MSPO CERTICATION SUMMARY REPORT

Transcription

1 MSPO CERTICATION SUMMARY REPORT HAP SENG PLANTATIONS (RIVER ESTATES) SDN BHD PLANTATION CENTRAL OFFICE GROUP STAGE 2 CERTIFICATION AUDIT Date: 25/01/2018 TUV NORD (Malaysia) Sdn Bhd No. 20, Jalan Tiara 3 Taman Perindustrian UEP Subang Jaya 47600, Selangor, Malaysia Phone: Fax:

2 MSPO Certification Summary Report Company Name: Certifying Unit: Hap Seng Plantations (River Estates) Sdn. Bhd. Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Table of Contents 1. INTRODUCTION Objective Scope Appointment and qualification of team members 4 2. METHODOLOGY...10 Table 2-1: List Of Estates Selected 3. ORGANISATION INFORMATION Production volume Planting Program for Each Estate Replanting program for each estate Maps of Company Location, Plantations and Organised SmallholdersError! Bookmark not defined. 4. CERTIFICATION ASSESSMENT Certification audit Error! Bookmark not defined Stakeholders Consultation Status of Non-Conformities Previously Identified Detail of Audit Findings Identified During This Audit CONCLUSION RECOMMENDATION REFERENCES...39 Table 7-1: Documents provided by Hap Seng Plantation Table 7-2: Background investigation and assessment documents Table 7-3: List Of Interviewed Persons And Stakeholders Annex / Enclosures 43 MSPO-F04b / Rev 2 2 of 43

3 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Abbreviations GAP MPOB MS MSPO NC OBS P&C PPP SOP Good Agricultural Practice Malaysia Palm Oil Board Malaysian Standard Malaysia Sustainable Palm Oil Non Conformance Observations Principles & Plant Protection Product Standard Operating Procedure MSPO-F04b / Rev 2 3 of 43

4 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi 1. INTRODUCTION Hap Seng Plantations (River Estates) Sdn Bhd has commissioned TUV NORD Malaysia Sdn Bhd to conduct an initial certification audit for Hap Seng Plantations Group of oil palm estates according to MS :2013 Part 3 General principles for Plantations and Organised Smallholders Objective The objective of this certification audit is to assess the Hap Seng Group Estates by an independent certification body with the aim for compliance of the standards Scope The certification is based on the documentation established and implemented by the group office and estates. The supporting documents were provided to the audit team as well as information received by means of interviews and background investigation. The documents and information were reviewed against the requirements and criteria based on MSPO :2013 Part 3 General principles for Plantation and Organized Smallholders. TUV NORD Malaysia has employed a risk-based approach in the audit, focusing on the identification of significant risks and reliability of the assessment and reporting. In addition, the following reference was used as part of the assessment; the compliance of the requirements out of the guidelines applied was checked. 1. Malaysian Sustainable Palm Oil Part 3: General Principles for Plantation and Organised Smallholders audit guidance; 1.3. Appointment and qualification of team members A certification team consisting of one team leader was appointed. The onsite team members contributed to the review of documents, the assessment of the project activity and to the preparation of this report under the leadership of the team leader. Qualification of the Lead Auditor: Terence Ang Requirement Post-secondary education, college or university diploma / degree in one of the following i) Agriculture; ii) Science & Technology (e.g. Environmental Sciences, Life Sciences, Geological Sciences, Natural Sciences,); iii) Engineering, Process Technology; iv) Energy Management, Quality Management; Qualifications Diploma and Advance Diploma in Tourism Management MSPO-F04b / Rev 2 4 of 43

5 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Requirement v) Social Sciences and/or Anthropology; vi) Business Management; or vii) Other relevant related fields At least five (5) years of work experience in the oil palm sector or related field in consultancy / auditing of similar industry or equivalent related to and as necessary for the certification process. (e.g., sustainability, palm oil management; agriculture, ecology; social science) Attended the MS 2530 series of standards training Conducted at least three (3) MSPO or equivalent sustainability certification audits as Lead Auditor-in-training with a minimum of fifteen (15) man-days under the supervision of a qualified Lead Auditor for MSPO or equivalent sustainability certification schemes within the last two (2) years. A good knowledge in handling and evaluating sources of information and data. Able to communicate in Bahasa Malaysia or any other local language. Field working experience in the palm oil sector, or demonstrable equivalent Good Agricultural Practices (GAP), and Integrated Pest Management (IPM), pesticide and fertilizer use Health and safety auditing on the farm and in processing facilities, for example OHSAS or Occupational, Health & Safety Assurance System Worker welfare issues and social auditing experience, for example with SA8000 or related social or ethical accountability Qualifications More than 8 years in sustainable related field Successfully completed MSPO, RSPO P & C LA, SCC, RSPO Next and ISCC-EU training. Has conducted 3 MSPO and equivalent sustainability certification (RSPO ) as lead auditor in training Able to communicate in Bahasa Malaysia, English, and Chinese languages. 1 year as Certifier and Reviewer for RSPO P&C and SCC schemes 1 year as Wildlife (Biodiversity) and Ecotourism Consultant (EMS &HCV) 3 years as Wildlife Guide (Licensed issued by Ministry of Tourism, Malaysia) 6 months as Field Technician for University of Montana on HC 1 year auditor for RSPO and MSPO schemes 1 year auditor for RSPO and MSPO schemes Successfully complete SA8000 Basic Training and 1 year auditor for RSPO and MSPO scheme MSPO-F04b / Rev 2 5 of 43

6 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi codes Requirement Environmental and ecological auditing, for example experience with organic agriculture, ISO or Environmental Management Systems (EMS) or High Conservation Value (HCV) Good Milling Practices for example palm oil milling working experience or demonstrate equivalent. Qualifications 1 year auditor for RSPO and MSPO scheme Trainee auditor for RSPO and ISCC in refinery and mill. Qualification of Team Members Requirement Assessor Qualification Compliance Post-secondary education, college or university diploma / degree in one of the following i) Agriculture; ii) Science & Technology (e.g. Environmental Sciences, Life Sciences, Geological Sciences, Natural Sciences,); iii) Engineering, Process Technology; iv) Energy Management, Quality Management; v) Social Sciences and/or Anthropology; vi) Business Management; or vii) Other relevant related fields At least five (5) years of work experience in the oil palm sector or related field in consultancy / auditing of similar industry or equivalent related to and as necessary for the certification process. (e.g., sustainability, palm oil management; agriculture, ecology; social science) Leong Sak Kuan Wan Jia Ann (Joanne) Mohamad Norhisham Mohd Salleh Bin Zul Hairi Bin Abu Hassan Leong Sak Kuan Mohamad Norhisham Mohd Salleh Bin Zul Hairi Bin Abu Hassan Graduate in Science (Physic). Graduate Environment Management Technology Graduate Agrobiology in in Graduate in Plantation Industry Management More than 6 years as quality manager for ISO schemes. 5 years working experience in palm oil estates. 9 years working experience in estate management. MSPO-F04b / Rev 2 6 of 43

7 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Requirement Assessor Qualification Compliance Attended the MS 2530 series of standards training Leong Sak Kuan Successfully complete MSPO Lead auditor training course. Conducted a minimum six (6) onsite audits for a total of at least 20 man-days of audit experience as an auditor-in-training under the direction and guidance of a qualified Lead Auditor for MSPO or equivalent sustainability certification schemes. A good knowledge in handling and evaluating sources of information and data. Able to communicate in Bahasa Malaysia or any other local language. Field working experience in the palm oil sector, or demonstrable equivalent Wan Jia Ann (Joanne) Mohamad Norhisham Mohd Salleh Bin Zul Hairi Bin Abu Hassan Leong Sak Kuan Wan Jia Ann (Joanne) Mohamad Norhisham Mohd Salleh Bin Successfully complete MSPO Lead auditor training course Successfully complete MSPO Lead auditor training course Successfully complete MSPO Lead auditor training course Qualified as auditor base on audit log. Qualified as auditor base on audit log. Qualified as auditor base on audit log Leong Sak Kuan.Bahasa Malaysia, English and Mandarin. Wan Jia Ann (Joanne) Mohamad Norhisham Mohd Salleh Bin Zul Hairi Bin Abu Hassan Bahasa Malaysia, English and Mandarin. Bahasa Malaysia and English Bahasa Malaysia and English Leong Sak Kuan Working experience as auditor for RSPO and MSPO scheme. Mohamad Norhisham Mohd Salleh Bin Zul Hairi Bin Abu Hassan 5 years working experience in palm oil estates. 9 years working experience in estate management. MSPO-F04b / Rev 2 7 of 43

8 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Requirement Assessor Qualification Compliance Good Agricultural Practices (GAP), and Integrated Pest Management (IPM), pesticide and fertilizer use Health and safety auditing on the farm and in processing facilities, for example OHSAS or Occupational, Health & Safety Assurance System Worker welfare issues and social auditing experience, for example with SA8000 or related social or ethical accountability codes Leong Sak Kuan 3 Years in RSPO P&C related to GAP and IPM. Mohamad Norhisham Mohd Salleh Bin Zul Hairi Bin Abu Hassan Leong Sak Kuan Wan Jia Ann (Joanne) 5 years working experience in palm oil estates. 9 years working experience in estate management. Successfully completed OHSAS and Working experience as auditor for ISO and ISO Successfully completed Basic SA 8000 training and qualified as RSPO and MSPO sustainability auditor. Mohamad Norhisham Mohd Salleh Bin Successfully completed Basic SA 8000 training and qualified as RSPO and MSPO sustainability auditor. Environmental and ecological auditing, for example experience with organic agriculture, ISO or Environmental Management Systems (EMS) or High Conservation Value (HCV) Leong Sak Kuan Wan Jia Ann (Joanne) Successfully completed ISO training and auditing experiences. Successfully completed EMS ISO 14001: Involved in RSPO, ISCC, MSPO Audit with work experience in waste management handling. Mohamad Norhisham Bin Successfully completed EMS ISO MSPO-F04b / Rev 2 8 of 43

9 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Requirement Assessor Qualification Compliance Good milling Practices for example palm oil milling working experience or demonstrate equivalent. Mohd Salleh 14001: 2015 Lead Auditor training. Zul Hairi Bin Abu Hassan Mohamad Norhisham Mohd Salleh Bin Successfully completed EMS ISO 14001: 2015 Lead Auditor training. Has involved in auditing for RSPO SCC standard MSPO-F04b / Rev 2 9 of 43

10 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi 2. METHODOLOGY The audit approach consists of the following steps: Contract review; Appointment of team members and technical reviewer; Contact client for relevant documentation according to the applicable MSPO standards; Audit planning; Background investigation, desk review of submitted documents; On-Site assessment, inspections, interviews with operational personnel, stakeholders and its contractors; review of documentation; On-site reporting Resolution of non-conformance (NC) (if any) Draft audit reporting Technical review Final audit reporting Peer review Address Peer Review Comments (if any) Final approval and issuance of certificate. The certification audit was conducted in 23-27/10/2017 stages in accordance to the certification procedure. Stage 2: The certification audit was conducted on 23/10/2017 to 28/10/2017 covers the following activities but not limited to below: Onsite visit, observations and inspections of estate facilities and field activities; Interview operation personnel and field workers for understanding for the work assigned; Reviewed revised and updated documentation established and implemented; Operating records; Training records; Reports established; Work plans established; Stakeholders consultation meeting; Review and closed out of non-conformance raised during stage 1 audit; Assessment reporting; MSPO-F04b / Rev 2 10 of 43

11 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi For list of all reviewed documents refer to chapter 7, Table 7-1. For list of personnel participated in the audits refer attendance sheet and Table 7-3. On-site Assessment The audit of the estates was conducted according to the MS :2013 Part 3 for Plantation and Organized Smallholders. The methodology for collection of objective evidence included physical site inspections, observation of tasks and processes, interviews of stakeholders, communities, staff, workers and their families, review of documentation and data. Checklists and questionnaires were used to guide the collection of information. The comments made by external stakeholders were also taken into account in the assessment. For the certification audit, the selected estates were based on the formula S = n x r where S = sample size, r = risk factor and n = number of estates which is in accordance to MSPO certification procedure. The number of estates in the group is 13. Based on the formula, the sample size for the estate S = 3.6, therefore round up to the next integral of 4 estates. The risk factor applied is low since the group is RSPO and ISCC certified Thus, a total of 4 estates were selected for the onsite assessment and inspection as listed in Table 2-1 below: Table 2-1: List of Estates Selected Bukit Mas Estate Northbank Estate Tagas Estate Lokan Estate Name of Estate Coordinates N, E N, E N, E N, E Non-conformance: On the basis of the desk review, evidences presented during the audits as well as from the onsite visits non-conformance (NC) Major or Minor as well as Observations (OBS) may be raised during the audit. Major non-conformance shall be addressed and responded with 60 days from date of audit. Minor NC and OBS will be reviewed and verified during the next audit. All Minor non conformities shall be submitted with action plan prior to the issuance of certificate. MSPO-F04b / Rev 2 11 of 43

12 MSPO Certification Summary Report Company Name: Certifying Unit: Hap Seng Plantations (River Estates) Sdn. Bhd. Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi 3. ORGANISATION INFORMATION The certified estates are owned by Hap Seng Plantation located at the Tawau, Sabah. The details of the 13 estates as below: Name of Estate Location Coordinates Tomanggong Estate Litang Estate TagasEstate Northbank Estate Tabin Estate Batangan Estate Lokan Estate Kapis Estate Lungmanis Estate Lutong Estate Bukit Mas Estate 80km off Jalan Jeroco, Lahad Datu Sabah 80km off Jalan Jeroco, Lahad Datu Sabah 80km off Jalan Jeroco, Lahad Datu Sabah 80km off Jalan Jeroco, Lahad Datu Sabah 80km off Jalan Jeroco, Lahad Datu Sabah 50km off Jalan Jeroco, Lahad Datu Sabah 50km off Jalan Jeroco, Lahad Datu Sabah 50km off Jalan Jeroco, Lahad Datu Sabah 50km off Jalan Jeroco, Lahad Datu Sabah 50km off Jalan Jeroco, Lahad Datu Sabah 40km off Jalan Jeroco, Lahad Datu Sabah N, E N, E N, E N, E N, E N, E N, E N, E N, E N, E N, E Sungai Segama 1 Estate 40km off alan Jeroco, Lahad Datu Sabah N, E Sungai Segama 2 Estate 40km off Jalan Jeroco, Lahad Datu Sabah N, E 3.1. Production volume Name of Estate Total* Area (Ha) Production** Projected FFB Production (mt) (November 2017 to October 2018) Tomanggong Estate 2, , , Litang Estate 2,648,62 2, , TagasEstate 2, , , Northbank Estate 2, , , Tabin Estate 3, , , Batangan Estate 3, , , MSPO-F04b / Rev 2 12 of 43

13 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Lokan Estate 3, , , Kapis Estate 2, , , Lungmanis Estate 2, , , Lutong Estate 2, , , Bukit Mas Estate 4, , , Sungai Segama 1 Estate 2, , , Sungai Segama 2 Estate 2, , , *includes productive and non-productive area (infrastructures, conservation, HCV, housing & office compound use, set aside area etc.) **Immature + Mature Area Total: 34, , , MSPO-F04b / Rev 2 13 of 43

14 3.2. Planting Program for Each Estate Year / estate Tomanggong Estate Litang Estate Tagas Estate Northbank Estate Tabin Estate Batangan Estate Lokan Estate Kapis Estate Lungmanis Estate Lutong estate Bukit Mas Estate Sungai Segama Estate 1 Sungai Segama Estate , , , , , ,

15 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Total Mature 1, , , , , , , , , , , , Total Immature Total Oil Palm , , , , , , , , , , , , , MSPO-F04b / Rev 2 15 of 43

16 3.3. Replanting program for each estate Year of replanting/ Name of estate Planted area (ha) in each estate Total area to be replanted (ha) Tomanggong Estate Litang Estate , TagasEstate Northbank Estate Tabin Estate Batangan Estate Lokan Estate Kapis Estate Lungmanis Estate , Lutong Estate Bukit Mas Estate Sungai Segama 1 Estate , Sungai Segama 2 Estate TOTAL , , , , ,332.40

17 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi 3.4. Maps of Company Location, and Plantations MSPO-F04b / Rev 2 17 of 43

18 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi MSPO-F04b / Rev 2 18 of 43

19 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi MSPO-F04b / Rev 2 19 of 43

20 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi MSPO-F04b / Rev 2 20 of 43

21 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi MSPO-F04b / Rev 2 21 of 43

22 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi MSPO-F04b / Rev 2 22 of 43

23 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi MSPO-F04b / Rev 2 23 of 43

24 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi 4. CERTIFICATION ASSESSMENT 4.1. Certification Audit The objective of the certification audit is to assess the activities of the estate are in compliance with MS :2013 Part 3 General principles for Plantations and Organised Smallholders. During this certification audit, 4 non-conformances were raised. There were 7 Observations (OBS) rised for improvement that will be assessed and verified during annual surveillance 1. The details assessment of the Principles &, refer to P & C audit report attached to this summary report. Stage 1: According to the Certification Scheme, operators who have obtained at least one international sustainability schemes for e.g. ISCC, RSB or RSPO certification are exempted from Stage I audit. In the aspect Hap Seng Plantations group, all estates have been certified to RSPO and ISCC schemes therefore, accepted by MPOCC for exemption of stage 1 Therefore, in this aspect, Hap Seng Plantations Central Office as the group manager and its 13 estates are exempted to undergo Stage I. The audit team has applied the Malaysian Sustainable Palm Oil Part 3: General principles for oil palm plantations and organized smallholders audit guidance to assess the established documents against the Principles and of the standard Stage 2: The Stage II audit was conducted on 23/10/2017 to 28/10/2017 covering 4 selected estates Bukit Mas Estate, Northbank Estate, Tagas Estate, and Lokan Estate During the Stage II audit, 2 Major NCs and 2 Minor NCs were raised. The responses to the findings were reviewed and closed out by means of documents reviewed and verifying documents that are established and implemented appropriately Stakeholders Consultation A stakeholders consultation meeting was conducted on 23/10/2017 to gather information from the local communities in accordance to Certification Scheme and Stakeholder Consultation requirements. The topics of discussion are as below: 1. Introduction of Hap Seng Plantation applying for MSPO certification. 2. Development of oil palm plantations by Hap Seng Plantations 3. Community service and support provided by Hap Seng Plantations 4. Wildlife management and wildlife corridor established by Hap Seng Plantations. 5. Type of wildlife sighted at Hap Seng Plantations and wildlife corridor. 6. Local communities development. MSPO-F04b / Rev 2 24 of 43

25 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi The following relevant Principles & of the applied standard have discussed during the stakeholders consultation: 1. Principle 2 2 Indicator 1: Consultation and Communication with stakeholders: The stakeholders could confirm they have attended meetings with SSB personnel on MSPO certification. 2. Principle 4 2 Indicator 3 & 4: A complaint form should be made available at the premises, where employees and affected stakeholders can make a complaint The stakeholders advice they have been informed a logbook and form is available to lodge any complaints or suggestions is available at the office. 3. Principle 4 3 Indicator 1: Contribute to local development in consultation with the local communities. The stakeholders could confirm the company has provided assistance and support to communities. 4. Principle 6 4 Indicator 1: Where contractors are engaged, they shall understand the MSPO requirements and shall provide the required documentation and information The stakeholder who provides maintenance and service could confirm briefing on MSPO requirements have been provided. There is no issues raised during the stakeholder s consultation in terms of tenure and/or use rights, social or environmental aspects of management and operations that need to be addressed by the certified unit. It can be concluded the relevant Principles and clauses of the applied standard are in compliance. Prior to the audit, a desktop study conducted on Hap Seng using website and available report in concerning of environmental and social issue. During this review, we have concluded that Hap Seng does not have incident where will post a risk to the certification. ISCC certification have been conducted by TUV NORD Malaysia which is also conducting the MSPO audit. The list of stakeholders who attended the meeting refer to Table 7-3 Items Subject discussed Audit team findings Company response and proposed action to be taken 1 Any information from Group Manager/Company [thereafter known as GM] in regards to the MSPO/RSPO audit? Interviewed stakeholders were aware of the certification scheme taken by Hap Seng Plantations Group. They also aware of other scheme certificates held by Hap Seng Plantations Group other than MSPO such as RSPO And ISCC 2 Social context During the consultation, it was noted that there was a school SK Tomanggong assisted by Hap Seng Plantations Group. It was also noted that there has Positive comment Positive comment MSPO-F04b / Rev 2 25 of 43

26 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Items Subject discussed Audit team findings Company response and proposed action to be taken 3 Understanding of NCR Land? 4 Economy / livelihood Is there any impact on livelihood after the introduction of MSPO/RSPO? no discipline problem arise at the plantation due to influence from worker. This is well noted even the school is situated in the plantation. Villages on the surrounding are in good relation and have confirmed that job opportunities for the younger generation in this location. Neighbouring plantations have also good relationship with the management and there have not been any social issues arise between workers who ae mainly foreigners. When asked on child labour, there is no child working for the plantations. It could have been years ago if this had happened. A few attendees from different group have noted that there have been no issue concerning NCR land arise. In the previous issue of Tanah Perkuburan the villages have informed that they admit the land have taken into Hap Seng Planttions Group territory. Nevertheless, they have applauded the effort and cooperation from Hap Seng and their management in handling the issue and the assistance that they have provided to the local villages concerning this piece of land. Local villagers have confirmed the opportunity of work have increase in relation to Hap Seng Plantations Group of companies. Many of the younger generation are now working with Hap Seng which have been a great impact to the livelihood of the people and have been applauded by the attendees. Positive comment Positive comment MSPO-F04b / Rev 2 26 of 43

27 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Items Subject discussed Audit team findings Company response and proposed action to be taken 6 HCV and environmental understanding 7 Awareness towards species, habitats, and high conservation values? The attendees are clear on the HCV and environmental issue. Some have confirmed on the training they have been provided which is very educational. They are aware of the habitat and conservation value of the site. Internal stakeholders could name the animals which are listed as protected and mention in the training. It was confirmed from interviews that there have been no hunting. Interview with Jabatan Hidupan Liar confirmed that there has been no complaint on Hap Seng and hunting have not been noted in the area. It was mention by the 2 officers that Hap Seng have taken great step in handling human wildlife conflict of which have been a great success. It was confirmed that the conflict have not arise for the year Support to smallholders Attendees from other estates have mention that Hap Seng have provides great support and cooperation. They are thankful and hope that this good relation will continue. 9 FFB quality There has been no complaint on quality of FFB. Although they have mention that Hap Seng have a strict grading, they also confirmed that they are abiding to the quality of hap Seng and are glad that Hap Seng also provide training to improve their FFB harvesting. 11 Do you consider any management is in conflict with the MSPO principles and criteria? All attendees confirmed they have been no conflict with MSPO principles. Positive comment Positive comment Positive comment Positive comment Positive comment 12 Do you have any Most of the stakeholders Positive comment MSPO-F04b / Rev 2 27 of 43

28 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Items Subject discussed Audit team findings Company response and proposed action to be taken suggestions management? matter for Other acknowledge they are satisfied with Hap Seng and have a good relationship and cooperation given. Although one of the attendees mention it will be great if some of the road Hap Seng can reconsidered for safety. In addition to this, it is also noted on that Hap Seng effort have been well recognize in road management School suggestions have been taken up which have been a much delight to the School management. It was confirmed by the school representative, the school management have involve them in many of the stakeholder process Status of Non-Conformities Previously Identified X The stage 1 audit findings of this system have been reviewed, in particular to assure appropriate corrections and corrective actions have implemented to address the identified audit findings. Details of the follow up action taken on stage 1 audit findings were recorded in the Stage 1 audit report. The last audit results of this system have been reviewed, in particular to assure appropriate corrections and corrective actions have implemented to address any nonconformity identified. The last audit results of this system have been reviewed, in particular to assure appropriate corrections and corrective actions have not been implemented effectively. The non-conformity will be re-raised. Not applicable. No non-conformity raised in previous audit. Note 1: If a minor non-conformity raised in last audit, is not closed out, then this finding will be re-raised to a Major non-conformity. Note 2: All minor NCs raise in last audit are required to capture in this report together with the closing of the non-compliance Detail of Audit Findings Identified During This Audit This section gives an overview of the non-conformities raised during this audit. AUDIT OUTCOME MAJOR Non-Conformities 2 MINOR Non-Conformities 2 Observations 6 Non Conformity Number < 01 > MSPO-F04b / Rev 2 28 of 43

29 MSPO Certification Summary Report Company Name: Certifying Unit: Hap Seng Plantations (River Estates) Sdn. Bhd. Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Non Conformity Number < 01 > Indicator: Procedure shall be established for consultation and communication with the relevant stakeholder. Location All estate Description of Finding / Objective Evidence: Hap Seng have made the announcement available in their own notice board. However, on their procedure for List of publicly available document have not been clearly followed. Certificate was not updated and have expired. There is also policy which was not updated where MSPO policy was not made available. Public announcement for the audit was also not updated and uploaded into the website to announcement to stakeholder for the audit. This is also required by MSPO requirement. Classification Major Minor Observation Deadline for implementation 27/12/2017 Root Cause Analysis (by company): Lack of understanding on MSPO's full requirement for the publicly available document. Correction (by company): To immediately obtain approval from Top Management to make available the relevant document on the company website. Approval is obtained on (Attachment 1.1 M) The Sustainable Agriculture Policy, MSPO Policy and Occupational Safety and Health Policy are uploaded in the website as below. Corrective / Preventive Action (by company) The independent Sustainability Team will monitor quarterly whether the updated relevant document is timely uploaded to the company website by the group compliance personnel. Review of Correction & Corrective / Preventive Action The website was reviewed and the document required have been uploaded in the website including MSPO policy, The Preventive action is deemed to be sufficient to ensure continuous compliance. The NC is closed. Closed: No Site verification : No Name of Lead Auditor: Terence Ang Date of Closure: 27/12/2017 Review of Implementation for Major NC (where applicable) Closed: No Name of Lead Auditor / Auditor: Date of Closure: Non Conformity Number < 02 > MSPO-F04b / Rev 2 29 of 43

30 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Non Conformity Number < 02 > Indicator: Standard operating procedures shall be appropriately documented and consistently implemented and monitored. Location All estate Description of Finding / Objective Evidence: Incorrect amount of chemicals was used for mixing, e.g. 60 litres of glyphosate used for 52 containers (1.15 litres per container) dated 05/09/2017 and 20 litres of glyphosate used for 27 containers (740 ml per container) dated 28/08/2017. Specification was 375 ml per container. (Northbank estate) 2000 gm of Ally was used for 160 containers (12.5 gm per container) dated 17/10/2017, specification was 24 gm per container. (Lokan estate) Chemical mixing was not recorded on 10/10/2017 & 13/10/2017 for Garlon, and 13/10/2017 & 19/10/2017 for Dewana. (Bukit Mas estate). Chemical mixing was not recorded on 10/10/2017 for Basta. (Tagas estate) Incorrect amount of calcium hydrochloride (chlorine) was added to the water treatment process, eg. for the month of October, 7.73 gm was added everyday instead of 800 gm. (Lokan estate) The formulations for chemical mixing could be improved by indicating the different type of chemicals that need to be mixed for each type of weeds. Classification Major Minor Observation Deadline for implementation 27/12/2017 Root Cause Analysis (by company): Incorrect amount of mixing and no mixing record are due to lack of supervision and training from management. Correction (by company): Estate Management to immediately assign a desinated personnel (Assistant Manager) to monitor the correct pre-mixing book record is implemented. Estate Management has rectified the issue by providing immediate training on the 30th October 2017 to the chemical mixing operator. Estate management has rectified the issue by providing immediatte training on the 30th October 2017 to the Water Treatment Plant operator. (Attachment 2.1 E - Northbank Estate) (Attachment 2.2 E & 2.6 E - Lokan Esatate) (Attachment 2.3 E & 2.4 E - Bukit Mas Estate) (Attachment 2.5 E - Tagas Estate) The training evidences were shown in Attachment 2 (E) and Attachment 3 (E). Corrective / Preventive Action (by company) The independent Sustainability Team to cross-check the improvement on the availability of chemical usage record and correct chemical mixing formula (as per OPAP) at 6-montly interval. Review of Correction & Corrective / Preventive Action MSPO-F04b / Rev 2 30 of 43

31 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Non Conformity Number < 02 > Sighted training report, attendance record, chemical issuance, photos of training, chemical inventory and chemical mixing formulation for Northbank estate ( ) and Lokan estate ( ). Sighted training report, attendance record, photos of training and WTP chemical issuance records for Lokan estate ( ) Sighted chemical issuance and inventory records for Bukit Mas and Tagas estates. Training were sighted for Bukit Mas and Tagas estates personnel. Closed: No Site verification : No Name of Auditor: SK Leong Date of Closure: 27/12/2017 Review of Implementation for Major NC (where applicable) Closed: No Name of Lead Auditor / Auditor: Date of Closure: Non Conformity Number < 03 > Indicator: : The occupational safety and health plan shall cover the following: b) The risks of all operations shall be assessed and documented i) Employee trained in First Aid should be present at all field operations. A first aid kit equipped with approved contents should be available at each worksite. Location All estate Description of Finding / Objective Evidence: Point 1 The risk assessment HIRARC have been conducted. Hap Seng have included element of likelihood, severity and risk in to the assessment. The action plan following to this have been set up. HIRARC have also included the action plan and all required action to be conducted. However, the plan did not clearly segregate according to the risk specify. Therefore, to avoid confusion from reader the management can consider separating the action plan according to the risk. Point 2.First aid has been sighted in all operation of work. First aid training record Dated 21 July 2017 Total of 16 personal have been train. However, not all the field worker group have a trained personal. Total of 12 group including harvesting, manuring and spraying which trained field personal is only 8 personal. Classification Major Minor Observation Deadline for implementation 27/10/2018 Root Cause Analysis (by company): MSPO-F04b / Rev 2 31 of 43

32 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Point 1 Non Conformity Number < 03 > Lack of understanding on the requirement that action plan for the HIRARC is needed to be segregated based on the individual hazard risk. Point 2 The estate management not include all of the harvesting, manuring and spraying team in the training program. The representative other 4 team was missed out from First Aid Training. Correction (by company): Point 1. To immediately segregate the Action Plan of the HIRARC based on the individual Hazard Risk. Point 2. To immediately conduct first aid training for the remaining spraying, manuring and harvesting group that not yet been train. Corrective / Preventive Action (by company) Point 1. HIRARC will be yearly monitored by Sustainability Team through internal audit to ensure the Action plan of the HIRARC segregated based on individual Hazard Risk. Review of Correction & Corrective / Preventive Action Action plan have been reviewed and is sufficient to address the NC. The actual implementation will be reviewed in the next audit. Closed: No Site verification : No Name of Auditor: Mohamad Norhisham Bin Mohd Salleh Review of Implementation for Major NC (where applicable) Date Review Action Plan: 27/12/2017 Closed: No Name of Lead Auditor / Auditor: Date of Closure: Non Conformity Number < 04 > Indicator: : A waste management plan to avoid or reduce pollution shall be developed and implemented. The waste management plan should include measures for: Location Northbank Estate Description of Finding / Objective Evidence: MSPO-F04b / Rev 2 32 of 43

33 MSPO Certification Summary Report Company Name: Certifying Unit: Hap Seng Plantations (River Estates) Sdn. Bhd. Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Non Conformity Number < 04 > Point 1 During the site visit in the housing quarters, it was noted that the recycle rubbish bin contain motor oil. This was to be recorded as schedule waste and to be disposed through schedule waste requirement. This however have only occurred in Northbank estate. Other estates have been well managed. Further review on the site show this is an isolated case. Point 2 The wastewater from washing of fertilizer bags could be channelled to the land instead of to the drain. Point 3 The wastewater from washing of chemical containers could be reused for chemical mixing. Classification Major Minor Observation Deadline for implementation 27/10/2018 Root Cause Analysis (by company): Point 1 Due to during the CePSWaM training, our competent person was taught that the waste from housing area shall not be categorized as schedule waste. Point 2 & 3 Lack of understanding by estate that wastewater from washing of chemical containers could be reused for chemical mixing. Correction (by company): Pont 1 To immediately dispose the motor oil under schedule waste. Point 2 & 3 Estate have immediately practised the wastewater from washing of chemical containers could be reused for chemical mixing. Corrective / Preventive Action (by company) Point 1 The independent Sustainability Team to cross-check the compliance of schedule waste under regulation at monthly internal Point 2 & 3 The independent Sustainability Team to cross-check the wastewater from washing of chemical containers could be reused for chemical mixing of monthly internal. Review of Correction & Corrective / Preventive Action Correction and corrective action were reviewed and found to be adequate. To verify compliance in next audit. Closed: No Site verification : No Name of Auditor: SK Leong Date Review Action Plan: 27/12/2017 MSPO-F04b / Rev 2 33 of 43

34 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Non Conformity Number < 04 > Review of Implementation for Major NC (where applicable) Closed: No Name of Lead Auditor / Auditor: Date of Closure: Observation < 01 > Indicator: : The action plan for continual improvement shall be based on consideration of the main social and environmental impact and opportunities of the company. Location All estate Description of Finding / Objective Evidence: Social and environment impact assessment have been conducted. In the same report they have placed in details of improvement, mitigation and action plan. However, in there is no proper segregated action plan and improvement plan. It is not clear to the team and auditor on the word used to be continuous. Review of Correction & Corrective / Preventive Action Action plan accepted. Implementation to be reviewed in the next surveillance. Closed: No Site verification : No Name of Lead Auditor / Auditor: Terence Ang Date Review Action Plan: 27/12/2017 Observation < 02 > Indicator: : The system shall be able to resolve disputes in an effective, timely and appropriate manner that is accepted by all parties. Location All estate Description of Finding / Objective Evidence: The management could consider to separate the housing maintenance request apart from complaint form. Review of Correction & Corrective / Preventive Action Action plan accepted. Implementation to be reviewed in the next surveillance. Closed: No Site verification : No Name of Auditor: Mohamad Norhisham Bin Mohd salleh Date Review Action Plan: 27/12/2017 Observation < 03 > Indicator: The risks of all operations shall be assessed and documented. Location Northbank estate Description of Finding / Objective Evidence: MSPO-F04b / Rev 2 34 of 43

35 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Observation < 03 > Soil erosion was detected at the gen-set location. The risk of landslide need to be taken into account. Review of Correction & Corrective / Preventive Action Action plan accepted. Implementation to be reviewed in the next surveillance. Closed: No Site verification : No Name of Auditor SK Leong Date Review Action Plan: 27/12/2017 Observation < 04 > Indicator: Domestic waste should be disposed as such to minimise the risk of contamination of the environment and watercourse. Location Bukit Mas estate Description of Finding / Objective Evidence: The old landfill need to be monitored in order to ensure that there are no landslide, scavenging by animals and other factors that could affect the condition of the landfill. Signage need to be free from vegetation cover. Review of Correction & Corrective / Preventive Action Action plan accepted. Implementation to be reviewed in the next surveillance. Closed: No Site verification : No Name of Lead Auditor / Auditor: SK Leong Date Review Action Plan: 27/12/2017 Observation < 05 > Indicator: The management shall establish water management plans to maintain the quality and availability of natural water resources (surface and ground water). Location Northbank estate Description of Finding / Objective Evidence: The practice of adopting the WHO drinking water standard need to be reviewed due to the absence of specifications for several critical parameters, eg. suspended solids, oil & grease, turbidity, ph, colour, E- coli and coliform count. Review of Correction & Corrective / Preventive Action Action plan accepted. Implementation to be reviewed in the next surveillance. Closed: No Site verification : No Name of Lead Auditor / Auditor: SK Leong Date Review Action Plan: 27/12/2017 Observation < 06 > Indicator: : Information shall be collated that includes both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors). Location All estate MSPO-F04b / Rev 2 35 of 43

36 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Description of Finding / Objective Evidence: Observation < 06 > However, during the audit, site observation has resulted to many other wildlife of which not recorded. camera trap has only restricted in the area and not beyond the area. There is a monitoring conducted by month however the above have not been able to be detected. The management can consider used different methodology to obtain information for identification. The management can actually consider more input from the worker in the field Review of Correction & Corrective / Preventive Action Action plan accepted. Implementation to be reviewed in the next surveillance. Closed: No Site verification : No Name of Lead Auditor / Auditor: Terence Ang Date Review Action Plan: 27/12/2017 MSPO-F04b / Rev 2 36 of 43

37 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi 5. CONCLUSION Hap Seng Plantations (River Estates) Sdn Bhd has commissioned TUV NORD (Malaysia) Sdn Bhd to conduct certification audit for Hap Seng Plantations Group of 13 oil palm estates according to MS :2013 Part 3 General principles for Plantations and Organised Smallholders. The were 2 Major NCs, 2 minor NCs and 7 observations found this audit. All major NCs raised was closed out successfully. The remaining, Minor NCs and Observations raised in this audit has been addressed with action plan and will be verified in the next surveillance audit. From the review of the standard operating procedures, relevant forms, work flow charts established and implemented; the subsequent background investigation and interviews conducted during this surveillance audit have provided TUV NORD Malaysia with sufficient evidence on the fulfilment of the applied standard Principles &. In conclusion the certified unit has been established, implemented and continued to improve in managing the estates are in line with the Principles & of the applied standards of MS : 2013 Part 3. Any audit is based on sampling within an organization s management system and therefore is not a guarantee of 100 % conformity with requirements. As a result of this Certification audit, the audit team confirms that: Total certified number of estates: 13 Total certified production area: 30, Ha Certified FFBs January to December 2017: 547, mt MSPO-F04b / Rev 2 37 of 43

38 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi 6. RECOMMENDATION The audit team conducted a process-based audit focussing on significant aspects/risks and objectives required by the standard(s). The audit methods used were interviews, observations, sampling of activities and review of documentation and records. The structure of the audit was in accordance with the audit plan included in to this summary report as annex. The audit team concludes that the organisation has established and maintained its management system in line with the requirements of the standard(s) and demonstrated the ability of the system to achieve requirements for products and/or services within the scope and the organisation s policy and objectives. Therefore, the audit team recommends that, based on the results of this audit and the system s demonstrated state of development and maturity that this management system certification be X Recommended for Certification Recommended for Continuity of Certification Recommended for Suspension of Certification Subang Jaya, 01/01/2018 Subang Jaya, 25/01/2018 Terence Ang TUV NORD Malaysia Sdn Bhd Audit Team Leader Cheong, Chun Yuen (Robert) TUV NORD (M) Sdn Bhd Technical Reviewer MSPO-F04b / Rev 2 38 of 43

39 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi 7. REFERENCES Table 7-1: Documents provided by Hap Seng Plantations (River Estates) Sdn. Bhd. Client Reference Document MSPO Policy dated 24/03/2017 Safety and Health Policy dated 01/04/2015 Human Right Policy dated 01/10/2016 Equal Opportunity Policy dated 22/03/2017 Prevention and Eradication of Sexual Harassment Policy dated 28/09/2010 Freedom of Association Policy dated 22/03/2016 Child Labour Policy 2017 Zero Burning Policy 2017 Internal Audit Report 2017 Management Review 2017 Social Impact Assessment and Continuous Improvement Plan Sg. Segama Group of Estates 2017 Social Impact Assessment and Continuous Improvement Plan Tomanggong Group of Estates 2017 Social Impact Assessment and Continuous Improvement Plan Jeroco Group of Estates 2017 Standard Operating Procedure for Supply Chain dated 23/08/2012 Complaint Procedure HSPSB P b updated 04/07/2011 Joint Consultation Committee Meeting Minutes 2017 Safety and Health Meeting minutes 2017 MSPO-F04b / Rev 2 39 of 43

40 MSPO Certification Summary Report Company Name: Certifying Unit: Hap Seng Plantations (River Estates) Sdn. Bhd. Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Client Reference Document Environmental Impact Assessments 2017 Safety and Health training records Carta Aliran Laporan Aduan Hap Seng Plantation Sdn. Bhd Water Management Plans 2017 Oil Palm Agricultural Policy Replanting programme documents Table 7-2: Background investigation and assessment documents Reference Document Malaysian Sustainable Palm Oil Part 3: General Principles for Plantations and Organized Smallholders MSPO Certification Scheme Doc. No: MPOB/MSPO/CS/01 Environmental Quality Act & Regulation Act 127 Environmental Quality (Scheduled Wastes) Regulations 2005 Environmental Quality (Clean Air) Regulations1978 Factories and machinery Act,1967 Factories and machinery act with regulations Act 139 Estate Hospital Assistance(registration)-Act 1965 Akta Keselamatan dan kesihatan Pekerjaan dan peraturan-peraturan-akta 514 OSHA (Classification, labelling and Safety data Sheet of Hazardous Chemicals) Regulations 2013 Employment Act 1995 Employees Social Security Act 1969-Act 4 (Socso Land Ordinance 1972 (Cap.68) MSPO-F04b / Rev 2 40 of 43

41 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Reference Document Workers Minimum Standards of Housing & amenities Act 1990 Act 446 Malaysian Palm Oil Board Act 1997-Act 582 Minimum Wage Order 2016 Wildlife Conservation Enactment 1997 Table 7-3: List Of Interviewed Persons And Stakeholders No. Name Organisation / Function 1 Sabperi B.A Adanan SK Tomanggong 2 Salleh Tahir Jabatan Hidupan Liar 3 Rayner Benedict Jabatan Hidupan Liar 4 Wong Wan Fatt CNY Chemical Engineering 5 Arimuddin Labiru Pacm Mach Sdn Bhd 6 Eldi Jay M&M Sdn Bhd 7 S. Mariappan First Raintree Sdn Bhd 8 Mohd Ejandi Baham PLE Plantation 9 Delvan Manikan LPC Plantation 10 Mansor Hj Salam Bulat Kretam 11 Jais Silimal Bulat Kretam 12 Hamsah Lahita Kg Litang MSPO-F04b / Rev 2 41 of 43

42 MSPO Certification Summary Report Company Name: Hap Seng Plantations (River Estates) Sdn. Bhd. Certifying Unit: Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi No. Name Organisation / Function 13 Abd Hama B. Abd Karim Kg Litang 14 Daniel Hap Seng (Internal stakeholder) 15 Yohanis Hap Seng (Internal stakeholder) 16 Adi Putra Hap Seng (Internal stakeholder) 17 Amir Hap Seng (Internal stakeholder) 18 Rudin Hap Seng (Internal stakeholder) 19 Aiman Hap Seng (Internal stakeholder) 20 Jusman Hap Seng (Internal stakeholder) 21 Saha Hap Seng (Internal stakeholder) MSPO-F04b / Rev 2 42 of 43

43 MSPO Certification Summary Report Company Name: Certifying Unit: Hap Seng Plantations (River Estates) Sdn. Bhd. Plantation Central Office Group (PCO Group) Client Number: Audit Type: Stage 2 - Certification Audi Distribution / Confidentiality / Rights of ownership / Limitations / Responsibilities / Audit Objectives This report is sent to the certification body or bodies, the members of the audit team and the audit representative of the organisation. All documents (such as this report) regarding the certification procedure are treated confidentially by the audit team and the certification body. This audit report remains the property of the certification body. An audit is a procedure based on the principle of random sampling and cannot cover each detail of the management system. Therefore nonconformities of weaknesses may still exist which were not expressly mentioned by the auditors in the final meeting or in the audit report. The responsibility for continuous effective operation of the management system always rests solely with the audited and certified organisation. Salvo clause: The audit report will be left to the organisation at the end of the audit - subject to approval by the certification body. The independent release process may cause modifications or additions. In these cases a modified revision will be sent to the audited organisation. The objective (goal) of the audit is to establish compliance of the management system of the aforementioned organization with the requirements of the aforementioned standard in order to achieve or maintain certification through an independent and accredited certification body. Identification of possibilities to improve the management system can also be a component of the audit and is considered simply to be an enhancement; it does not constitute consultancy or advice with regard to the management system. Annex / Enclosures Annex / corresponding audit documentation P&C Audit Report / Checklist(s) Audit Plan Additional annexes, number MSPO-F04b / Rev 2 43 of 43

44 , Item Description 1. Company Name Hap Seng Plantations (River Estates) Sdn. Bhd. 2. Certifying Unit Plantation Central Office Group (PCO Group) 3. Address Batu 2, Jalan Kastam Baru, Lahad Datu, Sabah, Malaysia 4. Contact Tel: Fax: Website: Location of plantation / estate Geo Coordinates of plantation / estate Refer to the certification summary report Refer to the certification summary report 7 Contact Person Name: Kee Keow Chong Tel: Mobile:: keekc@hapseng.com.my 8 Date of Audit 23/10/ /10/ Audit Team Members Team Leader /LA Auditor Member Expert / Trainee / Observer Terence Ang Leong, Sak Kuan ; Wan, Jia Ann (Joanne) ;Mohamad Norhisham Bin Mohd Salleh ; Zul Hairi Bin Abu Hassan (Trainee) Cheong, Chun Yuen (Robert) MSPO-F05b / Rev 2 Page 1 of 86

45 4.1 Principle 1 Management Commitment & responsibility Criterion 1 Malaysian Sustainable Palm Oil (MSPO) Policy Indicator 1 A policy for the implementation of MSPO shall be established Indicator 2 The policy shall also emphasize commitment to continual improvement Criterion 2 Internal Audit Indicator 1 Internal audit shall be planned and conducted regularly to determine the strong and weak points and potential area for further improvement / No - Policy should be signed by top management (e.g. CEO, Plantation Director) - Commitment towards a systematic approach to ensure sustainable production of palm oil - Commitment towards sustainable development and continuous improvement - Communicated to all employees - Interview of personnel and stakeholders whether they are aware of the MSPO Policy and its implementation at the site - Frequency: Once a year Policy sighted and displayed at the notice boards of estates audited and of the latest version. Malaysia Sustainable Palm Oil (MSPO) Policy dated 24/03/2017 approved by Chief Executive Group Plantation During interview, workers are able to provide some key understanding such as protection of wildlife and workers treatment and communication. MSPO Policy specify the commitment. Statement HSPHB is committed for continual improvement practice by harnessing its resources of people, process and technology in order to ensure the continuous production of oil palm product in a sustainable manner These have been evaluated in all estate to ensure the same version was used. Internal audit is planned on a yearly basis. Improvement has been done to determine the strong and weak point of the internal audit. Internal Audit for MSPO conducted on: Bukit Mas Estate: 30/01/2017 Internal audit results have been reviewed with all the MSPO-F05b / Rev 2 Page 2 of 86

46 Indicator 2 The internal audit procedures and audit results shall be documented and evaluated, followed by the identification of strengths and root causes of nonconformities, in order to implement the necessary corrective action / No findings were closed within the timeframe. - Establish the audit procedures - Root cause analysis on nonconformities - Correction and corrective action on nonconformities - Time frames for action to be taken North Bank estate: 28/07/2017 This includes both document review and site inspection. Follow up audit was conducted on 06/09/2017. Total of 5 findings are detected with 4 major 1 minor. Tagas estate: 08/08/2017 Internal audit covers all related requirements with total of 5 findings - 4 major 1 OFI Lokan Estate: 16/08/2017 Internal audit covered all elements of MSPO. Total of 3 major 1 minor have been documented. Results of internal audit have been documented. Internal audits are conducted according to the MSPO standard. Bukit Mas Estate: Internal audit has been documented. The process was in line with the requirements. Northbank Estate Example: First Aid Training was not conducted to workers Root cause: Missed out for first aid training Correction: To conduct immediately for first aid training. Corrective Action: To provide training program and ensure implement at yearly basis. MSPO-F05b / Rev 2 Page 3 of 86

47 Indicator 3 Report shall be made available to the management for their review / No NC closed on 30/08/2017 Tagas Estate Example: Triple rinsing was not implemented at fertilizer bay Root cause: Lack of knowledge on best practice Correction: Estate have implemented the triple rinsing and established 3 partitions of washing bay Corrective Action : To provide training program at yearly basis and ensure the program is followed consistently NC closed on 25/08/2017 Lokan Audit: Example finding : Fire drill evacuation training was not been conducted Root Cause: Missed out for fire drill evacuation training. Correction: To immediately conduct the fire drill evacuation training Corrective action: To provide training and ensure implement at yearly basis. Status: Completed Bukit Mas Estate: Management review conducted on 27/07/2017 includes internal audit findings and closed out as part of the review reporting. Northbank Estate MSPO-F05b / Rev 2 Page 4 of 86

48 4.1.3 Criterion 3 Management Review Indicator 1 The management shall periodically review the continuous suitability, adequacy and effectiveness of the requirements for effective implementation of MSPO and decide on any changes, improvement and modification / No - Review by top management - Frequency : once a year - Input audit findings - Decision on changes, improvement and modification - Improvement Plan and timeline for implementation Management review dated 11/08/2017 with attendance of General manager Tomanggong Group of Estates (TMGOE). Point 4 discuss on the internal audit report. Tagas Estate Internal audit dated 11/08/2017 has been reviewed. Point 4 covered the internal audit process and the findings associated to the internal audit Lokan Estate Management review has reviewed the internal audit. Northbank Estate: Management review conducted on 11/08/2017. This is attended by General Manager of Tomanggong Group Of Estates (TMGOE). The management review include topics such as 1. Review of policy 2. Review of Internal Audit 3. Legal requirement and changes in the law 4. Complaint 5. Diesel Consumption Tagas Estate: Management review conducted on 11/08/2017. Management review mention for the period July July Chairman of the meeting is General Manager Tomanggong Group of Estates (TMGOE) MSPO-F05b / Rev 2 Page 5 of 86

49 4.1.4 Criterion 4 Continual Improvement Indicator 1 The action plan for continual improvement shall be based on consideration of the main social and environmental impact and opportunities of the company / No and Chief Agronomist - Input (where available and applicable): (Check on HIRARC to be one of the continual improvement indicators cause the HIRARC register is normally reviewed annually.) Environmental and social Point 4 mention results of internal audit. Topics covered in the management review report Example: 1. Accidents & Injuries 2. Emergency 3. Environment Lokan Estate Management review conducted on 19/07/2017 chaired by General Manager - Jeroco Group of Estates (JGOE). Point 4 mention the internal audit results. Other discussion including the accidents & Injuries (LTA) The notice board indicates the statistic. Total: Kemalangan is 2 for the year Pont 12 discuss on the recommendations for improvement. Action plan based on SIA and other inputs. Bukit Mas Estate: Specify in the Social Impact Assessment was the impact and action plan required. Responsible person on this have also been stated. Social Impact includes housing area and JKKK representative have been recorded. OBS 1 MSPO-F05b / Rev 2 Page 6 of 86

50 / No impact Example: New techniques New technologies New standard New information - To establish a system to verify the validity or practicability of the new information and techniques before adoption. - Continual improvement plan for key social and environmental impacts, implementation and monitoring - Verification of the system in terms of the appropriateness & effectiveness - Budget allocation for implementation of social, environmental activities/new technologies and their timeline - Training programme to the relevant personnel involved in the implementation of new technology/techniques. - Interview of personnel and stakeholders concerning for example: - Good social practices of the company - Response of the management towards social and environmental concerns by Inadequate water supplies in housing area. Action plan do not open the main switch all at once ensuing the pressure is enough to supply to the houses. SIA established for both Sungai Segama Group of Estates (SSGOE) & Bukit Mas Palm Oil Mill (BPOM) Details are specified in appendix 8 including 3 details documented where 3 have been completed. Northbank Estate Environment impact assessment dated 02/10/ /10/2017 include issues, action plan required, mitigation measures and what required to be done. Social Impact assessment dated 02/10/ /10/2017 has included the plan to improve the method and social aspect of the area. Example: Organic wastes in worker area are disposed daily at landfill away from waterways. Medical facilities in the area where a doctor was appointed by (Hap Seng Plantations Holding Berhad) HSPHB as (Visiting Medical Officer) VMO to (Tomanggong Group of Estates) TMGOE every Friday / Saturday. Tagas estate: Environment Impact Assessment dated 2-5/10/2017 The assessment has includes the environmental impact, action plan and continuous improvement plan. The details include below ; MSPO-F05b / Rev 2 Page 7 of 86

51 / No - stakeholders a. Harvesting Improvement plans that have benefitted the stakeholders b. Manuring c. Pest Infestation d. Spraying e. Transportation f. Office work g. Generator hose Example: Office recycling waste Use of electricity, paper and plastic deplete natural resources. Plan: Paper used on both sides Light, fan and air condition switch off when not in used. Social Impact assessment dated 02/10/ /10/2017 The assessment includes clinic services and transport. Lokan Estate: SIA was conducted from 20/07/ /07/2017 Assessment based on stakeholder consultation input and action plan to be taken. Example: Tiada pagar sekolah Action plan: GM TMGOE will contact Majlis Daerah MSPO-F05b / Rev 2 Page 8 of 86

52 / No Kinabatangan and seek their advice onastray dogs. Will also seek advice from management to provide perimeter fencing. Observation: In the social aspect there is no proper action plan which has mention. It is not clear on the word used to be continuous. It is considered that action plan is not clearly address the action required Indicator 2 The company shall establish a system to improve practices in line with new information and techniques or new industry standards and technology, where applicable, that are available and feasible for adoption Company uses reports such as SIA, EIA as a reference basis which will be included in the action plan to improve practices. Document is sighted as in Any practice which as deemed to be feasible for adoption will be considered under their action plan. Example of feasible action to be taken: Inadequate water supplied in housing area. Action plan was not opening the main switch all at once ensuing the pressure is enough to supply to the house. Bukit Mas, Northbank & Tagas estates: New practice is only considered where applicable. Positive: Public facilities for workers are in a good condition 1. School 2. Religious area 3. Housing MSPO-F05b / Rev 2 Page 9 of 86

53 Indicator 3 An action plan to provide the necessary resources including training, to implement the new techniques or new industry standard or technology (where applicable) shall be established / No 4. Electricity and shop Respond: To continue maintain the facilities in good condition Lokan estate: SIA includes providing other facilities such as road upgrade, clinic and safety equipment. PPE. Action plan for training in relation to OSH and environmental have been sighted and reviewed. Action plan specify date of meeting and date of training listed. Example Bukit Mas Estate Training program environment Estate Operation - manuring 10/03/2017 Estate operation Spraying 07/03/2017 Soil Erosion 07/03/2017 Ecological Protection 07/03/2017 Training program OSH Company policy Training January 2017 ERP Training February 2017 First Aid Training April 2017 Attendance list for the above verified. Tagas Estate: Action plan on training is schedule in Jadual Latihan MSPO-F05b / Rev 2 Page 10 of 86

54 4.2 Principle 2 Transparency Criterion 1 Transparency of information and documents relevant to MSPO requirements Indicator 1 The management shall communicate the information requested by the relevant stakeholders in the appropriate languages and forms, except those limited by commercial confidentiality or disclosure that could result in negative environmental or social outcomes Indicator 2 Management documents shall be publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes / No bagi Tahun Request, response and release of information must be recorded (refer to ) - For public listed companies annual report is accepted Total of 42 aspects in training have been verified and reviewed. Example: Penuaian Buah Tandan Segar 3 training 5/08/2017, 04/04/2017, 19/07/2017. Trunk Injection 2 training 10/03/2017,13/07/2017 Triple rinsing 13/07/2017, 25/08/2017, Rat Baiting - 10/03/2017,14/02/2017, 02/03/2017, 122/08/2017 Procedure Memohon Maklumat Syarikat. Borang Pemohonan Maklumat sighted. There is no specific request of information at the time of audit. Stakeholder consultation confirmed that information was well received. Refer stakeholder consultation in summary report. Procedure List of Publicly Available Document sighted with 20 documents stated to be made publicly available upon request. MSPO-F05b / Rev 2 Page 11 of 86

55 4.2.2 Criterion 2 Transparent method of communication and consultation Indicator 1 Procedures shall be established for consultation and communication with the relevant stakeholders Indicator 2 A management official should be nominated to be responsible for issues related to Indicator 1 at each operating unit (MINOR) Indicator 3 List of stakeholders, records of all consultation and communication and / No - Established procedure include internal and external stakeholders - The procedure should include FPIC process - Companies discretion on whom to nominate - Appointment letter for responsible person - Review records Procedure Memohon Maklumat Syarikat was reviewed. Procedure specify document where is publicly available and where restricted and required further approval. Non-conformity: The procedure for List of publicly available document have not been clearly followed. Certificate was not updated and has expired. There is policy which was not updated and MSPO policy was not made available. Public announcement for the audit was not updated and uploaded into the website to announcement to stakeholders for the audit. FPIC and communication with relevant stakeholders have been evaluated. During the interview with stakeholders, all participants have shown satisfaction with Hap Seng cooperation. Refer to stakeholder consultation in summary report. Procedure memohon Maklumat Syarikat point 4 and point 5 specify estate and assistant estate managers are the person in charge for providing such information. Beyond the listed limit, confidential document further approval will be required from General Manager processing / Senior Planting Advisor / Chief Executive Group Plantation. List of stakeholders is available. This has been Maj NC 1 MSPO-F05b / Rev 2 Page 12 of 86

56 4.2.3 Criterion 3 Traceability / No records of action taken in response to input from stakeholders should be properly maintained Indicator 1 The management shall establish, implement and maintain a standard operating procedure to comply with the requirements for traceability of the relevant product(s). - Lists of stakeholders - Surrounding communities - Employees - Interview with personnel and stakeholders concerning for example: Awareness of consultation and communication procedures Availability of management response with regards to their requests /complaints( if applicable) - SOP to verify. reviewed prior to the audit and has been deemed to be adequate. List includes 1. NGO 2. Government organization 3. Neighboring estate 4. Villages 5. Suppliers 6. Contractors 7. Schools SOP Standard Operating Procedure for Supply Chain DOC/COC/001 dated 23/08/2012 has been reviewed. Procedure has mention handling of certified CSPO to ensure the segregation. Included in the procedure, process from the supplying estates, mills and onwards. CSPO and CSPK included and was reviewed. Bukit Mas Estate/ Lokan Estate:/Northbank Estate/ Tagas estate SOP for Traceability document number SOP/COC/001, 2 nd review dated 30/11/2015 was established. The SOP include purpose, receiving and delivery of CPO and PK. Responsibility in harvesting and sending FFB or CSFFB to mill. MSPO-F05b / Rev 2 Page 13 of 86

57 Indicator 2 The management shall conduct regular inspections on compliance with the established traceability system. / No - Internal audit Bukit Mas Estate: Internal audit was conducted for the year 2017, based on form HSP SE- 2017, management review report and finding raised has been closed. The period on solving all NCs was within the timeframe. North Bank Estate: Internal audit conducted on 28/07/2017 includes traceability. One major has been raised Description: Random check conducted on weighbridge tickets no , and are in order. Sighted weighbridge ticket no dated 03/03/2017 for 7,720kg FFBs; block no. B98D (names and block number recorded in daily bunches, vehicle no, T25 to Tomanggong palm oil mill) Tagas Estate: Internal audit conducted on 08/08/2017 covered the traceability. One major finding from the internal audit. Description: Random check conducted on weighbridge tickets no , and are in order. Sighted weighbridge ticket no dated 31/07/2017 for 7,740kg FFBs; block no. S01-B (names and block number recorded in daily bunches, vehicle no, ST2325N from Tagas estate to Jeroco MSPO-F05b / Rev 2 Page 14 of 86

58 Indicator 3 The management should identify and assign suitable employees to implement and maintain the traceability system. (MINOR) / No POM 1) - Appointment of employees - Appointment letters are required Lokan Estate: Internal audit conducted on 16/08/2017 covered traceability. Description Random check conducted on weighbridge ticket no , & are in order. No issue found from Lokan estate Sighted weighbridge ticket no dated 31/03/2017 block no Kg block (names and block number recorded in daily bunches, vehicle no, SD 891 M from Lokan estate to Jeroco 1 Palm Oil Mill. Bukit Mas Estate The management has assign person in charge Sr Estate Assistant, as person in charge of traceability. The letter was signed by manager Bukit Mas Estate. Northbank Estate: Person in charge for COC have been specify in organization chart for Traceability will he headed by Sr. Estate Assistant. Tagas estate: Person in charge for COC have been specify in organization chart for Traceability will he headed by assistant estate manager. Lokan Estate: The management has assigned person in charge for MSPO-F05b / Rev 2 Page 15 of 86

59 Indicator 4 Records of sales, delivery or transportation of FFB shall be maintained. / No - Hard or soft copy is both acceptable. traceability is Sr. Estate Assistant. The letter was sign by manager Lokan Estate. All audited estates: The delivery notes, weighbridge tickets, check roll notes were available and updated. Bukit Mas Estate: The estate delivery notes have been reviewed together with the weighbridge tickets. Both has similar information name of estate, date of dispatch, field number. Example delivery note number dated 30/09/2017 Lokan Estate: FFB delivery chit Delivery notes number: Vehicle number: SD 2190 M Block Number : R993/42 Date: 25/10/2017 Driver name: FFB Weighbridge Advice Ticket Ticket number: Dated: 25/10/2017 Gross: 18,360 kg Tare: 7,550 kg Nett: 10,810 kg Information from the weighbridge ticket can link back to DN was transporter, field lot and DO number. MSPO-F05b / Rev 2 Page 16 of 86

60 4.3 Principle 3 Compliance to legal requirements Criterion 1 Regulatory requirements Indicator 1 All operations are in compliance with the applicable local, state, national and ratified / No - Assessment of documents. FFB delivery chit DN: Vehicle number: SD 891 M Block Number: R9936/ R992 Dated: 25/10/2017 Driver name: FFB Weighbridge Advice Ticket Ticket number: Dated: 25/10/2017 Gross: 13,630 kg Tare: 7,740 kg Nett: 5,890 kg Information from the weighbridge ticket can link back to DN was transporter, field lot and DO number Northbank Estate Weighbridge tickets for the month of January 2017 have been reviewed and check against the collection, daily records and monthly records. Records checked refers to block number: B98D, B98G,B98C and B98H Bukit Mas Estate: MPOB License No valid from MSPO-F05b / Rev 2 Page 17 of 86

61 / No international laws and regulations 01/03/2017 till 28/02/2018 Northbank Estate: MPOB License sighted, No valid from 01/04/2017 to 31/03/2018 Tagas Estate: MPOB License No valid from 01/04/2017 to 31/03/2018 Lokan Estate: MPOB Licence Jeroco Plantation Sdn Bhd (No. pendaftaran: P) Validity date: 01/03/17 28/02/18 Lokan estate: (CL ) 2837 Hektar Indicator 2 The management shall list all laws applicable to their operations in a legal requirements register. - Individual company to list down all relevant laws to oil palm industries. All audited estates: List of applicable laws are available but not limited to: Factory and Machinery Act 1967 Control of Supplies Regulation 1974 Electricity Supply Act 1990 Lokan Estate: List of applicable laws are available. Reviewed show that the documents were up to date. Example: List of laws and regulations: Environmental quality act MSPO-F05b / Rev 2 Page 18 of 86

62 / No Immigration Act Indicator 3 The legal requirements register shall be updated as and when there are any new amendments or any new regulations coming into force. - Updating and document review, and compliance. - Suggest to add compliance status. Land Acquisition act 1960 All audited estate At the time of audit, updates have been reviewed and deemed to be up to date List of update: Laws Date update Minimum wages order 27/07/2016 Akta perubatan 17/04/2017 Akta Kemudahan dan perkhidmatan Jagaan Kesihatan Swasta /04/ Indicator 4 The management should assign a person responsible to monitor compliance and to track and update the changes in regulatory requirements. (MINOR) - Name of appointee and letter of appointment. Bukit Mas Estate: Person in charge of compliance requirement is Estate Manager. Northbank Estate: Person in charge of compliance requirement is Estate Manager. Tagas Estate: Person in charge of compliance requirement is Estate Manager. Lokan Estate Person in-charge of compliance requirement is Estate MSPO-F05b / Rev 2 Page 19 of 86

63 4.3.2 Criterion 2 Land use rights Indicator 1 The management shall ensure that their oil palm cultivation activities do not diminish the land use rights of other users Indicator 2 The management shall provide documents showing legal ownership or lease, history of land tenure and the actual use of the land. / No Verification of land use rights by means of official/legal documents. The following documents are accepted: - Land title and terms and conditions - Provisional Lease (PL) / License for Planted Forest (LPF) (for Sarawak) - Lease Agreement. - Quit rent paid by the holding.company (if applicable). - Perimeter survey map containing boundary markers. - Records of disputes and resolution process. - Records of agreements/legal documents between the previous owners and occupants. Visual inspection of for example: - Legal perimeter boundary markers. Manager Appointment letter dated 23/08/2017 with responsible stated to monitor compliance and to track and update the changes in regulatory requirement Oil palm plantations in Hap Seng Plantations Group did not diminish the land use right for other users. The land has been leased prior to 1980 and 1988 It is also confirmed through stakeholders consultation that there was no issue on the land used by Hap Seng Plantations Group. Legal Ownership of all the site have been reviewed. All sites land titles are evidence and traceable. Example as in below: Land Title Estate Area (Ha) Tagas, Tabin CL & Tomanggong 2, CL Tabin 1, CL Litang CL Tagas CL Litang CL CL Tomanggong & Northbank 3, Litang MSPO-F05b / Rev 2 Page 20 of 86

64 Indicator 3 Legal perimeter boundary markers should be clearly demarcated and visibly maintained on the ground where practicable. / No CL CL CL CL CL CL Litang (share CL with BME) Litang Litang (Wecan) Tagas (Tampilit) Northbank (Sanwide) Tabin (Sri Lamag) 1, Legal perimeter has been verify in the filed., boundary stone and peg was clearly visible. Bukit Mas Estate Boundary marking was clearly visible with pegging color red, at block 06 C Coordinate: N, E Tagas Estate Boundary marking was clearly visible, with pegging color red. Coordinate: N, E Northbank Estate Boundary marking clearly visible with pegging red color. Lokan Estate Boundary marking clearly visible with pegging red MSPO-F05b / Rev 2 Page 21 of 86

65 Indicator 4 Where there are, or have been, disputes, documented proof of legal acquisition of land title and fair compensation that have been or are being made to previous owners and occupants; shall be made available and that these should have been accepted with free prior informed consent (FPIC). (MINOR) Criterion 3 Customary rights Indicator 1 Where lands are encumbered by customary rights, the company shall demonstrate that these rights are understood and are not being threatened or reduced. / No - Provisional Lease (PL) and License for Planted Forest (LPF). - Records of Ex-gratia / Goodwill Payment and Agreement. - Konsep baru for Sarawak 1956 cut-off date. - Refer to color. No dispute or legal law suit has occurred in all estates. No compensation as of date of audit. This was confirmed through stakeholders consultation. Land titles have been verified showing legal owner is Hap Seng Plantations Group. Land leased by Hap Seng Plantations Group has been verified and does not conflict with any customary right. Local understand their right and are pleased with the cooperation provided by Hap Seng. See stakeholders consultation report Indicator 2 Maps of an appropriate scale showing extent of recognized customary rights shall be made available Indicator 3 Negotiation and FPIC shall be recorded and copies of negotiated agreements should be made available. 4.4 Principle 4 Social Responsibility, health, safety and employment conditions - Official maps from Land Survey for recognized customary rights are made available. - Records of negotiated agreements. Lands leased by Hap Seng Plantations Group has been verified and does not conflict with any customary right. Local understand their right and are pleased with the cooperation provided by Hap Seng. Refer to summary report for attached map. Land leased by Hap Seng Plantations Group has been verified and does not conflict with any customary right. Local understand their right and are pleased with the cooperation provided by Hap Seng. See stakeholders consultation report. MSPO-F05b / Rev 2 Page 22 of 86

66 4.4.1 Criterion 1 Social impact assessment (SIA) Indicator 1 Social impacts should be identified and plans are implemented to mitigate the negative impacts and promote the positive ones. (MINOR) / No - Social impact assessment can be conducted internally. Bukit Mas Estate: Social Impact Assessment and Continuous Improvement Plan for Sg. Segama Group of Estates and Bukit Mas Palm Oil Mill 5 th Review dated 01/03/2017 was sighted and incorporate 4 objectives. Information available on SIA but not limited to stakeholders meeting plan Organisation chart as at March 2017, demographic, gender census, list of applicable laws (42 laws and regulations), The Social Impact Assessment conducted involved workers and stakeholders. Example: Social Impact: Entrance pass need Manager to sign form for permission to enter, whereby sometime Manager was not around to sign the pass. Action Plan: Manager was available at state officeat 3.00PM. Those who want to have manager permission can meet him during allocated time or contact directly to Manager. Mitigation Promotion to Positive impact: Continue to provide good relations with contractors & suppliers. Responsibility: General Manager and manager Timeline: On going Tagas Estate: Social Impact Assessment: Tomanggong Group of estates and Tomanggong Palm Oil Mill 4 th review was conducted on 11/10/2017. The company has divided MSPO-F05b / Rev 2 Page 23 of 86

67 / No the review in between the negative and positive impacts, action plants and time bound. Example of issue addressed by the SIA; Social Impact: Transportation of student at NBE to Humana school which has been resolved. Action Plan: Action has been taken to resolve the problem. Mitigation Promotion to Positive impact: To continue to provide service to school and local community. Responsibility: Manager / Sr. Assistant Manager. Timeline: On going Lokan Estate Social Impact Assessment for Jeroco Group of Estates and Jeroco Oil Mill 1 and 2. Reported by -sustainability executive. Date of assessment was 20/06/2017 to 23/06/2017 and the next review will be at June Included in the SIA was 4 th JCC stakeholder Consultation list 2015 and 5 th JCC Stakeholder Consultation list The lists contain both external and internal stakeholders. Example; Social Impact: Speeding of motorcycle near to Humana School Action Plan: Manager warns all motorcyclist not to speed at Humana area. Mitigation Promotion to Positive Impact: Continue to MSPO-F05b / Rev 2 Page 24 of 86

68 4.4.2 Criterion 2 Complaints and grievances Indicator 1 A system for dealing with complaints and grievances shall be established and documented. / No Assessment of internal documents, for example: Availability of complaints form for employees and affected stakeholders Records of complaints and records of actions taken Records that are kept for the last 24 months Interview with personnel and stakeholders concerning for example: Awareness of complaints and grievances procedures and how to lodge complaints Verify if the complaints and grievances by the affected parties are resolved in an effective, timely and appropriate manner. provide good service. Time bound plan: Immediate action Responsibility: Senior manager Tagas and Northbank Social impact assessment for both Tomanggong Group of estate and Tomanggong POM dated 02/10/ /10/2017 have been reviewed. The report has included the action plan and mitigation plan. Bukit Mas Estate Complaints procedure HSPSB P Latest update on 11/06/2016 was available and display on the office notice board. There are two record keeping books one as External for all stakeholders and the other for Internal which mostly highlighted on housing and repairs. Tagas / Northbank Estates: Complaint procedure HSPSB P b last updated on 04/07/2011 was available and display at the office notice board. The estate has established external stakeholder complaint and internal stake holder complaint book record. Lokan Estate: The complaint form was display at the office notice board. The estate has established borang aduan luar and borang aduan pekerja. Borang aduan template consist of Nama pengadu MSPO-F05b / Rev 2 Page 25 of 86

69 / No Indicator 2 The system shall be able to resolve disputes in an effective, timely and appropriate manner that is accepted by all parties. Tarikh Keterangan aduan Tanda tangan perneima aduan Dan tarikh tindakan. Example: Nama pengadu: Kedai Lokan Date: 26/02/2016 Shop ceiling bocor Sign by recipient: Date: 27/02/2016 It was resolved by 02/03/2016. Nama pengadu: Date: 05/05/2017 Shop ceiling bocor Sign by recipient: Date: 08/05/2017 It was resolved by 06/05/2017. The estates established complaint and grievance flowchart dated 03/08/2016 which include the timeframe to resolve complaints received. Bukit Mas Estate: Carta aliran Mekanisma Aduan dan Masalah was establishing date revised 03/08/2016. OBS 2 MSPO-F05b / Rev 2 Page 26 of 86

70 / No Grievance book for external and internal complaint was separate and the process of solving the complaints was within the time schedule of 10days Tagas Estate: Complaint procedure HSPSB P b last updated on 04/07/2011 was available and display on the office notice board. Grievance book for external and internal complaint was separate and the process of solving the complaints was within the time schedule. Northbank Estate: Grievance book for external and internal sighted Lokan Estate Borang Aduan Pekerja andnorthbank Estate Borang Aduan Luar. Example of internal grievance; Complaint Date Issue Complaint receive by The respond was within the timelines of five days as per SOP. The estate has established internal and external complaint book. Lokan Estate Complaint procedure was available and display at office notice board. The records under borang aduan luar and borang aduan pekerja was sighted. All the issues were resolved within the timeframe. Observation: MSPO-F05b / Rev 2 Page 27 of 86

71 / No Indicator 3 A complaint form should be made available at the premises, where employees and affected stakeholders can make a complaint. (MINOR) Indicator 4 Employees and the surrounding communities should be made aware that complaints or suggestions can be made The management could consider to separate the housing maintenance request apart from the complaint form. Bukit Mas Estate: Borang aduan, complaint form HSPHB CF was available. Complain form is available at the office. Interviews with workers indicate they are aware of such form and procedure. Northbank Estate: Borang aduan, complaint form HSPHB CF was available. Complain forms are available at the office. Interviews with workers indicate they are aware of such form and procedure. Tagas Estate Borang aduan, complaint form HSPHB CF (b) was available. Complaint form are available at the office (for internal stakeholder) and at the guard house (for external stakeholder). Interviews with workers indicates they are aware of such form and procedure Lokan Estate Borang aduan, complaint form HSPHB CF (b) was available. Complaint form are available at the office (for internal stakeholder) and the estate main gate (for external stakeholder). Interviews with workers indicates they are aware of such form and procedure Bukit Mas Estate Grievance briefing was conducted on 26/09/2017 by MSPO-F05b / Rev 2 Page 28 of 86

72 any time. (MINOR) / No Assistant manager during morning muster. Interviews with workers at operation site show they are aware on their right to make complaints. Northbank Estate A Joint Consultative Committee is established to enhance the working relationship. The JCC meeting is held once annually. The last meeting was held on 18/05/2017. JCC meeting as platform for all relevant stakeholders to raise any complaints. Tagas Estate The Joint Consultation meeting involves representative from the management, contractors and villagers dated 23/08/2017. The stakeholders are aware of complaints procedure which is part of the JCC agenda. Interviews with workers at operation site show they are aware on their right to make complaints. Lokan Estate Indicator 5 Complaints and resolutions for the last 24 months shall be documented and made available to affected stakeholders upon request For employee they would inform their immediate superior on any complaint they want to raise. Estate use JCC meeting as the platform to inform stakeholders on grievance procedure. Interviews with workers at operation site show they are aware on their right to make complaints. Bukit Mas Estate The complaint record book for both external and internal complaints and grievance were established. House Repair Workers SSGOE and House Repair MSPO-F05b / Rev 2 Page 29 of 86

73 / No Executive & Staff. The remark contains the date of complaint resolve. All the issue was address within the time schedule. Complaints from 2015 onwards are available. Tagas Estate The complaint from internal dated 22/01/2015, complaint form external has been established House Repair Workers SSGOE and House Repair Executive & Staff. The remark contains the date of complaint resolve. All the issue was address within the time schedule Northbank / Lokan Estate The estate kept the record of grievance for 2015 onwards. Complaints record was available and has been reviewed Criterion 3 Commitment to local sustainable development Indicator 1 Growers should contribute to local development in consultation with the local communities (MINOR) - Positive impacts of SIA extended (or communicated) to surrounding communities Bkt Mas Estate Company provide electricity to worker for kenduri arwah, dated 22/10/2017 t Company provide electricity to worker for marriage dated 15/09/2017 to 16/09/2017. Estate provides transportation for children attending school at Humana School Northbank Estate Estate does provide technical support to local school as well as Humana Child Aid Society learning centre. Tagas Estate MSPO-F05b / Rev 2 Page 30 of 86

74 / No Humana Child Aid Society Sabah, estate provide vehicle for the soccer game at SK Ladang Tomanggong, dated 14/11/2016 Humana School infrastructure repair by the estate dated 03/03/2017. Lokan Estate Criterion 4 Employees safety and health The estate provided security and first aid for SK Jeroco Sports day dated 05/11/2017 and provide sport equipment for SK Jeroco sports day dated 13/10/ Indicator 1 An occupational safety and health policy and plan shall be documented, effectively communicated and implemented. - Endorsed by the current top management - OSH Act 1994 and Factory and Machinery Act 1967(Act139). Safety and Health Policy has been established dated 01/04/2015 sign by Chief Executive-Group Plantation. Policy was available and display on the operation centre. Bukit Mas Estate Safety and Health policy was display at office and muster ground. Example of safety and health training: SOP Training chemical application dated 07/03/2017 SOP training on manuring dated 10/03/2017. Northbank Estate Safety and health policy was available at notice board. Interviews with workers indicate they understand their job as per SOP and they are equipped with PPE. Training conducted base on SOP: MSPO-F05b / Rev 2 Page 31 of 86

75 / No Peengendalian ferry OSH dated 13/10/ Indicator 2 The occupational safety and health plan shall cover the following: Tagas Estate Safety and Health policy was display at office and muster ground. Example of safety and health training: Policy training; Prosedur Kerja Selamat Penuai Buah dated 04/04/2017 -SOP Harvesting dated 10/04/2017 attended by the sampled workers: SOP for Manuring was conducted on 19/04/2017. Lokan Estate OSH Organisation Chart 2017, estate manager as the chairman which involves management team and workers representatives. OSH Policy was displayed at the main office. The estate has established OSH Plan 2017 which was approved by estate manager which include health and safety activities, workplace inspection and health programme. Example training conducted. SOP spraying training dated 24/02/2017 Water Treatment & Chemical storage training dated 16/10/2017 MSPO-F05b / Rev 2 Page 32 of 86

76 / No a) A safety and health policy, which is communicated and implemented. - Policy display understandable language - Records of : Quarterly Meeting / Morning briefing Safety and Health Policy has been established dated 01/04/2015 sign by Chief Executive-Group Plantation. The policy display is in English and Malay. Bukit Mas Estate Latest Meeting was conducted on 12/10/2017. No latest issue for the estate site. Previous meeting was conducted, dated 22/03/2017 and 22/06/2017. Northbank Estate The latest Safety and Health meeting conducted 20/09/2017. Safety and health plan 2017 consist of list of policies and SOP trainings and safety inspections. Tagas Estate Safety and Health Policy dated 01/04/2016 display in both languages English, and Malay Previous meeting was conducted dated 17/03/2017 and 16/06/2017 Latest OSH meeting was conducted on 20/09/2017 OSH Plan 2017 signed and consists of Health and safety activities. Workplace inspection, training programmed, and health programmed. Lokan Estate The policy was display at the office in two languages Malay and English. Latest OSH Meeting was third JKKP meeting dated 13/09/2017. Previous meeting was conducted, dated 29/03/2017 and 20/06/2017. Water treatment chemical storage dated 16/10/2017 MSPO-F05b / Rev 2 Page 33 of 86

77 / No b) The risks of all operations shall be assessed and documented - Verify risk assessment report e.g HIRARC OSH has been implemented. All workers are provided with PPE and interviews indicates they understand the usage and purpose of wearing the right PPE. Bukit Mas Estate HIRARC was conducted by NIOSH dated 09/02/2017 consist of all applicable risks and analysis. Min NC1 OBS 3 Example of accident report; Name of worker: Date of accident 22/04/2017 Type of injury: fall of tractors injured his head, left and right legs. Meeting was conducted on 28/04/2017 regarding the accident. Among actions taken was training, inspection on vehicles, SOP driver training, Training was conducted on 26/04/2017 for Latihan Pemanduan Selamat Conducted by Assistant Manager Bukit Mas estate. Tagas Estate JKKP 8 was sent to OSH Department on 09/01/2017. The report indicated no accident happen during last year Monthly Accident Key Performance Indicator (KPI) indicates the accident happen and report. There is no accident reported from January to September HIRAC was revised on 11/09/2017 and next revision will be on 11/09/2017. MSPO-F05b / Rev 2 Page 34 of 86

78 / No Lokan Estate JKKP 8 was sent to OSH Department on 18/01/2017 Latest HIRARC review was conducted on 15/06/2017. The HIRARC covers Monthly accident key performance indicator for the 3 rd Quarter 2017 has been conducted Jumlah hari bekerja 224 Jumlah pekerja 114 Jumlah kemalangan 3 Jumlah kemalangan tanma hari kerja 1 Jumlah kemalangan hilan hari kerja 2 Kadar insiden 26 Kekerapan 15 Keterukan 10 Northbank estate The risk assessment HIRAC has been conducted abd include element of likelihood, severity and risk into the assessment. The action plan following to this has been set up. Min NC: The plan did not clearly segregate according to the risk specify. Therefore, to be clearer of what action to be taken the management can separate for clearer implementation. Observation: MSPO-F05b / Rev 2 Page 35 of 86

79 / No c) An awareness and training programme which includes the following requirements for employees exposed to pesticides: i. all employees involved shall be adequately trained on safe working practices; and - Yearly training plan and programme include safety aspects - Training and records of individuals - Material Safety Data Sheet (MSDS) / Chemical Safety Data Sheet (CSDS) and label Soil erosion was detected at the gen-set location. The risk of landslide need to be taken into account. Bukit Mas Estate List of safety and health training conducted for workers: Chemical mixing and CSDS training conducted on 08/08/2016. Tagas Estate List of safety and health training conducted for workers: Chemical Safety training conducted on 20/02/2017. CSDS Training was conducted on 25/08/2017 Lokan Estate List of safety and health training conducted for workers: Water treatment chemical storage dated 16/10/2017. SOP spraying training dated 24/02/2017 Northbank estate: Training have been provided to the worker. Example Pengendalian ferry 13/10/2017 MSPO-F05b / Rev 2 Page 36 of 86

80 / No ii. all precautions attached to products shall be properly observed and applied Tanggung jawab terhadap alam sekitar 17/10/2017 Bukit Mas estate CSDS was available in the chemical, fertilizer stores and pre-mix areas. The CSDS was up-to-date. Northbank Estate SDS was available on the chemical store, fertilizer store, and pre-mix areas. The CSDS is up-todate Tagas Estate SDS was available on the chemical store, fertilizer store, and pre-mix areas. The SDS was up to date. Lokan Estate T CSDS available at chemical store, fertilizer store, pre-mix area. SDS is up-to-date. d) The management shall provide the appropriate personal protective equipment (PPE) at the place of work to cover all potentially hazardous operations as identified in the risk assessment and control such as Hazard Identification, Risk Assessment and Risk Control (HIRARC) - Appropriate Personal Protective Equipment (PPE) CSDS was reviewed and practices are in accordance to the requirement. Bukit Mas Estate Manuring Gang block 94D6 is provided with appropriate PPE, glove, mask, apron, goggles. Harvesting gang block 95C8 is provided with appropriate PPE, hand gloves, safety helmet, and boots. PPE issuance book has been reviewed. Northbank Estate Site visit on spraying gang sighted they were provided with adequate PPE: mask, apron, safety boot, safety goggles. PPE issuance book sighted. Tagas Estate MSPO-F05b / Rev 2 Page 37 of 86

81 / No Site visit on Harvesting gang block SR01F were provided with adequate PPE. Issuance of PPE were recorded on PPE issuance book PPE training was conducted on 13/09/2017. Lokan Estate Site visit to harvesting gang confirm that the workers were equipped with applicable PPE. Estate PPE issuance book sighted. All the records were in place. -PPE issuance book has been reviewed. e) The management shall establish Standard Operating Procedure for handling of chemicals to ensure proper and safe handling and storage in accordance to Occupational Safety Health (Classification Packaging and Labelling) Regulation 1997 and Occupational Safety Health (Use and Standard of Exposure of Chemical Hazardous to Health) Regulation SOP - Storage facilities for PPP and fertilizers - Check on the compliance To CHRA requirement and Chemical Safety Requirement PPE have been provided in accordance to the HIRARC mention. During site visit, it was observed there is no evidence in violation of the PPE requirement. All audited Estates The estates have established HSPSB/SOP/20-17 SSOP for Chemical Store SOP is regarding handling and storing of chemicals. Site visits and interviews with workers indicate they understand the SOP related to their job, example, chemical gang Northbank estate Chemical handling procedure has been established Such as Penyemburan racun rumpai, 3x basuhan and masuk semula Lalang yang terdedah kepada racun. Procedure dated 02/03/2017. The procedure has specify type of injury and action to be taken and PPE required for the work scope. MSPO-F05b / Rev 2 Page 38 of 86

82 / No f) The management shall appoint responsible person(s) for workers' safety and health. The appointed person(s) of trust must have knowledge and access to latest national regulations and collective agreements g) The management shall conduct regular two-way communication with their employees where issues affecting their business such as employee's health, safety and welfare are discussed openly. - Appointment letter. - OSH committee members. - OSH committee meeting minimum 4 times a year (OSH Act) - Members representing all categories - Records of : Agenda / Minutes and attendance Bukit Mas Estate. Sighted Senior Assistant Manager dated 21/08/2017 as deputy chairman of estate OSHA committee. Sighted appointment letter for staff dated 21/08/2017 as committee member for Penombak division of estate OSHA committee. Tagas Estate Estate has established organization chart for OSHA dated 15/07/2017 chaired by estate manager. Sighted appointment letter as chairman OSH and deputy chairman OSH. Lokan Estate Sighted appointment letter for estate manager chairman OSH on 017 sign by Group General Manager and assistant manager as the deputy chairman of OSH. January Northbank Estate Appointed for the respective personnel have been reviewed. Appointment are for the year 01/01/2017 to 31/12/2017. Total of 12 appointment letters have been reviewed. Bukit Mas Estate The policy was display at the office in two languages Malay and English. Latest OSH Meeting was conducted on 12/10/2017. Previous meeting conducted on 22/03/2017 and 22/06/2017. Tagas Estate MSPO-F05b / Rev 2 Page 39 of 86

83 / No The policy was display at the office in two languages Malay and English. Latest OSH Meeting was conducted on 20/09/2017. Previous meeting conducted on 17/03/2017 and 16/06/2017. Lokan Estate The policy was display at the office in two languages Malay and English. Latest OSH Meeting was conducted on 13/09/2017. Previous meeting conducted on 29/03/2017 and 20/06/2017 Northbank estate Meeting conducted on 20/09/2017. Meeting was represented by workers representatives and management. Meeting topics include examples as below 1. Unit tindakan Bahan Kimia 2. Unit kemalangan 3. Tanah Runtuh h) Accident and emergency procedures shall exist and instructions shall be clearly understood by all employees - Accident and emergency procedures - Records of OSHA Accident and Investigation 3 meetings have been conducted on 22/03/2017, 16/06/2017 and 20/09/2017 SOP for handling accident been mention on specific procedure. An emergency preparedness and respond chart have been set up. Chart demonstrates control of situation and the process of handling the situation and provides information. Emergency respond team and their phone numbers are available. Bukit Mas Estate MSPO-F05b / Rev 2 Page 40 of 86

84 / No Accident record book and JKKP report sighted. JKKP 8 report has been sent to OSH department in January Northbank Estate Accident record book and JKKP report sighted. JKKP 8 report has been seen to OSH department. Tagas Estate Accident record book and JKKP report sighted There was no accident recorded from January 2017 until September Lokan Estate i) Employees trained in First Aid should be present at all field operations. A First Aid Kit equipped with approved contents should be available at each worksite - Records of First Aid Training - First Aid Kit for external used must be checked - Guidelines on First Aid in The Workplaces Accident record book and JKKP report sighted. There are no major injuries that cause lost time accident occur in the estate. Bukit Mas Estate First aid training was conducted on 20/09/2017 First aid kit was available at the work site with the list of medicines and date of inspection. Workers do understand the purpose of having first aid kit and know to use the items. No Tagas Estate First aid training was conducted on 21/10/2017. First aid box was checked during on site visit to harvesting at block SR01F. Workers do understand the purpose of having first aid kit and know to use the items. Lokan Estate MSPO-F05b / Rev 2 Page 41 of 86

85 / No The first aid training was conducted on 21/08/2016 for external stakeholder. For workers, the first aid training was conducted on 23/05/2017. Interviews at the fields indicate workers do understand the purpose of having first aid kit and know to use the items. Northbank estate First aid kits were sighted in all operation work areas. First aid training record Dated: 21/07/2017 Total of 16 personnel have been trained. Interviews at field indicates workers do understand the purpose of having first aid kit and know to use the items Non conformity: j) Records shall be kept of all accidents and be reviewed periodically at quarterly intervals - Accident records - Review during OSH committee meeting Not all the field workers group have a trained personnel. Total of 12 group including harvesting, manuring and spraying which trained field personal is only 8 personnel. Bukit Mas Estate Accident file contain the accident records, Submission of JKKP 8 on 09//01/2017 has list of workers who are injured that cause lost time accident or medical leave cases. Example: Worker F No Tagas Estate There is no accident recorded in the estate since no accidents had happen. Northbank Estate Monthly accident key performance indicator (KPI) MSPO-F05b / Rev 2 Page 42 of 86

86 / No Year 2016 have been reviewed and report dated 30/01/2017to Pengarah jabatan keselamatan dan kesihatan perkerjaan Malaysia. No ruj: NBE/H6/16002/JKKP Year meetings have been conducted respectively on 22/03/2017, 16/06/2017 and 20/09/2017 Nevertheless, as this is a main certification the earlier 2 meetings minutes was mention the accident as a topic although they have taken note of no accident in the report. Lokan Estate JKKP 8 was sent to OSH Department on 18/01/2017 Latest HIRARC review on 15/06/ Criterion 5 Employment Conditions Indicator 1 The management shall establish policy on good social practices regarding human rights in respect of industrial harmony. The policy shall be signed by the top management and effectively communicated to the employees. - Social Policy (in understand language) 9 policies have been established in additional to the sustainability policy and MSPO policy. Policies have been posted in notice boards. Hap Seng Plantations Group has established Human Right Policy dated 01/10/2016 sign by Chief Executive-Group Plantations The human right policy was available and publicly display on operation sites in both Malay and English languages. Bukit Mas / Tagas / NorthBank / Lokan Estate Policy on Freedom of Association and Policy on Equal Opportunity dated 22 / 03/2016 sign by Chief Executive-Group Plantations. MSPO-F05b / Rev 2 Page 43 of 86

87 / No Indicator 2 The management shall not engage in or support discriminatory practices and shall provide equal opportunity and treatment regardless of race, colour, sex, religion, political opinion, nationality, social origin or any other distinguishing characteristics - Equal opportunity statement by the top management - Interview the workers The established Equal Opportunity Policy dated 22/03/2016 sign by Chief Executive-Group Plantations. Policy was available and publicly display on operation sites in both Malay and English languages. Bukit Mas Estate There are no discriminatory complaints on records, and interviews conducted. Northbank Estate There are no records of complaints and interviews with workers indicate no discrimination issue arise. Tagas Estate The estate has established gender committee which was chaired by office staff and others representative comprise of estate staff and workers. Interview with workers indicate no discrimination against them occur. Lokan Estate There are no complaint regarding discrimination and interviews with workers confirm there are no discrimination occurs. MSPO-F05b / Rev 2 Page 44 of 86

88 Indicator 3 Management shall ensure that employees pay and conditions meet legal or industry minimum standards and as per agreed Collective Agreements. The living wage should be sufficient to meet basic needs and provide some discretionary income based on minimum wage. / No - Compliance to Minimum Wage Act 2012 (Mandatory). - Absence of complaints of employee. - Refer to payroll or pay slip. Bukit Mas Estate All employees and workers have a work contract with the company according to the Sabah Labour Ordinance Example: Worker E Income RM Deductions RM De-electricity 2.54 Holiday pay Oil palm- 1, harvester wages Ma-Maintain road repairs MA- Pruning Net Pay 1, Worker D Income RM Deductions RM De-electricity 0.29 Holiday pay GC-Repairs- 1, Sundry Building Net Pay 1, Tagas Estate Summary of Payroll for September 2017 shows all workers were paid above the minimum wages as per law of RM 920 per month. MSPO-F05b / Rev 2 Page 45 of 86

89 / No Issue: deductions. Deduction were made as per approval by the Jabatan Tenaga Kerja Among others Surat Kuasa Pemotongan Gaji. Example: Worker G Month: September 2017 Income RM Deductions RM De-electricity 5.30 De-Passport GC-Holiday pay Ma-circle raking Ma-Pest mammalian control Ma-stacking Net Pay 1, Worker ZZZ Month: September 2017 Income Deductions De-electricity 5.30 Oil Palm- 1, Harvesting wages GC-Holiday pay Ma-Maintain road repairs MSPO-F05b / Rev 2 Page 46 of 86

90 / No Sm-Labour (own workers) Net Pay 1, Lokan Estate The company pay salary and wages on the first week each month. The pay was made by cheque. Copy of pay slip given to workers. Example: Worker A Income RM De-electricity Holiday pay Ma-maintain road repairs Ma-path/circle Ma-selective (chemical) Net Pay 1, Worker B Deductions RM Income RM Deductions RM De-electricity 5.30 Holiday pay Ma-FFB application Ma-lallang Ma-sanitation Ma-Selective (chemical) Net Pay 1, The deduction was for the head of house or per MSPO-F05b / Rev 2 Page 47 of 86

91 / No family. It applies for single mother as well Indicator 4 Management should ensure employees of contractors are paid based on legal or industry minimum standards according to the employment contract agreed between the contractor and his employee. - Records of payment by company to the contractors. - Agreement between the management and contractors. All audited estates The estates use its own transportation for all work activities., There were no outsourcing contractors Indicator 5 The management shall establish records that provide an accurate account of all employees (including seasonal workers and subcontracted workers on the premises). The records should contain full names, gender, date of birth, date of entry, a job description, wage and the period of employment. - Employee registration details. All audited estates The lists of workers is available. Other related information on the list: Date Joined Name of workers Date of Birth Type of Job IC or passport number. Date of expired work pass Company has established the employee contract which contain all applicable information Indicator 6 All employees shall be provided with fair contracts that have been signed by both - Appointment letter for local workers / workers registration All audited estates MSPO-F05b / Rev 2 Page 48 of 86

92 / No employee and employer. A copy of employment contract is available for each and every employee indicated in the employment records. for. - Employment contract for foreign workers. - Any documents related to employment is acceptable. Appointment letter for both local and Foreign workers was based on the group format. The appointment letter contains: Type of work Rate per day Salary rate for ordinary time job Salary rate for over time Salary rate for public holiday. Counter sign by workers verify by Manager. Appoitment letter for workers on each estates has been sighted. All was following the per requirement Indicator 7 The management shall establish a time recording system that makes working hours and overtime transparent for both employees and employer. - Check roll records. - Display of working hours at general notice board. Bukit Mas Estate Site visit could observed that the estate has display the working hours at office notice board and muster ground. Check roll book records daily workers attendance. Tagas Estate Estate has divided the check roll book record based on division and type of work. Abbreviation noted: PH-Public holiday LV-On Leave SL-Paid sick leave S-Unpaid sick leave MSPO-F05b / Rev 2 Page 49 of 86

93 / No ML-Maternity Leave North bank Estate Site visit show workers understand the working time. Working time has been brief as part of induction trainings conducted, Example: Working time was display on the notice board near the muster ground and office Lokan Estate Site visit show workers understand the working time. Working time has been brief as part of induction trainings conducted, Example: Working time was display on the notice board near the muster ground and office Indicator 8 The working hours and breaks of each individual employee as indicated in the time records shall comply with legal regulations and collective agreements. Overtime shall be mutually agreed and shall always be compensated at the rate applicable and shall meet the applicable legal requirement. - Leave entitlement must be taken. - Pre-approved overtime sheet. - Not more than 104 hours.. Bukit Mas / Tagas Estate There is no overtime provided to workers. Counter check with the company pays slip system. Working hours and leave entitlement were indicated in the contract. Daily working hours from 5.30am and end by 1.30 pm. Leave entitlement is included in worker contract form. Northbank / Lokan Estate Overtime record file has been reviewed. Leave entitlement was sighted at the worker contract form. MSPO-F05b / Rev 2 Page 50 of 86

94 Indicator 9 Wages and overtime payment documented on the pay slips shall be in line with legal regulations and collective agreements Indicator 10 Other forms of social benefits should be offered by the employer to employees, their families or the community such as incentives for good work performance, bonus payment, professional development, medical care and health provisions. (MINOR) Indicator 11 In cases where on-site living quarters are provided, these quarters shall be habitable and have basic amenities and facilities in compliance with the Workers' Minimum Standards Housing and Amenities Act 1990 (Act 446) or any other applicable legislation. / No - Record book for contractors - Further check on check roll reports the source documents for payslips - Should be for employees instead of contractors. Contractor management falls under This must entirely be at the Management discretions any forms or quanta are acceptable. - The community part is covered under the This indicator is about benefit for employees only and should not involve the community, the employees or their families. Those temporary housing and amenities acknowledged by Jabatan Tenaga Kerja (JTK) and local authorities are accepted. Bukit Mas / Northbank / Tagas Estate Pay day was held on the first week every month There was no contractor for the estate. There is no overtime observed on the sampled payslips. Example of payslip was sighted, refer to indicator Lokan Estate Pay day was hled on the first week of every month Example of payslip sighted, refer to indicator All audited estates There are benefits provide to employees such as free education for children of both local Malaysia and foreign families, free medical, sport facilities and family day activities. All audited estates Workers have access to clean food storage areas and proper living houses provided with sufficient facilities. Houses are provided with electricity, clean water supply, fire extinguisher for safety Through onsite inspection and observation, electricity and clean piped water is supplied to all workers housing. MSPO-F05b / Rev 2 Page 51 of 86

95 Indicator 12 The management shall establish a policy and provide guidelines to prevent all forms of sexual harassment and violence at the workplace Indicator 13 The management shall respect the right of all employees to form or join trade union and allow workers own representative(s) to facilitate collective bargaining in accordance with applicable laws and regulations. Employees shall be given the freedom to join a trade union relevant to the industry or to organize themselves for collective bargaining. Employees shall have the right to organize and negotiate their work conditions. Employees exercising this right should not be discriminated against or suffer repercussions. / No - Refer to national guidelines on sexual harassment in the workplaces (Sexual Harassment policy) - Absence of complaints (Suggest to add Any actions taken to prevent or resolve issues shall be documented ). - Foreign workers follow Immigration Act (by state) Policy on Prevention and Eradication of Sexual Harassment in the Workplace dated 28/09/2010 sign by Chief Executive-Group Plantation. The policy indicates procedure on sexual harassment, flow chart on reporting on sexual harassment. Policy mention in below Polisi untuk mencegah dan membasmi terhadap gangguan seksual yang tidak diundang di tempat kerja This statement has specified the need for the prevention of sexual harassment. During interviews and stakeholders consultation confirmed that there is no sexual harassment reported in and surrounding the estates areas. Policy on Freedom of Association dated 22/03/2016 sign by Chief Executive-Group Plantations mention on the right of employee to join trade union. Bukit Mas Estate Sungai Segama Group of estate JCC meeting has been conducted on 05/07/2017. The meeting involved management and workers representatives. Among other discussion topics are basic amenities, safety and social condition Northbank Estate A Joint Consultative Commit-tee is established to enhance the working relationship. The JCC meeting is held once annually. The last meeting was held on 18/05/2017 Tagas Estate MSPO-F05b / Rev 2 Page 52 of 86

96 / No The estate has established JCC committee, chaired by Estate Manager. The JCC involve all level of workers. Interviews with workers indicated they are aware of their right in joining trade union. Lokan Estate Indicator 14 Children and young persons shall not be employed or exploited. The minimum age shall comply with local, state and national legislation. Work by children and young persons is acceptable on family farms, under adult supervision, and when not interfering with their education. They shall not be exposed to hazardous working conditions. - Employment records (Refer ) The estate has been established JCC committee was chaired by the estate manager. JCC meeting was conducted on 20/06/2017 involved representatives of management and workers. Child labor Policy was established dated 02/01/2017 sign by Chief Executive-Group Plantations. The policy strictly banned on the use of child labor. Bukit Mas / Northbank Estate Counterchecks with the workers list which indicate the birth date and the field observation show no child labor present in the estate. Tagas Estate Counterchecks with the workers list which indicate the birth date and the field observation show no child labor present in the estate. Lokan estate List name of worker have been reviewed for Lokan estate. Total of 110 worker data have been reviewed and all are above minimum age required by law. Company have reviewed the name against the age in passport during hiring to ensure no young person been hired. The management will provide advice where the MSPO-F05b / Rev 2 Page 53 of 86

97 4.4.6 Criterion 6 Training and competency Indicator 1 All employees, contractors and relevant smallholders are appropriately trained. A training programme (appropriate to the scale of the organization) that includes regular assessment of training needs and documentation, including records of training shall be kept. / No - Training programme and records Attendance Photos Training contents - Training needs for each operation. - Regular assessment at least once a year. - To include training for group manager for group certification. young person shall not come to the site during working or assist the parent. This has been verified on site and during interview no young child was present. All audited estates The training documents provided were together with the attendance photos and training materials. Estates have allocated training as per SOP based on Job description or task of each worker. Training was provided for staff, workers and external parties such as contractors and suppliers. For example of training may refer to indicator Indicator 2 Training needs of individual employees shall be identified prior to the planning and implementation of the training programmes in order to provide the specific skill and competency required to all employees based on their job description. - Training matrix. All audited estates Estates have established annual training programme for the year The estates management verify the need based on the workers job description. Example of trainings provided to workers: Bukit Mas estate - Fire extinguisher Training dated 11/10/2017-3R training n dated 25/09/ Bantuan kecemasan Training dated 20/09/ SOP for Sprayer dated 07/03/2017. Northbank Estate MSPO-F05b / Rev 2 Page 54 of 86

98 / No IPM Training dated 26/09/2016 SOP for Sprayer dated 20/10/2017 First aid training dated 21/07/2017 for Storekeeper SOP harvesting training on 17/10/2017. SOP Premixing and safety training on 16/06/2017 SOP chemical mixing 16/06/2017. Tagas Estate Training on spraying on 25/08/2017 Harvesting training on 10/04/2017 Manuring SOP training 19/04/2017 Lokan Estate SOP training spraying on 24/02/ Indicator 3 A continuous training programme should be planned and implemented to ensure that all employees are well trained in their job function and responsibility, in accordance to the documented training procedure. (MINOR) - Annual training programme. Harvesting training on 21/01/2017 All audited estates The training documents provided were together with the attendance photos and training contents. The estates have allocated training as per SOP based on work. All estates have established their annual training program for safety and health and policies. Under Safety and Health Programme 2017 it covers SOP and policies training, inspection on worksite and housing, medical checkup and medical surveillance programed. MSPO-F05b / Rev 2 Page 55 of 86

99 4.5 Principle 5 Environment, natural resources, biodiversity and ecosystem services Criterion 1 Environmental management plan Indicator 1 An environmental policy and management plan in compliance with the relevant country and state environmental laws shall be developed, effectively communicated and implemented Indicator 2 The environmental management plan shall cover the following: / No a. An environmental policy and objectives. Assessment of internal documents for example: Availability of signed environmental policy concerning management and protection of the environment according to the applicable laws. Environmental management plan which was developed from results of aspect and impact analysis, mitigation and monitoring plans and records of implementation and timelines. Continual improvement programme. Awareness and training programme on environmental management and improvement plans, minutes of meetings, attendance lists, photos Interview of personnel and stakeholders concerning for example: Knowledge of environmental policy and efforts to protect the environment e.g. compliance to applicable laws. All audited estates: Environment charter dated 02/04/2017 approved by Chief Executive Plantations appropriate infrastructure and responsibility for environmental affairs, preserve high conservation value tropical forest, EIA, conform to all environmental legislation, etc Bukit Mas Estate: Environment impact assessment, management action plans and continuous improvement plans for Sg. Segama group of estates dated 28/02/2017. Northbank /Tagas estates: Environment impact assessment, management action plans and continuous improvement plans for Tomanggong group of estates dated.05/10/2017 Lokan estate Environment impact assessment, management action plans and continuous improvement plans for Jeroco group of estates dated 25/05/2017 All estates: Environment charter dated 02/04/2014 approved by Chief Executive Plantations. MSPO-F05b / Rev 2 Page 56 of 86

100 / No b. The aspects and impacts analysis of all operations Indicator 3 An environmental improvement plan to mitigate the negative impacts and to promote the positive ones, shall be developed, effectively implemented and monitored Indicator 4 A programme to promote the positive impacts should be included in the continual improvement plan. (MINOR) Indicator 5 An awareness and training programme shall be established and implemented to ensure that all employees understand the policy and objectives of the environmental management and improvement plans and are working towards achieving the objectives. Objectives appropriate infrastructures and responsibility for environmental affairs, preserve high conservation value tropical forest, conform to all environmental legislation, etc. All audited estates: Environmental aspect/impact assessment harvesting, manuring, pest infestation, spraying, riparian reserve, workshop, washing of equipment, housing area sewerage, road maintenance, etc. Mitigating measures and monitoring programs implemented. All audited estates: Negative and positive impacts and monitoring plans are listed in the aspect/impact assessment, example. pruned fronds not recycled will result in soil erosion (negative) and minimize soil erosion by stacking (positive) and merit point system programme (monitoring). All audited estates: Rainwater harvesting, Merit Point System competition for performance in progressive pruning, frond stacking, fertilizing, reduction of inorganic fertilizer, etc. Bukit Mas: Environmental impact assessment management and improvement plan training programme for year Soil erosion dated 07/03/2017, water pollution dated 07/03/2017, biomass dated 14/02/2017, ecological MSPO-F05b / Rev 2 Page 57 of 86

101 / No protection dated 07/03/2017 and air pollutions dated 14/02/2017. Northbank estate: Training conducted on 12/10/2017for all workers on policies, safety & health, emergencies, etc. Attendance records and photos sighted. Training on impact to environment for gen-set operation dated 17/10/2017, ferry operation dated 13/10/2017 and ramp operation dated 17/10/2017. Tagas estate: Training on 16/10/2017 on policies, safety & health, etc. Attendance record and photos sighted. Training on control of soil erosion dated 20/10/2017. Lokan estate: Training on environmental procedure dated 16/07/2017 prevention of pollution, control of pesticide usage, etc Indicator 6 Management shall organize regular meetings with employees where their concerns about environmental quality are discussed. Daily briefing at muster ground on environment / safety & health policy, riparian reserve, open burning, proper disposal of waste oil, etc. Sighted record on briefing dated. 15/05/2017 Bukit Mas estate: Latest meeting conducted on 10/10/17 together with OSH meeting supplying water from rainwater and treatment plant, proper disposal of scheduled waste, etc. Northbank estate: MSPO-F05b / Rev 2 Page 58 of 86

102 / No Latest meeting conducted on 20/09/2017 on Environmental Quality. Items discussed scheduled waste control, open burning, domestic waste, riparian area, fertilizer and chemical storage and protected species. Minutes sighted. Tagas estate: Latest meeting on 19/09/2017 no open burning, natural disasters and actions, hunting without permit, riparian area, smoke and noise, etc. Attended by HOD and workers, attendance record sighted. Lokan estate: Criterion 2 Efficiency of energy use and use of renewable energy Latest meeting conducted on 08/09/2017 scheduled waste, open burning, domestic waste, riparian area. Attendance record and minutes sighted Indicator 1 Consumption of non-renewable energy shall be optimized and closely monitored by establishing baseline values and trends shall be observed within an appropriate timeframe. There should be a plan to assess the usage of non-renewable energy including fossil fuel, electricity and energy efficiency in the operations over the base period - Records from the base year are to be verified (minimum 3 years baseline value average) - Energy assessment plan Northbank Estate: Diesel usage records sighted for 2016 (xxx.000 liter) and 2017 till Sept (yyy.000 liter). Baseline set at zzz,000 liter based on average of 4 years ( ) Increase of usage in 2016 due to new Holland tractor TS HP and new road gravelling totalled 10,574 km Fossil fuel management plan regular servicing of gen-set and vehicles, schedule for fuel usage, etc., Tagas estate: 5 years diesel consumption for vehicles and gen-set. MSPO-F05b / Rev 2 Page 59 of 86

103 / No Baseline set at xx.000 liter based on usage. Usage for 2016 was yy,000liter, 2017 was zz,000 liter until July High usage in 2016 was due to diversion of crop to other mills for IP CSPO production Lokan estate: 5 years diesel consumption record maintained. Baseline set at zzz.000 l/tffb, average of usage from Usage of diesel for 2016 was xxx.000 liter and for 2017 until September is yyy,000 liter Indicator 2 The oil palm premises shall estimate the direct usage of non-renewable energy for their operations, including fossil fuel, and electricity to determine energy efficiency of their operations. This shall include fuel use by contractors, including all transport and machinery operations - Estimated annually - Estate annual budget gauge against actual usage Northbank estate: Sighted diesel consumption data for Efficiency for 2016 is x.xx5 l/tffb. Efficiency for 2017 till Sept is y.yy l/tffb. High usage due to new road gravelling, completed in mid Oct. No contractors hired. Tagas estate: Sighted diesel consumption for vehicle and gen-set for 5 years trend. Efficiency for 2016 was x.xx l/tffb and y.yy l/tffb for 2017 till July. High usage in 2016 due to diversion of crop to other mills for IP CSPO production. Lokan estate: 5 years diesel consumption vs FFB production record. Efficiency for 2016 was x.xx l/tffb and y.yy MSPO-F05b / Rev 2 Page 60 of 86

104 Indicator 3 The use of renewable energy should be applied where possible. (MINOR) Criterion 3 Waste management and disposal Indicator 1 All waste products and sources of pollution shall be identified and documented. / No - Identify all waste products (e.g. scheduled waste, domestic waste, clinical waste) - Identify sources of pollutions (e.g. fossil fuel, spillages of lubricant) l/tffb for 2017 until Sept. Baseline set at z.zz l/tffb. Not applicable. Document review s and site observation indicates no use of renewable energy. All estates audited: List of waste generated for estate and source of pollution are included in the environmental impact assessment organic waste, domestic waste, human faeces, used oil, empty chemical containers, electrical waste, clinical waste, paper and cartridge ink. Source of pollution pesticide contamination, spillage / leakage of oil and chemicals, direct discharge of sewerage, etc Indicator 2 A waste management plan to avoid or reduce pollution shall be developed and implemented. The waste management plan should include measures for: a. Identifying and monitoring sources of waste and pollution b. Improving the efficiency of resource utilization and recycling of potential wastes as nutrients or converting them into value-added by-products - E.g. use of POME as a substitute for inorganic fertilizers, EFB mulching for moisture retention, prune fronds stacking to prevent soil erosion - All used chemical containers must be triple rinsed, punctured and dispose off through DOE authorized collectors - Re-used empty chemical containers must be appropriately labeled and only used for spraying purpose - Records of EFB and POME utilization All estates audited: List of waste generated at estate and waste management plan included in aspect / impact assessment. Source of generation and mitigation measures established for organic waste, domestic waste, human faeces, used oil, empty chemical containers and other scheduled wastes. Monitoring of scheduled waste via inventory and disposal records Collection of scheduled waste by licensed contractors, septic tanks installed for all offices and housing, recycling of waste like paper, plastic and metal, EFB for mulching, reuse of chemical containers for spraying, etc. Min NC: Min NC OBS 4 During the site visit at the housing quarters, it MSPO-F05b / Rev 2 Page 61 of 86

105 Indicator 3 The management shall establish Standard Operating Procedure for handling of used chemicals that are classified under Environment Quality Regulations (Scheduled Waste) 2005, Environmental Quality Act, 1974 to ensure proper and safe handling, storage and disposal Indicator 4 Empty pesticide containers shall be punctured and disposed in an environmentally and socially responsible way, such that there is no risk of contamination of water sources or to human health. The disposal instructions on manufacturer s labels should be adhered to. Reference should be made to the national programme on recycling of used HDPE pesticide containers Indicator 5 Domestic waste should be disposed as such to minimize the risk of contamination of the environment and watercourses. (MINOR) / No was noted that the recycle rubbish bin contains motor oil. This was to be recorded as schedule waste and to be disposed through schedule waste requirement. - SOP - Refer to Location map of rubbish pits. - Management to ensure sufficient distance of landfill from habitation and to avoid water contamination. Observation: The wastewater from washing of chemical containers could be reused for chemical mixing. (Northbank estate) Company has established SOP Schedule Waste Store HSPSB/SOP/19-17 and SOP Empty chemical store HSPSB/SOP/21-17 All estates audited: No used chemicals are stored or disposed. Bukit Mas / Northbank / Tagas / Lokan estates: Empty pesticides containers are reused in the field for spraying activity. Rejected containers are triple rinsed and punctured before disposal to licensed contractor as scheduled waste. All estates audited: Domestic wastes are disposed to the landfills. Landfills are located away from water sources, fenced and signage posted with open and close OBS 5 MSPO-F05b / Rev 2 Page 62 of 86

106 / No dates recorded. Observation: The old landfill needs to be monitored in order to ensure that there is no landslide, scavenging by animals and other factors that could affect the condition of the landfill. Signage need to be free from vegetation cover. (Bukit Mas estate) Criterion 4 Reduction of pollution and emission Indicator 1 An assessment of all polluting activities shall be conducted, including greenhouse gas emissions, scheduled wastes, solid wastes and effluent - In-house assessment records are accepted. Assessment of all polluting activities is included in the Environment impact assessment, management action plans and continuous improvement plans for Sg. Segama group of estates dated 28/02/2017 Bukit Mas: Latest disposal of scheduled waste dated 29/09/2017 Sighted consignment notes to Legenda Bumimas for 5.6 ton of SW305 (waste oil), 971 kg of SW410 (rages and oil filters), 1.1 ton of SW102 (used batteries) and 62 kg of SW109 (used electronics). Inventory of scheduled waste submitted to DOE every month via e-swis, sighted record dated Sept for SW102, 110, 305, 306, 404, 409 and 410. Northbank estate: Latest disposal of scheduled waste to Legenda Bumimas dated 14/09/2017. Consignment note no for 54kg of SW110, no for 27kg of SW410, note no for 121kg of SW305, note no for 115 kg of SW102, note no for 291 kg of SW409 and note no for 30kg of SW410(used PPE). MSPO-F05b / Rev 2 Page 63 of 86

107 / No Summary report of inventory sighted for Sept (via eswis). Tagas estate: Latest of scheduled waste disposal to Legenda Bumimas dated 15/09/2017 for 39 kg of SW305, 149 kg of SW102, 115 kg of SW409, etc. Summary report inventory sighted for Sept (submission via eswis). Lokan estate: Latest disposal of scheduled waste dated 14/09/2017 to Legenda Bumimas for 76 kg SW102, 262 kg of SW305, 61 kg of SW309, 27kg of SW410 (PPE), 277kg of SW410 and 24kg of SW409. Summary report of inventory sighted for Sept (submission to DOE via eswis). Scheduled waste are adequately stored and labelled. Tagas Estate Environment Impact Assessment dated 02/10/ /10/2017pg33 listed of water generated in estate have been identify. List of the wastes (example) 1. Organic waste 2. Domestic waste 3. Maintenance Oil 4. Digestive waste / human faecal 5. Empty chemical container MSPO-F05b / Rev 2 Page 64 of 86

108 / No 6. Electrical Waste 7. Paper and Cartridge ink 8. Clinical waste 9. Schedule waste Fossil Fuel Management plan 1. Generator set 2. Vehicles Indicator 2 An action plan to reduce identified significant pollutants and emissions shall be established and implemented - E.g. Zero burning, management of water table in peat areas to reduce peat subsidence rate - Refer to , , Water Pump Zero burning policy included in the Sustainable Agriculture Policy dated 21/02/2017approved by Chief Executive Officer Plantation The policy was applied throughout the estates and site visit indicates that the policy was followed accordingly Example: Tagas Estate: Action plan fir mitigation and the impacts have been identified in the same chapter as in Example Organic waste Environment impact: Organic waste may attract rodent if not disposed properly Odour from organic waste may causes unpleasant smell in the environment MSPO-F05b / Rev 2 Page 65 of 86

109 / No Mitigation measure / action taken: Disposal of domestic waste on daily basis and is disposed at landfill far from waterways. Emission Generator set Environmental Impact: Release of carbon to the atmosphere may cause smog (NOx, Sox, etc.,) and may effect human health such as lung cancer. Mitigation measure / Action taken Criterion 5 Natural water resources Regular servicing of the generator set for smooth running of engine and prevent excessive emission of greenhouse gas Indicator 1 The management shall establish a water management plan to maintain the quality and availability of natural water resources (surface and ground water). The water management plan may include: - E.g Water quality sampling analysis incoming and outgoing sources, quality parameters - Frequency as requested by the state - Refer to national and/or local regulations for riparian zones (e.g. DID) - Check regulations for water catchment area a) Monthly water usage records b) Water sampling record from quarterly Environmental Monitoring (EMP) Bukit Mas Estate: Water management plan for Sg. Segama group of estates dated 01/03/2017 Water source identification, water usage monitoring, water quality analysis, improvement plans for water conservation, etc. Northbank / Tagas Estate: Water management plan for Tomanggong group of estates (TMGOE) and Tomanggong POM dated 05/10/2017 Lokan Estate: Water management plan for Jeroco group of estates and Jeroco POM 1 & 2, dated May OBS 6 Observation: MSPO-F05b / Rev 2 Page 66 of 86

110 / No a. Assessment of water usage and sources of supply c) Verify estate records. d) Riparian reserves. -signage s for riparian buffer zones -Briefing training for sprayers and workers e) Action plan and time bound plan. f) Records of water levels. The practice of adopting the WHO drinking water standard need to be reviewed due to the absence of specifications for several critical parameters, example. suspended solids, oil & grease, turbidity, ph, colour, E-coli and coliform count. (All estates) The wastewater from washing of fertilizer bags could be channelled to the land instead of to the drain. (Northbank estate) Bukit Mas estate: Water usage record sighted for Half yearly water quality analysis conducted by external lab (Indelab). Latest certificate of analysis no. GN/8987/17 dated 21/08/2017complying to WHO drinking water standards. Northbank estate: Water usage record for Jan Sept Sighted Aug 2017 water consumption report for Northbank 6,483 cu.m. Treated water supplied by Tomanggong POM. Tagas estate: Daily water usage recorded. Source is from water catchment pond. Lokan estate: Monthly usage of water recorded. Water consumption for 2016 was 7.7 mil liter and 5.7 mil liter for 2017 till Sept. Source is from water catchment pond. MSPO-F05b / Rev 2 Page 67 of 86

111 / No b. Monitoring of outgoing water which may have negative impacts into the natural waterways at a frequency that reflects the estate s current activities c. Ways to optimize water and nutrient usage to reduce wastage (e.g. having in place systems for re-use, night application, maintenance of equipment to reduce leakage, collection of rainwater, etc.). d. Protection of water courses and wetlands, including maintaining and restoring appropriate riparian buffer zones at or before planting or replanting, along all natural waterways within the estate e. Where natural vegetation in riparian areas has been removed, a plan with a timetable for restoration shall be established and implemented f. Where bore well is being use for water supply, the level of the ground water Water testing for August 2017 by Plantation Central lab. Sampling point buffer tank, housing area. Parameter ph 7.7, turbidity 0.5, chlorine residue ND, lead ND, total hardness 66, all complying to specifications. Cert of analysis no. GN/8978/17 dated 11/08/2017 for water sample at staff house, Lokan (twice a year) from Indelab. Upstream and downstream water analysis conducted by Bukit Mas lab. Latest report dated 1 14/08/2017 complying with specifications. All estates audited: Rainwater harvesting implemented for housing and offices. Wastewater from chemical container rinsing is reused for chemical mixing. POME channeled to land application. All estates audited: All riparian areas are maintained with no indication or any signs of activities that not permitted occurs. Signboards regarding activities that not permitted such as no manuring, no spraying was placed at areas nearby to bridges and fence. All estates audited: Field visit on all audited estates observed no intervention on natural vegetation occurs. The vegetation at riparian areas are well preserved. Not applicable, since it use rainwater harvesting for estates MSPO-F05b / Rev 2 Page 68 of 86

112 / No table should be measured at least annually Indicator 2 No construction of bunds, weirs and dams across main rivers or waterways passing through an estate Indicator 3 Water harvesting practices should be implemented (e.g. water from road-side drains can be directed and stored in conservation terraces and various natural receptacles). (MINOR) Criterion 6 Status of rare, threatened, or endangered species and high biodiversity value area Indicator 1 Information shall be collated that includes both the planted area itself and relevant wider landscape-level considerations (such as wildlife corridors). This information should cover: a. Identification of high biodiversity value habitats, such as rare and threatened ecosystems, that could be significantly affected by the grower(s) activities - site verification. - E.g. Silt pits, water bodies, site drains, diversion of water on site drains at regular intervals - Observed and examine animal droppings along estate boundaries - Locality maps - Take photos of birds and animals and compare to IUCN list - Internal biodiversity assessment can be accepted - Biodiversity assessment guidelines - Display of appropriate signage on prohibiting, hunting and fishing. All estates audited: Site visit indicates no construction of bunds or weirs that may block the waterways at the respective estates rivers. All estates audited: There are proper site drainage build to ensure no erosion occurs.at road.. Bukit Mas Estates: HCV assessment dated 01/03/2017 was conducted by internal team. Tomanggong group of estate HCV assessment dated 02/10/ /10/2017 was conducted by internal team. Jeroco group of estates HCV assessment dated 8-18/05/2017 was conducted by internal team OBS 7 MSPO-F05b / Rev 2 Page 69 of 86

113 / No Bukit Mas HCV identified is based on HCV requirement. Assessment has taken into consideration of precautionary approach. Different HCVs have been identified including detecting of crucial area such as along the Segama river which is crucial. Tomanggong Group of estate HCV 4, 5 and 6 have been detected and identified in the report. All locations have been identified in the maps with GPS coordinates. Lokan estate HCV have been evaluated on a group level. Identification of HCV at Sg. Kretam including HCV 4. Observation: During the audit, site observation has resulted there are many other wildlife which is not recorded. Bukit Mas camera trap is only restricted in the area and not beyond the area. Another site has not covered well. There is no inventory to ensure proper identification. Thus the management plan has been based on the basic data. During the audit species sighted such as 1. Green imperial pigeon 2. Oriental pied hornbill 3. Black Hornbill 4. Cattle egret 5. Intermediate egret MSPO-F05b / Rev 2 Page 70 of 86

114 / No b. Conservation status (e.g. The International Union on Conservation of Nature and Natural Resources (IUCN) status on legal protection, population status and habitat requirements of rare, threatened, or endangered species), that could be significantly affected by the grower(s) activities Indicator 2 If rare, threatened or endangered species, or high biodiversity value, are present, appropriate measures for management planning and operations should include: a. Ensuring that any legal requirements relating to the protection of the species 6. Great Egret 7. Little egret 8. Slender billed crow 9. Long tailed shrike 10. Barn swallow 11. Oriental Darter 12. Brown shrike 13. Buttonquail 14. Lesser Coucal 15. White breasted Woodswallow 16. Collared Kingfisher The above are not documented. IUCN status has been used to determine and records have been made on all the wildlife identified through camera trap. The company has taken into consideration some sensitive site including adjacent to Tabin wildlife reserve. See finding for details. Signage was installed at locations in all estates to MSPO-F05b / Rev 2 Page 71 of 86

115 are met / No provide awareness to the workers. The signage include prohibits illegal hunting. The same have been observed in all estate sampled. Legal compliance on this has been part of the document in legal list register. Trainings have been provided to staff Example: Lokan estate morning briefing was provided on 12/10/2017 includes prohibition of hunting and importance of riparian area. Additional training in Lokan has been conducted on 25/05/2017 and 25/09/2017. Training record has been verified. Effectiveness has been evaluated through workers interview. All workers interviewed are well aware of biodiversity and know the implication and no hunting process. b. Discouraging any illegal or inappropriate hunting, fishing or collecting activities and developing responsible measures to resolve human-wildlife conflicts Indicator 3 A management plan to comply with Indicator 1 shall be established and effectively implemented, if required. - Action plan. - If ERT are present. Management plan have been placed in continuous improvement chapter. It has specified the action to be taken, guideline and improvement. Appendix list has listed the impact and action to be taken. The plan for all audited sites have been reviewed Criterion 7 Zero burning practices Indicator 1 Use of fire for waste disposal and for preparing land for oil palm cultivation or replanting shall be avoided except in specific situations, as identified in regional best practice. - SOP for planting and replanting. Zero burning included Sustainable Agriculture Policy dated 02/02/2017 approved by Chief Executive Officer Plantation. OPAP no 2 revised on Oct 2014 title land clearing, MSPO-F05b / Rev 2 Page 72 of 86

116 / No preparation and planting state no burning will be used and Point 2.1 specifies no burn method. OPAP no 10 revised on Jan 2016 title pest and diseases. Measure used did not considered fire as a process of doing such control. Briefing has been conducted on 11/09/2017 in muster call and training on 06/10/ Indicator 2 A special approval from the relevant authorities shall be sought in areas where the previous crop is highly diseased and where there is a significant risk of disease spread or continuation into the next crop. - If controlled burning is allowed, examine the official letter of approval from the relevant authority. Hap Seng Plantations Group Sustainable Agriculture Policy states no burning allowed. No fire observed during field inspection at the sampled estates Indicator 3 Where controlled burning is allowed, it shall be carried out as prescribed by the Environmental Quality (Declared Activities) (Open Burning) Order 2003 or other applicable laws. Refer above Indicator 4 Previous crops should be felled or mowed down, chipped and shredded, windrowed or pulverized or ploughed and mulched. (MINOR) 4.6 Principle 6 Best Practices OPAP no 2 revised on Oct 2014 title land clearing, preparation and planting states method for land preparation and. Point 2.1 of OPAP specifies no burning allowed The SOP was made at group level and apply at estates level Criterion 1 Site management Indicator 1 Standard operating procedures shall be appropriately documented and consistently implemented and monitored. - SOP on best practices. Hap Seng Plantations (River Estate) has established Standard operating procedure (SOP) named Oil Palm Agriculture Procedure (OPAP) dated August 2009 for Maj NC 2 MSPO-F05b / Rev 2 Page 73 of 86

117 / No the best practices. Some of the OPAP was updated in JAN 2016 for upkeep of immature oil palm, upkeep of mature oil palm and pest and diseases. The OPAP covers all estate operations as below: 1. Nursery practice 2. Land clearing, preparation and planting. 3. Soil conservation and terracing 4. Road construction and maintenance. 5. Establishment and maintenance of legume covers. 6. Planting density and planting technique 7. Palm replacement during immaturity and supplying. 8. Upkeep of immature oil palms. 9. Upkeep of mature oil palm 10. Pest and diseases. 11. Manuring 12. EFB application 13. Harvesting 14. Bunch census 15. Palm thinning. For the consistence implementation of SOPs the management provides to workers 1. Regular training with difference aspects of SOP. MSPO-F05b / Rev 2 Page 74 of 86

118 / No 2. Agronomic report is produce annually by the agronomist department after visiting estate for implementation of best practice and include fertilizer recommendation. Example: Agronomist visit Bukit Mas 08/02/2017 9/02/2017, Northbank 22/05/ /05/2017, Tagas08/06/ /06/2017, Lokan14/03/ /03/ The Plantation Adviser (PA) will visit the estate twice a year and produce individual report The report will become the base to review the current SOP if it is needed. Example: Northbank 17/07/ /07/2017, Tagas 07/08-08/08/ /08/ /08/2017, Lokan 24/07/ /07/2017. Example of training conducted: 1. Bukit Mas estate training spraying on 07/03/201. Manuring training was conducted on 10/03/2017. Harvesting training on 14/02/ Lokan estate training spraying on 24/02/2017. Harvesting training on 21/01/ Tagas estate training spraying on 25/08/2017 Harvesting training on 10/04/201. Manuring SOP training 19/04/ Lokan estate training for chemical application for sprayer and safety at store dated 16/10/2017. Spraying training conducted on 24/02/2017. MSPO-F05b / Rev 2 Page 75 of 86

119 / No Harvesting & safety training on 21/01/ North bank estate Training on Genset operation impact on environment dated 17/10/2017 SOP on ramp operation dated 17/10/2017 Maj NC: Incorrect amount of chemicals was used for mixing, example: 60 liters of glyphosate used for 52 containers (1.15 liters per container) dated 05/09/2017 and 20 liters of glyphosate used for 27 containers (740 ml per container) dated 28/08/2017. Specification was 375 ml per container. (Northbank estate) 2000 gm of Ally was used for 160 containers (12.5 gm per container) dated 17/10/2017 specification was 24 gm per container. (Lokan estate). Chemical mixing was not recorded on 10/10/2017 & 13/10/2017 for Garlon, and 13/10/2017 & 19/10/2017 for Dewana. (Bukit Mas estate). Chemical mixing was not recorded on 10/10/2017 for Basta. (Tagas estate) Incorrect amount of calcium hypochloride (chlorine) was added to the water treatment process, example: for the month of October, 7.73 gm was added everyday instead of 800 gm. (Lokan estate) Indicator 2 Where oil palm is grown within permitted - Appropriate terracing The formulations for chemical mixing could be improved by indicating the different type of chemicals that need to be mixed for each type of weeds. For slope areas and terrace cultivation planting of MSPO-F05b / Rev 2 Page 76 of 86

120 / No levels on sloping land, appropriate soil conservation measures shall be implemented to prevent both soil erosion as well as siltation of drains and waterways. Measures shall be put in place to prevent contamination of surface and groundwater through runoff of either soil, nutrients or chemicals. - Planting of legume cover crops - In the case of Sabah, no replanting on slopes of 25 degrees and above unless specified in the EIA report and approved by the Environmental Protection Department (EPD). - In the case of Sarawak, no replanting on steep slopes unless specified in the EIA report and approved by the Natural Resources and Environment Board (NREB). cover crops such as legume and fronds stacking for soil erosion control. Nephrolepis Biserrata, soft grass is planted to control erosion. Soil conservation and terracing - HSPHB OPAP No 3 amended July 2009 Classification of slope according to Sabah legislation slope of 25 degrees or steeper are considered as high risk erosion areas and cannot developed for new planting unless specified in the EIA report and approved by relevant authorities. For Sabah areas of 100 ha to 500 ha are subject to approval of mitigation measure which is stated in SOP for soil conservation and terracing dated 01/04/1994 and revised in July The estate applies 3 methods for soil organic matter preservation for the upkeep of mature oil palms. Ref no HSPHB OPAP No 9 date: 01/04/1994 and revised: Jan Vegetation maintain in inter-row to minimise soil erosion, improve soil physical properties and organic status example legume cover crop (LCC), Nephrolepis bisserata and paspalum conjugatum) and other soft grasses. 2. Palm Platforms for soil erosion, fertilizer washoff and facilitate harvesting and fruit collection. 3. EFB application to maintain the moisture for the soil and erosion. Practices that maintain or enhance soil fertility to ensure sustained yield is contained in OPAP 3, OPAP 11 and OPAP 12. MSPO-F05b / Rev 2 Page 77 of 86

121 / No Actual fertilizer application was sighted and reviewed. Monthly monitoring by estate managers. The estate has records by each block and each division. The fertiliser program is based on the Agronomic Advisory estates visit., For this year Agronomic Advisory visit was carried out as follows: Example: 1. Bkt Mas Estate: 08/02/ /02/ Northbank Estate: 22/05/ /05/ Tagas Estate: 08/06/ /06/ Indicator 3 A visual identification or reference system shall be established for each field. - Block marking. 4. Lokan Estate: 14/03/ /03/2017 Site visits could observe the block marking was visible and put up at road junction of each block. Each of the estate has the block number and division for easy daily operation planning and operations. Bukit Mas Estate The estate has 4 Divisions A, B, C & D and has established block marking in the map and on site. Northbank Estate The estate has 4 Divisions 1, 2, 3 & 4 and has established block marking in the map and on site. Tagas Estate The estate has 3 Divisions A, B, C and has established block marking in the map and on site. Lokan Estate MSPO-F05b / Rev 2 Page 78 of 86

122 / No Criterion 2 Economic and financial viability plan The estate has 4 Divisions A, B, C, D and has established block marking in the map and on site Indicator 1 A documented business or management plan shall be established to demonstrate attention to economic and financial viability through long-term management planning. - Operational plan for at least 2 years. - Refer to A 5 years financial projection from 2018 to 2022 is established by estate covering all aspects of estate operations such as FFB yield per ha and per mt that includes CPO & PK, CAPEX. Example: Indicator 2 Where applicable, an annual replanting programme shall be established. Long term replanting programme should be established and review annually, where applicable every 3-5 years. - Long-term replanting programme. A 5 years financial projection from 2018 to 2022 is established covering all aspects of the estate activities such as crop yield, crop output per ha, etc., for audited estates were sighted and reviewed. The management has established annual and long term replanting program for year was sighted and reviewed. Example: Re-planting programme. Year of replanting Re-Planting area Ha in each estate Estate Bukit Mas Northbank Tagas Lokan Indicator 3 The business or management plan may contain: - Review of the business plan for the last 2 years performance. a. Attention to quality of planting materials Hap Seng Plantations Group MSPO-F05b / Rev 2 Page 79 of 86

123 / No and FFB Hap Seng Plantations group do not used GMO seeds. Records on seeds purchased and planting material origin were reviewed (including name of breed, vendor, location, date of application and quantity per area). Document check on existing certificates, label tags on seeds packaging. On-site verification and discussion with plantation managers on the choice for planting or grafting material. b. Crop projection: site yield potential, age profile, FFB yield trends.contracts and delivery notes of seeds suppliers are reviewed. The suppliers are Applied Agricultural Resources Sdn Bhd and Sime Darby Seeds and Agricultural Sdn Bhd. Example: Borang Akuan Jualan dan Penerimaaan Bahan Tanamanan Akta 582 Serial AA dated 15/06/2017 purchased from Applied Agricultural Resources for Northbank Estate Lokan estate Borang Akuan Jualan dan Penerimaaan Bahan Tanamanan Akta 582 Serial AA dated 20/09/2016 purchased from Applied Agricultural Resources Sdn Bhd The management has a crop projection for the 5 years from based on age profile and yield trends. c. Cost of production: cost per tonne of FFB The cost per ton of FFB and cost per HA is included in the business plan. A monthly progress report with comparison against the budget planning is sighted at the audited estates MSPO-F05b / Rev 2 Page 80 of 86

124 d. Price forecast / No e. Financial indicators: cost benefit, discounted cash flow, return on investment The price forecast per ton of FFB is included in the 5 years financial projection plan and updated. The financial budget plan includes the relevant financial indicators Indicator 4 The management plan shall be effectively implemented and the achievement of the goals and objectives shall be regularly monitored, periodically reviewed and documented. Monthly management and/or progress reports The management plan is implemented. Copies of financial budget were sighted and reviewed at the audited estates. The estate has to submit a monthly estate progress report to the management Criterion 3 Transparent and fair price dealing Indicator 1 Pricing mechanisms for the products and other services shall be documented and effectively implemented. - Monthly estate accounts. - Sales and purchase agreement and/or contract. The estates and mills are subsidiaries of Hap Seng Plantations group. Therefore, there is no purchase agreement Indicator 2 All contracts shall be fair, legal and transparent and agreed payments shall be made in timely manner. - Evidence of payment - Credit terms. - Fair Period of payment. Refer above Criterion 4 Contractor Indicator 1 Where contractors are engaged, they shall understand the MSPO requirements and shall provide the required documentation and information Indicator 2 The management shall provide evidence of agreed contracts with the contractor. - Contract agreement with special clause on MSPO indication, and/or self-declaration by the contractor to oblige regards to MSPO requirements (standardize form). - Briefing to the contractor with regards to MSPO. Since the company has their own workers for the estates operations and FFB transportation. They do not hired contractors for field work and transportation. Since the company has their own workers for the estates operations and FFB evacuation. They do not hired contractors for field work and transportation. MSPO-F05b / Rev 2 Page 81 of 86

125 Indicator 3 The management shall accept MSPO approved auditors to verify assessments through a physical inspection if required. (MINOR) Indicator 4 The management shall be responsible for the observance of the control points applicable to the tasks performed by the contractor, by checking and signing the assessment of the contractor for each task and season contracted. 4.7 Principle 7 Development of new planting Criterion 1 High biodiversity value Indicator 1 Oil palm shall not be planted on land with high biodiversity value unless it is carried out in compliance with the National and/or State Biodiversity Legislation Indicator 2 No conversion of Environmentally Sensitive Areas (ESAs) to oil palm as required under Peninsular Malaysia s National Physical Plan (NPP) and the Sabah Forest Management Unit under the Sabah Forest Management License Agreement. For Sabah and Sarawak, new planting or replanting of an area 500ha or more requires an EIA. For areas below 500ha / No - Interview of contractors. Therefore, no evidence of contract. - Contractor auditable - Site visit of contractor premises if applicable. - Work completion certificate or reports. - EIA - Refer to neighbouring estates ( ) - National and/or State Biodiversity Policy - Soil map - Carbon stock analysis (if available) - EIA - Proposal for Mitigation Measures (PMM) (concise list of requirements relevant to environmental protection) Hap Seng Plantations Group appointed TUV NORD Malaysia the accredited CB to conduct their MSPO certification. Since the company have their own workers for the estate operations for harvesting, upkeep and cultivation, manuring and FFB evacuation no contracts for these activities. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. Estate Ha planted in 2014 Tomanggong estate Batangan Estate Lokan estate Lutong estate Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. MSPO-F05b / Rev 2 Page 82 of 86

126 4.7.2 Criterion 2 Peat land / No but above 100ha, a Proposal for Mitigation Measures (PMM) is required Indicator 1 New planting and replanting may be developed and implemented on peat land as per MPOB guidelines on peat land development or industry best practice. - Refer to Akta Perlindungan Alam Sekitar New Planting -Evidence of water management programme/ plan. Water level maintenance. Replanting -Existing companies or group best practice management is acceptable. -Refer to Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. Examine records on water level management Criterion 3 Social and Environmental Impact Assessment (SEIA) Indicator 1 A comprehensive and participatory social and environmental impact assessment shall be conducted prior to establishing new plantings or operations. - SEIA report. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit Indicator 2 SEIAs shall include previous land use or history and involve independent consultation as per national and state regulations, via participatory methodology which includes external stakeholders. - SEIA report. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit Indicator 3 The results of the SEIA shall be incorporated into an appropriate management plan and operational - Review development plan Plantation last new planting was in No additional planting has been conducted therefore this MSPO-F05b / Rev 2 Page 83 of 86

127 / No procedures developed, implemented, monitored and reviewed Indicator 4 Where the development includes smallholder schemes of above 500ha in total or small estates, the impacts and implications of how each scheme or small estate is to be managed should be documented and a plan to manage the impacts developed, implemented, monitored and reviewed. (MINOR) Criterion 4 Soil and topographic information Indicator 1 Information on soil types shall be adequate to establish the long-term suitability of the land for oil palm cultivation. - Details as per requirement of SEIA report. - Government soil map is accepted for approval for planting. - Subsequently a more details soil survey is required. is not applicable at the time of audit. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit Indicator 2 Topographic information shall be adequate to guide the planning of planting programmes, drainage and irrigation systems, roads and other infrastructure. - Government topography map is accepted. - Any company GIS ground verification can be accepted Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit Criterion 5 Planting on steep terrain, marginal and fragile soil Indicator 1 Extensive planting on steep terrain, marginal and fragile soils shall be avoided unless permitted by local, state and national laws. - Refer to EIA report. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. MSPO-F05b / Rev 2 Page 84 of 86

128 Indicator 2 Where planting on fragile and marginal soils is proposed, plans shall be developed and implemented to protect them and to minimize adverse impacts (e.g. hydrological) or significantly increased risks (e.g. fire risk) in areas outside the plantation Indicator 3 Marginal and fragile soils, including excessive gradients and peat soils, shall be identified prior to conversion Criterion 6 Customary land Indicator 1 No new plantings are established on recognised customary land without the owners free, prior and informed consent, dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions Indicator 2 Where new plantings on recognised customary lands are acceptable, management plans and operations should maintain sacred sites. (MINOR) Indicator 3 Where recognized customary or legally owned lands have been taken-over, the documentary proof of the transfer of rights and of payment or provision of agreed compensation shall be made available. / No - Refer to EIA and development plan. - Soil suitability map and management blocking. - Refer to Review management plan. - Evidence of land use rights and payment made. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit.. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. MSPO-F05b / Rev 2 Page 85 of 86

129 Indicator 4 The owner of recognised customary land shall be compensated for any agreed land acquisitions and relinquishment of rights, subject to their free prior informed consent and negotiated agreement Indicator 5 Identification and assessment of legal and recognised customary rights shall be documented Indicator 6 A system for identifying people entitled to compensation and for calculating and distributing fair compensation shall be established and implemented Indicator 7 The process and outcome of any compensation claims shall be documented and made publicly available Indicator 8 Communities that have lost access and rights to land for plantation expansion should be given opportunities to benefit from the plantation development (MINOR) / No - Refer to land use rights document. - Terms and condition on NCR compensation system. - Company compensation procedures. - Court settlement (in cases of disagreement). - Go for public search. - On-going cases shall be recognized. - Owners have to prove rightful ownership. - Employment priority given to them. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit.. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit.. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. Plantation last new planting was in No additional planting has been conducted therefore this is not applicable at the time of audit. MSPO-F05b / Rev 2 Page 86 of 86