Roundtable on Sustainable Palm Oil 2nd Surveillance Audit Report No: ASA2_14005

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1 Roundtable on Sustainable Palm Oil 2nd Surveillance Audit Report No: ASA2_14005 Certification assessment against the Generic RSPO Principles & Criteria 2013 and RSPO Supply Chain Certification System November 2014 PT Gawi Makmur Kalimantan Jorong Palm Oil Mill Head Office : Gawi Building 4 th floor, Kuningan Office Park, Jl. Setiabudi Selatan Kav.16-17, South Jakarta, Indonesia Branch Office : Jl. Pramuka No. 16 RT 020, Sungai Lulut, Banjarmasin Timur Banjarmasin Province, Indonesia Date of assessmen: September 19 21, 2016 Report prepared by: Naik Monang Parlindungan Lingga (RSPO Lead Auditor) Certification decision by: Abdul Qohar (Director TUV Rheinland Indonesia) Certification Body PT TUV Rheinland Indonesia Menara Karya, 10 th floor Jl. H.R Rasuna Said Block X-5 Kav.1-2 Setia Budi Jakarta, Indonesia Tel: Fax:

2 1.0 SCOPE OF CERTIFICATION ASSESSMENT National Interpretation Used Type of Assessment Certification Details Location and Maps Organisational Information / Contact Person Description of Supply Base Actual production volumes, tonnages and projected outputs Dates of Plantings and Replanting Cycles Area of Plantation (Total, Planted and Mature) Progress Against Time Bound Plan Compliance to Rules for Partial Certification Progress of associated smallholders or outgrowers towards RSPO compliance Approximate Tonnages Certified ASSESSMENT PROCESS Certification Body Qualifications of Lead Assessor and Assessment Team Assessment Methodology & Agenda ASSESSMENT FINDINGS Summary of Findings Status of Previously Identified Non-conformities Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions Noteworthy Positive Component Issues Raised by Stakeholders and Findings Pertaining to Issues CERTIFIED RGANISATION S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY Date of Next Surveillance Visit Acknowledgements of Internal Responsibility and Formal Sign-Off by Client APPENDICES Appendix 1 : Revised certificate Appendix 2 : List of Abbreviations Appendix 3 : List of Stakeholders Interviewed and Contacted Appendix 4 : Observations and Opportunities for Improvement... 91

3 Page 3 of Scope of Surveillance Audit 1.1 Generic RSPO Principle and Criteria 2013 The operations of the palm oil mill(s) and its supply base of FFB were assessed against the Generic RSPO Principle and Criteria 2013 & RSPO SCCS November Type of Assessment The surveillance assessment was carried out on 1 (one) mill i.e Jorong Palm Oil Mill (POM) and 2 (two) estates i.e West Estate (Kebun Barat) and Central Estate (Kebun Tengah) under PT Gawi Makmur Kalimantan Unit of Jorong,, Indonesia. 1.3 Certification Details The details of RSPO certification of PT Gawi Makmur Kalimantan Unit of Jorong area as per the table below Table 1: RSPO Certification details of PT Gawi Makmur Kalimantan Unit of Jorong RSPO Membership no. : RSPO Certificate no. : RSPO e-trace no. : RSPO_PO Date of first RSPO certificate & validity : until Date of 2nd surveillance audit : September 19 21, 2016 Date of previous surveillance audit : August 3 5, 2015 Date of revised RSPO certificate & validity (if applicable) : Dec 28 th, 2016, validity still Oct 01 st, 2014 until Sept 30 th, 2019 CPO tonnages claimed : 37, tonnes PK tonnages claimed : 8, tonnes

4 1.4 Location and Maps Page 4 of 91 Figure 1 : Location map of PT Gawi Makmur Kalimantan Unit of Jorong in Tanah Laut District, South Kalimantan, Indonesia PT Gawi Makmur Kalimantan Unit of Jorong Figure 2: Map of Estate PT Gawi Makmur Kalimantan Unit of Jorong

5 Page 5 of 91 Table 2: GPS locations for all estates and mills included in main assessment Name of mill / estate Jorong POM West Estate / Kebun Barat Central Estate / Kebun Tengah Location Damit Hulu Village, Batu Ampar Sub District, Tanah Laut District, Province Damit Hulu Village and Pemalongan Village, Batu Ampar Sub District and Bajuin Sub District, Tanah Laut District, Province Damit Hulu and Batalang Village, Batu Ampar and Jorong Sub District, Tanah Laut District, South Kalimantan Province GPS locations Latitude Longitude S E ,0 S ,6 E ,0 S ,0 E 1.5 Organisational Information / Contact Person Contacts details of the company are as follows: Company Name : Address : Contact Person : PT Gawi Makmur Kalimantan Head office: Gawi Building 4 th floor, Kuningan Office Park, Jl. Setiabudi Selatan Kav.16-17, South Jakarta District, DKI Jakarta Province, Indonesia Mill: Damit Hulu village, Batu Ampar Sub District, Tanah Laut District, Province Mr. Farid Makruf Telephone : farid.makruf@wingsagro.com 1.6 Description of Supply Base Table 3: FFB Supply Information for PT Gawi Makmur Kalimantan - Jorong Mill for 2015 and 2016 FFB Contributors Company owned estates FFB supplied Year 2015* FFB supplied Year 2016** Tonnes % Tonnes % Barat Estate*** 75, , Tengah Estate*** 100, , Sub Total I 176, , Smallholder Pamalongan Smallholder**** , Damit Hulu Smallholder**** 2, , Sub Total II 2, , Outgrower**** : 90, , Total 270, , Note: *) January to December 2015 (after grading) **) January to August 2016 (after grading)

6 Page 6 of 91 ***) Certified FFB contributors ****) Uncertified FFB contributors 1.7 Actual production volumes, tonnages and projected outputs. Table 4: Certified tonnages claimed, certified tonnages purchased or sold, total and projected CPO and PK production from PT Gawi Makmur Kalimantan Jorong Mill Realization production for 2015 Amount (MT) CPO PK Certified tonnages claimed 51, , Certified tonnages sold under RSPO SCCS system** - 8, Certified tonnages sold under ISCC system*** 18, Certified tonnages purchased - - Actual Production for 2015 owned estate 39, , Actual Production for 2015 from all (Owned estate, smallholder and out grower (Jan Dec) 60, , Conversion Factor year 2015 (average) Projection for 2016 Projected FFB for 2016 from all (own estate, smallholder and outgrower) Projected FFB for 2016 from own estate (budget)* 160, Projected output for 2016 own estate (budget) 37, , Projected output for 2016 from all (own estate, smallholder and outgrower) 51, , Conversion Factor year 2016 (average) Note: *) Based on projection of production year 2016 from company owned estates only **) All dispatch in year 2015 for CPO and PK under claim RSPO SCCS system (nul) ***) Year 2015, company sold 18, mt of CPO under ISCC system. 1.8 Dates of Plantings and Replanting Cycles The company follows a replanting cycle of years. Information on the dates of plantings is as per the table below. Table 5: Age and year of plantings of company estate supplying to PT Gawi Makmur Kalimantan Unit of Jorong Age & Year of Plantings Oil palm planted area at each estate (ha) Kebun Barat Kebun Tengah Total Period of January-December 2014

7 Page 7 of 91 Age & Year of Plantings Oil palm planted area at each estate (ha) Kebun Barat Kebun Tengah Total 0 5 ( ) ( ) 2, , ( ) , , ( ) , , TOTAL , , Period of January-July 2015* 0 5 ( ) ( ) 2, ( ) 1, , ( ) , , TOTAL 3, , , Period of January-December 2015** 0 5 ( ) ( ) 2, , ( ) 1, , ( ) - 3, , TOTAL 3, , , Note *) Verification carried out in 1st Surveillance audit **) Verification carried out in 2nd Surveillance in September The difference area was explained in principle 7.3 in the report. The company does not have replanting program because based on age of planting, the palm oil trees still productive. 1.9 Area of Plantation (Total, Planted and Mature) Table 6 : Oil Palm Planted Area Summary, FFB Production and Average yield/ha for PT Gawi Makmur Kalimantan Unit of Jorong Real existing planted Estate Name Total area (ha) January December 2015 Barat Estate Tengah Estate Oil Palm Planted area (ha) Mature (Production) area (ha) Immature (Nonproduction) (tonnes) FFB Production area (ha) Average yield/ ha (tonnes/ha) 4, ,919.30* 3, , , ,481.00* 4, , TOTAL 9, , , , January August 2016 Barat Estate 4, ,919.30* 3, , Tengah 5, ,481.00* 4, ,

8 Estate Name Estate Total area (ha) Oil Palm Planted area (ha) Mature (Production) area (ha) Immature (Nonproduction) (tonnes) FFB Production area (ha) Page 8 of 91 Average yield/ ha (tonnes/ha) TOTAL 9, ,400.30* 8, , Note: *) For Barat Estate; some area about ( Ha) consist of Ha still under cadastral process for land use rights and did not have land use rights. For Tengah Estate; some area about ( Ha) consist of Ha still under cadastral process for land use rights and did not have land use rights. Real existing planted for audit scope Estate Name Total area (ha) January December 2015 Barat Estate Tengah Estate Oil Palm Planted area (ha) Mature (Production) area (ha) Immature (Nonproduction) area (ha) FFB Production Average yield/ ha (tonnes) (tonnes/ha) 4, ,698.22* 3, , , ,073.17* 4, , TOTAL 9, , , , January August 2016 Barat Estate 4, ,698.22* 3, , Tengah Estate 5, ,073.17* 4,073,17-44, TOTAL 9, , ,701, , Note: *) real planted inside land use rights Table 7: Land use data for PT Gawi Makmur Kalimantan Unit of Jorong Real Planted Estate Name Total area (ha) Oil Palm Planted Area (ha) HCV * (ha) Land used for other purposes (ha) Housing, Road, Drainage, Nursery Not plantable area Mill Other ** January December 2015 Barat Estate 4, , , Tengah Estate 5, , TOTAL 9, , , Period of January-August 2016 Barat Estate 4, , ,

9 Estate Name Total area (ha) Oil Palm Planted Area (ha) HCV * (ha) Land used for other purposes (ha) Housing, Road, Drainage, Nursery Not plantable area Mill Other ** Tengah Estate 5, , TOTAL 9, , , Page 9 of 91 Real Planted for audit scope Estate Name Total area (ha)* Oil Palm Planted Area (ha) HCV ** (ha) Land used for other purposes (ha) Housing, Road, Drainage, Nursery Not plantable area Mill Other ** January December 2015 Barat Estate 4, , , Tengah Estate 5, , TOTAL 9, , , Period of January August 2016 Barat Estate 4, , , Tengah Estate 5, , TOTAL 9, , , Note: *) Land use rights Decree Letter No.5/HGU/BPN/1999 mentioned the company concession area was 9,264 Ha. **) HCV area inside the planted area Progress against Time Bound Plan Table 8: Time Bound Plan of the Other Management Units Name of Holding PT Gawi Makmur Kalimantan Kebun Satui & Kebun Timur PT Gawi Makmur Kalimantan Kebun Penajam PT Gawi Makmur Kalimantan Kebun Paser Location Tanah Bumbu Regency Penajam Paser Utara Regency East Kalimantan Paser Regency East Kalimantan Time bound plan for certification Remarks st surveillance 2015 Pre assessment 2015 Pre assessment 1.11 Compliance to Rules for Partial Certification Compliance of the uncertified management units of PT Gawi Makmur Kalimantan against the rules for partial certification according to RSPO Certification System clause was assessed by submission self assessment report. A summary of findings is as stated below:

10 Page 10 of 91 Partial Certification Requirements (a) The parent organization or one of its majority owned and / or managed subsidiaries is a member of RSPO. (b-d) A challenging time-bound plan for certifying all its relevant entities is submitted to the Certification Body (CB) during the first certification audit. The time-bound plan should contain a list of subsidiaries, estates and mills. Any revision to the time-bound plan or to the circumstances of the company shall cause the plan to be reviewed. for whether it is still appropriate, such that changes to the timebound plan are permitted only where the organisation can demonstrate that they are justified (e) No replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3. Any new plantings since January 1st 2010 must comply with the RSPO New Plantings Procedure (f) Land conflicts, if any, are being resolved through a mutually agreed process, e.g. RSPO Grievance procedure or Dispute Settlement Facility, in accordance with RSPO criteria 6.4, 7.5 and 7.6. (g) Labour disputes, if any, are being resolved through a mutually agreed process, in accordance with RSPO criterion 6.3. (h) Legal non-compliance, if any, are being resolved in accordance with the legal requirements, with reference to RSPO criteria 2.1 and 2.2. Audit Findings PT Gawi Makmur Kalimantan is RSPO member since September 14, 2012 with RSPO membership number Company made timebound plan and reported to RSPO as determined on the table There is no evidence that company replace primary forest for they all plantation area. According to Indonesia Governemnt regulation plantation area have to established not in primary forest but could be in logged over area forest (LOA) or production forest for conversion to other forestry uses (hutan produksi yang dapat dikonversi) or non forest area/land for other uses as well as non productive area, land bank and other category area decided by government. In Penajam estate, there are HCV areas amount of ha (HCV 1, 3 & 4). There is no evidence that company replace HCV areas. There are land conflicts due to overlapping land between the companies (Penajam estate) with the villagers where the conflict is usually resolved by deliberation. The company has procedures/mechanism for handling of conflict and identification, calculation and compensation the loss of legal of land with the involvement of local community representative and relevant agencies. The company has provided evidence such as minute of meeting (include of agreement) a handling of conflict, result of inventories regarding owner of land, record of compensation that was signed by both the parties, head of village and head of sub district, etc No labor dispute in PT Gawi Makmur Kalimantan Paser and Penajam Paser Utara estates has identified laws/regulations non-compliance and the company are processing it with non-compliance status Progress of associated smallholders or outgrowers towards RSPO compliance

11 Page 11 of 91 As seen from data in Table 3, in year 2015 is about 1.02% FFB recieved from smallholders, and for year 2016 until the the end of August, the mill recieved 1.38%. The company manage community s land for oil palm plantation and all FFB from smallholder will send to the mill. During the 2nd surveillance audit, the company (Jorong Mill and estate) has been showed the smallholder RSPO certification program and implementation as a mention in RSPO requirement system. The company has been arrange the program for next year Approximate Tonnages Certified The approximate tonnage certified, based on projection of production year 2016 from company owned estates only are as follows: Crude Palm Oil (CPO) : 37, tonnes Palm Kernel (PK) : 8, tonnes

12 Page 12 of ASSESSMENT PROCESS 2.1 Certification Body PT TUV Rheinland Indonesia is member of Group TÜV Rheinland Group, a global leader in independent testing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 490 locations in 62 countries on all five continents. PT TUV Rheinland Indonesia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, SA 8000, RSPO, ISPO, SNI, Sustainable Forest Management, Timber Legality Verification, etc. PT TUV Rheinland Indonesia s office is located in Jakarta, Indonesia. 2.2 Qualifications of Lead Assessor and Assessment Team The main certification assessment team members of certification audit are as per the table below : Name Position Qualifications/Experience Education: Bachelor of Forestry, Gadjah Mada University. Naik Monang Parlindungan Lingga Mhd Fundy C Kurniawan Wahyu Lead Auditor Auditor Auditor Training attended: ISPO Auditor, Quality Management System (QMS) Auditor/Lead Auditor (ISO 9001:2008) by IRCA, Environmental Management Systems Auditor/Lead Auditor Conversion Training by IRCA (ISO ), Lead Auditor RSPO Training, SCCS Training and HCVA Training Working experience: Field Assistant PT Sapta Karya Damai ( ), Auditor in PT Sucofindo ( ), and Auditor in PT TUV Rheinland Indonesia (2015-present). Education: Master Degree in Natural Reseource and Environmental Management, Bogor Agriculture University Trainings attended: Environmental Impact Assessment (EIA), Ecological Risk Assessment (ERA), Internal Quality Audit Training for Quality Management System, IRQA-QMS ISO 9001:2000, IRQA-EMS 14001, High Conservation Value (HCV), RSPO Lead Auditor Course, ISPO Auditor Course, SCCS Auditor and ISCC plantation audit. Working experience: Experienced in Environmental Impact Assessment, Environmental Health Safety Senior Officer (EHS-Officer) in Wilmar International Plantation, Internal Auditor for Wilmar International Plantation, Auditor for Rountable on Sustainable Palm Oil (RSPO), Indonesian Sustainable Palm Oil (ISPO), and Certification for Timber Legality Verification (SVLK) in PT TUV Rheinland Indonesia since June 2012 present. Education: Master Degree of Management of Manufacturing Engineering, Faculty of Engineering, University of Pancasila Degree of Mechanical Engineering, University of Indonesia Training attended:

13 Page 13 of 91 Name Position Qualifications/Experience RSPO Lead Auditor Course, Pro-Forest & Daemeter, Calculation of Green House Gas at Palm Oil Plantation, Komisi ISPO, ISPO Lead Auditor Course, Komisi ISPO, Verified Legal Compliance & Reduced Impact Logging Auditor Training, by Tropical Forest Foundation, SVLK Auditor Training, Ministry of Forestry, CoC Auditor LEI, ISO 9001:2008, IRCA Approved Course, ISO 14001:2004, IRCA Approved Course Working experience : PT Carsurin, as QHSE Coordinator ( ), PT Mutu Hijau Indonesia, Jakarta as Technical Manager (2010-May 2014) and Auditor PT TUV Rheinland Indonesia (May 2014-present) Education: Bachelor of Agriculture, Bogor Agricultural Institute Trainings attended: Indonesian Sustainable Palm Oil (ISPO) Auditor Training, Sustainable Forest Management (Bogor, 2013). Mhd Nurul Anwar Meidia Pratama Auditor Auditor Working Experience: Trainer for community development and entrepreneurship projects and motivator for micro business entrepreneurship program since 1999, experience as expert of micro business development ( ), team leader of community development program ( ), program manager of corporate social rensponsibility in PT Aneka Tambang (2012) and PT Timah (2013), ISPO Auditor since 2014, SFM Auditor since 2013, Agriculture Expert for ANDAL and AMDAL since Education: Bachelor of Social Sciences in Social Anthropology, Faculty of Social and Political Sciences, Padjajaran University. Training attended: Community Development, Public Relation, Decision Making and Problem Solving, Project Management, Leadership, ISO 14001, ISO 26000, ISO 50001, FPIC, ISO Working experience: Research Coordinator and Land Conflict Specialist at People Center Advocacy Institute (PERGERAKAN) Indonesia ( ), Project Officer at Studio Drya Media ( ), CSR and Media Relation Assistant Manager at PT Agro Harapan Lestari ( ), Sustainability Specialist at PT SDS Consulting ( ), CSR Coordinator and Sustainability Stategic at PT Jawa Power ( ), Social Specialist at The Forest Trust ( ), Head of Department CSR and External Relation at PT Mitrabara Adiperdana (2015), Associate Freelance Consultant at ICWS (2016), and RSPO Auditor at PT TUV Rheinland Indonesia (June 2016-present). 2.3 Assessment Methodology & Agenda The 2nd surveillance audit was conducted from September 19 21, 2016 as per the assessment program below. The assessment was carried out in accordance with PT TUV Rheinland Indonesia s RSPO audit procedure as well as the RSPO Certification Systems document. During the assessment, the qualified TUV Rheinland asses-

14 Page 14 of 91 sors used the RSPO standard as endorsed for the country in which the assessment took place and recorded their findings. Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without compromising the integrity of the assessment in anyway. All 2 estates and 1 mill were visited and the assessment team carried out field and document assessments of compliance to all the RSPO principles and criteria Generic 2013 and RSPO SCCS year November Common systems were identified and specific evidence was recorded for individual estates. Interviews were conducted at all estates and the mill. The company proposed the correction and corrective action for all identified non conformities raised to the certification body 30 days after the closing meeting. Verification of closure of major non-conformances was conducted 2 months after the closing meeting of the main assessment and implementation of corrective actions for minor non-conformities will be verified during the next surveillance audit. The certification assessment agenda is as explained below: Surveillance Assessment Agenda Date September 19, 2016 September 20, 2016 September 21, 2016 Location/ Main sites Jorong Oil Mill Palm Tengah Estate Barat Estate Main activities Document Reviews: verification of previously audit result, update legal requirements and compliance, OSH, environmental issues, hazardous waste management, HCV management plan, efficiency energy, water used record, training, production record, transperancy, code of ethical conduct, workers walfare, water plan management, GHG calculation, emission, pollution prevention and reduction plan, RSPO- SCCS. On-site Visit: loading ramp, weighbridge activity, production plant Interviews: Head of mill, staff operational, foreman, mill workers, OSH officer, production clerk. Document Reviews: verification of previously audit result, update legal requirements and compliance, OSH, environmental issues, hazardous waste management, HCV management plan and implementation, spraying activity, production record, ethical conduct, transperancy, workers walfare, emission, pollution prevention plan, harvesting, riparian bufferzone conservation, chemical and fertilizer stores, OSH Committee, accident records, GHG calculation. On-site Visit: harvesting and spraying activity in Block C-47 Division 2, chemical and fertilizer stores, housing, hazardous waste, fertilizing activity Block G-43 Division 5, harvesting activity in Block C-49 Division 2, EFB application in Block E-49 Division 4 and Land application in Block G-33 Division 6 Interviews: Head of Tengah Estate, agronomist personal, Estate manager, chemical and fertilizer stores officer, harvesters, sprayers, OSH staff, workers. Document Reviews: verification of previously audit result, update legal requirements and compliance, OSH, environmental issues, hazardous waste management, HCV management plan and implementation, spraying activity, production record, ethical conduct, transperancy, workers walfare, emission, pollution prevention plan, harvesting, riparian bufferzone conservation, chemical and fertilizer stores, OSH Committee, accident records, GHG calculation. On-site Visit: fertilizing activity in Block E-28 Division 2. Interviews: Head of Barat Estate, agronomist personal, Estate manager, chemical and fertilizer stores officer, harvesters, sprayers, OSH staff, workers, Land application operator.

15 Page 15 of ASSESSMENT FINDINGS 3.1 Summary of Findings During the 2nd surveillance audit there were found 31 non-conformities against RSPO P&C requirement (19 major non-conformities and 12 minor non-conformities) and 5 observations or opportunities for improvement were identified. Further explanation of the non-conformities raised and corrective actions taken by the company are provided in Section 3.2. The observations & opportunities for improvement are listed in Appendix 4. The following is a summary of findings made for the criteria listed in the Generic RSPO Principles 2013 and RSPO SCCS November Principle 1: Commitment to transparency Criteria assessed: CR1.1, CR1.2, CR1.3 Criteria not assessed: Findings: Company still hold a documented procedure of communication no. SOP/GMK-AGRO/01/08, rev. 04, regarding Procedure of Internal and External Communication, published in April 1 st GMK Jorong has identified and documented list of stakeholders. There are some communication records has showed during audit, such as finding as follow: Incoming and Out-Coming Logbook 2015/2016. a. Incoming and Out-coming letters logbook of HSE department 2014/2015. Letters registered to this list were communication between GMKJ with National Environmental Body (all level office). b. Logbook of Information request and responses 2015/2016. Letters registered to this list were communication between GMKJ with local stakeholders. There are still several conditions not compliances such as: Jorong Mill, Barat Estate and Tengah Estate does not have a list of stakeholders that is classify Jorong Mill, Barat Estate and Tengah Estate does not have the time uniformity to conduct updating the stakeholders Jorong Mill, Barat Estate and Tengah Estate does conduct optimally disseminate information to relevant stakeholders Based on the verification results in the Batalang village, the stakeholder does not understand the company's policies and procedures It condition was raised as non-conformity (NCR RSPO 00689). Internal and external communication procedure does not show the time needed to respond the requests of information from stakeholders. It condition was raised as non-conformity (NCR RSPO 00690). Company still hold a documented procedure of communication no. SOP/GMK-AGRO/01/08, rev. 04, regarding Procedure of Internal and External Communication, published in April 1 st Since the last audit, revisions has been conducted to this procedure but not including the main contain. The revisions that has been made were: 1. June 9 th 2014, change the numbering system. 2. March 12 th 2015, changes in pages 1 5 regarding verification page. Regarding to this procedure, documents that can be made publicly available, such as follows : 1. Vision and mission of the company 2. Company policy 3. EIA (AMDAL/UKL-UPL, RKL-RPL) Documents 4. Location permit 5. Land use right 6. Legal permits 7. Continuous improvement

16 Page 16 of CSR activity report 9. Social conflict resolution 10. Work health and safety program. The publicly available document lists not yet explicitly mentioned documents required by RSPO P&C such as: 1. Report and Plan of Environment and Social Impact Management. 2. HCV 3. Negotiation Procedures 4. Public Summary of certification assessment 5. Human Rights policy 6. Code of Ethical Conduct policy Barat Estate and Tengah Estate has not been maximized to socialize the policies related to: Negotiation procedure Grievance and complaints procedure Human right policy Plan and impact assessment related withsocial and environmental aspect HCV document It condition was raised as non-conformity (NCR RSPO 00691). There is a policy of Work and Business Ethics at Gawi Planttion Group No. 005 / DIR / GMK / JKT / VII / 15, dated 1 December 2014 which contains, among others: Workers should avoid any activities of personal interest in performing tasks Worker is prohibited from making decisions related to business interests because of personal interests, siblings, family, and their group without consideration of QCD (quality, cost, delivery) Workers are prohibited exchange of information / data with competitors Workers are prohibited from accepting gifts from other parties related to the company Workers are prohibited from accepting a bribe in any form Workers prohibited from engaging in any form of corruption Work and Business Ethics policy in Gawi Plantation Group already covers: Respect the natural behavior of the business, which is listed at number 13, 14, 15, 16 and 17 The prohibition of all forms of corruption, bribery and misappropriation of funds and resources, listed in numbers 10, 11 and 19 The disclosure of appropriate information in accordance with applicable regulations and prevailing industry practice numbers 7 and 8 Business ethics policy has been documented and communicated to employees in socialization forums, namely: Tuesday, February 16, 2016 at the main office of the participants 12 people (the department head office) Tuesday, 30 August 2016, in the Office of Vehicle, participants 6 people (department vehicles) Monday, August 29, 2016, in the Meeting Room PT GMK PKS Jorong, participants 21 people (security department) June 28, 2016, in the laboratory, participants 14 people (department Laboratory) Monday, May 23, 2016 in the factory, the participants 23 people (the department) Wednesday, 24 Agusstus 2016 Workshop, participants 17 people (department workshop M & R) Tuesday, April 12, 2016, in the factory, the participants 15 people (the department) Monday, April 4, 2016 in HRD Unit, socialization policy of the company to the workers outsourching Saturday, August 6, 2016 in HRD Unit, socialization company policy for employees outsourching Documentation is made in Indonesian, in the form of a report with photo socialization activities and list of attendees. Based on interviews with security officers and clerical workers, it is known that they understand the business ethics policy PT Gawi Plantation Group

17 Page 17 of 91 Compliance status: Non Compliance NCR RSPO (Minor non-conformity) There are still several conditions not compliances such as: Jorong Mill, Barat Estate and Tengah Estate does not have a list of stakeholders that is classify Jorong Mill, Barat Estate and Tengah Estate does not have the time uniformity to conduct updating the stakeholders Jorong Mill, Barat Estate and Tengah Estate does conduct optimally disseminate information to relevant stakeholders Based on the verification results in the Batalang village, the stakeholder does not understand the company's policies and procedures NCR RSPO (Major non-conformity) Internal and external communication procedure does not show the time needed to respond the requests of information from stakeholders. NCR RSPO (Major non-conformity) Barat Estate and Tengah Estate has not been maximized to socialize the policies related to: Negotiation procedure Grievance and complaints procedure Human right policy Plan and impact assessment related withsocial and environmental aspect HCV document Principle 2: Compliance with applicable laws and regulations Criteria assessed: CR2.1, CR2.2, CR2.3, CR2.4, CR2.5, CR2.6 Criteria not assessed: Findings: During the 2nd surveillance, Jorong mill and supply based has established the document of law and regulation list document, dated on January 2, All regulation should fulfil by company already listed on this document, there are consist of National and International ratification Act, Government Regulation, Presidential decree, Ministry decree, Indonesian Standard National, and local government regulation. All kind regulation above covered from legal land use rights, environmental, labour, best practice, hazardous waste, waste handling, biodiversity conservation and others. The copies law and regulation available in place, in soft file. Mill already record of law and regulation compliance effort, such as: Land application license renewal process, based on minutes of meeting record dated on July 28, 2016 about technically verification process for land application renewal of Jorong Mill. This document explained about information of laboratory analysis, total area will application for land application, application dosage and others. Until during the 2nd surveillance, there is no new information about the process progress, the company still waiting for official government related about this license process. District Head decree of Tanah Laut number 2/2014 about water surface utilization for Jorong Mill. This license valid from May 30, 2014 until May 29, There is no specific information on this license mentioned. Governor decree letter number 503/004/IX/KP2T/2014 about plantation business permit of PT GMK (for two mill under GMK management; Jorong and Satui) covered total area about 21, Ha, with mill capacity was 150 tonnes/hours FFB. Issued on Sept 15, 2014 in Banjarmasin.

18 Page 18 of 91 The company already has procedure number SOP/GMK-AGRO/01/22 Rev00 dated on 31/08/2015 about law and regulation identification and implementation. This document explained: Person in charge who responsible for law and regulation identification was Sustainability Head. Sustainability Head and HSE Staff search for new update law and regulation through the website, , or invited the related official government, and the Sustainbaility Head will put all law and regulation in to the law and regulation list document. All law and regulation summary will distributed and brief to the related department. Procedure also mentioned about up-dating time line for law and regulation will carry out in once year by Sustainability Head and HSE Staff, and evaluation implementation will check also in every once year. Jorong mill and supply based through the company procedure above already set the mechanism for ensuring the law and regulation implementation and compliance in every once year. Record of evaluation available in place, carry out in January 2016, found 16 law and regulation was not compliance. For this case, company developed the work program to fulfil the law and regulation not compliance yet. In the work program showed the time table for compliance process and person in charge related. Jorong mill and supply based has system for tracking any changes in the law and regulation through procedure number SOP/GMK-AGRO/01/22 Rev00 dated on 31/08/2015 about law and regulation identification and implementation. This procedure already mentioned in point number 4.3 law and regulation updating process will carry out in every once year through the , website, facsimile, invited the related official government, and others. And if any law and regulation changes, the person in charge will updated and inform immediately in law and regulation list document. Several compliance of regulations that have not been implemented by the company such as: Based on field visit at Tengah Estate on manuring activity (Division 5 Block G-43), spraying (Division 2 Block C-47), harvesting (Division 2 Block C-49), EFB application (Division 4 Block E-49) and Main Office and Barat Estate on manuring (Division 2 Block E-28) found the contents of first aid box does not accordance with Permenaker No. 15 year 2008 Operator in the Barat and Tengah Estate such as dumptruck, grader, compactor and tractor does not have license (SIO) in accordance with Permenakertrans No. 9 year 2010 about operator for lifting equipment Officer who operated welding in the workshop at Barat and Tengah Estate does not have welder qualification in accordance with Permenaker No. 2 year 1982 about welding qualification in the workplace The company does not yet conduct re-ratification related composition the committee of occupational health and safety has changed where the name of Nazar Fahrizal has resigned. Colonestrase test has not been performed regularly at least once a year in accordance with the recommendation Pesticide Management in the Workplace of Labor, Transmigration and Social agency of Tanah Laut District No. 566/017 / Pesticides / LK / VIII / 2016 dated August 22, 2016 (Mill, Barat Estate and Tengah Estate) Daily workers have not been registered as a participant BPJS Health (Mill, Tengah and Barat estate). This is not in accordance with Law No. 24 year 2011 about BPJS The company could not demonstrate evidence of compliance with laws and regulations Kepmenakertrans / Permenakertrans No. 100 and 102 year 2004, because it was found spray workers and fertilizers had not read, sign an employment contract and in the Jorong mill the workers who work overtime more than 3 hours per day (Mr. Ngadirun) It condition was raised as non-conformity (NCR RSPO 00692). The Company has a mechanism through internal audits to assess compliance with regulations conduct once a year but in the list of rules and regulations of the company has not been evaluated related to the fulfillment of regulations in accordance with the company's operations, among others: Permenakertrans No. 9 year 2010 about operator of lifting equipment Permenaker No. 15 year 2008 about content of first aid box Permenaker No. 2 year 1982 about qualification of welder in the workplace

19 Page 19 of 91 It condition was raised as non-conformity (NCR RSPO 00693). During the 2nd surveillance, there is no revised of the legal land use rights. Legal land use rights will presented below: Primary: the company has land used right permit (HGU) base on head of National Land Agency Decree Letter No. 5/HGU/BPN/99 dated January 14, 1999 with total area 9,264 ha according to Land Used Map No /1996 revision dated November 2, 1998 valid for 35 years (February 18, 2034) and HGU certificate No. 01 dated February 19, 1999 with total area 9,264 ha according to measurement letter No.01/1999 dated February 15, 1999 located in Damit village, S.Bakar village, Asam-asam village, P.Linuh village, Pamalongan village and Batalang village, Jorong Sub District, Batu Ampar District, Pelaihari Sub District, Tanah Laut Regency, Province. In head of National Land Agency Decree Letter No. 5/HGU/BPN/99 and HGU certificate No. 01 on behalf PT Damit Mitra Sekawan but on the page of registrationo transfer right and other recording informed the change of ownership certificate name to PT Gawi Makmur Kalimantan accordance with deed of incorporation no.34 dated of November 20, 2007 by notary of Dr Irawan Soerodjo, SH, M.Si (DP No.2810/1009 and 208/654/2009 dated of July 2, 2009). The company (West and Central Estate) has location permit (decision letter from head of National Land Agency Province no /01/KPT-08/1997 dated January 4, 1997) on behalf PT Damit Mitra Sekawan amount of 15,000 Ha in S.Bakar village, Pamalongan village, Damit village, Pantai Linuh village, Sabuhur village, Pelaihari Sub District, Batu Ampar Sub District, Jorong Sub District, Tanah Laut Regency, Province. In Minutes of land examination committee (committee B) no.04/ris-hgu/06/1998 dated June 29, 1998 that West and Central estate is zoned for non-forest uses (Kawasan Budidaya Tanaman Tahunan/Perkebunan) based on province & regency spatial map (appendix local government regulation no.3 year 1993 and no.13 year 1993) but based on decision letter of Head of Ministry of Forestry no. 435/Menhut/2009 dated July 23, 2009 that part of estate is production forest (Hutan Produksi) amount of Ha so the land exchange of the region in still ongoing processing status. Current condition for process it are the auditee has submitted request of the exchange of the region (letter no. 009/Dir/JKT/XII/2012 dated on December 24, 2012) to Ministry of Forestry and The Ministry of Forestry has replied to the letter it (no. S.378/BRPUK-1/2013 dated on June 17, 2013) where there is shortage of requirement i.e recommendation of approval for the release of the region into non-forest from Governor of. Additional I: for this area that the company is processing land used right HGU) permit where current condition, the company has conducted re-measurement by National Land Agency within in order of the national coordinate programme so that the results of the re-measurement can be used to continue the release of forest area process and has submitted letter (no.015/dir/gmk/jkt/iii/2014 dated on March 14, 2014) to National Land Agency for Region about Some document ownership auditee which related of processing Land Used Right (HGU) permit such as : 1). location permit (decision letter from head of national land agency Province no /06/KPT-08/2004 dated of August 12, 2004) on behalf PT Damit Mitra Sekawan amount of 280 Ha in Batalang village, Damit Hulu village, Batu Ampar Sub District, Jorong Sub District, Tanah Laut Regency, Province; 2). the land use map no dated on January 15, 2007 amount of 260 Ha (result of survey of cadastral); 3). a letter form National Land Agency Province no /24/109/BPN-43 dated on February 5, 2007 about answer to the previous application letter that the company should complete letter of release of forest area from Ministry of Forestry and remove the overlap area amount of 10 ha with land use permit (HGU) no. No. 5/HGU/BPN/99 or HGU certificate No. 01; 4). result of verification to field by Committee B team for forestry section dated on October 17, 2006 where it areas in production forest for conversion to other forestry uses (HPK) based on appendix decision letter from Ministry of Forestry and Plantation No.453/Kpts- II/1999 dated on June 17, Additional II: for this area that the company is processing land used right (HGU) permit where current condition, the company has not received a response until now from the National Land Agency of South Kalimantan Region for letter was submitted on 9 March Some document ownership auditee which related of processing Land Used Right (HGU) permit such as : 1). location permit (head of Tanah Laut Regency decree no. 14/IL/2007 jo 942 Tahun 2009 dated of October 2, 2009) on behalf PT Gawi Makmur Kalimantan amount of 104 Ha in Batalang village, Jorong Sub District, Tanah Laut Regency, South Kali-

20 Page 20 of 91 mantan Province; 2). the land use map no (section II (NIB A : ) and section I (NIB B : )) dated on July 27, 2010 amount of Ha (section I : Ha and section II : Ha where it is result of survey of cadastral). Additional III: for this area that the company is processing land used right (HGU) permit where current condition, the company has not received a response until now from the National Land Agency of South Kalimantan Region for letter was submitted on 9 March Some document ownership auditee which related of processing Land Used Right (HGU) permit such as : 1). location permit (head of Tanah Laut Regency decree no. 13/IL/2007 jo 941 Tahun 2009) on behalf PT Gawi Makmur Kalimantan amount of Ha in Damit Hulu village, Batu Ampar Sub District, Tanah Laut Regency, Province; 2). The land use map no (NIB A : and NIB B : ) dated on July 27, 2010 amount of Ha (section A : Ha and section B : 3.54 Ha where it is result of survey of cadastral). During the document verification of boundary pillars monitoring records in September 2016, found 29 boundary pillars in the Tengah estate in good condition, accessible and available in place. This records complete with photograph and boundary pillars list and boundary pillars location map. In the last 1st surveillance audit found the planted area was outside legal land use rights about Ha, this is consist of Ha outside legal land use rights (HGU) and Ha (in cadastral process). For condition, the company develop cooperation to cover this area. During the 2nd surveillance, this area was include in Serba Usaha Daya Mitra Sejahtera Cooperative with total area under cooperative was Ha. This cooperative has been legality document through the Akta Pembentukan Koperasi No. 05 dated on October 7, Then this cooperative also get approval from the Head of District of Tanah Laut No. 14/BH/XIX.8/2015 issued on October Especially for cadastral above, progress process in 2016 the company submitted letter No. 004/Dir/GMK/JKT/VI/2016 dated on June 9, 2016 addressed to the Regional Office of Land Agency South Kalimantan. This letter mentioned about request information update process for land use rights process for land total about 280 Ha. Also letter No. 006/Dir/GMK/JKT/VI/2016 dated on June 8, 2016 addressed to the Regional Office of Land Agency. This letter mentioned about request information update process for land use rights process for land total about Ha. But until during the 2nd surveillance audit there is no any response from the related official government. For Barat estate, boundary pillars monitoring program also available in place for Based on boundary monitoring records showed that all boundary pillars available in place with accessible and good condition (based on photograph evidenced). Found 22 boundary pillars in Barat estate, but for boundary pillars located in Buluh, Tandukan dan Paikat hills not monitored by the estate because there is no access to there and if estates develop access to the location it will be high risk because the community will enter the location to search wood and animal for hunting. So the company make policy to not develop the access for this area. Also, this HCV area side-aside with Meratus Mountain protected areas by the National regulation. During the 2nd surveillance, for planted area outside the land use rights, the company already submitted letter to the Regional Office of Land National Agency of about request information for land use rights process with letter number 007/Dir/GMK/JKT/VI/2016 on June 9, Based on letter above total area still in process was Ha. In the last 1st surveillance, found planted area outside the HGU was about Ha and in cadastral process about Ha with Ha already planted (in cadastral area). For planted area outside the land use rights the company develop the cooperative for this area, to covered the legality of this area. The legality of the cooperative based on legality document through the Akta Pembentukan Koperasi No. 05 dated on October 7, Then this cooperative also get approval from the Head of District of Tanah Laut No. 14/BH/XIX.8/2015 issued on October 2015, with cooperative name was Serba Usaha Daya Mitra Sejahtera, covered total area about Ha. The real land use rights used by the company (Barat and Tengah estate) presented below:

21 Page 21 of 91 Remarks Barat Estate Land use rights Cadastral process* Without land use rights* Total Planted (ha) 3, , Tengah Estate Planted (ha) 4, , Total 7, * * 8, Note: all planted area in cadastral process and without land use rights will transferred by company into cooperation/smallholder namely was Serba Usaha Daya Mitra Sejahtera. But, even though this planted outside the land use rights has been cooperative license (both of two estate Barat and Tengah estate), neither abort the obligation to get the legal land use rights. Based on company information, both of two estate Barat and Tengah estate (under Jorong mill supply based) accordance to the letter above, the current condition (2nd surveillance) still waiting for Panitia B or B committee for approval process of Peta Bidang to issue the land use rights decree and certificate. The Company does not have conflict resolution plans and land claim based on the principle of FPIC. It condition was raised as non-conformity (NCR RSPO 00694). There are still several conditions not compliances such as: The company does not have participatory mapping procedure Map of conflict and land claim does not indicated as result of participatory mapping It condition was raised as non-conformity (NCR RSPO 00695). There was no new land dispute found during surveillance. The last land disputes that has happened has been covered in main audit (2014), such as: a. Company against PT Prafa Coal Mining. There is coal mining activities on behalf PT PT Prafa Coal Mining (coal mining activities) amount of 409 ha Inside land use right (HGU) areas where allegedly overlaps with PT GMK s land use right (HGU) no,1 year Current condition is cassation process in the Supreme Court. b. Company against community members. The company has provided evidence such as record of meeting with 36 owners or cultivators of the community s land inside of the company s land use right area. The result was the owners or cultivators did not want to release their land to the company because they need the land for their daily life. For example was: a. Minute of meeting with AS from Damit Hulu village on June 17th, 2014, cultivator of 5.92 ha land at Block K division 13. b. Minute of meeting with Dg from Damit Hulu village on June 17th, 2014, cultivator of 1.24 ha land at Block C division 30. c. Minute of meeting with Dm from Damit Hulu village on June 17th, 2014, cultivator of 8.5 ha at Block J division 5. c. Company against 36 local Palm Oil Farmer that planted inside HGU. The company has provided evidence such as copy of negotiated agreements between the company with 36 owners or cultivators of the community s land inside of the company s land use right area. The content of negotiated agreement example : a. Agreement with villager of land claimer 5.92 ha land at Block K13 division 5 ; land claimer 1.24 ha land at Block C30 division 2 from Damit Hulu village on June 17th, 2014, they still not agree to sell his land to b. Agreement with land claimer of 8.5 ha land at Block J17 division 5 from Damit Hulu village on June 17th, 2014, that they agree to sell his land to company; c. Agreement with land claimer from Damit Hulu village on June 09th, 2014, Block F25 division 2 that agree, if companies want to provide compensation for his land;

22 Page 22 of 91 Field check has been conducted during surveillance. The coal mining area has been abandoned by all parties (communities and companies), no mining activities found at field. The land inside HGU that has been planted by local community and does not yet meet resolution (compensation values) still owned/claimed by the community. Management has a clearly boundary between community s claimed land and company s planted area. A map that consist of claimed land inside HGU has been developed based on field visit and information from the claimers. Interview result with local community leader found that all negotiation process has been conducted in a proper procedural manner. No indication regarding the uses of para-military during negotiation process. There are still several conditions not compliances such as: The Company has a FPIC procedure but not yet fully adopted the principles of FPIC Maps of land use and land management which still claims by the community does not produced based on the results of participatory mapping It condition was raised as non-conformity (NCR RSPO 00696). Compliance status: Non Compliance NCR RSPO (Major non-conformity) Sveral compliance of regulations that have not been implemented by the company such as: Based on field visit at Tengah Estate on manuring activity (Division 5 Block G-43), spraying (Division 2 Block C-47), harvesting (Division 2 Block C-49), EFB application (Division 4 Block E-49) and Main Office and Barat Estate on manuring (Division 2 Block E-28) found the contents of first aid box does not accordance with Permenaker No. 15 year 2008 Operator in the Barat and Tengah Estate such as dumptruck, grader, compactor and tractor does not have license (SIO) in accordance with Permenakertrans No. 9 year 2010 about operator for lifting equipment Officer who operated welding in the workshop at Barat and Tengah Estate does not have welder qualification in accordance with Permenaker No. 2 year 1982 about welding qualification in the workplace The company does not yet conduct re-ratification related composition the committee of occupational health and safety has changed where the name of Nazar Fahrizal has resigned. Colonestrase test has not been performed regularly at least once a year in accordance with the recommendation Pesticide Management in the Workplace of Labor, Transmigration and Social agency of Tanah Laut District No. 566/017 / Pesticides / LK / VIII / 2016 dated August 22, 2016 (Mill, Barat Estate and Tengah Estate) Daily workers have not been registered as a participant BPJS Health (Mill, Tengah and Barat estate). This is not in accordance with Law No. 24 year 2011 about BPJS The company could not demonstrate evidence of compliance with laws and regulations Kepmenakertrans / Permenakertrans No. 100 and 102 year 2004, because it was found spray workers and fertilizers had not read, sign an employment contract and in the Jorong mill the workers who work overtime more than 3 hours per day (Mr. Ngadirun) NCR RSPO (Minor non-conformity) The Company has a mechanism through internal audits to assess compliance with regulations conduct once a year but in the list of rules and regulations of the company has not been evaluated related to the fulfillment of regulations in accordance with the company's operations, among others: Permenakertrans No. 9 year 2010 about operator of lifting equipment Permenaker No. 15 year 2008 about content of first aid box Permenaker No. 2 year 1982 about qualification of welder in the workplace NCR RSPO (Minor non-conformity) The Company does not have conflict resolution plans and land claim based on the principle of FPIC NCR RSPO (Minor non-conformity) There are still several conditions not compliances such as:

23 Page 23 of 91 The company does not have participatory mapping procedure Map of conflict and land claim does not indicated as result of participatory mapping NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: The Company has a FPIC procedure but not yet fully adopted the principles of FPIC Maps of land use and land management which still claims by the community does not produced based on the results of participatory mapping Principle 3: Commitment to long-term economic and financial viability Criteria assessed: CR3.1 Criteria not assessed: - Findings: Mill and Estate has a record of budget summary for 3 years from In the budget summary record showed the information about plan for incoming FFB (own estate, smallholder and out grower), CPO and PK production plan, OER and KER for CPO and kernel, oil losses, production cost, fertilizing and spraying plan, production plan every years, planting years, road maintenance, replanting plan, and others. Compliance status: Full Compliance Principle 4: Use of appropriate best practices by growers and millers Criteria assessed: CR4.1, CR4.2, CR4.3, CR4.4, CR4.5, CR4.6, CR4.7, CR4.8 Criteria not assessed: Findings: The company has procedure for agronomy and mill, Laboratory and maintenance of PT Gawi Makmur Kalimantan year The procedure has been cover key process such as harvesting, transportation, fertilizing, IPM, Good Agriculture Practice, Supply Chain. Each unit has a copy of the procedure and it is documented in an appropriate language. Based on interview with worker on site such as fertilizing activity (Block G-43 Division 5), harvesting (Block C-49 Division 2), spraying (Block C-47 Division 2), EFB Application (Block E-49 Division 4), that the worker has been understood about the content and implementation the procedure. The procedure has been available in each unit. The company has list of all procedure. In the list of procedure has been stated the revision for each procedure. The procedure has been available in the Indonesian language. The company has been conduct internal audit to monitor implementation the procedure on January The company assigns Internal Audit Department to conduct audit to assess compliance the procedure. The company conduct internal audit once a year. The company has procedure of corrective action (SOP/GMK-Agro/01/04 revision 01 effective date June 7, 2013) and procedure of preventive action (SOP/GMK-Agro/01/05 revision 01 effective date June 7, 2013). The company has recording of internal audit result and record of corrective action for nonconformity that has been raised. Mill aready record of third praty FFB sourced for 2015 and 2016 until August. Based on production record for: 1. Year 2015: Pemalongan smallholder about mt Damit smallholder about 20, PT SSU about 11, mt Kop Cipta Prima Sejahtera about 1, mt

24 Page 24 of 91 Kelompok Tani Swadaya about 3, mt PT Candi Artha about 40, mt PT Bangun Kalimantan about 5, mt CV Gratia about 11, mt KUD Agro Mandiri about mt Kelompok Tani Rukun Tani about 2, mt CV Satria Bagus about 10, mt PT Rahmat Perkasa about 2, mt 2. Year 2016 until August: PT SSU about 6, mt Damit smallholder about 1, mt Pemalongan smallholder about mt Kop Cipta Prima Sejahtera about mt Kelompok Tani Swadaya about 1, mt PT Candi Artha about 15, mt PT Bangun Kalimantan about 3, mt CV Gratia about 3, mt Kelompok Tani Rukun Tani about mt CV Satria Bagus about 9, mt PT Rahmat Perkasa about mt CV Tanah Laut Sejahtera about mt PT Unggul Bunga Bakung about mt UD Berkat Tani about 4,900 mt Based on MoU/ work agreement between Jorong Mill with the Third party source, example, work agreement No: 1. No. 357/PJB-TBS/GMK/IV/16 between PT Gawi Makmur Kalimantan with PT Unggul Bunga Bakung, on the statement letter signed by Management/Director of PT Unggul Bunga Bakung stated that they will provide and guarantee the FFB they delivere to PT Gawi Makmur Kalimantan (Jorong Mill) come from legal FFB as a required form law and regulation. 2. No. 311/PJB-TBS/GMK/X/14 between PT Gawi Makmur Kalimantan with PT Bangun Kalimantan, on the statement letter signed by Management/Director of PT Bangun Kalimantan stated that they will provide and guarantee the FFB they delivere to PT Gawi Makmur Kalimantan (Jorong Mill) come from legal FFB as a required form law and regulation. 3. No. 274/PJB-TBS/GMK/V/15 between PT Gawi Makmur Kalimantan with Koperasi Jasa Profesi Cipta Prima Sejahtera, on the statement letter signed by Chairmen of Cooperative stated that they will provide and guarantee the FFB they delivere to PT Gawi Makmur Kalimantan (Jorong Mill) come from legal FFB as a required form law and regulation. The Company has procedures No. SOP / GMK-AGRO / 01/20 Rev0 date issued on , about the FFB source of third party. But the procedures are not clearly mention about the ensuring of selecting the FFB source from third parties in accordance with laws and regulations. It condition was raised as non-conformity (NCR RSPO 00697). The company has procedure of an-organic manuring for Mature and Immature (SOP/GMK-Agro/02/08 revision 01 effective date June 7, 2013) and application of empty bunch and solid (SOP/GMK-Agro/02/10 revision 03 effective date January 10, 2016). The company has been conduct manuring activity in accordance with related procedure. The company has the records of fertilizer application both organic and an organic fertilizer until December 2015 and until August Records showed that the realization of fertilization activities conducted based on recommended fertilization work program and doses. Following the realization of fertilization in 2015 and 2016 with the following details: Tengah Estate Year 2015

25 Use of FFB Produced No Type of fertilizer Realization (kg) fertilizers (ton) (kg/ton FFB) 1 Kieserite 14, , KCl 57, , HGFB 6, , Hikay/NPK 13 3,474, , Calsium Carbonat 29, , Year 2016 (until August 2016) Use of FFB Produced No Type of fertilizer Realization (kg) fertilizers (ton) (kg/ton FFB) 1 ZA 176,650 44, KCl 143,300 44, RP 175,300 44, Kieserit 22,750 44, HGFB 37,701 44, NPK 13/Hikay 1,165,950 44, NPK ,000 44, Dolomite 36,750 44, Barat Estate Year 2015 No Type of fertilizer Realization (kg) Use of FFB Produced fertilizers (ton) (kg/ton FFB) 1 ZA 30,800 75, KCl 293,200 75, RP 81,050 75, Kieserit 7,300 75, HGFB 2,780 75, NPK 13/Hikay 2,370,750 75, NPK ,000 75, NPK ,5 6,000 75, NPK TE/CCM 44 93,100 75, Year 2016 (until August 2016) Use of FFB Produced No Type of fertilizer Realization (kg) fertilizers (ton) (kg/ton FFB) 1 RP 1,600 43, HGFB 37,540 43, NPK 13/Hikay 1,164,050 43, NPK ,339,150 43, NPK 20,900 43, Page 25 of 91

26 Page 26 of TE/CCM 44 The Company has a determination of census tree and tree sample procedures (SOP / GMK-Agro / 02/11 revisions 01 effective date June 7, In that procedure has not listed the schedule of leaf analysis and soil analysis. It condition was raised as non-conformity (NCR RSPO 00698). The company (Barat and Tengah estate) has evidence of fertilizing implementation and EFB application. Barat and Tengah estate has record of leaf analyze that has been conduct on July until August 2015 and analyze by Bah Lias Research Station to get the recommendation of fertilizer for year Soil analyze has been conduct on August until September 2012 and analyze by Researh Soil and Agriculture Development Laboratory, Agriculture Department. The study has been incorporated into the fertilizer program. The company (Barat and Tengah Estate) has record of EFB application. Tengah estate has records of the use EFB to maintain soil fertility i.e year 2015 EFB application as much as 22, ton with cover area as large as ha and year 2016 (until August), EFB application as much as 10, ton with cover area as large as ha. Barat estate has records of the use EFB to maintain soil fertility i.e year 2015 EFB application as much as 27, ton with cover area as large as ha and year 2016 (until August), EFB application as much as 16, ton with cover area as large as ha. The company also (Tengah estate) has records of solid application year 2015 as much as 5, ton with cover area as large as ha and year 2016 (until August) solid application as much as 3, ton with cover area as large as ha. Barat estate has records of solid application year 2015 as much as 6, ton with cover area as large as ha and year 2016 (until August) solid application as much as 2, ton with cover area as large as ha. The company also (Tengah estate) has records of land application year 2015 as much as 104, m3 with cover area as large as ha and year 2016 (until August) land application as much as 63,684 m3 with cover area as large as ha. Barat estate has records of solid application year 2015 as much as 128,059 m3 with cover area as large as ha and year 2016 (until August) solid application as much as 94,086 m3 with cover area as large as ha. During the 2nd surveillance based on EIA document April 2002 on page IV-3, stated that the company (both of two estate (Barat and Tengah estate) located around above sea level, with topography condition is flat until undulating in most of the area. In some fraction area is directly adjacent with secondary forest in north area. Next, in pages of IV-4, topography condition and slope, i.e.: 0 8% (flat) with total area 6,723.8 Ha (72.58%) 8 15% (undulating) total area 1,592.5 Ha (17.19%) 15 25% (hilly) total area Ha (8.39%) > 40% (steep) total area Ha (1.30%) The EIA document also said soil type in location is podsolic red and yellow, and there is a potential erosion in some company s area such as: In area planted by palm oil with 1 year planting, erosion about 73.3 until ton/ha/year, this classified in to medium potential erosion In area planted by palm oil with 3 year planting, erosion will be lower than palm oil in 1 year planting, because the cover crops and palm oil canopy will be covered top soil. Estimated the erosion about 44.3 to ton/ha/year, this is classified as low potential erosion. The company has marginal area map made by topography condition as well as non-productive area map is available. Based on those maps, management could recognized which area should be terraced, not planted or need special treatment. Management strategy on steeps area is using contour terrace system. Every year the company provide budget for terrace maintenance and monitored in monthly estate progress report. Management of planted marginal soil regulated in SOP/GMK-AGRO/02/03 Rev01 dated on 07/06/2013 about Soil and Water Conservation. Area with slope > must be made terrace with 4 meters width depend on soil

27 Page 27 of 91 condition. Terrace installed align with contour with stop bund every 50 m. During the field assessment in Field number D46/D47 division II, this area are installed the terracing system, also in others field during the field assessment showed that the estate commit to maintain the soil erosion. In the other hand, Tengah estate also maintain the soil erosion through the cover crop in some area with hilly and step condition. Tengah estate has been established the road maintenance for every division. This program in generally not implementation yet, only some location was implemented, example in division I, ring road field number B35, B36, B37 and B38. While in division II, there is no implementation yet carry out by the estate. During the field assessment, road condition was good. The reason why the road maintenance not implemented yet until during the 2nd surveillance because the heavy equipment (excavator) in broken condition. This estate didn t have any heavy equipment, they borrowed from the Barat estate. Others example in division IV, this division already carried out road maintenance in field number F48, F49, F50, F51, F52, G49 and G50. This is was meet with the division program. Based on soil type information in EIA and HCV document assessment, there is no peat soil found in Tengah estate. During the 2 surveillance audit, Tengah estate has established the water management and water source identification. But the estate couldn t showed the record of water sources identification. This is raised as a nonconformity. Based on water source monitoring and implementation plan for 2016, estate already conducted the activity in February 2016 in field number G44 division V. But based on field observation found chemical activity in palm oil tree near the water stream in that location. Based on company procedure number SOP/GMK-AGRO/01/14 about river protection in section number 4.a mentioned that the small water stream the company should provide the buffer zone about 5 m in rights and left of the water stream and not allowed for chemical activity. This is raised as a nonconformity because noncompliance with the company procedure. This is raised as a nonconformity (NCR RSPO00699). Water quality analysis in Tengah estate already conducted by the estate through the certification result No.05976/LHP/VII/2016 dated on June 22, 2016 issued by PT Unilab Perdana (laboratory analysis). The water quality analysis accordance to the Ministry Decree No. 416/1990. Based on water quality analysis record, the result still below the parameter standard. Barat estate showed the monitoring program for water source maintenance. Which the activity such as washing and cleaning area, fencing area, signboard installment and pipe checking. Barat estate showed the river cleaning and washing photograph. Barat estate has been carried out the water quality analysis, when the water sampling took from water treatment. This water analysis accordance to the Health of Ministry Decree No.416/1990. Based on laboratory result issued certificate result No /LHP/VII/2016 dated on June 22, 2016 the result showed under the parameters regulation. But, there is no evidence that the company has been conduct analyzed the water quality of the river is required in the matrix RKL RPL.. This is raised as a nonconformity (NCR RSPO00699). Both of two estate has been established the procedure for riparian bufferzone protection through the document number SOP/GMK-AGRO/01/14 Rev02 issued date on 24/02/2014. This document already set about how to protect the riparian buferzone through the set the riparian bufferzone wide based on national regulation, and give the marking on the palm oil tree also installment the riparian bufferzone protection signboard. The company could not show a map of water source which located in the company's concession area. This is raised as a nonconformity (NCR RSPO00699). While for Jorong mill already carried out the water quality analysis based on certification result No /LHP/VII/2016 dated on June 22, 2016 issued by PT Unilab Perdana (Laboratory analysis) accordance

28 Page 28 of 91 to the Ministry Decree of Health No.416/1990. Based on certification result the water quality was under the parameters standard. Tengah estate has established the IPM management plan. This IPM management plan was for 2016 covered about EWS monitoring plan for every field and division. Based on company procedure number SOP/GMK- AGRO/02/13 Rev01 dated on 07/06/2013 about pest and disease control for mature and immature plan. This procedure already explained about pest and disease control through the larva collecting, pesticide use, tree injection, root injection, biological treatment. Based on company procedure in page 14 mentioned EWS will carry out in every month (monthly) if not good condition (attacked more than 4 Ha) and every three month if attacked total area lowest than 4 Ha. EWS time line in once year already stated in chemical budget for Example for division 2, the EWS will carry out 4 th rotation in once year. Based on recapitulation record for EWS in 2016 from January until July, showed there is no critical attacked, but found in division field number B37, B38, C40, and D41 in the EWS latest on July. If the medium level the company will handled with chemical activity. Person in charge who responsible for IPM implementation already trained by the company evidenced through the certificate on behalf Sukari, Isar, Akhyadi, Nanang Taufik, this training conducted on August 23 26, Tengah estate already record for biological control such as Turnera subulata and Tyto alba. Map of Tyto alba (owl box) installment and beneficial plant planted map available in place. While in Barat estate, also they have a IPM program for This program covered all division in Barat estate, also showed the EWS location will implemented and total area will check. Based on EWS recapitulation for January July 2016, found medium level attacked by rat in July 2016 located in: Division I, field number F26, I28A Division III, field number I18 Division IV, field number K31, J35B Division V, field number I11A, I12A, K11A Division VI, field number L16 For this medium level attacked, Barat estate carried out the chemical handling used Warfarin to control this condition. There are minutes of meeting for chemical handling dated on July 28, 2016 issued by Pest and Disease coordinator of Barat Estate. On this minutes of meeting, showed the total Warfarin used about kg for Ha total applied. Based on EWS record after chemical used, the level attack reduce until below the 20% as accordance to the procedure number SOP/GMK-AGRO/02/13 Rev01 issued date on 07/06/2013 in page number 11, section b mentioned chemical application should stop when the level attack below 20%. Then based on recapitulation for caterpillars level attacked showed the low level. For this, estate used the biological control such as Tyto alba and Turnera subulata to control the level attacked. Barat estate also carried out the Tyto alba (owl) individual census, for August 2016 recorded the 16 mature owl, 6 immature owl and 3 egg. Map of owl box location and biological planted map also available in place. For Pest and Disease coordinator of Barat estate has been qualified by evidenced of training and certificate on August 23 26, This training conducted by Indonesian Palm Oil Research Institute. While for person in charge for EWS implementation in field also get training from Pest and Disease coordinator of Barat estate evidenced by Pest and Disease training attendant list document number 01/GMK/T&D/2016 on January 2, 2016 attendant by 9 person. Then, on April 8, 2016 also carried out IPM training for person in charge who responsible for EWS implementation, evidenced by attendant list, this training attendant by 28 person, complete with training photograph. The company has been established commitment to reduce of limited pesticides/chemical. This policy signed by Vice President Director on March 3, This policy covered about efficiency and effectiveness of chemical use, IPM implementation, minimize chemical use, best practice for chemical handling, brief and training periodically for chemical workers, and environmental protection from the chemical use. Company also has

29 record of chemical list under WHO class 1A, 1B and Stockholm and Rotterdam convention pesticides. Page 29 of 91 Procedure for chemical handling and chemical use also established in place, through the document number SOP/GMK-AGRO/02/16 Rev01 dated on 7/06/2013 about chemical/pesticides handling. This procedure already explained about chemical handling, from chemical incoming, storage process in store, timing for chemical use, first aid for chemical contamination and others. Tengah estate has been license for chemical use in working area through the decree letter number 025/HIPK-WAS/VIII/2016 issued by Labour, Transmigration and Social Official Government of Tanah Laut district in August 22, This letter valid for 1 years since the issued date. Which chemical type mentioned in license was Supretox 276 SL, Aladin 865 SL, Primaxone 280 SL, Winson 20 WP, Metaprima 20 WG, Wintag 490 SL, Amiphosate 480 SL, Matador 25 CS, Furadan 3 GR, Ratgone BB, Walfarine and Storm BB. Based on chemical stock card in 2016 (chemical stored) chemical type kept in chemical store was compliance with the chemical license above. Tengah estate already has record of chemical use applied per Ha per active ingredient, presented below: No. Active ingredients Used total per Year 2015 Average used/ha 2016* Average used/ha 1. Glifosate (litter) 2, Paraquat dichloride (litter) Methyl metsulfuron (gr) Note *) Until August 2016 Tengah estate already has IPM plan. Based on IPM monitoring plan implementation showed the level attacked still in below the procedure company standard. So the company used the biological treatment. During the 2nd surveillance audit, there is no record and evidenced that the Tengah estate use the prophylactic use of pesticides. Based on chemical use records for 2016, found paraquat dichloride used on May in division III and VI with total 40 litter. The company has record for chemical policy, on this policy document stated that the paraquat will use until In 2016, paraquat will use about 300 litter, in 2017 about 200 litter and in 2018 about 150 litter. Based on chemical used for 2015 for paraquat used was 20 litter and for 2016 until August used was 40 litter. This chemical used was under estate target. This policy already communicated to the division on January 1, Tengah estate already established the procedure for chemical/pesticides handling document number SOP/GMK-AGRO/02/16 Rev01 dated on &/06/2013 about chemical/pesticides handling. This procedure already explained about chemical handling, from chemical incoming, storage process in store, timing for chemical use, first aid for chemical contamination and others. Chemical training record also available in place, evidenced by attendant list of chemical training dated on September 3, 2015, attendant by 16 chemical workers, also complete with training certificate, example certificate training number 14176/KP3/KS/I/2014 issued by Fertilizer and Pesticides Commission. Based on field assessment in spraying activities in field number C47 division II, showed that all chemical workers already understood properly how to handle the chemical and spraying activities based on interview. Chemical workers also said that they are understood if happen the chemical contamination, riparian bufferzone protection from chemical activities, medical surveillance and others. All of chemical workers already used complete PPE and they understood why they should use the PPE. Chemical foreman also complete with first aid box, and MSDS to handling if any chemical accident. During the chemical store assessment also showed the chemical store already kept in good condition ac-

30 Page 30 of 91 cordance to the chemical handling company procedure. The chemical container are categorized as hazardous waste and already disposal to the authorized collector by evidence hazardous manifest document number dated on May 03, Based on decree letter number /551-KUM/2013 issued by Tanah Laut Head of District, this license valid for 5 years since the issued date on November 08, 2013, the chemical second container categorized as a hazardous waste and should kept in hazardous temporary store in 90 days. Tengah estate already carried out the medical surveillance (cholinesterase test) for chemical workers conducted on May 18, 2016 by Medrin Laboratory Clinic. Based on medical surveillance test all of chemical workers was in good condition to work. Based on chemical workers interview there is no any chemical workers in breast feeding and pregnancy condition. But every morning briefing, the foreman was communicate to the chemical workers that the company not allowed any chemical workers on duty when they are in breast feeding and pregnancy condition, and the company controlled this through the clinic testing. For Barat estate, they already have the chemical use in work place license, based on decree letter number 026/HIPK-WAS/VIII/2016 issued by labour, Transmigration and Social Official Government of Tanah Laut district. Valid for 1 years since the dated of issue on August 24, Chemical type mentioned in the license was Jurassic 480 SL, Supretox 276 SL, Winsion 20 WG, Triester 480 EC, Cynoff 25 UL, Spreader, Storm BB, Sime Ebor Baits. Based on chemical stock card in 2016 (chemical stored) chemical type kept in chemical store was compliance with the chemical license above. Based on chemical used records for 2015 and 2016 until August, found the increase of paraquat used in Barat estate, are presented below: No. 1. Active ingredients Isoprophanol and Ployglikol Nonyl Fenol Eter (litter) Used total per Year 2015 Average used/ha 2016 Average used/ha Methyl metsulfuron (kg) Triklopir Butoksietyl Ester Paraquat dichloride Isoprophyl Glyphosate , Barat estate has commitment to reduce the paraquat use, while for 2015 paraquat use will about 4, litter (target commitment) and in 2016 will use about 3, litter (target commitment), based on chemical use record above ingredients applied per ha, showed that the paraquat used increase than last year. The Barat estate has reason for this, i.e.: thining out in 2015 and spraying for wood in The Company has a safety and health policy signed by vice president (Hadi Setiadarma) on January 2, Safety and health policy has covered the risk of accidents and mitigation of risk. The company has been socialized of safety and health on July 28, The company has HSE program year The program has covered safety and health aspect and has been equipped with target of implementation. The safety and health program such as: Socialization of safety and health has been conduct on June 2, 2016 First aid training has been conduct on May 25, 2016 Socialization of emergency response procedure has been conduct on May 9-11,2016 Safety and health inspection has been conduct from January until August 2016

31 Page 31 of 91 The safety and health program has been distributed to each unit. The company has due date to implemented HSE programme and there is evaluation if any programme does not implemented. The company has aspect of hazard identification, assessment and risk control for safety, health and environmental (FR/GMK-SMK3/HRC/01/01, issued date January 2, 2016). There are still several conditions not compliances such as: Document identification of risk assessment in Jorong mill does not cover about stock measurement activities in the storage tanks. There are no records were recorded near misses that occur in the Jorong mill area. This is not according with SOP / KLS-SMK3 / 01/15 that at point 6.1 states each nearmiss that occur must be recorded It condition was raised as non-conformity (NCR RSPO 00700). The company has form for data of work accident (FM/GMK-SMK3/DKK/01/01). Based on work accident investigation report from January until August 2016, there is an accident on behalf Nurudin (harvester) on August 13, The Company has a control plan to prevent accidents recurring basis by socializing PPE and safety aspects. Based on observation at estate and mill, the worker has been wearing properly PPE. The company has socialization records of safe working practices by used PPE such as socialization of PPE has been conduct on June 7, 2016 at Tengah estate. The company has training plan for year 2016 related safety and health such as lifting equipment, welding and steam equipment. The company has policy for replaced the PPE that has been regulated on procedure of request and PPE replaced (SOP/GMK-Agro/01/16 revision 2, issued date February 24, 2014) and provide in accordance with type of activity. The procedure stated if any PPE damaged and replaced with showing the PPE that has been damaged and the company give the new PPE. Based on mill and field visit, the workers has been wearing the properly PPE in accordance with HIRAC. The company has person in charge to implement of safety and health that has been stated on Committee of Occupational Health and Safety. The committee of occupational health and safety has been conduct monthly regularly meeting. The company has been reported related committee of occupational health and safety report to related agency i.e committee of occupational health and safety report period I (January until March 2016) and period II (April until June 2016) on June 2, The company has records of committee of occupational health and safety meeting every month from January until August Occupational health and safety committee (P2K3) does not discussed all aspects of safety where there is work accidents occurred in August 2016 but does not discussed in the occupational health and safety committee meeting in August It condition was raised as non-conformity (NCR RSPO 00701). The company has emergency procedure (SOP/GMK-Agro/01/08 revision 02, issued date February 24, 2014) cover work accident, fire, explosion, flood, earthquake, commotion, electrical disturbances and spills or leaks chemical. Based on interview with workers, they have understood clearly for the emergency procedure. The company has been conduct first aid training on September 6-7, 2016 (Tengah estate). The company has records of first aid training such as training material, training documentation such as photograph and attendant list. Based on field visit, the foreman has been equipped with first aid kit. There are still several conditions not compliances such as: During field visit to Tengah Estate on harvesting activities (Division 2 Block C-49) found a drug taken by harvesting foreman has expired, among others rivanol (expired April 2016), Rohto (expired in December 2015) and Ranitidine (expired in May 2015) Could not shown evidence of implementation the first aid training that has been conduct in 2015, the last recording which shown is the implementation of training in 2014 (mill) It condition was raised as non-conformity (NCR RSPO 00702). The company provided medical care for workers i.e clinic. In addition, the company also includes employees in the worker social assurance, among others BPJS Health and BPJS Employment. However, not all employees involved in the BHL BPJS. The company has program to engage the workers in the worker social assurance. The company has records of accident and the company has been calculating of lost time accident. Based on data of LTE from January until August 2016, the company has lost 6 days cause of work ac-

32 Page 32 of 91 cident. Jorong Mill The organization has established a documented procedure SOP HRD Training Document No. SOP/GMK- AGRO/04/03, Reev. 01, dated June 07, The procedure written by Corporate Chief HRD, Checked by MR and approved by Director. The procedure was explained regarding training processes witihin the organization. For example as stated in the procedure poin 2.1, regarding Training Calendar, i.e: Training Deparment will be coordinate with Regional Head/Divisiion Head to identified Traininig Need Analysis (TNA) at each business unit respectively at beginning of year. Training Department will be announce the training calendar to Regional Head/Division Head/Estate Head There is sufficient evidence that Jorong Mill maintain a list of staff and workers, whom training must be provided as documented in the document Assessment of Jorong Mill s Operation Competency/Penilaian Kompetensi Operasional Pabrik PKS Jorong, dated February 03, The document has contained completed list of Jorong Mills Empoyee (60 persons totally) and competency needed by each person respectively. The competency divided into some fields, i.e: Administration, Workforce, Technical, Operational System and Sustainablility. The Jorong Miil has established a formal training programme that covers aspects of the RSPO Principles and Criteria, as documented in the document Training needs planning/rencana Kebutuhan Pelatihan for Jorong Mill s employee for year Some of training planned for year 2016 are sustainability systems for mandore processes, OHS operator for Boiler, and etc. The formal training program was include regular assessment of training needs of all staff and workers and documentation of all the training assessment needs, formal training conducted and the list of participants attending these formal training. There is evidence that training for workers was cover the following: The health and environmental risks of mills machineries/equipments exposure; Ways to minimise exposure to workers and their families; International and national instruments or regulations that protect workers health; and Productivity and mills best management practices Some records of year 2015 and 2016 were reviewed, i.e: Socialization review schedule of job description, working instruction, and standard operating procedure. Socialization review schedule of company s policy (PT Gawi Makmur Kalimantan) for year Training plan of year 2016 of Banjarmasin branch including PT Gawi Makmur Kalimantan. Attendance list of socialization of Company Regulation, dated September 05, The socialization was attended by 5 (five) persons. Attendance list of socialization of working instruction for Mill operation, dataed May 18, Attendance list of socialization of working instruction for Mill operation, dated June 13, 2015 Attendance list of socialization of working instruction for Mill operation, dated June 08, 2015 Attendance list of socialization of working instruction for Mill operation, dated June 11, 2015 Tengah Estate There is sufficient evidence that the organization has a formal training programme that covers all aspects of the RSPO Principles and Criteria, and also includes regular assessments of training needs and documentation of the programme. Herewith, some documents were reviewed, i.e.: Competency assessment of Estate s Operational, the assessment was covered maintenance mandore, harvest mandore, harvest keran, fertilizer mandore, division mandore, emplacement mandore, and IPM mandore. Based on training need analysis result, some of training was identified, that are: introduction and awareness training of RSPO, ISPO, and ISCC management systems, and training of technical matters such as SOP for maintenance, fertilizer, harvesting IPM and etc. Schedule of Internal Training for year 2016, the training schedule was coveresd castration and sanitation, insertion palm oil, anorganic fertilizer, land application, application of empty fruit bunch, integrated pest and disease management, pesticides dose and applicator, storage and usage of pesticides; fertilizer storage, sociaization of vision and mission and policies and company s regulation, cencus and

33 Page 33 of 91 plant identification, Back Bunch Census and FFB sensus, harvets, infrastructures (roads and bridges), FFB transportation, and etc. However, all of programmes scheduled starting on October Some of Internal Training was realized on Tengah Estate for Year 2015 as below: a. February 07, 2015: training of leadership / problem solving, was attended by 14 participants. b. March 13, 2015: training of determination of pesticides dosage and applicator (including pesticides storage and usage), was attended by 12 participants. c. May 12, 2015: Cencus and palm oil plant identification, was attended by 18 participants. d. June 09, 2015: Black Bunch Census and bunch Cencus e. September 02, 2015: Socialization of Harvesting SOP and PPE area s training program for year 2016 was covered basic security, safety driving, transportation s maintenance and repair, OHS for Crane s operator, OHS for steam engine operator, OHS for Welder, OHS officer, fire fighting, supervisory skill, archiving documents, basic leadership, basic agonomy, SOP for harvesting and replanting, warehouse management, awareness of ISO 9001 and ISO 14001, management of pest and disease, genset s operator, and also was conducted FPIC, LTR, & RCR workshops. August 30-31, 2016: Report of Standar Operasional Prosedur (SOP) for Harvesting and Replanting Training that was conducted at Satui Mill s Training Center. Document of assessment of pest and disease control training. The company has maintained records of each employees, the records of training for each employee spreadly in many documentation, such CV, certificates of training, attendance list, evaluation results, and etc. For example training record of Mr Amlani (chemist at Barat Estate), Junaedi Efendi (Loader Operator at Jorong Mill), Triyono (Engineroom operator at Jorong Mill), and etc. Compliance status: Non Compliance NCR RSPO (Major non-conformity) The Company has procedures No. SOP / GMK-AGRO / 01/20 Rev0 date issued on , about the FFB source of third party. But the procedures are not clearly mention about the ensuring of selecting the FFB source from third parties in accordance with laws and regulations. NCR RSPO (Minor non-conformity) The Company has a determination of census tree and tree sample procedures (SOP / GMK-Agro / 02/11 revisions 01 effective date June 7, In that procedure has not listed the schedule of leaf analysis and soil analysis. NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: Found indications of spraying on palm oil tree directly set aside with the river flows at Block G44 Division V Tengah estate and Block L25 Division 6 Barat Estate. There is no evidence that the company has been conduct analyzed the water quality of the river is required in the matrix RKL RPL. The company could not show a map of water source which located in the company's concession area. NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: Document identification of risk assessment in Jorong mill does not cover about stock measurement activities in the storage tanks. There are no records were recorded near misses that occur in the Jorong mill area. This is not according with SOP / KLS-SMK3 / 01/15 that at point 6.1 states each nearmiss that occur must be recorded NCR RSPO (Major non-conformity)

34 Page 34 of 91 Occupational health and safety committee (P2K3) does not discussed all aspects of safety where there is work accidents occurred in August 2016 but does not discussed in the occupational health and safety committee meeting in August 2016 NCR RSPO (Minor non-conformity) During field visit to Tengah Estate on harvesting activities (Division 2 Block C-49) found a drug taken by harvesting foreman has expired, among others rivanol (expired April 2016), Rohto (expired in December 2015) and Ranitidine (expired in May 2015) Could not shown evidence of implementation the first aid training that has been conduct in 2015, the last recording which shown is the implementation of training in 2014 (mill) Principle 5: Environmental responsibility and conservation of natural resources and biodiversity Criteria assessed: CR5.1, CR5.2, CR5.3, CR5.4, CR5.5, CR5.6 Criteria not assessed: Findings: The Jorong Mill, Barat and Tengah Estates has conducted EIA in accordance with the scope of operational activities as documented in documents ANDAL and RKL-RPL. The EIA was documented according to local and national requirements. The EIA document has approved by competent authority agency, according to Decree of Head of Environmetal District of Tanah Laut, Kalimantan Selatan Province No. 660/06/BLH/2011, dated February 24, 2011, Regarding approval of environmental management plan (Rencana Pengelolaan Lingkungan Hidup RKL) and environmental monitoring plan (Rencana Pemantauan Lingkungan Hidup - RPL) b PT Gawi Makmur Kalimantan at Desa Damit Hulu, Batu Ampar Sub District, Desa Pamalongan, Bajuin Sub District, Desa Pasir Putih and Sungai Cuka, Kintap Sub District, Desa Jorong, Batalang Asam-asam, Jorong Sub District, Tanah Laut District, Kalimantan Selatan province. The scope of EIA Documents was covering for areal ha and Mill processing with capacity 60 tonne FFB per hour. The documents includes details on the estate activities, usage of natural resources, climate, air and water quality, geography and other environmental aspects, social aspects, potential environmental impacts, and monitoring. The environmental impact assessment was done using a matrix of severity and probability of occurrence to determine the status of the significance of an environmental impact by considering its relevance to the relevant regulations. The organization s environmental management plan was documented on RKL, include identification of responsible person(s); potential impacts from current practices; measures to mitigate negative impacts; timetable for change (where changes in current practices). There is evidence that RKL has implemented and documented on Laporan Pelaksanaan RKL & RPL periods Semester I There is evidence that the organization has conducted environmental monitoring for semester I 2016, i.e.: Quality of air (ambient and emission of boiler #1, genset #1 and #2, Quality of water (river water, well water, monitoring well at blok H.30, monitoring well #1, monitoring well #2, effluent inlet and outlet at pond #5, There is evidence that all monitoring results still in accordance threshold value as required by the law and regulations. The organization has reported the implementation of RKL & RPL of Semester I 2016 to the competent authority, i.e.: Province Environmental Agency (BLHD) of Province at August 05, 2016 (refer to letter head no. 234/GMK-BJM/HSE/VIII/2016). The environmental s management and monitoring plan (RKL-RPL) was incorporate a monitoring protocol, adaptive to operational changes, and implemented to monitor the effectiveness of the mitigation measures. The organization (Jorong Mill, Barat and Tengah estates) has conducted environmental aspect identification and impact assessment (EIA) regularly 1 (one) time per year. Result of assessment has documented in document Aspek dan Dampak Lingkungan (2016). The environmental identification and assessment was covered all estate s and mill s activities, i.e::

35 Page 35 of 91 HRD, KTU (administration), and audit (office s activities) Emplacement (camp s environmental cleanliness, kitchen activities, genset operation, and mess s activities) Agronomy (division office, weeding land, spray pre-planting, planting/insertion, plant maintenance, fertilization, insertion, land arrangement, inventory, control of pests and diseases, harvesting, loading TBS to Truck, and transportation,) Civil works (road s development and maintenance, and development processes Polyclinic activities Logistic (fertilizer, herbicides, pesticides, insecticides, transportation mode, materials, diesel fuel, oil, waste control, and returns back of fertilizer sacks. The EIA reflect the results of monitoring and where there are operational changes that may have positive and negative environmental impacts. PT Gawi Makmur Kalimantan (Barat and Tengah estate) has conducted an assessment and identification of protected, rare and endangered species and HCV habitats within their area. An identification of flora and fauna has been carried out by a consultant, Re-mark asia in year 2012 (July to August 2012). The results of these assessments are documented in HCV assessment report. Scopes of the HCV assessment, i.e:: covered: Barat Estate Jorong Plasma Damit Hulu Village, KUD (coooerative) Ulin Raya (as one of FFB supplier to Jorong Mill) Tengah estate Satui estate Supplier PT Candi Artha estate (one of FFB supplier) East Kalimantan, covered Penajam estate. Overall covered are was assessed based on land use right (HGU) is 28, ha (based on analysis of GIS 31, ha), with detail as below:: Satui Estate: 7,199 ha (8,262 ha) Barat and Timur (Jorong) Estates: 9,2264 ha (11,022 ha) Timur Estate: 4,026ha (4,468 ha) Penajam Estate: 7,871 ha (7,890 ha) Acreage total: 28,360 ha (31,642 ha) HCV assessment was conducted by Consultant Team of PT Remark Asia, that consist of 6 (enam) persons, i.e.: Dwi R. Muhtaman (team Llader) Social Field R. Sukasmianto (team member) Environmental Field Sigit Budhi Setyanto (team member) Social Field Dr. Wawan Gunawan, S.Hut, M.Si. (team member) Ecology/Biodiversity Field Junaedi Syamsudin (team member) Expert of Mapping and GIS Cecep Saepulloh (team member ) Ecology/environmental The HCV assessment also engaging the public through public consultation that was conducted, as follow: PT GMK Penajam that located at Penajam Paser Utara District, Province of East Kalimantan, was conducted in Balikpapan at July 18, 2012 PT GMK Province (covered Tengah, Barat, Plasma Damit Hulu estates, PT Candi Artha, Satu and Timur Estate) that located at Tanah Bumbu Tanah Laut District, was conducted in Banjarmasin at July 27, Some records relating to public consultation were reviewed, i.e.: The minute of meeting, Banjarmasin, July 27, The attendance list of Public Consultation dated July 27, 2102, attended by 40 persons, consist of relating govermental agencies (Tanah Laut Agriculture Agency, Tanah Bumbu Agriculture and Forestry Agency, Tanah Laut Cities Development Planning Boad, Tanah Laut Environmental Agency, Tanah Bumbu District Environmental Agency, Tanah Bumbu Cities Development Planning Boad), public figures, village head of Setarap, Sekapuk, Batalang, and Pamalongan, Farmer, work partners, consultant team dari Re-Mark Asia, and etc.).

36 Page 36 of 91 The HCV assessment methodology has refer to Handbook Identification of High Conservation Values were drafted by the Consortium of Indonesian Toolkit Revised version June 2008 and applicable legislation both naionally and intrnationally. The HCV report assessment has reviewed by Yana Suryadinata (HCV s Consultant) at October 01, Map of HCV assessment results has provided in accordance scope of assessment. Identified HCV s area as result of assessment as follows: No HCV Location Size (ha) Barat and Tengah Estates 679,114 1 HCV 1.1 Satui estate 825,096 Timur estate 202,116 Penajam estate 756,72 Barat estate 291,665 2 HCV 1.2 Satui estate 824,48 Penajam estate Barat estate HCV 1.3 Satu estate 578,37 Penajam estate 3,38 4 HCV 1.4 Satui estate Penajam estate HCV 2.1 Barat estate HCV 2.3 Barat estate Satui estate HCV 3 Satui estate Penajam estate HCV HCV 5 & 6 Not identified - Several protected species have been found in PT GMK area (Barat and Tengah estate), including the following species : there are 108 flora species where there are 9 flora species categorized as protected species according to CITES and ministry of forestry consist of: aren/enau (Arenga pinnata) in Barat estate, banggeris (Koompassia malaccensis) in other estate owned company, bayur (Pterospermum javanicum Jungh) in Barat estate, forest durio (Durio kutejensis Becc) in other estate owned company, Keruing (Dipterocarpus costulatus) in other estate owned company, red meranti (Shorea ovalis) in Barat estate, white meranti (Shorea lamellata) in Barat estate, jelutung (Dyera costulata) in other estate owned company, rengas (Gluta renghas L) in Barat area, and ironwood (Eusideroxylon zwageri T,et B) in Barat area; Whereas fauna species founded 53 fauna species where there are 20 fauna species consist of: alap-alap erasia (Falco tinnunculus) in Barat estate, white stork (Egretta spp) in other estate owned company, black hawk (Ichtyophaga sp) in Barat estate, enggang klihingan (Anorrhinus galeritus) in Barat estate, java gelatik (Padda oryzifora) in Barat estate, raja udang meninting (Alcedo meninting) in other estate owned company, rangkong badak (Buceros rhinoceros) in Barat estate, tiong emas (Gracula reliosa) in Barat estate, proboscis monkey (Nasalis larvatus) in Barat estate, honey bear (Helarctos malayanus) in Barat estate, beruk (Macaca nemestrina) in Barat estate, mouse deer (Tragulus sp) in Barat estate, kijang (Muntiacus muntjak) in Barat estate, jungle cat (Felis bengalensis) in Barat estate,

37 Page 37 of 91 porcupine (Hystrix brachyurum) in Barat estate, lutung (Trachypithecus auratus) in Barat estate, owa-owa (Hylobates muelleri) in Barat estate, rusa (Cervus univcolor) in Barat estate, pangolin (Manis javanica) in Barat and Tengah estate, sapit crocodile (Tomistoma schlegelii) in other estate owned company. The organization has had a policy of Environmental and Bioversity that was signed by Vice President Director (Hadi Setiadarma), dated March 03, The contents of policy, at point no. 5, said eliminate any impact to environmental and biodiversity that may arise as a result of operational activities. The organization also has defined SOP of High Conservation Value (HCV), document no. SOP/GMK- AGRO/01/17, Revision 01, dated June 11, The procedure was explained processes if any important wildlife found including coordination and reporting to the competent authority. The organization has defined a program to educate workers regarding status of RTE species. The program was documented in form Rencana Kegiatan Pengelolaan dan Pemantauan HCV that defined every year. The program related to RTE species for year 2016 as follows: Maintain and updated pamphlet / poster regarding protection of flora dan fauna Monitoring presence of rare fauna and their habitat regularly every 3 months. Monitoring progress of development of habitat cover by means of analysis of vegetation 1 (one) times per year. Doing rehabilitation (cultivation / enrichment) in inhabited areas that have been damaged by natural vegetation. Monitoring riparian area to ensure not damaged and marking border s river remain legible. Ensuring marking the limit (signpost or stakes) at hilly area Monitoring and control of poaching are protected regularly every month. PT GMK has been socialized related HCV area located in the company's area, including in Barat Estate, however, the implementation has not been effective, for example in the HCV area 4.2 on Tandukan Mount, Division 4, Block 27/28 there are opening/utilization of land for planting chili and eggplant by "local community". It condition was raised as non-conformity (NCR RSPO 00703). Some records were reviewed at Barat and Tengah Estates as below: Minute of HCV s socialization dated July 28, 2016 that was performed by Nana Taufik (Chief Assistant). The socialization was attended by 30 persons. Attendance list of HCV s socialization to Tengah estate s Staf at June Tally Sheet of wildlife observation that reported by PHPT HSE (Sukari) dated June 13, 2016 There is no HCV set-asides with existing rights of local communities have been identified. Jorong Mill The organization has identified and documented all waste products and sources of pollution, i.e: Operasional vehicle: used oil, used filter, used accu, and emission Genset (135 KVA Alfa, 150 KVA Perkin and 150 KVA Denyo): used oil, used accu, used filter, and emission. Vibrator (Compact Bomag): used oil, used accu, used filter, and emission Pesticides: container ex chemical and bottles ex pesticides Office activities: used TL bekas and Catridge/Toner Printer Fertilizer usage: used fertilizer sack The company has procedure of the handling of hazardous waste as guidance in handling of wastes (SOP/GMK-SMK3/01/12, Rev.00, dated January 02, 2014). The inventory of chemical and their container that are used and kept on site (TPS LB3). The organization has valid licensed of Temporary Hazardous Waste Storage, No /552 KUM/2013, dated November 08, 2013 and valid until November 08, Hazardous waste type: used oil, used filter, used rag, used accu, used tube lamp, hazardous waste contaminated glove, used jerry can, and container ex chemical/pesticides, used tired, and used metal can. All collec-

38 Page 38 of 91 tion and disposal records of chemical and their containers are available at: Hazardous waste manifest (Neraca Limbah B3) documents (FR/GMK-SMK3/LB3/01/03). The document updated regularly on monthly basis. And consist of used oil, used accu, ex plastic drum, ex metal drum, used filter, used lamps, used gloves and masks, computer s tape and catridge. Hazardous waste manifest (Dokumen Limbah B3) No: a (PT Nazar), dated April 30, 2016, used accu, a number of 0,14 tonne b (PT Nazar), dated April 30, 2016, used oil, a number of 0,9981 tonne c (PT Nazar), dated April 30, 2016, used gloves, a number of 0,00925 tonne d (PT Nazar), dated April 30, 2016, used tube lamp, a number of 0,0144 tonne e (PT Nazar), dated April 30, 2016, used filter, a number of 0,082 tonne Tengah estate The company has identified and record all generated waste from mill and estate activities. The waste are classified by domestic waste and hazardous waste. For example, some records were reviewed, such as hazardous waste manifest and liquid hazardous waste form no. FR/GMK-SMK3/LB3/01/03, for August and September 2016, as follow: Used oil, recorded total 702 and 809 litre which derived from Genset and operational vehicle and vibrator Used Jerrycan, recorded total 70 dan 76 pcs eks pesticides container. Used accu, recorded total 17 and 17 pcs Used filter, recorded total 56 and 66 pcs Used bottles ex Methyl, recorded total 144 and 164 pcs Used lamp, recorded total 141 and 141 pcs Used Toner Bekas, recorded total 1 and 1 pcs Used fertilizer sack, recorded total and 16,314 sheets. The organization has agreement with PT Nazar in accordance letter of agreement No. 065/GMK- BJM/SPK/V/16, dated May 04, 2016 which valid until May 04, 2017, regarding collection and transporting hazardous waste. The object of agreement is assignment of PT. Nazar to collecting and pick up the hazardous waste which is produced by the organization. The hazardous waste should be collected and picked up by PT Nazar from estates and Mill i.e: used oil, used accu, used filter, used drum ex HCL, used jerrycan ex chemical, used bucket ex grease, hazardous contaminated of rag/tissues/gloves and used tube lamp. The organization has permit of temporary storage of hazardous waste in accordance Decree of Tanah Laut Regent No /551 KUM / 2013, dated November 08, 2013 and valid for 5 (five) year since issued. The organization has proposed letter no. 0244/GMK-BJM/HSE/I/2016, dated September 07, 2016 to District Environmental Agency of Tanah Laut about of extention of hazardous waste retention time, especially retention time of used TL become 180 days since August 31, The permit covered: 1. Jorong Mill Damit Hulu Village, Batu Ampar Sub District, Tanah Laut District 2. Tengah Estate Batalang villgge, Jorong Ampar Sub District, Tanah Laut District 3. Barat Estate Damit Hulu Village, Batu Ampar Sub District, Tanah Laut District 4. Timur Estate Pasir Putih Village, Kintab Sub District, Tanah Laut District. The letter has received by District Environmental Agency of Tanah Laut District at September 08, Some of records handover of hazardous waste (Berita Acara Penyerahan Barang Bekas/ BAPP) were reviewed such as: BAPP dated September 01, 2016, handover of 1 (one) pcs of hydraulic filter which come from Vibrator Compact Bomag, was submitted by Mechanic and received by warehouse. BAPP dated September 03, 2016, handover of 19 litre of used oil which come from Vibrator Compact Bomag, was submitted by Mechanic and received by warehouse BAPP dated September 06, 2016, handover of 19 litre of used oil which come from Vehicle No. DA 9532 AO, was submitted by Mechanic and received by Warehouse. Jorong mill has record for renewable energy used for 2015 and 2016 until August. The record per FFB process presented below: No. FFB process Total fiber used (mt) Total shell used (mt) Shell used (mt)/ton CPO Fiber used (mt)/ton

39 Page 39 of 91 (mt) product ,296 35, , ,376 16, , Jorong palm oil mill has record for energy efficiency used for 2015 and The efficiency energy used was calculated and estimated in IDR. Based on energy efficiency used record for 2015, from FFB total process about 117,296 mt, efficiency estimated energy used per tones CPO was IDR 174,810.98, with total fuel used was 570,361 litter for turbine. Then for 2016 from total FFB process about 86,376 mt, efficiency estimated energy used per tones CPO was IDR 107,108.71, with total fuel used was 440,088 litter for turbine. The organization has defined documented Procedure No.SOP/GMK-AGRO/02/02, revision 02, dated Nopember 03, 2014, Namely SOP Persiapan Lahan (Land Preparatin). The SOP, poin 1.4 said... commitment of the organization to applied Zero burning method that is land clearing /preparation without fire. Meanwhile, there is no land clearing due to no replanting plan until year The company has zero burning policy as seen letter number by General Manager PT Gawi Mamur Kalimantan and has procedure of emergency response (SOP/GMK-AGRO/01/08) where include emergency response to land burning. There is regular patrol program, to monitor activites that might cause of fire in company s area. Company conduct fire drill simulation and socialization to all workers and community surrounding plantation area. Company has identified the emission source and pollution from mill and estate. The emission and pollution source is: FFB transport CPO transport Heavy equipment operational Generator operational Water pump operational Waste water treatment plant (IPAL) Land clearing Fertilizing and spraying activity IPM activity The Company has a plan to reduce or minimize the pollutant and GHG emissions identified but in the plan do not include targets and time frames to reduce emissions and pollution. It condition was raised as nonconformity (NCR RSPO 00704). The Company has been conducting some of activity that has been set such as planting of soursop plant as much as 10 trees on July 2016 and regularly maintenance for truck engine. The company has been conducting POME quality measurements every month performed by the Laboratory Unit BLHD Tanah Bumbu District. The company has a system to monitor emission of pollutants including greenhouse gases from estate (plantation) and mill operations. The Company has not conduct reporting the results of GHG calculations that has been performed to RSPO. It condition was raised as non-conformity (NCR RSPO 00705). Compliance status: Non Compliance NCR RSPO (Minor non-conformity) PT GMK has been socialized related HCV area located in the company's area, including in Barat Estate, however, the implementation has not been effective, for example in the HCV area 4.2 on Tandukan Mount, Division 4, Block 27/28 there are opening/utilization of land for planting chili and eggplant by "local community". NCR RSPO (Major non-conformity) The Company has a plan to reduce or minimize the pollutant and GHG emissions identified but in the plan does not include targets and time frames to reduce emissions and pollution NCR RSPO (Minor non-conformity)

40 Page 40 of 91 The Company has not conduct reporting the results of GHG calculations that has been performed to RSPO Principle 6: Responsible consideration of employees and of individuals and communities affected by growers and mills Criteria assessed: CR6.1, CR6.2, CR6.3, CR6.4, CR6.5, CR6.6, CR6.7, CR6.8, CR6.9, CR6.10, CR6.11, CR6.12, CR6.13 Criteria not assessed: Findings: PT Gawi Makmur Kalimantan has conduct and published a report egarding Social Impact Assessment (SIA) covering all activities under company s operation in Tanah Laut Regency, Tanah Bumbu Regency, Jorong Palm Oil mill in Province and estates in Paser Penajam Regency, East Kalimantan Province. There are still several conditions not compliances such as: Social Impact Assessment (SIA) document does not explain the specific impact on each village around the Barat and Tengah Estate. Social Impact Assessment (SIA) document does not covering the explanation related livelihoods, access to land use, cultural and religious values, educational and health facilities. It condition was raised as non-conformity (NCR RSPO 00706). Social Impact Assessment (SIA) document does not show evidence that the process of drafting a social impact study has been through a consultative process with stakeholders. It condition was raised as nonconformity (NCR RSPO 00707). Potential impacts that has been identified are: a. Key Issues regarding social problem: workforce and working opportunity; local economic development; tenure and legal compliments; environmental Management; coordination and communication. b. Internal Issues: Workforce and remuneration; worker facility and Occupation Health and Safety; Personal Protection Equipment c. Positive and sustainable impacts: d. Company s Internal and External interaction e. Social Risks f. Company s activities g. Challenges of Estate Internal Management The SIA report consists of information about history of the company, positive and negative impacts, action plan to manage identified impact and monitoring the action plan. The identified positive impact such as, improve and increase diversity of community s income. While the negative impact was destruction or damage of community s road because of FFB transportation activities and pollution. The existing social impact Management Plan has developed by the company. There are still several conditions not compliances such as: Matrix of Social Management Plan Document in Barat Estate and Tengah Estate are not accompanied with a timeline (time allocation for each program implementation) There is not monitoring mechanism in Barat estate and Tengah estate in order to monitor impact reduction It condition was raised as non-conformity (NCR RSPO 00708). There is no documentation of the recording process of stakeholder consultation on Barat estate and Tengah estate. It condition was raised as non-conformity (NCR RSPO 00709). The company has internal and external communication Standard Operating Procedure i.e. no: SOP/GMK- AGRO/01/20, rev.02, valid since 24/02/2014. The method of communication can be made vertically and hori-

41 Page 41 of 91 zontally in form of meetings, sign board, letter, , sms and socialization. While for external communication, CSR manager or community relation was responsible to accept, make archive, disposition and prepare sufficient responses to stakeholder. There are several conditions not compliances such as: List of affected communities have not been prepared in the Barat estate and Tengah estate Internal and External Communications procedure have not entered the principle of FPIC It condition was raised as non-conformity (NCR RSPO 00710). External communication could be in form of letter, , facsimile, telephone, direct communication, newspaper and other. There were evidences showed during surveillance, such as: a. Direct Communication. GMKJ has a list of stakeholder that routinely met (by public relation officer) every month, the list is updated in May 10 th The list contain 19 stakeholder that consist of local formal and non-formal leader and members of District Leaders Meeting MUSPIDA/MUSPIKA. b. Minutes of events: Records of public relations activity with MUSPIKA c. Records of Communication and Consultation with stakeholders 2014/2015. The records contained 8 events of stakeholder communication/consultation with various issues such as road maintenance and support of heavy equipment to local community. GMK Jorong has identified and documented list of stakeholders. All related and strategic stakeholders from government and local civil society has been identified and listed. Contact persons, official address and phone number has also recorded in the list. There are several conditions not compliances such as: Barat and Tengah estate does not has list identification of affected stakeholders Barat and Tengah estate does not has documentation related communication with stakeholders (respond recording for input from affected stakeholder) It condition was raised as non-conformity (NCR RSPO 00711). Company still hold a system for complaint handling or conflict resolution i.e. SOP no. SOP/GMK-AGRO/01/15 valid since February 24 th 2014, states that : a. Branch controller/plantation controller/estate Head/Mill Head/Community relation and CSR head is responsible for conflict handling. b. Plantation controller/ Estate head/mill head submit reports to the Department Head of CSR/community relation/legal related to existing issues, grievance, claim, and conflict recorded in verbal or written. c. Department Head of CSR/community relation/legal collects related data and information. d. When the report was assumed as priority the next step was to identify option available for decision making. e. Assign third party as mediator if no result or no agreement among both parties. Based on branch controller, the direction board will consider and prepare policy to resolve the conflict. The company has a logbook of communication with external stakeholder and archived all incoming letters. There is some letters regarding grievances and/or complaints from stakeholders and affected parties since last audit until this surveillance. The company also has logbook from internal stakeholder (worker) regarding grievances and/or complaints. Check into this log book found that there are 9 grievances/complaints that have been recorded into this logbook. Issues that recorded are: base camp or housing facilities; reward and recognition for worker; personal protection equipment; box of suggestions; and housing safety regarding theft. The company does not have the clear mechanisms in the procedures for handling grievance and complaints. It condition was raised as non-conformity (NCR RSPO 00712). The Jorong Mill and Estate still hold a system for complaint handling or conflict resolution i.e. SOP no. SOP/GMK-AGRO/01/15 valid since February 24th, This SOP covers identification, calculation and compensation procedures to communities and other stakeholder, which is states that third party (local government) will get involved if there was no agreement made between the company and complainers. Company has provided evidences regarding negotiations and compensation records during surveillance. The only

42 Page 42 of 91 compensations records were regarding land acquisition and growth planted vegetation above (tanamtumbuh). There was a list of land compensation GMKJ showed consist information regarding agreements since 2005 to Each documents consist records and data regarding the negotiation/compensation process and administrative legal compliment, such as: Copy of ID card; Payment Slips; Agreement; and declaration letters. The agreements has titled as Minutes of Compensation Payment for the Release of the Rights towards the Land and Planted Vegetation above. The last compensation process records was dated on April 8 th The compensation was paid to a community member of Ketapang Village for compensation of land and the vegetation above. There are provisions on worker status PT Gawi Plantation stipulated in regulation of company; Article 7 Employee Status: Employees fixed (PKWTT), employees who are engaged in a working relationship with a company that is not based on a specific time period or completion of a specific job. Employee Contracts (PKWT); employees who are engaged in a working relationship with a company that is based on a certain time period, called the Working Agreement Specific Time Employees freelance; employees who work with the system not bound by time and work or hours of work the company because the nature of work is changing Employees Honorer; not bound in the employment relationship with the company (on the basis of part-time or contract work) Special Employee / Foreign; employees are foreigners Name: Girish Kumar Gopala Krishnan, Malaysia citizens, Position: Plantation Advisor, IMTA No: /MEN/P/IMTA/2016, Valid: 1 April 2016 s / d March 31, 2017; Permits: valid up to March 31, 2017, Passport : A , Valid: July 27, 2018 There is documentation of wages in the form of payroll, which contains conditions of employment, wages and medical benefits, welfare benefits, leave entitlements, termination of employment and others. Each permanent employee has an employment contract with the company. There is a definition of wages which have been agreed in accordance with Law No. 13 of 2003 on Manpower. Definition of "WAGES" in Law 13/2003 Article 1 point (30): Wage is the right of workers / laborers received and expressed in terms of money as compensation to the worker / laborer assigned and paid by an employment agreement, opportunity or statutory laws and regulations, including allowances for workers / laborers. The entire record of the wages of employees have been documented by the company in Finance Departemen. Wages given to workers of minimum equal to the minimum wage in 2016, amounting to Rp 2,090,000. Salaries and conditions of work facilities clearly detail was written employment contract between the employee and PT Gawi Plantation, the number of basic salary, health benefits, working hours, deductions, overtime, sick leave entitlements and maternity leave, reasons for termination, the notice period, the right to worship, etc. Based search documents note that the Company Regulations, Article 44 of the hajj, mentioned the employee must have worked at least one year. Halini contrary to the principle of giving workers the opportunity to worship according to his religion. Sample employment contract PKWT examined: Contract No. 02 / HRD-Central / PK-PH / II / 2016, name: Oktovianus Maya, 1-year contract period 1 April 2016 s / d March 31, Position: energy harvesting / unloading TBS / Agronomy. Wages: in accordance with the provisions of piece rate and employee premiums in Salary: IDR /month (salary mandays : IDR 83,600), Overtime: IDR ; Half mandays Labor contracts prepared in the Indonesian language understood by the workers, signed by both parties, ie the company and its employees. Examples of contract PKWT No. 010 / HRG / PWT / VIII / 2016, Date: August 23, 2016, The worker's name: catur Ravia Chandra, Position: HSE staff-hcv, Status: Contract 12 months from 1 September 2016 until August 31, 2017, Income tax (PPH): paid by Employers. Conditions:

43 Page 43 of 91 Salary, allowances, leave and discipline, clearly stated in the articles of agreement. Salary is given in accordance with the provisions of the Sectoral minimum wages. The implementation of the wage PT Gawi have followed local legal requirements by providing: Basic wages according to the Sectoral minimum wages. Guarantee BPJS employment and health. Examples of Salary Slip period of August 2016: Workers: Ilham Dwi Ramda, NIK: , The basic salary: Rp ,- Overtime: Rp ,- Meal allowance: Rp ,- Total gros income: ,-. Reduction: BPJS JHT: Rp ,-; BPJS JPN: Rp ,-; BPJS Health: Rp ,-; Cooperative: Rp ,-; Total reduction : Rp ,- Total net income : Rp ,- (above the minimum wages Rp ) Salary and conditions provided in accordance in labor laws, union agreements or direct contracts of employment in accordance with sectoral minimum wages in accordance with the decree of the Governor of South Kalimantan No / 0511 / KUM / 2015 dated December 22, 2015 on the Establishment of Sectoral Minimum Wage Province in 2016; for the palm oil sector is Rp million, - per month Based on the document search is known that there are still several conditions not compliances such as: There are no written employment agreement for daily workers (Barat and Tengah estate) There are no documents about Obligatory Labor Reporting in Labour agency of Tanah Laut District (Mill, Tengah estate and Barat estate) There is no salary slips for daily workers. (Barat and Tengah estate) It condition was raised as non-conformity (NCR RSPO 00713). PT. GMK both plantations and factories have been providing adequate housing and other basic needs national standard for employees at Jorong Mill, Center estate, West and Eat estate. Clean water: there is a water supply through the WTP to all employee housing. Education: join the west estate (TK, SD), the school bus 6, a distance of about 4-5 km. Electricity: Turbine from Mill (PKS) 24 hours for all housing. Genset in residential estates western, central and eastern, Kids daycare in the Mill, Central Estate, Estates West and East Estate. Health Clinic (Central estate gand West estate) BPJS Health In Health Insurance, Ambulance: 1 unit (in the Central estate). Reguler medical checkup for the worker. Sports: football field, table tennis, badminton, tennis, voley ball, silat martial loyal heart. Schools: Elementary (206) and TK ( students), Elementary school teachers: 8 TK: 40. Mosque: 2, Cooperative: Mitra Makmur Jaya, cooperative activities provision of groceries and daily necessities. Based document tracking note that : Test Colonestrase not been conducted regularly at least once a year in accordance with Recommendation Management of Pesticides in the Workplace of Disnakertransos, District Tanah Laut No. 566/017/Pestisida/LK/VIII/2016 dated August 22, 2016 (Mill, Central, and West estate) Based on the verification of the workers, it is known that the PT GMK provides food allowance. Examples of Salary Slip period of August 2016: Workers: Basuki Rahmat, NIK: , The basic salary: Rp ,-; Overtime: Rp ,-; and Meal allowance: Rp ,-; Total income: ,-. Access to food is provided by the Cooperative employees' "Gawi Karya Sentosa" with offices and shops in the Mill Jorong provide basic food items such as rice and others. Meal allowance is given at all levels of office take to the roads department when most low of Rp / one meal. PT. GMK has had a policy of companies in the Indonesian language that recognizes the rights of employees to freedom of association in the Company Regulations Article 68 of the United Workers' Company gives the opportunity for workers to form unions, the records do not contradict with the legislation in force and does not interfere with the operation company.

44 Page 44 of 91 All employees have associations and bargain collectively with the company, namely LKS BIPARTIT has been endorsed by Decree of the Head of Manpower and Transmigration, Kabupaten Tanah Laut Number: 045/DTKTS/HIPK/TU/IV/2016 on Registration Bipartite Cooperation Institution-JORONG PT GMK PKS Tanah Laut District, dated 4 April 2016 shall be valid for three (3) years after enactment. Members arrangement LKS Bipartit has been balanced between representatives of management with employee representatives: Chairman: Herman ST (management) and Abdul Aziz (Employees), Vice Chairman: Bayu NR (management) and Ardiyansyah (Employees), Secretary: Grace A (management) and Agus Supriyanto (Employees), Health Section: M. Iqbal (management) and Muslim Abdillah (Employees), Training Section: Sawal (management) and Fathor Rozi (employees), Section K3: Supriono (mamajemen) and Sulasno (Employees), Sexy femininity: S. Panjaitan (management) and Istiani (employees), Communication Section: TW Dimas (management) and Iyaka Sa'ban (employees) LKS Bipartit in Tengah Estate: Decree of the Head of Manpower and Transmigration, District Tanah Laut No: 042 / DTKTS/HIPK/TU/VI / 2015 on Registration Bipartite Cooperation Institution PT GMK Tengah Estate, District Tanah Laut, 2016 dated July 22, 2015 are valid for three (3) years after enactment. LKS Bipartit in Barat Estate: Decree of the Head of Manpower and Transmigration, District Tanah Laut No: 038 / DTKTS/HIPK/TU/VI/2015 on Registration Bipartite Cooperation Institution PT GMK Barat Estate, District Tanah Laut, and dated June 3, 2015 are valid for three (3) years after enactment. LKS Bipartite has held a meeting with the company to address grievances of employees. Here are some notes LKS Bipartit meetings that have been followed up by the company : Meetting date about Election Administrators LKS Bipartite 2016, follow up : The ratification of the board to the Department of Social Labor, District Tanah Laut dated 4 April 2016 In the Company Regulations there are provisions detailing the payments and leave borne by the company, created in the Indonesian language that is understood by workers. The employment agreement has been referred to the Law NO The Company Regulations Article 41 : 1. When a worker works for twelve (12) months of continuous entitled to annual leave for 15 (fifteen) days, with fixed pay. 2. The Company reserves the right to determine most of the days of leave such as leave en masse. 3. The feast (which happens to fall within the period of leave) is not counted as part of the leave. 4. The right to annual leave in the autumn when the period of 6 (six) months after its rights arise not used, then leave rights automatically forfeited unless the assignment of Chairman / right to leave was in retreat by Direct Supervisors approved by the Executive Board. Meeting LKS Bipartite conducted regularly every month. Documents meeting between the union and the company have been documented and stored by the board LKS Bipartite. Documentation of the discussion of the problems of employees, among others : Date Topic Follow up 28 June 2016 The establishment of the committee Ormed committee independence independence day August 17 day Complaints about employee health clinic Displacement PJS facility to sub centre to serve BPJS location is too far health clinic centers ( puskemas away (3 hours) pembantu ) located in the nearby village about 20 minutes. 28 May 2016 Preparation Ramadhan activities 2016 Select committee Ramadan Discussion Welfare Fund employees activities 2016 (DKK) Contribution 200rb / month paid 4 times 18 March Election administrators LKS Bipartite 2016 The ratification of the board to the

45 Page 45 of Department of Social Labor Kabupaten Tanah Laut dated 4 April January January 2016 Socialization BPJS pensions and Employment. Establishment of Employee Benefit Plan Fund (DKK) Socialization of safety and health Socialization BPJS labor and Health Cards and JHT balance for drivers and security yet Establishment of Employee Benefit Plan Fund stil on proces Coordinate with management labor suplay (PT KPY) Meeting LKS Bipartite conducted regularly every month according to the agreement of members. Documents available to workers and record by secretaries LKS Bipartite that can be accessed by workers. There are no operational mechanisms for employee complaints. (Mill, Barat estate and Tengah estate). It condition was raised as non-conformity (NCR RSPO 00714). The meaning of this nonconformity same with NCR RSPO There are provisions concerning the minimum age to work at PT GMK. The Companies Regulations Article 5 REQUIREMENTS FOR WORKERS ; The general requirements of recruitment procedures, as follows: Indonesian citizen (citizen), with the exception of employees who have special expertise requirements. At least 18 (eighteen) years old, physically and mentally healthy and meet the qualifications or requirements specified positions. There are Policy and Management Commitment dated 1 June 2012, signed by the Board of Directors; provide equal employment opportunity for all Indonesian citizens who meet the job requirements, to be honest, more than 18 years of age as well as the appropriate organizational needs. NO workers who work under age 18 years at PT Gawi Makmur Kalimantan. Based on employee data, the youngest employee is Anggari Ribut Prakoso, position: section estateer, date of birth: May 3, 1998, started to work: 16 September 2016 (18 years 4 months) Based verification data and interview with harvester worker: no workers under 18 years old at Mill, Tengah estate and Barat estate. There is a non-discrimination policy of equal employment opportunity. SOP HRD Recruitment No. SOP document / GMK-AGRO / 04/02, Aim : To equate procedures and formats related to the process of new employees / recruitment. To provide clear guidelines so as to create consistency and better implementation, correct and timely PT Gawi Makmur Kalimantan, is committed to providing opportunities equal access to employment, through the following business: The Company provides equal opportunities to workers to find employment and a decent income, The company puts all workers in accordance with the expertise, capabilities and other job requirements, and in accordance with operational needs of employees. PT Gawi Makmur Kalimantan, understand that employment opportunities for men and women are equal in accordance with job requirements. The company supports gender equality, by providing employment according to skills, skills, expertise, abilities, and work experience, as well as meet the requirements position regardless of gender. PT Gawi Makmur Kalimantan, understand that the treatment of inequality and gender difference in treatment, such as restrictions on the role, violation of their human rights, subordination, labeling (stereotypes), and violence an improperly actions and could include actions violation of the law. PT Gawi Makmur Kalimantan, always trying to maintain and pay attention to security and safety for all worker, so the placement of the right employees in the right positions a major consideration. Publicly available information contained in the form of job requirements (recruitment)

46 Page 46 of 91 Be applicable in the form of recruitment information. The Information policy open to the public are accessible to all interested stakeholders. Mounted on board notices for policies in the company page. Policies have been implemented proven employees of PT GMK come from various regions of both local and surrounding areas. Job conveyed through the press, job fairs, and announcements in the surrounding villages, as well as through a job fair in collaboration with universities in Banjarmasin. Based documents and interviews with workers proved that there is no labor discrimination on PT GMK. Employee Data Barat Estate; number of employees: 754 people with outsourching, male: 483 people, Women: 271 people, local (district Tanah Laut): 300 people, non local (Java, NTT, Banjarmasin, Sumatra, etc.): 454 people. Employee data (daily workers) at Tengah Estate: Daily workers (BHL) total 438 people who have e-ktp and family card (KK) 110 people who do not have 328 people. Total employees (BHL and staff) 595 people, 539 people of Islamic, Christian and Catholic 55, Budha 1. Employee data (daily workers) at Barat estate: Daily workers (BHL) total 553 people who have e-ktp and family card (KK) 195 people who do not have 358 people. Total employees (BHL and staff) 676 people, 474 people of Islamic, Christian and Catholic 200 people, Buddhist 2 people. Based on interviews with Winda, Dewi, and Paramita (Tengah estate) and Rusdiana (cashiers, Barat Estate). Employees are satisfied with the treatment of the company for all treated equally without any distinction of race, class, national origin, and gender. Based on the verification of documents and interviews with workers in mind that No complaints from employees about discrimination issues in the implementation of the company's operations, such as a career path Employee complaints and groups including local communities, women, and migrant workers have been filed against the company, for example : 1. January 4, 2016: Imam Muhadi (employee outsourcing) complaint: Not having BPJS cards, though already signed up. Follow up Manajemen : Will be coordinated with the company's labor provider PT Kartika Purna Yudha 2. April 15, 2016: Ahmad Yani (Primary Schools Head) complaint: Need more rubbish bins and the cost of making the park. Follow up Management : Coordinated with the civil engineering section 3. March 3, 2016, As'ad (security) complaint: can not access the balance of JHT. Follow up Management : Can be accessed via the Internet or contact the branch BPJS District 4. March 7, 2016, Suryani (mosque officials) complaint: Need Extra tent mosque. Follow up Management : The mosque officials must submit a letter request for assistance to the Head of Division Based on interviews with clinic personnel, it is known that there is a record employee medical history presented in the clinic Companies explicitly stated indiscriminatory policy for recruitment selection, appointment and promotion process. POLICY EQUALITY OF OPPORTUNITY; PT Gawi Makmur Kalimantan, is committed to providing opportunities equal access to employment, through the following business: The Company provides equal opportunities to workers to find employment and a decent income, The company puts all workers in accordance with the expertise, capabilities and other job requirements, and in accordance with operational needs of employees. Indiskriminatori policy routinely done in the form of: The monthly salaries in accordance with the competence, without discrimination. The assessment and evaluation of employee performance every year. Assessment carried out by the direct supervisor at the end of each year. The results of this assessment determine career paths and an annual bonus. There Evaluation of Employee Performance Assessment annually and used as the basis for promotion of employees. This performance assessment provides an assessment of the commitment and technical competence and non technical competency.

47 Page 47 of 91 The company has a policy to prohibit all forms of sexual and other forms of harassment and violence. There SEXUAL HARASSMENT POLICY PT Gawi Makmur Kalimantan : Understand that sexual harassment includes physical actions (behaviors and actions) and verbal (words or intimidation) that leads to sexual and constitute misconduct. PT Gawi Makmur Kalimantan, strongly opposed to any act of sexual harassment and is committed to creating a work environment free of sexual harassment. PT Gawi Makmur Kalimantan, will provide a firm witness to all employees (in accordance with the regulations and legislation in force), in case of sexual harassment. Every employee should understand and be responsible for the implementation of this policy. Adopted by the Board of Directors in Jakarta on March 3, 2O14 That policy has been documented in the administration of companies. sexual harassment policy has been communicated to all levels of employees, and also delivered during the muster morning. There are clear protocols for companies to deal with problems such as complaints received from labor, namely Decree on the Protection and Empowerment of Women's Labor No. 001/SKBC-GMK /V/2014; On April 2, 2014 which provides: Are called upon to labor, especially women who are pregnant and work related to chemicals, in order to report on HRD in order to look for work avoid the risk of exposure to chemicals The Company does not undertake regular pregnancy checks, but for a pregnant employee obliged to check into the Polyclinic. If there are a pregnant employee and job related to chemicals, failed to report to HRD, then all the risks of work outside the responsibility of the company. The Company has a list of programs of awareness or training provided to workers in relation to the issue of sexual abuse compiled by the Gender Committee. The Company has a letter of appointment Chairman of the Committee on Gender No. 001 / GP-JM / MGR- MILL / KG / I / 2015 on January 5, Chairman of the Gender Committee on Mill Unit Jorong: Istiani Nur Hasanah, Secretary: Sri Sayekti, Members: Virdianti, Kiki Sera Sentosa, Yayuk Suprapti, Emy Syamsiar. Gender Committee members at the estae West are Mrs.Subasir (camp central) and Mrs Agung (camp Lokbungur). For workers who are breastfeeding provided a place to breastfeed in "daycare" is contained in every estate. Policies disseminated in accordance with the schedule of activities that have been arranged in a gender committee work program. Socialization is done to: Members of the committee gender and women labor. Dissemination of sexual harassment presented by the company and unit head. There are still several conditions not compliances such as: Socialization about sexual harassment to male workers for year 2016 does not perform (mill, Barat estate and Tengah estate) Members of Gender Committee has not got a briefing or counseling training for women as victims of violence (mill, Barat estate and Tengah estate) It condition was raised as non-conformity (NCR RSPO 00715). The company PT GMK, has a policy of protection of women's reproductive rights. The policy also contained in Company regulations childbirth leave and leave of menstruation The female employee who gave birth, was granted the leave (with pay) as per the legislation, as follows: Pre-natal leave is given 1 ½ months. Leave after giving birth given 1 ½ months. For precisely the approximate calculation of the time of birth, the employee concerned shall attach a medical certificate when applying for maternity leave. Employee entitled to menstruation leave the first day and the second (with fixed wages), and the question must be willing to be examined by the Medical Company or attach a letter from your midwife or GP / obstetrician. Implementation of a medical examination had been conducted through medical check audiometri which was

48 Page 48 of 91 held on June and July The company still conduct cholinesterase testing but until surveillance audit has been conducted, the company still ongoing process for cholinesterase testing. Test Cholonestrase medical tests should be done regularly at least once a year in accordance with the recommendation Pesticide Management in the Workplace of Disnakertransos Tanah Laut District No. 566/017/Pestisida/LK/VIII/2016 dated August 22, There are rules of the company, which is authorized by the Department of Labor and Transmigration South Kalimantan Province No. KEP.561.3/013/PP/VII/Disnakertrans dated July 22, 2016; Article 48 of the grievances and complaint settlement of employees. Every employee grievances and complaints will be resolved and discussed with their immediate supervisor, and all parties are trying to resolve it with deliberation and consensus, whether related to labor relations or other issues, especially on things that are not clear legal basis and rules. Where the solution is not satisfactory, then with the consent / knowledge of the immediate supervisor, the employee may forward complaints and complaint to the higher tops. In terms of the settlement and complaints of the employees still can not be reached by deliberation and consensus between representatives of employers and employees, the problem can be solved in accordance with Act No. 13 Year 2003 on Labour and Law No. 2 of 2004 concerning Industrial Relations Dispute Settlement (PPHI). If the arbitration is not desired road then they can request mediation of the dispute in writing to the Manpower office. Grievance mechanisms, in addition to reporting to the direct superior, also provided a suggestion box and LKS Bipartite meeting. Auditor take a sample of complalnt i.e on behalf Suci Winarni and Lidiawati as a operator payroll (April 2016). Employee complaint that the previous month when the harvester and fertilzer is holiday and the daycare also get holiday. The employee (Suci and Eni) does not get facility of child care because the daycare employee is holiday. The employee has been ask the management and the management respond about that issue that the daycare employee come to work eventhough the harvester and fertilizing worker is holiday Routinely LKS Bipartite meetings to accommodate employee complaints. The Company do not have policies and mechanisms to handling of complaints that respects and protects the anonymity of the complainant (Whistle blower policy). It condition was raised as non-conformity (NCR RSPO 00716). The FFB price was defined by meeting between related parties such as growers, smallholders and National Estate Agency. All interested parties can obtain this price decision from the agency by print out or sms service. There was FFB purchasing agreement with third parties as follow : 1. No. 115/PJB-TBS/GMK/X/12 on October 29th, 2012 with Usaha Sejati Mandiri Coopeartive, placed at Harapan Maji village, Batu Licin, Tanah Bumbu Regency. 2. No. 111/PJB-TBS/GMK/X/12 with Pemuda Makmur Kelapa Sawit Cooperative. 3. No. 175/PJB-TBS/GMK/III/14 with Farmer association Karyan Tani. No. 136/PJB-TBS/GMK/V/2013 with Rukun Tani Farmer Group. No. 105/PJB-TBS/GMK/V/12 with Cipta Prima Sejahtera Cooperative. This is all agreement has the same template that consist of term and conditions such as: FFB requirements (minimum weight, no dura seed, not being claimed by other party), delivering procedure, location and time delivery, pricing and payment conditions. On this surveillance commitment regarding fairly deal and transparently with local business also checked to other local business partner such as FFB transporter and contractors. Jorong Mill and Estate showed list of active local business partner, consist of 4 contractors of construction services, and 3 FFB transporters. All of contractors has comply with regulation according to outsource requirements, and the company has conducted fairly trade with them. Evidences showed during surveillance were contract agreement, contractors legality and payments records, such as: a. Working Agreement Letter, No. 06/SPK/GMK-Tengah/V/2015, issued in May 1 st 2015, for EFB Transportation.

49 Page 49 of 91 b. Report Delivery Letter of CV Cahaya Muda, July 15 th Attached to this letter detail information regarding EFB traffic of each vehicle. c. Payments records of CV Cahaya Muda period I, June July 2015, for EFB transportations. One of contractor has been interviewed during surveillance. He claimed that company has deal fairly and transparently with him. He hope that this cooperation could be sustain. Jorong Mill and Estate has developed CSR program, consist of activities that giving contribution to local development. The program divided into 4 activities, such as: educations support; local traditional, national and religion holiday celebration; environmental support; social and community contribution. There were reports showed regarding CSR program of January August Some records samples such as payment and minutes has been checked during surveillance and found complied. The company has human rights policy, which states : Comply with laws and regulations concerning human rights both nationally and internationally that have been ratified by the Indonesian government. The company appreciates each employee to organize all that apply in Indonesia The company guarantees every employee the rough treatment of disorders or physical or verbal threat to self and family The company define forced labor is doing work under the threat of sanctions or penalties where workers do not have the freedom to agree on the implementation of work, or in other words, the job is not done voluntarily. Examples of punitive sanctions can include threats of violence, or delayed payment of wages. Based on interviews with employees and document tracking known that forced labor is not found in this company. Recruitment of foreign workers carried out based on need and then made an announcement to the Consultants International. Furthermore, international consultants recommend foreign workers and the company fit and proper test. If in accordance with the required competencies will be recruited by the company. The person who responsible for the selection of foreign workers is HRD Unit and Branch and users head unit. The company does not have information about foreign workers have to pay fees to recruitment agency in the origin countries of workers. There are no restrictions on leaving the factory or plantation workers or their residential facility outside working hours. Process if an employee wants to terminate their employment before their contracts expire have set in 1. Regulation of the Company Article 52 of the layoffs because the employee quit Self Submitted a letter of resignation to the HRD mnimal 1 month prior to the date of resignation Accomplishing all the obligations of both work and accounts payable 2. Agreements PKWT Article 3: if an employee resigns before the contract expires, all the travel costs initial become the worker. Based on the search documents and explanation workers' employment contracts, it is known that there are not additional penalties for workers who were laid off before the contract expires. Workers' passports were made by workers not by the company. In accordance with Indonesian government regulations all workers are required to have valid identity documents. Companies do not hire workers without identity. Whole identity documents and work permits held by workers. The Company does not hold workers' passports or identity as collateral work. The company has only a copy of the identity documents of workers.workers have access to obtain personal documents by filing a written request to the HRD. Based on the search of documents and explanations HR Manager, it is known that there is no evidence of any replacement contract. Foreign workers were asked to sign a contract in the country of origin.each worker is given a copy of the contract are identical to those signed at the time of recruitment. This can be seen in every contract, stated that

50 Page 50 of 91 the contract was made with the two set out, each of which has the same legal force. There are two types of migrant workers, migrant workers internal and international migrants. Internal migrant workers are those workers who migrate within the country. Examples of the most common and easily understood is urbanization and transmigration. That international migrants are individuals who migrate abroad for work purposes. Internal migrant workers partly comes from NTT, Central Java and East Java. Based on interviews with migrant workers, it is known that the company does not discriminate in employment opportunities, wages, housing, health care, the opportunity to worship and others. This is in accordance with Company policy, which states : PT GMK, committed to providing equal opportunities for labor, through the following business: The Company provides equal opportunity for labor to get a job and a decent income, The company puts all workers in accordance with the expertise, capabilities and requirements of other positions, as well as in accordance with the operational needs of employees. Thus this policy is made, to be a concern and responsibility all parties on the implementation of this policy. There is not available procedure for temporarily migrant workers or foreign workers whereas in implementation the companies have foreign workers (2 persons). It condition was raised as non-conformity (NCR RSPO 00717). The human rights policy, which states : Comply with laws and regulations concerning human rights both nationally and internationally that have been ratified by the Indonesian government. The company appreciates each employee to organize all that apply in Indonesia The company guarantees every employee the rough treatment of disorders or physical or verbal threat to self and family But in the Company Regulations on article 44 contained provisions of the Hajj should be 1 year after the work (this is incongruous with the rights). The Company Regulation Article 44: Workers were allowed to leave work to perform Hajj after the worker with a minimum service period of 1 (one) year, with fixed wages / full salary.workers were allowed to leave work to perform Hajj after the worker with a minimum service period of 1 (one) year, with fixed wages / full salary. The company's general policy, including human rights policy formally submitted socialization and communicated at morning assembly with all workers. It can be seen from interviews with workers' security agencies. The officer who is specifically responsible for delivering rights policy is Estate Assistant, HRD and Head of Division Based search documents and interviews with workers in mind that there are no outstanding cases of human rights violations in PT GWK during the years Company Regulations Article 44: in order to get permission to leave to performing hajj must have worked one year. It is contrary to the principles of human rights that give the freedom to worship in accordance religion and belief. It condition was raised as non-conformity (NCR RSPO 00718). Compliance status: Non Compliance NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: Social Impact Assessment (SIA) document does not explain the specific impact on each village around the Barat and Tengah Estate. Social Impact Assessment (SIA) document does not covering the explanation related livelihoods, access to land use, cultural and religious values, educational and health facilities. NCR RSPO (Major non-conformity) Social Impact Assessment (SIA) document does not show evidence that the process of drafting a social im-

51 Page 51 of 91 pact study has been through a consultative process with stakeholders NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: Matrix of Social Management Plan Document in Barat Estate and Tengah Estate are not accompanied with a timeline (time allocation for each program implementation) There is not monitoring mechanism in Barat estate and Tengah estate in order to monitor impact reduction NCR RSPO (Minor non-conformity) There is no documentation of the recording process of stakeholder consultation on Barat estate and Tengah estate NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: List of affected communities have not been prepared in the Barat estate and Tengah estate Internal and External Communications procedure have not entered the principle of FPIC NCR RSPO (Minor non-conformity) There are still several conditions not compliances such as: Barat and Tengah estate does not has list identification of affected stakeholders Barat and Tengah estate does not has documentation related communication with stakeholders (respond recording for input from affected stakeholder) NCR RSPO (Major non-conformity) The company does not have the clear mechanisms in the procedures for handling grievance and complaints NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: There are no written employment agreement for daily workers (Barat and Tengah estate) There are no documents about Obligatory Labor Reporting in Labour agency of Tanah Laut District (Mill, Tenagh estate and Barat estate) There is no salary slips for daily workers. (Barat and Tengah estate) NCR RSPO (Minor non-conformity) There are no operational mechanisms for employee complaints. (mill, Barat estate and Tengah estate) NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: Socialization about sexual harassment to male workers for year 2016 does not perform (mill, Barat estate and Tengah estate) Members of Gender Committee has not got a briefing or counseling training for women as victims of violence (mill, Barat estate and Tengah estate) NCR RSPO (Minor non-conformity) Companies do not have policies and mechanisms to handling of complaints that respects and protects the anonymity of the complainant (Whistle blower policy).

52 Page 52 of 91 NCR RSPO (Major non-conformity) There is not available procedure for temporarily migrant workers or foreign workers whereas in implementation the company have foreign workers (2 persons) NCR RSPO (Major non-conformity) Company Regulations Article 44: in order to get permission to leave to performing hajj must have worked one year. It is contrary to the principles of human rights that give the freedom to worship in accordance religion and belief. Principle 7: Responsible development of new plantings Criteria assessed: CR7.3; CR7.4; CR7.6 Criteria not assessed: CR.7.1; CR7.2; CR7.5; CR7.7; CR7.8 Findings: Based on planting records and hectare statement in 2016, there is no new planting in Tengah estate, but found revision of planted area after November 2005 in Tengah estate. During the 1st surveillance, found the planted in 2006 was about Ha, then in 2016 during the 2nd surveillance reduce in to 67.4 Ha. This is because 0.7 Ha was converted to the biogas plan development. Based on minutes of planted area revised in field number I32 division VI for water intake for biogas plan. Issued on January 01, This letter signed by estate manager and estate manager assistant. Based on HCV assessment document there is no statement that the planted location above contained with the HCV and/or from primary forest. This statement also similar with map from Citra Landsat and Land Covered from 2013 with data sourced is: Indonesian Map 2007 (Peta Rupa Bumi Indonesia 2007) scale 1:50,000 Forestry Based Thematic Map 2006 scale 1:250,000 Forestry Map of Province scale 1:250,000 (Decree of Ministry of Forestry number SK.435/Menhut-II/2009, dated on July 23, 2009). Based on Satelite Image, Barat and Tengah Estate location did not have primary forest, when the condition is shrub, secondary dry forest, production forest, crop estate, housing, dry crop estate and opened land, and also coal mining. For Barat estate, they have revised some information about planting after November 2005, i.e.: No. Div 1st Surveillance Ha YoP Planted Div 2nd Surveillance YoP Ha Planted Information reason revise by company Land used trajectory 1 III III This area came from mixed agriculture of the communities Some area was enclave and unproductive area about 11.0 Ha in field No. I17B and Ha in This area came from mixed agriculture of the communities.

53 Page 53 of 91 2 IV IV V V VI VI field No. I18B. Some area was planted about 3.18 Ha, this is additional planted in field No. J35B. Field merger because the field is small, i.e., field No. J40 and J41. The difference area about 7.23 Ha, came from field merger J11A and J12A because the total planted area is to small and based on remeasurement in filed No. I14A. It is because remeasurement and found in field No.L13 and L14 the area was reduce from the 1st surveillance. The difference area was include in HCV area about 5.90 Ha. The land came from land compensation process from community. Some field No.K16A merger to K17A about 7.41 Ha, and in field No. L18 about 8.6 ha was unproductive area, and there are enclave in field No. L18, L19 and L22 about Ha. This area was unplanted area/land bank asaside in field. This area came from mixed agriculture of the communities. This area came from mixed agriculture of the communities. This area came from mixed agriculture of the communities. - This area came from mixed agriculture of the communities. This area came from mixed agriculture of the communities.

54 There are enclave in field No.L16, L17, L20B, L21B about Ha. Page 54 of 91 This area came from mixed agriculture of the communities In fact, the planted was done in 2013, but because the planted area is to small then the company carry out this planted area into Because field condition showed the palm oil was in mature condition (TM1). Came from palm oil mill land bank. During field assessment in field No. K13B and I12B, this area was planted in Based on land use history, this land was enclave area by local community, the company carried out compensation process until the local community release that land. This land before was under Mr. Sukijo, Mr. Jafar, Mr. Jarman. Next, based on land clearing documentation book, that area was open by manual land clearing used heavy equipment, with evidence: 1. Record of Perun in field No.J19B about 0.9 Ha (20/2/2014) 2. Record of Rolling perun in field No.K14C about 1.3 Ha (20/10/2013) 3. Record of Perun lahan in field No.K13B about 0.5 Ha (19/07/2013) 4. Record of Perun lahan in field No.J22B about 0.3 Ha (16/09/2013 Based on field observation and interview with Head Division V, the planted in 2013 up came from mixed agriculture i.e.: water melon, rubber, and others. Based on EIA and HCV document there is no information stated on that document about marginal soil present in Tengah estate and Barat Estate. Social Impact Assessment (SIA) document does not covering the explanation related the land use of local community. It condition was raised as non-conformity (NCR RSPO 00719) Compliance status: Non Compliance NCR RSPO (Major non-conformity) Social Impact Assessment (SIA) document does not covering the explanation related the land use of local community. Principle 8: Commitment to continuous improvement in key areas of activity

55 Page 55 of 91 Criteria assessed: CR8.1 Criteria not assessed: - Findings: Based on field observation, document verification and interview with workers, showed that the Jorong Mill and Estate (Barat and Tengah) could show the effort to continuous improvement in each activity in mill and estate. Example in riparian bufferzone management, the company showed strongly commitment to maintain and protect the riparian bufferzone from any contamination and pollution. Signboard about riparian river protection already installed in every riparian location. Also in PPE used during on duty, found the workers also strongly commitment to used PPE during on duty, this is evidenced by the low of accident number recorded by OHS committee. Then, in energy efficiency, Jorong mill also showed the commitment to reduce the fossil fuel used for production process in mill. All by product from processing (shell and fiber) used by mill to energy source through the boiler burned. In IPM also company could showed the record of EWS monitoring, whereas the monitoring record showed that the level attack from pest was low and the company still used biological control (Turnera, Antigonon and Tyto alba) as a biological control to minimize the chemical used. Compliance status: Full Compliance RSPO SCCS Jorong Palm Oil Mill is producing crude palm oil (CPO) and palm kernel (PK). The company currently sells their product without claiming it as certified sustainable palm oil (CSPO) but sold as International Sustainability Carbon Certification (ISCC) certified claimed product. The company only claiming certified sustainable palm kernel (CSPK) and the product sells was register on RSPO etrace. from RSPO to support implementation of sustainability requirements. The company implements SCC-RSPO with Mass Balance (MB) model according to the nature of mill FBB supply condition. The following is a description of the company s supply chain management system according to the RSPO SCCS requirements (it was assessed/audited against Module E), including status of compliance of the company and their outsourced third parties to RSPO SCCS requirements. Results of audit/assessment as describe on the explaination belows: E.1. Definition Findings: Jorong Palm Oil Mill implemented the RSPO SCCS MB model. This model allowed the mixing of certified product and uncertified product with control in mass balance record. Jorong Palm Oil Mill (PKS Jorong) located in Indonesia. Jorong Mill has production capacity of 90 tonne/hours. In year 2014, the mill processed Fresh Fruit Bunches (FFB) from company owned estate (Barat and Tengah Estate), Pemalongan smallholder (named KUD Ulin Jaya), Damit smallholder (named Kopermas Subur Mandiri), PT Sentosa Sukses Utama (SSU) and outgrower, whereas in year 2015 that FFB supplier same as year 2014 exclude Timur estate. The location of Jorong Palm Oil Mill is within Barat estate. Jorong Palm Oil Mill has an operating licensed from the Indonesian State Minister of Investment of Investment Coordinating Board i.e.: approval of foreign investment (Izin Usaha Tetap) No. 189/T/INDUSTRI/PERTANIAN/2008 (issued date on 11 March 2008) with production capacity of FFB : 515,500 tonnes (FFB from estate in Tanah Laut Regency : 330,000 tonnes and in Tanah Bumbu Regency : 185,500 tonnes), CPO : 111,400 tonnes, PK : 25,500 tonnes. Jorong mill has extention permit from previous permit i.e.: approval of head of integrated licensing service offices no. 1/63/IU/II/PMDN/INDUSTRI/2013 dated on June 26, 2013 with capacity of CPO : 118,800 tonnes and PKO : 24,300 tonnes. Whereas license from Ministry of Agriculture i.e cultivation business (IUP/SPUP) no, 749/Menhutbun-VII/2000 dated on June 29, 2000 jo head of tanah laut regency letter no. 525/148/UT.1 dated on May 5, 2008 that mill capacity 30

56 Page 56 of 91 tonnes/hour to 90 tonnes/hour. In 2015, Jorong Palm Oil Mil has received FBB approximately 65.36% (176, tonne) from owned estate (Barat and Tengah Estate), from company smallholder is about 1.02% or 2, tonne, and about 33.62% or 90, tonne from out grower. While in 2016 (until August 2016), Jorong Palm Oil Mill has received the FFB from owned estate is about 87, tonne (67.05%), from company smallholder is about 1.38% or 1, tonne, and about 31.57% or 41, tonne from out grower. Compliance status : Full Compliance E.2. Explanation Findings: Estimated of tonnage CPO and PK products has been recorded in to the public summary of the P&C certification report. The actual of certified CPO and PK year 2015 are 39, MT (CPO) and 8, MT. Whereas, projection of certified product year 2016 are 37, MT (CPO) and 8, MT (PK) with projection of certified FFB process is 160, MT and extraction rate are 23.20% (OER) and 5.00% (KER). This information gets from budget of mill year Jorong Palm Oil Mill registered in RSPO IT Platform (e-trace) with the RSPO e-trace member ID RSPO_PO Compliance status: Full Compliance E.3. Documented procedures Findings: Jorong Palm Oil Mill has established the procedure related to RSPO SCCS MB implementation. That procedure such as: 1. SPO/GMK-AGRO/01/10 Rev04 valid from about traceable sustainable mass balance report 2. SOP/GMK-AGRO/03/06 Rev04 valid from about product delivery from palm oil mill 3. SOP/GMK-AGRO/06/01 Rev01 valid from about purchasing 4. SOP/GMK-AGRO/03/05 Rev03 valid from about product receiving in palm oil mill 5. SOP/GMK-AGRO/01/03 Rev02 valid from about handling non-conforming product 6. SOP/GMK-AGRO/01/05 Rev01 valid from about corrective action 7. SOP/GMK-AGRO/01/06 Rev01 valid from about calibration 8. SOP/GMK-AGRO/01/09 Rev02 valid from about incoming material receiving 9. SOP/GMK-AGRO/01/11 Rev02 valid from about sounding tank The mill has been assigning person, i.e. head of administration (Mr. Rully Walun) that having overall responsibility for and authority over the implementation of SCCS requirements and compliance with all applicable requirements. The head of administration is expected to be able to demonstrate awareness of the facilities procedures for the implementation of SCCS standard. Respective staff has good knowledgeable and competent in implementing the supply chain procedures in Jorong mill, as proved during interview with weight bridge staff, FFB ramp etc. There is training evidence for SCCS awareness for Mill staff manager level and all relevant staff such as attendance list; training was conducted on September 15, Evidence of training: Minutes meeting SCCS workshop for employees working with Critical control Point such as Photographs of training session dated September 15, Compliance Status : Full Compliance

57 Page 57 of 91 E.4. Purchasing and good in Findings: Jorong Palm Oil Mill has separate between certified FFB and non-certified FFB; also include the certified and un-certified palm oil product (CPO and PK) through the mass balance record control. Especially for FFB certified and un-certified will marked use stamp of SCCS in form slip FFB in weighbridge. Only FFB from Barat and Tengah estate marked use that stamp. And for FFB from outside that estate not marked this is mean the FFB is not certified. Amount of FFB and palm oil product certified and un-certified was explained in principle and criteria 1 above. Until 2nd surveillance audit, there is no overproduction of certified palm product or FFB, but if the overproduction will happen, the mill has mechanism to inform to the certification body through the mill procedure. Jorong mill has procedure and mechanism to inform the over production into the CB by document number SOP/GMK-Agro/03/06 revision 04 date issue August 10, 2015, mentioned if over production projected, the management representative will inform to the CB related that over production, Compliance status: Full Compliance E.5. Record keeping Findings: Jorong palm oil mill has recorded and balance receipts all if RSPO certified and uncertified in to mass balance record and also for palm oil product such as CPO and PK and evaluated in every 3 months. During the 2nd surveillance audit palm oil mill still consistent to record and control the mass balance stock, when in August 2016 (during the surveillance) certified palm oil product for CPO is about 70, tonne and PK is about 40,142 tonne. While the un-certified palm oil product for CPO is minus stock (70, tonne) and PK is about tonne. Until the 2nd surveillance audit, Jorong palm oil mill has no transaction yet for certified palm oil product. There is no outsourced process in Jorong Palm oil mill. The mill s product CPO and palm kernel are internally processed in company s location Compliance status: Full Compliance 3.2 Status of Previously Identified Non-conformities A total of 23 non-conformances were identified during 1 st surveillance audit. These consisted of 11 major nonconformities and 11 minor non-conformitiy for P&C Generic 2013 and consisted of 1 major non-conformities for SCCS November During this surveillance assessment, it was found that there was sufficient evidence for closure of all non-conformities. The following is a description of the evidence of action taken to close the nonconformities raised during the previous surveillance, as well as auditor s conclusions on the status of the nonconformities. RSPO Required System NCR of 22 (Non-conformity against of RSPO Requirement system) During the 1st surveillance audit, PT GMK can not show the record of work program and implementation of smallholder certification plan. Verification results :

58 Page 58 of 91 The company has developed and submitted the smallholder certification work plan for In the work program showed the 20 activity such as training for RSPO introduction, training for document control, brief for policy related biodiversity, sexual harassement, OSH and others. The company has been realized smallholder certificarion work plan 2016 such as training of document control for Pemalangan smallholder (March 12, 2016), socialization of procedure i.e harvesting, spraying, manuring (April 8, 2016), training of first aid for work accident (June 13, 2016), socialization of HCV, hazardous material (May 2, 2016). Auditor Conclusions: Closed Criteria Publicly available documents shall include, but are not necessarily limited to: land titles, OSH plans, plans and impact assessment relating to environmental and social impacts, HCV document, pollution prevention and reduction plans, details of complains and grievances, negoatiation procedures, continual improvement plans, public summary of certification assessment and human rights policy. NCR of 22 (Major non-conformity) The publicly available document lists not yet explicitly mentioned documents required by RSPO P&C 2013, such as Environment and Social Impact Management Plan and report; HCV; Negotiation Procedures; Public Summary of certification assessment; Human Rights policy and Code of Ethical Conduct policy. a. Interview result with local community headman (Batalang and Pemalongan) found that Company not yet communicated their policy regarding transparency. Verification results : The company has brief all of related stakeholders with the evidenced in brief attendant list conducted on August 24, 2015, attendant with 10 persons from all of stakeholders. This brief was completd with minutes of meeting and photograph also. The company also submitted the new procedure complete with the new information related the new publically available document. Auditor Conclusions: Closed Criteria A documented system, which includes written information on legal requirements, shall be maintained. NCR of 22 (Minor non-conformity) It was found in the law register book, the company no input yet the two regulation related workforce, such as regulation number 100/2004 and 102/2004 from Ministry of Man Power and Transmigration. Verification Result : The company has been input the regulation related workforce to law register book such as regulation number 100/2004 and 102/2004 from Ministry of Man Power and Transmigration Auditor Conclusions: Closed Criteria A mechanism for ensuring compliance shall be implemented NCR of 22 (Minor non-conformity) a. There is no mechanism from the company in work contract related to evaluate the work contract has fulfill and compliance with regulation number 100/2004 about working agreement. b. Occupational Health and Safety Committee (P2K3) for Jorong Mill, Tengah and Barat Estate still not authorised by the Government, also there is no periodically report for OSH meeting in every three months to the government for II, II and IV in 2014 and I, II in 2015 Verification Result :

59 Page 59 of 91 The company has been submitted the evidenced, i.e.: Mechanism of evaluated the work contract that the mechanism has been fulfill with regulation number 100/2004 about working agreement. But, this surveilance audit founded that there is no work agreement for daily workers and this nonconformity escalation to Major non-conformity. Decree of Labor and Transmigration agency about authorized of Occupational Health and Safety Committee (P2K3) and periodically report every three months to agency Auditor Conclusions: Closed Criteria Documents showing legal ownership or lease, history of land tenure and the actual legal use of the land shall be available. NCR of 22 (Major non-conformity) a. During the document verification of hectarage statement, overlay map of land use right with planted area, showed indication of planted in outside of HGU (land use right) in Barat and Tengah Estate. Map scale 1:65,000, the indication is planted in year of 2003, 2004, 2007 and b. During the 1st surveillance the company can showed yet the up to date progress in 2015 for the progress land use permit process. Last update only in 2014 without significant progress from Land Office of Verification result : The company has submit the evidence, i.e.: 1. Minutes of meeting about the explanation of Gawi Makmur Kalimantan Area dated on Friday April 24, 2015 from Government Office of Forest. 2. Letter of recommendation from Industrial, Trading and Cooperation Government Office number 518/584/INDAGKOP DAN UKM/IX/2015 about supported to cooperation development for planted area in the outside of HGU. 3. Work program of cooperation development for planted area in the outside of HGU, named is KSU Daya Mitra Sejahtera 4. Letter of information about the HGU progress for area 280 Ha addressed to the Head of Land Agency of, dated on August 19, Letter of progress update process of Cooperation KSU Daya Mitra Sejahtera Auditor Conclusions: Closed Criteria Standard Operating Procedures (SOPs) for estates and mills shall be documented. NCR of 22 (Major non-conformity) Tengah estate during the 1st surveillance audit can not show the water management program. Verification result : The companya has submitted the water source management program. The water management program was include activity such as maintain the clean condition around the water source, installement the signboard, piping checking periodically, enrichement of forest vegetation around the water source. Company also has submitted the photograpgh of water management program implementation was conducted by company base on water management program above. Auditor Conclusions: Closed Criteria A mechanism to check consistent implementation of procedures shall be in place. NCR of 22 (Minor non-conformity) There is no mechanism on monitoring the effectiveness of SOP implementation causing several inco sistency between procedure with implementation such as :

60 Page 60 of 91 Domestic waste not separate/mixing between organic waste with inorganic waste in warehouse office Tengah Estate, office division Batalang unit division 1,3, and 6 so this is condition inconsistency with SOP/GMK-SMK3/01/14 page 4; SOP / GMK-AGRO / 10/01 on Engineering and Workshop are not implemented properly as mentioned in Section 8.1 of the SOP and monthly report and work evaluation is not available as set out in the SOP. Mill Maintenance Procedure No.SOP /GML-AGRO / 03/04 are not in accordance with the implementation. Available forms, Annex 8.2, Annex 8.3 and Annex 8.4, in the SOP never been used as part of mill maintenance procedure Verification result : Based on document and field verification, the company has conduct such as: The company has been separate between organic and inorganic waste by provide garvage dump for each waste The company has been implemented SOP/GMK-Agro/10/01 on Enginering and Workshop i.e fill the form of monitoring and daily maintenance (P2H) for vechile and made monthly report. Based on monthly report period July 2016 has been conduct monitoring and daily maintenance (P2H) for vechile with type Mitsubishi PS.220/DA 9672 C The company has latest procedure related Maintenance and Mill Construction (SOP/GMK-Agro/03/04 revision 01, effective date June 7, 2013). The procedure describe that the company fill the maintenance request and fill the purchase request if there is not material vailable in the storage. Auditor Conclusions: Closed Criteria Records of monitoring and any actions taken shall be maintained and available, as appropriate. NCR of 22 (Minor non-conformity) Records of monitoring the implementation of SOPs are not available, and then the organization cannot perform an evaluation to measure the effectiveness of SOPS. Verification result : The company has been conduct internal audit on 25 until 28 July This audit conducts to see the compliance between procedure and implementation. There is 7 non-conformities for this internal audit and the company has been improve for all the non-conformities. Auditor Conclusions: Closed Criteria All operations where health and safety is an issue shall be risk assessed, and procedures and actions shall be documented and implemented to address the identified issues. All precautions attached to products shall be properly observed and applied to the workers. NCR of 22 (Major non-conformity) a. It was found mini truck John Deer 05 in Tengah estate was not completed with horn and mirror as a warning system when they are operated. b. During the estate visit in Barat Estate, it was found the truck tank which used to spraying activity was not completed with MSDS and also the responsible foreman on duty didn t have the MSDS related chemical used to readily available for easy reference. Verification result : The company has submit the evidence, i.e.: 1. Attendantlist of MSDS acceptance for fertilizer warehouse foreman 2. Attendantlist of MSD acceptance for chemical foreman dated on August 4, 2015 for 4 persons foreman (3 fertilizer foreman and 1 chemical foreman) 3. Attendantlist of MSD acceptance for chemical foreman dated on August 15, 2015 for 5 persons foreman (2 fertilizer foreman and 3 chemical foreman) 4. Attendantlist of MSD acceptance for chemical foreman dated on July 04, 2015 for 2 persons fore-

61 Page 61 of 91 man (1 fertilizer foreman and 1 chemical foreman) 5. Attendantlist of MSD acceptance for chemical foreman dated on August 4, 2015 for 4 persons foreman (3 fertilizer foreman and 1 chemical foreman) 6. Photograph of documentation installament of MSDS in mixing tank for chemical and installation of horn and mirror to the Jhon Deer. Auditor Conclusions: Closed Criteria All workers involved in the operation shall be adequately trained in safe working practices (see Criterion 4.8). Adequate and appropriate protective equipment shall be available to all workers at the place of work to cover all potentially hazardous operations, such as pesticide application, machine operations, and land preparation, harvesting and, if it is used, burning. NCR of 22 (Major non-conformity) a. It was found John Deer mini truck operator, whell loader, crane operator and boiler operator diid not having a certificate which proved they are competence to operate the equipment proper and safely. b. It was found in Jorong Mill Boiler area, harvesting activities in Tengah Estate, John Deer ini truck driver in Barat Estate Division 2, Truck driver for FFB transporter in Jorong Mill not using the PPE and proper shirt when entering this area as detailed in their Hazard Identification, Risk Assessment and Risk Control document. Verification result : The company has submit the evidence, i.e.: 1. Record of PPE brief attendantlist and photograph dated on August 11, 2015, attendant 11 persons from all heavy equipment operator. 2. PPE brief record attendantlist and photograph dated on September 2, 2015 brief to all the harvesting workers in Tengah Estate 3. PPE brief dated on June 5, 2015 to all workers in Jorong Mill attendant by 21 persons from laoding ramp, tippler, processing, boiler, turbine 4. PPE brief dated on June 12, 2015 to all workers in Jorong Mill attendant by 15 persons from kernel process, loading ramp, sterilizer, boiler, clarification, enginee room. 5. PPE brief dated on August 14, 2015 to boiler operator attendant 7 persons Auditor Conclusions: Closed Criteria All workers shall be provided with medical care, and covered by accident insurance. NCR of 22 (Minor non-conformity) a. There is no available audio metric test result for employee who working in the area which have more than 85 db noise such as electrical generator operators as required by Transmingration and Man Power ministry regulation No.2/MEN/1980 related regular medical test for employee. For Jorong Mill employee, annual medical checkup also never been performed during the time. b. Found in Jorong Mill the stairs with more than 45 degree slope which not completed with handrail to prevent any accident when used. Verification result : The company has been conduct medical checkup year 2016 and has been conduct medical checkup for audio metric test The company has been installed handrail in the stair beside hopper EB Conveyor on September 8, 2015 and equipped with minutes of installed the handrail and photograph. Auditor Conclusions: Closed Criteria Where rare, threatened or endangered (RTE) species, or HCVs, are present or are affected by plantation or mill operations, appropriate measures that are expected to maintain and/or

62 Page 62 of 91 enhance them shall be implemented through a management plan. NCR of 22 (Major non-conformity) The company failed to demonstrate the implementation of planned HCV management since 2014 Verification result : The company provided documents that prove some HCV management has carried out, such as : Rehabilitation degraded habitat area in Gunung Tandukan on August 13rd, 2015 proved by a implementation report by field head assistant and HCV staff. In addition, riparian zones programmed will be rehabilitation on December 2015 and and adds to the existing rehabilitation area in block J32, J33 Barat estate. Identification of erosion-prone areas in Barat estate on June 2015 proved by report of implementation, this report contains information on areas which has steep slope and the condition of terrace system completed with photos. Monitoring of HCV 5 in Barat estate on August 2015 to ensure the HCV 5 still exist. Auditor Conclusions: Closed Criteria Where a management plan has been created there shall be ongoing monitoring: a) The status of HCV and RTE species that are affected by plantation or mill operations shall be documented and reported; b) Outcomes of monitoring shall be fed back into the management plan. NCR of 22 (Minor non-conformity) The company cannot shows any document or report on HCV and RTE species status monitoring Verification result : The organization has established an activity plan for manage and monitor their HCV. For example as documented in the document Rencana Kegiatan Pengelolaan dan Monitoring HCV Kebun Timur 2016, the organization has defined some activities to ensure that all identified HCV well managed and monitored. The document was included activities plan, the purposes, and frequency of monitoring for each HCV respectively. For example: HCV 4, monitoring of RTE species and it s habitat, will be monitor every 3 (three) month. HCV 4, Monitoring of water quality (debit and surface level of water) HCV 1, will be monitor monthly There are records of HCV monitoring results, i.e.: Document No. FR/GMK-AGRO/HCV/01/04, namely Monitoring Activity of Habitat Data Sheet, dated March 08, 2016 Document No. FR/GMK-AGRO/HCV/01/02 namely Tally Sheet of RTE Fauna Observation, on Timur Estate, dated March 08, 2016 Document No. FR/GMK-AGRO/HCV/01/02 namely Tally Sheet of RTE Fauna Observation, on Tengah Estate, dated June 13, 2016 Auditor Conclusions: Closed Criteria Where HCV set-asides with existing rights of local communities have been identified; there shall be evidence of a negotiated agreement that optimally safeguards both the HCVs and these rights. NCR of 22 (Minor non-conformity) There is no agreement or memorandum of understanding available between the company and local communities related to HCV 6 management in Tengah Estate. Verification result : Based on observation to Tengah Estate, especially HCV 6 location (Datu Saimah binti Datu Taifah Ceme-

63 Page 63 of 91 tery) found that the location is within the area of the organization. There is evidence that the organization has maintained and taking care the cemetery. Auditor Conclusions: Closed Criteria All chemicals and their containers shall be disposed of responsibly. NCR of 22 (Major non-conformity) Based on PT Nazar s license from Environmental and Forestry Ministry No year 2015 dated May 13 th, 2105, PT Nazar as a partner PT GMK to collect and transport hazardous and toxic waste is not allowed to handle agrochemical container, but in fact this company collect and transport that kind of waste. PT Wastec Internasional, PT Muhtomas and PT Job colouring as a partner of PT Nazar and PT GM process and utilize hazardous waste does not have valid license to handle the waste. PT GMK cannot show a valid license of those companies in the contracts. This condition causing uncertainty of safety waste handling and waste disposed of responsibly. Verification result : The company has delivered a license/permit of PT Nazar which includes the handling of chemical container. License issued by Transportation Ministry on December 15 th, 2104 No. KL.204/2/4/DN-14 for transportation of hazardous waste as well as license for solid and liquid waste include chemical container collection issued by Environment Agency of Province on May 20 th, 2014 No 1 year In addition, PT Nazar also include progress of permit extension of PT Wastec International which has been responded by the Environmental Ministry on January 20 th, 2015, and license of PT Muhtomas No year 2014 issued by the Environmental Minister on December 4 th, 2014 valid for three years, meanwhile PT Job Colouring is no longer involved in hazardous and toxic waste disposed. Auditor Conclusions: Closed Criteria Significant pollutants and greenhouse gas (GHG) emissions shall be identified, and plans to reduce or minimise them implemented. NCR of 22 (Major non-conformity) Mill and both of estate still no has work program to reduce and minimize the significant emission and pollution and there is no record for that implementation. Verification result : Company has submitted the evidenced, i.e.: 1. Record of realization enrichment planting program with forest vegetation with 40 tree planted by company 2. Record work program to reduce and minimize the siginificant pollutan, with the activity such as enrichment, GHG identification source, emission and pollution identification, EIA evaluation and others. Auditor Conclusions: Closed Criteria A monitoring system shall be in place, with regular reporting on progress for these significant pollutants and emissions from estate and mill operations, using appropriate tools. NCR of 22 (Minor non-conformity) GHG calculation was created by the mill and estate, but the GHG calculation not used the RSPO template and there is no record that the GHG calculation used was endorse by RSPO. Verification result:

64 Page 64 of 91 The company has been conduct GHG calculation year 2015 in accordance with GHG Toolkit that issued by RSPO version Auditor Conclusions: Closed Criteria Plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts identified, shall be developed in consultation with the affected parties, documented and timetabled, including responsibilities for implementation. NCR of 22 (Major non-conformity) Found that the Social Impact Management plan does not covered the Land Acquisitions Program for community s land inside HGU and its conflict potentials; Social risk regarding coal mining activity inside Estate (HGU) areas; Local Economic Strengthening activities. Verification result : 1. Kebun Barat Estate Social Impact Management Plan Matrix of PT Gawi Makmur Kalimantan, prepared by Public Relation and Approved by Site Manager for Kebun Barat Estate, issued in September 11th In this document has stated related social impact as follow: a. Point 6, stated regarding local community expectation regarding land price escalation regarding company operations. b. Point 7, 8, and 9, stated impacts regarding coal mining activity inside estate/plantation c. Point 5 stated regarding local econmic strengthening activity by introducing palm oil commodity. 2. Kebun Tengah Estate Social Impact Management Plan Matrix of PT Gawi Makmur Kalimantan, prepared by Public Relation and Approved by Site Manager for Kebun Tengah Estate, issued in September 11th In this document has stated related social impact as follow: a. Point 6 and 11 stated impacts regarding local community expectation regarding land price escalation regarding company operations. b. Point 7, 8 and 12, stated impacts regarding coal mining activity inside estate/plantation c. Point 5 and 13 stated impacts regarding local econmic strengthening activity by introducing palm oil commodity. Auditor Conclusions: Closed Criteria The plans shall be reviewed as a minimum once every two years and updated as necessary, in those cases where the review has concluded that changes should be made to current practices. There shall be evidence that the review includes the participation of affected parties. NCR of 22 (Major non-conformity -escalation from NCR of 25) Company has not yet conducting review and revision regarding Social Impact Management Plan with participation of affected parties. Verification result : 1. Kebun Barat Estate Evidences regarding stakeholder participations of Social Impact Management Plan submitted are: Attendent list 1, signed by 5 people from formal institutions (head of Village, staff and RTs), July 6th 2015 Attendent list 1, signed by 7 people from formal and non formal institutions of tanah laut Village (head of Village, staff, BPP and RTs), September 4th Photo Documents 2. Kebun Tengah Estate Evidences regarding stakeholder participations of Social Impact Management Plan submitted are: Attendent list, signed by 60 people, September 6th 2015 Minute of Meeting: Social Impact management Plan, September 6th Minute of Meeting: Social Impact management Plan in Dammit Village, August 7th 2015.

65 Page 65 of 91 Auditor Conclusions: Closed Criteria A list of stakeholders, records of all communication, including confirmation of receipt and that effort are made to ensure understanding by affected parties, and records of actions taken in response to input from stakeholders, shall be maintained. NCR of 22 (Minor non-conformity) List of stakeholders of PT GMK has not yet identified all of strategic stakeholders, especially parties that have enough ability and capability to influence the estate operation, such as suppliers, contractor and local coal miner (community and/or company). Verification result: The company has list of stakeholders that has been identified of stakeholders such as suppliers, contractor and local community. The evidence of stakeholders still not cover for all affected parties and this non conformity escalation as Major nonconformity. Auditor Conclusions: Open (Escalation to Major nonconformity) Criteria Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc.) shall be available in the languages understood by the workers or explained carefully to them by a management official. NCR of 22 (Minor non-conformity) a. Status of harvesters workers still not comply with national regulation. Because according to the National Regulation number Minster of Manpower and Transmigration Regulation No 19 year 2012 regarding outsource, article 3. b. Harvesters and maintenance workers in estate still no have contract letter will explained about rights and obligations for both parties (working hour, payment calculation, deduction, overtime, leave day, and others. c. The norm of Piece Rate payment for Sunday and national holiday has not yet synchronized with Ministry of Workforce and Transmigration regulation no. 102 year 2004 regarding overtime. In this regulation, working in Sunday (and national holiday) difined as overtime, so the payments must comply with overtime payments regulation (the different between regular day and Sunday/holiday piece rate still too small). Verification result : Based on interviews with harvesters (Sugiyanto, Syukur and Ferdi) in mind that: a. Daily temporary worker status has been transformed into workers' Fixed Day. b. The employment contract between the company and workers have been made for each worker. c. Harvest workers on holidays receive incentives from the company. Attached regular day wages and wage a national holiday. Auditor Conclusions: Closed Criteria Growers and millers shall provide adequate housing, water supplies, medical, educational and welfare amenities to national standards or above, where no such public facilities are available or accessible. NCR of 22 (Minor non-conformity) During surveillance found that the water quality for consumptions was very low It indicated that Jorong Mill and Estate has not provided adequate clean water supplies for daily consumptions for workers who live in emplacements. Verification result : Based on observations of the corrective actions in mind that Jorong Mill has been repairing water pipelines

66 Page 66 of 91 from the Jorong Mill to housing employees. Auditor Conclusions: Closed RSPO SCCS System E.3. Documented procedures NCR SCCS of 01 Jorong Palm Oil Mill did not yet provide the new standard of RSPO SCCS Nov 2013 to all person in charge who responsible to RSPO SCCS implementation in Jorong Mill. Verification result : There is training evidence for SCCS awareness for Mill staff manager level and all relevant staff such as attendance list; training was conducted on September 15, Evidence of training: Minutes meeting SCCS workshop for employees working with Critical control Point such as Photographs of training session dated September 15, Auditor Conclusions : Closed 3.3 Identified non-conformances, corrective actions taken and auditors conclusions A total of 31 nonconformances were identified during the 2nd surveillance audit. These consisted of 19 nonconformity categorized as major non-conformities and 12 nonconformity categorized as minor non-conformities. For the major non-conformances, the company has taken the necessary corrective action to close these nonconformances, and this was verified by the audit team through documented evidence submitted by the company. For the minor non-conformances, the company has taken corrective action against these as well, and for those which could not be verified as closed through document checks, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as below: Criteria 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. NCR RSPO (Minor non-conformity) There are still several conditions not compliances such as: Jorong Mill, Barat Estate and Tengah Estate does not have a list of stakeholders that is classify Jorong Mill, Barat Estate and Tengah Estate does not have the time uniformity to conduct updating the stakeholders Jorong Mill, Barat Estate and Tengah Estate does conduct optimally disseminate information to relevant stakeholders Based on the verification results in the Batalang village, the stakeholder does not understand the company's policies and procedures Correction : Make a list of stakeholder based classify Make procedure which set the time to conduct updating for list stakeholder Make program for socialization/information dissemination plan related the policy for the related stakeholders

67 Page 67 of 91 Make program for socialization/information dissemination plan related the company policy and procedure in detail Corrective Action : Ensuring the list of stakeholder made based on classify Ensuring the procedure which set the time to conduct updating the stakeholder/list stakeholder has been made and stated Ensuring the program for socialization/information dissemination plan related the policy for the related stakeholders has been made and implemented Ensuring the program for socialization/information dissemination plan related the company policy and procedure in detail has been made and socialize Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification Result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit Criteria Records of requests for information and responses shall be maintained. NCR RSPO (Major non-conformity) Internal and external communication procedure does not show the time needed to respond the requests of information from stakeholders Correction : Set a time limit to response the information from stakeholders stated in communications procedure Corrective Action : Ensure a time limit to response the information from stakeholders has been stated in the communications procedure Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification results : The Company has submitted evidence of improvement i.e internal and external communication procedure that has been revised (SOP/GMK-Agro/01/08, revision 06, effective date November 1, 2016). In the procedure has been stated that the company respond for the request of information is 30 days after the information request has been sent. Criteria Publicly available documents shall include NCR RSPO (Major non-conformity) Barat Estate and Tengah Estate has not been maximized to socialize the policies related to: Negotiation procedure

68 Page 68 of 91 Grievance and complaints procedure Human right policy Plan and impact assessment related social and environmental aspect HCV document Correction : Make program for socialization plan for related policy in detail and cpmprehensive Corrective Action : Ensuring the program for socialization plan for related policy has been made and socialize Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification Result : The Company has submitted evidence of improvement such as: Socialization of negotiation procedure, grievance and complaint procedure to local community of Batalang village and Damit village on October 10, 2016 and documentation of socialization such i.e photograph and attendent list of participant Minutes of socialization related human right policy to local community of Damit Hulu village and Pemalongan village that has been conduct on October 27, 2016 Minutes of socialization related plan and impact assessment related social and environmental aspect to local community of Damit Hulu village and Pemalongan village that has been conduct on October 27, 2016 Minutes of socialization related HCV document to local community of Damit Hulu village and Pemalongan village that has been conduct on October 27, 2016 Attendant list of socialization participant and photograph of socialization Criteria A mechanism for ensuring compliance shall be implemented NCR RSPO (Major non-conformity) Several compliance of regulations that have not been implemented by the company such as: Based on field visit at Tengah Estate on manuring activity (Division 5 Block G-43), spraying (Division 2 Block C-47), harvesting (Division 2 Block C-49), EFB application (Division 4 Block E-49) and Main Office and Barat Estate on manuring (Division 2 Block E-28) found the contents of first aid box does not accordance with Permenaker No. 15 year 2008 Operator in the Barat and Tengah Estate such as dumptruck, grader, compactor and tractor does not have license (SIO) in accordance with Permenakertrans No. 9 year 2010 about operator for lifting equipment Officer who operated welding in the workshop at Barat and Tengah Estate does not have welder qualification in accordance with Permenaker No. 2 year 1982 about welding qualification in the workplace The company does not yet conduct re-ratification related composition the committee of occupational health and safety has changed where the name of Nazar Fahrizal has resigned. Colinestrase test has not been performed regularly at least once a year in accordance with the recommendation Pesticide Management in the Workplace of Labor, Transmigration and Social agency of Tanah Laut District No. 566/017 / Pesticides / LK / VIII / 2016 dated August 22, 2016 (Mill, Barat Estate and Tengah Estate) Daily workers have not been registered as a participant BPJS Health (Mill, Tengah and Barat estate). This is not in accordance with Law No. 24 year 2011 about BPJS The company could not demonstrate evidence of compliance with laws and regulations Kepmenakertrans / Permenakertrans No. 100 and 102 year 2004, because it was found spray workers and fertilizers

69 Page 69 of 91 does not read, sign an employment contract and in the Jorong mill the workers who work overtime more than 3 hours per day Correction : Make list content of first aid box and fulfill the first aid box in accordance with regulation of Permenaker No. 15 year 2008 List all operators are license obliged and make training program for operators who do not have the license Make a training program for welding to officer that has welding responsibility Make a letter for re-ratification related the latest composition changes of occupational health and safety committee to get re-ratification process rom related agency Make a program for cholinesterase test conduct once a year Make a program for BPJS registration of daily workers especially for the worker who fulfill the requirement that has been stated by BPJS Make an employee contract for daily workers Make a collective agreement between employee representative regarding overtime more than 3 hours Corrective Action : Ensuring the content of first aid box in accordance with regulation of Permenaker No. 15 year 2008 Ensuring the license data of operator is available and make training program for operator that has not license Ensuring the training plan program for person who has job and responsibility as a welder has been provide Ensuring the submission of re-ratification letter related the latest composition changes of occupational health and safety committee to related agency has been delivered Ensuring the program for cholinesterase test has been made and conduct once a year Ensuring the program for BPJS registration of daily workers gradually has been program Ensuring an employee contract owned by employee Ensuring the collective agreement between employee representative regarding overtime more than 3 hours has been made Auditor Conclusions: Closed Date of closure: November 18, 2016 Verification Result : The Company has submitted evidence of improvement such as: Internal purchasing order dated September 22, 2016 with number PPI is 003. In the purchasing order has been stated about name and specification order for first aid content at Tengah Estate Memorandum with number 003/HSE-BJM-1/GMK/IX/2016 dated October 1, 2016 about revision standard of first aid box content related to government regulation (Permenaker No.15 year 2008) Planing for training and socialization program year 2016 for dumptruck, grader, compactor, tractor and welding operator. The company plan to conduct training on December 2016 Letter from PT Gawi Makmur Kalimantan to Labor and Transmigration agency of Province with number 094/GMK-HRD/X//2016 dated October 21, 2016 about composition changes of occupational health and safety committee Program for year 2017 about medical checkup for audiometri and cholinesterase. The company plan to conduct medical checkup on April and May for Cholinestrase and August for Audiometri. Form of BPJS participant migration of PT Gawi Makmur Kalimantan that has been covered employee as much as 679 person Work agreement for daily worker on behalf Arbaniah (Barat estate) with number agreement is 001/HRD/PKWT-TH/X/2016 dated October 10, The work agreement has been sign between employee and company. In the work agreement stated if an employee had overtime, the company will paid regarding on government regulation (UU No.13 year 2003 about Labor)

70 Page 70 of 91 Work agreement for daily worker on behalf Bekti Arisandi (Tengah estate) with number agreement is 002/HRD/PKWT-TH/X/2016 dated October 10, The work agreement has been sign between employee and company. In the work agreement stated if an employee had overtime, the company will paid regarding on government regulation (UU No.13 year 2003 about Labor) Criteria A mechanism for ensuring compliance shall be implemented. NCR RSPO (Minor non-conformity) The Company has a mechanism through internal audits to assess compliance with regulations conduct once a year but in the list of rules and regulations of the company has not been evaluated related to the fulfillment of regulations in accordance with the company's operations, among others: Permenakertrans No. 9 year 2010 about operator of lifting equipment Permenaker No. 15 year 2008 about content of first aid box Permenaker No. 2 year 1982 about qualification of welder in the workplace Correction : Make an evaluation program for regulation compliance overall Corrective Action : Ensuring regulation compliance evaluation program has been evaluated Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit Criteria Where there are or have been disputes, additional proof of legal acquisition of title and evidence that fair compensation has been made to previous owners and occupants shall be available, and that these have been accepted with free, prior and informed consent (FPIC). NCR RSPO (Minor non-conformity) The Company does not have conflict resolution plans and land claim based on the principle of FPIC Correction : Make a conflict resolution plans and land claim based on the principle of FPIC Corrective Action : Ensuring the conflict resolution plans and land claim has been made based on the principle of FPIC Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit

71 Page 71 of 91 Criteria For any conflict or dispute over the land, the extent of the disputed area shall be mapped out in a participatory way with involvement of affected parties (including neighbouring communities where applicable). NCR RSPO (Minor non-conformity) There are still several conditions not compliances such as: The company does not have participatory mapping procedure Map of conflict and land claim does not indicated as result of participatory mapping Correction : Make participatory mapping procedure Make a conflict and land claim map on the related community that the result indicated as participatory mapping Corrective Action : Ensuring the participatory mapping procedure has been made and sign by management Ensuring the map of conflict and land claim that has been made involve entire related community that it result of participatory mapping Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit Criteria Maps of an appropriate scale showing the extent of recognised legal, customary or user rights (Criteria 2.2, 7.5 and 7.6) shall be developed through participatory mapping involving affected parties (including neighbouring communities where applicable, and relevant authorities). NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: The Company has a FPIC procedure but not yet fully adopted the principles of FPIC Maps of land use and land management which still claims by the community does not produced based on the results of participatory mapping Correction : Revised the FPIC procedure with include of FPIC principle into the procedure Make map of conflict and land claim based on participation of community Corrective Action : Ensuring the revised of FPIC procedure has been include the principle of FPIC into the FPIC procedure Ensuring the map of conflict and land claim based on participatory from community has been made Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result :

72 Page 72 of 91 The Company has submitted evidence of improvement such as: FPIC procedure that has been revised with document number SOP/GMK-Agro/05/02 revision 01, effective date November 2, The latest FPIC procedure has been added related FPIC principles. Partisipatory mapping (1:25.000) of land conflict and claim by local community of Damit Hulu village and Pemalongan village on Barat estate. The map has been sign by land owner/claimer. Criteria The mill shall record the origins of all third-party sourced Fresh Fruit Bunches (FFB). NCR RSPO (Major non-conformity) The Company has procedures No. SOP / GMK-AGRO / 01/20 Rev0 date issued on , about the FFB source of third party. But the procedures are not clearly mention about the ensuring of selecting the FFB source from third parties in accordance with laws and regulations. Correction : Completely the procedure which regulated to ensuring of selecting the FFB source from third parties in accordance with laws and regulation i.e SOP/GMK-Agro/01/23 about FFB Tracebility Corrective Action : Ensuring the procedure which regulated to ensuring of selecting the FFB source from third parties in accordance with laws and regulation i.e SOP/GMK-Agro/01/23 about FFB Tracebility has been stated inside the procedure. Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement i.e procedure of FFB tracebility (SOP/GMK-Agro/01/23 revision 0, effective date November 16, 2015) that has been completely. In the procedure has been stated that the supplier must completed the legal requirement such as deed of incorporation, SIUP, TDP, NPWP, map of area, source of seed, identity card, letter from head village that the land does not primer forest, year of planting, list of independent grower and account number. Legal requirement checking by legal department at head office and than management give instruction to conduct ground checking. The company will issued purchasing agreement if the supplier has been accordance with legal requirement. Criteria There shall be evidence of periodic tissue and soil sampling to monitor changes in nutrient status. NCR RSPO (Minor non-conformity) The Company has a determination of census tree and tree sample procedures (SOP / GMK-Agro / 02/11 revisions 01 effective date June 7, In that procedure has not listed the schedule of leaf analysis and soil analysis. Correction : Include provisions about the schedule of leaf analysis and soil analysis in the SOP / GMK-AGRO / 02/11 Corrective Action :

73 Page 73 of 91 Ensuring the SOP/GMK-Agro/02/11 about tree census and tree sample has been revised with including related item i.e the schedule of leaf analysis and soil analysis. Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit Criteria Protection of water courses and wetlands, including maintaining and restoring appropriate riparian and other buffer zones (refer to national best practice and national guidelines) shall be demonstrated. NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: Found indications of spraying on palm oil tree directly set aside with the river flows at Block G44 Division V Tengah estate and Block L25 Division 6 Barat Estate. There is no evidence that the company has been conduct analyzed the water quality of the river is required in the matrix RKL RPL. The company could not show a map of water source which located in the company's concession area. Correction : Make a socialization program about limits the ban on spraying in the river riparian and conduct repainting to the river marking in the river riparian that has been faded Make a program for analyzed the water quality of the river in accordance with matrix of RKL-RPL Make a map of water source that has been identify which located in the company's concession area. Corrective Action : Ensuring a socialization program about limits the ban on spraying in the river riparian and conduct repainting to the river marking in the river riparian has been made Ensuring a program for analyzed the water quality of the river has been made in accordance with matrix of RKL-RPL Ensuring a map of water source which located in the company's concession area has been made and assigned Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement such as: Minutes of socialization about the ban of spraying and fertilizer in the river riparian. The socialization has been conduct on September 24, 2016 for all of staff at Barat estate. This activity equipped with attendent list and photograph of activity Minutes of socialization about the ban of spraying and fertilizer in the river riparian. The socialization has been conduct on September 26, 2016 for all of employee both of spraying and fertilizing at Barat estate. This activity equipped with attendent list and photograph of activity Receipt of sample of water quality testing with receipt number 90-93/AP/VI/16 dated June 30, The company conduct water quality testing on Environmental Laboratory of Environmental Agency of

74 Page 74 of 91 Tanah Bumbu District. Sample of water quality testing taken from Katal-katal river, Setarap river, asam-asam river and kasatan kintap river accordance with matrix of RKL-RPL Hidrology map of water source which located in the company's concession area with scale 1: Criteria All operations where health and safety is an issue shall be risk assessed, and procedures and actions shall be documented and implemented to address the identified issues. All precautions attached to products shall be properly observed and applied to the workers. NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: Document identification of risk assessment in Jorong mill does not cover about stock measurement activities in the storage tanks. There are no records were recorded near misses that occur in the Jorong mill area. This is not according with SOP / KLS-SMK3 / 01/15 that at point 6.1 states each nearmiss that occur must be recorded Correction : Revising the identification of risk assessment documents by entering identification related the stock measurement activities in the storage tanks. Recording and documenting each near misses that occur in the mill area Corrective Action : Ensuring the identification related the stock measurement activities in the storage tanks has been conduct identification of risk assessment Ensuring the documentation related near misses that occur has been documented and filed Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement such as: Document identification of risk assessment with document number FR/GMK-SMK3/HRC/01/02, effective date October 01, The company has been added about stock measurement activities in the storage tanks into HIRAC. Record of hazard observation and nearmiss report in the Jorong Mill dated October 12, 2016 in the loading ramp area. Detail of nearmiss is slip because there is puddle in the loading ramp area. The company has been taken action i.e cleaning the loading ramp area on Friday, 14 October Hazard observation and nearmiss report has been sign by HSE Spesialist Criteria The responsible person/persons shall be identified. There shall be records of regular meetings between the responsible person/s and workers. Concerns of all parties about health, safety and welfare shall be discussed at these meetings, and any issues raised shall be recorded. NCR RSPO (Major non-conformity) Occupational health and safety committee (P2K3) does not discussed all aspects of safety where there is work accidents occurred in August 2016 but does not discussed in the occupational health and safety committee meeting in August 2016 Correction :

75 Page 75 of 91 Recording all aspects of safety and health that has been discussed at monthly meetings of occupational health and safety committee, and any issues that has not been discussed, will be included in the next month agenda Make a plan of occupational health and safety advisor internal training program in sub-secretary of occupational health and safety advisor Corrective Action : Ensuring the monthly meeting agenda of occupational health and safety committee has covered aspects of safety and health Ensuring the plan of occupational health and safety advisor internal training program in sub-secretary of occupational health and safety advisor has been made Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement such as: Minutes of meeting of occupational health and safety committee that has been conduct September 30, The issue has been discussed such as renewal composition of occupational health and safety committee, safety and health, inspection of safety and health, employee facilities and environmental. The company has been discussed about accident on harvesting activity and the company has been made program for socialization to minimize an accident. Planning of training and socialization program of safety and health year 2016 such as first aid training, safety working on harvesting activity, socialization about safety and health. Criteria Accident and emergency procedures shall exist and instructions shall be clearly understood by all workers. Accident procedures shall be available in the appropriate language of the workforce. Assigned operatives trained in First Aid should be present in both field and other operations, and first aid equipment shall be available at worksites. Records of all accidents shall be kept and periodically reviewed. NCR RSPO (Minor non-conformity) There are still several conditions not compliances such as: During field visit to Tengah Estate on harvesting activities (Division 2 Block C-49) found a drug taken by harvesting foreman has expired, among others rivanol (expired April 2016), Rohto (expired in December 2015) and Ranitidine (expired in May 2015) Could not shown evidence of implementation the first aid training that has been conduct in 2015, the last recording which shown is the implementation of training in 2014 (mill) Correction : The foreman carrying the list form of the drugs related to the drugs condition and status of expired, available in the first aid bags and has been conduct examined the expired time Make a first aid training program periodically once year Corrective Action : Ensuring the list form of the drugs related to the drugs condition and status of expired has been carried by foreman Ensuring every year the first aid training program scheduled in the training program

76 Page 76 of 91 Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit Criteria Where a management plan has been created there shall be ongoing monitoring: The status of HCV and RTE species that are affected by plantation or mill operations shall be documented and reported; Outcomes of monitoring shall be fed back into the management plan. NCR RSPO (Minor non-conformity) PT GMK has been socialized related HCV area located in the company's area, including in Barat Estate, however, the implementation has not been effective, for example in the HCV area 4.2 on Tandukan Mount, Division 4, Block 27/28 there are opening/utilization of land for planting chili and eggplant by "local community". Correction : Make the letter agreements with surrounding communities that expand the garden / farm in the HCV area, to not conduct opening the garden / farm in the HCV area Corrective Action : Ensuring mutual agreement with the community has agreed not to expand the garden / farm in the HCV area Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit Criteria Significant pollutants and greenhouse gas (GHG) emissions shall be identified, and plans to reduce or minimise them implemented. NCR RSPO (Major non-conformity) The Company has a plan to reduce or minimize the pollutant and GHG emissions identified but in the plan does not include targets and time frames to reduce emissions and pollution Correction : Make identification of GHG sources and create targets and time frames to reduce the significant emissions and pollution Corrective Action : Ensure the program for targets and time frames to reduce the significant emissions and pollution has been program Auditor Conclusions : Closed

77 Page 77 of 91 Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement such as: Target and due date of pesticide used to reduce emition and pollutants from 2014 until 2017 for Barata Estate Target and due date of pesticide used to reduce emition and pollutants from 2014 until 2017 for Tengah Estate Target and due date of CH4 to reduce emition and pollutants from 2014 until 2017 for Jorong Mill Criteria A monitoring system shall be in place, with regular reporting on progress for these significant pollutants and emissions from estate and mill operations, using appropriate tools. NCR RSPO (Minor non-conformity) The Company has not conduct reporting the results of GHG calculations that has been performed to RSPO Correction : Report the results of GHG calculation to RSPO Corrective Action : Ensuring GHG calculation has been reporting to RSPO Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit Criteria A social impact assessment (SIA) including records of meetings shall be documented. NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: Social Impact Assessment (SIA) document does not explain the specific impact on each village around the Barat and Tengah Estate. Social Impact Assessment (SIA) document does not covering the explanation related livelihoods, access to land use, cultural and religious values, educational and health facilities. Correction : Make further studies on the specific impact of each village around the estate Make further observations related livelihoods resources, access to land use, cultural and religious values, educational and health facilities, sources of livelihood Corrective Action : Ensuring the further studies that has been made already described the specific impact of each village around the estate

78 Page 78 of 91 Ensuring the further observations related livelihoods resources, access to land use, cultural and religious values, educational and health facilities, sources of livelihood has been implemented Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement such as: Revision impact on each village around the Barat and Tengah Estate such as Pendamaran Jaya village, Setarap village, Satui Barat village, Jombang village, Pasir Putih village, Sungai Cuka village, Pemalongan village, Damit Hulu village and Batalang village Revision of profile of village around Barat and Tengah estate such as livelihoods, access to land use, cultural and religious values, educational and health facilities Criteria There shall be evidence that the assessment has been done with the participation of affected parties. NCR RSPO (Major non-conformity) Social Impact Assessment (SIA) document does not show evidence that the process of drafting a social impact study has been through a consultative process with stakeholders Correction : Attach attendance list of stakeholders in the Social Impact Assessment (SIA) Corrective Action : Ensuring attendance list of stakeholders attached in the Social Impact Assessment (SIA) Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement i.e attendant list of participant related public consultation on 27 July 2012 at Aria Barito Hotel. Attendant list has cover all of stakeholder i.e government and local community Criteria Plans for avoidance or mitigation of negative impacts and promotion of the positive ones, and monitoring of impacts identified, shall be developed in consultation with the affected parties, documented and timetabled, including responsibilities for implementation. NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: Matrix of Social Management Plan Document in Barat Estate and Tengah Estate are not accompanied with a timeline (time allocation for each program implementation) There is no monitoring mechanism in Barat estate and Tengah estate in order to monitor impact reduction Correction : Completing the timeline on social management plan and implementation program that has been run-

79 Page 79 of 91 ning Make a monitoring mechanism to monitor the impact reduction Corrective Action : Ensuring the timeline on social management plan and implementation program that has been running created Ensuring monitor monitoring mechanism is available impact reduction Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement such as: Revision of social impact assessment has been equipped with a timeline (time allocation for each program implementation) for Barat and Tengah estate Mechanism of monitoring to reduce of impact in Barat and Tengah estate. The mechanism starting from make a management plan based on social impact assessment document until evaluation of plan and management monitoring of social impact every year. Criteria The plans shall be reviewed as a minimum once every two years and updated as necessary, in those cases where the review has concluded that changes should be made to current practices. There shall be evidence that the review includes the participation of affected parties. NCR RSPO (Minor non-conformity) There is no documentation of the recording process of stakeholder consultation on Barat estate and Tengah estate Correction : Attach recordings of public consultation in the Social Impact Assessment (SIA) document Corrective Action : Ensuring recording attachement of public consultation available become a single entity in the Social Impact Assessment (SIA) document Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit Criteria Consultation and communication procedures shall be documented. NCR RSPO (Major non-conformity) There are several conditions not compliances such as: List of affected communities have not been prepared in the Barat estate and Tengah estate Internal and External Communications procedure have not entered the principle of FPIC

80 Page 80 of 91 Correction : Make a list of affected communities Entering entered the principle of FPIC into Internal and External Communications procedure Corrective Action : Ensuring list of affected communities has been prepared Ensure the principle of FPIC in the Internal and External Communications procedure has been entered Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement such as: List name of local community which affected related with social and environmental aspect in Barat and Tengah Estate The Company has submitted evidence of improvement i.e internal and external communication procedure that has been revised (SOP/GMK-Agro/01/08, revision 06, effective date November 1, 2016). In the procedure has been entered the principle of FPIC. Criteria A list of stakeholders, records of all communication, including confirmation of receipt and that effort are made to ensure understanding by affected parties, and records of actions taken in response to input from stakeholders, shall be maintained. NCR RSPO (Minor non-conformity escalation to Major Nonconformity) There are still several conditions not compliances such as: Barat and Tengah estate does not has list identification of affected stakeholders Barat and Tengah estate does not has documentation related communication with stakeholders (respond recording for input from affected stakeholder) Correction : Conduct identification of affected stakeholder Conduct recording of response for incoming stakeholder input Corrective Action : Ensuring the identification of affected takeholder are identified and a list of affected stakeholder identification available and documented Ensure the recording of the response to incoming stakeholder input to respond in accordance with the applicable procedures Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement such as: The company has been sent the latest evidence list of stakeholders by adding stakeholder such as government and NGO Log book which contains about documentation such as letter of input from stakeholders and respond

81 Page 81 of 91 from the company. Criteria The system, open to all affected parties, shall resolve disputes in an effective, timely and appropriate manner, ensuring anonymity of complainants and whistle-blowers, where requested. NCR RSPO (Major non-conformity) The company does not have the clear mechanisms in the procedures for handling grievance and complaints Correction : Make a mechanisms and procedures for handling grievance and complaints Corrective Action : Ensuring mechanisms and procedures for handling grievance and complaints made and ratified Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement i.e the flowchart of internal and external communication for handling grievence and complaints Criteria Labour laws, union agreements or direct contracts of employment detailing payments and conditions of employment (e.g. working hours, deductions, overtime, sickness, holiday entitlement, maternity leave, reasons for dismissal, period of notice, etc.) shall be available in the languages understood by the workers or explained carefully to them by a management official. NCR RSPO (Major non-conformity) There are several conditions not compliances such as: There are no written employment agreement for daily workers (Barat and Tengah estate) There are no documents about Obligatory Labor Reporting in Labour agency of Tanah Laut District (Mill, Tengah estate and Barat estate) There is no salary slips for daily workers. (Barat and Tengah estate) Correction : Creating employment contracts for upkeep daily workers Made employment report to the relevant agencies for year 2015 Make receipt of wages / salary on daily worker Corrective Action : Ensuring employment contracts for upkeep daily workers has been made Ensuring the obligatory labor reporting has been submitted to relevant agency Ensuring the receipt of wages / salary on daily worker has been made and has been delivered Auditor Conclusions : Closed Date of closure : November 18, 2016

82 Page 82 of 91 Verification result : The Company has submitted evidence of improvement i.e: Work agreement for daily workers in Barat and Tengah estate such as on behalf Arbaniah (Tengah Estate) with contract number 002/HRD/PKWT-TH/X/2016 dated October 11, 2016 and Inah (Barat Estate) with contract number 003/HRD/PKWT-TH/X/2016 dated October 10, 2016 Letter from PT GMK with number 091/GMK-HRD/X/2016 dated 17 October 2016 about Obligatory Labor Reporting year 2015 to Head of Labor and Transmigration agency of Tanah Laut District. The letter has been submitted and receipt on 17 October 2016 Slip of salary for daily worker period September 2016 for Barat and Tengah Estate Criteria Minutes of meetings with main trade unions or workers representatives shall be documented. NCR RSPO (Minor non-conformity) There are no operational mechanisms for employee complaints. (mill, Barat estate and Tengah estate) Correction : Creating operational mechanisms employee complaints more systematically Corrective Action : Ensuring operational employee complaints made and approved by the competent Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit Criteria A policy to prevent sexual and all other forms of harassment and violence shall be implemented and communicated to all levels of the workforce. NCR RSPO (Major non-conformity) There are still several conditions not compliances such as: Socialization about sexual harassment to male workers for year 2016 does not perform (mill, Barat estate and Tengah estate) Members of Gender Committee has not got a briefing or counseling training for women as victims of violence (mill, Barat estate and Tengah estate) Correction : Make a socialization program about sexual harassment to male workers for year 2016 Creating a counseling training program for women as victims of violence Corrective Action : Ensuring a socialization program about sexual harassment to male workers for year 2016 has been made and implemented Ensuring a counseling training program for women as victims of violence has been made and imple-

83 Page 83 of 91 mented Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement i.e: Minutes of meeting and attendant list of participant related socialization of sexual harassment to male workers at Barat estate. The socialization has been conduct on 30 September 2016 (Tengah Estate), 8 October 2016 (Barat Estate) and 6 October 2016 (Jorong Mill) Minutes of meeting and attendant list of participant related counseling training for women as victims of violence (mill, Barat estate and Tengah estate). The socialization has been conduct on 27 October Criteria A specific grievance mechanism which respects anonymity and protects complainants where requested shall be established, implemented, and communicated to all levels of the workforce. NCR RSPO (Minor non-conformity) Companies do not have policies and mechanisms to handling of complaints that respects and protects the anonymity of the complainant (Whistle blower policy). Correction : Make a policy and mechanism to handling of complaints that respects and protects the anonymity of the complainant. Corrective Action : Ensuring policies and mechanisms to handling complaints of work that respects and protects the anonymity of the complainant was made and approved by the competent Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Evidence of immediate action taken was accepted. Effectiveness of implementation to verified at next audit Criteria Where temporary or migrant workers are employed, a special labour policy and procedures shall be established and implemented. NCR RSPO (Major non-conformity) There is not available procedure for temporarily migrant workers or foreign workers whereas in implementation the company have foreign workers (2 persons) Correction : Make a procedure for foreign workers Corrective Action : Ensuring the procedure for foreign workers was made and approved by the competent

84 Page 84 of 91 Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement i.e the procedure of migrant workers (SOP/GMK- AGR/04/04 revision 00 effective date 1 November 2016). Criteria A policy to respect human rights shall be documented and communicated to all levels of the workforce and operations NCR RSPO (Major non-conformity) Company Regulations Article 44: in order to get permission to leave to performing hajj must have worked one year. It is contrary to the principles of human rights that give the freedom to worship in accordance religion and belief. Correction : Revise the company regulations or issued a circular letter related permission to leave to performing hajj to be deleted from the company regulations and issued a circular letter about does not implemented Article 44 of the company regulation Corrective Action : Ensuring the revised of company regulation and circulars letter related to Article 44 of the company regulation that has been revoked Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : The Company has submitted evidence of improvement i.e Revision of company regulation Article 41 where the company give permission to leave the work and get the wage to conduct hajj Decree of Labor and Transmigration agency of with number KEP.561.3/013/PP/VII/Disnakertrans dated July 22, 2016 about issued of company regulation of PT Gawi Makmur Kalimantan Criteria Documented identification and assessment of demonstrable legal, customary and user rights shall be available. NCR RSPO (Major non-conformity) Social Impact Assessment (SIA) document does not covering the explanation related the land use of local community Correction : Attaching the land use of local community into Social Impact Assessment (SIA) document Corrective Action :

85 Ensuring the land use of local community in the Social Impact Assessment (SIA) was documented Auditor Conclusions : Closed Date of closure : November 18, 2016 Verification result : Page 85 of 91 The Company has submitted evidence of improvement i.e revision of profile of village around Barat and Tengah estate such as livelihoods, access to land use, cultural and religious values, educational and health facilities 3.4 Noteworthy Positive Component There is no positive component issued during surveillance audit. 3.5 Issues Raised by Stakeholders and Findings Pertaining to Issues There is no issues raised by stakeholders during interviewed onsite.

86 Page 86 of CERTIFIED ORGANISATION S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY 4.1 Date of Next Surveillance Visit The next surveilance audit is planned for November Acknowledgements of Internal Responsibility and Formal Sign-Off by Client It is acknowledged that the assessment visit was carried out as described in this report and we accept the assessment findings and report content. Signed on behalf of TUV Rheinland Indonesia Naik Monang Parlindungan Lingga Lead Auditor Date: December 19, 2016

87 Page 87 of 91 APPENDICES Appendix 1: Revised certificate

88 Page 88 of 91

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