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

Transcription

1 Certification Audit for PT. PP London Sumatera Indonesia Tbk. Begerpang Mill and Its Supply Base FMS40033 RSPO Membership number: RSPO Member Name: PT. PP London Sumatra Indonesia Tbk Audited Address: Begerpang Mill: Batu Lokong Village, Galang District, Deli Serdang Regency, North Sumatera Indonesia Its supply bases: Begerpang Estate: Batu Galang Village, Galang District, Deli Serdang Regency, North Sumatera Indonesia Sei Merah Estate: Tanjung Morawa, Deli Serdang Regency, North Sumatera Indonesia Rambong Sialang Estate: Sei Rampah District, Serdang Bedagai Regency, North Sumatera Indonesia Date of audit: 05/04/2014 COMMERCIAL- IN CONFIDENCE I The contents of this report must not be disclosed to a third party without the agreement of the SAI Global Client Doc ID: 3843 / Issue Date May 2014 SAI Global Limited Copyright ABN Page 1 of 218

2 Table of contents Page Executive Overview 4 Abbreviations Used SCOPE OF THE ASSESSMENT 1.1 Introduction Audit Objective Scope of Certification Palm Oil Mill Oil Palm Estate Location of Mill and Estates Description of Supply Base Date of Plantings Area of Plantation Approximate Tonnages Offered for Certification (CPO and PK) Other Certificates Held Organisational Information/Contact Person Time Bound Plan for Other Management Units Partial Certification Requirements Date of Issue of Certificate dan Date of Previous Assessment AUDIT PROCESS 2.1 Certification Body Audit Methodology Pre-audit Certification Audit Qualification of the Lead Auditor and Audit Team Members Stakeholder Consultation Date of Next Surveillance Visit AUDIT FINDINGS 3.1 Action taken on previous audit issues Claim and use of certification mark and or logo Description of audit findings RSPO Principle and Criteria, Indonesian National Interpretation Mill Supply Chain Requirements Supply Chain Certification Standard Supply Chain Certification System Recommendation Environmental and social risk for this scope of certification for 162 planning of the surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of 162 Assessment Findings List of Tables Page 1 Mill and Estates GPS Locations included in certification assessment 8 2 FFB Production of the supply base 17 3 Estate Age Profiles of Planted Palms 17 4 Land use description of Begerpang, Sei Merah and Rambong 18 Sialang Estate in Estates and Area Planted Begerpang, Sei Merah and Rambong Sialang Estate FFB Production Trend Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 2 of 218

3 7 Actual Production Figure Mill production of Certified Products (CPO and Kernel), actual 21 volume since date of last reporting period (2013) 9 Estimated of production of FFB, CPO and PK Certificates Held by Mill and Estates RSPO Certification Time Bound Plan List of internal and external stakeholder 29 List of Figures Page 1a-d2 Map of Mill and Estates Location 9-16 List of Appendices Page A Audit Record 163 B Previous nonconformities, corrective actions and status 166 C Nonconformities, Corrective Actions and Observations 169 Summary D Stakeholder s issues and comment 215 E Definition of, and action required with respect to audit findings 218 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 3 of 218

4 Executive Overview SAI Global has audited Begerpang Mill PT. PP London Sumatera Indonesia Tbk. and its supply bases operations comprising one mill, three oil palm estates, support services and infrastructure. 16 Major Nonconformities were identified during this certification audit. Follow up audit was conducted on 24 th of June and 17 th of September 2014 to review the corrective action taken to the Major Nonconformities and objective evidences reviewed that Major Nonconformities could be closed out. At the conclusion of this audit, Begerpang Mill PT. PP London Sumatera Indonesia Tbk. and its supply bases operation was found complies with the requirements of the National Interpretation of RSPO Principles and Criteria for Sustainable Oil palm Production, Republic of Indonesia, May 2008 and the RSPO Supply Chain Certification System, November 2011 and RSPO Supply Chain Certification Standard, Module D CPO Mill: Module D Segregation November Previously PT. PP London Sumatera Indonesia Tbk. Begerpang Mill was certified to National Interpretation of RSPO Principles and Criteria for Sustainable Oil palm Production, Republic of Indonesia, May 2008 and the RSPO Supply Chain Certification System, November 2011 and RSPO Supply Chain Certification Standard, Module D CPO Mill: Module D Segregation November 2011 by PT. TUV NORD Indonesia (Certificate # TNI RSPO , expiry date 29 th of April 2014). Last surveillance audit was performed on 16 th 17 th of September The report indicated that there were major and minor non-conformances and the report mentioned that all non-conformances have been corrected. The reason of moving to SAI Global was for refreshment and late report from the previous Certification Body. The recommendation from this audit is that certificate can proceed for PT. PP London Sumatera Indonesia Tbk. Begerpang Mill as a producer of RSPO Certified Sustainable Oil palm and Palm Kernel Segregation Model. Estimated tonnage of certified CPO produced Estimated tonnage of certified PK produced 66, MT 16, MT Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 4 of 218

5 Abbreviations Used AK3U AMDAL AME BHL BKM BLH BLRS BOD BPN COD CPO CSR DO EFB EMS EWS FFB GAPKI GPS Ha HCV HGU GHG HIPERKES HO IDN IPM ISCC ISO ISPO Jamsostek Kepmen KTU LA LD Lonsum LSU LTI MCU MSDS MT NCR NGO OER OHS OHSAS P2K3 P&C PEL Occupational Health and Safety Expert (Ahli K3 Umum) Environmental Impact Analysis (Analisis Dampak Lingkungan) Area Manager Engineering Daily worker (Buruh Harian Lepas) Log book of group leader activity (Buku Kegiatan Mandor) Environmental Agency (Badan Lingkungan Hidup) Bah Lias Research Biological Oxygen Demand National Land Agency (Badan Pertanahan Nasional) Chemical Oxygen Demand Crude Palm Oil Corporate Social Responsibility Delivery Order Empty fruit bunch Environmental Management System Early Warning System Fresh Fruit Bunch Indonesian Palm Oil Association (Gabungan Pengusaha Kelapa Sawit Indonesia) Global Positioning System Hectare High Conservation Value Land Use Title (Hak Guna Usaha) Green House Gases Industrial Hygienist Head Office Indonesia Integrated Pest Management International Sustainability Carbon Certification International Standards Organisation Indonesia on Sustainable Palm Oil Man Power Social Assurance (Jaminan Sosial Tenaga Kerja) Degree of Man Power Ministry (Keputusan Menteri Tenaga Kerja) Head of Administration (Kepala Tata Usaha) Land Application Lethal Dosage London Sumatera Leaf Sampling Unit Loss Time Incident Medical Check-Up Material Safety Data Sheet Metric Ton Non Conformance Report Non-Government Organisation Oil Extraction Rate Occupational Health and Safety Occupational Health and Safety Assurance Services OHS Committee Principle and Criteria Environmental Evaluation Presentation (Penyajian Evaluasi Lingkungan) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 5 of 218

6 Permen/Permenaker Regulation of Man Power Ministry (Peraturan Menteri Tenaga Kerja) Permentan Regulation of Agricultural Ministry (Peraturan Menteri Pertanian) PK Palm Kernel PKB Joint Working Agreement (Perjanjian Kerja Bersama) PKWT Contracted worker (Pekerja Waktu Tertentu) POM Palm Oil Mill POME Palm Oil Mill Effluent PP Government Regulation (Peraturan Pemerintah) PPE Personal Protective Equipment PUK Caretaker Unit (Pengurus Unit Kerja) QC Quality Control R&D Research and Development RABQSA Quality Society of Australia RKH Daily Work Plan (Rencana Kerja Harian) RKL Environmental Management Plan (Rencana Pengelolaan Lingkungan) RPL Environmental Monitoring Plan (Rencana Pemantauan Lingkungan) RSPO Roundtable on Sustainable Palm Oil SCCS Supply Chain Certification System SG Segregation SIA Social Impact Assessment SIO Operator Lisence (Surai Ijin Operasi) SMK3 Occupational Health and Safety Management System (Sistem Manajemen Kesehatan dan Keselamatan Kerja) SPSI Indonesian Worker Union (Serikat Pekerja Seluruh Indonesia) SOP Standard Operational Procedure UKL Environmental Management Effort (Upaya Pengelolaan Lingkungan) UPL Environmental Monitoring Effort (Upaya Pemantauan Lingkungan) Walhi (Wahana Lingkungan Hidup Indonesia) WWF World Wild Fund WWTP Waste Water Treatment Plant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 6 of 218

7 1.0 SCOPE OF THE ASSESSMENT 1.1 Introduction SAI Global conducted an audit of PT. PP London Sumatera Indonesia Tbk. Begerpang Mill and Its Supply Base on 01/04/2014 to 05/04/2014 with Major Nonconformities identified. Follow up audit has been conducted on 24 June and 17 September 2014 for verification of corrective action taken by the organisation. The purpose of this audit report is to summarise the degree of compliance with the relevant criteria, as defined on the cover page of this report, based on the evidence obtained during the audit of your organisation. SAI Global audits are carried out within the requirements of SAI Global procedures which also reflected the requirements and guidance provided in the international standards relating to audit practice such as ISO/IEC 17021, ISO 19011, RSPO Certification System, relevant RSPO Supply Chain Certification System and other normative criteria. SAI Global Auditors are assigned to audits according to industry, standard or technical competencies appropriate to the organisation being audited. Details of such experience and competency are maintained in our records. The audit team is detailed in the attached audit record. In addition to the information contained in this audit report, SAI Global maintains files for each client. These files contain details of organisation size and personnel as well as evidence collected during preliminary and subsequent audit activities (Documentation Review and Scope) relevant to the application for initial and continuing certification of your organisation. Details of your primary contact persons and their contact details and site addresses are also maintained. Please take care to advise us of any change that may affect the application/certification or may assist us to keep your contact information up to date, as required by SAI Global Terms and Conditions. Please note that this report is subject to independent review and approval. Should changes to the outcomes of this report be necessary as a result of the review, a revised report will be issued and will supersede this report. 1.2 Audit Objective This is initial (certification) audit. The purpose of this audit was to determine compliance of your organisation s management system with the audit criteria (National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production, Republic of Indonesia, May 2008 and the RSPO Supply Chain Certification System, November 2011 and RSPO Supply Chain Certification Standard, Module D CPO Mill: Module D Segregation November 2011) and its effectiveness in achieving continual improvement and system objectives. It was also to verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers, and the implementation of any processing controls (for example, if segregation is used) 1.3 Scope of certification The scope of certification is the CPO production from one (1) Palm Oil Mill and three (3) FFB supply base owned by PT. PP London Sumatera Indonesia Tbk. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 7 of 218

8 1.3.1 Palm Oil Mill Begerpang Mill PT. PP London Sumatera Indonesia Tbk. Location: Batu Lokong Village, Galang District, Deli Serdang Regency, North Sumatera Indonesia GPS Location: East 98 o North 3 o Mill capacity: 50 MT FFB/hour Oil Palm Estate 1. Begerpang Estate PT. PP London Sumatera Indonesia Tbk. Location : Galang District, Deli Serdang Regency, North Sumatera Indonesia GPS Location : East 98 o North 3 o Sei Merah Estate PT. PP London Sumatera Indonesia Tbk. Location : Tanjung Morawa, Deli Serdang Regency, North Sumatera Indonesia GPS Location : East 98 o North 3 o Rambong Sialang Estate PT. PP London Sumatera Indonesia Tbk. Location :Sei Rampah District, Serdang Bedagai Regency, North Sumatera Indonesia GPS Location : East 99 o North 3 o Location of mill and estates PT. PP London Sumatera Indonesia Tbk. mill and estates are located in North Sumatera Province, Indonesia. The geographical coordinate of the mill and estates are shown on Table 1. Table 1: Mill and Estates GPS Locations included in certification assessment MILL AND ESTATE EASTING NORTHING Begerpang Mill 98 o o Begerpang Estate 98 o o Sei Merah Estate 98 o o Rambong Sialang Estate 99 o o Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 8 of 218

9 Figure 1a Map of Mill and Estates Location Source: Lonsum, April 2014 Note: BGE Begerpang Estate RSE Rambong Sialang Estate SME Sei Merah Estate Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 9 of 218

10 Figure 1b-1 Map of Bagerpang Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 10 of 218

11 Figure 1b-2 Map of Bagerpang Estate Source: Lonsum April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 11 of 218

12 Figure 1b-3Map of Bagerpang Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 12 of 218

13 Figure 1c Map of Sei Merah Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 13 of 218

14 Figure 1d-1 Map of Rambong Sialang Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 14 of 218

15 Figure 1d-2 Map of Rambong Sialang Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 15 of 218

16 Figure 1d-1 Map of Rambong Sialang Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 16 of 218

17 1.5 Description of supply base The FFB source is three (3) organisation owned by PT. PP London Sumatera Indonesia Tbk. and no FFB from the third party. The hectarage and FFB production of the plantation is shown on Table 2. Table 2: FFB Production of the supply base ESTATE PLANTED AREA (HA) FFB (TON/YEAR) (BUDGET 2014) Begerpang Estate 5, , Sei Merah Estate 1, , Rambong Sialang Estate 4, , Total 11, , Source: Lonsum, April Date of plantings Table 3: Estate Age Profiles of Planted Palms 2014 Year Begerpang Estate Sei Merah Estate Rambung Sialang Total % of Planted Area , *) *) *) 1, , *) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 17 of 218

18 Year Begerpang Estate Sei Merah Estate Rambung Sialang Total % of Planted Area 2009*) *) *) Total Mature 4, , , , *) 113, *) Total Immature Total 5, , , , Source: Lonsum, September 2014 Note: *) replanting 1.7 Area of plantation The areas details for organisation owned estates are shown on Table 5. Review of estate boundary maps was done. The organisation objections to send estate boundary maps due law of Republic of Indonesia #4/2001 mentioned that boundary maps was only organised by the organisation for their own interest and cannot disseminated. Table 4: Land use description of Bagerpang, Sei Merah and Rambong Sialang Estate in 2014 AREA BAGERPANG ESTATE SEI MERAH ESTATE HECTARES RAMBONG SIALANG ESTATE TOTAL Mature area 4, , , , Immature area Total area planted 5, , , , Emplacement and Mill Other area (enclave, water ponds, land with slope >30%) Total leased area 5, , , , HCV Area (included in planted area Source: Lonsum, September 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 18 of 218

19 Table 5: Estates and Area Planted 2014 ESTATE MATURE (HA) IMMATURE (HA) Begerpang Estate 4, Sei Merah Estate 1, Rambong Sialang Estate 4, Source: Lonsum, September Approximate tonnages offered for certification (CPO and PK) Approximate tonnages offered for certification is estimated based on the organisation last three years actual FFB production of Begerpang, Sei Merah and Rambong Sialang Estate as well as last year CPO and PK, OER and KER of Begerpang Mill. The OER and KER of each supply bases were estimated based on laboratory analysis. The projection of FFB production in 2014 taken into account increase productivity of oil palm planted in year , which estimated around 6 7%. Table 6: Begerpang, Sei Merah and Rambong Sialang Estate FFB Production Trend YEAR Actual Production (MT) Begerpang Sei Merah Rambong Total Estate Estate Sialang Estate , , , , ,00 42, , , , , , , Source: Lonsum, November 2014 Table 7: Actual Production Figure 2013 Supply Base FFB Processed (MT) CPO Production (MT) Actual production 2013 Begerpang Estate* 95, , OER (%) PK Production (MT) 5, Sei Merah Estate* 37, , , ** Rambong Sialang Estate* 117, , , Total 250, , , Estimate production 2014 Begerpang Estate 106, , , Sei Merah Estate 40, , , KER (%) 6.24** 6.10 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 19 of 218

20 Rambong Sialang Estate 120, , , Total 266, , , Source: Lonsum, November 2014 *Detail see Table 8 ** Based on laboratory analysis The FFB from Begerpang, Sei Merah and Rambong Sialang Estate are processed without FFB from other supply based, therefore Begerpang Mill used RSPO Supply Chain Segregation Model Module D. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 20 of 218

21 Table 8: Actual Begerpang Mill Production of CPO and PK derived from Begerpang Estate, Sei Merah Estate and Rambong Sialang Estate FFB in 2013* FFB Production (ton) Palm Oil (MT) PK (MT) Month Begerpang Sei Rambong Total Begerpang Sei Rambong Total Begerpang Sei Rambong Total Merah Sialang Merah Sialang Merah Sialang January 6, , , , , , , , February 6, , , , , , , , March 6, , , , , , , , April 6, , , , , , , , May 6, , , , , , , , June 9, , , , , , , , July 9, , , , , , , , August 7, , , , , , , , September 11, , , , , , , , , October 8, , , , , , , , November 7, , , , , , , , December 8, , , , , , , , Total 95, , , , , , , , , , , , Source: PT. Lonsum, November 2014 *Begerpang, Sei Merah and Rambong Sialang Estate are the certified FFB sources Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 21 of 218

22 Table 9: Estimated Begerpang Mill Production of CPO and PK derived from Begerpang Estate, Sei Merah Estate and Rambong Sialang Estate FFB in 2014* FFB Production (ton) Palm Oil (MT) PK (MT) Month Begerpang Sei Rambong Total Begerpang Sei Rambong Total Begerpang Sei Rambong Total Merah Sialang Merah Sialang Merah Sialang January 6, , , ,91 1, , , , February 6, , , , , , , March 8, , , , , , , , April 7, , , , , , , , May 7, , , , , , , , June 9, , , , , , , , July 9, , , , , , , , August 9, , , , , , , , September 12, , , , , , , , October 10, , , , , , , , November 9, , , , , , , , December 10, , , , , , , , , Total 106, , , , , , , , , , , , Source: PT. Lonsum, November 2014 *Begerpang, Sei Merah and Rambong Sialang Estate are the certified FFB sources Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 22 of 218

23 Based on the above figures, the estimated of certified CPO and PK offered in 2014 Segregation Model for certification are: Estimated tonnage of certified CPO produced Estimated tonnage of certified PK produced 66, MT 16, MT 1.9 Other certificates held Table 10: Certificates Held by Mill and Estates MILL/ESTATE Begerpang Mill, Begerpang Estate, Rambong Sialang Estate, dan Sei Merah Estate. OTHER CERTIFICATION HELD OHSAS 18001:2007, certificate BA from Intertek, expired: 31 October 2014 SMK3, certificate 199/177/2011 from Sucofindo, expired 4May 2016 RSPO Supply Chain Certification System, November 2011 and RSPO Supply Chain Certification Standard, Module D CPO Mill: Module D Segregation November 2011, certificate #TNI RSPO , expiry date 29 April 2014 Source: Lonsum, May Organizational information/contact person PT. PP London Sumatera Indonesia Tbk. Jl A. Yani No.2 Medan Phone : (+62-61) Fax : (+62-61) Contact person : Mr Muhammad Waras Head of Environment and CSR Coordination Department Muhammad.Waras@londonsumatra.com 1.11 Time bound plan for other management units PT. PP London Sumatera Indonesia Tbk. is committed to RSPO certification of all its Management Units located in North Sumatera, South Sumatera and East Kalimantan. Time bound plan has been developed to achieve the RSPO certification for all its Management Units by There were some changes from the previous time bound plan due to several requirements of Management Units have not been ready (e.g. building of temporary storage of hazardous waste, permits have not been finished yet) and according to readiness of Unit Management. SAI Global agreed with the changing. The time bound plan is realistic and challenging. The plan is detailed on Table 11. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 23 of 218

24 Table 11: RSPO Certification Time Bound Plan Name of Mill Gunung Bais Arta Kencana Belani Elok Sei Lakitan Terawas Indah Mill Address Musi Rawas, Sumatera Selatan Lahat, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Name of Supply Base Plantation Gunung Bais Arta Kencana Kencana Sari Belani Elok Bukit Hijau Batu Cemerlang Ketapat Bening Sei Kepayang Sei Lakitan Sei Gemang Estate Address Musi Rawas, Sumatera Selatan Lahat, Sumatera Selatan Lahat, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Sei Punjung*) Banyuasin Bangun Musi Harjo*) Banyuasin Suka Bangun*) Musi Banyuasin Terawas Musi Indah**) Rawas, Proposed Time for Certificati on December 2011 December 2012 December 2013 December 2014 Revised Time Bound Plan December 2015 Remarks 2015 Audit in May Final audit 2015 Audit in May Audit in May 2015 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 24 of 218

25 Name of Mill Pahu Makmur Mill Address Selatan Kutai Barat, Kalimantan Timur Name of Supply Base Plantation Pahu Makmur Isuy Makmur Kedang Makmur*) Source: Lonsum, September 2014 Note: *) still development **) Terawang Estate only for seeding estate Estate Address Sumatera Selatan Kutai Barat, Kalimantan Timur Kutai Barat, Kalimantan Timur Kutai Barat, Kalimantan Timur Proposed Time for Certificati on December 2016 Revised Time Bound Plan Remarks 2015 Audit in November Partial Certification Requirements There was no evidence that the management units that have not been certified replace primary forests or any area identified as containing High Conservation Values (HCVs) into oil palm plantations, and have land conflicts, labour disputes and legal non-compliance. Major non-conformance against partial certification requirements was issued (NCR ). Major Non-conformance NCR There was no evidence that uncertified management unit complied with partial certification requirements regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs), land conflicts, labour disputes and legal noncompliance. Major Non-conformance NCR closed. The Environmental and CSR Staff of organisation conducted the internal audit and reviewing regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3, land conflict, labour disputes and legal noncompliance to all management units which have not been certified to ensure that partial certification requirements were fulfilled in July October Site visit was conducted by the organisation for ensuring compliance against partial certification requirements according to RSPO Certification System clause 4.2.4: 1. Arta Kencana Estate on 21 July Kencana Sari Estate on 23 July Pahu Makmur Estate on 10 September Isuy Makmur Estate on 10 September Riam Indah Estate on 22 October Sei Gemang Estate on 23 October Sei Lakitan on 25 October Sei Punjung on 24 October Gunung Bais Estate on 29 October 2013 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 25 of 218

26 Based on the reviewing it was concluded that: 1. There was no new planting since January 2010 so there was no replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion There were no land conflict and labour disputes. 3. There was no non-compliance with regulations Date of issue of certificate and date of previous assessment Date of issue of certificate will be the date on approval of this Assessment Report after Peer Reviewed. 2.1 Certification body 2.0 AUDIT PROCESS PT. SAI Global Indonesia Graha Iskandarsyah, 4 th floor Jl. Iskandarsyah Raya No. 66 C Kebayoran Baru, Jakarta 12160, Indonesia Phone : , Fax : Contact person : Ms Inge Triwulandari Technical Manager inge.triwulandari@saiglobal.com SAI Global is one of the world s leading business providers of independent assurance. SAI Global provides organisations around the world with information services and solutions for managing risk, achieving compliance and driving business improvement. We provide aggregated access services to Standards, Handbooks, Legislative and Property publications; we audit, certify and register your product, system or supply chain; we facilitate good governance and awareness of compliance, ethics and policy issues and provide training and improvement solutions to help individuals and organisations succeed. The SAI Global business is driven by two equally important client needs - the mandated need for organisations to conform to regulations, standards and legislation in all their locations, and the operational need for organisations to improve business processes and procedures as well as corporate culture. As we are a global company, we can meet these needs for any client - those operating within one country's borders and in one language or those operating across borders and in many languages. There are three business units/divisions within SAI Global namely the Information Services Division, the Compliance Division, and the Assurance Division. The Assurance Division helps organisations manage risk, achieve process or product certification and drive improvement by providing training, registration audits and supplier management programs that can improve business performance. We provide independent audits, assessments and certification of your Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 26 of 218

27 products or business processes to ensure they comply with industry standards or customer specific requirements. We understand how compliance with those standards can improve the efficiency, economy and profitability of your operation. With auditing and assessment staff located around the world, our clients include large global corporations as well as single site organisations. 2.2 Audit methodology Pre-audit SAI Global planned the stage 2 certification audit based on review of the data given during stage-1 ISPO audit including: stakeholder, land title, etc. on 27 November SAI Global has already communicated with RSPO Secretariat and ASI and it was confirmed that stage-1 is not mandatory under RSPO Certification System Certification audit The Certification Audit was performed on 1 st 5 th of April 2014 integrated with ISPO Peraturan Menteri Pertanian #19/Permentan/OT.140/3/2011. The audit programme was included in the body of report. Audit was conducted in Begerpang Mill and two supply bases (Begerpang Estate and Rambong Sialang Estate). One supply base (Sei Merah Estate) was not audited. Sample taken was based on minimum sample of 0.8 y and based on result of risk assessment in Stage 1 audit, there were no potential risk regarding environmental and social in Sei Merah Estate (RSPO Certification system and 4.2.8). The audit methodologies for collection of objective evidences are site inspection, documentation and record review and interview with staffs, workers, and other stakeholders. Objective evidences from documentation/record review in one area may also be cross checked with other objective evidences in other areas and with the evidence of implementation on site during the audit. Inputs from stakeholders via letter, , or other communication media were also considered for this certification audit. Audit plan is available in Appendix A of this report on page Qualification of the lead auditor and audit team member Ria Gloria Lead Auditor Ria Gloria graduated with Bachelor of Chemical Engineering from Bandung Institute of Technology in She has working experience as Environmental Consultant for many years. She has completed ISO (1995), ISO 9001 (2004), RSPO P&C (2009) lead auditor training courses, RSPO SCCS (2010) and ISPO (2012) lead auditor training courses. For the last 9 years she has been involved in quality (ISO 9001) and environmental (ISO 14001) management system audits for very broad industrial and in the oil palm sector since 2003 for several plantations and mills. She has received training for good agricultural practices including integrated pest management and high conservation value ( ). She was assigned to audit environmental aspect and RSPO SCC. Anwarsyah Harahap Audit Team Member Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 27 of 218

28 Anwarsyah Harahap graduated with Bachelor of Natural Forest Resource Conservation from Bogor Agriculture Institute in He has working experience as biodiversity researcher at oil palm plantation on Since 2008 to 2013, He has working experiences in oil palm plantation on Sumatra as a team member of sustainable certification task force (such as: Biodiversity and HCV management, RSPO, ISCC, ISO and ISPO) and his last position as a sustainable and Environment Officer. He has completed ISO 9001 (2013), ISO (2013), RSPO (2013) and ISPO (2013) lead auditor training courses. He was also as an OSH auditor accredited by Labour and Transmigration Ministry of Indonesian (SMK3 Auditor based on PP No.50/2012). He was assigned to audit social aspect and HCV. Edy Widodo Audit Team Member Edy Widodo graduated with bachelor of the Faculty of Agriculture, Department of Agricultural Technology, University of Padjadjaran, Bandung. Earlier he worked as an Assistant Estates Manager in PT SMART Tbk. (1999 to 2005). He joined SAI Global in 2013 as a Lead Auditor for ISO 9001: He has working experience in the industrial sector and audit Plantation, and also the processing industry and agricultural mechanization. He is also the ISPO auditor who has obtained a certificate from the ISPO Commission, Ministry of Agriculture of Indonesia, in February He has got a certificate of training Understanding ISO 14001: 2004 & Auditing ISO 14001: 2004 in He has followed RSPO P&C training (2013). He was assigned to audit best practice in estate and legal aspect. Daniel Sitompul Audit Team Member Daniel Sitompul graduated with Bachelor of Chemical Engineering from Indonesia Institute of Technology in He has working experience as Quality, Environment and Safety Consultant for many years. He has completed ISO (2007), OHSAS (2010), Ahli K3 Umum (2007), ISO 9001 (2009), RSPO PC Training (2013), Auditor SMK3 (2013) dan ISPO Auditor Training (2013). He has also completed the training form government regarding to Safety Management System (SMK3), PROPER and AMDAL (environment). For the last 5 years he has been involved in quality (ISO 9001), Safety (OHSAS 18001) and environmental (ISO 14001) management system consultancy and audits for very broad industrial and in the oil palm sector since 2013 for several plantations and mills. He was assigned to audit best practice in mill and occupational health and safety aspect. 2.4 Stakeholder consultation Public notification was made on 3 rd of March 2014 and was published on RSPO website as well as SAI Global website. Stakeholder consultation was performed to internal and external stakeholders. Internal stakeholders included staffs and workers. External stakeholders were selected by considering that they have an interest in the organisation activities, directly border with organisation, area which the workers live. External stakeholders included NGO, governments and civil societies. Letters were also sent to external stakeholders to invite for comment or individual/group discussion. Group and individual discussions with stakeholders (Table 12) were conducted during the audit, to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. Surrounding village of estate and mill has been Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 28 of 218

29 chosen to represent societies. For Rambong Sialang Estate, group discussion was conducted for one session especial for representative workers (Sprayer, Foreman of sprayer, Harvester and Nurse). One on one interview was conducted for around stakeholder directly affected on estate and mill, i.e. head of village, local NGO. One on one interview was conducted with head of worker union and worker cooperative. It was conducted to verify compliance against relevant criteria and indicator related to infrastructure facility, labour, social aspect (discrimination and sexual harassment), environment and HCV. Interview was also conducted with Head of Worker Union and Head of worker cooperative. For Bagerpang Estate and Mill, group discussion was also conducted with Village head, Christian leader, Community leader of Moslem, District police, Government supervision of district. Interview was conducted with Sprayer, Harvester, Worker of care, Worker of Smart House - Rumah Pintar (Rumpin), Nurse, Head of mill laboratory and Mechanic. Moreover, was also sent to National/International NGO to invite for comment to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. The result of stakeholder consultation was used to justify fulfilment of some indicators, e.g. criterion 2.2 indicator major 3, minor 1 and minor 2, criterion 2.3 indicator major 1, criterion 6.5 indicator minor 1, criterion 6.6 indicator minor 1, criterion 6.7 indicator minor 1, criterion 6.8 indicator minor 1, criterion 6.9 indicator minor 1, 2 and 3, criterion 6.10 indicator minor 1 and 2, criterion 6.11 indicator minor 1, etc. Table 12: List of internal and external stakeholder STAKEHOLDERS Internal stakeholder SPSI and Worker cooperative head of Rambong Sialang and Bagerpang Representative of worker and nurse Bagerpang estate and mill Representative of worker and nurse Rambong Sialang External Stakeholder Head of Village around Rambong Sialang estate Head of Village around, Christian leader, Moslem leader of Bagerpang estate and mill Local NGO Topan METHOD OF CONSULTATION Individual discussion Group Discussion Individual discussion Group Discussion Individual discussion Group discussion Individual discussion Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 29 of 218

30 Cooperative, transmigration and social Department of Serdang Bedagai Plantation Department of Deli Serdang Forestry Department of Deli Serdang Trasmigration and Labour Department of Deli Serdang District Head (Camat) of Sei Rampah District Head (Camat) of Pegajahan District Head (Camat) of Sei Bamban District Head (Camat) of Galang District Head (Camat) of Bangun Purba District Head (Camat) of STM Hilir District Police of Galang District Police of Bangun Purba District Police of Talun Kenas District Police of Firdaus Walhi-Wahana Lingkungan Hidup Indonesia of North Sumatera GAPKI AMAN (Aliansi Masyarakat Adat Nusantara) WWF Indonesia Sawit Watch An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent 2.5 Date of next surveillance visit The next surveillance visit will be 9 12 months from the Intial audit. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 30 of 218

31 3.0 AUDIT FINDINGS 3.1 Action taken on previous audits findings Last surveillance audit was performed on 19 th 20 th of September 2013 by TUV NORD Indonesia. The report indicated that there were major and minor non-conformances and the report mentioned that all non-conformances have been corrected. There were recurrences of the major and minor non-conformance during the audit in minor, major, minor and minor. 3.2 Claim and use of certification mark and or logo CPO and PK were sold under Green Palm however sales document indicated that CPO and PK phisicaly were sold under RSPO scheme. The organisation did not register the transaction in etrace (Refer to NCR ). No claim and use of certification mark and or logo. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 31 of 218

32 3.3 Description of audit findings RSPO Principle and Criteria, Indonesia National Interpretation PRINCIPLES 1: COMMITMENT TO TRANSPARENCY REF CRITERION AND INDICATORS Reference Department in major Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in appropriate languages & forms to allow for effective participation in decision making. Are there any records of information requests? 1. Procedure EMS- P05 Communication, 10 August SPO - 01 Logbook Record of information request and responses. Mill and Estate (Head of administration KTU) Requests information and their responses were determined in a documented procedure. Communication procedure was established and implemented by the organisation. Communication procedure describes the method to follow up the information request from stakeholder. All information requests from stakeholder were listed and recorded by Mill and Estate on logbook SPO 01. Most of letters from stakeholder are notification letter for attend an event of stakeholder. Several requests information from stakeholder such as: 1. Letter from Deli Serdang Regent (Bupati) No # 18.28/411.4/177/2014, date on 20 th of January 2014 to Rambong Sialang Estate, about Social activities and CSR program data of organization. 2. Letter from health center of Sei Rampa to Rambong Sialang Estate on 10 th of February 2014, request information of monthly treatment of patients records at estate clinic. 3. Letter from Cipta Karya and Mining Department of Deli Serdang No # Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 32 of 218

33 REF CRITERION AND INDICATORS Reference Department in B.70/1416/DCKP/DS/2013, date on 16 th of September 2013 to Bagerpang Mill and Estate about inspection of fire protection equipment and system. 4. Letter from Stats Central Body- Badan Pusat Statistik (BPS) No. # dated on 27 June 2013 to Bagerpang Mill and Estate about company data collection as part of SDK3 survey major Are there any records of responses to information requests? SPO 01 Logbook Record of information request and responses Mill and Estate (Head of administration KTU) Records of request information from stakeholder were kept by Mill and Estate on logbook Record of request information and responses. The requests from stakeholder were responded by the organization. Evidence of response including: minutes of report handover Several records of responses to information requests such as: 1. Reporting social activities and CSR program data Letter to Deli Serdang Regent (Bupati) on 29 th of January 2014 by Estate Manager No # 031/RSE/GOV/I/2014. Compliant 2. Reporting of monthly treatment of patients records at estate clinic to Health Center of Sei Rampa. For example: Pasients data for January 2014 has reported on 10 th of February Reporting fire protection equipment and system data to Cipta Karya and Mining Department of Deli Serdang on 22 nd of September Reporting company data as part of SDK3 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 33 of 218

34 REF CRITERION AND INDICATORS Reference Department in survey to Stats Central Body- Badan Pusat Statistik (BPS) on 9 th of August Major Does records of information requests from stakeholders, and the responses given, be kept for a period determined in the applicable regulations and taking into account their relative importance? Procedure EMS-P05 Communication, 10 August 2009 Mill and Estate (Head of administration KTU) Record of request information and its response was kept by the organization. Retention time for records was determined minimum 5 years. Compliant Guidance Growers and millers should respond constructively and promptly to request for information from stakeholders. See criterion 1.2 for requirements relating to publicly available documentation. See also criterion 6.2 relating to consultation. 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes major Are management documents available and are publicly available? Note: Information request and responses shall include any relevant or required documentation, in accordance with applicable national laws, such as: 1. Legal: Land titles/user rights (Site Permit (Izin Lokasi)), plantation operation permit (Ijin Usaha Perkebunan), land use title (Hak Guna Usaha) or other documentation relating to application for Land Use Title in accordance with relevant procedures. 2. Environmental: Environmental and social impact Procedure EMS-P05 Communication, 10 August 2009 Mill and Estate (Head of administration KTU) Organisation documents are generally available. List of management documents are publicly available. The coverage of request on information as stated in the procedure including: 1. Land Legality, such as: Site Permit (IzinLokasi), Land Use Title (HGU), Plantation Operation Permit (IUP), 2. Environment document such as: Environmental and Environment Impact Analysis document (AMDAL)/, environmental management and monitoring report (RKL and RPL implementation reports), environment policy, environment impact aspect analyses, hazardous waste permit, 3. Social document, including: Occupational Health and Safety Management Plan, OHS Policy, Corporate Social Responsibility (CSR), management program of OHS, environment and Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 34 of 218

35 REF CRITERION AND INDICATORS Reference Department in major assessment (AMDAL/UKL-UPL) and elated monitoring reports (RKL-RPL). 3. Social: Documentation of social activities of social and community programs. 4. Health and Safety Plan 5. Continuous improvement plan Are records of information requests from stakeholders, and the responses given, kept for a period determined in the applicable regulations and taking into account their relative importance? 1. Procedure EMS- P05 Communication, 10 August SPO 01 Logbook Record of information request and responses. Mill and Estate (Head of administration KTU) social impact management. 4. Continuous Improvement Plan including minimize chemical use, The documented procedure was established; it mentioned the process, responsibilities and authorities in regards responding the request on information from the public. Documented procedure was established to respond the request from interested parties. The form to record the respond and associated follow up on respond has been established. It was shown that the records have been well documented. The retention time for record is 5 years. Compliant Guidance Examples of commercially confidential information include financial data such as costs and income, and details relating to customers and/or suppliers. Data that affects personal privacy should also be confidential. Examples of information where disclosure could result in potential negative environmental or social outcomes include information on sites of rare species where disclosure could increase the risk of hunting or capture for trade, or sacred sites which a community wishes to maintain as private. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 35 of 218

36 PRINCIPLES 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS REF CRITERION AND INDICATORS Reference Department in 2.1 There is compliance with all applicable local, national and ratified international laws and regulations major Is there evidence of compliance with laws and regulations, which concern the operation of oil palm plantations? 1. Form EMS f-02a- Register of SPO regulation 2. Form EMS IA-C6- Evaluation of Compliance with Laws and Regulations 3. Ministry of manpower certificates and inspection results 4. MSDS 5. Hazardous waste manifest 6. Result of environmental monitoring and measurement 7. Memorandum internal of HR Director No.# 008/HRD/C- SAL/III/2013, on 13 March 2013 about provisions of salary increase Safety Officer in charge Environmental Officer Head of Administration Evidence of compliance with applicable local, national and ratified international laws and regulations of Begerpang Mill and Estate and Rambong Sialang Estate has been provided, including: 1. Valid permits: Waste water discharge permit, river water and ground water abstraction permits, hazardous waste storage permit, boiler and pressurised vessel permits, lifting equipment, personnel who conducted lifting equipment, electrical. 2. Provision of required infrastructure waste water treatment ponds, hazardous waste storage, availability of MSDS, 3. Environmental: Periodic environmental parameter monitoring (stationary emission, ambient emission and ambient noise, moving source emission, waste water discharge quality, and ground water quality), 4. System of plant cultivation, oil palm plantation, - list of flora and fauna protected, application of restricted pesticide 5. Management of guard area, 6. Paramedic and company doctor, medical check-up, safety committee, 7. Minimum wage, labour law, occupational safety, employee social benefit. Compliant (Major NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 36 of 218

37 REF CRITERION AND INDICATORS Reference Department in 2013 and internal memo No. No.001/HRD/C- SAL/III/2014, on3 March 2014 about provisions of salary increase Employee pay list on March 2014 of compliance with laws and regulations was evaluated, and evaluation of compliance result indicated that compliance status was justified with reference to the objective evidence of compliance. Example: social security, training programs, employment list, CSR program and its implementation, payroll and over time calculations, menstruation leave, valid permits of boiler and pressurised vessel permits, lifting equipment, personnel who conduct lifting equipment and electrical, availability of MSDS, transport and lifting equipment, medical check-up, safety committee and occupational safety, result of environmental monitoring and measurement, hazardous waste manifest, etc. The compliance with regulation was evaluated in January 2014 However there was no evidence of compliance with several relevant legal requirements, e.g. SPUP, Kep.MenLH 28/2003, permit of surface water abstraction, Permenaker No.15/2008, Permenaker No.1/1982, Kep Menaker No. 186/1999, Kepres No.32 tahun 1990, UU No.13 tahun 2013, Permenaker No. 12 tahun Major Non Conformance : Rambong Sialang Estate 1. Based on list of worker per February 2014, there was main activity (harvesting) conducted by temporary worker (11 workers). It was not appropriated with Indonesian Law # 13/2003 about Employment and Transmigration and Labour Ministry Decision of Indonesian No. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 37 of 218

38 REF CRITERION AND INDICATORS Reference Department in KEP.102/MEN/VI/2004 about over time and pay of overtime. 2. There was no temporary worker agreement of upkeep in appropriate with Indonesian Law # 13/2003 about Employment. 3. It was observed several first aid bags/boxes that deployed in several areas and Supervisors (e.g. harvesting mandor in Division II) were not completed as required by regulation Permen 15/ The fire fighter personnel were not provided with training certificates as required by the regulation (Fire fighting training basic level I and II). The competencies of fire fighter personnel are not evident based on defined within the regulation of Kep Menaker 186/ Permit of excavator form Dinas Tenaga Kerja has not been provided as required by Permenaker No.1/1982. Begerpang Estate 1. There was temporary worker agreement of upkeep (Pruning, wedding, manuring, spraying and maintenance of other activities), it was represented by group leader however term of the contract was not clearly described. (Indonesian Law # 13/2003 about Employment) 2. There are 7 ground wells utilised by Estate. Permit of ground well abstraction has not been valid since Application letter for extention Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 38 of 218

39 REF CRITERION AND INDICATORS Reference Department in the permit was sent to Bupati Deli Serdang on 26 th of November However until now, permit has not been provided. 3. First aid bags/boxes carried out by mandor (e.g. harvesting mandor in Division V) were not completed as required by regulation Permen 15/ SPUP/IUPdocument of Bagerpang Estate Ha could not be shown. Based on SPUP No. 173/Mentanhut/VII/2000 Location: Kecamatan Galang, Kabupaten Deli Serdang, Propinsi Sumatra Utara, 2.539,68 Ha dan SPUP No. 174/Mentanhut/VII/2000 Location: Kecamatan Bangun Purba, Kabupaten Deli Serdang, Propinsi Sumatra Utara, 2.204,48 Ha. Total of Estate in SPUP is 4.744,16 Ha, while total area of Begerpang Estate is 5, Ha. Moreover the existing SPUP did not state permit of capacity of POM. Bagerpang Estate and Rambo Sialang Estate 1. Determination of riparian zone in the related procedure was noncompliance with President Decision No.32/1990 about environmental management. In the related procedure was described that: Width of the river is 5-10 meters, than the riparian zone is 5 meters Width of the river is meters, than the Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 39 of 218

40 REF CRITERION AND INDICATORS Reference Department in riparian zone is 15 meters Width of the river more than 25 meters, than the riparian zone is 25 meters. Begerpang Mill 1. There was no evidence that record of Land Application Q was reported to Dinas Pertanian Tanaman Pangan, Perkebunan dan Peternakan Kabupaten Deli Serdang dan Dinas Kehutanan Kabupaten Deli Serdang as required by permit of Land Application. 2. Flow meter to monitor surface water abstraction was broken. Permit of surface water abstraction required to install water meter and/or water debit measuring device. Sei Merah Estate 1. Based on SPUP Kebun Sei Merah No. HK.350/195/Bun.5/III/2001 dated 10 th of July 1997, 1, Ha was oil palm and crumb rubber. However based on area statement all the areas were oil palm major Is there evidence of efforts made to comply with changes in the regulations? 1. Identification of regulation procedure (EMS- P02) 2. Evaluation of Environmental and CSR Officer Estate and Mill Manager Established procedure described mechanism for updating latest laws and regulations and required regular access to regulatory bodies to update information of laws and regulations. Update and compliance review against change of law and regulation was conducted periodically by Compliant (Major NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 40 of 218

41 REF CRITERION AND INDICATORS Reference Department in compliance procedure (EMS- P09) 3. Form EMS f-02a- Register of SPO regulation 4. Form EMS IA-C6- Evaluation of Compliance with Laws and Regulations Environment and CSR Department use internet access and communicated with local and national department. Applicable laws and regulations were registered in Form f-02a. Evaluation result of compliance with laws and regulations was recorded in Form EMS IA-C6, and communicated to Mill and Estate. Updating of law and regulations change activities were well documented and last update was performed on 6 th of January Information on applicable legal and other requirements have been reviewed and summarised. However several regulations have not been registered, e.g. Permentan 98/Permentan/OT.140/9/2013, Per.MenLH 14/2013, Permenperind No 23/M- IND/PER/4/2013, Peraturan Daerah Kabupaten Deli Serdang 6/2006 tentang Pengendalian Dampak Lingkungan Hidup di Kab. Deli Serdang,Permenaker No. 13/2011 mengenai NAB faktor kimia dan fisika, Permenaker No. 2/1980 mengenai Pemeriksaan kesehatan, Permenaker No. 1/1981 mengenai pelaporan PAK, Permenaker No. 3/1982 mengenai Pelayanan Kesehatan Kerja, Permenaker No. 25/2008 mengenai Diagnose PAK. Major Nonconformance : Rambong Sialang Estate 1. Several regulations have not been updated, registered and evaluated their compliance, e.g. Permentan 98/Permentan/OT.140/9/2013, Per.MenLH 14/2013, Permenperind No 23/M- IND/PER/4/2013, Permenaker No. 13/2011 regarding chemical and physical factor threshold limit value, Permenaker No. 2/1980 regarding Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 41 of 218

42 REF CRITERION AND INDICATORS Reference Department in employee medical check up, Permenaker No. 1/1981 regarding occupational disease reporting, Permenaker No. 3/1982 regarding occupational health, Permenaker No. 25/2008 regarding occupational disease diagnose. Begerpang Mill and Estate 1. Several regulations have not been updated, registered and evaluated their compliance, e.g. Peraturan Daerah Kabupaten Deli Serdang 6/2006 tentang Pengendalian Dampak Lingkungan Hidup di Kab. Deli Serdang, Permentan 98/Permentan/OT.140/9/2013, Per.MenLH 14/2013, Permenperind No 23/M- IND/PER/4/2013, Permenaker No. 13/2011 regarding chemical and physical factor threshold limit value, Permenaker No. 2/1980 regarding employee medical check up, Permenaker No. 1/1981 regarding occupational disease reporting, Permenaker No. 3/1982 regarding occupational health, Permenaker No. 25/2008 regarding occupational disease diagnose minor Is there a documented system, which includes written information on legal requirements that the oil palm company should comply with? 1. Identification of regulation procedure (EMS- P02) 2. Evaluation of compliance procedure (EMS- Environmental and CSR Officer Estate and Mill Manager Applicable laws and regulations were registered including detail requirement applied. Update and compliance review against change of law and regulation is conducted periodically by Environment and CSR Department use internet access and communicated with local and national department. Applicable laws and regulations were registered in Form f-02a. Evaluation result of compliance with Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 42 of 218

43 REF CRITERION AND INDICATORS Reference Department in minor Guidance Is there a mechanism for ensuring that compliance with relevant legal requirements is implemented? P09) 3. Form EMS f-02a- Register of SPO regulation 4. Form EMS IA-C6- Evaluation of Compliance with Laws and Regulations 1. Identification of regulation procedure (EMS- P02) 2. Evaluation of compliance procedure (EMS- P09) 3. Regulation register dated 6 January 2014 Environmental and CSR Officer Estate and Mill Manager laws and regulations was recorded in Form EMS IA- C6. And communicated to Mill and Estate. A documented procedure has been established to describe method to identify new/revised law and regulation including awareness and implementation of those laws within the company. As defined within the procedure that the mechanism for ensuring compliance with all applicable local, national and ratified international laws and regulations was described in procedure. Evaluation of compliance with regulation was conducted by Environmental and CSR Department. Compliant Identifying inconsistencies between national, regional and local regulations. Implementing all legal requirements is an essential baseline requirement for all growers whatever their location or size. Relevant legislation includes, but is not limited to, regulations governing land tenure and land-use rights (including customary rights), labour, agricultural practices (e.g. chemical use), environment (e.g. wildlife laws, pollution, environmental management and forestry laws), storage, transportation and processing practices. It also includes laws made pursuant to a country s obligations under international laws or conventions (e.g. the Convention on Biodiversity, CBD). Furthermore where countries have provisions to respect customary law, these must be taken into account. For small-scale produces the focus should be on the grower having adequate knowledge of the main legal requirements and implementing them. Key international laws and conventions are set out in Annex List of Related Laws and Regulations 2.2 The right to use land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights major Are there documents showing ownership or lease of the land in accordance with relevant laws? 1. Land use title permit: SK HGU and HGU Estate Bagerpang Estate Copy of land use title (HGU) of Begerpang Estate was sighted and legally owned by PT. PP London Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 43 of 218

44 REF CRITERION AND INDICATORS Reference Department in certificate. 2. Decision of the Head of BPN. 3. State Minister for Agrarian Affairs / Head of National Land Agency. Sumatere Indonesia Tbk. Copy of land use title was available. Land use title of Gunung Malayu Estate was located at Deli Serdang District, Province of North Sumatera. Based on Decree Letter of Interior Minister #Sk.17/HGU/DA/77, Begerpang Estate was Concessie rightwhich consisted of Begerpang and Namo Rambei Concessie, based on decision of Resident Sumatra Timur 1895 and 1900 on behalf of The United Serdang (Sumatra) Rubber Plantations Ltd and Concessie Right/erfpacht based on agreement Zelf bestuur Deli on 1 st of November 1895 and legalled by decision of Resident Sumatra Timur on 7 th of December 1895 and 20 th of July 1898 on behalf of The Sialang Rubber Est. Ltd and valid through 75 years. The Concessive Right was converted to HGU based on letter of Agriculture and Agrarian Minister #Ka.13/7/1 on 1 st of March During period , the company was under authority and control of the government until availability of agreement between Government of Republic of Indonesia and Harison & Crosfield Ltd. On 20 th of March 1968, government will give HGU during 30 years implicitly on 1 st of April Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #173/Mentanhut/VII/2000, dated 10 th of June Area: 2, Ha. Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #174/Mentanhut/VII/2000, dated 2 nd of July Area: 2, Ha. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 44 of 218

45 REF CRITERION AND INDICATORS Reference Department in Plantation Business Assessment (Penilaian Usaha Perkebunan (PUP)); Class II, based on the Decree SK No. 525/038.a/F The first concession was issued by decree Minister of Internal Affairs in 1978, further extensions of the concession in 2005, according to the Decree of the Head of BPN, as follows: 1. SK HGU of BPN, no. 62/HGU/BPN/97, dated 2 nd of July 1997, covering an area of 2, ha. 2. SK HGU of BPN, no. 66/HGU/BPN/97, dated 10 th of June 1997, covering an area of 2, ha. 3. SK HGU of BPN, no. 02/HGU/BPN.12/VII/2012, covering an area of ha. 4. Certificate no. 1/Lau Rampak D.I.208 no. 320/2003, dated 20 th of January Initial rights holders on behalf of PT Karimun Aromatics Co.Ltd. Acquired in 2007 (sale deed no. 35/2007), covering an area of 945 ha. 1) The deed of establishment of PT Karimun Aromatics Co. Ltd., date 2 nd of November ) SK HGU dated no. 18/HGU/BPN/98 3) Deed of Giving Rights Tanggunngan no. 01/2006, date , created by TRIS DAME ERNITA TAMPUBOLON, SH PPAT Deli Serdang over book Land / Certificate of Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 45 of 218

46 REF CRITERION AND INDICATORS Reference Department in no dependents. 32/2006. Based on the decree and Certificate of HGU owned by Bagerpang Estates total area is 5, ha, in compliance with the 'area statement in Building Permit (IMB): 503/941/DPPWP/DS/2002 for mill /3619/BG/2014 for housing Sei Merah Estate Copy of land use title (HGU) of Sei Merah Estate was sighted and legally owned by PT. PP London Sumatere Indonesia Tbk. Copy of land use title was available. Land use title of Gunung Malayu Estate was located at Deli Serdang District, Province of North Sumatera. Based on Decree Letter of Interior Minister #Sk.8/HGU/DA/78, Sei Merah Estate was Concessie right based on decision of Resident Sumatra Timur on 7 th of January 1887 #40/L and agreement Zelfbestuur Deli on 20 th of September 1895 and legally by decision of Resident Sumatra Timur on 10 th of October 1895 document #150 on behalf of N.V The United Serdang (Sumatra) Rubber Plantation Ltd and valid through 75 years. The Concessive Right was converted to HGU based on letter of Agriculture and Agrarian Minister #Ka.13/7/1 on 1 st of March During period , the company was Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 46 of 218

47 REF CRITERION AND INDICATORS Reference Department in under authority and control of the government until availability of agreement between Government of Republic of Indonesia and Harison & Crosfield Ltd. On 20 th of March 1968, government will give HGU during 30 years implicitly on 1 st of April Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #HK.350/195/Bun.5/III/2001. Area: 1, Ha. Plantation Business Assessment (Penilaian Usaha Perkebunan (PUP)); Class I, based on the Decree SK No. 525/5818/III/BUN.PPUP/2013. Sei Merah Estate has gained the concession, by decree of the Minister of State Agrarian / Head of National Land Agency, dated 10 th of July 1997, no. 65/HGU/BPN/9. HGU certificate no. 2/1997, dated 6 th of October 1997 and based on Surat Ukur dated 30 th of September 1997, no. 9180/1997, Sei Merah Estate covers an area of 1, ha area and in compliance with Area Statement Sei Merah Estate. Rambong Sialang Estate Copy of land use title (HGU) of Rambong Sialang Estate was sighted and legally owned by PT. PP London Sumatere Indonesia Tbk. Copy of land use title was available. Land use title of Gunung Malayu Estate was located at Deli Serdang District, Province of North Sumatera. Based on Decree Letter of Interior Minister #Sk.36/HGU/DA/78, Sei Merah Estate was Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 47 of 218

48 REF CRITERION AND INDICATORS Reference Department in Concessie right based on agreement between Zelfbestuur Deli and N.V Rubber My Sibulan and Sei Rampah Rubber en Cocoanut Plantations Co. Ltd. on 14 th of July 1910, 5 th of April 1911, 21 st of December 1908 and 1 st of May 1910 and legally by decision of Resident Sumatra Timur on 10 th of December 1910, 15 th of April 1911, 27 th of January 1909 and 29 th of September 1910 and valid through 75 years. The Concessive Right was converted to HGU based on letter of Agriculture and Agrarian Minister #Ka.13/7/1 on 1 st of March During period , the company was under authority and control of the government until availability of agreement between Government of Republic of Indonesia and Harison & Crosfield Ltd. On 20 th of March 1968, government will give HGU during 30 years implicitly on 1 st of April Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #176/Mentanhut/VII/2000 on 3 rd of November Area: Ha. Commodity: oil palm Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #177/Mentanhut/VII/2000. Area: Ha. Commodity: oil palm Plantation Operation Permit/Surat Pendaftaran Usaha Perkebunan (SPUP) #Hk.350/1999/Bun.5/III/2001. Area: 4, Ha. Commodity: oil palm and cocoa. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 48 of 218

49 REF CRITERION AND INDICATORS Reference Department in Rambong Sialang Estate has had the concession, which consists of 3 HGU certificates, that is: 1. HGU certificate no. 1/1997, dated 8 th of October 1997, by decree of the Minister of Agriculture / Head of National Land Agency dated 30 th of June 1997, no. 58/HGU/BPN/97, located in the village of Firdaus Estate Subdistrict Sei Rampah, Deli Serdang district. Covering an area of hectares, in accordance with the Surat Ukur no.9183/ HGU certificate no. 1/1997, dated 8 th of October 1997, by decree of the Minister of Agriculture / Head of National Land Agency dated 30 th of June 1997, no. 58/HGU/BPN/97, located in the village of Firdaus Estate Subdistrict Sei Rampah, Deli Serdang district. Covering an area of hectares, in accordance with the Surat Ukur no.9182/ HGU certificate no. 1/1997, dated 8 th of October 1997, by decree of the Minister of Agriculture / Head of National Land Agency dated 30 th of June 1997, no. 58/HGU/BPN/97, located in the village of Firdaus Estate Subdistrict Sei Rampah, Deli Serdang district. Covering an area of 4, hectares, in accordance with the Surat Ukur no.9181/1997. So based on concession certificate above, total area of Rambong Sialang Estate is 5, Ha. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 49 of 218

50 REF CRITERION AND INDICATORS Reference Department in major Is there evidence that legal boundaries are clearly demarcated and visibly maintained? 1. Map of Land title use dated 1 January Checklist of Pegs Weekly Monitoring. 3. Map of Soil Investigation Committee (Panitia Pemerikasaan Tanah) Estate Legal boundaries marker were sighted during audit and maintained along the perimeters of estate lands which were mapped with Global Positioning System (GPS). Field observation was conducted to pegs number: Bagerpang Estate 1. BPN peg no. 54, N: '; E: ', the location in' blocks 'Division 04 Batu Gingging, bordered by PTPN 4 Adolina Business Unit. 2. BPN peg no. 1, N: 03 20,483 ; E: ,339, the location in blocks Division 07, bordered by Rubber Plantation PT Havea. 3. BPN peg no. 4, N: 03 20,923 ; E: ,763, the location in blocks Division 7, bordered by Lou Rempa Village. 4. BPN peg no. 18, N: 03 26,223 ; E: ,012, the location in blocks Division 02, bordered by Pisang Pala Village. Compliant Rambong Sialang Estate 1. BPN peg no.13, N: '; E: ', the location on block , is bordered by Rambong Sialang village and Blok Delapan Village. 2. BPN peg no. 64, N: '; E: ', the location on Division 4 Firdaus, is bordered by Firdaus village. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 50 of 218

51 REF CRITERION AND INDICATORS Reference Department in 3. BPN peg no.37, N: '; E: ', the location on block , is bordered by Pelintahan village. 4. BPN peg no.40, N: '; E: ', the location on block , is bordered by Ibus village. Realization of sight on maintenance pegs Weekly Checklist Monitoring was conducted by the Assistant Division and Estate Security Unit (Satpam), noted that peg monitoring is done every week with items checked are: identity, condition and position pegs. All activities were carried out inside the legal boundaries, no activities conducted outside the boundaries major Where there are, or have been disputes are there proof of resolution or progress towards resolution processes acceptable to all parties are implemented? 1. Group discussion with Village Head as well as Christian and Moslem leader around Bagerpang Mill and Estate on 4 April Interview with Village Head around Rambong Sialang Estate on 2 April HGU Map of Estate Planted areas of the Estates are wholly on Government s land, leased under HGU as indicated above. Maps have been developed for estate indicating Legal demarcation and planted areas. It was confirmed from the group discussion with Village Head as well as Christian and Moslem leaders around Bagerpang Mill and Estate (Head of Batu Gingging Village, Head of Bagerpang Village, Head of Sialang Village, Government Supervision of Pialang District, Head of Ujung Rambe Village, Head of Batu Rata Village, Head of Pisang Pala Village, Head of Batu Lokong Village, Head of Naga Timbul Estate, Head of Paya Itik Village, Christian leader of HKBP Church, Moslem leader and Police of Bangun Purba District) on 4 th of April 2014 and also confirmed when interview with Village Head Not Applicable Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 51 of 218

52 REF CRITERION AND INDICATORS Reference Department in Rambong Sialang and Bagerpang Estate around Rambong Sialang Estate (Head of Firdaus Estate, Head of Sei Rampah Estate, Head of Pergulaan Village and Head of Sukasari Village on 2 nd of April 2014 that there were no land conflict at all land within estate and mill, however there was land dispute from community of Pergulaan Village. This case has been clarified and described on criterion minor Is there evidence of land acquisition resolution with free prior and informed consent? 1. Group discussion with Village Head as well as Christian and Moslem leader around Bagerpang Mill and Estate on 4 April Interview with Village Head around Rambong Sialang Estate on 2 April Interview with Estate manager of Rambong Sialang and Bagerpang Estate 4. Legal entities of PT. London Sumatera #93/1962 Legal HO Estate Based on group discussion with village head as well as Christian and Moslem leaders around Bagerpang Mill and Estate on 4 th of April 2014 and also confirmed when interview with Village Head around Rambong Sialang Estate on 2 nd of April 2014 as well as interview with Estate Manager of Rambong Sialang and Bagerpang Estate, no land acquisition after Concession area of PT. PP London Sumatera Indonesia Tbk. is a former concession of PT. Harrisons & Crossfield (H&C). In 1908, H&C was established Harrison & Crossfiled Plantation Ltd. H&C bought Gunung Malayu Estate in In 1928 H&C bought Tjong Ah Fie Plantation including Rambong Sialang, Egaharap, Bengambing, Tanjoeng Poteri, Bandar Teloe, Suka Radjin, Nagaga, Maligas, Bolok, Bah Lias, Bah Hilang and Mardjandi. Based on Legal entities of PT. PP London Sumatera Indonesia Tbk. #93/1962 concession area including: 1. Asahan Rubber Estate Limited is a Gunung Not Applicable Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 52 of 218

53 REF CRITERION AND INDICATORS Reference Department in Melayu Estate. 2. The Bah Lias Rubber Estate Limited is a Bah Lias Estate 3. Central Sumatra Rubber Estate Limited is a Turangi, Bungara and Pulau Rambung Estate. 4. Namoe Tonga Rubber Estate Limited is a Turangi Estate 5. The Sialang Rubber Estate Limited is a Rambong Sialang Estate 6. The Soengei Rampah Rubber and Coconut Plantations Company Limited is a Rambong Sialang Estate 7. The Tandjung Rubber Company Limited is a Sungai Merah Estate 8. Toerangie (Sumatra) Rubber and Produce Estate Limited is a Turangi Estate 9. The United Langkat Plantation Company Limited is a Turangi, Bungara and Pulau Rambung Estate 10. The United Serdang (Sumatera) Rubber Plan Limited is Bagerpang, Sungai Merah and Dolok Estate. In 2007, organization has acquisition PT. Karimun (980,06 Ha). At present, this area is able Division Timbang Serdang of Bagerpang Estate (Deed of sale #35/2007, dated 4 th of September 2007). Overall total area, there were 35,06 Ha local right and it has been compensable. Evidence of land compensation including letter of right release of land Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 53 of 218

54 REF CRITERION AND INDICATORS Reference Department in was on 17 th of September It was strengthened and signed by Head of Senembah Tanjung Muda Hilir District. Over all letter of right release of land has been notarized and described in the minutes of the committee B #08/PPT/B/2012, dated on 10 th of August Several examples are as follow: 1. Sdr. Sembiring (1 Ha), letter of right release of land #593.21/97/STM/1987, Notarize letter Ratna Ningsih SH, #02, dated on 13 th of April Nasib (2 Ha), letter of right release of land #593.21/100/STM/1987, Notarize letter Ratna Ningsih SH, #05, dated on 13 th of April Wagiyem (2 Ha), letter of right release of land #593.21/101/STM/1987, Notarize letter Ratna Ningsih SH, #06, dated on 13 th of April minor Is there a mechanism to resolve conflict which is accepted by all parties? 1. Communication procedure (EMS- P05), date on 10 August Land acquisition and compensation procedure (OP 2.2), December Minutes and attendance list of Legal HO Estate A mechanism to resolve conflict was described in the communication procedure and land acquisition and compensation procedure to identify and determine calculation method to provide fair compensation due to loss of land and customary rights were identified. Though the organization has conducted stakeholder meeting (Rambong Sialang Estate was conducted on 29 th of July 2013 and Bagerpang Estate was conducted on 27 th of July 2013), however there was no evidence of communication procedure (EMS- P05, Communication) arranged in collaboration with Minor NCR Refers to closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 54 of 218

55 REF CRITERION AND INDICATORS Reference Department in stakeholder meeting (Rambong Sialang Estate was conducted on 29 July 2013 and Bagerpang Estate was conducted on 27 July 2013) local communities and other affected or interested parties. Stakeholder meeting in Rambong Sialang and Bagerpang Estate only discussed following issues: CSR program, dissemination and transparency sustainable oil palm (environment management, mill processes, HCV and wildlife management, environment policy and OHS policy). Guidance 1. Where there is a conflict on the condition of land use as per land title, growers should show evidence that necessary action has been taken to resolve the conflict with relevant parties. 2. For any conflict or disputes over the land, the extent of the disputed area should be mapped out in participatory way. 3. Ensure a mechanism to solve the conflict (Criteria 6.3 and 6.4). 4. All operations should cease on land planted beyond the legal boundary. 5. Any customary land use rights or disputes which are likely to be relevant should be identified. 2.3 Use of land for oil palm does not diminish the legal rights, or customary rights, of the other users, without their free, prior and informed consent major Major major Are there records of any negotiated agreements between traditional owners of land and plantation companies (if any), supplemented with maps in appropriate scale? Are there maps of an appropriate scale showing extent of recognised customary rights? Are there copies of negotiated agreements detailing process of consent? 1. Group discussion with Village Head as well as Christian and Moslem leader around Bagerpang Mill and Estate on 4 April Interview with Village Eead around Rambong Sialang Estate on Estate Maps have been developed for each estate indicating Legal demarcation and planted areas. Planted areas of the Estate are wholly on Government land, leased under HGU. It was confirmed from the group discussion with Village Head as well as Christian and Moslem leader around Bagerpang Mill and Estate on 4 th of April 2014 and also confirmed when interview with Village Head around Rambong Sialang Estate on 2 nd of April 2014 as well as interview with Estate Manager of Rambong Sialang and Bagerpang Estate that no land within Mill and Estates are encumbered by legal or customary rights, however Not Applicable Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 55 of 218

56 REF CRITERION AND INDICATORS Reference Department in 2 April HGU Map of Rambong Sialang and Bagerpang Estate. 4. Legal entities of PT. London Sumatera #93/1962 there was land dispute from community of Pergulaan Village. This case has been clarified and was described on criterion 6.3. Concession area of PT. PP London Sumatera Indonesia Tbk. is a former concession of PT. Harrisons & Crossfield (H&C). In 1908, H&C was established Harrison & Crossfiled Plantation Ltd. H&C bought Gunung Malayu Estate in In 1928 H&C bought Tjong Ah Fie Plantation including Rambong Sialang, Egaharap, Bengambing, Tanjoeng Poteri, Bandar Teloe, Suka Radjin, Nagaga, Maligas, Bolok, Bah Lias, Bah Hilang and Mardjandi. In 2007, organization has acquisition PT. Karimun ( Ha). At present, this area is able Division Timbang Serdang of Bagerpang Estate (Deed of sale #35/2007, dated 4 th of September 2007). Overall total area, there were 35,06 Ha local right and it has been compensable. Evidence of land compensation including letter of right release of land was on 17 th of September It was strengthened and signed by Head of Senembah Tanjung Muda Hilir District. Over all letter of right release of land has been notarized and described in the minutes of the committee B #08/PPT/B/2012, dated on 10 th of August Several examples are as follow: 1. Sdr. Sembiring (1 Ha), letter of right release of land #593.21/97/STM/1987, Notarize letter Ratna Ningsih SH, #02, dated on 13 th of April Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 56 of 218

57 REF CRITERION AND INDICATORS Reference Department in Nasib (2 Ha), letter of right release of land #593.21/100/STM/1987, Notarize letter Ratna Ningsih SH, #05, dated on 13 th of April Wagiyem (2 Ha), letter of right release of land #593.21/101/STM/1987, Notarize letter Ratna Ningsih SH, #06, dated on 13 th of April Guidance Where lands area encumbered by legal or customary fights, the grower must demonstrate that these rights are understood and are not being threatened or reduced. This criterion should be considered in conjunction with criteria 6.4, 7.5 and 7.6. Where customary rights areas are unclear these are best established through participatory mapping exercises involving affected and neighbouring communities. This criterion allows for sales and negotiated agreements to compensate other users for lost benefits and/or relinquished rights. Negotiated agreements should be non-coercive and entered into voluntarily, carried out prior to new investments or operations and based on an open sharing of all relevant information in appropriate forms and languages, including assessments of impacts, proposed benefit sharing and legal arrangements. Communities must be permitted to seek legal counsel if they so choose. Communities must be represented through institutions or representatives of their own choosing, operating transparently and in open communication with other community members. Adequate time must be given for customary decision-making and iterative negotiations allowed for, where requested. Negotiated agreements should be binding on all parties and enforceable in the courts. Establishing certainty in land negotiations is of long-term benefit for all parties. For definition of customary rights, see definitions. PRINCIPLES 3: COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY Ref. CRITERION AND INDICATORS Reference Department in 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability major Is there a documented working plan of minimum of 3 years period? Note: documented working plan shall include plan for new acquisition which have not replaced primary forests or 1. Management Plan period Annual Budget period Draft of Head of administration KTU Top Management policy & principles Management plan for the period was used to achieve economic viability and long-term financial captured on "Oil Palm Forward Study ". The plan was approved by the Director of Principle. The parameters in the management plan Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 57 of 218

58 Ref. CRITERION AND INDICATORS Reference Department in HCVs to comply with RSPO Management Plan requirements. period Harvesting and Production Year that includes projected FFB production each year of planting, production and yield of CPO OER, PKE kernel extraction rate, were not only listed but it also estimated the cost of opreasional plantation / estate including (therein upkeep costs, research and development, harvesting, processing, packing, transportation, depreciation) as well as mill cost (processing, repair and maintenance). This plan was prepared by taking into account the parameters of CPO prices, and the price of TBS and trends that have sub-standard production (15 tonnes / ha) to do rejuvenation. The achievement of the management plan is reviewed every year for management review Bagerpang and Rambong Sialang Estate has set short-and long-term plans to keep ongoing the plantation business, including: Short Term Plan is an annual plan drawn up in the form annual Budget (maintenance, production and infrastructure development). Organisation has planned plantation business activities, such as: 1. Replanting program from 2013 to 2016 Bagerpang Estate, 2. Replanting program from 2014 to minor Is there annual replanting programme, where applicable, projected for a minimum of 5 years with yearly review? 5. Replanting Program for 5 years Estate period Head of administration KTU Replanting programs have been planned for next five years and has been in accordance with company policy, where the allocation of replanting activities / planting per year is not more than 5% and the consideration of the trend production FFB per hectare minimum 15 tons / ha. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 58 of 218

59 Ref. CRITERION AND INDICATORS Reference Department in Bagerpang Estate Replanting program (Rubber Plant) from 2013 to 2016, In total covering hectares. In 2013, replanting program has been completed covering hectares and in 2014 was planned replanting covering ha Rambong Sialang Estate Rambong Sialang Estate, and based Study Reports Forward Crop Rambong Sialang Estate: replanting consideration is based on the production yield / ha <17 tonnes / ha and a total covering hectares replanted areas, which will be held on plants in 1993 and Guidance Whilst it is recognised that long-term profitability is also affected by factors outside their direct control, top management must be able to demonstrate attention to economic and financial viability through long-term management planning. The business or management plan may contain: 1. Attention to quality of planting materials 2. Crop projection = FFB yield trends 3. Mill extraction rates = OER trends 4. Cost of Production = cost per tonne of CPO trends. 5. Forecast prices. 6. Financial indicators. 7. Suggested calculation trends in 3-year running mean over the last decade (FFB trends may need to allow for low yield during major replanting programmes). Growers should have a system to improve practices in line with new information and techniques. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 59 of 218

60 PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Ref. CRITERION AND INDICATORS Reference Department in 4.1 Operating procedure are appropriately documented and consistently implemented and monitored major Are there Standard Operating Procedures (SOPs) for estates, from land clearing to harvesting? Standard Operating Procedure Oil Palm- Development Procedures, LONSUM, march 2008 Estate Estates has established the procedure (SOP) for plantation cultivation best practices include land clearing, seeding, planting, maintenance, harvesting and transporting of FFB. Generally Bagerpang and Rambong Sialang Estate have already implemented best management farming practices SOP that has been set. Procedures have been established in March 2008 in Oil Palm Procedure document, that is: 1. OP-1 Nursery Preparation and Upkeep 2. OP-2 Preparation and Planting (include Land Clearing) 3. OP-3 Immature Upkeep OP-3.1 OP-5.2 OP-3.3 Weeding Management Pest and Disease (Integrated Pest Management) Fertilizer Schedule for Development Oil Palm 4. OP-0.4 Harvesting (Crop Potentials, Crop Forecasting, Harvesting Task, Harvesting Standard, Fruit Handling and Transportation) 5. OP-5 Mature Upkeep (Weeding, Pest & Disease, pruning, Census & survey operation, Fertilizer Management, Empty bunch & POME application). Hardcopies of procedure were available and controlled. Interviews with the employees indicated a satisfactory level of understanding and application in relation to their job function. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 60 of 218

61 Ref. CRITERION AND INDICATORS Reference Department in major Are there Standard Operating Procedures (SOPs) for mills, from reception of FFB to dispatch of CPO and PK? POM Documented procedures Mill Documented procedure for mill operational in local language for supporting Mill activities has been established: POM-WI/01 up to POM-WI/19 for all of its operations from receiving of FFB, processing CPO and palm kernel and dispatch. The procedure also describes quality control check, sampling methods including its reporting from reception of FFB up to dispatch of CPO and palm kernel. The company has implemented internal monitoring processes that check and report on the implementation of the Management Guidelines. These include independent checks of the mill by the corporate internal audit. Compliant Generally the procedures which currently existing was within the revision 01 that officially published in 2006 (dated 01/10/2006). Herewith the procedures available at POM Begerpang such as: 1. Weigh Bridge Procedure (POM-WI/01) 2. Loading ramp & FFB Shortage Procedure (POM- WI/02) 3. IK Sterilization station Procedure (POM-WI/03) 4. Threshing Procedure (POM-WI/04) 5. Pressing Procedure (POM-WI/05) 6. Clarification Procedure (POM-WI/06) 7. Depericarping Procedure (POM-WI/07) 8. Kernel Recovery Procedure (POM-WI/08) 9. Boiler Procedure (POM-WI/09) 10. Power Generation Procedure (POM-WI/10) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 61 of 218

62 Ref. CRITERION AND INDICATORS Reference Department in 11. Water Treatment Procedure (POM-WI/11) 12. Empty Fruit Bunch Handling Procedure (POM- WI/13) 13. Workshop equipment Procedure (POM-WI/14) 14. Electrical System Procedure (POM-WI/15) 15. Quality Procedure (POM-WI/16) 16. Dispatch COP and Kernel Procedure (POM-WI/17) 17. Laboratory Equipment and Reagents Procedure (POM-WI/18.1) 18. Care & Use of the analytical Balance Procedure (POM-WI/18.3) 19. Low Producing of FFA oil Procedure (POM-WI/19) 20. SOP no. OP-5.6.2; Field Application of POME Enriched Mulch 21. POM-SOP/12 Effluent Treatment LA 22. SCCS/PR-SG/01 Supply Chain System RSPO CSPO minor Are there records of at least yearly checking and monitoring of operations? 1. Report of LKBM (Lembar Kerja Blok Management) periods July Monthly Report of Estate, periods December 2013 Resume of Area Manager Estate Head Office Estates monitor and inspect all estate activities through periodic visits of LKBM (Lembar Kerja Blok Management) from BLRS Researches & Development. The last visit was made on 25 th of June 3 rd of July Contents include an evaluation report including harvesting operations, maintenance, pest control, replanting process, mature & immature maintenance, and deficiency of fertilizer. The report includes recommendations for following-up and BLRS Researches & Development follows the progress of Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 62 of 218

63 Ref. CRITERION AND INDICATORS Reference Department in Engineering Visit previous visits. Visit LKBM (Lembar Kerja Blok Management) of BLRS R&D is an inspection of the operational activities of the field (minimum once a month). The organisation conducted monitoring and checking for all applicable procedures and GAP through yearly periodic visit of Area Manager Engineering (AME) from Head office. The last visit was conducted on 28 th of March The content of the report covers evaluation of mill operational activities, Mill process and cost control. The report includes recommendation for follow up from Area Manager Engineering and progress of follow up action from the previous visit minor Are there records of operational results? 1. Monthly Report of Estate, periods December Daily record of activities, e.g.: Foreman Book (BKM=Buku Kerja Mandor), 3. Operation daily report from FFB receiving trough delivery on period July September 2013 Estate and Mill Plantation Operation The records of operational performance and result were well maintained in Bagerpang and Rambong Sialang Estate on Monthly Report. Estate activities were programmed in annual program and distributed in Monthly Work Guidelines. Activities program consist of pest and diseases census, fertilizing, spraying circle and path, cleaning of trench and road maintenance. Head Assistant and Division Assistant check and monitor the activities at site regularly. Site observation was performed during the audit to some activities: Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 63 of 218

64 Ref. CRITERION AND INDICATORS Reference Department in harvesting, spraying, pruning, handpicking. Activities have been performed at defined interval. The record covered activities type, number of worker, quantity of agro chemical use, quantity of activities output and area of activities. In daily activities Estate foreman would make Daily Work Plan (RKH= Rencana Kerja Harian), then further will be noted that the realization of the activities in the Book Mandor (BKM: Buku Kerja Mandor), which contains a record of the type of activity (maintenance / weeding, harvesting, census, spraying etc.), number of employees, number of agro-chemical use, the amount of output and activity location (block). Checking harvesting activities were conducted by the harvest foremen and foremen-i, foremen harvest recorded the inspection harvest (Monitoring Ancak Panen) daily, inspection items: preparing the midrib, ripe fruit is not harvested; the fruit lagged (not harvested) and cut raw fruit. The examination and transport of FFB performed by Adm. Harvest (Kerani Panen), inspection items: TBS maturity and amount of fruits (berondolan) including cutting the fruit stalk (V = mouth frog system) and recorded in the form of transport and the quality of the fruit (FFB Transports form). Checking of harvesting activity conducted by harvesting foreman and first foreman daily, while Division Assistant and Head Assistant conducted the checking by sampling. Items checked e.g. maturity of FFB, preparation of midrib and loose fruit. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 64 of 218

65 Ref. CRITERION AND INDICATORS Reference Department in Results of the daily activities in the field will always be recorded in BKM (Foreman workbook) as the basis for the calculation of operational costs per hectare and input the data in the SAP program. Records of monitoring and action taken have been maintained and kept for more than 12 months. Records and action taken such as circle spraying, selective spraying, harvesting, pest management, FFB application, and manuring and road maintenance have been verified to be satisfactory maintained. Costs on all field operations have been recorded every day and then input data on the SAP program. Daily activities in the estate are included plant maintenance, pest and disease control, fertilization, preventive maintenance of roads, vehicles, machinery etc. It has been observed among some estate activities: Bagerpang Estate Spraying activity (Circle Spraying) in blocks , division 05 year of planting: Harvest activities in blocks , year of planting: 2004, division 05. Rambong Sialang Estate Conducted field observations on upkeep activities, such as pruning (tunas) in blocks , division 01 year of planting: Spraying activity; path (pasar pikul), circle and TPH spraying in block Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 65 of 218

66 Ref. CRITERION AND INDICATORS Reference Department in planting year: 2007, herbicide used was Glyposat (Eagle) dose: 200 cc / ha and Metsulindo dose: 100 g / ha. Harvest activities in block planting year: 2007 Mill Operation FFB processed by Begerpang Mill is received from Rambong Sialang Estate, Sei Merah Estate and Begerpang Estate. All of the FFBs are processed in the same facility (Begerpang Mill). Begerpang Mill capacity is 50 MT/hour FFB. The site operates horizontal sterilization with capacity 6 lories per each. Threshing, digesting, pressing, filtering, clarification and purification process then follow before the CPO was transferred to daily tank. The Mill maintains records of processing monitoring reports, such as shift log sheets with records of operating conditions at each of the mill work station. A review of daily report operation (January March 2014) demonstrated the consistency of procedures implementation. CPO and PK are delivered to customer. A review for April 2014 records of CPO delivery found appropriate. A brief tour to processing facility was made during audit to review a number of work station: receiving and grading, sterilizing, threshing, pressing, clarifying, nut and kernel and dispatch. Interview with employees working in those work stations showed that procedures were implemented. Processes were monitored at defined arrangement and records of processes log sheet were sighted, including: FFB Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 66 of 218

67 Ref. CRITERION AND INDICATORS Reference Department in receiving and grading, sterilizing, threshing, pressing and digesting, clarifying, nut and kernel, boiler, quality control (in process, CPO and PK). 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield minor Are there records of regular soil, leaf, and visual analysis? 1. Reports leaf sample unit collection and delivery month January 2014 Bah Lias Resources and Development. 2. Memo no. 311/BLRS/OP/IV/20 14, dated 22 April 2014 from the Research Department. Operational Estate (Assistant, Head of Assistant and Manager) Head of administration KTU Soil and leaf sampling was analysed regularly to determine the nutritional status of soil, to assist and to be guided in the preparation of annual fertilising programme recommendation. Procedure of leaf sampling mentioned that leaf is analysed annually two months after the first application. Method of sample taken and preparation of analysis was described in the procedure no. RTD 5.1, by Research and Technology Development February 2006: Making Oil Palm Fertilizer Recommendations. Procedure of soil analysis mentioned that soil was analysed every 5 years. Compliant Based on Internal Memo no. 311/BLRS/OP/IV/2014, dated 22 nd of April 2014 from the Research Department. Coordinator, that: soil sampling activities performed routinely on each sample block (block monitors) contained at the entire estate of PT. PP London Sumatra Indonesia Tbk. conducted every 2 years, these activities are done by a team of Agronomy Services Sumbio. In 2014 soil sampling program will be conducted at the entire blocks in PT. PP London Sumatra Indonesia Tbk. Diagnosis / leaf visual observations done by considering the following criteria: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 67 of 218

68 Ref. CRITERION AND INDICATORS Reference Department in - Comparison of green leaf with standard green colour (dark green). - The signs and symptoms (symptom) nutrient deficiency. - Symptoms of pests and plant diseases. Bagerpang Estate Bagerpang Estate has had a record Fertilization Recommendations that have been determined based on LSU (leaf sampling unit) were performed by Bah Lias Research Station, the last one was held in December 2014 by taking a block sampling in all divisions in Bagerpang Estate, while making soil sampling is planned to be conducted in Rambong Sialang Estate Fertilization recommendations Mature Oil Palm in 2014 has to be shown in accordance with the results of sampling leaf (Leaf and rachis Sampling) which was conducted in January 2014, where the leaf sample was taken for 360 samples from 7 divisions and LSU (leaf sampling units) undertaken by Bahlias Research. Soil sampling as the basis for determining fertilizer recommendations which last conducted in February Application of fertilizer recorded properly on the "Monitoring Pemupukan" includes the date of application, type and dose of fertilizer, block applied and the amount of material used. No fertilization was observed during the audit, but the estate has a system to monitor whether the application meets the actual Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 68 of 218

69 Ref. CRITERION AND INDICATORS Reference Department in fertilizer recommendation. It was noted that the actual fertilizer application in Bagerpang and Rambong Sialang Estate conducted in accordance with the recommendation of fertilizer in minor Are there records of efforts to maintain and increase soil fertility (through use of fertiliser, planting of legume cover crops, compost, and land applications of POME or EFB) based on the result of analysis carried out as in point minor above? 1. Fertilizer recommendation 2014 by Bah Lias Resources and Development. 2. Memo no. 311/BLRS/OP/IV/20 14, dated 22 April 2014 from the Research Department. 3. SOP no. OP-5.6.2; Field Application of POME Enriched Mulch. 4. SOP no. PRS : Land Application Operational Estate (Assistant, Head of Assistant and Manager) Bagerpang and Rambong Sialang Estate maintained and increased soil fertility through fertilizer application as well as land application of EFB and composite and also planting legume that covered crops in replanting area. Manuring activity was conducted based on procedure of Manuring, that is: Empty Fruit Bunch application recommendations (EFB) and wastewater / land applications (POEM), in accordance with SOP no. OP-5.6.2; Field Application of POME Enriched Mulch. Dose of empty bunch (EFB) on mature; 40 tons / ha or 285 kg per tree and Land Application (LA) Dose: 750 tons / ha per year. Or 250 tons / plot. The recommended type of fertilizer applied to mature plants (crop yield / TM) is a single fertilizer, while for immature plants (immature / TBM) is a compound fertilizer. Compliant (Minor NCR closed) Bagerpang Estate Based Effluent Flow Statements in March 2014 (24 th of February to 30 th of March 2014): Applications in block plot area of 5 ha as much as 6,949 tons (1300 tons / ha) and blocks Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 69 of 218

70 Ref. CRITERION AND INDICATORS Reference Department in 03,111,001 II area of 7 ha plot as much as 3526 tons (503 tons / ha). The recommended dose of 750 tons / ha. Based on the observations to block Making a batch of shelters with a depth of 1.5 meters. The depth is 60 cm by SOP no. PRS : Land Application Minor Nonconformance : Begerpang Mill 1. Based on Effluent Flow Report in March 2014, application in block plot 1 5 Ha was 6,949 ton (1300 ton/ha) and block plot II 7 Ha was 3,526 ton (503 ton/ha) while recommended dosage was 750 ton/ha. 2. It was observed that dept of trenches in block was 1.5 meters. SOP mentioned that dept of trenches was 60 cm. Opportunity of Improvement 1. In the application of compost (EMU) with the manual method, it is suggested to be adapted to the SOP: EMU: RTD 7.2: do dispersion with a thickness of 5-7 cm and not just stacked it. Guidance Long term fertility depends on maintaining the structure, organic matter content, nutrient status and microbiological health of the soil. Managers should ensure that best agricultural practice is followed. Nutrient efficiency must take account of the age of plantations and soil conditions. 4.3 Practices minimise and control erosion and degradation of soils Are there maps of fragile soils? 1. Soil map and soil minor types map (Satuan Peta Tanah Semi Operational Estate (Assistant, Head of Assistant The organisation has a detailed soil map showing gradients and soil types. The soil and topography map was available in Bagerpang and Rambong Sialang Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 70 of 218

71 Ref. CRITERION AND INDICATORS Reference Department in Detail) period and Manager) 2. Soil Structure Maps 2013 Estate, Soil Type Unit Maps and Semi Detailed Soil Map (scala 1:15.000) were issued by Research & Development Centre PT Nusa Pusaka Kencana Analytical & QC Laboratory in January Bagerpang Estate Based on the maps (topographic maps and soil type) it appears that Bagerpang Estate dominated by mineral soils (type clay to clay loam), approximately 91.96% (5, ha), although there are still about 0.15% (8.8 ha) of the total area is an area of poor drainage due to a low land and often waterlogged. Although based on real Bagerpang soil conservation maps Bagerpang Estate landless fragile have hilly areas about 14.59% ( ha) and the flats area by 85.41% (4, ha) of the planted area. Rambong Sialang Estate Based on the maps (topographic maps and soil type) it appears that Rambong Sialang Estate dominated by mineral soils (type clay to clay loam), approximately 90.07% (4, ha), although there are still about 9.93% ( ha) of the total area is an area of poor drainage due to a low land and often waterlogged. In general, the area Rambong Sialang Estate is as follows: Flat area of 87.93%, hills (terraces) by 2.14% and by 9.93% Low Land minor Is a management strategy exists for plantings on slopes above a certain limit (needs to be soil and climate specific)? 1. Soil map and soil types map (Satuan Peta Tanah Semi Operational Estate (Assistant, Head of Assistant and Manager) Bagerpang and Rambong Sialang Estate has management strategy for planting on slopes above certain limit such as terracing, as referred to Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 71 of 218

72 Ref. CRITERION AND INDICATORS Reference Department in Detail) period Soil Structure Maps 2013 company s SOP and work instructions. The Work instruction described preparation for planting including planting on slopes area has been developed by organisation. System for planting on slopes area is provided through terracing, levelling of terrace, planting legume cover crops and determining of planting space. Some actions to reduce the rate of erosion on slopes 16-30, that is by: 1. Making terracing 2. Making Tapak Kuda and Rorak 3. Making Pungguhan platform Bagerpang Estate Terracing making activity has been done and well maintained; where the soil conservation monitoring data until April 2014 are Ha Rambong Sialang Estate Terracing making activity has been done and well maintained; the soil conservation monitoring data until April 2014 are Ha minor Is a road maintenance program presence? 1. Road hardening program year Monthly Report of Estate, periods Operational Estate (Assistant, Head of Assistant and Manager) Estate have established an annual program of road maintenance both collection and main road. Besides according to the annual program, road maintenance activities are also conducted in accordance with the road conditions and road maintenance manual. Maintenance was performed well, as long as the field Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 72 of 218

73 Ref. CRITERION AND INDICATORS Reference Department in December observations, it appears that all roads, culverts and bridges are in a satisfactory condition. Bagerpang Estate Bagerpang Estate has made hardening road program using the gravel (Sirtu). Realization of roads hardening in 2013 recorded in the Historical Hardening Road 2009 to Hardening in 2013 was 28,603 meters, program hardening in 2014 was 15,130 meters and program in 2015 is 4,150 meters. The road hardening was presented and recorded on maps of road hardening program in (scale 1:35.000). Rambong Sialang Estate Rambong Sialang Estate has made hardening road program using the gravel (Sirtu). Realization of roads hardening in 2013 was recorded in the Historical Hardening Road 2009 to Hardening in 2013 was main road was 1,691 meters, Collection road was 9,017 meters. The road hardening was presented and recorded on map of road hardening program in (scale 1:35.000). In 2014 there were no street paving program, but road maintenance activities using road grader (road profile) is 1 rotation a year. Rock Padas or gravel used the standard budget as large as 0.3 m 3 per meter road. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 73 of 218

74 Ref. CRITERION AND INDICATORS Reference Department in Is subsidence of peat soils minimised minor under an effective and documented water management programme? minor Guidance Is a management strategy in place for other fragile and problem soils (e.g. sandy, low organic matter, acid sulphate soils)? 1. Soil map and soil types map (Satuan Peta Tanah Semi Detail) period Soil Structure Maps Soil map and soil types map (Satuan Peta Tanah Semi Detail) period Soil Structure Maps 2013 Operational Estate (Assistant, Head of Assistant and Manager) Operational Estate (Assistant, Head of Assistant and Manager) Based on the location map, soil type map and topographical map Bagerpang and Rambong Sialang Estate, there is no peat land. Based on the location map, soil type map and topographical map Bagerpang and Rambong Sialang Estate, there is no peat land. Not Applicable Not Applicable Techniques that minimise soil erosion are well-known and should be adopted, wherever appropriate. This may include practices such as ground cover management, biomass recycling, terracing, and natural regeneration or restoration instead of replanting. For existing plantings on peat, water table should be maintained at a mean o 60cm (within a range of 50-75cm) below ground surface through a network of appropriate water control structures e.g. weirs, sandbags, etc. in fields, and Watergates at the discharge points of main drains (see also Criteria 4.4 and 7.4). 4.4 Practices maintain the quality and availability of surface and ground water Is there protection of watercourses and 1. Management of Estate wetlands, including maintaining and riparian strips major restoring appropriate riparian buffer procedure (SOPzones at or before replanting? OP.13) 2. Field observation was conducted on Riparian zone of Sialang on Block and Sei Embat River on Block Bagerpang Estate as well as Riparian zone of Lembah on Policy of riparian buffer zone management at or before replanting was provided in related procedure. Procedure mentioned that riparian buffer zone is planted with monoculture plants (woody trees) to minimize land claim, communicated management and protection of riparian zone to employee and surrounding community and set up sign of riparian protection as well as manually maintenance oil palm in the riparian area. There were several rivers travers at Rambong Sialang including: Bata River, Panglong River, Batu Pihit River and Lembah River. In Bagerpang, there were also several rivers including: Kali Tawang River, Cimahi River, Bah Perak River, Greahan River, Sialang River and Bagerpang River. Compliant (Major NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 74 of 218

75 Ref. CRITERION AND INDICATORS Reference Department in Block , Riparian zone of Bata on Block and Block Rambong Sialang Estate Field observation was conducted on Riparian zone of Sialang on Block and Sei Embat River on Block Bagerpang Estate as well as Riparian zone of Lembah on Block , Riparian zone of Bata on Block and Block Rambong Sialang Estate to verify procedure implementation. Riparian zone of Sialang on Block and Sei Embat River on Block Bagerpang Estate was preserved naturally. However, field observation observed pesticide application up to riverside on riparian zone of Lembah on Block as well as Riparian zone of Bata on Block and Block observed that there was pesticide application up to riparian zone. Moreover, upkeep of oil palm in riparian zone of Lembah (water pump of nursery) was manually conducted; however intensity of upkeep result surface erosion to river. Riparian zone of Lembah on Block has been enriched with woody trees, such as: Gmelina arborea and Tectona grandis. Major Non conformance : Rambong Sialang Estate 1. Field observation in Riparian zone of Bata Block and Block as well as at Riparian zone of Lembah was observed that there ware pesticide application up to riparian zone 2. Upkeep of oil palm in riparian zone of Lembah (water pump of nursery) was manually conducted however intensity of upkeep result surface erosion Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 75 of 218

76 Ref. CRITERION AND INDICATORS Reference Department in to river minor Is there an implemented water management plan? 1. Permit of surface water abstraction from Keputusan Kepala Badan Pelayanan Perizinan Terpadu Propinsi Sumatera Utara #610/161/BPPT SU/2/12.1/XI/2013 dated 12 November Permit of surface water abstraction from Keputusan Kepala Badan Pelayanan Perizinan Terpadu Propinsi Sumatera Utara #610/162/BPPT SU/2/12.1/XI/2013 dated 12 November Application letter to Bupati Deli Serdang #0355/GSD/G/43/XI /2010 dated 26 November 2010 Mill Estate The main source of water for Mill activity is surface water Kali Tawang River. Permit of water abstraction from surface water has been obtained on 12 th of November 2013 and valid through 3 years. Flow meters were installed to monitor water usage. The volume of water usage is monitored monthly both for process and domestic usage. Water consumption data July December 2013 and January February 2014 were sighted. The organisation has program to reduce water consumption, e.g. recycle condensate water from steriliser for dilution in clarification station, and repair water pipe in boiler. Source of water for Bagerpang Estate and domestic activity is surface water and ground water. Permit of water abstraction from surface water has been obtained on 12 th of November 2013 and valid through 3 years. Flow meters were installed to monitor water usage. The volume of water usage is monitored monthly both for process and domestic usage. Water consumption data July December 2013 and January February 2014 were sighted. Permit of ground water was expired in The organisation was applied to extent permit of ground water abstraction. Application letter was sent to Bupati Deli Serdang on 26 th of November However the permit has not been provided until present time. (Refer NCR ). Source of water for Rambong Sialang Estate and domestic is ground water. There are 7 ground water wells. Permit of water abstraction from ground water has been obtained on 20 th of February Flow meters were installed to monitor water usage. The Compliant (Minor NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 76 of 218

77 Ref. CRITERION AND INDICATORS Reference Department in 4. Permit of ground water abstraction from Keputusan Kepala Badan Pelayanan Perizinan Terpadu Kabupaten Serdang Bedagai #Nomor: /01/II/KP2TPM/ 2012 dated 20 February Certificate of analysis of surface water quality volume of water usage is monitored monthly both for process and domestic usage. Water consumption data July December 2013 and January February 2014 were sighted. Surface water quality is monitored annually (Sungai Kali Tawang, Sungai Cimahi, Sungai Bah Perak, Sungai Greahan, Sungai Sialang dan Sungai Timbang Serdang both for upstream and downstream in Begerpang Estate and Sungai Panglong, hulu Sungai Bah Didua Dua I, hulu Sungai Bah Sidua Dua II, hilir Sungai Titi Payung, hulu dan hilir Sungai Firdaus in Rambong Sialang Estate) except for Sungai Kali Tawang is monitored quarterly. Monitoring result of surface water quality was reviewed for 2 nd semester 2013 against Government Regulation #82/2001 class II. Quality of river water was inline with Government Regulation #82/2001 class II. Minor Nonconformance : Begerpang Estate 1. It was found secondary containment was broken in two locations that could cause oil spill to land. Begerpang Mill 1. Bulking silo was leak therefore the leakage was drained to open drainage. 2. Contaminated water from clay bath directly drained to open drainage. Previously the contaminated water was drained to sludge pit. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 77 of 218

78 Ref. CRITERION AND INDICATORS Reference Department in Is there monitoring of effluent BOD? 1. Permit of Land Mill minor Application from Bupati Deli Serdang #336 year 2011 on 21 April Analysis Report of Waste Water Quality POME is monitored monthly as required by permit of land application on 21 st of April The permit was valid through 3 years. The result of POME monitoring was reviewed including measurement of BOD for period July December 2013 and January February The Ministry of Environment Decree #29/2003 and permit of land application required that BOD of POME flowed to land application is less than 5,000 mg/litre. The result of POME quality during this period was under 5,000 mg/litre. Compliant minor Is there monitoring of mill water use per tonne of FFB? Key Performance Indicator Mill Mill water use per tonne of FFB is monitored monthly. Result of monitoring of mill water use per tonne of FFB was sighted for period July December 2013 and January February It was noted that mill water use per tonne of FFB period July December 2013 and January February 2014 was decreased being compared with budget. Compliant Pemakaian air Budget Realisasi (m3/ton TBS) (m3/ton TBS) Juli Desember ,25 0,94 Januari Februari 1,25 0, Guidance Growers and millers should address the effect of their use of water and the effects of their activities on local water resources. The Water Management Plan may include: 1. Taking account of the efficiency of use and renewability of sources. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 78 of 218

79 Ref. CRITERION AND INDICATORS Reference Department in 2. Ensuring that the use of water does not result in adverse impacts on other users. 3. Avoiding contamination of surface and ground water through run-off of soil, nutrients or chemicals, or as a result of inadequate disposal of waste including POME. 4. Appropriate treatment of mill effluent and regular monitoring of discharge quality, which should be in compliance with national regulations. 4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques Is IPM plan documented and current? 1. Monthly Report of Operational Bagerpang and Rambong Sialang Estate has Compliant major Bagerpang& Estate (Assistant, documented and implemented an IPM system Head of Assistant Rambong includes setting out of technique to be implemented, and Manager) SialangEstate, chemical to be used, locations to be applied, and time periods December frame for implementation Daily record of activities, e.g.: Foreman Book (BKM=Buku Kerja Mandor), 3. Monthly Upkeep Report Estate month March Minute of Review Pest & Diseases 15 March 2014 Programme for IPM was established annually. IPM programme includes pest and diseases detection, census and controlling, use of pesticide and herbicide. IPM program of oil palm plantations have been prepared within the budget in 2013 and 2014, and base on the procedure OP-5.2 Pest and Disease. Stages IPM program, are: 1. Visual observation (visual plant e.g. leaves or broken stems and fruit rot) 2. Conducting a census (to determine the distribution and level of attack) 3. Control (manual, biological or chemical). 4. Census of evaluation (to see the effect of control) minor Is there monitoring extent of IPM implementation including training? 1. Monthly Report of Bagerpang& Rambong SialangEstate, periods December 2013 Operational Estate (Assistant, Head of Assistant and Manager) The implementation of Integrated Pest Management was monitored at Bagerpang and Rambong Sialang Estate. Census of caterpillar, Oryctes (beetle), Ganoderma and rodent were conducted regularly to determine its control. Closed (Minor NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 79 of 218

80 Ref. CRITERION AND INDICATORS Reference Department in 2. Daily record of activities, e.g.: Foreman Book (BKM=Buku Kerja Mandor), 3. Monthly Upkeep Report Estate month March Minute of Review Pest & Diseases 15 March 2014 Controlling is performed based on level of attack. There are three levels of attack: low, medium and high. Result of census was recorded including area of census, type of caterpillar, quantity of caterpillar and level of attack. Material used, dosage and concentration of agro chemical were recorded when controlling pest and disease using agro chemical spraying. So far there were no medium and high attacks of caterpillar and rodent. Recording observations and implementation of pest control is shown in: Program and Realization Census Leaf Eater Pest, Rodent Attack Calculations and ganoderma, Census Results Owl and others. Based on the schedule recording control leaf-eating caterpillars (leaf eater), rotation detection was performed 4 times per year, while the census ganoderma was conducted in 2 rotations per treatment. Monitoring of ganoderma (Ganoderma treatments Summary) at Bagerpang and Rambong Sialang Estate used the control method: the manufacture of sanitary holes, mounding and granting / application trychoderma. Leaf-eating caterpillar detection program oil palm has been established in all divisions, per 3 months (4 rotations per year). Programme for planting beneficial plants (Turnera subulatta, Casia cobanensis and Antigonon leptopus) has been carried out. These beneficial plants could be Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 80 of 218

81 Ref. CRITERION AND INDICATORS Reference Department in seen along the main road and collection road. Some training has been followed by Bagerpang Estate, e.g. Management Control of Pests and Diseases Plants and internal training organized by Bah Lias Resources Station (e.g. on 15 th of April 2013 and 16 th of December 2013, held by Bah Lias Resources Station). Minor Non-conformance : Rambong Sialang Estate There was no evidence that IPM training has been conducted minor Is there monitoring of pesticide toxicity units (a.i. / LD50 per tonne of FFB or per hectare)? 1. Monthly Report of Estate, periods December Monthly Upkeep Rreport Bagerpang and Rambong SialangEstate month March Minute of Review Pest & Diseases 15 March Operational Estate (Assistant, Head of Assistant and Manager) The company has monitored and recorded pesticides use in 2011, 2012 and Usage quantity of pesticides was within the recommended levels. However, monitoring the toxicity of the pesticide and the counting unit LD50/tonne TBS has not been done. Minor Non-conformance : Rambong Sialang Estate Record of calculation and monitoring of toxicity of pesticide unit use could not be shown. Compliant (Minor NCR closed) 4. List of chemical use Bagerpang and Rambpng Sialang Estate Guidance Growers should apply recognised IPM techniques, incorporating cultural, biological, mechanical or physical methods to minimise use of chemicals. Native species should be used in biological control wherever possible. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 81 of 218

82 Ref. CRITERION AND INDICATORS Reference Department in 4.6 Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorised as World Health Organisation Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented major Is there evidence of use of only approved and registered agrochemicals permitted by the relevant authorities? 1. Monitoring of Pesticides Use period 2011, 2012 and The Green Book of Pesticides, Operational Estate (Assistant, Head of Assistant and Manager) The company only used approved and registered agrochemical, permitted by the relevant authority, based on The Green Book of Pesticides issued by The Pesticides Commission of the Agricultural Ministry of the Republic of Indonesia. As seen in the records, agrochemicals used by Estates were include: 1. Ally 20 WDG, license RI. 1257/4-2009/T, expired on 30 th of April Smart 486 AS license RI. 1313/7-2008/T, expired on 7 th of August Garlon 670 EC, license RI. 695/9-2008/T, expired on 6 th of October Klerat RMB, license RI. 666/9-2008/T, expired on 6 th of October Metsulindo 20 WP 6. Starane 290 EC 7. Elang 480 SL 8. Gramoxone 9. Topzone 10. Orthene 75 SP 11. Dipel WP 12. Marshal 5 GR Compliant (Major NCR closed) Agrochemical materials that have expired permit of governments: 1. Smart 486 AS license RI. 1313/7-2008/T, Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 82 of 218

83 Ref. CRITERION AND INDICATORS Reference Department in expired on 7 th of August Garlon 670 EC, license RI. 695/9-2008/T, expired on 6 th of October Klerat RMB, license RI. 666/9-2008/T, expired on 6 th of October Major Non-conformance : Rambong Sialang Estate 1. There was no evidence that only registered and permitted agrochemical used, e.g. starane, metsulindo, topzone, gramoxone, elang, orthene 75 SP, Dipel WP, Marshal 5GR. Begerpang Estate 1. Copy of valid permit has not been provided for several expired permits of agrochemical, e.g. Klerat (6 th of October 2013) major Are there records of pesticide use (including active ingredients used, area treated, amount applied per ha and number of applications)? 1. Monitoring of Pesticides Use period 2011, 2012 and The Green Book of Pesticides, Operational Estate (Assistant, Head of Assistant and Manager) Pesticides were used based on annual work programme. Activities used pesticides among other circle and path spraying, selective spraying etc. Records of pesticides use have been recorded including active ingredient, area treated, amount applied per ha, use of selective product and rotation number of applications. Compliant Several records of pesticide used were sighted, e.g. application schedule, list of pesticide used in oil palm estate, work achievement and pesticide use, stock card of agrochemicals. The record covered date of Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 83 of 218

84 Ref. CRITERION AND INDICATORS Reference Department in application, quantity of pesticide use and name of sprayers. The records were sighted in Division office. It was noted that dosage applied was inline with annual programme. Bah Lias Resources Station (BLRS) constantly monitor the agrochemical type list, containing of the active ingredients, effectiveness trials / applications, the deadline the government's permission, field applications, the recommended dose and concentration major Is there documentary evidence that usage of agrochemicals is appropriate for the target species, given at correct dosage and applied by trained personnel in accordance with the product label and storage instructions? 1. Monthly Report of Estate, periods December Monthly Upkeep Rreport Estate month March Notulen Review Pest & Diseases 15 March Certificate training HerbisidaTerbatas, by the Komisi Pengawasan Pupuk dan Pestisida. Operational Estate (Assistant, Head of Assistant and Manager) Records of pesticides used were well documented including active ingredient used, applied area and use per hectare and number of application rotation. Spraying record Work achievement and pesticide use of weed spraying using agrochemicals was sighted. Dosage of pesticides use, target weed was in-line with the company Work Instruction, instruction on the label and storage instruction. It was noted that agrochemicals used were in-line with target pest, weed or disease, determined dosage. Field observation conducted: Bagerpang Estate Spraying activity (Circle Spraying) in blocks , division 05 year of planting Activity is carried out by a team of sprayers (6 people); equipment used is micron herby and herbicides used are glyposat (Elang 486 SL); dose of 20 cc per litter of water + dimetil Compliant (Major NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 84 of 218

85 Ref. CRITERION AND INDICATORS Reference Department in amina (Lindomin 865 SL); dose of 5 cc per litter of water. Rambong Sialang Estate Spraying activity, that is path (pasar pikul), circle and TPH spraying in block planting year 2007, herbicide used was Glyposat (Eagle) dose: 200 cc / ha and Metsulindo dose: 100 g / ha. Training programs that have been followed by team / spraying workers regarding the use of herbicides in the Bagerpang and Rambong Sialang Estate could not be shown at audit time. Training Herbisida Terbatas by Topzone in Rambong Sialang Training Centre on 6 th of February 2014 was only attended by foreman Major Non-conformance : Rambong Sialang Estate 1. Training regarding agrochemical use was only attended by one group leader (mandor) and one spraying operator from 5 spraying operators in Division I. Begerpang Estate 1. Training regarding agrochemical use was only attended by one group leader (mandor) and one spraying operator from 6 spraying operators in Division 5. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 85 of 218

86 Ref. CRITERION AND INDICATORS Reference Department in Are waste material from agrochemicals 1. Management of Estate including pesticides containers are Hazardous and major properly disposed in accordance with Toxic Material and laws and regulations? Waste Procedure - EMSP Hazardous waste manifest 3. Balance of hazardous waste All agrochemical containers were triple rinsed and then managed by licensed vendor: CV. Amindy Barokah for transporter and PT. Wahana Pamunah Limbah Industri as processor. Hazardous waste manifests were sighted for handling of agrochemical containers on 18 th of December 2013 for Bagerpang Estate and 17 th of December 2013 for Rambong Sialang. Liquid waste from agrochemical was reused for the next spraying application. Compliant minor Is there documentary evidence that use of chemicals categorised as World Health Organisation Type 1A or 1B, or listed by Stockholm or Rotterdam Conventions, and paraquat, is reduced and/or eliminated? 1. Monthly Report of Estate, periods December Monthly Upkeep Rreport Estate month March Notulen Review Pest & Diseases 15 March Certificate training HerbisidaTerbatas, by the Komisi Pengawasan Pupuk dan Pestisida. Operational Estate (Assistant, Head of Assistant and Manager) Chemicals categorised as World Health Organisation type 1A or 1B, or listed by Stockholm or Roterdam Conventions were still used. Paraquat as the active ingredient of Gramoxone was still used in Bagerpang and Rambong Sialang Estate. Policy and commitment of the company has been determined, based on the decision of Director in PT PP London Sumatera Indonesia Tbk., dated 23 rd of September 2013, no. 038/MGT/S & P/IX/2013: Reduce and discontinue use of paraquat herbicide active ingredients in stages: "committed to gradually reduce and discontinue use of the active ingredient paraquat herbicides in weed control by 10% per year from use of paraquat ratio (ltr / ha) began in January 2014, and recommended alternative / substitution of herbicides are effective in controlling weeds 4 th quarter of Compliant Bagerpang Estate Data of paraquat used have been provided since Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 86 of 218

87 Ref. CRITERION AND INDICATORS Reference Department in Year Unit Plan Actual 2012 Liter Liter Liter Has not been planned Nil March) (until Rambong Sialang Estate Data of paraquat used have been provided since Budget for 2012 for Gramoxone (paraquat) using of 2477 litres realization of 316 litres, budget for 2013 use paraquat (Gramoxone) of 984 litres, realization of 85.6 litres. While in 2014 there was budgeted use of paraquat of 27 litres and there was no realization until April Year Unit Plan Actual 2012 Liter 2, Liter minor Are there records of the results of health check-up for those who apply agrochemicals? 1. P-21 Medical Check-Up Procedure 2. Medical check-up record February 2014 for Spraying operators Clinic 2014 Liter 27 Nil (until March) The medical check for employees exposed to agrochemical was performed once a year. The medical check-up reports for February 2014 were sighted and verified. Samples are taken to operators who exposed to agrochemical (spraying operators and workers at chemical warehouses). The medical checkup package was considering working hazard from chemical substances and records of medical check-up Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 87 of 218

88 Ref. CRITERION AND INDICATORS Reference Department in minor Are there records showing that no work with pesticides for pregnant and breastfeeding women? 1. Monthly checking record of pregnant monitoring. 2. List of employee for March Menstruation leave record 4. Interview with sprayer of Bagerpang Estate was conducted on 3 April 2014 and Group discussion with sprayer Rambong Sialang Estate on 2 April 2014 Estate (Nurse) were maintained. There were 10 totally women sprayer for all Divisions in Bagerpang Estate and totally 12 women sprayer for all Divisions in Rambong Sialang Estate. To ensure that there were no pregnant women during spraying of pesticides, there was list of menstruation leave record of women sprayer. During interview and group discussion as well as based on employee list per March 2014 was shown that some of women sprayer have been up to 50 years old (Menopause age). It was indicated that there were no pregnant women sprayer. Group discussion with sprayer of Rambong Sialang and Bagerpang Estate has been confirmed that there was no breastfeeding sprayer during spraying of pesticides. Compliant 4.7 An occupational health and safety plan is documented, effectively communicated and implemented major Is there evidence of documented Occupational Health and Safety (OHS) policy and its implementation? 1. OHS policy, 2. OHS Manual 3. OHS related procedures (e.g. Communication procedure (P-06), Emergency response and handling (P-10), OHS Department Estates and Mill The OHS policy for Mill and Estates has been established and approved by President Director dated 13 th of June OHS Manual system management has been established including relevant procedures. The policy was displayed at strategic locations of Estates and Mill and communicated to employees including contractor workers. The occupational health and safety program 2014 has also been established among other consist of training activity, safety committee meeting, medical check-up, etc. Compliant (Major NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 88 of 218

89 Ref. CRITERION AND INDICATORS Reference Department in Monitoring and measurement (P- 18), Medical Check- Up (OP-21),Safety Permit (P-21), OHS Audit (P-16), PPE Management (P- 01), Working Incident Handling (P-12) 4. OHS Patrol records 5. Inspection and test records from authorised body for boilers, sterilizers, electrical installation, lighting protection, lifting equipment, etc. Boiler, compressors and sterilizers were operated and all have been inspected and tested by third party. Steam vessel, air compressor, generator set, electrical installation, heavy equipment, lightning arrestor have already been inspected by local authority and the permits were evidence. A new Boiler operation has been inspected by local authorities in April Tested parameters including pressure, temperature and water level and these parameters were recorded properly. There was also safety patrol/inspection activity conducted monthly to identify any unsafe acts and conditions; findings were followed up as appropriate; based on verified reports during November Work permit system was established (for tank cleaning). Moving parts of machine/equipment generally has been covered. Safety sign was provided to make workers aware on this hazard and risk. Electrical hazard symbol was provided at each electrical panel. Access for workers to workplace in general was also good e.g. stair was provided with hand rail and platform at height was provided with border to prevent fall risk. Vertical stair in general has been provided with cover as well. Noise level has been measured by third party and used as justification for using ear plug/muff (generator set area). It was noted that noise level at Mill and generator set area was generally higher than TLV. Safety sign for using PPE was provided at these Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 89 of 218

90 Ref. CRITERION AND INDICATORS Reference Department in areas. It was noted that workers appear have a good discipline in wearing this PPE. The procedure for management of PPE has been established. The PPE for each activity has been established, e.g. working at Mill, working at generator set, welder, working at laboratory, harvester, sprayer, fertilizer storage, chemical storage, etc. Observation during this audit generally concluded that PPE has been well provided and implemented. However during unloading activity of FFB it was observed that the FFB transporters/workers from Rambong Sialang Estate were found working without proper PPE. Workers were interviewed during this audit and generally they were understood the risk of their work and the purpose of using PPE. Observation for OHS implementation is conducted to: Rambong Sialang Estate Block Division 02 for spraying, division 01 for harvesting, block division 02 for replanting activity, block 14 Division for pruning and weeding. Begerpang Estate Block Division 05 for harvesting, block division 05 for spraying, block for replanting, harvesting activity, block Division 02 for weeding activity. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 90 of 218

91 Ref. CRITERION AND INDICATORS Reference Department in Begerpang Mill Mills activities (loading/unloading, production process including utilities, workshop, storage, laboratory including waste water pond). Major Non-conformance Begerpang Mill When performing FFB unloading activities at Begerpang POM from Rambong Sialang Estate it was found two workers did not wear safety shoes major Are responsible person for health and safety program identified? Are records of their regular meetings with workers to discuss health, safety and welfare issues kept? 1. Organisation structure of P2K3 2. OHS briefings records 3. OHS committee meeting report for Q1 and Q OHS Department Estates and Mill The safety committee (P2K3) for Mill and two Estates has been established. The chairman of safety committee is Estate or Mill Manager and the secretary of safety committee is an OHS expert as required by local regulation. OHS expert has responsibilities and authorities as OHS Officer. The members of safety committees are representing each area or function within Mill and Estates. Monthly safety committee meeting was held to review the OHS programme and performance. Records were sighted for P2K3 meeting in March Reports were quarterly submitted to local authority as required by local regulation. Compliant minor Is there provision for accident insurance for workers? Copies of insurance payment Head of Administration Accident insurance was provided to workers and this is also including for daily base workers, under the scheme Jamsostek as required by local regulation. Samples of workers for Mil and Estates were taken during this audit and found satisfactory. All samples Compliant (Minor NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 91 of 218

92 Ref. CRITERION AND INDICATORS Reference Department in taken have been provided with accident insurance. However for Rambong Sialang Estate, copies for 4 employees of insurance payment were not available. Minor Non-conformance : Rambong Sialang Estate Base on Rambong Sialang Estate employee data in February 2014 there were 825 workers. However only 821 workers insurance have been paid by the organization that month minor Is there regular health examination by a doctor for workers in stations or exposed to high-risk work? 1. Medical Check-Up (P-21) 2. Medical check-up report Spray operators, welder and boiler operators Clinic The provisions for medical check-up were described in the procedure Medical Check-Up (OP-21). Medical check-up has been planned to be conducted once a year. High-risk worker is assigned to be checked with special test such as lever test, blood test, etc. Result of medical check-up was sighted and evident for period of Compliant minor Is there documented risk assessment for Occupational Health and Safety (OHS)? 1. P-03 Hazard Identification and Risk Assessment Control procedure 2. Hazard identification and risk assessment records OHS Department Estates and Mill OHS risk assessment procedure (P-03) was established and implemented for Mill and Estate activities. Hierarchy of control was considered for planning of risk control. The latest review of OHS risk assessment has been performed on 8 th of May 2013 for Begerpang Mill, 19 th of July 2013 for Begerpang Estate and 29 th of June 2013 for Rambong Sialang Estate that inline with procedure, once a year. Compliant Are there records of OHS training? 1. Training schedule HRD Training records related to OHS were sighted and Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 92 of 218

93 Ref. CRITERION AND INDICATORS Reference Department in minor for year 2013 and Head of 2014 Assistance minor Is there accident and emergency preparedness procedure? 2. Attendance list 3. Training certificate for boiler operator, heavy equipment, hiperkes 1. P-10 (Emergency procedure) 2. Emergency chart for Division and Mill 3. Emergency tools list 4. Emergency simulation plan and realisation record 2013 and 2014 Emergency response team OHS Officer in charge verified during this audit, e.g. boiler certificate and licence for boiler operator, licence for operator of generator set, licence of heavy equipment operator, pesticide training for sprayers, hiperkes training for medical doctor and paramedics, and basic OHS training performed internally such as Fire Training. The emergency conditions have been identified including general fire, land fire, explosion, chemical spillage, riot, and flood and earth quake. The team to handle emergency conditions has been established and consists of fire fighting team, mitigation team, medical team/first aid, evacuation team, transportation team, etc. Evacuation route and muster point were available and made known to the employee. Portable fire extinguishers have been sufficiently provided at Mill and Estate, fix hydrant was provided at Mill, mobile water tank was available, first aid kits were provided sufficiently at each location of Mill and Estate. Regular inspection and maintenance of this emergency equipment were sighted. The schedule for simulation of emergency preparedness and response plan was sighted. It was noted that the latest simulations have been performed in Fire Fighting on 21 st of January Compliant minor Is there evidence of OHS and first aid equipments available at worksites? List of emergency tools Mill Estate Clinic Emergency shower and/or eyewash in general have been provided at chemical warehouse, fertilizer warehouse and chemical mixing area both at Mill and Estate. The content of emergency kits and the function of emergency shower/eyewash were regularly Compliant (Minor NCR Refer to NCR Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 93 of 218

94 Ref. CRITERION AND INDICATORS Reference Department in checked. Mill and Estate was supported with one clinic centre and first aid room at each division office. The group leader (mandor) was provided with first aid kit. They were trained with first aid handling. However the items provided were not matched with the requirements of regulations for both estates and mill. (Refer to NCR ). closed) minor Are workers trained in first aid should be present in both field and mill operation? 1. Emergency team chart 2. Copies of emergency training (February 2014) Head of Assistant First aid kits were sufficiently provided at Mill and Estates including each group leader (mandor) at Estates. Sufficient training in regard first aid treatment has been provided by company doctor/nurses to assistant at Estate and technician at Mill. During the audit, assistant was able in demonstrating the use of first aid kit. Compliant minor Guidance Are there records of the occurrence of any work accidents are maintained and regularly reviewed? 1. P-18 (Monitoring and measurement procedure) 2. P-12 (Incident investigation procedure) 3. Incident investigation records for year 2013 and 2014 Head of Assistant Clinic A procedure for monitoring and measurement OHS performance was described by procedure P-18 and investigation for any incident by procedure P-12. Accident number was reported on monthly basis. Quarterly accident statistic was also reported to local authority. Accident was followed up with treatment of the victim and accident investigation. The last incident recorded was on 24 th of May 2013 at Begerpang Mill. Compliant Growers and millers should ensure that the workplaces, machinery, equipment, transport and processes under their control are safe and without undue risk to health. Growers and millers should ensure that the chemical, physical and biological substances and agents under their control are without undue risk to health when appropriate measures area taken. A safe and healthy working environment should be provided for all workers whether they are employees or contractors. The health and safety plan should also reflect guidance in ILO Convention All staff, workers, small holders and contractors are appropriately trained. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 94 of 218

95 Ref. CRITERION AND INDICATORS Reference Department in Is there documented training 1. Training program HRD programme for staff, employee and 2014 major scheme small holders in accordance Head of with workers positions and 2. Employee job Administration competence? description 3. Employee competency including evaluation of competency 2013 The training program for 2013 has been established which includes internal and external trainings. Internal training consists of the standard operational procedure training, Introduction of Mill Processing, basic OHS, Introduction SMK3, roles and responsibilities of OHS committee, first aider, emergency response and chemical handling, also accident Investigation. External training consists of Human Resource Management, Leadership, Stock Management, Administration (General), General Experts OHS, OHS Fire Expert and OHS Chemistry expert. Evidence of training such as photos, list of attendees and certificates e.g., licence for boiler operator, licence for operator of generator set, license of heavy equipment operator, license for welder, HIPERKES and first aider for paramedics and doctors are available and properly maintained. There were also established training programme for period of 2014 as feedbacks of regulations and training needs identification from Mill and Estates. Compliant Major Are there records of training for each employee kept? Training records (attendance list and certificates) Head of Administration Evidence of training for personnel were verified and sighted, including for boiler operator, hoist crane operator, welders, heavy equipment operators, sprayer, and chemical mixing operator, assistant of estates, pesticide and herbicide training, etc. The system to record personal training was established. Sample was taken for Head Assistant Position Training record from Compliant Is there evidence that the company uses experienced or trained 1. P-13 Contractor Head of Administration Selection process for contractor has been done considering the experiences data. Relevant Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 95 of 218

96 Ref. CRITERION AND INDICATORS Reference Department in major contractors? Evaluation 2. Sample of contracts (UD. Sinar Dunia) documents are verified such as contract, company profile, and list of experience works including competency of the personnel. Monitoring of contractor during perform job is also made through daily monitoring. Sample was taken for Replanting contractor UD. Sinar Dunia. Guidance Training should be given to all staffs and workers by growers and millers to enable them to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of these principles, criteria and guidance. Contractors should be selected for their ability to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of these principles, criteria and guidance. Workers on smallholder plots also need adequate training and skills and this can be achieved through extension activities of growers or mills that purchase fruit from them, by smallholders organisation, or through collaboration with other institutions and organisations. For small holders training records should not be required by anyone working on the farm should be adequately trained for the job they are doing. PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY Ref. CRITERION AND INDICATORS Reference Department in major 5.1 Aspect of plantation and mill management, including replanting, that have environmental impacts are identified, and plant to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement. Is there documented impact assessment? 1. PEL of Begerpang Estate #RC.220/699/B/IV/1 994 dated 18 April RKL RPL of Begerpang Estate #RC.220/948/B/V/1 994 dated 28 May Mill and Estate Impact assessment was documented in: 1. Document of PEL of Begerpang Estate and Ranbong Sialang Estate approved by Ministry of Agricutrural on 18 th of April Document of RKL and RPL of Begerpang Estate and Rambong Sialang approved by Ministry of Agricutrural on 28 th of May Document of UKL UPL of Begerpang Mill Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 96 of 218

97 Ref. CRITERION AND INDICATORS Reference Department in PEL of Rambong Sialang Estate #RC.220/699/B/IV/1 994 dated 18 April UKL UPL of Begerpang Mill #0318/BPDL/DS/20 04 dated 26 March UKL UPL of Timbang Serdang Division #09151/BPDL/DS/2 008 dated 5 September Environmental aspect identification and evaluation procedure EMS- P01 7. Identification and evaluation of environmental aspect and impact approved by Kepala Bapedalda Kabupaten Deli Serdang on 26 th of March Document of UKL UPL of Timbang Serdang Division Bagerpang Estate approved by Kepala Bapedalda Kabupaten Deli Serdang on 5 th of September Impact assessment covered in PEL, e.g.: 1. Water resources 2. Biological diversity 3. Air quality 4. Natural and cultural heritage 5. Environment quality 6. Economical, social and culture Begerpang Mill and Estate and Rambong Sialang Estate implemented procedure for identifying environmental aspect and evaluating its impact based on Environmental Management System ISO 14001:2004. The result of environmental aspect and impact identification and evaluation was documented. As required by the procedure, the information of environmental is reviewed and updated annually. Last review and update of environmental aspect and impact register was performed in June Begerpang Mill and its supply bases have ensured that all activities with significant environmental impacts were managed, e.g. land clearing, use of fertiliser, use Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 97 of 218

98 Ref. CRITERION AND INDICATORS Reference Department in of pesticide, waste water discharged, and emission to air from mill and POME. Control measure were defined and implemented for ensuring that negative environmental impact were prevented or mitigated. Several types of control measures were defined, e.g. controlling of land clearing, use of fertiliser and pesticides based on program, availability WWT, boiler chimney, segregation of waste water. Environmental impact assessment has covered 1. Building new roads, processing mills or other infrastructure, 2. Putting in drainage or irrigation systems. 3. Replanting or expansion of planting area. 4. Disposal of mill effluents. 5. Clearing of remaining natural vegetation major Are there records of regular report on environmental management in accordance with relevant regulations? 1. Report of RKL RPL and UKL UPL 1 st and 2 nd semester 2013 for Begerpang Mill and Estate and Rambong Sialang Estate Environmental and CSR Department Implementation of RKL RPL and UKL UPL is reported every six months. The reports were submitted to Deli Serdang District Environmental Agency (Begerpang Mill and Estate) and Serdang Bedagai District Environmental Agency (Rambong Sialang Estate). However inconsistency was found in the content of report. Complaint (Major NCR closed) 2. Receipt note of RKL RPL submission Major Non-conformance: Begerpang Estate 1. UKL UPL report did not record the soil fertility. UKL UPL document required soil fertility is analysed annually. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 98 of 218

99 Ref. CRITERION AND INDICATORS Reference Department in 2. There was no measurement result of river water quality, community well quality, ground water quality and air ambient measured every six months as required by UKL UPL document. In 2013 measurement was only conducted once. Begerpang Mill 1. UKL UPL report did not mention measurement result of WWTP inlet. UKL UPL document required that WWTP inlet is measured monthly. 2. UKL UPL report has not been sent to several government institutions as required by UKL UPL document, e.g. BKPM Jakarta, Bainpro Sumatera Utara, BLH Sumatera Utara, Dinas Perindustrian Kabupaten Deli Serdang, Dinas Perkebunan Kabupaten Deli Serdang as requested by Dokumen UKL UPL. Report was only sent to Bapedalda Kabupaten Deli Serdang minor Are revisions to environmental management document if there are changes in companies operating areas or activities? 1. Head of General Services Department letter #0214/GSD/G/43/VI /2013 dated 10 June Ministrial of Environment letter #B- 9249/Dep.I/LH/PDA L/08/2013 dated 23 Environmental and CSR Department Document of UKL UPL mentioned willing to update UKL UPL document when there are changes in organisation and or activities (capacity/process/ location, etc) or every 3 years since UKL UPL proposed. PT. PP London Sumatera Indonesia Tbk. Head of General Services Department sent letter #0214/GSD/G/43/VI/2013 dated 10 th of June 2013 to Ministrial of Environment regarding Application of Determination of Environmental Document PT. PP London Sumatera Indonesia Tbk. Deli Serdang Estate Group and Bagerpang Mill. Reply letter from Ministrial Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 99 of 218

100 Ref. CRITERION AND INDICATORS Reference Department in August 2013 of Environment was provided #B- 9249/Dep.I/LH/PDAL/08/2013 dated 23 rd of August The letter mentioned in point f. Related to requirement in UKL UPL document Deli Serdang Estate Group to revise every 3 years. The requirement have to be based on applicable regulation, when there is planning of activities changes from the activities in UKL UPL document, article 50 subsection 2 letter (c) PP 27, 2012 regarding Permit of Environmental is valid therefore the organisation has to change the UKL UPL document but when there are no changes, the UKL UPL document is still valid as long as the activities is continued. Currently PT. PP London Sumatera Indonesia Tbk. has had agreement with PT. Sucofindo #009/ENV/CONT/XI/2013 regarding Consultation in Environmental Document Development including updating of UKL UPL document of Bagerpang Mill due to increase capacity become 50 ton/hour. Guidance Documented impact assessment is AMDAL for plantation area 3000 Ha and UKL/UPL for plantation < 3000 Ha. In view of the fact that development activities in general will alter the environment, it is important to pay due attention to environmental components having the following characteristics: a. Environmental components for which the functions must be maintained, safeguarded and preserved, such as: 1. protection forests, conservation forests, and biosphere reserves 2. water resources 3. biological diversity 4. air quality 5. natural and cultural heritage 6. environment quality 7. environmentally-oriented cultural values b. Environmental components which may undergo fundamental change(s), along with such change(s) as are considered important by the community in the area of the proposed business or activity, for instance: 1. land ownership and control 2. employment and business opportunities 3. living standards of the community 4. public health Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 100 of 218

101 Ref. CRITERION AND INDICATORS Reference Department in AMDAL is Analisis Mengenai Dampak Lingkungan Hidup consisting of 3 (three) main documents; 1) Environmental Impact Assessment, 2) Environmental Management Plan, and 3) Environmental Monitoring Plan. The company must report periodically to related institution on environmental management and monitoring plan implementation. It is the responsibility of the companies to provide sufficient objective evidence to the audit team that the full requirements of an EIA are met for all aspects of plantation and mill operations, and captures all changes over time. Environmental impact assessment should cover the following activities where they are undertaken: 1. Building new roads, processing mills or other infrastructure. 2. Putting in drainage or irrigation systems. 3. Replanting or expansion of planting area. 4. Disposal of mill effluents (see criterion 4.4) 5. Clearing of remaining natural vegetation major Impact assessment may be a non restrictive format, e.g. ISO EMS and/or EIA report incorporating elements spelt out in this criterion and rose through stakeholder consultation. Documented management action plans addressing issues rose from the above impact assessment, which is monitored annually. Effect on the environment can be identified on soil and water resources, air quality (see criterion 5.6), biodiversity and ecosystems, and people s amenities and people amenities (see criterion 6.1 for social impacts), both on and off-site. Stakeholder consultation has a key role in identifying environmental impacts. The inclusion of consultation should result in improved processes to identity impacts and to develop any required mitigation measures. It is important that where activities, techniques or operations change over time, identifications of impacts, and any required mitigation, are updated as necessary. 5.2 The status of rare, threatened or endangered species and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations Are there records of results of identification of any protected, rare, threatened or endangered species, and HCV habitat? Reground checking HCV result 2008 Estate In August 2008, the organization has conducted reground checking HCV area in Rambong Sialang and Bagerpang Estate internally by Senior Conservation Staff. Report of reground checking HCV was only contained map of HCV potential. It did not describe HCV identification analyses. Major Non-conformance : Rambong Sialang Estate and Begerpang Estate Report of reground checking HCV which conducted in August 2008 was only contained map of HCV potential. It did not describe HCV identification analyses. Compliant (Major NCR closed) NCR closed Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 101 of 218

102 Ref. CRITERION AND INDICATORS Reference Department in Based on objective finding, organization has performed HCV Assessment. HCV assessment report has been distributed to each estate. Organization has performed HCV assessment collaborated with PT. SAIL consulting (PT. Siklus Alam Indonesia Lestari). Field assessment was conducted on 20 th 22 nd of May 2014 (Rambong Sialang Estate) and 13 th 15 th of May 2014 (Bagerpang Estate) by four HCV assessor accredited by RSPO. Public consultation was done on 19 th of May 2014 in Bagerpang Estate (attended 38 stakeholders) and on 26 th of May 2014 in Rambong Sialang Estate. It has intended to get aspiration and responses from stakeholders related identification result of HCV and its management plan. HCV assessment report has commented by accredited assessor form Forestry Faculty of IPB. There was no RTE species identified, however it was identified some protected species in appropriate to PP No.7/99 regarding Kucing kuwuk (Felis bengalensis), Raja udang (Alcedo meninting), Burung madu kelapa (Anthreptes malacensis), Burung madu belukar (Anthreptes singalensis), and Piton (Phyton morulus). HCV identified in Rambong Sialang Estate regarding: 1. Critical areas to water catchments (HCV 4.1) regarding: River of Bata 1,2,3 (5.00 ha), Batu Pihit river (1.35 ha), Belidaan river (0.71 ha), Lembah river (3.55 ha), Panglong river (9.14 ha), Water pond in Pondok Bundar (3.07 ha), Water resource Dedet (2.60 ha) and Water resource for Nursery Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 102 of 218

103 Ref. CRITERION AND INDICATORS Reference Department in (0.23 ha) 2. Critical areas to religious significance (HCV 6) regarding: Cemetery of Egaharap (0.18 ha), Cemetery of emplasment (0.78 ha) and Cemetery of Firdaus (0.02 ha). HCV identified in Bagerpang estate regarding: Divisi Batu Lokong 1. Critical areas to water catchments (HCV 4.1) regarding: Batu Lokong rivers (4.94 ha), Water source of housing area : Batu Lokong 1 (0.10 ha), batu Lokong 2 (0.08 ha), Naga Timbul 1 (0,562 ha), Naga timbul 2 (0.18 ha), Namu rambe (0.34 ha), 2. Critical areas to religious significance (HCV 6) regarding: Cemetery of Batu Lokong (0.29 ha), Naga Timbul 1 (0.15 ha), Naga Timbul 2 (0.28 ha), Namu Rambe 1 (0.09 ha), Namu Rambe 2 ( ha), Namu Rambe 3 (0.09 ha), Namu Rambe 4 (0.10 ha) Divisi Tambang Serdang 1. Critical areas to water catchments (HCV 4.1): Serdang river (3.63 ha), Water source 1 (0.02 ha), Water source 2 (0.004 ha), Water source 3 (0.007 ha), Water source 4 (0.01 ha), River of BG 1 (0.98 ha), River of BG 2 (0.23 ha), River of KF 1 (0.39 ha), River of KF 2 (0.71 ha), River of KT 1 (1.14 ha), River of KT 2 (3.55 ha), Water source of Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 103 of 218

104 Ref. CRITERION AND INDICATORS Reference Department in BG (1.34 ha), Water source of KF (0.19), Water source of KT (0.11 ha) 2. Critical areas to religious significance (HCV 6) regarding: Cemetery 1 (0.05 ha), Cemetery M2 (0.06), Cemetery BG (0.52 ha) Cemetery KF (0.36 ha) major If, rare, threatened or endangered species, or high conservation value habitats are present, are appropriate measures to preserve them to be taken? 1. Management of riparian strips procedure (SOP- OP.13) 2. HCV Management and Monitoring procedure (EMS- P16) 3. Record of flora and fauna monitoring Estate Though the HCV assessment result was not available, organization has arranged HCV management generally in company s SOP. The management of HCV potential areas was presently based on the company s SOP of HCV area management. It was sighted that the management and monitoring plan described all HCV (HCV 1-6). Generally HCV management program including: 1. Setting of boundaries 2. Planting areas of prone erosion to river bank and planting wood plant. Compliant 3. Setting of protection signboards, including: prohibition to hunting wildlife, prohibition to protected area. 4. Appoint officer to ensure the implementation of management and monitoring HCV area. 5. Patrol of HCV area. 6. Implemented best management practise for all estate activities especial for immediately adjacent with HCV area. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 104 of 218

105 Ref. CRITERION AND INDICATORS Reference Department in Field observation in several HCV potential areas including Riparian zone of Sialang on Block and Sei Embat River on Block Bagerpang Estate was preserved naturally. Though riparian zone of Lembah on Block has been enriched with woody trees, such as: Gmelina arborea and Tectona grandis However, field observation observed pesticide application up to riverside on riparian zone of Lembah on Block as well as Riparian zone of Bata on Block and Block observed that there ware pesticide application up to riparian zone. Moreover, Upkeep of oil palm in riparian zone of Lembah (water pump of nursery) was manually conducted however intensity of upkeep impact to the surface erosion to river. This case has been described in criterion major. Organization also developed and established monitoring program to ensure condition and the existence of HCVA, including: 1. Existences monitoring of flora and fauna using line transect method. 2. Monitoring condition and the existence of riparian buffer zone including periodically quality monitoring of river water. Monitoring activities were conducted for HCV potential in Rambong Sialang and Bagerpang Estate including flora and fauna monitoring and periodically quality monitoring of river water. Its records were documented and sighted. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 105 of 218

106 Ref. CRITERION AND INDICATORS Reference Department in Are measures taken for protecting 1. Form EMS IA-C6- Environment and major species and their habitats in accordance Evaluation of CSR Department with relevant laws and included actions Compliance with to control any illegal or inappropriate Estate hunting fishing or collecting activities? Laws and Regulations 2. Management of riparian strips procedure (SOP- OP.13) 3. HCV Management and Monitoring procedure (EMS- P16) The HCV management and monitoring plan described measures taken for each HCV and its monitoring. It has described in criterion 5.2 indicator 2. Relevant laws were taken into account for determining appropriate measure including Government regulation #7/1999, President Decree #32/1990, and Indonesian Laws # 5/90, Indonesian Laws # 5/94, Indonesian Laws # 11/1974, Indonesian Laws #7/2004 and Ministry of Forestry Decree # 104/Kpts-11/2000. Compliant minor Are posters and signs warning of the presence of protected species produced, distributed, and made visible to all workers, and the community, including guidelines in handling them? 1. Field observation was conducted on Riparian zone of Sialang on Block and Sei Embat River on Block Bagerpang Estate as well as Riparian zone of Lembah on Block , Riparian zone of Bata on Block and Block Estate Posters and sign boards concerning HCV areas potensial and poster of the presence of protected species are available in the necessary places. Dissemination about protected against HCV area potential and protected of wildlife was conducted in Rambong Sialang Estate on 6 th of January 2014, 3 rd of February 2014 and 21 st 24 th of March Dissemination to worker of Bagerpang Estate was conducted (8 th of March 2014; 10 th, 15 th, 21 st and 29 th of March 2014), however dissemination protection of protected species to Mill worker of Bagerpang was not done. Dissemination to community around Estates was conducted at the same time with stakeholder meeting Compliant (Minor NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 106 of 218

107 Ref. CRITERION AND INDICATORS Reference Department in Rambong Sialang Estate 2. Attendance List of dissemination about protected against HCV area and protected of wildlife in Bagerpang and Rambong Sialang Estate (Stakeholder meeting in Rambong Sialang on 29 th of June 2013 and in Bagerpang on 27 th of July 2013 and 10 th of January 2014). Based on the interview, it was indicated that staff and employees were informed in regard HCV potencial areas pot and ERT species. Minor Non-conformance : Begerpang Mill Dissemination of HCV potensial protection and dissemination of protected species to estate worker has been done however dissemination to worker of Gunung Malayu mill was not done minor Does company appoint dedicated and trained officers to monitor any plans and activities as above? 1. Decision Letter from Estate Manager of Rambong Sialang No # 015/RS/DIV/V12, date on 25 January Decision Letter from Estate Manager of Bagerpang No # 209/BGE/DIV/XII/ 2013, date on 31 Estate Rambong Sialang Estate has appointed water pump operator and Bagerpang Estate has appointed Head of Assistant as an officer to ensure the implementation of management and monitoring plan. These HCV Officers have no particular background for HCV management. Evidence of competent/training record of HCV Officers was not available. Minor Non-conformance : Rambong Sialang Estate Organization has appointed water pump operator as an officer to monitor any plans and activities of HCV management and monitoring program (Decision Letter of Estate Manager No. 015/RS/DIV/V12, date on 25 th Compliant (Minor NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 107 of 218

108 Ref. CRITERION AND INDICATORS Reference Department in December of January 2012). These HCV Officers have no particular background for HCV management. Evidence of competent/training record of HCV Officer was not available. Begerpang Estate Organization has appointed Head of assistance as an officer to monitor any plans and activities of HCV management and monitoring program (Decision Letter of Estate Manager No.209/BGE/DIV/XII/2013, date on 31 st of December 2013). These HCV Officers have no particular background for HCV management. Evidence of competent/training record of HCV Officer was not available. Guidance This information gathering should include checking available biological records and consultation with relevant government departments, research institutes and interested NGOs if appropriate. Depending on the biodiversity values that are present, and the level of available information, some additional field survey work may be required major 5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner. Are all waste and pollutions sources identified and documented? Identification and evaluation of environmental aspect and impact Mill and Estate Identification of waste and pollution sources from Begerpang Mill and Estate and Rambong Sialang Estate activities was evident. The source of pollution, type and control method of waste was documented except for waste and pollution sources of Laboratory activities. Identified wastes were among others: POME, used oil, used oil filter, agrochemical and chemical containers, contaminated rags and domestic wastes. Compliant (Major NCR closed) Major Non-conformance NCR : Begerpang Mill Waste and pollutions sources from laboratory activities Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 108 of 218

109 Ref. CRITERION AND INDICATORS Reference Department in have not been identified and documented major Are estates and mills waste management and disposal implemented to avoid or reduce pollution? 1. Management of Hazardous and Toxic Material and Waste Procedure - EMSP Waste management procedure - SOP EMS-WI-8 3. Daily report compost 4. Permit of temporary storage of hazardous waste for Begerpang Mill #440 year Application letter for temporary storage permit extension #048/GSD/G/43/II/2 014 on 30 January Result of site visit by Bapedalda Kabupaten Deli Serdang regarding temporary storage permit extension on Environmental and CSR Department Mill and Estate Wasres handling procedure including hazardous waste handling has been established and implemented. The procedure required waste to be segregated from point of generation. Implementation of waste management, e.g.: 1. EFB mixed with boiler ash and a part of POME was processed in composting process. Compost was applied in Begerpang Estate. 2. Fibre and Shell from Begerpang Mill was used for boiler feed. Rest of shell was sent to the sister Units for boiler feed. 3. It was observed that organic and inorganic wastes were segregated at point of source. Mill and Estate including housing has provided different of waste bin for each type of waste. Organic and inorganic wastes from Mill and Estate including housing were disposed to landfill in the Estate area. 4. Hazardous wastes generated by Mill and Estate are used oil, used oil filter, used battery, agrochemical and chemical containers waste, medical waste and used lamp. Temporary storage of hazardous waste in Begerpang Mill still held valid permit from Bupati Deli Serdang on 3 rd of May 2012 with permissible period 90 days and valid through 5 years. Permit of temporary storage of hazardous waste in Begerpang Estate and Compliant (Major Nonconformance NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 109 of 218

110 Ref. CRITERION AND INDICATORS Reference Department in 18 February Result of site visit by BLH Kabupaten Serdang Bedagai regarding temporary storage permit extension on 14 February Contractual agreement of PT. PP London Sumatera Indonesia Tbk. and CV. Amindy Barokah and CV. Karisma #005/ENV/Cont/XII/ Contractual agreement of PT. PP London Sumatera Indonesia Tbk. and CV. Amindy Barokah and PT. Wahana Pamunah Limbah Industri #007/ENV/Cont/XII/ Permit of CV. Amidy Barokah as Rambong Sialang Estate was expired. The organisation has sent letter to extent the permit to Deli Serdang and Serdang Bedagai Distric Environmental Agency. These hazardous wastes were managed by licensed vendor: CV. Amindy Barokah as transporter of all wastes, PT. Wahana Pamunah Limbah Industri as processor of used filter, agrochemical and chemical containers waste, used lamp, PT. Nonferindo Utama as processor of used battery, CV. Karisma as processor of used oil. Disposal of hazardous waste was completed with manifest. Manifest of disposal were sighted for 17 th of December 2013 for Rambond Sialang Estate and 18 th of December 2013 for Begerpang Mill and Estate. Hazardous waste was reported to Deli Serdang District Environmental Agency and Serdang Bedagai District Environmental Agency. Receipt note was also sighted. Several inconsistencies were found in waste management and disposal implementation. Major Non-conformance NCR : Rambong Sialang Estate 1. There was no evidence that contaminated rags and gloves were disposed as hazardous waste. 2. Report of hazardous waste management Q3 and Q4 was only sent to BLH Serdang Bedagai. There was no evidence that hazardous waste management report was sent to Ministry of Environment, BLH Propinsi Sumatera Utara and Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 110 of 218

111 Ref. CRITERION AND INDICATORS Reference Department in hazardous waste transporter minor Is there management plan of hazardous waste and instruction of disposal of agrochemicals and their containers waste in accordance with the product label and existing regulations? 11. Hazardous waste manifest 12. Report of hazardous waste management 3 rd and 4 th quarter Receipt note of report of hazardous waste management submission 1. Management of Hazardous and Toxic Material and Waste Procedure - EMSP Hazardous waste manifest 3. Balance of hazardous waste Estate Pusat Pengeloaan Ekoregion Sumatera. Begerpang Estate 1. There was no fence at the final landfill of non hazardous waste. 2. Report of hazardous waste management Q3 and Q4 was only sent to BLH Deli Serdang. There was no evidence that hazardous waste management report was sent to Ministry of Environment, BLH Propinsi Sumatera Utara and Pusat Pengelolaan Ekoregion Sumatera. All agrochemical containers were triple rinsed and then managed by licensed vendor: CV. Amindy Barokah for transporter and PT. Wahana Pamunah Limbah Industri as processor. Hazardous waste manifests were sighted for handling of agrochemical containers on 18 th of December 2013 for Bagerpang Estate and 17 th of December 2013 for Rambong Sialang. Liquid waste from agrochemical was reused for the next spraying application. Compliant minor Are there records of waste monitoring or analysis? Balance sheet of hazardous waste Mill and Estate The hazardous wastes balance sheet was made for each type of hazardous waste: waste oil, waste battery, used filters, agrochemical and chemical containers waste, used lamp and medical waste. Record was also provided for fertiliser sacks. Compliant Guidance The waste management and disposal plan should include measures for: 1. Identifying and monitoring sources of waste and pollution. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 111 of 218

112 Ref. CRITERION AND INDICATORS Reference Department in 2. Improving the efficiency of resource utilisation and recycling potential wastes as nutrients or converting them into value added products (e.g. through animal feeding programmes). 3. Appropriate disposal of hazardous chemicals and their containers. Surplus of chemicals container should be disposed of or cleaned in an environmentally and socially responsible way (e.g. returned to the vendor or cleaned using a triple rinse method), such that there is no risk of contamination of water sources or to human health. The disposal instruction on manufacture s label should be adhered to minor Efficiency of energy use and use of renewable energy is maximised. Are records of monitoring renewable energy use and its efficiency analysis? (energy/ton CPO, or energy/ton palm product) 1. Key Performance Indicator 2. Monitoring of renewable energy use Mill Fibre and shell was used as boiler feed. Volume of fibre and shell used for boiler feed is estimated monthly. Record sighted for 2012 and Total energy generated by steam turbine generator for Begerpang Mill was recorded monthly and evaluated yearly as total renewable energy use (ton fibre and shell) per ton CPO. Data of total renewable energy use 2012 and 2013: Compliant YEAR CPO (Ton) Renewable Renewable energy use energy use (shell (ton) (ton shell/ ton CPO) , , , , YEAR CPO (Ton) Renewable Renewable energy use energy use (fiber (ton) (ton fiber/ ton CPO) , , , , minor Are records of monitoring of fossil fuels use for operational reason and its efficiency analysis? 1. Key Performance Indicator 2. Monitoring of Mill and Estate Fossil fuel used for Mill and Estate activities were recorded. Fossil fuel was used for heavy equipment, diesel generator and FFB transportation. Minor NCR Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 112 of 218

113 Ref. CRITERION AND INDICATORS Reference Department in fossil fuels use In 2013 fossil fuel use in Mill was below the budget. And fossil fuel budget in 2014 is less than budget in In 2013 fossil fuel use in Estate has been recorded however its efficiency has not been analysed yet. YEAR CPO (Ton) Fossil fuel use Fossil fuel (L) use L/ton CPO , , , , Minor Non-conformance : Rambong Sialang Estate, Begerpang Estate There was no evidence for efficiency analysis of fossil fuels use. Guidance Growers and mills should assess the direct energy use of their operations, including fuel and electricity, and energy efficiency of their operations. This should include estimation of fuel use by contractors, including all transport and machinery operations. The feasibility of collecting and using biogas should be studied if possible. 5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice major Is there documented assessment where fire has been used for preparing land for replanting? Standard Operating Procedure Oil Palm- Development Procedures, LONSUM, march 2008 Estate The procedure of replanting mentioned that field assistant should do an inspection to ensure that the contractor does not burn for land preparation for replanting. Inspection report was evident. Replanting 2012 and 2013 was performed in Division V. No fire used for preparing land for replanting. During field observation there is no evidence of fire useing during Not Applicable Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 113 of 218

114 Ref. CRITERION AND INDICATORS Reference Department in land preparation on replanting area in Division V Major Are there records of implementation of zero burning policy? Standard Operating Procedure Oil Palm- Development Procedures, LONSUM, march 2008 Estate The organisation has policy of zero burning documented in the procedure of land preparation strategies and parameters no. OP 2.8 revises in March 2008 and replace in September 2006: The use any fire with any reason is strictly prohibited, such as activities in land preparation of new developments areas and replanting. Realisation of land preparation for replanting activities was well documented and reported including activities of chipping, ripping, cleaning ditch, making ditch and total area prepared. Zero burning. Compliant major Are there procedure and records of emergency responses to land burning (tanggap darurat kebakaran lahan)? Land Burning Emergency procedure Estate Land Burning Emergency procedure Emergency for handling land fire has been established. The team to handle emergency conditions has been established consists of fire fighting team, medical team, evacuation team, transportation team, mitigation team etc. The simulation of land fire handling has been performed on 21 st of January 2014, reports were sighted. Compliant minor Are there presence of appropriate fire extinguishers and facilities, depending on the risks assessment? 1. List of emergency tools 2. Emergency kit inspection records Estate The equipment for land fire handling has been provided, this including portable fire extinguisher, mobile water truck and other mechanical equipment for handling the fire. This equipment was justified sufficient based on the simulation that conducted once a year. Compliant Guidance Fire should be used only where an assessment has demonstrated that it is the most effective and least environmentally damaging option for minimising the risk of severe pest and disease Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 114 of 218

115 5.6 Ref. CRITERION AND INDICATORS Reference Department in outbreaks, and with evidence that fire-use is carefully controlled. Use of fire on peat soils should be prohibited Major Plans to reduce pollution and emissions, including greenhouse gasses, are developed, implemented and monitored. Is there evidence of identification of emission sources at mills? Identification and evaluation of environmental aspect and impact Mill Identification of pollution and emission sources at Begerpang Mill activities was evident. The source of pollution, type of pollution and its control were documented, e.g. stack of boiler, electricity generator and heavy equipment, methane from WWTP and fertiliser. Compliant major Is there monitoring of emission quality of the sources identified? Report of analysis for boiler emission, generator emission, ambient air, noise Mill and Estate Monitoring of pollution and emission quality of identified sources has been programmed. Monitoring and measurement results for 1 st and 2 nd semester 2013 were sighted for boiler emission against Environment Ministry Decree #07/2007, diesel electricity generator against Environment Ministry Decree #Per13/Menlh/2009, vehicle and heavy equipment emission against Environment Ministry Decree #05/2006, odour emission against Environment Ministry Decree #50/Menlh/11/96, ambient noise against Environment Ministry Decree #48/Menlh/11/96, also ambient air quality against Government Regulation #41/1999. Compliant (Major NCR closed) Major Non-conformance : Rambong Sialang Estate There are 31 FFB transportation vehicles. Measurement result of emission of FFB transportation vehicles was provided in Book of Periodical Vehicle Inspection (KIR). However it was not all KIR stated measurement result of emission, e.g. BK 9206 CI, BK 8995 CI, BK 8870 CG, BK 8742 CI, BK 8701 CI, BK 9001 CN. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 115 of 218

116 Ref. CRITERION AND INDICATORS Reference Department in Begerpang Estate 1. Measurement result of emission was provided in Book of Periodical Vehicle Inspection (KIR). However not all KIR stated measurement result of emission, e.g. all FFB transportation vehicles BK 9675 CK, BK 8802 CI, BK 9241 CS, B 8395 CP. 2. There was no measurement result of heavy equipment emission, e.g. traktor TR04, traktor TR05, traktor TR06, traktor TR07. Begerpang Mill Measurement result of emission was provided in Book of Periodical Vehicle Inspection (KIR). However it was not all KIR stated measurement result of emission, e.g. BK 9023 CA minor Are there records of efforts and strategies employed to reduce pollution and emissions? Environmental improvement programs Mill and Estate Efforts and strategies employed to reduce pollution and emissions were sighted, e.g.: 1. Substitute diesel fuel to fibre and shell to operate boiler. Compliant 2. Conduct preventive maintenance regularly based on working hour of electricity generator 3. Install dust collector to control boiler ash. 4. Grow Sansevieria (Lidah mertua) in housing and office. 5. Manuring application based on recommendation. 6. Composting process from EFB, boiler ash and Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 116 of 218

117 Ref. CRITERION AND INDICATORS Reference Department in POME 7. No wastes burning. 8. Waste bins were provided in housing minor Are there records of identification, monitoring, and treatment methodology for POME? 1. Effluent Treatment LA procedure POM-SOP/12 Mill A part of POME was processed in 3 ponds: acidification (pond A), anaerobic (pond C) and facultative (pond D). Run off water from composting was transferred to pond D. Compliant 2. Certificate of analysis of waste water quality 3. Permit of Land Application from Bupati Deli Serdang #336 year 2011 on 21 April Report of Land Application period July December 2013 POME from pond D was applied in the Begerpang Estate according to permit of land application from Bupati Deli Serdang on 21 st of April 2011 and valid through 5 years. POME was monitored by Begerpang Mill laboratory for parameter ph and debit and external laboratory for parameter required by permit of land application (ph, BOD, COD, Cu, Pb, Cd, Zn, oil and grease). The result of POME monitoring was reviewed including measurement of BOD for period July December 2013 and January February The Ministry of Environment Decree #29/2003 and permit of land application required that BOD of POME flowed to land application is less than 5,000 mg/litre. The result of POME quality during this period was under 5,000 mg/litre. Monitoring well in area of LA, non LA and community is conducted every 6 months. The result of monitoring well measurement was reviewed for period 1 st and 2 nd Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 117 of 218

118 Ref. CRITERION AND INDICATORS Reference Department in semester Result mentioned that quality of monitoring well was inline with Per- 416/Menkes/Per/IX/1990. Report of land application is reported to Environmental Agency of Kabupaten Deli Serdang. Receipt note was also sighted. PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in 6.1 Aspects of plantation and mill management including replanting that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement major Is there documented environmental and social impact assessment, including details of positive and negative social effect that may be caused by plantations and mills, and documented participation of affected parties and local communities? 1. Presentation of Environmental Evaluation- Penyajian Evaluasi Lingkungan (PEL) of Bagerpang 1993, #RC. 220/699/13/IV/94 2. UKL-UPL document of PT. Karimun 2008, #08146/BPDL/DS/2 Estate and Mill Documentation of impact analyses covering negative and positive impacts of social from mill and estate did not clearly describe about scope of study as well as the impact of Mill and Estate activities. Record of participation of affected parties and local communities in Presentation of Environmental Evaluation-Penyajian Evaluasi Lingkungan (PEL) was not available. Major Non-conformance : 1. Though the organization has arranged Presentation of Environmental Evaluation- Penyajian Evaluasi Lingkungan (PEL) Document (PEL of Bagerpang 1993, #RC. 220/699/13/IV/94 and UKL-UPL document of PT. Compliant (Major Nonconformance closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 118 of 218

119 Ref. CRITERION AND INDICATORS Reference Department in 008 (At the present, Ex PT. Karimun be able as Timbang Serdang Division Bagerpang Estate) 3. Presentation of Environmental Evaluation- Penyajian Evaluasi Lingkungan (PEL) of Rambong Sialang 1993, #RC. 220/699/B/IV/94 4. Social mapping of Bagerpang on October Social mapping of Rambong Sialang on 7-13 October 2013 Karimun 2008, #08146/BPDL/DS/2008 and PEL of Rambong Sialang 1993, #RC. 220/699/B/IV/94), however it did not clearly describe scope of study as well as the impact of Mill and Estate activities. 2. Organization has also conducted social mapping covering village around Estates (Each of Rambong Sialang and Bagerpang covering 11 villages around estate) however its result was only used to arrange CSR program Rambong Sialang Estate 1. Presentation of Environmental Evaluation- Penyajian Evaluasi Lingkungan (PEL) of Rambong Sialang 1993, No # RC. 220/699/B/IV/94 was not described clearly about scope of study as well as the impact of mill and estate activities. 2. Organization has conducted social mapping on 7 th 13 th of October 2013 in Rambong Sialang Estate and 29 th 30 th of October 2013 in Begerpang Estate covering 11 villages around estate however its result was only used to arrange CSR program NCR closed 1. Based on objective finding during audit, organization has performed social impact analyses. Social impact assessment result has Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 119 of 218

120 Ref. CRITERION AND INDICATORS Reference Department in been distributed to each estate. 2. Organization has conducted social impact analyses based on Social mapping result on 7 th 8 th of October 2013 in Rambong Sialang and 29 th 30 th of October 2013 in Bagerpang as well as social survey which performed by Public relation officer and Community Development Officer in July 2014 covered village around estate. Social survey was conducted involving village head around estate. Some aspects were considered during assessment such as land identities, residence, economy, social cultural and public health. Negative and positive impacts were identified during assessment. It was noted that negative and positive issues from social assessment results for all estates and mills were similar. Negative impacts were identified such as: Transport of dusting and noising originating from FFB (public health), social envy from inequitable donation for surrounding community (social cultural). Positive impacts were identified such as: Regional development and increased the village economy, ease of road access, ease of information access, reducing jobless, improved the public education and job opportunities minor Are there regular monitoring and management of social impact, with the participation of local communities? Environment management and monitoring plan (RKL- RPL) Report of Rambong Sialang and Bagerpang Estate and Mill Record of social impact monitoring with local community participation was not available. Though the report of environment management and monitoring plan implementation has been arranged based on Presentation of Environmental Evaluation-Penyajian Evaluasi Lingkungan (PEL) however evidence of local Minor NCR Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 120 of 218

121 Ref. CRITERION AND INDICATORS Reference Department in community participation was not available. Minor Non-conformance : Rambong Sialang Estate and Begerpang Estate Though the report of environment management and monitoring plan implementation has been arranged based on Presentation of Environmental Evaluation- Penyajian Evaluasi Lingkungan (PEL) however evidence of local community participation was not available minor Are results of revision to the environmental management document that encompasses social impact assessment in the event there are changes to company s operational scope, in accordance with existing regulations? 1. Head of General Services Department letter #0214/GSD/G/43/ VI/2013 dated 10 June Ministrial of Environment letter #B- 9249/Dep.I/LH/PD AL/08/2013 dated 23 August 2013 Environmental and CSR Department Document of UKL UPL mentioned that willing to update UKL UPL document when there are changes in organisation and or activities (capacity/process/location, etc) or every 3 years since UKL UPL proposed. PT. PP London Sumatera Indonesia Tbk. Head of General Services Department sent letter #0214/GSD/G/43/VI/2013 dated 10 th of June 2013 to Ministrial of Environment regarding Application of Determination of Environmental Document PT. PP London Sumatera Indonesia Tbk. Deli Serdang Estate Group and Bagerpang Mill. Reply letter from Ministrial of Environment was provided #B- 9249/Dep.I/LH/PDAL/08/2013 dated 23 rd of August Compliant The letter mentioned in point f. Related to requirement in UKL UPL document Deli Serdang Estate Group to revise every 3 years. The requirement have to be based on applicable regulation, when there is planning of activities changes from the activities in UKL UPL document, article 50 subsection 2 letter (c) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 121 of 218

122 Ref. CRITERION AND INDICATORS Reference Department in PP 27, 2012 regarding Permit of Environmental is valid therefore the organisation has to change the UKL UPL document but if there were no changes, the UKL UPL document is still valid as long as the activities is continued. Currently PT. PP London Sumatera Indonesia Tbk. has had agreement with PT. Sucofindo #009/ENV/CONT/XI/2013 regarding Consultation in Environmental Document Development including updating of UKL UPL document of Bagerpang Mill due to increase capacity become 50 tons/hour minor Are there a regular and scheduled environmental management and monitoring report? RKL-RPL report of Rambong Sialang and Bagerpang Estate for July- December 2013 period. Estate and Mill Though the documentation of impact analyses covering negative and positive impacts of social was not available, organization has conducted monitored social issue based on SPO- 01 Logbook of aspiration and complaint There was reporting social impact management and monitoring implementation in RKL-RPL report for July- December 2013 period. Compliant minor Are particular attention paid to the impacts of outgrower schemes (were the plantation includes such a scheme) NA NA There was no out grower scheme in PT. PP London Sumatera Indonesia Tb. Bagerpang and Rambong Sialang Estate Not Applicable Guidance The identification of social impacts can use AMDAL as a part of the process but it is the responsibility of the companies to provide sufficient objective evidence to the audit team that the full requirements of an SEIA are met for all aspects of plantation and mill operations, and captures all changes over time. Identification of social impacts should be carried out by the grower with the participation of the affected parties as appropriate to the situation. The involvement of independent experts should be sought where this is considered necessary to ensure that all impacts (both positive and negative) are identified. Potential social impacts may results from activities such as: building new roads, processing mills or other infrastructure; replanting with different crops or expansion of planting area; disposal of mill effluents; clearing of remaining natural vegetation; changes in employee numbers or employment terms. Plantation and mill management may have social impacts (positive or negative) on factors such as: Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 122 of 218

123 Ref. CRITERION AND INDICATORS Reference Department in 1. Access and use rights 2. Economic livelihoods (e.g. paid employment) and working conditions. 3. Subsistence activities. 4. Cultural and religious values. 5. Health and education facilities. Other community values, resulting from changes such as improved transport/communication or arrival of substantial migrant labour force. 6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties major Is there documented procedure and records of communication and consultation with the communities? 1. Communication procedure (EMS- P05), date on 10 August SPO-01 Logbook aspiration and complaint stakeholder. Head of Administration- KTU Documented procedure for communication and consultation with public was established. Stage of communication and consultation with public was described in the procedure. However, there was no evidence of communication procedure (EMS-P05, Communication) arranged in collaboration with local communities and other affected or interested parties. Though the stakeholder meeting has been done however it did not discuss about procedure EMS-P05. Compliant (Major NCR closed) 3. Meeting with stakeholder of Bagerpang has been conducted on 27 July 2013 attended by 88 stakeholder (Village head, head of district-camat, BPD, District police, teacher of school around estate and Related procedure described communication and consultation including aspiration and complaint methods. Communication and consultation can be done using verbal or letter. Result of communication and consultation was recorded in the log logbook SPO-01. Most of requests were road maintenance, donation, facilities support, invitation for memorial, invitation to follow the event held by the stakeholders, for example: invitation for memorial of religious holidays, etc. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 123 of 218

124 Ref. CRITERION AND INDICATORS Reference Department in community leader 4. Stakeholder meeting of Rambong Sialang has been conducted on 29 July 2013 attended by 38 stakeholder (Village head, head of district-camat, BPD, District police and community leader Major Non-conformance : Rambong Sialang Estate Stakeholder meeting has been conducted on 29 th of July 2013 attended by 38 stakeholders (Village head, head of district-camat, BPD, District police and community leader) however it only discussed limited issues including CSR program, dissemination and transparency sustainable oil palm (environment management, mill processes, HCV and wildlife management, environment policy and OHS policy). Begerpang Estate Meeting with stakeholder has been conducted on 27 th of July 2013 attended by 88 stakeholders (Village head, head of district-camat, BPD, District police, teacher of school around estate and community leader), however it only discussed limited issues including CSR program, dissemination and transparency sustainable oil palm (environment management, mill processes, HCV and wildlife management, environment policy and OHS policy) minor Is a list of stakeholders maintained? List of stakeholder, December 2013 Head of administration- KTU Stakeholder list was made and mentioned interested party. Stakeholder list made detail, address and phone numbers which were mentioned in the list. It was updated in December Stakeholder list covered: 1. Government institution including; Head of Regency (Bupati), Forestry and Plantation local Department, Cooperative Deparment, Health Deparment, Labour, transmigration and social local Department, Camat, Village Head around Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 124 of 218

125 Ref. CRITERION AND INDICATORS Reference Department in estate and mill, Police of district. 2. Local Community including: Christian and Moslem leader 3. Worker Organization : SPSI 4. Local NGO: Topan. During the audit, s were also sent to National/International NGO to invite for comment to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. (Refer to Table 12. List of nasional/international NGO for consultation) minor Are there records of local communities aspiration and responses or follow up actions by companies to there requirements? 1. Group discussion with Village Head as well as Christian and Moslem leader around Bagerpang Mill and Estate on 4 April Interview with Village Head around Rambong Sialang Estate on 2 April SPO-01 Logbook aspiration and complaint stakeholder Mill and Estate Community aspirations were kept and recorded by the Head of Administration on logbook stakeholder aspiration e.g. Assist clean water, road maintenance, donation, invitation for memorial, invitation to follow the event held by the stakeholders, etc. Social mapping and survey has intended to get aspiration and responses from stakeholder related social impact from mill and estate activities. In general, group discussion and interview result indicated that the communication between local society and Estate/Mill was evident where some agreements were made to improve social relationship. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 125 of 218

126 Ref. CRITERION AND INDICATORS Reference Department in Is there a dedicated person responsible Environment and for consulting and communicating with CSR Department local communities? minor Guidance 1. Communication procedure (EMS- P05) date on 10 August Manager letter of Rambong Sialang #152/RS/DIV/X/12, 7 October Manager letter of Bagerpang #183/BGE/DIV/XI/2 013, on 20 November 2013 Estate Organization has appointed that public relation officer of each Estate has responsible to coordinate communication and consultation with stakeholder. Environment and CSR Coordinator have responsible coordinate communication and consultation corporate level issue. Compliant Decision that the growers or mills are planning to make should be made clear, so that local communities and other interested parties understand the purpose of the communication and/or consultation. Communication and consultation mechanism should be designated in collaboration with local communities and other affected or interested parties. These should consider the use of existing local mechanism and languages. Consideration should be given to the existence/formation of a multi-stakeholder forum. Communication should take into account differential access to information of women as compared to men, village leaders as compared to day labourers, new versus established community groups, and different ethnic groups. Consideration should be given to involving third parties, such as disinterested community groups, NGSs, government (or a combination of these) to facilitate smallholder schemes and communities, and others as appropriate, in these communications. 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties major Is there an open mechanism, which is accepted by affected parties, to receive complaints and resolve dispute in an effective, timely and appropriate manner? 1. Communication procedure (EMS- P05), date on 10 August Internal Memorandum of HR Director #028/HRD/CIR/IV/2 011, on 1 April Estate and Mill (Head of administration- KTU) Procedure for complaints and grievances was determined with different acces between external and internal stakeholders (woker and or union worker). Mechanism of complaints and grievances from exsternal stakeholder was described in procedure EMS-P05, whereas complaint mechanism from internal was described in internal memo of HR Director and also HR Policy on 25 th of May 2005 Internal Complaint procedure Complaints and grievances can be done using verbal Compliant (Major NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 126 of 218

127 Ref. CRITERION AND INDICATORS Reference Department in HR Policy on 25 May 2005 Internal Complaint procedure 4. SPO-01 Logbook aspiration and complaint stakeholder. 5. Communication book 6. Meeting with stakeholder of Bagerpang Estate has been conducted on 27 July 2013 attended by 88 stakeholder (Village Head, Head of District- Camat, BPD, District police, teacher of school around estate and community leader 7. Stakeholder meeting of Rambong Sialang Estate has been or letter. Complaint from external stakeholder was recorded on SPO 01 and was recorded in communication book if any complaint from internal. During audit, there was no evidence of communication procedure (EMS-P05, Communication) arranged in collaboration with local communities and other affected or interested parties. Though the stakeholder meeting has been done however it did not discuss about procedure EMS-P05. Related procedure described communication and consultation including aspiration and complaint methods. Major Non-conformance : Rambong Sialang Estate Stakeholder meeting has been conducted on 29 th of July 2013 attended by 38 stakeholders (Village head, head of district-camat, BPD, District police and community leader) however it only discussed limited issues including CSR program, dissemination and transparency sustainable oil palm (environment management, mill processes, HCV and wildlife management, environment policy and OHS policy) Begerpang Estate Meeting with stakeholder has been conducted on 27 th of July 2013 attended by 88 stakeholders (Village head, head of district-camat, BPD, District police, teacher of school around estate and community leader), however it only discussed limited issues including CSR program, dissemination and Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 127 of 218

128 Ref. CRITERION AND INDICATORS Reference Department in conducted on 29 July 2013 attended by 38 stakeholder (Village Head, Head of District- Camat, BPD, District police and community leader transparency sustainable oil palm (environment management, mill processes, HCV and wildlife management, environment policy and OHS policy) minor Are there records of handling of the complaints? 1. Communication procedure (EMS- P05), date on 10 August Internal Memorandum of HR Director #28/HRD/CIR/IV/2 011, on 1 April HR Policy on 25 May 2005 Internal Complaint procedure Estate and Mill (Head of administration- KTU) Group discussion with Village Head around Bagerpang Mill and Estate was indicated there was no complaint and grievances from surrounding community. During interview with Village Head around Rambong Sialang, it was informed that there was land dispute with community of Pergulaan Village. During audit, this issue has been clarified. Clarification result was shown that its issue has been resolved through the courts. Clarification result following as: Companies historical 1. Concession area of PT. PP Lonsum Sumatera Indonesia Tbk. is a former concession of PT. Harrisons & Crossfield (H&C). In 1908, H&C established Harrison & Crossfiled Plantation Ltd. H&C bought Gunung Malayu Estate in Compliant 4. SPO-01 Logbook aspiration and complaint stakeholder. 5. Communication book 2. In 1928 H&C bought Tjong Ah Fie Plantation including Rambong Sialang, Egaharap, Bengambing, Tanjoeng Poteri, Bandar Teloe, Suka Radjin, Nagaga, Maligas, Bolok, Bah Lias, Bah Hilang and Mardjandi. 3. Based on Legal entities of PT. PP London Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 128 of 218

129 Ref. CRITERION AND INDICATORS Reference Department in 6. Group discussion with Village Head as well as Christian and Moslem leader around Bagerpang Mill and Estate on 4 April Interview with Village Head around Rambong Sialang Estate on 2 April Clarification process with Rambong Sialang Estate Manager on 2 April 2014 and Bagerpang Estate Manager on 4 April 2014 Sumatera Indonesia #93/1962 concession area including: a. Asahan Rubber Estate Limited is a Gunung Melayu Estate. b. The Bah Lias Rubber Estate Limited is a Bah Lias Estate c. Central Sumatra Rubber Estate Limited is a Turangi, Bungara and Pulau Rambung Estate. d. Namoe Tonga Rubber Estate Limited is a Turangi Estate e. The Sialang Rubber Estate Limited is a Rambong Sialang Estate f. The Soengei Rampah Rubber and Coconut Plantations Company Limited is a Rambong Sialang Estate g. The Tandjung Rubber Company Limited is a Sungai Merah Estate h. Toerangie (Sumatra) Rubber and Produce Estate Limited is a Turangi Estate i. The United Langkat Plantation Company Limited is a Turangi, Bungara and Pulau Rambung Estae j. The United Serdang (Sumatera) Rubber Plan Limited is a Bagerpang, Sungai Merah and Dolok Estate. 4. In 1964, based on President Decree #6/1964, plantation area was under the control and supervision of Republic of Indonesia Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 129 of 218

130 Ref. CRITERION AND INDICATORS Reference Department in Government under the name Dwikora Plantation. 5. In 1968, its control and supervision was returned to Horrison & Crosfield, LTD which established based on Agreement, dated on 20 th of March Dispute Resolution 1. Organization has given compensation on 5 th of February 1976 to 133 communities. It was documented on stamped receipt which was signed by compensation beneficiaries and it was also unknown as well as signed by Puterpa (Tentara/Koramil), Musda Sei Rampah District/Asisten Wedana (Camat) and Dandistrict POLRI/District Police. For example: Compensation on berhalf of Ranta, No. Induk Garapan/Arable number 15, as big as IDR. 2. However, there was still fluctuation of land dispute. Therefore, on 30 th of September 2003 Sawit Watch wrote letter to National Land Agency-BPN (Letter No # 074/I-SW/IX/2003) to ask progress of land case settlement of Pergulaan Village communities. 3. Based on letter of Sawit Watch, on 12 th of January 2004 BPN wrote letter to PT. Lonsum Indonesia to verify progress of land case settlement (Letter No. 540.I-056) 4. On 5 th of February 2004 PT. PP London Sumatera Indonesia Tbk. has sent a reply to Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 130 of 218

131 Ref. CRITERION AND INDICATORS Reference Department in BPN (letter.#0138/gad/g/43/i/04). It covered land historical, dispute resolution and land legality (HGU). Dispute resolution will be done through the courts 5. On 12 th of September 2008, District Court of Tebing Tinggi rejected the plaintiff and declared that the plaintiff was unacceptable Rekonpensi (Niet), Decision letter #318 PDT/2008/PT.MDN (in the case of Tumiran against PT.PP London Sumatera Indonesia Tbk.) anvankelijke verklaard. These decisions were strengthening of the decision of Tebing Tinggi Court on 20 th of September 2009 (Decision letter #35/Pdt.G/2006/PN.TTD). During group discussion, Village Head of Paya Itik informed that the compost application in the area caused flies growth on community housing around Estate. Moreover, deepening of security trench which adjacent with SDN Paya Itik potentially cause of the children could be fall in to trench. During audit, this issue has been clarified. It would be checked at the next audit. Clarification result following as: Compost apllication 1. Organization has clarified these issues for Head of Paya Itik Village on 4 th of April Although there was no children fall in to trench, however the distance between the trench with school building (± 5 meters) potentially that there could be children playing near security trench and they Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 131 of 218

132 Ref. CRITERION AND INDICATORS Reference Department in could fall in to it. 2. At the same day, organization has approved and agreed to conduct planting Bamboo as a live fences and could be performed the maintenance of bamboo. Implementation of its agreement would be checked at the next audit Deepening of security trench 1. Filed observation was conducted by organization with Village Head of Paya Itik on 4 th of April 2014 to clarify this issue. The shortest distance between compost application with residential of around community is 225 meters (Block ), ± 650 meters (Block ) and 700 meters (Block ). Although the distance between compost application area with residential was near enough, however flies growth potentially up to residential especially during the rainy. 2. Organization and village head has agreed so that organization could be assist to handle flies growth in the residential. Overall complaint from internal of Rambong Sialang and Bagerpang Estate and Mill was related with infrastructure. It has been documented and handled minor Are there procedures for identification and calculation of fair compensation for the loss of legal or customary right of the land, with the involvement of local 1. Communication procedure (EMS- P05), date on10 Estate (Head of administration- KTU) Organization has estableshed procedure for identification and calculation of fair compensation for the loss of legal or customary right of the land. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 132 of 218

133 Ref. CRITERION AND INDICATORS Reference Department in community representatives and relevant August 2009 agencies and made publicly available? 2. Land acquisition and compensation procedure (OP 2.2) on December Related procedure described identification and compensation mechanism and also completion if any land occupation. Guidance Dispute resolution mechanism should be established through open and consensual agreements with relevant affected parties. Complaints may be dealt with by mechanism such as Joint Consultative Committee (JCC). Grievance may be internal (employees) or external. 6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their view through their own representative institutions major Are there procedures for the identification, calculation and compensation for the loss of legal or customary rights of the land, with the involvement of local community representatives and relevant agencies? 1. Communication procedure (EMS- P05), date on10 August Land acquisition and compensation procedure (OP 2.2) on December Estate Legal Department HO A mechanism to resolve conflict was described in some procedures; procedure for complaint handling including claim or conflict of land, identification procedure and compensation calculation to identify and determine calculation method to provide fair compensation due to loss of land and customary rights where identified. If any land complaint, Estate Manager would coordinate with Legal Department. Observation will be done to verify land claim. If the stakeholder who complaint had the land ownership, so that negotiations could be done to identify and determine calculation. Litigation will be done if there was no agreement. Compliant minor minor Are there records of identification of people entitled to receive compensation? Are there records of negotiations processes and/or the details of compensation settlements? Are there records of the implementation 1. Group discussion with Village Head as well as Christian and Moslem leader around Bagerpang Mill and Estate on NA The organisation did not acquire any new land after It was noted that there was no ongoing progress of new land acquisition during group discussion and interviews with Village Head. There was consession area before Concession area of PT. PP London Sumatera Not Applicable Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 133 of 218

134 Ref. CRITERION AND INDICATORS Reference Department in minor of compensation payment? 4 April Interview with Village Head around Rambong Sialang Estate on 2 April Interview with Estate Manager of Rambong Sialang and Bagerpang 4. Legal entities of PT. Londom Sumatera No.# 93/1962 Indonesia Tbk. is a former concession of PT. Harrisons & Crossfield (H&C). In 1908, H&C established Harrison & Crossfiled Plantation Ltd. H&C bought Gunung Malayu Estate in In 1928 H&C bought Tjong Ah Fie Plantation including Rambong Sialang, Egaharap, Bengambing, Tanjoeng Poteri, Bandar Teloe, Suka Radjin, Nagaga, Maligas, Bolok, Bah Lias, Bah Hilang and Mardjandi. Based on Legal entities of PT. PP London Sumatera Indonesia Tbk. #93/1962 concession area including: 1. Asahan Rubber Estate Limited is a Gunung Melayu Estate. 2. The Bah Lias Rubber Estate Limited is a Bah Lias Estate 3. Central Sumatra Rubber Estate Limited is a Turangi, Bungara and Pulau Rambung Estate. 4. Namoe Tonga Rubber Estate Limited is a Turangi Estate 5. The Sialang Rubber Estate Limited is a Rambong Sialang Estate 6. The Soengei Rampah Rubber and Coconut Plantations Company Limited is a Rambong Sialang Estate 7. The Tandjung Rubber Company Limited is a Sungai Merah Estate 8. Toerangie (Sumatra) Rubber and Produce Estate Limited is a Turangi Estate 9. The United Langkat Plantation Company Limited is a Turangi, Bungara and Pulau Rambung Estae Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 134 of 218

135 Ref. CRITERION AND INDICATORS Reference Department in 10. The United Serdang (Sumatera) Rubber Plan Limited is a Bagerpang, Sungai Merah and Dolok Estate. In 2007, organization has acquisition PT. Karimun (980,06 Ha). At present, this area is Division of Timbang Serdang of Bagerpang Estate (Deed of sale #35/2007, date on 4 th of September 2007). Overall total area, there were 35,06 Ha local right and it has been compensable. Evidence of land compensation including letter of right release of land on 17 th of September It was strengthened and signed by Head of Senembah Tanjung Muda Hilir District. Over all letter of right release of land has been notarized and described in the minutes of the committee B No # 08/PPT/B/2012, date on 10 th of August Several examples are as follow: 1. Sdr. Sembiring (1 Ha), letter of right release of land #593.21/97/STM/1987, Notarize letter Ratna Ningsih SH, #02, date on 13 th of April Nasib (2 Ha), letter of right release of land #593.21/100/STM/1987, Notarize letter Ratna Ningsih SH, #05, date on 13 th of April Wagiyem (2 Ha), letter of right release of land #593.21/101/STM/1987, Notarize letter Ratna Ningsih SH, #06, date on 13 th of April 2007 Guidance 6.5 This criterion should be considered in conjunction with Criterion 2.3. and the associated guidance. Local communities have right to appoint their own representatives and this processes and results must be documented. Pay and condition for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 135 of 218

136 Ref. CRITERION AND INDICATORS Reference Department in decent living wages major Is there documentation of employees pay rates? 1. Northern Sumatera Governor s Decree Letter #188.44/711/KPTS/ Minimum wages payment 2013 ( IDR/month) 2. Letter of HR Director #008/HRD/C- SAL/III/2013, date on 13 March 2013 about Wage Increase MRP & DRP 2013 North Sumatra ( IDR/month). 3. Northern Sumatera Governor s Decree Letter #188.44/811/KPTS/ Minimum wages payment 2013 ( IDR/month) 4. Letter of HR Director #001/HRD/C- SAL/III/2014, date Estate and Mill (Head of administration- KTU) Documentation of employees pay rates was made by the organization. In the Rambong Sialang Estate as well as Bagerpang Estate and Mill, workers were classified into daily/temporary worker (PHL Pekerja Harian Lepas), and permanent worker (DRP & MRP). Evidence that the workers have received wage according regulation could be shown. Wages payment refers to Letter of HR Director. It was more than pay rate of Northern Sumatera Governor s Decree Letter. Based on interview with worker it was noted that there was no worker wage deduction. Payments for workers were determined according to daily attendance register and over time shift. Daily attendance for workers was recorded and controlled manually by each Assistant. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 136 of 218

137 Ref. CRITERION AND INDICATORS Reference Department in on 3 March 2014 about Wage Increase MRP & DRP 2014 North Sumatra ( IDR /month) major Are there a company working regulations and work contracts, in accordance with existing regulations? 5. Pay slip for February March 2014 PKB year 2012 Estate and Mill (Head of administration- KTU) The company and workers have arranged mutual working agreements as described in PKB document (created in 2012) which is expected to be updated every 2 years, its time limit is ). PKB has been approved by Social security and industrial relation Director of Transmigration and Labour Ministry, Decree XII/2012. Rights and obligation between two parties seems to be implemented accordingly. Some items were regulated in the PKB (2012 version, such as working hours, wage, over time, sickness, leave, maternity leave, work accident, etc. Worker also receives rice that was distributed twice a month. This was mentioned in the Joint Working Agreement (PKB), 2012 between employees and the organisation. Compliant minor Do growers and millers provide adequate housing, water supplies, medical, educational, and other facilities for employees where such facilities are not available or accessible? 1. Building statement of Rambong Sialang and Bagerpang Estate, January Interview with Estate and Mill Public facilities were provided by the organisation and covered residential facilities, day care, kindergarten, building for prayers, sports facility (e.g. volley ball, badminton, and tennis), and Moslem education place. At the Estate, there was primary school of government. Organization also provided transportation for children of worker to go to school out of Estate. Housing for workers and medical facilities (clinics) Compliant (Minor NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 137 of 218

138 Ref. CRITERION AND INDICATORS Reference Department in representative worker were provided by the organisation with basic facilities. Clean water was distributed from ground well and surface water, however water quality testing result which distributed to worker housing of Bagerpang Estate (resource of clean water including one well and 7 surface water) was not available in according with Decision of Health Ministry No.416/MEN.KES/PER/IX/1990. In the Rambong Sialang Estate, auditee information at the last water quality testing conducted in 2012 however its result was not available. Minor Non-conformance : Rambong Sialang Estate Auditee information, last water quality testing was conducted in 2012; however its result was not available. Groundwater permit presuppose that the water quality testing should be conducted every semester. Begerpang Estate There was one well and 7 water sources which distributed to housing area, however result of water quality analyses was not available minor Are agreements entered into with contractors to specify that contractors abide by labour laws? 1. Working agreement #26/EP/Cont/2013, dated 1 July 2013 (contractor of HO Local contractors were used by organization for several activities. Working agreement with contractor Rambong Sialang and Bagerpang Estate with third party (contractor) did not require contractor abide to labour laws. For example: Minor NCR Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 138 of 218

139 Ref. CRITERION AND INDICATORS Reference Department in compost transport) 2. Working agreement #001/PCS.CASE.L ONSUM/XII/2013 dated 11 December 2013 (heavy equipment contractor) 1. Working agreement between Bagerpang Estate and UD. Sinar Dunia to executed compost transport was not required to labour laws. For example: Working agreement #26/EP/Cont/2013, 2. Working agreement between Rambong Sialang Estate and PT. Probesco Disatama as a heavy equipment contractor did not require abide to labour laws. For example: Working agreement #001/PCS.CASE.LONSUM/XII/2013. Minor Non-conformance : Rambong Sialang Estate Agreement with heavy equipment contractor was not specified that contractor abide by labour laws. For example: Agreement with PT.Probesco Disatama, No. # 001/PCS.CASE.LONSUM/XII/2013 date on 11 th of December Begerpang Estate Agreement with contractor of compost transport was not specified that contractors abide by labour laws. For example: Agreement with UD. Sinar Dunia, No.# 26/EP/Cont/2013, date on 1 st of July Guidance Where temporary or migrant workers are employed, a special labour policy should be established. This labour policy should state the non-discriminatory practices; no contract substitution; post arrival orientation program to focus especially on language, safety, labour laws, cultural practice, etc; decent living condition to be provided. Migrant workers are legalised, and a separate employment should be drawn up to meet immigration requirements for foreign workers, and international standards. Deductions do not jeopardies a decent living wage. 6.6 The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 139 of 218

140 Ref. CRITERION AND INDICATORS Reference Department in all such personnel major Is there documented company policy recognising freedom of association? Internal memorandum of HR Director #006/HRD/CIR/2004, date on 07/01/2004 Mill and Estate A published statement in local languages recognizing freedom of association was stated in the Internal memorandum of HR Director # 006/HRD/CIR/2004, date on 7 th of January Memorandum stated that the organisation respect to comply with regulation pertinent to freedom of association. PKB also stated that freedom of association can be conducted by the worker through Labour Union. Indonesian Worker Union (Serikat Pekerja Seluruh Indonesia (SPSI) was established for Mill and Estate. Worker representative was available and they conduct a communication with the Labour Union at Head Office Medan. There was SPSI in the Rambong Sialang Estate. It has been approved by SPSI Serdang Bedagai Regency, Decree #141/org/PC.FSP.PP-SB/VII/2013. At the Bagerpang Mill and Estate, there was also SPSI. It has been approved by SPSI Deli Serdang Regency, Decree #SK.071/ORG/PC FSP.PP- DS/VI/2011. Compliant minor Area there documented minutes of meeting with any labour union (if any)? 1. Decision letter of Worker Union Deli Serdang, Decree Regency #SK.071/ORG/PC FSP.PP- DS/VI/ Decision letter of Worker Union Mill and Estate There are SPSI (Serikat Pekerja Seluruh Indonesia- Indonesian Worker Union) for Mill and Estates. Estates and Mill have PUK (Pengurus Unit Kerja- Caretaker unit). Worker representative was elected independently among workers. Worker Union of Bagerpang has been registered in Indonesian Worker Union of Deli Serdang. Worker union of Rambong Sialang has also been registered in Indonesian Worker Union of Serdang Bedagai. As found during group discussion with union worker Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 140 of 218

141 Ref. CRITERION AND INDICATORS Reference Department in Serdang Begadai Regency, Decree #141/org/PC.FSP.P P-SB/VII/ Minutes of meeting date 10 December employee wage agreement for Minutes of meeting date 17 July 2013 Replacement holiday of Eid each estate, conditional meeting was also held to discuss any issues as necessary and recorded in minutes of meeting. Several issues discussed at meetings including: Bagerpang Mil and Estate Meeting between organization and worker union on 29 th of June 2013, it discussed about work equipment and medical expense to hospital Rambong Sialang Estate Meeting between organization and worker union on 10 th of December 2013, it discussed about employee wage agreement for Guidance The right of employees and contractors to form associations and bargain collectively with their employer should be respected, in accordance with Convention 87 and 98 of the International Labour Organisation. Labour laws and union agreements or in their absence, direct contracts of employment detailing payments and other condition are available in the languages that understood by the workers or explained carefully to them by a management official. 6.7 Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions major Is there documented company policy on worker age requirements, in accordance with national laws? 1. Internal Memorandum of HR Director #006/HRD/CIR/200 4, on 07 January 2004, 2. PKB 2012 Mill and Estate Organisation has policy for minimum age for worker and mentioned in the Internal memorandum of HR Director and PKB Minimum age of worker is 18 years old. This was in accordance with Indonesian Law 13/2003. List of worker and related document were verified and there was no worker under 18 years old. According to observation result and interview with representative worker Mill and Estate, there was no worker under 18 years old. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 141 of 218

142 Ref. CRITERION AND INDICATORS Reference Department in Are there records of implementation of 1. Group discussion Mill and Estate minor company policy on worker age with village head as requirements? well as Christian and Moslem leader around Bagerpang Mill and Estate on 4 April Interview with village head around Rambong Sialang Estate on 2 April Interview with Estate Manager of Rambong Sialang and Bagerpang 4. Interview with Head of worker union and worker cooperative, representative worker of Rambong Sialang Estate and group discussion with sprayer, office worker, harvester and nurse on 2 April Interview with Worker representative of Bagerpang Estate Job opportunities were communicated and given to surrounding villagers at first priority where no discrimination found during group discussion with Village head around estate. Based on related records (list of worker), there was no worker under 18 years old. All workers are treated equally in accordance with company regulation including rights of worker as well. Interview with village head, head of worker union and worker cooperative as well as interview with representative worker were informed that 18 years old is a one of recruitment requirement for new worker. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 142 of 218

143 Ref. CRITERION AND INDICATORS Reference Department in on 4 April 2014 and interview with sprayer, harvester, care worker, officer of Smart house (Rumah Pintar) as well as interview with head of mill laboratory and Mechanical on 5 April 2014 Guidance 6. List of worker period February and March 2014 Growers and millers should clearly define minimum working age, together with working hours under national regulations. Smallholders and family farm should allow work by children only if permitted by national regulations. 6.8 Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited major Is there documented equal opportunities policy? Business conduct instruction- Petunjuk Perilaku Binis, Chapter , date on 20 January 2006 Mill and Estate Policy for against discrimination was determined by the organisation. Business conduct instruction- Petunjuk Perilaku Binis, Chapter also mentioned ban of discrimination for all workers in the organization. Compliant minor Is there evidence of equal treatment in working opportunities for workers? 1. Interview with Head of worker union and worker cooperative, representative worker of Rambong Sialang and group discussion with Mill and Estate Interview and worker list indicated that all workers came from different backgrounds as well as no discrimination was identified based on religion, ethnic, gender (race, religion, gender, etc). Ethnic diversity of worker including Malay, Bataknese, Mandailing, Java, Sundanese. During interview and group discussion with worker Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 143 of 218

144 Ref. CRITERION AND INDICATORS Reference Department in sprayer, office worker, harvester and nurse on 2 April Interview with Worker representative of Bagerpang on 4 April 2014 and interview with sprayer, harvester, care worker, officer of Smart house (Rumah Pintar) as well as interview with head of mill laboratory and Mechanical on 5 April List of worker period February and March 2014 representative and with head of worker union was informed no evidence of discrimination found during the audit. Guidance The grievance procedures detailed in 6.3 apply. Positive discrimination to provide employment and benefits to specific communities is acceptable as part of negotiated agreements. 6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied major major Is there a documented company policy on sexual harassment and violence? Is there a documented company policy on the protection of reproductive rights? Business conduct instruction- Petunjuk Perilaku Binis, Chapter , date on 20 January 2006 Mill and Estate Policy for sexual harassment and violence and to protect women reproduction rights was determined in the Business conduct instruction- Petunjuk Perilaku Binis, Chapter , date on 20 th of January 2006 Prohibition of sexual harassment, intimidation and employee protection. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 144 of 218

145 Ref. CRITERION AND INDICATORS Reference Department in Is there proof of implementation of minor sexual harassment policy? Mill and Estate minor Is there proof of implementation of reproductive rights policy? 1. Interview with Head of worker union and worker cooperative, representative worker of Rambong Sialang Estate and group discussion with sprayer, office worker, harvester and nurse on 2 April Interview with Worker representative of Bagerpang Estate on 4 April 2014 and interview with sprayer, harvester, care worker, officer of Smart house (Rumah Pintar) as well as interview with head of mill laboratory and Mechanical on 5 April Attendance list of communication about prevent sexual harassment and protected Communication to workers pertinent to prevent sexual harassment and protect women reproduction was conducted by the organisation and nurse. Organization has also established circular letter about breastfeeding and pregnant women be forbidden to use chemical spraying or usage tasks (Bagerpang- Circular letter No. 207/BGE/DIV/XII/2013, dated 13 th of December 2013, Rambong Sialang- Circular letter #604/RS/DIV/1/10, dated 2 nd of January 2010). As a commitment organization to the protection of reproduction rights, menstruation leave has been given for women worker. Moreover, breastfeeding permit was given to worker for two hours/day. Organization conducted dissemination on women s rights, dissemination about women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks, and women to be given specific break times to enable effective breastfeeding. Bagerpang Estate obtained charter award from Health Department of North Sumatra in November 2013 as an organization has implemented reproductive health & breastfeeding in the work place. During interview with Head of worker union and representative worker was informed that there was no sexual harassment case. It was observed that workers have understood about sexual harassment policy and grievance mechanism. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 145 of 218

146 Ref. CRITERION AND INDICATORS Reference Department in women reproduction on on August as well as on 5-7 September 2013 (At the Rambong Sialang Estate) and at the Bagerpang Estate on 4-7 January minor Is specific grievance mechanism is available? 4. Circular letter from Estate Manager of Bagerpang #207/BGE/DIV/XII/2 013, date on 13 December Circular letter from Estate Manager of Rambong Sialang #604/RS/DIV/1/10, date on 2 January Internal Memorandum of HR Director on 1 April 2011 #028/HRD/CIR/IV/ Interview with Head of worker union and worker cooperative, Mill and Estate Complaint handling procedure for sexual harassment was determined in internal memorandum of HR Director. All complaints can be issued verbal and or written and informed to all administrators, direct superiors and Mill/Estate Manager. Sexual harassment case will be handled by bipartite as required by Indonesian Laws UU 13/2003. Base on UU 13/2003 sexual harassment is serious violation case. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 146 of 218

147 Ref. CRITERION AND INDICATORS Reference Department in representative worker of Rambong Sialang and group discussion with sprayer, office worker, harvester and nurse on 2 April Guidance major 3. Interview with Worker representative of Bagerpang on 4 April 2014 and interview with sprayer, harvester, care worker, officer of Smart house (Rumah Pintar) as well as interview with head of mill laboratory and Mechanical on 5 April Based on workers interview and group discussion with union worker and women workers representative, it was concluded that there was no sexual harassment and violence within the organization. There should be a clear policy developed in consultation with employees, contractors, and other relevant stakeholders, and the policy should be publicly available. Progress in implementing the policy should be regularly monitored, and the results of monitoring activities should be recorded. A gender committee specifically to address areas of concern to women may be requested to comply with the criteria. This committee, to have representatives from all areas of work, will consider matters such as; trainings on women s rights, counselling for women affected by violence, child care facilities to be provided by the growers and millers, women to be allowed to breastfeed up to nine months before resuming chemical spraying or usage tasks, and women to be given specific break times to enable effective breastfeeding. Growers and mills deal fairly and transparently with smallholders and other local business. Are current and past prices paid for FFB publicly available? NA NA Not applicable since the FFB supplied from internal estate / same company (group). Not applicable Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 147 of 218

148 Ref. CRITERION AND INDICATORS Reference Department in Are pricing mechanism for FFB and inputs/services documented (where these are under control of the mill or plantation) major minor Is the evidence available that all parties understand the contractual agreements they enter into, and that contracts are fair, legal and transparent? NA NA Not applicable since the FFB supplied from internal estate / same company (group). Contract agreement between Lonsum and CV Citra Inti Perdana Estate The contract was in October 2013 with CV. Citra Inti Perdana as Employee Housing Contractor. The selection and evaluation of supplier was based on capability of supplier to supply services. Specification services required was communicated to the supplier/vendor. Not applicable Compliant minor Are agreed payment made in timely manner? Payment records on 24 March 2014 Estate Finance Department A review to the current service payment shows that the payment was performed according to the terms of payment agreed. Payment was recorded on 24 th of March Compliant Guidance minor Transaction with smallholders should consider issues such as the role of middle men, transport and storage of FFB, quality and grading. The need to recycle the nutrient in FFB (under 4.2) should be also considered; where it is not practicable to recycle wastes to smallholders, compensation for the value of the nutrients exported might be made via the FFB price. Smallholders must have access to the grievance procedure under criterion 6.3, if they consider that they are not receiving a fair price for FFB, whether or not middle men are involved. The need for a fair and transparent pricing mechanism is particularly important for out growers, who are contractually obliged to sell all FFB to a particular mill. If mills require smallholders to change practices to meet the RSPO criteria, consideration must be given to the costs of such changes, and the possibility of advance payment for FFB could be considered. Growers and millers contribute to local sustainable development wherever appropriate. Are there records of company contributions to the local developments? 1. CSR Program 2013 and SPO 01- Aspiration stakeholder 3. Minutes, receipt note and several photo of assistance. 4. CSR report 2013 Estate and Mill Mapping social in Rambong Sialang and Bagerpang Estate was provided by the organization and it was deployed in to CSR program. CSR program was generally established. There were several sector CSR Programs for 2014 including: 1. Education: assist honorarium of teacher for several schools around estate, scholarship and Smart Home-Rumah Pintar (Rumpin) as a media for training. 2. Religion: house of worship maintenance around Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 148 of 218

149 Ref. CRITERION AND INDICATORS Reference Department in 5. Social mapping of Bagerpang on October Social mapping of Rambong Sialang on 7-13 October 2013 estate. 3. Health: services of maternal health and toddlers in cooperation with health local department. 4. Sport: assist sport equipment, assist donation for sports tournaments. 5. Community empowerment through Smart Home- Rumah Pintar (Rumpin) including handy craft from oil palm stick. 6. Smart Home-Rumah Pintar (Rumpin) is a program SIKIP which is used for community around estate including for workers and family workers. It has been obtained in The main program in Rumpin among others: a. Reading center: drawing, reading independently, b. Audio visual: singing, local dance, music (piano) c. Computer: Training of windows, paint and Ms. Office. d. Craft Center: Handy craft from oil palm stick (lidi). Besides, CSR program and Social contribution were implemented based on stakeholder aspiration. Records of organization contribution to regional development were evident, among other: agreement contract, and social assistance list. Some of Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 149 of 218

150 Ref. CRITERION AND INDICATORS Reference Department in organization social contributions are: Bagerpang Estate and Mill 1. Assist heavy equipment for road maintainance to Ujung Rambe Village on 8 th of March 2014, to Cimahi Village on 12 th of January 2014, to Sialang Village on 15 th of January 2014 and to Perguruan Village on 17 th of January Donation for KRM Moslem children and youth talent contest at the Bintang Bulan Village on 1 st of January Donation for building of HKBP church of Galang on 4 th of March Donation for building kindergarten and Moslem education place- Madrasah in Ujung Rambe Village on 27 th of December Handy craft training from oil palm stick (lidi) for community around estate on 24 th 28 th of February Rambong Sialang Estate 1. Assist heavy equipment for road maintenance of Bah Sidua-dua Village on 17 th of March 2014, to Vergulaan Village on 12 th of February 2014 and to Sukasari Village on 16 th of February Donation for Natal Holiday of Sei Rampah District on 26 th of February Donation for refuges of Sinabung eruption on 9 th of February Assist ball and net of volley to LONES volley Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 150 of 218

151 Ref. CRITERION AND INDICATORS Reference Department in club of Pergulaan Village on 23 rd of January Guidance Contributions to local development should be based on the results of consultation with local communities. See also criterion 6.2. Such consultation should be based on the principles of transparency, openness and participation, and should encourage communities to identify their own priorities and needs, including the different needs of men and women. Where candidates for employment are of equal merit, preference should always be given to members of local communities. Positive discrimination should be recognised as conflicting with criterion 6.8 PRINCIPLES 7: RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS Planting year within November 2005 and November 2007 was replanting therefore Principles 7 is not applicable PRINCIPLES 8: COMMITMENT TO CONTINUOUS IMPROVEMENT IN KEY AREAS OF ACTIVITY Ref. CRITERION AND INDICATORS Reference Department in 8.1 Growers and miller regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations major Is there a monitoring action plan based on the social environmental impact assessment (AMDAL), and regular evaluations of plantation and mill operations? As a minimum these must include, but not necessarily be limited to: 1. Reduction in use of certain chemicals (criterion 4.6) 1. Environmental improvement program 2. SMK3 and OHSAS Audit Report 3. Corrective/ preventive action OHS Officer in charge OHS Committee member Environment and CSR Evidence of several improvements was shown, e.g. Reduction in use of certain chemicals: 1. Reduction in use of paraquat. 2. Dissemination of safe chemical use. Environmental impacts: 1. Pesticide warehouse was completed with Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 151 of 218

152 Ref. CRITERION AND INDICATORS Reference Department in 2. Environmental impacts (criterion 5.6) 3. Waste reduction (criterion 5.3) 4. Pollution and emissions (criterion 5.6) 5. Social impacts (6.1) cleaning room, MSDS, label, sign, secondary containment, PPE and first aid box. 2. Bulk tank, genset and workshop is completed with oil trap, secondary containment, spill kit and signboard. 3. Segregation between organic and nonorganic waste. Waste reduction and pollution emission: 1. Grow Sansiviera. 2. Provide PPE and first aid box in hazardous waste storage. 3. Change material cause GHG with environmental friendly material. 4. Application organic waste as compost and landfilling of non-organic waste. 5. Installing cover for Lathe Machine at mill workshop. Social impacts: 1. Though negative and positive social impacts of estate and mill were not clearly described, organization has arranged CRS program for 2014 period and has implemented CSR program for The goals of CSR program are: to minimize negative impact and increase positive impact. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 152 of 218

153 Ref. CRITERION AND INDICATORS Reference Department in The Mill and Estate is already certified to OHSAS 18001:2007 and local Safety Certification from government (SMK3). The company continually set management objective and target which were supported by safety management program. Regular internal and external audits and management review meeting were held to evaluate the adequacy and effectiveness of the management system. Most recent Safety internal audit has been conducted on 12 th of September Audits were performed for Mill and Estates. Internal audit report was reviewed on Safety Management Review conducted on 15 th of January Internal audit findings were followed up by the Mill and Estates. A list of findings and its corrective action plan was used for monitoring their status minor Are there records of follow-up actions taken against RSPO audit findings, if any? 1. Internal audit result 2. Corrective and preventive action request Mill and Estate RSPO internal audit has been conducted on 25 th of February 2014 in Rambong Sialang Estate, 28 th of February 2014 in Bagerpang Estate and 7 th of March 2014 in Begerpang Mill combined with ISPO internal audit. Internal audit report was reviewed. There were several non-conformances. Completion date of corrective action is defined on 30 th of April Verification result has not been available since completion date of corrective action has not been due. Compliant All major and minor nonconformances issues from previous RSPO audit have been corrected. Guidance Growers should have a system to improve practices in line with new information and techniques and a mechanism for disseminating this information throughout the workforce. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 153 of 218

154 3.3.2 Mill Supply Chain Requirements The FFB sources are three (3) organisations owned by PT. PP London Sumatera Indonesia Tbk. and no FFB from the third party. Therefore the Model selected is Segregation and RSPO Supply Chain Module D was used as audit criteria. The detail of FFB processed in Begerpang Mill is described in Table 7, Table 8 and Table 9 presented in this report. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 154 of 218

155 Supply Chain Certificatio Standard Supply Chain Certification Standard Supply chain actors who take legal ownership and physically handle RSPO Certified Sustainable oil palm products before and up to the (final) refinery need to register their transaction in the RSPO IT System upon the moment of physical shipment. Note: at present, it is not yet possible to enter palm kernel product transaction into the RSPO IT System. Therefore, until further notice, the reporting of trades into a central database will not be required. Trade will be monitored by RSPO accredited certification bodies as part of supply chain certification audits that also cover the palm kernel product supply chain. Actor who must register include: Palm oil mills producing RSPO certified palm oil and palm kernel oil Refineries (the final refinery that does not further delivery to other refineries directly or indirectly via traders only needs to confirm the receipt of shipments; it does not need to do sales announcements) D.1 Documented procedures D.1.1 The facilities shall have written procedures and/or work instructions to ensure the implementation of all the elements specified in these requirements. This shall include at minimum the following: AUDIT FINDINGS / OBJECTIVE EVIDENCE Previously Mill was certified under RSPO scheme with Supply Chain Model: Segregation by PT. TUV NORD Indonesia (Certificate # TNI RSPO , expiry date 29 th of April 2014). Based on sales document reviewed, it was indicated that CPO and PK in 2013 were sold under RSPO scheme. The quantity that already sold under RSPO scheme were 62, MT (certified CPO) and 15, MT (certified palm kernel). However the transaction was not registered in etrace due base on information from organisation, CSPO and CSPK was sold under Green Palm. Non conformance report was issued in this area. There is documented procedure available on site to ensure the implementation of RSPO SCC requirements. SCCS/PR-SG/01 Supply Chain System RSPO CSPO dated 5 th of May The procedure was established to ensure that the production of sustainable CPO and PK produced by the Mill and shipped out can be traced to the suppliers of raw material, STATUS (NC/AoC/ Compliant) Compliant (Major NCR closed) Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 155 of 218

156 Supply Chain Certification Standard AUDIT FINDINGS / OBJECTIVE EVIDENCE and also to ensure the oil palm production process can be described and also described mechanism to monitor whether the supply chain of certified CPO and PK production are sustainable, from receipt of raw materials to the delivery of mill products and to ensure the record of number of "sustainable" CPO and PK production generated by POM and shipped out from the mill were "balance" in each 3-months period. STATUS (NC/AoC/ Compliant) 1. Complete and up to date procedures covering the implementation of all the elements in these requirements The procedures are up to date covering all the elements of RSPO SCC requirement, including purchasing and goods in, recording and mass balancing, and sales goods out. The implementation was appropriate with existing procedure. Compliant 2. The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. This person shall be able to demonstrate awareness of the facilities procedures for the implementation of this standard. D.1.2. The facility shall have documented procedures for receiving and processing certified and uncertified FFBs. Currently, personnel who having overall responsibility are Factory Manager. They have demonstated awareness of the facilities procedures for the implementation of this standard since they have already trained on 15 th of August There is documented procedure for receiving and processing certified FFB, including the grading up to CPO and Kernel dispatch are described within the procedure: 1. SCCS/PR-SG/01 Supply Chain System RSPO CSPO 2. Weigh Bridge Procedure (POM-WI/01) 3. Loading ramp & FFB Shortage Procedure (POM-WI/02) Compliant Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 156 of 218

157 Supply Chain Certification Standard AUDIT FINDINGS / OBJECTIVE EVIDENCE 4. IK Sterilization station Procedure (POM-WI/03) 5. Threshing Procedure (POM-WI/04) 6. Pressing Procedure (POM-WI/05) 7. Clarification Procedure (POM-WI/06) 8. Kernel Recovery Procedure (POM-WI/08) 9. Dispatch COP and Kernel Procedure (POM-WI/17) STATUS (NC/AoC/ Compliant) There was no uncertified FFB received. The facility only process certified FFB. D.2 Purchasing and goods in D.2.1. The facility shall verify and document the volumes of certified and non-certified FFBs received. D.2.2. The facility shall inform SAI Global immediately if there is a projected overproduction. Begerpang Mill has a clear system for recording FFB received from certifiable supply base. The mill only received certified FFB. It was verified that receiving of FFB was traceable to the supply base unit. Weighing slip and receiving report issued clearly stated weight of FFB received and its source. There is two weighbridges Avery Weigh Tronix Type E1205 with maximum capacity was 40,000 kg. Weighbridge has been calibrated on 1 st of November 2013 however certification of calibration has not been finished. Label of calibration was provided at the equipment. A review to the current records (March 2014) found that they were well maintained and retrievable. No overproduction identified in The organisation aware that if there was a projected overproduction, they would inform Compliant Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 157 of 218

158 Supply Chain Certification Standard SAI Global. AUDIT FINDINGS / OBJECTIVE EVIDENCE STATUS (NC/AoC/ Compliant) D.3 Record keeping D.3.1. The facility shall maintain accurate, complete, upto-date and accessible records and reports covering all of these requirements. A review to the records and related documentation of the implementation of the SCC are found accurate, complete and up to date records and report have been maintained by Begerpang Mill e.g. FFB receiving records; CPO and PK production daily records; monthly recapitulated record of FFB received, and CPO and PK produced. Compliant D.3.2. Retention times for all records and reports shall be at least five (5) years. The records and reports are easily accessible both in hard copy and soft copy. Retention time for these records and reports has been determined (5 years). Compliant D.3.3. The facility shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO, PKO and palm kernel meal on three-monthly basis. Balance among all FFB, CPO and PK receipts, produced and delivered were conducted in daily basis and recapitulation was done in three months interval. The records (January December 2013) were well maintained. Compliant D.3.3. The following trade names should be used and specified in relvant documents, e.g. purchase and sales contracts, e.g. *product name/s or Segregated. The supply chain model used should be clearly indicated. Supply chain model RSPO SG was clearly stated in Delivery Note. Statement CPO Certified RSPO and Kernel Certified RSPO was also clearly stated in Delivery Note. Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 158 of 218

159 Supply Chain Certification Standard D.4 Sales and good out D.4.1. The facility shall ensure that all sales invoices issued for RSPO certified products delivered include the following information: a) the name and address of the buyer b) the date on which the invoice was issued c) a description of the product, including the applicable supply chain model (Segregated) d) the quantity of the products delivered e) reference to related transport documentation D.5 Processing D.5.1. The facility shall assure and verify through clear procedures and record keeping that the RSPO certified palm oil is kept segregated from non certified material including during transport and storage and be able to demonstrate that is has taken all reasonable measures ensure that contamination is avoided. The objective is for 100% segregated material to be reached. The system should guarantee the minimum standard of 95% segregated physical material, up to 5% contamination is allowed. Note: the background of guaranteeing the minimum standard of 95% segregated physical material is due to physical intermixing of two product flows (certified and conventional oil) in processing, which is technically unavoidable. D.5.2. The facility shall provide documented proof that the RSPO certified palm oil can be traced back to AUDIT FINDINGS / OBJECTIVE EVIDENCE It was observed that document related to sales invoices provided information regarding: 1. The name and address of the buyer 2. The date on which the invoice was issued 3. A description of the product, including the supply chain model (Segregated) 4. The quantity of the product delivery 5. Reference to related transport documentation The facility only received certified FFB. Base on internal Memorandum from President Director #086-Mdn/ECSR/V/2013 on 15 th of May 2013, supply chain model is Segregated since CPO produced only from certified FFB. Base on internal memorandum from President Director #086- Mdn/ECSR/V/2013 on 15 th of May 2013, supply chain model is STATUS (NC/AoC/ Compliant) Compliant Compliant Compliant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 159 of 218

160 Supply Chain Certification Standard only certified segregated material. AUDIT FINDINGS / OBJECTIVE EVIDENCE Segregated since CPO produced only from certified FFB from own Estate. The facility did not receive uncertified FFB. STATUS (NC/AoC/ Compliant) D.5.3. In cases where a mill outsources activities to an independent palm kernel crush, the crush still falls under the responsibility of the mill and does not need to be separately certified. The mill has to ensure that: The crush operator conforms to these requirements for segregation The crush is covered through a signed and enforceable agreement. Not applicable Not applicable D.6 Training D.6.1. The facility shall provide the training for all staff as required to implement the requirements of the Supply Chain Certification Systems Training for all personnel regarding implementation of RSPO SCC standard has been provided. Training was conducted on 15 th of August Complaint (Major NCR closed) Major Non-conformance NCR Begerpang Mill There was no evidence that training was delivered to Manager, Krani Timbang. D.7 Claims Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 160 of 218

161 Supply Chain Certification Standard D.7.1 The facility shall only make claims regarding the use of or support of RSPO certified oil palm products that are in compliance with the RSPO Rules for Communications and Claims. AUDIT FINDINGS / OBJECTIVE EVIDENCE It was observed that claim regarding the use of or support of RSPO certified CPO and PK was not inline as required by RSPO Rules for Communications and Claims. The transaction was not registered in etrace. STATUS (NC/AoC/ Compliant) Compliant (Major NCR closed) Supply Chain Certification System Supply Chain Certification System Have the client made aware that until they receive written confirmation of their RSPO Supply Chain certification registration and its expiry date that they are not certified and cannot make any claims concerning registration? Have the client made aware what actions they may have to complete before certification can proceed? Have the client made aware of the findings of the audit team including any deficiencies which may result in a negative certification decisions or which may require further actions to be completed before a certification decision can be taken? Have the client made aware that when there is a projected overproduction, SAI Global shall decide whether an interim visit is required? Have detail records been compiled of the closing meeting including: 1. a list of the participants in the meeting 2. records of certified FFB received on monthly basis 3. records of CSPO and certified PK produced 4. records of CSPO and certified PK sold (under GreenPalm and UTZ system) to each buyer Have the client made aware that the findings of the audit team are tentative pending review and decision making by the duly designated representatives of the certification body? STATUS (YES/NO) Yes Yes Yes Yes Yes Yes Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 161 of 218

162 3.4 Recommendation The recommendation from this audit is approval as a producer of the National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production, Republic of Indonesia, May 2008 and the RSPO Supply Chain Certification Standard, Module D CPO Mill: Module D Segregation November 2011 when corrective action is taken and verified. Audit recommendations are always subject to ratification by RSPO. This report was prepared by: Ria Gloria, Daniel Sitompul, Edy Widodo and Anwarsyah Harahap 3.5 Environmental and social risk for this scope of certification for planning of the surveillance audit Begerpang Mill and Estate 1. Environmental risk: compliance with regulations, hazardous waste management, RKL RPL reporting 2. Social risk: compliance with regulations 3. OHS: prevention of hazard and risk, compliance with regulations Sei Merah Estate 1. Environmental risk: compliance with regulations, hazardous waste management, RKL RPL reporting 2. Social risk: compliance with regulations 3. OHS: prevention of hazard and risk, compliance with regulations 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of Assessment Findings Please sign below to acknowledge receipt of the assessment visit described in this report and confirm the acceptance of the assessment report contents including assessment findings. Ms. Inge Triwulandari Technical Manager Date 21 September 2015 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 162 of 218