RSPO ANNUAL SURVEILLANCE ASSESSMENT3 PUBLIC SUMMARY REPORT

Transcription

1 of 36 RSPO ANNUAL SURVEILLANCE ASSESSMENT3 PUBLIC SUMMARY REPORT PT. TÜV NORD Indonesia System Certification Management Has assessed PT. PP LONDON SUMATRA Tbk < Gunung Melayu Mill and its Supply Bases> for Compliance to RSPO Principles and Criteria for Sustainable Palm Oil Production Date of assessment for North Sumatera Region: June 18-28, 2012 Report Number: P&C-F-XXX Head Office System Certification Management Perkantoran Hijau Arkadia Tower F, 7 th Fl Suite 706 Jl. Let. Jend. TB Simatupang Kav. 88 Jakarta Indonesia Tel : Fax : Laboratory Division Jl. Jababeka XVII E Blok U No.. 27B Kawasan Industri Jababeka I Cikarang Bekasi Indonesia Tel : Fax : Branch Office Intiland Tower 11 th Fl, Suite 1E Jl. Panglima Sudirman Surabaya Indonesia Tel : Fax : President Director: Mr. Robert Napitupulu rnapitupulu@tuv-nord.com Website: or

2 : 2 of 36 List of Contents 1 Scope of Surveillance Assessment Report Type of Assessment (Mill, Estate and Mill, etc.) Location, mill, and or hectare statement Production volume of all certfiied products Certification detais Description of Supply Base Description of Plantation (Fruit Sources) Age Profile of Palm Progress of Time-bound Plan (for other management units and justifications) Organizational Information/Contact Person Assessment Process Assessment Methodology (Program, Site Visits) General Overview Assessment Agenda Assessment Team Lead Assessor: Sudarmadjii Assessment Team Members Certification Body Assessment Findings Summary of the Findings by Criteria Identified Non Conformances and Noteworthy positive components Detail of Non Conformity Resume of Audit Results Status of non-conformities (both minor and major) previously identified Issues Raised by Stakeholders Certified Organization s Acknowledgement of Internal Responsibility Date of next surveillance visit Date of closing non-conformities (both major and minor) Formal Sign-off of Surveillance Assessment Findings... 32

3 : 3 of 36 List of Figures Figure 1. Location Maps of Gunung Melayu Mill and Supply Bases... 5 List of Tables Table 1-1 Location of the mill and supply bases... 4 Table 1-2. Production volume of CPO and PK to be claimed... 6 Table 1-3: Production volumes of FFB and its source... 6 Table 1-4:. Statistic of supply base... 6 Table 1-5: Age Profile of Palms... 7 Table 1-6 Time bound plan for mills and estates under PT. PP London Sumatra Tbk....7 Table 2-1 Audit Schedule... 9 Table 3-1 Summary of Findings by Criteria Table 3-2 Resume of Audit Results List of Appendices Appendix 1 List of Abbreviations Appendix 2 Summary of the findings for compliance with the RSPO Supply Chain Module E (Mass Balance) ver. November

4 : 4 of 36 1 Scope of Surveillance Assessment Report 1.1 Type of Assessment (Mill, Estate and Mill, etc.) PT. London Sumatra Tbk in North Sumatera Region operations consist of four mills and 12 estates, i.e: Gunung Melayu Mill (GMM) which is supplied by two estates: Gunung Melayu Estate (GME), and Sei Rumbiya Estate (SRE. The annual surveillance assessment 3 was done as per National Interpretation of RSPO Principle and Criteria for Sustainable Palm Oil Production - Republic of Indonesia (RSPO Indonesian National International <INA-NI. ver. May 2008 Standard), as well as RSPO Supply Chain Standard for Mills (module E: Mass Balance) ver. November The scope of this annual surveillance assessment 3 was for Gunung Melayu Mill (GMM) and its supply bases,. Gunung Melayu Estate (GME) and Sei Rumbiya Estate (SRE). The mill solely processes FFB from their own estates. 1.2 Location, mill, and or hectare statement. The detail of coordinate s location can be seen in the table below:. Table 1-1: Location of the mill and supply bases Name of Mill and Plantation Location GPS Coordinates Longitude (E) Latitude (N) Gunung Melayu POM (GMM) Gunung Melayu Estate (GME) Sei Rumbiya Estate (SRE) Asahan Regency, Province of North Sumatra 99 34'26" 2 42'4" Asahan Regency, Province of North Sumatra 99 33'39" 2 41'40" Labuhan Batu Regency, Province of North Sumatra 100 5'5" 1 1'30"

5 : 5 of 36 Figure 1. Location Maps of Gunung Melayu Mill and Supply Bases

6 : 6 of 36 Figure 2. Maps of Gunung Melayu Estate

7 : 7 of Production volume of all certified products The production tonnages for CPO and PK for period of certificate and projected output are listed in Table 1-2. (These figures exclude any output product from non-certified suppliers). Table 1-2. Production volume of CPO and PK to be claimed Name of mill Certification production 2009 (tonnes) Actual production 2011 (tonnes) Actual production until May 2012 (tonnes) Projected production 2012 (tonnes) CPO PK CPO PK CPO PK CPO PK Gunung Melayu Mill Capacity 30 FFB/ hour 34,885 8,821 30,314 7,890 10,750 2,739 32,435 8,142 *Source data: Based on production report 2011, 2012 and budget Certification details PT. PP London Sumatra Tbk RSPO membership number : since 11 April Gunung Melayu Mill Unit Certificate number as part of Lonsum North Sumatra Region : TNI RSPO Date of previous assessment: June 20 July 01, 2011 Date of certification approved/ issued: valid until Description of Supply Base Description of Plantation (Fruit Sources) Oil palm fruit is sourced solely from company owned estates. The certified FFB counted from 2 (two) company owned estates is listed in Table 1-3. Table 1-3: Production volumes of FFB and its source Sources of FFB* Actual Production volume of FFB in 2011 (tonnes) Actual production volume of FFB until May 2012 (tonnes) Projected production volume of FFB in 2012 (tonnes) Gunung Melayu Estate (GME) 94,656 30,864 98,112 Sei Rumbiya Estate (SRE) 33,078 12,989 35,365 Total FFB own estates 127,734 43, ,477 FFB from smallholder FFB purchased Total FFB Received 127,734 43, ,477 * Source : Based on production report 2011, 2012 and budget 2012 Table 1-4. Statistic area summary of supply base. Estates Total (Ha) Planted with Oil Palm (Ha) Area Summary* Mature (Ha) Immature (Ha) Gunung Melayu Estate (GME) 4, , , Sei Rumbiya Estate (SRE) 5, , , Total 10, , , *Source : Hectare statement in January 2012

8 : 8 of Palm Age Profile Table 1-5. Palm Age Profile Estates 0 5 (Ha) % 6 10 (Ha) % (Ha) % (Ha) % (Ha) Gunung Melayu , , , Sungai Rumbiya , Total , , , , Source: Hectare statement in January 2012 % Total (Ha) 1.6. Progress of Time-bound Plan (for other management units and justifications). The company will use the experience obtained in the main assessment to ensure that the other management units conform to the RSPO principles and criteria. Progress of this plan of time-bound certification has been verified. There were some changes made from the previous time bound plan due to technical condition in each management unit. The updated time bound plan is can be seen in Table 1-6 with sign off of Head of Sustainability attached in Annex. Table 1-6. Time bound plan for mills and estates under PT.PP London Sumtra Tbk: No Mills Location Proposed Time for Certification Revised Time Bound Plan 1 Gunung Bais Musi Rawas, Sumatera Selatan December 2011 December Arta Kencana Lahat, Sumatera Selatan December 2012 December Belani Elok Musi Rawas, Sumatera Selatan December 2013 December Sei Lakitan Musi Rawas, Sumatera Selatan December 2014 December Terawas Musi Rawas, Sumatera Selatan December 2015 December Pahu Makmur Kutai Barat, Sumatera Selatan December 2016 December 2016 Proposed Time for No Estates Location Certification Revised Time Bound Plan 1 Gunung Bais Musi Rawas, Sumatera Selatan December 2011 December Arta Kencana Lahat, Sumatera Selatan December 2012 December Kencana Sari Lahat, Sumatera Selatan December 2012 December Sei Kepayang Musi Rawas, Sumatera Selatan December 2013 December Bukit Hijau Musi Rawas, Sumatera Selatan December 2013 December Ketapat Bening Musi Rawas, Sumatera Selatan December 2013 December Belani Elok Musi Rawas, Sumatera Selatan December 2013 December Batu Cemerlang Musi Rawas, Sumatera Selatan December 2014 December Sei Lakitan Musi Rawas, Sumatera Selatan December 2014 December Riam Indah Musi Rawas, Sumatera Selatan December 2014 December Sei Gemang Musi Rawas, Sumatera Selatan December 2014 December Terawas* Musi Rawas, Sumatera Selatan December 2015 December Issuy Makmur Kutai Barat, Kalimantan Timur December 2016 December Pahu Makmur Kutai Barat, Kalimantan Timur December 2016 December 2016 *Note : Terawas Estate only for seedling estate 1.7. Organizational Information/Contact Person Contact Person Mr.Muhammad Waras Position Head of Environment and CSR Co-ordination Department Organization name PT PP London Sumatra Indonesia Tbk Address Jl. Ahmad Yani No.2 Postal code, city PO Box 1154, Medan North Sumatra Country Indonesia Telephone Nr Fax Nr muhammad.waras@londonsumatra.com

9 : 9 of Assessment Process 2.1. Assessment Methodology (Program, Site Visits) General Overview The assessment was carried out by referring to TÜV NORD Indonesia Certification Procedure, PRSPO-TNI-01 Rev Assessment Agenda The annual surveillance assessment 3 was conducted on June 18 to 28, 2012 for all North Sumatera Region. For Gunung Melayu Mill and its supply bases : Gunung Melayu Estate and Sei Rumbiya Estate was led by Mr. Sudarmadji (SD) as lead auditor, Ms. Wieke Savitri (WS) and Ms.Karlina Bone (KB) as auditors team member and was assisted by Mr. Dr. Hariyadi (HR) as Agronomy expert, Mr Fahroby Falatehan as socio-economic expert and Supardy Marbun, SH, MHum as land legal expert. The audit schedule available as below. Table 2-1 Audit Schedule Client: Address: MR Name, Pos.: PT. PP London Sumatra Indonesia Tbk Jl. Jend. A. Yani No. 2 PO Box 1154, Medan Mr. Adi Bastomi, Env. Manager/ Mr. Muhammad Waras Number of Mills: 4 Number of estate(s): 12 Order No. - Business No. - Standard: RSPO P&C (Principles & Criteria) May 2008 Type of audit: Annual Surveillance Audit 3 (ASA-3) Lead Auditor: Sudarmadji (SD) Trainee/Expert: Audit date8 June 28 June 2012 Dr. Hariyadi (HR), Fahroby Falatehan (FF), Supardy Marbun (SM) Auditor(s): Wieke Savitri (WS), Karlina Bone (KB) Audit days on-site: 9 work days Name/ location of Mills Name/ location of Estates Audit date 1. Gunung Melayu 2. Dolok 3. Begerpang 4. Turangie 1. Gunung Melayu, Sei Rumbiya 2. Dolok, Bah Lias, Si Bulan, Bah Bulian, 3. Begerpang, Sei Merah, Rambong Sialang. 4. Turangie, Bungara, Pulo Rambong 1) Site / Shift / Date / Time Organizational Unit Auditor (Abbrev.) Interviewpartner Requirements Day : Opening meeting SD, WS, KB, HR Lonsum-RSPO team Introduction team and fine tune audit plan (if necessary) 12:00-13:00 Break and lunch End of Day-1 Day

10 0 of 36 1) Site / Shift / Date / Time Organizational Unit Auditor (Abbrev.) Interviewpartner Requirements Dolok POM - SD - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representative - (MG) Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Chemical Mgt, Safety, Training Waste Mgt, Energy Mgt Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment Gunung Melayu Estate 2. Sei Rumbiya Estate - WS, HR - KB - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representative - (AB) Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Soil Control, Errosion Control,Water Mgt, IPM, Chemical Mgt EIA, HCV, Burning Issues, Waste Mgt, Agrochem. SIA, Communication, Complaint, Customary, Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment, Payment to Outgrower, CSR End of Day -2 : Day-3: Si Bulan Estate. 2. Bah Bulian Estate. - SD + HR - WS - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representative - Community Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Soil Control, Errosion Control,Water Mgt, IPM, Chemical Mgt EIA, HCV, Burning Issues, Waste Mgt, AgrocheM SIA, Communication, Complaint, Customary, Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment, Payment to Outgrower, CSR Gunung Melayu POM - KB - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representative Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Chemical Mgt, Safety, Training Waste Mgt, Energy Mgt Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment End of Day-3 Day-4 : Bah Lias Estate 2..Dolok Estate - SD, KB, HR - WS, FF - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representative Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Soil Control, Errosion Control,Water Mgt, IPM, Chemical Mgt EIA, HCV, Burning Issues, Waste Mgt, Agrochemical SIA, Communication, Complaint, Customary, Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment, Payment to Outgrower, CSR End of Day-4 Day-5:

11 1 of 36 1) Site / Shift / Date / Time Organizational Unit Auditor (Abbrev.) Interviewpartner Requirements Desa Pergulaan SD, WS, KB, HR, FF Stakeholders in absence of Lonsum Team Public Consultation/ interview with stakeholders at Pergulaan Village 12:00-13:00 Break and lunch Review of Public consultation/ interview SD, WS, KB, HR, FF Traveling to Medan End of Day-5 Day-6: Begerpang Estate 2.. Rambong Sialang Estate - SD, - WS, SM, FF - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representative - Community Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Soil Control, Errosion Control,Water Mgt, IPM, Chemical Mgt EIA, HCV, Burning Issues, Waste Mgt, Agrochemical SIA, Communication, Complaint, Customary, Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment, Payment to Outgrower, CSR End of Day-6 : Day-7: Sei Merah Estate SD - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representative - Community Begerpang POM WS, FF - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representative - Community End of Day-7: Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Soil Control, Errosion Control,Water Mgt, IPM, Chemical Mgt EIA, HCV, Burning Issues, Waste Mgt, Agrochemical SIA, Communication, Complaint, Customary, Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment, Payment to Outgrower, CSR Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Chemical Mgt, Safety, Training Waste Mgt, Energy Mgt Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment Day-8:

12 2 of 36 1) Site / Shift / Date / Time Organizational Unit Auditor (Abbrev.) Interviewpartner Requirements Turangie POM - WS - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representativ - Community Pulo Rambong Estate - SD - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representative - Community End of Day-8 Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Chemical Mgt, Safety, Training Waste Mgt, Energy Mgt Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Soil Control, Errosion Control,Water Mgt, IPM, Chemical Mgt EIA, HCV, Burning Issues, Waste Mgt, Agrochemical SIA, Communication, Complaint, Customary, Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment, Payment to Outgrower, CSR Day-9: Turangie Estate. 2.Bungara Estate. - WS - SD - Lonsum-RSPO team - Employees - Contractors, - Trade Union Representative - Community Request of info and respons Regulation compliance, land-use right, customary right, actual and budgeted production SOP, Soil Control, Errosion Control,Water Mgt, IPM, Chemical Mgt EIA, HCV, Burning Issues, Waste Mgt, Agrochemical SIA, Communication, Complaint, Customary, Wages,Trade Union, Anti Child Labour/ Discrimination/Sexual Harrasment, Payment to Outgrower, CSR End of Day-9 : Traveling to Medan and back to Jakarta 2.2. Assessment Team Lead Assessor: Sudarmadji Qualification Compliance Educational Background Working Experience RSPO Training Other Training Has a bachelor degree from Electrical Engineering, University of Indonesia Having involved for many Construction projects and Power plant/ power generation projects 2002-Now: PT. TUV NORD Indonesia (formerly known as RW TUV) as ISO 9001/OHSAS/ ISO 14001/RSPO/Lead Auditor.. Responsibilities : conduct audit and reporting also in many palm oil mills and oil palm plantations Certified RSPO Lead Auditor Training by Indonesian Palm Oil Board in Lead Auditor Training of Quality Management Training (ISO 9001), Indonesia - Lead Auditor Training of Environmental Management System (ISO 14001), Indonesia. - Lead Auditor Training of OHSAS, Indonesia - ISO 9001:2008 upgrading training, by TUV NORD Indonesia. Yes Yes Yes Yes Experience related to RSPO RSPO to date (2008 May 2012) - More than 25 x pre-assessments and main assessment of RSPO P&C in Indonesia, (RSPO P&C) - 1 x NPP assessments in Indonesia Yes

13 3 of Assessment Team Members RSPO REQUIREMENT ASSESSOR QUALIFICATIONS COMPLIA NCE Fluent in main local languages and English. Wieke Saviitri (WS), Karlina Bone (KB), Hariyadi (HR), Fahroby Falatehan (FF), Supardy Marbun (SM) Indonesian citizen, fluent both in Bahasa and English Yes Field working experience in the palm oil sector, or a demonstrable equivalent. HR He holds a doctorate in Environmental and Natural Resources Management from Bogor Agricultural University (IPB), and has a strong background and experience in Agronomy aspects. He has been working in IPB since 1986 as a lecturer in Agronomy, including Palm Oil Plantation subject. Yes Good agricultural practices (GAP), integrated pest management (IPM), pesticide and fertilizer use. HR WS He has extensive experiences in research, such as in plant water and nutrient requirements, irrigation and fertilizer application, seedling selection and Integrated Pest Management; Several research subjects that had been done, for example: Research of high grow fertilizer effect on growth and production of oil palm, She has a bachelor degree in Agricultural Faculty from Bogor Agricultural University. Yes Yes KB She has a bachelor degree in Biological Science, in ecology major. Done a research in a nitrification and denitrification in a recirculation water treatment project. Yes Health and Safety assessment on the farm and in processing facilities. (For example OHSAS or occupational. Health and safety assurance system). WS KB As audit team member in some OHSAS audit such as Bakrie Sumatra Plantation Group in North Sumatera and South Sumatera. Observed audit in OHSAS Audit as a trainee for Indonesian contractors, such as PT. Inti Indah, PT. Virajaya Riauputra, etc. Other than that, observed as a trainee as well RSPO P&C for PT. Inti Indo Sawit - Tungkal Ulu (CA), PT. London Sumatra (ASA III), UPOIC (CA stage 1 and stage 2), PT. Sahabat Mewah Makmur (ASA I), etc. Yes Yes Social-economic issues FF WS He has a bachelor degree in Agriculture Social Economy from Bogor Agricultural University (IPB) and from University of Indonesia (UI), Master of Planning and Public Policy, Faculty of Economics ( ). Has been working as a lecturer in Agriculture Social Economy Department, Bogor Agricultural University. And involved in numerous researches for social economic projects, etc She has a bachelor degree from Bogor Agricultural University. which has subjects in Agricultural and Rural Sociology, Social Research Methodology. She has experience as an enumerator/ data processing for socio-economic projects researches during her study in university. She also has experience in Danone-Aqua Foundation as Associate Representative with responsibilities to develop community development programs.. Yes Yes Environmental and ecological assessmenting. (For example experience with organic agriculture, ISO 14001) HR WS KB He qualifies in biodiversity assessment and biodiversity science. Underwent auditor training in oil palm estates and palm oil mill in EMS and RSPO P & C. Member of the team in RSPO assessment of PT. London Sumatra Indonesia Tbk, PT. Perkebunan Nusantara IV, and many more. She has experience in implementing ISO and also as internal auditor for other factories in PT Tirta InvesGMMa.. She has a bachelor degree in Biological Science, in ecology major. Done a research in a nitrification and denitrification in a recirculation water treatment project. Yes Yes Yes Land legal SM He holds a Master degree in land law and worked in Badan Pertanahan Nasional (BPN/ National Land Agency) in North Sumatera and now is working in BPN South Sulawesi. Yes

14 4 of Certification Body is a subsidiary of the German TÜV NORD Group. Our company is a market leader in Indonesia for inspection, testing and certification services. Through more than 800 clients, we offer Not just a high added value service but also the trust and confidence embedded in our issued certificates/reports. We satisfy No.t only our direct customers but also other stakeholders, like regulators and interested society including NGOs, through our competent auditors, inspectors and analysts. PT. TÜV NORD Indonesia, under its HQ in Germany, is a member of International Accreditation Forum (IAF) and accredited by DAR German and by the Indonesian Accreditation Committee (KAN). Services provided by the Strategic Business Unit Systems Certifications are: Food Safety Management System ISO 22000, Information Security Management System ISO 27001, Social Accountability SA 8000, Food Hygiene HACCP, Medical Device Directive MDD, ISO 13485, Occupational Health and Safety OHSAS 18001, Product Certification: GS-Mark, CE-Mark, SNI Mark, Inspection for ISPS Code, Clean Development Mechanism (CDM) Validation & Verification, British Retail Consortium, BRC Issue 5 and ISCC.. 3. Assessment Findings 3.1. Summary of the Findings by Criteria Objective evidences were obtained separately for each of the indicators for mills and estates in the annual surveillance assessment. The results for each indicator from the different operational areas were aggregated to assess the overall conformances of the company s operations to each criterion. A statement is made for each indicator on the finding. A summary of the Non-Conformities is given in Section During the annual surveillance assessment 3, 2 (two) major non-conformities and 6 (six) minor nonconformities have been raised against RSPO Principals and criteria, whilst 0 (zero) major non-conformities have been raised against RSPO Supply Chain Standard module E (mass balance). Gunung Melayu Mill (GMM) and its supply bases have prepared a Corrective Active Plan which each date for implementation has been accepted by PT. TÜV NORD Indonesia. Thus, Gunung Melayu Mill (GMM) and its supply bases are still recommended to extend the certification of RSPO Principal and Criteria which valid until 29 April The following is a summary of the findings for compliance with the RSPO Principles & Criteria for Indonesian National International <INA-NI ver. May 2008 Standard). While a summary of the findings for compliance with the RSPO Supply Chain Module E (Mass Balance) ver. November 2011 is attached in Appendix 2. Summary of the findings for compliance with the RSPO Supply Chain Module E (Mass Balance) ver. November

15 5 of 36 Table 3-1 Summary of Findings by Criteria FINDINGS/COMMENTS Criterion 1.1 (C.1.1) Provide adequate information to other stakeholders on environmental social and legal issues relevant with RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision-making GMM has a procedure for communicating with stakeholders as decribed in Prosedur Komunikasi, or Communication Procedure, (EMS-P05 Rev.4 dated on 10 August 2009). All the heads in the mill / estates are required to provide adequate information as required by the RSPO criteria. The requests for information are recorded in the Daftar Permintaan dan Tanggapan dari Pemangku Kepentingan or List of information and response from Stakeholder (Form No. SPO-01) for each mill/ estate. The response(s) are prepared by the heads of mill / estates or by the Area Manager Agronomy depending on their importance. Stakeholders aspiration, especially for asking donation will be transfered to Area Manager Agronomy before reported monthly to Environment & CSR Dept Department in Head Office and approved by BOD. As said by interviewed Estate Manager, donation less than Rp ,- could be approved by Estate Manager without forwarded to AMA. The records of requests / responses will be kept for 5 (five) years as stated in Procedure Control of Records. Criterion 1.2 (C.1.2) Management documents are publicly available, except where these are prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes All management documents on legal, environmental, health safety and social issues are publicly available upon request. The legal documents are : Izin Lokasi (Site Permit), Izin Usaha Perkebunan (Plantation Operation Permit) HGU (Land Use Title The environmental documents for AMDAL (Environmental Impact Analysis) was approved by Badan Lingkungan Hidup Daerah (BAPEDALDA). Various environmental parameters and also social impact are measured and reported six-monthly in Laporan Pelaksanaan Rencana Pengelolaan Lingkungan Hidup dan Rencana Pemantauan Lingkungan Hidup (RKL & RPL). Since GMM is a labour-intensive company, it is required to comply with the mandatory SMK3 (Occupational Health and Safety Management System). Progress on the Health and Safety Program (K3 program) is reported regularly to the Ministry of Labour of Republic of Indonesia. All the records are properly kept for the proper periods as stated in Procedure Control of Records dated on , e.g., safety, health and environment reports for 5 years, social records 5 years and legal records indefinitely, and are available on request. Notwithstanding this, environmental and social data are presented during the yearly public consultation with stakeholders as part of its CSR program, e.g., Posyandu (integrated healthcare service post and health education to promote human hygiene), sanitation and nutrition intake for infants, pregnant and breast-feeding women, agricultural skills training for the locals (estate workers and smallholders), honor for school teachers, scholarships available, renovation aid for schools, roads, worship buildings. Criterion 2.1 (C.2.1) There is compliance with all applicable local, national and ratified international laws and regulations GMM keeps copies of all the legislations / regulations applicable to it from the applicable regulation list in Prosedur EMS-PO2 rev.4 Legal Requirements dated on , compiled by Environmental & CSR Departrment in Head Office which has to keep track of its (LONSUM s) legal requirements and makes sure that they are complied with., that covers Legislation (Perundangan), Regulation (Peraturan), Decree (Keputusan) & Directives (Pedoman), Permit (Perijinan), Treaties (Pakta), Convention (Konvensi) and Protocol; Judgement of Court (Putusan pengadilan). The Legal Department in Head Office is responsible for validating / renewing licenses and permits, especially land permit, while Head of Engineering & Processing responsible for license/ of mill operation since GMM has ISO certification for its environmental management and also SM-K3 for Health Safety Environment. for keeping the mill / estates operating within the national laws / regulations, and is required to keep up to date with any changes in the laws / regulations. Criterion 2.2 (C.2.2) The right to use the land can be demonstrated and is not legitimately contested by local communities with demonstrable rights Currently, there are no claims on GMM land by anyone. General Affairs department and Legal department are responsible to solve if there is a conflict of land acquired, however, if the land conflict can not be resolved by negotiation, the last option is to bring it into court. Mills manager and estates manager have registered properly for the certificate of HGU in land acquiring register list. The whole land use for oil palm planted by identification and demarcated by stone boundary shall be managed. There was evidence that legal boundary periodically monitored There is mechanism to monitor the boundary stones periodically, to ensure that they are not broken, had been moved or missing, if this case happens, an action plan should be carried out to fix the boundary stone accordingly. However, it was found in Sei Rumbiya Estate that maintenance program for identified legal boundaries was not well implemented. No clear statement of each stone boundary condition. A Major NonConformity was raised. (See NCR-GM-01). Corrective action has been submitted, being reviewed and accepted. by auditor. Criterion 2.3 (C.2.3) Use of land for oil palm does not diminish the legal rights or customary rights of other users, without their free, prior and informed consent.

16 6 of 36 It was confirmed during surveillance assessment as well as during interview with stakeholders that there was no customary right of other users. Criterion 3.1 (C.3.1) There is an implemented management plan that aims to achieve long term economic and financial viability GMM has 5 years projection ( ) for its crop, including key performance data for its mill and estates as part of its long term economic planning for all corporate of PT. PP London Sumatra Tbk (Lonsum). For GMM (Gunung Melayu Mill, Gunung Melayu Estate, and Sei Rumbiya Estate) there is 10 years projection from including mill allocation, production of FFB (tonnage) FFB/ ha (yield); OER, by predicting inflation rate; exchange rate; interest rate; portion cash; dividen; non deductible expensive; working hours; turnover; a% allowance for doubtful accounts, age of asset; price of FFB purchase; cost to build a mill. Criterion 4.1 (C.4.1) Operating Procedures are appropriately documented and consistently implemented and monitored GMM has Standard Operating Procedures with the best practices for its mill and estate operations. The mill and estates have been certified to, EMS ISO and HSE management SMK3 by the Ministry of Labour of Indonesia. Most of the Standard Operation Procedures are incorporated in the SM-K3 management system. The following procedures have been implemented for sustainable palm oil production a. SOP for Oil Palm (containing aspects from nursery, land preparation, planting, upkeep, harvesting, waste management, HCV, emergency preparedness and response, and environmental monitoring). b. SOP for Palm Oil Mill (containing stages of process, boiler, power generation, water treatment, land application, electrical system, quality (inc monitoring of CPO parameters), dispatch and laboratory). c. Manual and SOP for Environment Management System, Health & Safety and SPO (containing application of pesticides, use of PPE, emergency preparadness). Daily Implementation and Monitoring of the SOP is documented in reported in LPF (Lonsum Procedure Form). The LPF report should be approved by Acting Assistant Manager and verified by Assistant. The results of the daily reports are summarized in monthly report. Monthly report contains figures of crop protection activities, fertilizer application, climate data, block list and hectares, nurseries statemnt, field upkeep, crop harvest and statistics, personal data, stores and fixed asset. Other kind of Monitoring kinds include site visit, monthly meeting. Criterion 4.2 (C.4.2) Practices to maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield There are some agronomic practice to improve and maintain soil fertility implemented in LONSUM/ GMM : 1. Plant Legume Cover Crops 2. Pruning and frond stacking 3. Weeding, especially wild fern (Stenochlaena palustris) 4. Fertilizing Recommendation of fertilizing dosage is prepared by BLRS (Bah Lias Research Station/ Sumatera BioScience), its own laboratory in Medan, North Sumatera. After taking sample of Leaf Sampling Unit of in ratio area of 5% of 17th leaf of 28 trees in a row in February each year, BLRS analyses the leaf samples and recommends the dosage of fertilizer application. Each sample represents every 25 ha area. The recommendation will be submitted to the estate by September the same year. The fertilization frecuency is once or twice a year. Criterion 4.3 (C.4.3) Practices to minimize and control erosion and degradation of soils As there are no fragile soils (including peat) according to a HCV assessment, GMM does not have any plan to manage them. Practices to minimise and control erosion in GMM are : 1. Plant Legume Cover Crops, one year before planting time, the legume cover crop is planted for increase the soil fertility and control soil erosion. 2. Pruning and frond stacking. Road maintenance. Regular road maintenance is carried out (grading, compacting and cambering) and also ditch maintenance according to annual program. Criterion 4.4 (C.4.4) Practices to maintain the quality and availability of surface and ground water GMM has facilitated provision of water in storage tanks consume daily operation mills and estates and employee s housing. The water for industrial use is supplied from the river and for households. Record of BOD and record of water using per ton FFB, was available which during 2012 the average was below the LONSUM standard 1.25 m3/ ton FFB processed. The BOD levels and other parameters refers to with the local requirements in the Liquid Waste regulations in environmental decree by Province of South Sumatra. The BOD data are submitted six-monthly in RKL/ RPL to BAPEDALDA (Regional Environmental Monitoring Body). Checks on records show that all the data are comply with regulation. To avoid the contamination of river water, GMM installing HCV area along the riparian zones a 50 meter belt along the river banks - and no replanting of oil palm will be done along all river banks as stated in SOP OP5.10 : HCV. However, the implementation did not conducted accordingly, it was found in Gunung Melayu Et that Estate oil palm maintenance using agrochemicals along the riparian zone still conducted. A Major nonconformity was raised. (See NCR-GM-02). Corrective action has been submitted, being reviewed and accepted by auditor

17 7 of 36 Criterion 4.5 (C.4.5) Pests, diseases, weeds and invasively-introduced species are effectively managed using appropriate Integrated Pest Management (IPM) Techniques GMM has formulated an Integrated Pest Management (IPM), practiced incorporating cultural, biological, mechanical or physical methods, by : 1. Identification of pests, diseases and weeds before it become an outbreak of maximum level 2. Introducing of beneficial plants for hosts of pests. 3. Introduction Barn Owl (Tyto alba) 4. Planting LCC 5. Frond stacking 6. Minimise use of agrochemicals. Oil Palm Leaf Eater Control includes detection, cencus, examination, treatments, evaluation, monitoring and organisation. Planting beneficial plants, such as Bunga pukul delapan (Turnera subulata) and air mata pengantin (Antigonom leptosus) to harbour predators of the crop pests. MRF (Monthly Requisition for Fund) reported the use of benefecial plants (Antigonon leptopus, Turnera subulata). Eradication of outbreaks of leaf-eating bagworm (ulat api, especially Setora nitens) is by biological control using a virus taken from the insects themselves. GMM conduct monitoring of pesticide toxicity units (a.i. /LD 50 per tonne of FFB or per hectare. The barn owl (Burung hantu, scientifically Tyto alba) is protected and encouraged as a natural predator of rats. The use of pesticides has to be minimised by only implementing for severe infestation in selected area instead of blanket method, Criterion 4.6 (C.4.6) Agrochemicals are used in a way that does No.t endanger health or the environment. There is No. prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorized as World Health Organization Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented. There is a List of pesticides used and pesticides stocks is listed in the Balance Stock Agrochemical in 2011 and 2012., those can be bought for application are in accordance with the Permentan No 1/2001, WHO and Rotterdam convention, are issued and distributed to Procurement division. Only procurement division can buy and supply the matter. GMM has a procedure on how to apply agrochemicals, refers to Peraturan Menteri Pertanian No. 07/Permentan /SR.140/ /2007, or Regulation No. 07/ Permentan /SR.140/ 2/2007 Ministry of Agriculture Republic of Indonesia.. All the agrochemicals used are registered and approved by Pusat Perizinan dan Investasi Sekertariat Jenderal Departemen Pertanian 2008, or Invesation and Permit Center, Agriculture Department, Republic of Indonesia The application of pesticides refers to SOP OP Guide to the safe use of Pesticides (March 2008). Checks on the records of agrochemicals used found that they complied with the regulation. GMM has a procedure to store agrochemical wastes and empty containers in a secured area a B3 (hazardous and toxic materials) waste warehouse - before collection by a licensed contractor. Records of the hazardous wastes stored are kept properly and in compliance with the Material Safety Data Sheet (MSDS) in Government Regulation (PP) No. 74 of There was evidence of regular medical check-ups for workers involved in handling hazardous chemicals. GMM has policy that pregnant and breast-feeding women are prohibited from working with pesticides. Criterion 4.7 (C.4.7) An occupational health and safety plan is documented, effectively communicated and implemented. GMM has established a safety, health and environment policy and certified SMK3. The organisation structure of Panitia Pembina Keselamatan dan Kesehatan Kerja (P2K3), or Guiding Committee on Occupational Health and Safety, has been established. Explanation and communication of the policy is the responsibility of the safety engineer (SM-P2K3) who daily monitors and inspects all facilities in the mill and estates for emergencies. There are regular monthly meetings between the management and workers on health and safety issues. All the permanent employees and contract workers are insured under JAMSOSTEK A record of JAMSOSTEK payment installment was sighted. Employee above 55 years old have pension.all employees, especially those in high risk work, undergo an annual health examination with the results submitted in Laporan Hasil Pemeriksaan Kesehatan Berkala Tenaga Kerja to Dinas Tenaga Kerja Balai Hiperkes Dan Keselamatan Kerja Provinsi Sumatera Utara (Department of Labor, Province of North Sumatra). Record of healthy employee available. The point check were : Cholinesterase (pesticide), Audiometric ( hearing), Spirometri (lung), Work Environmental tested were : Noisy, Dusty, Vibrations at work place, Luminosity,. All the operations have been risk assessed for obtaining SMK3 certification. The P2K3 team identified and analysed the risks for all routine and non-routine activities. The records of risk analysis are documented properly. GMM has developed procedures for accidents and emergency preparadness The effectiveness of this procedure is tested every year. Workers in hazardous areas are provided training to minimize their risk in an annual training program on safety and health issues including training for boiler operators, K3 regulations and legislations of the Republic of Indonesia, elevation equipment (crane / gondola). A record of work accidents was compiled by the company physician every month. Records of work accidents are kept 5 years and regularly submitted to DISNAKER, the Regional Labor Department, and JAMSOSTEK for insurance claims. In a work accident, the P2K3 team will meet immediately to investigate the cause and recommend corrective and preventive action. According to SMK3 procedure there should be health and safety training program including regular first aid training and emergency drills, however in Gunung Melayu mill records of health and safety training based on the annual program 2012 made by the company do not exist. A Minor NonConformity was raised. (See NCR-GM-05). Corrective action has been submitted, being reviewed and accepted by auditor. The P2K3 team has assigned to assure that all P2K3 and K3 equipment, such as fire extinguishers, PPE, hydrants, P3K tool kits (medical box) are available on worksites by regular checking in the mill and estates. However, during this surveillance audit in Gunung Melayu mill it was found that :

18 8 of 36 Workshop worker did not use hand glove while welding Boiler and engine workers did not use ear plug while working on boiler and engine room. Contracted workers using no helmet and hand gloves while welding.. A Minor NonConformity was raised. (See NCR-GM-06). Corrective action has been submitted, being reviewed and accepted by auditor. Criterion 4.8 (C.4.8) All staff, workers, smallholders and contractors are appropriately trained. GMM has developed training procedure that require the Mill / estate managers have to identified the training needs in each section / department to organize an annual training program which also covers contractors and farmers eventhough in North Sumatera Region LONSUM do not received FFB from smallholders. Criterion 5.1 (C.5.1) Environment aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. GMM has developed criteria to determinate methods to replanting oil palms in Impact of plantation and mill which is identified in AMDAL Document, AMDAL/RKL/RPL of Oil Palm Plantation and Palm Oil Mill. GMM conducted an environmental impact assessment (ANDAL) of its mill and estates operations in 2004 which has not been revised because there has been no change in its operations that could have differently affected the environmental and socioeconomic issues. Any adverse impacts identified will be studied for mitigation. Assessment is also being carried out on the environmental management and monitoring (RKL/RPL). GMM had previously assessed its environmental impact in obtaining ISO certification (for environmental management) for its mill and estates. Six-monthly reports of RKL/RPL are submitted to BAPEDALDA (local environmental controlling body) available for Semester II 2011 (July-Dec 2011) while for Semester I 2012 (Jan-Jun 2012) still in progress. Criterion 5.2 (C.5.2) The status of rare, threatened or endangered species and High Conservation Value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations. GMM has prepared and developed all information as well for flora and fauna which a are comprehensively identified in Executive Summary of High Conservation Value Report The HCV s areas are recognized with HCV s 4.1, 4.2, and 6, which most of HCV s are available in the whole of the plantations. The HCV s area at the field is well identified with signboards. Identification of HCV s was updated for 2010 and its accordance government regulation No. 07 Tahun The identification of HCV s whole in LONSUM was documented in List of Protected Species. Eventhough LONSUM has developed SOP for HCV but guideline and monitoring program for appointed officer to handle the HCV area in Gunung Melayu Estate and in Sei Rumbiya Estate was not available. Minor NonConformities were raised. (See NCR-GM-02 and NCR-GM-04). Corrective action has been submitted, being reviewed and accepted by auditor. Criterion 5.3 (C.5.3) Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner GMM has identified all waste and pollutions sources in the mill and estates and listed them in accordance with its related procedure SOP OP Identification of waste sources,,the records of actual wastes in the mill and estates are documented properly. Suitable methods have been established to minimize the production of wastes and to minimize their environmental impacts. GMM has, in fact, already implemented waste management and disposal to avoid / reduce pollution and developed SOP OP 5.8. Waste Management.to obtain its ISO certification. EFB is used to mulch young palms in the field near mill in Gunung Melayu Estate liquid wastes treated as in Instalasi Pengolah Air Limbah /IPAL (waste water treatment) to reduce their BOD and COD, with their ph monitored to the requisite standards. Analyses of POME for BOD, COD and ph are done regularly to ensure the parameters meet the standards, the last report in Semester II 2011 showing compliance. GMM has a licence to store the wastes in accordance with decree before collection by a licensed waste collector. The records of waste and hazardous material disposal were checked, and the evidence of hazardous waste disposal found to be well documented, such as used grease waste collected by licensed contractor/ transporter recorded in hazardous waste manifest. Criterion 5.4 (C.5.4) Efficiency of energy use and use of renewable energy is maximized. GMM has a renewable energy program in which it continually strives to improve energy efficiency and use more renewable vis-à-vis fossil fuels. The generator set is only used as backup to generate electricity when the main turbine is down. Regular maintenance of mill engines ( e.g: boiler, sterilizer, BPV, Steam separator, Motor Compressor, turbine) and motor vehicles also contribute to increase energy efficiency rate. Monitorng of renewable energy and fossil fuels used have been recorded (EMS F16 Pemantauan bahan bakar fossil dan non fossil) but their efficiency have not been analyzed yet. Minor NonConformities were raised. (See NCR-GM-07 and NCR-GM-08). Corrective action has been submitted, being reviewed and accepted by auditor.

19 9 of 36 Criterion 5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice. The use of fire with any reason is strictly prohibited, such as activities in land preparation of new developments and replanting. GMM has a zero burning policy, and established procedure SOP OP 2.8. Land preparation-strategies and parameter (March 2008). GMM has installed fire protection systems and training for preparedness in fighting fire at all estates and other infrastructure. Compliance Status : Full Criterion 5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored. GMM has identified pollution and emission sources, which comes mainly from boilers, generator sets and motor vehicles, e.g., dump trucks, backhoe loader, excavators. Monitoring of their exhaust emissions is done regularly by Dinas Tenaga Kerja dan Transmigrasi UPTD Balai Hiperkes dan Keselamatan Kerja, an external independent laboratory - every 6 months for boiler and yearly for vehicles. The smoke opacity results are recorded as part of its RKL-RPL (Environment Management and Monitoring) Semester Report. The parameters tested for are SO 2, NO 2, H 2S and particulates as per the Ministry of Environment, Republic of Indonesia, regulation Peraturan Menteri Lingkungan Hidup No. 07 Tahun A check on the reports found that the levels complied with the standards. GMM has a pollution and emission reduction program in which is prohibited the burning of EFB and domestic wastes in the mill, estates and housing complex; tree planting is encouraged around the mill and housing complex instead, and also planting LCC to subtitute Nitrogren demand by manufactured fertilizer. A procedure to treat POME has been established and the records of monitoring POME are kept properly and were sighted. Organisastion has implemented ISO 14001/ enviromental management system and annually assessed by third party Certification Body and by Government for yearly monitoring of environmental aspect-impact. Criterion 6.1 Aspects of plantation and mill management including replanting that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. GMM has a method to monitor social information from the locals and its employees. The information is assessed and the results reported to the Environment Manager and concerned parties, such as the environmental impact-controlling agency, as a part of RKL/ RPL. Interviews with the stakeholders indicated that the practice has resulted in improved relationships with the local communities. Criterion 6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties GMM has an effective communication and consultation procedure with plasma smallholders and its local communities (Prosedur Komunikasi),. It has also drawn up an external communication procedure. Consultation with stakeholders is done at least yearly, and minutes of the meeting in 2011 and 2012 were sighted. Adjacent estate officers are responsible for communication with the respective parties on estate activities, while the Environment and CSR Department assumes overall responsibility for communication and consultation with stakeholders and to ensure that community programs are run effectively. A list of GMM stakeholders includes the local communities, NGOs, labour union, contractors and local government: Camat, Police, Military (Muspika: Camat, Kapolsek, Danramil), environmental agency (Bapedalda), Ministry of Labour. Criterion 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties. GMM has a complaints, grievance and dispute procedure integrated in its communication procedure. (Internal complaints and grievances are resolved according the Mutual Working Agreement (Perjanjian Kerja Bersama). These procedures have been communicated to all stakeholders at each mill / estates. It was noted that the responses from stakeholders have been positive. During visits to stakeholders, the audit team confirmed that there were no serious complaints, grievances and disputes at the moment. Local communities and stakeholders obey and respect the company legal rights, reciprocated by the company s respect for their traditional rights. Criterion 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stake-holders to express their views through their own representative institutions. GMM has developed OP Land Acquisition and Compensation. (OP2.2). In this certification assessment, the audit team studied the whole compensation mechanism, and found it satisfactory with no legal action being taken by any party against another. The mechanism has been communicated to the stakeholders. Checks on the records and interviews with the local communities confirmed that there is no current claim on any land. Based on HCV studies and AMDAL report there is no customary rights of local community. Inteviews with the Chief of Local Community confirmed that they have no customary rights. Criterion 6.5 Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages. A policy on pay and working conditions in LONSUM was established in Internal Memorandum. The salary scales and