK value, then the incentive value would be twice of normal day piece rate. 3.4 Description of Supply Chain Certification System Kerry Sawit Indonesia Palm Oil Mill (KSI POM) is located in Central Kalimantan - Indonesia. Kerry Sawit Indonesia Palm Oil Mill 1 (POM 1) was established in 2009 with a production capacity of 45 tonnes/hours or 250,000 tonnes per year and Kerry Sawit Indonesia Mill 2 (POM 2) was established in 2013 with production capacity of 90 tonnes/hours. The location of Kerry Sawit Indonesia POM 1 is within Kerry Sawit Indonesia 2 (KSY-2) of estate and Kerry Sawit Indonesia POM 2 is within Kerry Sawit Indonesia 1 (KSY-1) of estate. Based on table 3 above that in year 2014 and year 2015 that the mill 1 (POM 1) & mill 2 (POM 2) processes Fresh Fruit Bunches (FFB) from company owned estates (Kerry Sawit Indonesia of estate (KSI 1-3)) and other Wilmar estate. The company implements SCC-RSPO with Mass Balance (MB) model according to the nature of mill FBB supply condition. The following is a description of the company s supply chain management system according to the RSPO SCCS requirements (it was assessed/audited against Module E), including status of compliance of the company and their outsourced third parties to RSPO SCCS requirements. Results of audit/assessment as describe on the explaination below : Module E CPO Mills: Mass Balance E.1. Definition

52 Page 52 of 64 Findings: The organization (KSY-1 & KSY-2 Mill) was implemented the RSPO-SCCS Mass Balance (MB) model since get certificate. This SCCS model allowed to mixing of certified and uncertified product but shall be control by the Mass Balance record to ensure the quantity of certified product, and only certified product could be claim by the organization as certified palm oil product. Organization has identified the volume of certified and uncertified FFB supplied to the mill. Based on record of Mass Balance showed the amount of FFB certified and uncertified, when the certified FFB is come from PT Kerry Sawit Indonesia and others company under Wilmar Group Based on Table 3 that KSY-1 & KSY-2 Mill was received certified FFB year 2014 is approximately 301, tons of FFB (98.94% from the total of FFB received in once year) from PT Kerry Sawit Indonesia and uncertified FFB is approximately 3, tones (1.06%) from PT Rimba Harapan Sakti. The mills has received FFB from PT Mustika Sembuluh and PT Sarana Titian Permata but it was not calculated because they are implement tolling system since July KSY-1 & KSY-2 Mill only produced Crude Palm Oil (CPO) and Palm Kernel (PK). Mass balance record in both mills also showed the certified product. In year 2014 that certified CPO are 66, tonnes (98.94%) and uncertified CPO is tonnes (1.06%). Whereas, certified PK are 12, tones (98.89%) and uncertified PK are tones (1.11%). Compliance status : Full Compliance E.2. Explanation Findings: The projections of certified CPO and PK year 2014 & 2015 were available. Projection of certified CPO and PK year 2015 are 92, ton (OER : 22.30%) and 18,657 ton (KER : 4.5%) with FFB process is 414,600 ton where include FFB from PT KSY which was processed in other mill under Wilmar group. The realization of certified product sold is 7, MT (PK) and null (CPO) by e-trace platform. Register in etrace on behalf PT Kerry Sawit Indonesia (KSY-1 & KSY-2 POM). Compliance status : Full Compliance E.3. Documented procedures Findings: The company (POM 1) has a procedure for implementation of SCCS requirements. There are a set of existing procedure consisting of : 1. Procedure to receive FFB (SOP/KSYPOM-LOG-003 Rev.02, issued on December 04, 2012), This is procedure include definition of certified and non-certified FFB and mechanism validity process of FFB certified supplier list in Kerry Sawit Indonesia mill too. 2. Procedure for receiving outside FFB (SOP/KSYPOM-LOG-004 Rev.01, issued on July 02, 2012), 3. Procedure for purchasing administration of FFB (SOP/KSYPOM-LOG-002 Rev.04, issued on July 02, 2012), 4. Procedure for supply chain mass balance model (SOP/KSYPOM-LOG-014 Rev.02, issued on December 04, 2012) where there are add annotations that dispatch can be done when delivery of PK directly from the mill to the ship and from the temporary warehouse to the ship. While dispatch from the mill to the temporary warehouse not recorded in the mass balance reports (section of information column 24 on page 7 of 8), 5. Procedure for the selling CPO (SOP/KSYPOM-LOG-005 Rev.01, issued on July 02, 2012), 6. Procedure for the selling PK (SOP/KSYPOM-LOG-006 Rev.01, issued on July 02, 2012), 7. Procedure for over production (SOP/KSYPOM-LOG-003 Rev.01, issued on July 02, 2012),

53 8. Procedure for the selling administration (SOP/KSYPOM-LOG-007 Rev.01, issued on July 02, 2012), Page 53 of Procedure for uploading with the selling of Loco and Franco (SOP/KSYPOM-LOG-012 & 013 Rev.01, issued on July 02, 2012), 10. Procedure for sounding and reporting 501 (SOP/KSYPOM-LOG-008 Rev.01, issued on July 02, 2012), 11. Procedure for storage tank operation (SOP/KSYPOM-LOG-009 Rev.01, issued on July 02, 2012), 12. Procedure for filling kernels into sacks (SOP/KSYPOM-LOG-010 Rev.01, issued on July 02, 2012), 13. Procedure for the washing of storage tank (SOP/KSYPOM-LOG-011 Rev.01, issued on July 02, 2012), 14. Procedure for WB operation (SOP/KSYPOM-LOG-001 Rev.01, issued on July 02, 2012), 15. Procedure for control of documents (SOP/KSYPOM-MR-001 Rev.01, issued on July 02, 2012). Whereas mill 2 (POM 2) has a procedure for implementation of SCCS requirements too. There are a set of existing procedure consisting of : 1. Procedure for WB operation (SOP/KSY2POM-LOG-001 Rev.00) 2. Procedure for receiving administration of FFB (SOP/KSY2POM-LOG-002 Rev.01) 3. Procedure to receive FFB (SOP/KSY2POM-LOG-003 Rev.00) 4. Procedure for receiving outside FFB (SOP/KSY2POM-LOG-004 Rev.00) 5. Procedure for the despatch CSPO/Non CSPO (SOP/KSY2POM-LOG-005 Rev.01) 6. Procedure for the selling PK (SOP/KSY2POM-LOG-006 Rev.01) 7. Procedure for the selling administration (SOP/KSY2POM-LOG-007 Rev.01) 8. Procedure for sounding and reporting 501 (SOP/KSY2POM-LOG-008 Rev.00) 9. Procedure for storage tank operation (SOP/KSY2POM-LOG-009 Rev.00) 10. Procedure for filling kernels into sacks (SOP/KSY2POM-LOG-010 Rev.00) 11. Procedure for the washing of storage tank (SOP/KSY2POM-LOG-011 Rev.00) 12. Procedure for uploading with the selling of Loco and Franco (SOP/KSY2POM-LOG-012 & 013 Rev.00) 13. Procedure for supply chain mass balance (SOP/KSY2POM-LOG-014 Rev.02) 14. Procedure for the selling CPO (SOP/KSY2POM-LOG-015 Rev.01) 15. Procedure for control of documents (SOP/KSY2POM-MR-001 Rev.00) 16. Procedure for inform to CB if projected over production (SOP/KSY2POM-MR-003 Rev.00) The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements has been assigned at the audit time. According to decision letter No. 01/PKS-KSY/X/2014 issued on October 15, 2014 (it is revision from previous appoint letter) that company assign head of finance & HR as Management Representative (MR) for ISCC, ISPO & RSPO include SCCS program implementation in Kerry Sawit Indonesia mill 2 (POM 2). There is changes personil as mill manger in mill 1 (POM 1) so that appointed letter as MR RSPO SCCS is head of finance & HR (based on decision letter No 03/KSI-POM1/MH/V/2015 dated on May 30, 2015). The duties and responsibilities of MR are set out in document no. JD/MSPOM-MR-001 Rev.02, issued on July 26, Based on attendant list of SCCS training on 21 May 2014 and September 2014 that MR KSY1 POM not participant. Whereas, MR KSY2 POM has participated in SCCS training on April The results of interview with both MR that they have not knowledge/understand about implementation of RSPO SCCS in mill. It was raised as nonconfomity (NCR No of 23). Kerry Sawit Indonesia mill has a procedure for reception of FFB (SOP/KSYPOM-LOG-003 Rev.02 & SOP/KSY2POM-LOG-003) and procedure for receiving outside FFB (SOP/KSYPOM-LOG-004 Rev.01 and SOP/KSY2POM-LOG-004). The procedure describes instructions for receiving and processing certified and non-certified FFBs. Compliance status: Non Compliance NCR No of 23 MR RSPO SCCS in KSY1 & KSY2 POM has not been knowledged or understood about procedure and implementation of RSPO SCCS in mill.

54 Page 54 of 64 E.4. Purchasing and goods in Findings: PT Kerry Sawit Indonesia Palm Oil Mill (POM 1 & POM 2) has a mechanism to receive FFB both from certified sources and non-certified sources. The document to be verified from certified sources are : material delivery letter (Surat Pengantar Buah) including name of estate origin and barcode code for material delivered letter. Based on name of estate origin then weighbridge operator ensure that name of estate origin include in the list certified suppliers. If include in the list certified suppliers then it is status is FFB certified. Certification status will be stated on Incoming Certified FFB Received report (daily, monthly and three monthly report) in weighbridge location. Non Certified status will be stated on Incoming Non Certified FFB Received report (daily, monthly and three monthly report) in weighbridge location as seen from sample documents e.g. delivery note (Surat Jalan), Weighbridge Slip and FFB Grading Report. The KSY1 POM does not verification of FFB from PT STP and PT RHS as certified or not on year 2014 & 2015 so that their information on mass balance report not available. It was raised as non-conformity (NCR No of 23). Year 2014 that in the POM 1 & 2, supply of FFB from KSY (KSY 1-3) estate are RSPO Certified FFB because PT Kerry Sawit Indonesia has RSPO P&C Certificate. Non-certified FFB was received by both mills come from PT Rimba Harapan Sakti. The both mills has received FFB from PT Mustika Sembuluh and PT Sarana Titian Permata but it not include calculation because they was implemented tolling system. The based on table 3 that FFB receipt in both mill year 2014 amount of 301, tonnes from company owned estate and 3, tonnes from Wilmar s group estate (PT Rimba Harapan Sakti). Volume of FFB receipt from Wilmar s group estate (PT RHS) until May 2015 in both mills are ton. A person has been appointed to be responsible to check and ensure the FFB quality and quantity as per purchase documents. According to FFB reception procedure (SOP/KSYPOM-LOG-003 Rev.02 and SOP/KSY2POM-LOG-003) and procedure for reception of outside FFB (SOP/KSYPOM-LOG-004 Rev.01 and SOP/KSY2POM-LOG-004) the mechanism of receive FFB in mill is : 1) Security guard will check the FFB delivery note or delivery note from the truck driver; 2) The truck driver shall doing weighing at weightbridge. Once done, the gross weight of the truck is taken; 3) At the time of doing weighing at weightbridge, the truck driver shall submit the FFB delivery note or delivery note to weightbridge operator. The weightbridge operator shall check whether the name of estate origin is including in the list certified suppliers or not. If included in the list certified suppliers, and then is the status is FFB certified. 4) Upon completion of weighing of FFB load, the FFB shall be sent to loading ramp. The truck s driver will unload the FFB and will return to the weightbridge to be weighed again; 5) The weightbridge operator will then generate the Weightbridge Slip and this will be kept together with the FFB delivery note or delivery note; 6) A copy of the Weightbridge Slip will then be given to the driver and attached with the FFB delivery note or delivery note. Both documents need to be sent back to the estate office or seller office by the truck driver; 7) At the grading platform, the quality of FFB (e.g. fresh, unripe, under ripe, rotten bunch & etc) shall be graded & recorded on the FFB Grading report. The company (POM 1 & 2) has recapitulation of production report for year 2014 & 2015, including volumes of FFBs received which is separated into certified and non-certified FFB volumes. Total FFB received include of FFB certified and FFB non-certified in year 2014 and year Compliance status: Non Compliance NCR No of 23 The KSY1 POM does not verification of FFB from PT STP and PT RHS as certified or not on year 2014 & 2015 so that their information on mass balance report not available

55 Page 55 of 64 E.5. Record keeping Findings: The company has established a mechanism to control and maintenance of the document and data control procedure No. SOP/KSYPOM-MR-001 Rev.01 issued on July 02, 2012 and SOP/KSY2POM-MR-001 and the retention time for all records and reports have defined for at least for five (5) years. The company s procedure for records keeping is applied, as the following evidences: the company maintains records of weightbridge slips, FFB delivery notes and FFB grading reports. All records (weightbridge slips. FFB delivery notes and FFB grading reports) are collected or complied per month. Records on the quantity of FFB received and CPO/PK dispatched daily is maintained in the weightbridge software. The mechanism to update information about production (production CPO/PK, dispatch CPO/PK, stock CPO/PK, OER and KER) to related section is by notification every morning by the logistic division. The mill has records and balances of all receipts of RSPO certified FFB and deliveries of RSPO certified CPO and PK on daily, monthly and three monthly basis. The material balance includes information about incoming FFB (certified sources and non-certified sources), incoming FFB of processed, CPO production result, OER, delivered CPO, and balance stock. All volumes of palm oil that are delivered are deducted from the material accounting system according to actual daily conversion ratios and only deliver mass balance sales from a positive stock. Information on mass balance report year 2014 & 2015 on behalf KSY1 POM not accurate or can not shown actual condition because the KSY1 mill not conducting verification FFB from PT STP and PT RHS. It was raised as non-conformity (NCR No of 23). All volumes of palm oil that are delivered are deducted from the material accounting system according to actual daily conversion ratios. There are no outsourced supply chain processes in PT Kerry Sawit Indonesia Palm Oil mill. Compliance status : Non Complaince NCR No of 23 Information on mass balance report year 2014 & 2015 on behalf KSY1 POM not accurate or can not shown actual condition because the KSY1 mill not conducting verification FFB from PT STP and PT RHS. 3.5 Status of Previously Identified Non-conformities E.3. Records Keeping SCCS Non-conformance of 03 KSY POM 1 not maintains complete records because evidence of PK dispatch to buyer on July 15, 2013 amount of tonnes not available. Verification result : The company provided PK dispatch records, such as : PK state note dated on July 19, 2013 where it has informed that PT Kerry Sawit Indonesia has delivery PK product on July 11-18, 2013 to PT Wilmar Nabati Indonesia Pelintung by KM Katara amount of tonnes and quality product has accordance with DO no Weightbridge ticket no. A dated on July 15, Auditor Conclusions : Closed. E.3. Records Keeping

56 Page 56 of 64 SCCS Non-conformance of 03 Information on mass balance report not accurate because there are some conditions as follows : There are different several informations (FFB receipt, PK production and PK dispatch) between mass balance reports with daily production report on December 31, 2013 in KSY1 POM. PK dispatch on October 9, 2013 (DO no ) was categorized as certified but information of supply chain model on their records (DO and transport record) not available. FFB from PT Sarana Titian Permata has claimed as certified by mill before dated on January 15, 2014 (effective date or issue certificate date). Verification result : The company provide some evidence such as : A revision of mass balace report year 2013 which it has appropriate with daily production report dated on December 31, State note on May 28, 2014 that PK dispatch on October 09, 2013 with DO no is RSPO claim. Moreover, the company has submitted weightbridge ticket/slip no. SKB dated on October 9, 2013 too where RSPO wet stamp & their supply chain model ( MB ) has available. Revision of List of supplier certified RSPO SCCS where PT Sarana Titian Permata certificate date is November 30, PT Sarana Titian Permata certificate date in list of supplier certified RSPO SCCS has appropriated with issue certificate date in registration certificate on behalf PT Sarana Titian Permata. Auditor Conclusions : Closed. E.4. Sales and goods out SCCS Non-conformance of 03 Supply chain model on weightbridge slip dated on December 5-6, 2013 for PK dispatch not available Verification result : The company provide the revision of weightbridge slip/ticket (for PK product) dated on 5-6 December 2013 (no. SKA , 317, 319, 320, 336, 378, 421 and 481) where RSPO wet stamp has available. Auditor Conclusions: Closed. 3.6 Identified Non-conformances against RSPO SCCS Requirements, Corrective Actions Taken and Auditors Conclusions E.3. Documented Procedure NCR No of 23 MR RSPO SCCS in KSY1 & KSY2 POM has not been knowledged or understood about procedure and implementation of RSPO SCCS in mill. Correction : Re-training RSPO SCCS to MR RSPO SCCS from both mill Corrective Action : To ensure that MR have knowledge adequate about RSPO SCCS MR have responsibilities to ensure implementation of RSPO SCCS system was appropriate with standard

57 Page 57 of 64 Auditor Conclusions : Closed. Date of closure : July 13, 2015 Verification result : The company provide some evidence such as : Minute of training on 10 July 2015 where Sustainability coordinator has carried out training to new MR RSPO SCCS (head of finance & HR) in KSY1 & KSY2 POM. Main substance of training are RSPO SCCS certification system, RSPO SCCS Standard, supply chain model (MB) and job and responsible as MR. The results of test (pre test and post test) that there are improve knowledge because point in post test better pre test. Records of test (pre test and post test) for both MR. Attendant list E.4. Purchasing and good in NCR No of 23 The KSY1 POM does not verification of FFB from PT STP and PT RHS as certified or not on year 2014 & 2015 so that their information on mass balance report not available Correction : Intriduction of FFB certified and non-certified to MR so that MR be understand Revision of mass balance report where FFB from PT STP as FFB certified but not include calculation because it has implemented tolling system (FFB process only) and FFB from PT RHS as FFB noncertified and include calculation. Corrective Action : MR has knowledge adequate so that he can ensuring mass balance report is ok and appropriate. Auditor Conclusions: Closed. Date of closure : July 13, 2015 Verification result : The company provide the revision of CPO & PK product daily and monthly movement summary report year 2014 and 2015 where FFB from PT STP period of January to June 2014 still include calculation as FFB certified and starting July 2014 was excluded calculation because implementation of tolling system. Whereas, FFB from PT RHS was included calculation as FFB non-certified. Starting July 2014 till May 2015 that source FFB from PT Kerry Sawit Indonesia as certified and PT Rimba Harapan Sakti as non-certified. E.5. Record keeping NCR No of 23 Information on mass balance report year 2014 & 2015 on behalf KSY1 POM not accurate or can not shown actual condition because the KSY1 mill not conducting verification FFB from PT STP and PT RHS Correction : Intriduction of FFB certified and non-certified to MR so that MR be understand Revision of mass balance report where FFB from PT STP as FFB certified but not include calculation because it has implemented tolling system (FFB process only) and FFB from PT RHS as FFB noncertified and include calculation.

58 Page 58 of 64 Corrective Action : MR has knowledge adequate so that he can ensuring mass balance report is ok and appropriate. Auditor Conclusions: Closed. Date of closure : July 13, 2015 Verification result : The company provide the revision of CPO & PK product daily and monthly movement summary report year 2014 and 2015 where their information/data was appropriated with actual condition because the company has carried out verification FFB as certified or not. 3.7 Noteworthy Positive Component 1. Housekeeping in PT KSY still maintained 2. Biogas plant has been developed in PT KSY 3.8 Conclusion and Recommendation for RSPO P & C and Supply Chain Certification The audit team has confirmed through the audit process that PT Kerry Sawit Indonesia has established and maintains an effective system to ensure compliance with the RSPO P & C and Supply Chain Certification System requirements (dated November 2011). It is also confirmed that the company s annual volume of CPO and PK sold for the period of 2014 has not exceeded the certified annual tonnages as claimed in the organization s RSPO certificate no because no CSPO claimed product sold and demand for CSPK still low as until 4 th surveillance audit. TUV Rheinland recommends that Kerry Sawit Indonesia Mill (POM 1 & POM 2) and estate be continuing approved for certification of compliance to the RSPO P & C and Supply Chain Certification System requirements. 3.9 Issues Raised by Stakeholders and Findings Pertaining to Issues 1. Existing conditions that auditee do not have land use right because part of KSY areas on convertion of forest areas (HPK). 2. Auditee preparing allocation of smallholder areas

59 Page 59 of CERTIFIED ORGANISATION S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY 4.1 Date of Next Surveillance Visit The next surveillance or re-certification visit is planned for June Acknowledgements of Internal Responsibility and Formal Sign-Off by Client It is acknowledged that the assessment visit was carried out as described in this report and we accept the assessment findings and report content. Signed on behalf of PT Kerry Sawit Indonesia Signed on behalf of TUV Rheinland Indonesia Simon Siburat Group Sustainability Controller August 07, Hendra Fachrurozy Lead Auditor August 07, 2015

60 Page 60 of 64 APPENDICES

61 Page 61 of 64 Appendix 1 : Revision of certificate

62 Page 62 of 64