PT. PP London Sumatera Indonesia Tbk. Dolok Mill and Its Supply Base

Transcription

1 Surveillance Audit for PT. PP London Sumatera Indonesia Tbk. Dolok Mill and Its Supply Base FMS40044 RSPO Membership number: RSPO Member Name: PT PP London Sumatra Indonesia Tbk Audited Address: Dolok Mill: Desa Perkebunan Dolok, Kecamatan Limapuluh, Kabupaten Batubara, North Sumatera IDN Its supply bases: Dolok Estate: Kecamatan Limapuluh, Kabupaten Batubara, North Sumatera IDN Bah Lias Estate: Kecamatan Bandar, Kabupaten Simalungun, North Sumatera IDN Bah Bulian Estate: Kecamatan Raya Kahean, Kabupaten Simalungun, North Sumatera IDN Si Bulan Estate: Kecamatan Tebing Syahbandar, Kabupaten Serdang Bedagai, North Sumatera IDN Date of audit: 27/05/2016 COMMERCIAL- IN CONFIDENCE I The contents of this report must not be disclosed to a third party without the agreement of the SAI Global Client Doc ID: 3843 / Issue Date May 2014 SAI Global Limited Copyright ABN Page 1 of 230

2 Table of contents Page Executive Overview 4 Abbreviations Used SCOPE OF THE ASSESSMENT 1.1 Introduction Audit Objective Scope of Certification Palm Oil Mill Oil Palm Estate Location of Mill and Estates Description of Supply Base Date of Plantings Area of Plantation Approximate Tonnages Offered for Certification (CPO and PK) Other Certificates Held Organisational Information/Contact Person Time Bound Plan for Other Management Units Partial Certification Requirements Date of Issue of Certificate dan Date of Previous Assessment AUDIT PROCESS 2.1 Certification Body Audit Methodology Qualification of the Lead Auditor and Audit Team Members Stakeholder Consultation Date of Next Surveillance Visit AUDIT FINDINGS 3.1 Action taken on previous audit issues Claim and use of certification mark and or logo Description of audit findings RSPO Principle and Criteria, Indonesian National Interpretation Mill Supply Chain Requirements Supply Chain Certification Standard Supply Chain Certification System Recommendation Environmental and social risk for this scope of certification for 171 planning of the surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of 172 Assessment Findings Page List of Tables 1 Mill and Estates GPS Locations included in certification assessment 8 2 FFB Production of the supply base May 2016 April Estate Age Profiles of Planted Palms Land use description of Dolok, Bah Lias, Bah Bulian and Si Bulan 17 Estate in Estates and Area Planted FFB Production Trend Total CPO and PK Production 2015 and Estimate Production of WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 2 of 230

3 8 Mill Production and Delivery of ALL Certified Products (CPO and 20 PK), actual volume since date of last reporting period 9 Estimated Production of Certified CPO and PK Certificates Held by Mill and Estates RSPO Certification Time Bound Plan List of internal and external stakeholder 26 List of Figures Page 1a-d2 Map of Mill and Estates Location 9-15 List of Appendices Page A Audit Record 173 B Previous nonconformities, corrective actions and status 180 C Nonconformities, Corrective Actions and Observations 196 Summary D Stakeholder s issues and comment 227 E Definition of, and action required with respect to audit findings 230 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 3 of 230

4 Executive Overview This is the first (1 st ) annual surveillance audit visit on May 2016 against the Generic RSPO Principles and Criteria for Sustainable Palm Oil Production, May 2013 and RSPO Supply Chain Certification Standard, CPO Mill, Module D Identity Preserved, November PT PP London Sumatra Indonesia Tbk Dolok Mill operations is comprised 1 (one) Palm Oil Mill and 4 (four) FFB supply bases owned by PT PP London Sumatra Indonesia Tbk. There was no supply base from independent third party. Six (6) minor and sixteen (16) major non-conformances were issued during this audit.the organisation has followed up by submitting correction and corrective action plan. Follow up audit for verification on the correction and corrective action of the major and minor NCR issued was done on 25 August The issued findings in the 1 st annual surveillance audit has been rectified and considered as closed. The audit concluded that PT PP London Sumatra Indonesia Tbk Dolok Mill and its supply bases operation were found complies with the requirements of the Generic RSPO Principles and Criteria for Sustainable Palm Oil Production, May 2013 and RSPO Supply Chain Certification Standard, CPO Mill, Module D Identity Preserved, November The estimate figures of production offered for certification 2016 are: Estimated tonnage of certified CPO produced Estimated tonnage of certified PK produced 39,970 MT 10,033 MT Therefore PT PP London Sumatra Indonesia Tbk Dolok Mill and supply bases can continues to be certified as RSPO Identity Preserved Model CPO and PK producer. WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 4 of 230

5 Abbreviations Used AK3U AMDAL AME BHL BKM BLE BLH BLRS BOD BPN COD CPO CSR DLE DO EFB EMS EWS FFB GAPKI GPS Ha HCV HGU GHG HIPERKES HO IDN IPM ISCC ISO ISPO Jamsostek Kepmen KTU LA LD Lonsum LSU LTI MCU MSDS MT NCR NGO OER OHS OHSAS P2K3 Occupational Health and Safety Expert (Ahli K3 Umum) Environmental Impact Analysis (Analisis Dampak Lingkungan) Area Manager Engineering Daily worker (Buruh Harian Lepas) Log book of group leader activity (Buku Kegiatan Mandor) Bah Lias Estate Environmental Agency (Badan Lingkungan Hidup) Bah Lias Research Biological Oxygen Demand National Land Agency (Badan Pertanahan Nasional) Chemical Oxygen Demand Crude Palm Oil Corporate Social Responsibility Dolok Estate Delivery Order Empty fruit bunch Environmental Management System Early Warning System Fresh Fruit Bunch Indonesian Palm Oil Association (Gabungan Pengusaha Kelapa Sawit Indonesia) Global Positioning System Hectare High Conservation Value Land Use Title (Hak Guna Usaha) Green House Gases Industrial Hygienist Head Office Indonesia Integrated Pest Management International Sustainability Carbon Certification International Standards Organisation Indonesia on Sustainable Palm Oil Man Power Social Assurance (Jaminan Sosial Tenaga Kerja) Degree of Man Power Ministry (Keputusan Menteri Tenaga Kerja) Head of Administration (Kepala Tata Usaha) Land Application Lethal Dosage London Sumatera Leaf Sampling Unit Loss Time Incident Medical Check-Up Material Safety Data Sheet Metric Ton Non Conformance Report Non-Government Organisation Oil Extraction Rate Occupational Health and Safety Occupational Health and Safety Assurance Services OHS Committee WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 5 of 230

6 P&C Principle and Criteria PEL Environmental Evaluation Presentation (Penyajian Evaluasi Lingkungan) Permen/Permenaker Regulation of Man Power Ministry (Peraturan Menteri Tenaga Kerja) Permentan Regulation of Agricultural Ministry (Peraturan Menteri Pertanian) PK Palm Kernel PKB Joint Working Agreement (Perjanjian Kerja Bersama) PKWT Contracted worker (Pekerja Waktu Tertentu) POM Palm Oil Mill POME Palm Oil Mill Effluent PP Government Regulation (Peraturan Pemerintah) PPE Personal Protective Equipment PUK Caretaker Unit (Pengurus Unit Kerja) QC Quality Control R&D Research and Development RABQSA Quality Society of Australia RKH Daily Work Plan (Rencana Kerja Harian) RKL Environmental Management Plan (Rencana Pengelolaan Lingkungan) RPL Environmental Monitoring Plan (Rencana Pemantauan Lingkungan) RSPO Roundtable on Sustainable Palm Oil SCCS Supply Chain Certification System SG Segregation SIA Social Impact Assessment SIO Operator Lisence (Surai Ijin Operasi) SMK3 Occupational Health and Safety Management System (Sistem Manajemen Kesehatan dan Keselamatan Kerja) SPSI Indonesian Worker Union (Serikat Pekerja Seluruh Indonesia) SOP Standard Operational Procedure UKL Environmental Management Effort (Upaya Pengelolaan Lingkungan) UPL Environmental Monitoring Effort (Upaya Pemantauan Lingkungan) Walhi (Wahana Lingkungan Hidup Indonesia) WWF World Wild Fund WWTP Waste Water Treatment Plant WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 6 of 230

7 1.0 SCOPE OF THE ASSESSMENT 1.1 Introduction SAI Global conducted an audit of PT PP London Sumatra Indonesia Tbk. Dolok Mill and Its Supply Base on 23/05/2016 to 27/05/2016 with Major Nonconformities identified. Follow up audit has been conducted on 25 August 2016 for verification of corrective action taken by the organisation. The purpose of this audit report is to summarise the degree of compliance with the relevant criteria, as defined on the cover page of this report, based on the evidence obtained during the audit of your organisation. SAI Global audits are carried out within the requirements of SAI Global procedures which also reflected the requirements and guidance provided in the international standards relating to audit practice such as ISO/IEC 17021, ISO 19011, RSPO Certification System, relevant RSPO Supply Chain Certification System and other normative criteria. SAI Global Auditors are assigned to audits according to industry, standard or technical competencies appropriate to the organisation being audited. Details of such experience and competency are maintained in our records. The audit team is detailed in the attached audit record. In addition to the information contained in this audit report, SAI Global maintains files for each client. These files contain details of organisation size and personnel as well as evidence collected during preliminary and subsequent audit activities (Documentation Review and Scope) relevant to the application for initial and continuing certification of your organisation. Details of your primary contact persons and their contact details and site addresses are also maintained. Please take care to advise us of any change that may affect the application/certification or may assist us to keep your contact information up to date, as required by SAI Global Terms and Conditions. Please note that this report is subject to independent review and approval. Should changes to the outcomes of this report be necessary as a result of the review, a revised report will be issued and will supersede this report. 1.2 Audit Objective This is the 1 st annual surveillance audit. The purpose of this audit was to determine continuing compliance of your organization s management system with the audit criteria Generic RSPO Principles and Criteria for Sustainable Palm Oil Production, May 2013 and RSPO Supply Chain Certification Standard, CPO Mill, Module D IP, November 2014 and its effectiveness in achieving continual improvement and system objectives. It was also to verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers. 1.3 Scope of certification The scope of certification is the CPO production from one (1) Palm Oil Mill and four (4) FFB supply base owned by PT. PP London Sumatera Indonesia Tbk. WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 7 of 230

8 1.3.1 Palm Oil Mill Dolok Mill PT. PP London Sumatera Indonesia Tbk. Location: Desa Perkebunan Dolok, Kecamatan Limapuluh, Kabupaten Batubara, North Sumatera IDN GPS Location: East 99 o North 3 o Mill capacity: 45 MT FFB/hour Oil Palm Estate Dolok Estate PT. PP London Sumatera Indonesia Tbk. Location: Kecamatan Limapuluh, Kabupaten Batubara, North Sumatera IDN GPS Location: East 99 o North 3 o Bah Lias Estate PT. PP London Sumatera Indonesia Tbk. Location: Kecamatan Bandar, Kabupaten Simalungun, North Sumatera IDN GPS Location: East 99 o North 3 o Bah Bulian Estate PT. PP London Sumatera Indonesia Tbk. Location: GPS Location: East 99 o North 2 o Kecamatan Raya Kahean, Kabupaten Simalungun, North Sumatera IDN Si Bulan Estate PT. PP London Sumatera Indonesia Tbk. Location: GPS Location: East 99 o North 3 o Kecamatan Tebing Syahbandar, Kabupaten Serdang Bedagai, North Sumatera IDN 1.4 Location of mill and estates Table 1: Mill and Estates GPS Locations MILL AND ESTATE EASTING RTHING Dolok Mill 99 o o Dolok Estate 99 o o Bah Lias Estate 99 o o Bah Bulian Estate 99 o o Si Bulan Estate 99 o o WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 8 of 230

9 Figure 1a Map of Mill and Estates Location Lima Puluh Note : DLE Dolok Estate. BLE Bah Lias Estate Source: Lonsum, April 2014 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 9 of 230

10 Figure 1b Map of Mill and Estates Location Serdang Note: BBE Bah Bulian Estate, SIE Si Bulan Estate Source: Lonsum, April 2014 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 10 of 230

11 Figure 1c Map of Dolok Estate Source: Lonsum, April 2014 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 11 of 230

12 Figure 1d Map of Dolok Estate Sei Bejangkar Division Source: Lonsum, April 2014 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 12 of 230

13 Figure 1e Map of Bah Lias Estate Source: Lonsum, April 2014 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 13 of 230

14 Figure 1f Map of Bah Bulian Estate Source: Lonsum, April 2014 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 14 of 230

15 Figure 1e Map of Si Bulan Estate Source: Lonsum, April 2014 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 15 of 230

16 1.5 Description of supply base The FFB sources are four (4) organisations owned by PT. PP London Sumatera Indonesia Tbk. No supply base from independent third party. The hectarage and FFB production of the plantation is shown on Table 2. Table 2: FFB Production of the supply base May 2016 April 2017 ESTATE PLANTED AREA (HA) FFB (TON/YEAR) Dolok Estate 2, , Bah Lias Estate 3, , Bah Bulian Estate 1, , Si Bulan Estate , Total 8, , Source: Lonsum, May Date of plantings Year Dolok Estate Table 3: Estate Age Profiles of Planted Palms 2016 Bah Lias Estate Bah Bulian Estate Si Bulan Estate Total % of Planted Area *) *) *) 0 1, , *) *) WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 16 of 230

17 Year Dolok Estate Bah Lias Estate Bah Bulian Estate Si Bulan Estate Total Audit Report % of Planted Area 2011*) *) *) Mature 2, , , , *) **) **) Immature Total 2, , , , Source: Lonsum, May 2016 Note: *) replanting **) conversion from rubber to oil palm 1.7 Area of plantation The areas details for organisation owned estates are shown on Table 5. Review of estate boundary maps could be done. There is no new open area since November Planting year above 2005 was replanting. Table 4: Land use description of Dolok, Bah Lias, Bah Bulian and Si Bulan Estate in 2016 AREA DOLOK BAH LIAS HECTARES BAH BULIAN SI BULAN TOTAL Mature area 2, , , , Immature area Total area planted 2, , , , Emplacement and Mill Other plantation (Rubber/Cocoa/Coco nut) Other area (enclave, water ponds, land with slope >30%) Total leased area 3, , , , , HCV Area (included in planted area Source: Lonsum, May 2016 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 17 of 230

18 Table 5: Estates and Area Planted 2016 ESTATE MATURE (HA) IMMATURE (HA) TOTAL (HA) DOLOK 2, , BAH LIAS 3, , BAH BULIAN 1, , SI BULAN TOTAL 8, , Source: Lonsum, May Approximate tonnages offered for certification (CPO and PK) Approximate tonnages offered for certification is estimated based on the organisation last three years actual FFB production of Dolok, Bah Lias, Bah Bulian and Si Bulan Estate as well as last year CPO and PK, OER and KER of Dolok Mill. The OER and KER of each supply bases were estimated based on laboratory analysis. Table 6: FFB Production Trend Actual Production (MT) YEAR Dolok Estate Bah Lias Estate Bah Bulian Estate Si Bulan Estate Total , , , , , , , , , ,410, , , , , , , , , , , , , , , , Source: Lonsum, May 2016 Table 7: Total CPO and PK Production 2015 and Estimate Production of 2016 Supply Base FFB Processed (MT) CPO Production (MT) OER (%) Actual production May 2015 April 2016 Dolok Estate , ,74 PK Production (MT) 3.531,64 Bah Lias Estate , , ,69 Bah Bulian Estate , , ,39 Si Bulan Estate , ,41 820,77 Total , , ,50 KER (%) 6.43 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 18 of 230

19 Estimated production May 2016 April 2017 Dolok Estate , , ,90 Bah Lias Estate , , ,22 Bah Bulian Estate , , ,59 Si Bulan Estate , ,12 747,02 Total , , ,73 Source: Lonsum, May WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 19 of 230

20 Table 8: Mill Production and Delivery of ALL Certified Products (CPO and PK), actual volume since date of last reporting period Audit Report Month Dolok FFB Production (ton) Palm Oil (MT) PK (MT) Bah Bah Si Bah Bah Si Bah Bah Total Dolok Total Dolok Lias Bulian Bulan Lias Bulian Bulan Lias Bulian 2015 August 6,424 8,480 2,892 1,369 19,165 1,594 2, , ,245 September 6,069 7,274 2,554 1,344 17,241 1,498 1, , ,122 October 6,951 8,654 3,061 1,685 20,351 1,720 2, , ,320 November 4,709 5,695 2,133 1,215 13,752 1,148 1, , December 4,114 6,179 2,591 1,432 14, , , January 3,125 3,182 1, , , February 2,678 4,029 1, , , March 3,478 4,032 1, , , April 2,867 3,893 1, , , Total 40,415 51,418 19,405 9, ,937 9,905 12,595 4,750 2,375 29,625 2,642 3,364 1, ,913 Source: Lonsum, May 2016 Si Bulan Total WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 20 of 230

21 Table 9: Estimated Production of Certified CPO and PK Month Dolok FFB Production (ton) Palm Oil (MT) PK (MT) Bah Bah Si Bah Bah Si Bah Bah Total Dolok Total Dolok Lias Bulian Bulan Lias Bulian Bulan Lias Bulian 2016 May 3,825 5,714 1, , , , June 5,993 6,927 2,775 1,265 16,960 1,492 1, , ,060 July 4,119 9,645 1,395 1,230 16,389 1,026 2, , ,024 August 4,819 8,734 1,983 1,186 16,722 1,200 2, , ,045 September 6,210 7,780 2,865 1,515 18,370 1,546 1, , ,148 October 4,755 5,576 2, ,102 1,184 1, , November 4,744 5,437 3, ,488 1,181 1, , December 5,167 7,280 3,304 1,296 17,047 1,287 1, , , January 2,474 2,843 1, , , February 2,394 4,111 1, , , , March 3,164 4,125 1, , , , April 2,732 3,526 1, , , Total 50,396 71,698 26,474 11, ,521 12,548 17,854 6,592 2,976 39,970 3,151 4,481 1, ,033 Source: Lonsum, May 2016 Si Bulan Total The FFB only comes from Dolok, Bah Lias, Bah Bulian and Si Bulan Estate, therefore Dolok Mill used RSPO Supply Chain Identity Preserved Model Module D. Based on the above figures, the estimated of certified CPO and PK offered in period May 2016 April 2017 for 1 st surveillance audit are: Estimated tonnage of certified CPO produced Estimated tonnage of certified PK produced 39,970 MT 10,033 MT WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 21 of 230

22 1.9 Other certificates held Table 10: Certificates Held by Mill and Estates MILL/ESTATE Dolok Mill, Dolok Estate, Bah Lias Estate, Bah Bulian Estate, Si Bulan Estate OTHER CERTIFICATION HELD ISPO by PT SAI Global Indonesia FMS40035, valid through 8 May 2020 Source: Lonsum, May Organizational information/contact person PT. PP London Sumatera Indonesia Tbk. Jl A. Yani No.2 Medan Phone : (+62-61) Fax : (+62-61) Contact person : Mr Muhammad Waras Head of Environmental and CSR Muhammad.Waras@londonsumatra.com 1.11 Time bound plan for other management units PT. PP London Sumatra Indonesia Tbk. is committed to RSPO certification of all its Management Units located in North Sumatera, South Sumatera and East Kalimantan. Time bound plan has been developed to achieve the RSPO certification for all its Management Units and Plasma by The time bound plan is realistic and challenging. The plan is detailed on Table 5. Table 11: RSPO Certification Time Bound Plan Name of Mill Turangie Dolok Gunung Malayu Begerpang Mill Address Langkat, Sumatera Utara Batubara, Sumatera Utara Asahan, Sumatera Utara Deli Serdang, Sumatera Name of Supply Base Plantation Turangie Pulo Rambong Bungara Dolok Sibulan Bah Bulian Bah Lias Gunung Malayu Sei Rumbiya Begerpang Sei Merah Estate Address Langkat, Sumatera Utara Batubara, Sumatera Utara Serdang Bedagai, Sumatera Utara Simalungun, Sumatera Utara Asahan, Sumatera Utara Labuhanbatu, Sumatera Utara Deli Serdang, Sumatera Utara Time Bound Remarks 2014 Certified on 9 January Certified on 19 August Certified on 23 July Certified on 10 August 2015 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 22 of 230

23 Name of Mill Pahu Makmur Belani Elok Arta Kencana Sei Lakitan Gunung Bais Terawas Mill Address Utara Kutai Barat, Kalimantan Timur Musi Rawas, Sumatera Selatan Lahat, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Source: Lonsum, May 2016 Name of Supply Base Plantation Rambong Sialang Pahu Makmur Isuy Makmur Kedang Makmur Belani Elok Bukit Hijau Batu Cemerlang Ketapat Bening Sei Kepayang Arta Kencana Kencana Sari Sei Lakitan Riam Indah Sei Gemang Gunung Bais Eka Sari Region (Plasma) Estate Address Serdang Bedagai, Sumatera Utara Kutai Barat, Kalimantan Timur Musi Rawas, Sumatera Selatan Lahat, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Time Bound Remarks 2015 Stage-1 audit in December Certified in September Stage-1 audit in October Stage-1 audit in December Partial Certification Requirements The organisation conducted the site visit and reviewing regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3, land conflict, labour disputes and legal noncompliance to all management units which have not been certified to ensure that partial certification requirements were fulfilled. Site visit was conducted by the organisation for ensuring compliance against partial certification requirements according to RSPO Certification System clause 4.2.4: PT PP London Sumatra Indonesia Tbk: Terawas Indah Mill and their supply bases on 17 November 2015 PT PP London Sumatra Indonesia Tbk: Gunung Bais Mill and their supply bases on 18 November 2015 Based on the reviewing it was concluded that: There was no replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3. There were no land conflict and labour disputes There was no non-compliance with regulations. WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 23 of 230

24 1.13 Date of issue of certificate and date of previous assessment Date of issue of certificate: 19 August 2015 Date of previous audit: April Certification body 2.0 AUDIT PROCESS PT. SAI Global Indonesia Graha Iskandarsyah, 4 th floor Jl. Iskandarsyah Raya No. 66 C Kebayoran Baru, Jakarta 12160, Indonesia Phone : , Fax : Contact person : Ms Inge Triwulandari Technical Manager inge.triwulandari@saiglobal.com SAI Global is one of the world s leading business providers of independent assurance. SAI Global provides organisations around the world with information services and solutions for managing risk, achieving compliance and driving business improvement. We provide aggregated access services to Standards, Handbooks, Legislative and Property publications; we audit, certify and register your product, system or supply chain; we facilitate good governance and awareness of compliance, ethics and policy issues and provide training and improvement solutions to help individuals and organisations succeed. The SAI Global business is driven by two equally important client needs - the mandated need for organisations to conform to regulations, standards and legislation in all their locations, and the operational need for organisations to improve business processes and procedures as well as corporate culture. As we are a global company, we can meet these needs for any client - those operating within one country's borders and in one language or those operating across borders and in many languages. There are three business units/divisions within SAI Global namely the Information Services Division, the Compliance Division, and the Assurance Division. The Assurance Division helps organisations manage risk, achieve process or product certification and drive improvement by providing training, registration audits and supplier management programs that can improve business performance. We provide independent audits, assessments and certification of your products or business processes to ensure they comply with industry standards or customer specific requirements. We understand how compliance with those standards can improve the efficiency, economy and profitability of your operation. With auditing and assessment staff located around the world, our clients include large global corporations as well as single site organisations. 2.2 Audit methodology The Surveillance Audit was performed on May 2016 integrated with ISPO Peraturan Menteri Pertanian #19/Permentan/OT.140/3/2011. The audit programme was included in the body of report. The audit methodology for collection of objective evidences is site inspection, WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 24 of 230

25 documentation and record review and interview with staffs, workers, and other stakeholders. Objective evidences from documentation/record review in one area may also be cross checked with other objective evidences in other areas and with the evidence of implementation on site during the audit. During the audit, particular attention has been paid to previous non-conformities. The previous major and minor non-conformities were checked for being closed. Assessments plan has included but not be limited to areas of potential environmental and social risk. Considering previous audit findings, the mill and supply base were audited during this surveillance audit. Audit has paid special attention on some potential risks in the following areas: - All environment aspects of P&C including reporting of environmental management, waste handling (Dolok Mill and Dolok, Bah Lias, Bah Bulian and Si Bulan Estate) - All social aspects of P&C including land conflict issue (if any), customary right, labour issue, organization contribution (CSR program, empowerment of local community) (Dolok Mill and Dolok, Bah Lias, Bah Bulian and Si Bulan Estate) - All HCV aspects of P&C including identification, management and monitoring HCV (Dolok Mill and Dolok, Bah Lias, Bah Bulian and Si Bulan Estate). Audit plan is available in Appendix A of this report on page Qualification of the lead auditor and audit team member Ria Gloria Lead Auditor and audited mill and estate operation, legal aspect and SC Ria Gloria graduated with Bachelor of Chemical Engineering from Bandung Institute of Technology in She has working experience as Environmental Consultant for many years. She has completed ISO (1995), ISO 9001 (2004), RSPO P&C (2009) lead auditor training courses, RSPO SCCS (2010), ISPO (2012) lead auditor training courses. Supply Chain (2016) lead auditor training courses. For the last 11 years she has been involved in quality (ISO 9001) and environmental (ISO 14001) management system audits for very broad industrial and in the palm oil sector since 2003 for several plantations and mills. She has received training for good agricultural practices including integrated pest management and high conservation value ( ). Mujinius Jalaraya Audit Team Member and audited HCV and Social Aspect Mujinius Jalaraya, Bachelor from Faculty of Forestry, Bogor Agricultural University (IPB) in 2008, Majoring in Forest Resources Conservation. He has a working experience in palm oil plantations as SHE Assistant at PT. Astra Agro Lestari Tbk in and as Supervisor Sustainability at Teladan Prima Group in He joined the SAI Global since April 2014 as Auditor ISO 9001: 2008, ISPO and RSPO. Various training has followed, such as : Supply Chain Lead Auditor Courses (2016), Lead Auditor ISO 9001: 2008 Training (2014), Auditor ISPO Training (2014), Lead Auditor RSPO Training (2014), HCV Assessor Training (2013), Internal Auditor ISO 14001: 2004 Training (2013 ), Training for Trainers (2013), Training OHS Expert/Ahli K3 Umum (2010), etc. He has much experience in application of quality management system, environmental and OHS management system in the company and much involved in audit of the management system. During work at SAI Global he has had experience for audit ISO 9001: 2008 in various industries and services, RSPO and ISPO audit for several oil palm plantation companies. Daniel Sitompul Audit Team Member and audited OHS Aspect Daniel Sitompul graduated with Bachelor of Chemical Engineering degree from Indonesia Institute of Technology in He has working experience as Quality, Environment and Safety Consultant for many years. He has completed ISO (2007), OHSAS (2010), Ahli K3 Umum (2007), ISO 9001 (2009), RSPO PC Training (2013), Auditor SMK3 (2013) dan ISPO Auditor WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 25 of 230

26 Training (2013). He has also completed the training form government regarding to Safety Management System (SMK3), PROPER and AMDAL (environment). For the last 5 years he has been involved in quality (ISO 9001), Safety (OHSAS 18001) and environmental (ISO 14001) management system consultancy and audits for very broad industrial and in the palm oil sector since 2013 for several plantations and mills. Fitria Rahmayanti Audit Team Member and audited Environmental and OHS Aspect Fitria Rahmayanti owned bachelor degree majoring health nutrition from Gadjah Mada University. She has experience as nutritionist at hospital in Jakarta. She joined SAI Global Indonesia in She has followed the lead auditor training ISO 9001:2008 (2012), ISO 14001:2004 (2012), lead auditor training ISPO (2013) also registered in local government ministry of manpower AK3U. She is also the ISPO auditor who has obtained a certificate from the ISPO Commission, Ministry of Agriculture of Indonesia, in February Stakeholder consultation Stakeholder consultation was performed to internal and external stakeholders. Internal stakeholders included staffs and workers. External stakeholders were selected by considering that they have an interest in the organisation activities, directly border with organisation, area where the workers live. External stakeholders included NGO, government and civil societies. Letters were also sent to external stakeholders to invite for comment or individual / group discussion. Group and individual discussions with stakeholders (Table 12) were conducted during audit, to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. Surrounding village of estate and mill has been chosen to represent societies. Group and individual discussions were conducted for two sessions. First session was conducted especially for around stakeholder directly affected on estate and mill, i.e. Head of village, farmers. Second session was conducted especially for labour union, gender committee and selected workers. Group interview was conducted for workers with similar job while others were interviewed individually in the scope to verify compliance against relevant criteria and indicator related to infrastructure facility, labour, social aspect (discrimination and sexual harassment), environment and HCV. The result of stakeholder consultation used to justify fulfilment of some indicators, e.g. criterion 2.2 indicator major 3, minor 1 and minor 2, criterion 2.3 indicator major 1, criterion 6.5 indicator minor 1, criterion 6.6 indicator minor 1, criterion 6.7 indicator minor 1, criterion 6.8 indicator minor 1, criterion 6.9 indicator minor 1, 2 and 3, criterion 6.10 indicator minor 1 and 2, criterion 6.11 indicator minor 1, etc. The result of these consultations was provided in Appendix D on page 212. Table 12: List of internal and external stakeholders STAKEHOLDERS Internal stakeholder (mill and estates) Head of SPSI Head of Gender Committee Workers External Stakeholder (mill and estates) Head of Village: METHOD OF CONSULTATION Individual discussion Group Discussion Group discussion for workers with similar role, otherwise individually interviewed Group discussion WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 26 of 230

27 - Dolok - Si Bulan - Bah Bulian Transmigration and Labour Department of Kab. Simalungun, Batubara and Serdang Bedagai Agriculture and Plantation Department of Kab. Simalungun, Batubara and Serdang Bedagai Environmental Agency of Kab. Simalungun, Batubara and Serdang Bedagai National Land Agency (BPN) of Kab. Simalungun, Batubara and Serdang Bedagai Sub District Head (Camat) of Lima Puluh, Bandar, Se Balai, Bosar Maligas District Police of Bandar GAPKI AMAN (Aliansi Masyarakat Adat Nusantara) WWF Indonesia Sawit Watch An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent 2.5 Date of next surveillance visit The next surveillance visit will be conducted around May 2017 three months before datum month of the certification period. 3.0 AUDIT FINDINGS 3.1 Action taken on previous audits findings All non-conformances (Major and Minor) from the previous audits have been followed up by taking corrective actions. Corrective actions have been implemented and verified. All corrective actions were considered as closed satisfactorily. However there was recurrence of NC in Supply Chain Clause D Claim and use of certification mark and or logo CPO and PK were sold under Green Palm. The organisation did not register the transaction in etrace (Refer to NCR ). During 2015 the organisation did not record and balance CPO and PK certificate sales for each mill, but overall record for PT PP London Sumatera and started recorded for each individual mill on The data is presented in Table 13a to d below. Table 13a: Green Palm CPO Certificate Sales 2015 all PT PP London Sumatera DATE VOLUME (MT) BUYER REF 6-May Fritolay (A Division of Pepsico) May Kappus Seifen GmbH Riesa & Co Kg WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 27 of 230

28 DATE VOLUME (MT) BUYER REF 8-May Natra SA May Beiersdorf AG May Vandemoortele Group May Procter & Gamble Jun Fritolay (A Division of Pepsico) Jun Fritolay (A Division of Pepsico) Jun Farmo SPA Jun AB Foods & Beverages (Thailand) Ltd Jun Daudruy Van Cauwenberghe Et Fils Jun Van Delft Biscuits BV Jun Advanced Liquid Feeds Ltd Jun Sodexo Jun Unilever Supply Chain Company AG Jun Agro Supply A/S Jul Frieslandcampina Jul Advanced Liquid Feeds Ltd Jul Advanced Liquid Feeds Ltd Jul Conagra Foods Inc Jul Conagra Foods Inc Sep Fritolay (A Division of Pepsico) Sep Fritolay (A Division of Pepsico) Sep Fritolay (A Division of Pepsico) Sep Fritolay (A Division of Pepsico) Sep Fritolay (A Division of Pepsico) Sep Maymo Cosmetics S.A Sep Lantmannen Unibake Sweden AB Sep Daudruy Van Cauwenberghe Et Fils Sep-15 3,800 Ulker Biskuvi Sanayl A.S Oct Advanced Liquid Feeds Ltd Oct-15 1,000 Fiska Molle AS Oct-15 1,000 PT Brahma Binabakti Oct Oy Karl Fazer AB Oct-15 2,375 Oy Karl Fazer AB Oct Nuova Ruggeri SRL Oct-15 2,477 Fritolay (A Division of Pepsico) Oct Fritolay (A Division of Pepsico) Oct-15 2,000 Fritolay (A Division of Pepsico) Oct Nove Alpi SRL Oct-15 2,950 AB Mauri (UK) Limited Oct-15 3,000 Procter & Gamble Oct-15 1,252 Procter & Gamble Oct Daudruy Van Cauwenberghe Et Fils WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 28 of 230

29 DATE VOLUME (MT) BUYER REF Audit Report 22-Oct-15 2,700 Nevedi (Dutch Feed Industry Association) Nov-15 2,000 Procter & Gamble Nov Carecos Kosmetik GmbH Nov Advanced Liquid Feeds Ltd Nov Dulcesa S.L. Unipersonal Nov Culinary Arts Specialties, Inc Nov-15 3,360 Fritolay (A Division of Pepsico) Nov-15 1,000 Daudruy Van Cauwenberghe Et Fils Nov PT Salim Ivomas Pratama Tbk (Refinery) Dec Valio Ltd Dec-15 1,200 Kaka AB Dec The Belgian Chocolate Group NV Dec-15 3,675 Mondelez Europe GmbH Dec-15 2,000 Kerry Foods Limited Dec Delhaize Group SA/NV Dec Qualityfoodgroup Spa Dec-15 1,862 Colgate Palmolive Company Dec Cadbury India Limited Dec-15 5,000 Mondelez Global LLC Dec-15 4,028 Mondelez Global LLC Dec-15 4,191 Mondelez Global LLC Dec Gala Kerzen GmbH Dec Moi International (Aust) Pty Ltd TOTAL 112,827 Table 13b: Green Palm PKO Certificate Sales 2015 all PT PP London Sumatera DATE VOLUME (MT) BUYER REF 24-Jun Unilever Supply Chain Company AG Sep Colgate Palmolive Company Unilever Supply Chain Company 30-Sep AG Oct KAO Corporation Oct Fritolay (A Division of Pepsico) Oct Saraya Co Ltd Oct Givaudan Suisse SA Oct Beiersdorf AG Oct Beiersdorf AG Nov Pagen AB Nov Pagen AB WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 29 of 230

30 12-Nov L'Oreal Nov Colgate Palmolive Company Nov Colgate Palmolive Company TOTAL 12,835 WI Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 30 of 230

31 3.3 Description of audit findings RSPO Principle and Criteria PRINCIPLES 1: COMMITMENT TO TRANSPARENCY 1.1 Growers and millers provide adequate information to relevant stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages and forms to allow for effective participation in decision making There shall be evidence that growers and millers provide adequate information on (environmental, social and/or legal) issues relevant to RSPO Criteria to relevant stakeholders for effective participation in decision making. Specific Guidance: For 1.1.1: Evidence should be provided that information is received in appropriate form(s) and language(s) by relevant stakeholders. Information will include information on the RSPO mechanisms for stakeholder involvement, including information on their rights and responsibilities. a. Does the company maintain a list of stakeholders? (E.g. listed by category and stakeholders listed should be site specific) b. What is the frequency of updating the stakeholder list? c. Is there evidence of stakeholder verification? d. What type of information is provided? (E.g. Environmental, social and legal) e. What is the frequency and level of access to this information? f. How and where is the information disseminated? g. Who is responsible for providing & updating information? h. Is there an SOP available to describe the process (of information List of stakeholder, last updated in May 21 st, 2016 Communication procedure (EMS-P05), date on 10 August 2009 Public consultation and interview with stakeholder in May 23 th 25 th, 2016 Field observation and interview with employee Organization has defined list of stakeholder and updated once a year, last updated in May 21 st, 2016 both in Si Bulan Estate, Bah Bulian Estate, Dolok Estate and Dolok Mill. Stakeholder information which was updated such as contact person, name of institution, address and phone number. Stakeholder verification has been performed by organization through visiting and contacting stakeholders directly, if there is a change then immediately will be updated. It was sighted that stakeholder verification has been done and evidenced. Information provided to public and stakeholder specified in social communication procedures -Communication procedure (EMS-P05), date on 10 August Information regarding environmental, social and legal was provide for stakeholder based on their needs since it relevant such as: Plan for social and environmental impact assessment, Occupational health and safety plan, Plan for the reduction and prevention of pollution, Company policy, Certificate/land use rights, HCV management plan, FF price, etc. Information was confidential and restricted for stakeholder such as: financial information. Documents available to the public and stakeholder can be provided to stakeholders according to their relevance through a written request to the organization. The information most frequently requested by stakeholders are information related to the management of occupational helath and safety (P2K3 report) - Disnakertrans, (Minor NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 31 of 230

32 sharing/dissemination)? i. Are stakeholders aware of the type of information available and the procedures for accessing the information? environmental management report (wastewater, LB3) - BLH, employment report - Disnakertrans, production data and area statements - BPS, etc. Organisation has performed the stakeholder meeting on June and July 2014 to discuss regarding corporate social responsibility program and to enhance relationship between company and stakeholder. However Information provided to the public and stakeholder has not been disseminated to the stakeholder by organisation. Organization has assigned a responsible person for providing and updating information and stakeholder that was Humas/KTU. Responsibility and function was described in Humas/KTU job description. SOP to describe the process of information sharing/dissemination defined in social communication procedure EMS-P05 dated 10 August Consultation and communication with stakeholders conducted by collecting community leaders, village heads and local community or visiting the office/the village hall to meet with the village head, village officials and community. Stakeholders do not aware regarding the type of information available and the procedures for accessing the information. It was verified during public consultation and interview with stakeholder in May 23 th (M) Records of requests for information and responses shall be maintained. Minor Non-conformance : - No evidence that organisation has communicated to stakeholder related public information which available and defined in Communication procedure (EMS- P05), date on 10 August 2009 Guidance: Growers and millers should have a Standard Operating Procedure (SOP) to respond constructively to stakeholders, including a specific timeframe to respond to requests for information. Growers and millers should respond constructively and promptly to requests for information from stakeholders. Growers and millers should ensure that sufficient objective evidence exists to demonstrate that the response is timely and appropriate. See Criterion 1.2 for requirements relating to publicly available documentation. See Criterion 6.2 on consultation. See Criterion 4.1 on SOPs. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 32 of 230

33 a. Does the company have an SOP to ensure constructive response to stakeholders? b. Who is the personnel in charge (PIC)? c. Does the SOP cover the elements under 1.1.1? d. Is there a clear time frame for response to request for information? e. Are records of requests for information and responses maintained? f. Are responses to requests for information timely and appropriate? Communication procedure (EMS-P05), date on 10 August 2009 Log Book: Notes of society and stakeholders aspirations and the information request record 2015 and 2016 Public consultation with stakeholders and the local community May 23 th 25 th, 2016 Field observation and interview with employee Organization has defined the procedure to ensure constructive response to stakeholders in Procedure Communication EMS-P05 dated 10 August Procedure described the requests for information and the aspirations of stakeholders. Requests for information can be submitted in writing to the organization, all the information and aspirations will be addressed by organization with consideration couple of things before information and aspiration was rejected or approved. Responses can be handled directly by Managers, but if necessary coordination and consideration of management, information passed on to the public. The initial response was given no later than one month after receipt of the request from stakeholders. PIC whos tasked associated with social communication are Estate manager with the daily implementing are Humas. This procedure already covers elements Clear time frame for response to request for information has been explain above; The initial response was given immediately after receipt of the request from stakeholders. Records of information requests and aspirations documented in the Log Book: Notes of society and stakeholders aspirations and the information request record. Records of requests for information and responses were well maintained by the document controller. Organization responses to requests for information can be demonstrated and archived properly. The responses to requests for information were timely and appropriate. Some example for information request and responses were verified during audit. Audit Report 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes (M) Publicly available documents shall include, but are not necessarily limited to: Land titles/user rights (Criterion 2.2); Occupational health and safety plans (Criterion 4.7); Plans and impact assessments relating to environmental and social impacts (Criteria 5.1, 6.1, 7.1 and 7.8); HCV documentation (Criteria 5.2 and 7.3); Pollution prevention and reduction plans (Criterion 5.6); Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 33 of 230