PT. SOCFIN INDONESIA Bangun Bandar Mill and Its Supply Bases

Transcription

1 Audit Report Surveillance Audit for PT. SOCFIN INDONESIA Bangun Bandar Mill and Its Supply Bases RSPO20008 RSPO Membership number: Audited Address: Bangun Bandar Mill: Kecamatan Dolok Masihul Kabupaten SERDANG BEDAGAI IDN Its supply bases: Kecamatan Dolok Masihul Kabupaten SERDANG BEDAGAI IDN Date of audit: 19/09/2013 COMMERCIAL- IN CONFIDENCE ACTIVITY ID :Activity_ID QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Page 1 of 159

2 Audit Report Table of contents Page Executive Overview 3 Abbreviations Used SCOPE OF THE ASSESSMENT 1.1 Introduction Audit Objective Scope of Certification Location of Mill and Estates Description of Supply Base Date of Plantings Other Certificates Held Organisational Information/Contact Person Time Bound Plan for Other Management Units Area of Plantation Approximate Tonnages Offered for Certification (CPO and PK) Partial Certification Requirements Date of Issue of Certificate AUDIT PROCESS 2.1 Certification Body Audit Methodology Qualification of the Lead Auditor and Audit Team Members Stakeholder Consultation Date of Next Surveillance Visit AUDIT FINDINGS 3.1 Action taken on previous audit issues Claim and use of certification mark and or logo Summary of findings Recommendation Environmental and social risk for this scope of certification for planning 107 of the surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of 108 Assessment Findings Page List of Tables 1 Mill and Estates GPS Locations 6 2 Organisation FFB Production 9 3 Age Profiles of Planted Palms 9 4 Other Certificates Held by Mill and Estates 10 5 RSPO Certification Time Bound Plan of 11 6 Estates and Area Planted 11 7 Plantation Hectare Statement 12 8 List of internal and external stakeholder 15 9 Mill production and delivery of CPO and PK Mill Production and 100 Delivery of ALL Certified Products (CPO and Kernel), actual volume since date of last reporting period 10 Estimated of production of FFB, CPO and PK 100 List of Figures Page 1 Map of Mill and Estates Location 7 2 Map of HCV 8 List of Appendices Page A Audit Record 109 B Previous nonconformities, corrective actions and status 112 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 2 of 159

3 Audit Report C Nonconformities, Corrective Actions and Observations Summary 126 D Stakeholder s issues and comment 157 E Definition of, and action required with respect to audit findings 160 Executive Overview SAI Global has audited PT. Socfin Indonesia operations comprising one mill, one oil palm estate, support services and infrastructure. PT. Socfin Indonesia operation was found complies with the requirements 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 System, November 2011 and RSPO Supply Chain Certification Standard, Module E CPO Mill: Module E Mass Balance November Initially Major Nonconformities were identified during this 2 nd annual surveillance audit. Follow up audit have been conducted to review the corrective action taken to the Major Nonconformities, and objective evidences reviewed that Major Nonconformities could be closed out. The recommendation from this audit is that continuation of certification for PT. Socfin Indonesia Bangun Bandar Mill as a producer of RSPO Certified Sustainable Palm Oil and Palm Kernel is issued. Abbreviations Used AMDAL Environmental Impact Analysis (Analisis Dampak Lingkungan) BHL Daily worker (Buruh Harian Lepas) BOD Biological Oxygen Demand BPN National Land Agency (Badan Pertanahan Nasional) CPO Crude Palm Oil CSR Corporate Social Responsibility EFB Empty fruit bunches FFB Fresh Fruit Bunch FRF Fractionation and Refinery Factory GPS Global Positioning HCV High Conservation Value HGU Land Use Title (Hak Guna Usaha) HPH Forest Authority Concession (Hak Penguasaan Hutan) IPM Integrated Pest Management ISO International Standards Organisation ISPO Indonesia on Sustainable Palm Oil KHT Permanent worker (Karyawan Harian Tetap) kwh Kilo Watt Hour LCC Legume cover crops MB Mass Balance MSDS Material Safety Data Sheet NGO Non Government Organisation OHS Occupational Health and Safety P2K3 Safety Committee PEL Environmental Evaluation Manual (Pedoman Evaluasi Lingkungan) POM Palm Oil Mill PPE Personal Protective Equipment PK Palm Kernel PKB Joint Working Agreement (Perjanjian Kerja Bersama) PKOF Palm Kernel Oil Factory RABQSA Quality Society of Australia RKL Environmental Management Plan (Rencana Pengelolaan Lingkungan) QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 3 of 159

4 RPL RSPO SA SCCS SIA SP TLV TPH WWTP Audit Report Environmental Monitoring Plan (Rencana Pemantauan Lingkungan) Roundtable on Sustainable Palm Oil Social Accountability Supply Chain Certification System Social Impact Assessment Indonesian Worker Union (Serikat Pekerja) Threshold Limit Value Ton Per Hour Waste Water Treatment Plant QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 4 of 159

5 Audit Report 1.0 SCOPE OF THE CERTIFICATION ASSESSMENT 1.1 Introduction SAI Global conducted an audit of PT. Socfin Indonesia Bangun Bandar Mill and Its Supply Bases on 17 to 19 September 2013 with Major Nonconformities identified. Follow up audit has been conducted on 15 and 16 November 2013 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 that also reflect 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 The purpose of this audit was to determine continuing compliance of your organization 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 RSPO Supply Chain Certification System Requirements Modul E, 2011; and in meeting its specified objectives (indicator); and the conformity of the RSPO system to stated principles, criteria and indicator Also to verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers 1.3 Scope of certification The scope of certification is the CPO production from one (1) Palm Oil Mill and one (1) FFB supply base owned by PT. Socfin Indonesia. Bangun Bandar Mill PT. Socfin Indonesia Location: Kecamatan Dolok Masihul, Kabupaten Serdang Bedagai 20691, Sumatera Utara, Indonesia QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 5 of 159

6 GPS Location: Annual production: Audit Report East 99⁰ 2' 34.80'' North 3⁰ 19' 54.73'' CPO/year: 15, ton, PK/year: 2, ton Bangun Bandar Estate PT. Socfin Indonesia Location: Kecamatan Dolok Masihul, Kabupaten Serdang Bedagai 20691, Sumatera Utara, Indonesia GPS Location: East 98 o o North 3 o o Annual FFB Production: 62, ton Total Area: 4, Ha Planted Area: 3, Ha 1.4 Location of mill and estates PT. Socfin Indonesia mill and estate are located in North Sumatera Province. The geographical coordinate of the mill and estates are shown on Table 1. Table 1: Mill and Estates GPS Locations MILL AND ESTATE EASTING NORTHING Bangun Bandar Mill 99 o E 3 o N Bangun Bandar Estate 98 o o E 3 o o N QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 6 of 159

7 Audit Report Figure 1 Map of Mill and Estates Location QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 7 of 159

8 Audit Report Figure 2 Map of HCV QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 8 of 159

9 Audit Report 1.5 Description of supply base The FFB is sourced from one (1) organisation owned by PT. Socfin Indonesia and the third party which excluded from certification. The hectare 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) Bangun Bandar 3, , Source: Socfin Indonesia, November Date of plantings Table 3: Age Profiles of Planted Palms Year Bangun Bandar Estate Planted Area (Ha) % of Planted Area Mature Immature Mature Immature QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 9 of 159

10 Audit Report Total 2, Grand Total 2, Source: Socfin Indonesia, November Other certificates held The organisation is implementing quality, environmental, and occupational health and safety management system based on ISO 9001:2008, ISO 14001:2004, and OHSAS 18001:2007. The details of other certifications held are shown in the following table. Table 4: Certificates Held by Mill and Estates MILL/ESTATE Bangun Bandar Mill Bangun Bandar Estate OTHER CERTIFICATION HELD ISO 9001:2008 by SAI Global, Certificate number: QEC24386, Expired date: 19 August 2015 ISO 14001:2004 by SAI Global, Certificate number: CEM20621, Expired date: 10 February 2016 OHSAS 18001:2007 by SAI Global, Certificate number: OHS21506, Expired date: 29 January 2016 ISO 14001:2004 by SAI Global, Certificate number: CEM20621, Expired date: 10 February 2016 OHSAS 18001:2007 by SAI Global, Certificate number: OHS21506, Expired date: 29 January Organizational information/contact person PT. Socfin Indonesia Jl. K.L. Yos Sudarso No. 106, Medan Phone : (+62-61) Fax : (+62-61) Contact person : Mr. Hasan Bisri Kasyhuri Head of Sustainability Sub Department hasan@socfindo.co.id 1.9 Time bound plan for other management units PT. Socfin Indonesia is committed to RSPO certification of all its Management Units located in North Sumatera and Aceh. Time bound plan has been developed to achieve the RSPO certification QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 10 of 159

11 Audit Report for all its Management Units by The time bound plan is realistic and challenging. The plan is detailed on Table 5. The time bound plan remained the same. Certification audit of Negeri Lama, Matapao, Sungai Liput and Aek Loba was performed in May Major non-conformances raised from the audit have been followed up. The organisation is waiting for approval the report from RSPO. Table 5: RSPO Certification Time Bound Plan 1.10 Area of plantation The areas details for organisation owned estates are shown on Table 6. Table 6: Estates and Area Planted ESTATE MATURE (HA) IMMATURE (HA) Bangun Bandar 2, ,74 Source: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 11 of 159

12 Audit Report Table 7: Plantation Hectare Statement AREA HECTARES Mature area 2, Immature area Total area planted 3, Emplacement and Mill Nursery 4.23 Effluent 3.67 Isolation drain 3.54 PLN 5.25 Conservation area 8.79 Bamboo 0.47 Bud wood Garden 1.24 Swamp 4.64 Other area 1, Total leased area 4, Source: 1.11 Approximate tonnages offered for certification (CPO and PK) The approximate tonnages certified are: CPO/year: 15, ton, PK/year: 2, ton 1.12 Partial Certification Requirements The organisation conducted the site visit and reviewing regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3, land conflict, labour disputes and legal noncompliance to all management units (Lae Butar, Seunagan and Seumanyam) which have not been certified to endure that partial certification requirements were fulfilled in August Based on the reviewing it was concluded that: 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 7.3. There were no land conflict and labour disputes Corrective action has been planned for non-compliance with regulations, e.g. inconsistency regarding RKL RPL reporting, inconsistency regarding availability of label and hazard symbol of hazardous material and waste, permit of waste water discharge. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 12 of 159

13 1.13 Date of issue of certificate Audit Report Date of issue of certificate: 11 November 2012 Date of previous audit (1 st surveillance audit): 15 to 16 and 19 October AUDIT PROCESS 2.1 Certification body PT. SAI Global Indonesia Graha Iskandarsyah, 4 th floor Jl. Iskandarsyah Raya No. 66 C Kebayoran Baru, Jakarta 12160, Indonesia Phone : , Fax : Contact person : Ms. Inge Triwulandari Technical Manager inge.triwulandari@saiglobal.com SAI Global is one of the world s leading business providers of independent assurance. SAI Global provides organisations around the world with information services and solutions for managing risk, achieving compliance and driving business improvement. We provide aggregated access services to Standards, Handbooks, Legislative and Property publications; we audit, certify and register your product, system or supply chain; we facilitate good governance and awareness of compliance, ethics and policy issues and provide training and improvement solutions to help individuals and organisations succeed. The SAI Global business is driven by two equally important client needs - the mandated need for organisations to conform to regulations, standards and legislation in all their locations, and the operational need for organisations to improve business processes and procedures as well as corporate culture. As we are a global company, we can meet these needs for any client - those operating within one country's borders and in one language or those operating across borders and in many languages. There are three business units/divisions within SAI Global namely the Information Services Division, the Compliance Division, and the Assurance Division. The Assurance Division helps organisations manage risk, achieve process or product certification and drive improvement by providing training, registration audits and supplier management programs that can improve business performance. We provide independent audits, assessments and certification of your products or business processes to ensure they comply with industry standards or customer specific requirements. We understand how compliance with those standards can improve the efficiency, economy and profitability of your operation. With auditing and assessment staff located around the world, our clients include large global corporations as well as single site organisations. 2.2 Audit methodology The Surveillance Audit was performed on September 2013 and Follow up Audit was performed on November The audit programme was included in the body of report. The audit methodology for collection of objective evidences is site inspection, documentation and record review and interview with staffs, workers, and group discussion with the 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 13 of 159

14 Audit Report during the audit. Inputs from stakeholders via letter, , or other communication media were also considered for this surveillance audit. During the audit, particular attention has been paid to previous non-conformities. The previous minor non-conformities were checked for being closed. Assessments plan has included but not be limited to areas of potential environmental and social risk. Considering previous audit findings, the mill and all supply bases were audited during this surveillance audit. 2.3 Qualification of the lead auditor and audit team member Ria Gloria Lead Auditor Ria Gloria graduated with Bachelor of Chemical Engineering degree 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 palm oil sector since 2003 for several plantations and mills. She has received training for good agricultural practices including integrated pest management and high conservation value ( ). Irawan Y Bawono Audit Team Member Irawan Y Bawono graduated with Bachelor of Food Technology from Gadjah Mada University on He has completed ISO 9001 (2008), ISO (2005) lead auditor training courses, RSPO auditor (2008), RSPO SCC training (2010), RSPO SC Lead Auditor Training Course (2012), ISPO (2012) lead auditor training courses, and RSPO (2012) lead auditor training courses. For the last 6 years he has been involved in quality (ISO 9001) and food safety management system (ISO and HACCP) audits including in the palm oil sector since 2007 for several plantations and mills. He has received training for good agricultural practices including integrated pest management and high conservation value ( ). Muhamad Rezza Arbie Audit Team Member Muhamad Rezza Arbie graduated with Bachelor of Electrical Engineering degree from Gadjah Mada University in He has working experience in Quality, Environmental, Health and Safety matters for years. He has completed ISO 9001 Lead Auditor Training (2008), ISO Lead Auditor Training (2008), RSPO (2008) Principles and Criteria Training, OHSAS Lead Auditor Training (2010). For the last 5 years he has been involved in quality (ISO 9001), environmental (ISO 14001) and occupational health and safety (OHSAS 18001) management system audits for very broad industry ranges including several palm oil mill and oil palm plantation. He also participated in several trainings such as training for good agricultural practices including integrated pest management and high conservation value ( ). Eko Purwanto Audit Team Member Eko Purwanto graduated with Bachelor degree of Forestry from Forest Conservation Department, Faculty of Forestry, Bogor Institute of Agriculture (IPB) in He has working experience at Palm Oil Plantation in East Kalimantan since 2003 to 2012 with the last position was Estate Manager. He has implementing good agricultural practice including integrated pest management and limited pesticides uses. He has completed lead auditor training courses for RSPO P & C (2013), ISO 9001 (2012), ISPO (2012) and RSPO SC (2012). He has also completed training QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 14 of 159

15 Audit Report course of ISO (2012), Minaut Indonesia (2011) and Introduction to HCV Toolkit HCV (2011). For the last 1 year he has been involved in quality (ISO 9001) management system audits for very broad industrial and involved in Indonesia Sustainable Palm Oil (ISPO) audit for several plantations and mills since October Anwarsyah Harahap Audit Team Member Anwarsyah Harahap graduated with Bachelor of Natural Forest Resource Conservation from Bogor Agriculture Institute in He has working experience as biodiversity researcher at palm oil plantation on Since 2008 to 2013, He has work experiences in palm oil 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), RSPO (2013) and ISPO (2013) lead auditor training courses. 2.4 Stakeholder consultation Stakeholder consultation was performed to internal and external stakeholders. Internal stakeholders included staffs and workers. External stakeholders were selected by considering that they have an interest in the organisation activities, directly border with organisation, area which the workers live. External stakeholders included NGO, governments and civil societies. Letters were also sent to external stakeholders to invite for comment or Group discussion. Group discussion with stakeholders was conducted during audit, to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. Surrounding Village of estate and mill has been chosen to represent societies. Group discussion was conducted for two sessions. First session was conducted especially for around stakeholder directly affected on estate and mill, i.e. Head of village, FFB supplier. Second session was conducted especially for labour union, gender committee and representative worker. One on one interview was conducted for worker and its family to verify compliance against relevant criteria and indicator related to infrastructure facility, labour, social aspect (discrimination and sexual harassment), environment and HCV. Moreover, 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. Table 8: List of internal and external stakeholder STAKEHOLDERS Internal stakeholder Head of SPSI Head of Gender Committee Representative of worker Nurse and care worker External Stakeholder Head of Village around estate and mill Farmer groups Yakin (FFB Supplier) Social and Labour Agency METHOD OF CONSULTATION Group discussion Group discussion Group discussion One on one Interview Group discussion Group discussion Sending an invitation letter to comment QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 15 of 159

16 Audit Report Agriculture and Plantation Agency Sending an invitation letter to comment Environment Agency Sending an invitation letter to comment National land Agency Sending an invitation letter to BadanPertanahanNasional (BPN) comment District Police of Dolok Masihul Sending an invitation letter to comment District Head (Camat) of Dolok Sending an invitation letter to Masihul comment AMAN (Aliansi Masyarakat Adat Sending invitation to comment Nusantara) WWF Indonesia Sending invitation to comment GAPKI Sending invitation to comment Forest Peoples Program Sending invitation to comment Walhi-Wahana Lingkungan Hidup Sending invitation to comment Indonesia Green Peace Indonesia Sending invitation to comment Sawit Watch Sending invitation to comment 2.5 Date of next surveillance visit The next surveillance visit will be conducted around August 2014 three months before datum month of the certification period. 3.0 AUDIT FINDINGS 3.1 Action taken on previous audits findings It was noted that corrective actions of previous major and minor non-conformances have been implemented and verified. However there were issue that were not properly actioned yet in the criterion 4.8 indicator major 1 and the non-conformance was reissued. In addition two minor conformances were upgraded to major non-non-conformances since the same issues have been identified as minor non-conformances during certification audit back in 2011 or 1 st annual surveillance audit on October The detail was mentioned in Appendix B and C. 3.2 Claim and use of certification mark and or logo No claim and use of certification mark and or logo. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 16 of 159

17 3.3 Description of audit findings Audit Report PRINCIPLE AND CRITERIA PRINCIPLES 1: COMMITMENT TO TRANSPARENCY REF CRITERION AND INDICATORS Reference Department in Charge 1.1 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? Procedure SOC/PSM/9.01 Social communication, Rev 1 date 01 January 2013 Logbook Record of information request and responses Mill and Estate (Head of administration KTU) (SAI Global use) Information request and their respond 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 interested party. All information requests from stakeholder were listed and recorded by Mill and Estate on logbook Record of information request and responses. Status Are there any records of responses to information requests? Logbook Record of information request and responses Mill and Estate (Head of administration KTU) Records of information request from stakeholder were kept by Mill and Estateon logbook Record of information request and responses. Most of requests were an invitation to follow the event held by the stakeholders, for example: invitation for memorial of religious holidays, etc. And also there are request from Tax office of Pratama about salary data and financial audit reports on 01/03/2013, request from department of revenue, finacial and asset management about air consumption report on 20/02/2013. Overall the requests from stakeholder were directly responded by the organization. Evidence of respond including: notes of tax payment QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 17 of 159

18 Audit Report and handover of report 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 SOC/PSM/9.01 Social communication, Rev 1 date 01 January 2013 Mill and Estate (Head of administration KTU) Record of information and response was kept by the organisation. Retention time for records was determined minimum 5 years. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 18 of 159

19 PRINCIPLES 1: COMMITMENT TO TRANSPARENCY Audit Report REF CRITERION AND INDICATORS Reference Department in Charge 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 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: 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. Environmental: Environmental and social impact assessment (AMDAL/UKL-UPL) and elated monitoring reports (RKL-RPL). Social: Documentation of social activities of social and community programs. Health and Safety Plan 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? Procedure SOC/PSM/9.01 Social communication, Rev 1 date 01 January 2013 Procedure SOC/PSM/9.01 Social communication, Rev 1 date 01 January 2013 Mill and Estate (Head of administration KTU) Mill and Estate (Head of administration KTU) (SAI Global use) Organisation documents that is generally available by the organisation. List of management documents are publicly available such as: Site Permit (Izin Lokasi), Land Use Title (HGU), Plantation Operation Permit (IUP), Environmental and Environment Impact Analysis document (AMDAL), environmental management and monitoring report (RKL and RPL implementation reports), HCV Assessment report, Social Impact Assessment (SIA) Report, Occupational Health and Safety Management Plan, Corporate Social Responsibility (CSR) and Continuous Improvement Plan Those documents were accessible and shown during this audit. The documented procedure was established, it s mentioning the process and responsibilities and authorities in regards responding the request on information from the public. The coverage of request on information as stated in the procedure including information on legal documents, environmental documents, social activities documents, occupational health and safety programme documents and continual improvement documents. A documented procedure was established to respond the request the public in regard the legal documents. The form to record the respond and associated follow up on respond has been established. It was reported that so far no request from public in regard legal documents. The retention time on such record is 5 years. Status QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 19 of 159

20 Audit Report 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 20 of 159

21 Audit Report PRINCIPLES 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS Ref. CRITERION AND INDICATORS Reference Department in Charge 2.1 There is compliance with all applicable local, national and ratified international laws and regulations Is there evidence of compliance with laws and regulations, which concern the operation of oil palm plantations? SOC/Form/ Identification and evaluation compliance against law and regulation Group discussion with weigh bridge worker on 16 September 2013 Premium provision 2013 Sustainability Sub Department (SAI Global use) Evidence of compliance with applicable local, national and ratified international laws and regulations of Bangun Bandar Mill and Estate have been provided, including 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 conduct lifting equipment, electrical), provision of required infrastructure (waste water treatment ponds, hazardous waste storage), availability of MSDS, periodic environmental parameter monitoring (stationary emission, ambient emission and ambient noise, moving source emission, waste water discharge quality, and ground water quality), system of plant cultivation, oil palm plantation, list of flora and fauna protected, management of guard area, paramedic and company doctor, transport and lifting equipment, medical check-up, safety committee, minimum wage, labour law, occupational safety, employee social benefit. The records were sighted for period October 2012 and May Status Major Nonconformance NCR closed Status of compliance with laws and regulations were evaluated, and evaluation of compliance result indicated that compliance status was justified with reference to the objective evidence of compliance. Evaluation of compliance result indicated that compliance status was justified with reference to the objective evidence of compliance. Example: employment agreement, social security, training programs, employment list, CSR program and its implementation, list of employees, payroll and over QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 21 of 159

22 Audit Report time calculations, menstruation leave, result of environmental monitoring and measurement, hazardous waste manifest, etc. A program called PROPER has been implemented and evaluation by the Ministry of Environment has concluded that Bangun Bandar Mill granted for Blue award which indicated status of their environmental legal compliance for period However, it was found inconsistence implementation of working time according with related regulation. (UU No.13/2003, clause 77 and Labour and Transmigration Ministry Degree No.102/2004, clause 1), Permenaker 4/1987 P2K3 (Safety committee), Permenaker 1/1979 Hyperkes training for paramedic and Permenaker 1/1976 Hyperkes training for doctor. Opportunity for improvement: It could be considered not to remove obsolete regulation or irrelevant regulation from evaluation result of compliance with regulation to ensure that there was no mistaken during evaluation of compliance. Although use of surface water has been paid based on quantity use through regional tax, it could be considered to report the quantity of surface water used to local government quarterly Is there evidence of efforts made to comply with changes in the regulations? Procedure SOC/PSM/4.05,- Identification and evaluation environment, occupational, health and safety law and regulation, date 1 Sustainability Sub Department Established procedure was described mechanism for updating latest laws and regulations and requires regular access to regulatory bodies to update information of laws and regulations. Update and compliance review against change of law and regulation was conducted six monthly. Organization has been review and update regulation in October Last review and update was performed in May QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 22 of 159

23 January 2011 SOC/Form/ Identification and evaluation compliance against law and regulation Audit Report Opportunity for improvement: Although wastes have been segregated based on type and nature of waste, it could be considered to evaluate compliance with relevant regulation, e.g. PP 81/ minor Is there a documented system, which includes written information on legal requirements that the palm oil company should comply with? Procedure SOC/PSM/4.05,- Identification and evaluation environment, occupational, health and safety law and regulation, date 1 January 2011 SOC/Form/ Identification and evaluation compliance against law and regulation Sustainability Sub Department Valid applicable laws and regulations were registered including detail requirement applied. Updating of law and regulations change activities were well documented and last update was performed in May Updating of regulation in October 2012 was sighted. Information on applicable legal and other requirements have been reviewed and summarised minor Guidance Is there a mechanism for ensuring that compliance with relevant legal requirements is implemented? Procedure SOC/PSM/4.05,- Identification and evaluation environment, occupational, health and safety law and regulation, date 1 January 2011 Sustainability Sub Department 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. 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 Sustainability Sub Department and Mill and Estate Manager. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 23 of 159

24 Audit Report 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 24 of 159

25 Audit Report PRINCIPLES 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS Ref. CRITERION AND INDICATORS Reference Department in Charge 2.2 The right to use land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights Are there documents showing ownership or lease of the land in accordance with relevant laws? Land use title permit: HGU No. 2, issued 26 February 1998, valid to 31 December Total area: 4, Ha. Plantation permit: Surat Pendaftaran Usaha Perkebunan No. HK.350/821/ DJ.Bun/XI/2001 dated 23 November 2001 Head of administration KTU (SAI Global use) Copy of land title (HGU) of Bangun Bandar Estate was sighted and legally owned by PT. Socfindo. Copy of land use title was available and well maintained in the office of Bangun Bandar Estate, while the original one was kept in the Head Office Medan. Land use title mentioned that the land was located at Tanjung Meriah Village, Dolok Mesihul Sub District, Deli Serdang District (now Serdang Bedagai), North Sumatera Province. Status Is there evidence that legal boundaries are clearly demarcated and visibly maintained? Map of Land title use dated 1 January 2013 Checklist of EHS Patrol (SOC/FORM/ ) Head of administration KTU 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: 1. SOC #51 (3º N and 98º E) 2. SOC #3 (3º N and 98º E) 3. SOC #12 (3º N and 99º E) 4. SOC #27 (3º N and 99º E) Realisation of pegs maintenance was sight on Checklist of EHS Patrol (SOC/FORM/ ), it was noted that pegs monitoring were conducted monthly QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 25 of 159

26 Audit Report with items checked were identity, condition and position of pegs. All activities were carried out inside the legal boundaries, no activities conducted outside the boundaries Where there are, or have been disputes are there proof of resolution or progress towards resolution processes acceptable to all parties are implemented? Group discussion with Village Head of Martebing and farmer groups Yakin on 16 September 2013 HGU Map of HGU #2 issued on 26 February 1998 Estate and Head Office 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 of Martebing and farmer groups Yakin on 16 September 2013 that there were no land conflict at all land within estate and mill. Not Applicable minor Is there evidence of land acquisition resolution with free prior and informed consent? Group discussion with Village Head of Martebing and farmer groups Yakin on 16 September 2013 Interview with Head assistant of Estate Estate Based on group discussion with Village Head of Martebing and farmer groups Yakin on 16 September 2013 and interview with Head assistant of Estate, no land acquisition after Not Applicable minor Is there a mechanism to resolve conflict which is accepted by all parties? Procedure SOC/PSM/9.02 Social complaint handling Procedure SOC/PSM/9.05 Identification and compensation calculation Estate and Head Office A mechanism to resolve conflict which is accepted by all parties was described in the procedure for social complaint handling including claim or conflict of land and in the procedure identification and compensation calculation to identify and determine calculation method to provide fair compensation due to loss of land and customary rights where identified. Dissemination for procedure introduction was evident and documented. It was communicated to related on 27 September 2010 to related parties (Village head, QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 26 of 159

27 Audit Report Camat, Police district, Local plantation and forestry department, local environmental agency) Guidance 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. Ensure a mechanism to solve the conflict (Criteria 6.3 and 6.4). All operations should cease on land planted beyond the legal boundary. For any conflict or disputes over the land, the extent of the disputed area should be mapped out in participatory way. Any customary land use rights or disputes which are likely to be relevant should be identified. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 27 of 159

28 Audit Report PRINCIPLES 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS Ref. CRITERION AND INDICATORS Reference Department in Charge 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 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? Group discussion with Village Head of Martebing and farmer groups Yakin on 16 September 2013 HGU Map of HGU #2 issued on 26 February 1998 SIA report HCV assessment report Estate (SAI Global use) 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 during group discussion with Village Head Martebing and Farmer groups Yakin on 16 September 2013 that no land within mill and estates are encumbered by legal or customary rights Based on SIA report and also according with HCV assessment report there are no identified HCV 5 and HCV 6. It was indicated that are no customary right in Bangun Bandar. Status Not Applicable 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 28 of 159

29 Audit Report PRINCIPLES 3: COMMITMENT TO LONG-TERM ECONOMIC AND FINANCIAL VIABILITY Ref. CRITERION AND INDICATORS Reference Department in Charge 3.1 There is an implemented management plan that aims to achieve long-term economic and financial viability 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 HCVs to comply with RSPO requirements. Management Plan period Minute of Management Review Meeting 30 March Draft of Management Plan period Principal Director (SAI Global use) Management Plan for period was still used in order to achieve long-term economic and financial viability. The plan was approved by the Principle Director. The parameters stated in the management plan were including revenue and profit, crop projection (FFB yield trends), CPO and PK extraction rate; estimated estate cost (upkeep, research and development, harvesting, processing, packing, transportation, depreciation) as well as mill cost (processing, repair and maintenance, overhead and depreciation). This plan was established by considering economical parameters/assumptions such as inflation, US Dollar and Indonesian Rupiah (IDR) rate, CPO price, and FFB price. The management plan achievement was reviewed annually during the management review. Last management review was conducted on 30 March 2013, minute of management review meeting was sighted. Management has no plan of new land acquisition in period Work programmes for the financial year had been planned for all field operation. Cost on all field operations had been recorded daily for monitoring against the budget by management staff in order to close supervision on field operation to ensure work efficiency of the workers. These include preventive maintenance of roads, vehicles, machinery etc. Status minor Is there annual replanting programme, where applicable, projected for a minimum of 5 years with yearly review? Replanting Program for 5 years Bangun Estate Overall replanting program project for the next 5 years was available for all Estate of PT. Socfindo including Bangun Bandar Estate. It was verified that QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 29 of 159

30 Bandar Estate period Audit Report replanting planned to approximately 5% of oil palm every year to maintain the continuity supply to the mill. Replanting Plan was exist for period The oldest planting in Bangun Bandar Estate was 1988 which was in Division II and IV. Replanting for 2013 was planned at Division II and IV. The replanting plan of 2013 has been realized Ha, report was sighted and in general it was well realized. 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: Attention to quality of planting materials Crop projection = FFB yield trends Mill extraction rates = OER trends Cost of Production = cost per tonne of CPO trends. Forecast prices. Financial indicators. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 30 of 159

31 Audit Report PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Ref. CRITERION AND INDICATORS Reference Department in Charge 4.1 Operating procedure are appropriately documented and consistently implemented and monitored Are there Standard Operating Procedures (SOPs) for estates, from land clearing to harvesting? Standard Operating Procedure for Oil Palm Plantation (SOC/PSM/7.10) Head Office (SAI Global use) The documented Standard Operating Procedures (SOP) for estate has been documented and found to be consistently implemented, monitored and reviewed for effectiveness. The SOPs consist of procedures for several processes including land clearing, nursery, preparation before replanting, fertilizing, drainage system, integrated pest management, maintenance of immature and mature upkeep and harvesting. The procedures include those for good agricultural practices, integrated pest management, chemical monitoring and handling, pollution mitigation and safety practices. 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. Status Are there Standard Operating Procedures (SOPs) for mills, from reception of FFB to dispatch of CPO and PK? SOC- POM/PSM/7.08 SOC- POM/PSM/7.09 SOC- POM/PSM/7.06 SOC-POM/IK/01 through SOC- POM/IK/16 Mill Documented procedure for mill operational is available on SOC/PSM/7.09 rev 00 1 May 2007 (Prosedur Pengendalian Proses Produksi di Pabrik Minyak Kelapa Sawit). Work instructions in local language for supporting Mill activities have established: SOC-POM/IK/01 up to SOC-POM/IK/16 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 31 of 159

32 Audit Report implementation of the Management Guidelines. These include independent checks of the mill by the corporate internal audit. Opportunity for improvement Consider to review the documented procedures which found no longer appropriate with actual condition on several; i.e. SOC/PSM/6.03, SOC/POM/IK/05, Quality Plan SOC/PP/ minor Are there records of at least yearly checking and monitoring of operations? Resume of General Manager Visit (PD- GM/G2/BB/Bi/251/ 13) Minute of Management Review Meeting 30 March Internal Audit Report March Monthly Report of July Head Office The organisation conducted monitoring and checking for all applicable procedure and GAP through periodic visit of General Manager or Department of Agriculture. The last General Manager visit was conducted on 5 June The content of the report covers evaluation of operational activities including harvesting, maintenance, pest management, replanting process, immature upkeep, light deficiency of Mg, hatch and carry, Mill process and cost control. The report includes recommendation for follow up from Head of General Manager and progress of follow up action from the previous visit. Mill and Estate operation performance was also checked and monitored regularly by Internal Audit Group II (the representative of HO). This audit is performed twice a year. The last audit was carried out in March Audit result covers implementation evaluation of ISO 9001, ISO 14001, OHSAS, RSPO and ISPO. Audit result was evident and corrective action has been determined. Opportunity for improvement Consider to review the broken kernel target (currently 20%), which since using two ripple mills this target appeared not achievable Are there records of operational Monthly Report of Bangun Bandar Mill and The records of operational performance and result were well maintained in Bangun Bandar Estate on QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 32 of 159

33 minor results? Estate July 2013 Daily record of activities, e.g.: Foreman Book, Daily Attendance and Overtime Sheet, General Workgroup Task Data Collection Sheet, Cek Kualitas Ancak Panen Operation daily report from FFB receiving trough delivery on period July September 2013 Audit Report Estate Monthly Report. Estate activities were programmed in annual program and distributed in Monthly Work Guidelines. Activities program consist of as pest and diseases census, fertilising, 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 audit to some activities: 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. 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. Records of monitoring and action taken have been maintained and kept for more than 12 month. Records and action taken such as circle spraying, selective spraying, harvesting, pest management, FFB application, manuring, road maintenance have been verified to be satisfactory maintained. FFB processed by Mill of Bangun Bandar is received from own Estate (four divisions) and out growers (Kelompok Tani Yakin). The third party is not included in the scope of certification. All of the FFBs are processed in same facility (Bangun Bandar Mill). Mill of Bangun Bandar capacity is 23 MT/hour FFB. Proportion of FFB third party is 42% from total FFB processed. CPO produced in The site operates 3 (three) horizontal sterilization with capacity 6 lories each. There are three screw press 12 ton available on site. Filtering, clarification and purification process then follows before the CPO QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 33 of 159

34 Audit Report 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 stations. A review operation daily report (June September 2013) demonstrate the consistency of procedures implementation. CPO and PK are delivered to customer via Belawan Instalation Tank (TIB). as well as to Refinery & Fractionation Factory (FRF). A review to June 2013 records of 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 was sighted including: FFB receiving and grading, sterilizing, threshing, pressing and digesting, clarifying, nut and kernel, boiler, quality control (in process, CPO and PK). Opportunity for Improvement: It is recommended that the operational upkeep activities in the Division I prioritized by management in order to give more attention to the Division. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 34 of 159

35 Audit Report PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Ref. CRITERION AND INDICATORS Reference Department in Charge 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? Procedure of soil analysis SOC/PSM/ dated 1 March Procedure of leaf sampling SOC/PSM/ dated 1 March 2011 Revision of Soil Analysis Program ( ) by Staff of Agricultural Department dated 9 September 2013 Head Office (SAI Global use) 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 soil analysis mentioned that soil was analysed every 5 years. 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. Last soil and leaf sampling analysis was conducted by the external laboratory. Soil analysis was conducted by Param Agricultural Soil Surveys (M) SDN.BHD and leaf sampling analysis was conducted by CIRAD (Centre de coopération internationale en recherche agronomique pour le développement). Last report of soil analysis was issued in February It was noted that soil analysis has not been conducted in 2012 and 2013 as required by procedure that soil was analysed every 5 years. The cause was the internal laboratory to analyse the soil was being built and has not been finished yet. The internal laboratory approximately started to be operated in early Revision of Soil Analysis Program ( ) by Staff of Agricultural Department dated 9 September 2013 was verified. Last report of leaf analysis was issued in July Leaf sample unit (LSU) of Bangun Bandar Estate taken in June to July It was 121 leaf sample taken. Leaf analysis for 2013 was in progress of LSU taking. Visual leaf monitoring was conducted by internal Status QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 35 of 159

36 Audit Report researcher from Agricultural Department. Last visual analysis was conducted in June Result of visual analysis was sighted. Report included observation result and its recommendation for improvement 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? Work Instruction of Manuring (SOC- KB/IK/01) Work Instruction of EFB Application (SOC-KKS/IK/12) Monthly Report July 2013, Specification of Manuring. Manuring Booklet of Bangun Bandar Estate 2013 Estate Bangun Bandar Estate maintain and increase soil fertility through fertilizer application as well as land application of EFB and composite, and also planting legume cover crops in replanting area. Manuring activity was conducted based on Work Instruction of Manuring. Manuring programme was developed by Agriculture Department in Socfin Medan Head Office assisted by CIRAD as consultant for all Division of Estate based on result of soil, leaf sampling and visual analysis. Manuring programme covers type, dosage and amount of fertilizer, area and schedule of application. Manuring in Bangun Bandar Estate was performed manually and mechanically using fertilizer spreader. Manuring in peat land conducted manually by digging a hole in the plant circle, then put the fertilizer inside the hole. Type of fertilizer recommended and applied in mature area were compound, while in the immature area were single fertilizer. Result of manuring was well recorded in Manuring Booklet covers date of application, type and dosage of fertilizer, block applied and amount of material used. No manuring activity observed during audit, however the estate has a system to monitor whether actual fertilizer application met the recommendation. It was noted that Bangun Bandar Estate actual fertilizer application were done in accordance with the recommendation for Legume cover crops (LCC) were planted to protect soil from erosion, improve soil fertility by increasing QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 36 of 159

37 Audit Report nutrient N and control weed. The LCC planted was Mucuna brachteata. LCC was maintained through manual maintenance (cleaning from weed), manuring and agro chemical selective spraying. Rock phosphate was used as fertilizer to grow LCC. LCC growth was monitored regularly. Manuring program for LCC was sighted including the realisation. LCC was sight at year 2012 replanting area, Block 101 and 102 Division IV. LCC growth was well maintained. All of empty fruit bunches (EFB) is treated in composting process. The process was operated in January Land application of Palm Oil Mill Effluent (POME) was not applied in Bangun Bandar Estate % of POME was treated in composting process with EFB and the rest was treated in WWTP and then discharged to water body. Compost was started being applied in Record of compost dosage applied was recorded. Area of which compost applied was monitored. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 37 of 159

38 Audit Report PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Ref. CRITERION AND INDICATORS Reference Department in Charge 4.3 Practices minimise and control erosion and degradation of soils minor Are there maps of fragile soils? Soil of Bangun Bandar Oil Palm Estate dated 1 January 2013 issued by Agricultural Department Head Office (SAI Global use) The organisation has a detailed soil map showing gradients and soil types. The soil map available in Bangun Bandar Office. The latest version of soil map was issued by Department of Agriculture on 1 January 2013, however the source of soil map was still from Param Agricultural Soil Surveys (M) SDN.BHD, June Map of soil mentioned that there were no fragile soils in Bangun Bandar, there was only 4.4% of area is poorly drainage and 2.50 ha is peat soil. Bangun Bandar Estate has slopes % around ha. Status minor Is a management strategy exists for plantings on slopes above a certain limit (needs to be soil and climate specific)? Work Instruction of Planting (SOC- KKS/IK/05) dated 1 December 2011 Procedure of Terracing (SOC/PSM/7.10 Chapter ) Estate The organisation has management strategy for planting on slopes above certain limit such as terracing, as referred to 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. Practices to control and minimize erosion have been applied by terracing and planting legume cover crop. Evidence of terracing and cultivation of legume cover crop was sight at replanting area Division IV Block 101 (terrace length 3,806 m) and Block 102 (terrace length 2,150 m). There has been a mechanism to measure erosion level by using erosion tubs method sight at Block 102 Division IV. This method was a result from the research of Bogor Agricultural University. Erosion rates (tonne/ha) measured by the formula: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 38 of 159

39 Audit Report ( ) Measurement of erosion level was just started on 26 August 2013, so the summary was not available yet minor Is a road maintenance program presence? Procedure of road maintenance (SOC- KB/IK/07). Road Maintenance Program using Grader and Compactor Estate Estate has established annual programme of mechanical road maintenance for government road, primary road, and secondary road. Besides according to annual program, road maintenance activity was also conducted according to road condition as well as manual road maintenance. Record of manual and mechanical road maintenance realisation was sighted included block and length of road maintained. Road maintenance was well implemented. During field observation it was sight that all roads, culverts and bridges were in satisfactory condition. Opportunity for Improvement: It is recommended that the road maintenance activities in the Division I prioritized by management in order to give more attention to the Division minor Is subsidence of peat soils minimised under an effective and documented water management programme? Work Instruction of Oil Palm Planting (SOC-KKS/IK/05) Chapter Work Instruction of Peat land management (SOC- KB/IK/07) Monitoring of Peat Land (SOC/FORM/IK- 08.2) Estate The peat land area was only 2.46 Ha in Block 68 Division I, which was planted in 1998, has been well managed. A water dam has been constructed using sandbags to effectively maintain water level at minimum 70 cm in the peat area. The water level was being monitored at two different fixed measuring points with a marker and a special portable measuring tool invented by the company. No Piezometers have been applied, as the policy of the company states that Piezometers were only applied in areas which have > 3 meters depth of peat and > 50 hectares of area size. At the time of the surveillance audit, the water level was 30 cm. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 39 of 159

40 Audit Report Data monitoring was sight for months October 2012 to September 2013, and the lowest water level was at 35 cm from the peat surface in April 2013 and highest was 25 cm from the peat surface in January Over all, the management of the peat land in Bangun Bandar Plantation was already confirmed to Best Management Practice. Weeding activities in peat soil were mostly conducted manually consider to water condition. Manuring in peat land conducted manually by digging a hole in the plant circle then put the fertilizer inside the hole also consider to water condition. Opportunity for Improvement: Even though that peat area was only 2 Ha, however water level management has been conducted by constructing dyke to minimize peat soil subsidence and water level is maintained at a maximum of 70 cm from the peat surface through routine monitoring conducted every week. It is recommended that monitoring point to be equipped with a sign board minor Guidance Is a management strategy in place for other fragile and problem soils (e.g. sandy, low organic matter, acid sulphate soils)? Soil of Bangun Bandar Oil Palm Estate dated 1 January 2013 issued by Agricultural Department Procedure of Drainage Ditch (SOC/PSM/ ) Estate Another problem soil in Bangun Bandar Estate was poorly drainage soil which exist around 183 Hectare or 4.4 % of total area. This area was treated by developing 1 m X 1 m drainage ditch. Drains in the block were made with 16 m or 32 m intervals consider the condition of the field (volume and depth of water). Poorly drainage soil in Block 101 Division IV has been sight and satisfactory in accordance with the procedure. Plants condition arround the trench was fertile. 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). QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 40 of 159

41 Audit Report QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 41 of 159

42 Audit Report PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Ref. CRITERION AND INDICATORS Reference Department in Charge 4.4 Practices maintain the quality and availability of surface and ground water Is there protection of watercourses and wetlands, including maintaining and restoring appropriate riparian buffer zones at or before replanting? Procedure SOC/PSM/9.07 dated 15 August 2012 HCV Management Program 2013 period Field observation on replanting area 2013 period in Block 66, 3 Division Estate (SAI Global use) Bangun Bandar Estate was traversed by Martebing and Belutu River. Policy of riparian buffer zone management at or before replanting was provided in related procedure. Procedure mentioned that riparian buffer zone is planted with beneficial plants and plants (woody trees) that produce flowers and fruit for bird food, manured with NPK and applied with EFB.Manual control was conducted based on monthly riparian monitoring result. Manual control realization was recorded on activity record every month. During audit, field observation was conducted on replanting area 2012 period in Block 54, Division 1 to verify procedure implementation. It was observed, It was sighted only manual control conducted in the riparian buffer zone. Pollution prevented by means of a > 25 meters buffer zone where the application of agrochemicals is prohibited. This buffer zone is enriched with beneficial plants such as Cassia cobanensis and Turnera sp. The present pollution of the river is caused by upstream activities of third parties outside the concession area. Irrigation canal of river has being built by government before entering the concession area where buffer zone was damage and caused erosion and abrasion along the Martebing River. Status minor Is there an implemented water management plan? Permit of ground water abstraction from Kantor Pelayanan Perizinan Terpadu Mill There are two water supplies for Bangun Bandar Mill: river water and ground water which currently still held valid permit from relevant authorities. All rivers were categorized as HCV 1.1 and HCV 4.1. This was discussed in criterion 5.2. Minor Nonconformance NCR QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 42 of 159

43 dan Penanaman Modal Kab. Serdang Bedagai #030&031/08/IV/KP 2TPM-SB/2013 Permit of surface water usage from Kepala Badan pelayanan Perizinan Terpadu Prop. Sumatera Utara #610/77/BPPTSU/2/ 12.1/IX/2013 on 2 September 2013 Audit Report River water is consumed for boiler feed-water. Daily supply to boiler was recorded based on flow meter reading. Ground water was consumed for processing, cleaning and housing. 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 period 2012 and 2013 (January to August) was sighted. The organisation has program to reduce water consumption, e.g. reusing water from steriliser condensate for digester and press station, installing new boiler in January Surface water quality is monitored annually. Surface water quality was analysed both for upstream and downstream. Monitoring result of surface water quality of Martebing and Belutu River was review for 2012 and 2013 against Government Regulation #82/2001 class II. Quality of river water was in line with Government Regulation #82/2001 class II. Note: During certification audit in Minor NCR issued for this indicator however the nature of Minor NCR was considered different. Therefore the finding grade is remained minor minor Is there monitoring of effluent BOD? Permit of waste water discharge from Badan Lingkungan Hidup Kab. Serdang Bedagai #660/460/LH/2010 Analysis Report of Waste Water Quality Mill POME is monitored monthly as required by permit. The results of POME monitoring were reviewed including measurement of BOD for period October 2012 to August The Environment Ministry Decree #Kep-51/MENLH/10/1995 annexure B-IV required that BOD of POME discharged is less than 150 mg/litre. The result of POME quality during this period was under 150 mg/litre Is there monitoring of mill water use per tonne Mill operation Mill Mill water use per tonne of FFB is monitored monthly. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 43 of 159

44 Audit Report minor of FFB? monthly report Result of monitoring of mill water use per tonne of FFB was sighted for period January to August The real water use per tonne of FFB was started being monitored in January 2013 due the flow meter has just been installed. 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: Taking account of the efficiency of use and renewability of sources. Ensuring that the use of water does not result in adverse impacts on other users. 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. Appropriate treatment of mill effluent and regular monitoring of discharge quality, which should be in compliance with national regulations. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 44 of 159

45 Audit Report PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Ref. CRITERION AND INDICATORS Reference Department in Charge 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? Procedure to Control Caterpillar (SOC/PSM/ ) Procedure to Control Oryctes rhinoceros (SOC/PSM/ ) IPM Procedure for rat (SOC/PSM/ ) IPM Program Program for Planting Beneficial Plant Estate (SAI Global use) The organization has documented and implemented an IPM system includes setting out of technique to be implemented, chemical to be used, locations to be applied, and time frame for implementation. Programme for IPM was established annually. IPM programme includes pest and diseases detection, census and controlling, use of pesticide and herbicide. Programme for planting beneficial plants (Turnera subulatta, Casia cobanensis and Antigonon leptopus) had been carried out. These beneficial plants can be seen along the main road and collection road. Leguminous Cover Crops were planted for supressing growth of weeds. These LCC can be seen most in immature area and a small part of mature area. Rat damage was minimal in Bangun Bandar Estate, possibly due to natural biological control of rat by development of Tyto alba. Rat damage assessment had been carried out by FFB crop checker during crop quality inspection. There was no rat found during field observation. Status minor Is there monitoring extent of IPM implementation including training? Realisation of IPM Programme (Cencus Realisation of Planting Benficial Palnts (Turnera subulatta, Casia Estate The implementation of Integrated Pest Management was monitored. Census of caterpillar, Oryctes (beetle), Ganoderm and rodent was conducted regularly to determine its controlling. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 45 of 159

46 cobanensis and Antigonon leptopus) Monitoring of Oryctes Larva Handpicking (Monitoring Pengutipan Larva Oryctes) 2013 Audit Report Material used, dosage and concentration of agro chemical was recorded when controlling pest and disease using agro chemical spraying. So far there were no medium and high attacks of caterpillar and rodent. A kind of beetle (Oryctes rhinoceros) was controlled through handpicking of its imago and larva. The Oryctes rhinoceros and its larva was conducted at the decayed parts of such palms, the palms naturally fallen and the palms still standing but presenting rotten tissues at the bottom. The controlling was conducted in immature upkeep and land clearing area. Control of Oryctes rhinoceros using chemical was also conducted regularly based on determined program. Beneficial plant (Cassia cobanensis, Turnera subulatta and Antigonon leptopus) upkeep was performed by cleaning from weeds and inserted if there were dead beneficial plants. Results of these activities were well recorded. IPM training was performed e.g. for all Division Assistant, Pest Foreman, Census Foreman and Census worker. Training materials included information on types of pest, chemical control, biological control, cultural control and physical control methods. Attendance list of training on 29 January 2013 was sighted minor Is there monitoring of pesticide toxicity units (a.i. / LD50 per tonne of FFB or per hectare)? Monitoring of Pesticides Use period 2011, 2012 and Monitoring of Pesticides Toxicity Unit Estate The company has monitor and record pesticides use in 2011, 2012 and Usage quantity of pesticides was within the recommended levels. Monitoring of pesticides toxicity unit LD50/tonne FFB was conduted at the end of financial year. Monitoring of pesticides toxicity unit was available for year In the monitoring show that the use of all pesticides was little at gr/tonne FFB in Opportunity for Improvement: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 46 of 159

47 Audit Report Monitoring of pesticides toxicity unit has been performed but only at the end of the year, it is recommended pesticide toxicity monitoring units performed at the end of each month. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 47 of 159

48 Audit Report PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Ref. CRITERION AND INDICATORS Reference Department in Charge 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. Is there evidence of use of only approved and registered agrochemicals permitted by the relevant authorities? Monitoring of Pesticides Use period 2011, 2012 and The Green Book of Pesticides, Estate (SAI Global use) 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 on the records, agrochemicals used by Bangun Bandar Estate were include the following: - Round up 486 SL license RI expired on 18 March Gramoxone 276 SL license RI expired on 18 March Ally 20 WDG license RI 837/4-2009/T expired on 30 April Dacomin 865 SL license RI 2062/4-2009/T expired on 30 April Decis 25 EC license RI 387/ /T expired on 13 December Santador 25 EC licence RI 2138/7-2009/T expired on 10 August It was noted that there were no agrochemicals used which were not on registered in the Green Book of Pesticides. Status Are there records of pesticide use (including active ingredients used, area treated, Monitoring of Estate Pesticides were used based on annual work QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 48 of 159

49 amount applied per ha and number of applications)? Pesticides Use period 2011, 2012 and Audit Report programme. Activities using pesticides among others 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. Several record of pesticide used was sighted, e.g. application schedule, list of pesticide use in oil palm estate, work achievement and pesticide use, stock card of agrochemicals. The record covered date of application, quantity of pesticide use and name of sprayers. The records were sighted in Division office. It was noted that dosage applied was according to annual programme 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? General Workgroup Task Data Collection Sheet. Work achievement and pesticide use Monthly Report of July 2013 Training of limited pesticides use, 2 July 2013 Estate Records of pesticides uses were well documented including active ingredient used, applied area and use per hectare and number of application rotation. Field observation conducted to Block 43 (year of planting 2011) Division II to activity spraying circle and path. Dosage used was 100 cc/ha round up and dacomin solution. Spraying record Work achievement and pesticide use of weed spraying using agrochemicals was sighted. It was noted that agrochemicals (round up and dacomin) use were approved and registered agrochemical. 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, and applied by qualified person. It was noted that agrochemicals were applied by qualified persons who have received limited pesticide training. All spraying operators have been trained. Training for all sprayers was conducted on 2 July 2013 by supplier Syngenta. Material trained includes understanding of pesticides used, their nature and characteristic as well as first aid QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 49 of 159

50 Audit Report treatment if accidently exposed to dangerous level of agro-chemicals. Training record such as attendance list and photograph were evident. PPE used during spraying activity were boots, apron, safety glass, respiratory mask and hand gloves. Agrochemicals were stored in the determined area separated from fertiliser and other chemicals. Agrochemicals storage was provided in each Division. Agrochemicals storage was locked areas with limited access. The storage was ventilated through cross flow ventilation. MSDS and hazard symbol label were provided nearby of agrochemicals. Emergency shower and eyewash were also provided to anticipate in case of an emergency of chemical handling. PPE for handling of chemicals were provided including boots, apron, safety glass, respiratory mask and hand gloves. The possible spill was managed. Secondary containment was provided around the chemical storage area. Spill kit was also provided in the area. EHS patrol was regularly performed monitor possible spill. Prior to be used in the field, agrochemical was diluted in Division Office. There was a designated area of mixing which was completed with roof, secondary containment and information of agrochemical hazard. The area was also used for cleaning the agrochemical containers and fertiliser sacks. Notice is displayed in the area treated with highly toxic pesticides, e.g. pesticides warehouse and facility to mix agrochemical Are waste material from agrochemicals including pesticides containers are properly disposed in accordance with laws and regulations? Procedure SOC/DP/ agrochemical container handling Supporting document Estate All empty agrochemical containers were triple rinsed, destroyed and disposed in the designated area and separated with organic and inorganic waste landfill. Records of chemical containers quantity disposed were evident. Empty agrochemical containers are disposed monthly. Liquid waste from agrochemical was reused for the next spraying application. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 50 of 159

51 SOC/DP/ Method of agrochemical container handling Record of hazardous waste Audit Report 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? Weed eradication program using Paraquat period Paraquat Reducing Program of Bangun Bandar, period 2013 Estate All chemicals categorised as World Health Organisation type 1A or 1B, or listed by Stockholm or Roterdam Conventions. Paraquat which was the active ingredient of Gramoxone was still used in Bangun Bandar Estate, however the organisation has set internal target to reduce paraquat use. Data of paraquat used has been provided since It was observed that paraquat use was decreased in mature upkeep however paraquat usage was increased in immature upkeep. This increase is acceptable because of the plants status turn from mature into immature due to replanting. There were more weeds in immature plants because of their open area, so that the uses of paraquat will increase. Paraquat reduction program of Bangun Bandar Estate was made by considering plant age factor minor Are there records of the results of health check-up for those who apply agrochemicals? SOP/PSM/4.19 Medical check-up record November 2012 for Spray operators Clinic The medical check for employees exposed to agrochemical was performed once a year. The medical check-up reports 2010, 2011 and 2012 were sighted and verified. The realisation for year 2013 was on progressing to be finalised within this year. Samples are taken to operators who exposed to agrochemical. The medical check-up packet is considering working hazard and records of medical check-up are maintained. Minor Nonconformance minor Are there records showing that no work with pesticides for pregnant and breastfeeding women? Monthly checking record of pregnant test Estate (Nurse) There were 51 totally sprayer for all division. All divisions still involve women as pesticides sprayer. To ensure that there were no pregnant women QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 51 of 159

52 Audit Report during spraying of pesticides, there are lists of women worker including data of monthly checking conducted by nurses. Group discussion with sprayer was conducted on 17 September There was no breastfeeding sprayer during spraying of pesticides QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 52 of 159

53 Audit Report PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Ref. CRITERION AND INDICATORS Reference Department in Charge 4.7 An occupational health and safety plan is documented, effectively communicated and implemented. Is there evidence of documented Occupational Health and Safety (OHS) policy and its implementation? OHS policy, OHS Manual OHS related procedures (e.g. Communication procedure (SOC/PSM/4.07), Emergency response and handling (SOC/PSM/4.08), Monitoring and measurement (SOC/PSM/4.09), Hazardous material handling (SOC/PSM/4.10), OHS patrol (SOC/PSM/4.12), Log Out Tag Out (SOC/PSM/4.17), PPE Management (SOC/PSM/4.18), Working instruction for operating heavy equipment, Working instruction for operating utilities (boiler, steriliser, etc.) OHS Patrol Document control, Estate and Mill (SAI Global use) The OHS policy has been established and remained no change dated on 10 January SOC/MSM/4/01 Manual system management has been established including relevant procedures and working instructions. The policy was displayed at strategic locations of Estate and Mill and communicated to employees including contractor workers. The occupational health and safety program 2012/2013 has also been established among other consist of training activity, safety committee meeting, medical check-up, etc. Boilers, 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 already have been inspected by local authority, the permits were evidence. Boiler operation was monitored its parameters including pressure, temperature and water level, these parameters were recorded. Boiler was completed with automatic water feeding to prevent over heat and explosion in case of less water level. Records of internal inspection and maintenance to the equipment were sighted e.g. electrical inspection, compressor inspection and welding equipment and heavy equipment. 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 first semester The procedure for critical activities was established. The procedure was covering OHS control for working in confined space (e.g. cleaning of storage tank), Status Major Nonconformance closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 53 of 159

54 records Inspection and test records from authorised body for boilers, sterilisers, electrical installation, lighting protection, lifting equipment, etc. Audit Report working at height and welding. Work permit system was established but not well implemented, see nonconformance below. Lock out tag out (LOTO) procedure has also been established and implemented especially intended for risk control of maintenance activities. Moving parts of machine/equipment generally has been covered, however see finding below, although it has been immediately rectified. Safety sign was provided to make workers aware on this hazard and risk. In general, electrical installation was improving from previous SAI Global audit even though some substandard electrical installation still found, but immediately corrected. Electrical hazard symbol was provided at electrical panel. Housekeeping at Mill and Estate (office estate, storage, and workshop) in general was improving from previous visit. Access for workers to workplace in general 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, e.g. chimney vertical stairs at Mill and water torn vertical stair at Estate. Noise level has been measured by third party and used as justification for using ear plug/muff (mill, 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 areas. It was noted here 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 54 of 159

55 Audit Report implemented. Workers were interview 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 Block 47 Division I for harvesting, micron spraying at Division I block 58, selective spraying at division II Block 36, fertilising at division II block 30 and mills activities (loading/unloading, processing including utilities, workshop, storage, laboratory including waste water pond) minor 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? Is there provision for accident insurance for workers? Organisation structure of P2K3 OHS briefings records OHS committee meeting report for Q1 and Q Copies of insurance payment Document Control, Mill Administration The safety committee (P2K3) has been updated dated on 15 May The chairman of safety committee is Estate 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 Estate. Monthly safety committee meeting was held to review the OHS programme and performance. Records were sighted for Q1 and Q2 of Reports were quarterly submitted to local authority as required by local regulation. 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 Estate were taken during this audit and found satisfactory. All samples taken have been provided with accident insurance. The contractor workers were also provided with Jamsostek as mentioned in the contract agreement between company and contractors minor Is there regular health examination by a doctor for workers in stations or exposed to high-risk work? SOP/PSM/4/19 Copies of medical check-up Clinic The provisions for medical check-up were described in the procedure SOP/PSM/4.19. Medical check-up has been planned to be conducted once per year. Minor Nonconformance QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 55 of 159

56 certificate for Spray operators, welder and boiler operators Audit Report High-risk worker is assigned to be checked with special test such as lever test, blood test, etc. Result of medical check-up is sight and evident minor Is there documented risk assessment for Occupational Health and Safety (OHS)? SOC/PSM/4.13 (Procedure) SOC/FORM/ (List of identification and evaluation of OHS aspects) Mill and Estate OHS risk assessment procedure (SOC/PSM/4.13) 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 in 1 June 2013 that inline as procedure once a year minor minor Are there records of OHS training? Training schedule for year 2012 and 2013 Is there accident and emergency preparedness procedure? Attendance list Training certificate for boiler operator, heavy equipment, hyperkes SOC/PSM/4.08 (Emergency procedure) Emergency chart for Division and Mill (4/1/2013) Emergency tools list Emergency simulation plan and realisation record 2012 and 2013 Document control, clinic Estate, Mill, document control Training record related to OHS were sighted and 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, hyperkes training for medical doctor and paramedics, and basic OHS training performed internally. 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 consists of fire fighting team, hydrant team, medical team/first aid, evacuation team, external relation, etc. 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 simulations have been performed in Spill on June 2012 and July 2013, fire on March 2012 and May 2013 and September 2013, and spill on June 2012 and July QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 56 of 159

57 4.7.6 minor Is there evidence of OHS and first aid equipments available at worksites? List of emergency tools Emergency kit inspection records (Monthly) Audit Report Mill, Estate and Clinic Emergency shower and eyewash in general has 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 was regularly checked, checklist was sighted. 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. Major Nonconformance closed minor minor Guidance Are workers trained in first aid should be present in both field and mill operation? Are there records of the occurrence of any work accidents are maintained and regularly reviewed? Emergency team chart Copies of emergency training (April 2013) SOC/PSM/4.09 (Monitoring and measurement procedure) SOC/PSM/4.14 (Incident investigation procedure) OHS statistic reports (Monthly) Incident investigation records for year 2012 and 2013 Document control Document control, clinic First aid kits were sufficiently provided at Mill and Estates including each group leader (mandor) at estate. Sufficient training in regard first aid treatment has been provided by company doctor to assistant at Estate and technician at Mill. During the audit, assistant was able demonstrating the use of first aid kit. A procedure for monitoring and measurement OHS performance is sight on SOC/PSM/4.09 and investigation for any incident on SOC/PSM/4.14. 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. 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 184. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 57 of 159

58 Audit Report PRINCIPLES 4: USE OF APPROPRIATE BEST PRACTICES BY GROWERS AND MILLERS Ref. CRITERION AND INDICATORS Reference Department in Charge 4.8 All staff, workers, small holders and contractors are appropriately trained. Is there documented training programme for staff, employee and scheme small holders in accordance with workers positions and competence? Training programme 2012 and 2013 Employee job description Employee competency matrix including evaluation of competency 2012 Document control (SAI Global use) The competency requirements for each function/position were described in the document Personnel Qualification which includes education, experience and training. The system to identify the training needs was established at the form Evaluation of personnel qualification, however this was not performed consistently, and see nonconformance below. Even though that the training needs were not identified using the established system but the training programme 2013 has been established and generally well realized, e.g. lock out tag out training, overhead crane operator, etc. This situation is also issued as non-conformance at previous audit. A major non-conformance is raised regarding to insufficient follow up of previous audit issue Status Major Nonconformance closed Are there records of training for each employee kept? Is there evidence that the company uses experienced or trained contractors? Training records (attendance list and certificates) SOC/PSM/6-07 Sample of contracts (CV. Surya Baru and CV. Kirana Pratama) Document control Document control Evidence of training for key persons were verified and sighted, including for boiler operator, overhead 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 at the List of individual training record. Selection process for contractor has been done considering with experiences data. Relevant documents are verified such as company profile, list of experience works including personnel. Monitoring of contractor during perform job is also made through inspection. It could be beneficial to provide checklist that can be used to verify selection process documentation QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 58 of 159

59 Guidance Audit Report 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 59 of 159

60 Audit Report PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY Ref. CRITERION AND INDICATORS Reference Department in Charge 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? Document of RKL and RPL for Bangun Bandar Mill and Estate #660/084/Tarukim -SB/2005 Procedure SOC/PSM/4.04 Environmental aspect and impact identification SOC/Form/ Identification of Environmental Aspect SOC/Form/ Significant Environmental Aspect Management Mill and Estate (SAI Global use) Documents of RKL and RPL were approved by Head of Serdang Bedagai District Environmental Agency on June 20, Bangun Bandar Mill and 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 regularly. Last review and update of environmental aspect and impact register for Bangun Bandar Mill and Estate was performed on 01 June Bangun Bandar Mill and Estate has ensured that all activities with significant environmental impacts were managed. Control measure were defined and implemented for ensuring that negative environmental impact were prevented or mitigated. There were two types of control measures defined: engineering control and administrative control. The implementation of those control measures are monitored during monthly environmental patrol and also round of internal audits. Status Are there records of regular report on Report of RKL Mill and Implementation of RKL RPL is reported regularly Major Non- QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 60 of 159

61 environmental management in accordance with relevant regulations? RPL 3 rd and 4 th quarter 2012 and 1 st and 2 nd quarter 2013 Receipt note of RKL RPL submission Audit Report Estate however the content has not complied with RKL RPL document. The reports were submitted to North Sumatera Province and Serdang Bedagai District Environmental Agency, Central of Environmental Management Regional Sumatera and Ministerial Office of Environment. conformance NCR closed Opportunity for improvement: It could be considered to submit RKL RPL report not too long from time limit, e.g. not more than two months from time limit or not submit two period reports in the same time minor Are revisions to environmental management document if there are changes in companies operating areas or activities? Initial AMDAL on 24 May 1994 Document of RKL Document of RKL and RPL for Bangun Bandar Mill and Estate #660/084/Tarukim -SB/2005 Procedure SOC/PSM/4.04 Environmental aspect and impact identification Mill and Estate Initial Environmental Impact Assessment documents (ANDAL, RKL and RPL) which were approved by Department of Agriculture of Republic of Indonesia on May 24, 1994 for Bangun Bandar Mill and Estate were available. The document was revised and approved by Head of Serdang Bedagai District Environmental Agency on June 20, It was noted that the organisation is revising RKL RPL due there was new activity composting. The organisation is planning the revised RKL RPL is finished in December For internal environmental aspect and evaluated its impact document, as required by the procedure SOC/PSM/4.04, the information of environmental aspect and impact was reviewed and updated at least once a year. Last review and update of environmental aspect and impact register was performed on 01 June 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: 1. Environmental components for which the functions must be maintained, safeguarded and preserved, such as: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 61 of 159

62 Audit Report protection forests, conservation forests, and biosphere reserves water resources biological diversity air quality natural and cultural heritage environment quality environmentally-oriented cultural values 2. 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: land ownership and control employment and business opportunities living standards of the community public health 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: Building new roads, processing mills or other infrastructure. Putting in drainage or irrigation systems. Replanting or expansion of planting area. Disposal of mill effluents (see criterion 4.4) Clearing of remaining natural vegetation. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 62 of 159

63 Audit Report PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY Ref. CRITERION AND INDICATORS Reference Department in Charge 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? HCV assessment report Peer Review report Attendance list of consultation public Estate (SAI Global use) Identification of any protected, rare, threatened or endangered species and HCV habitat has been performed by Forestry Department of Bogor Agricultural Institute (IPB) for PT. Socfin Indonesia Bangun Bandar Estate. The HCV assessment performed in September to October Peer Review was conducted by WWF Indonesia on March Public consultation was carried out at Lima Puluh Sub-district on August 2010.It had intended to get aspiration and responses from stakeholders related identification result of HCV and its management. HCV identified including : HCV 1.1 and HCV 4.1 : Riparian buffer zone of Belutu (0.86 ha), riparian buffer zone of Martebing (32,55 ha) HCV 1.2, species of birds endangered based on red list of IUCN were identified, e.g. Alcedo euryzona and Pycnonotus zeylanicus Public cemetery was identified as HCV 6 (1.65 ha) Status If, rare, threatened or endangered species, or high conservation value habitats are present, are appropriate measures to preserve them to be taken? Procedure SOC/PSM/ HCV management and monitoring, Estate The management of HCV areas was presently based on the company s SOP of HCV area management. The HCV management and monitoring plan has been prepared and available at the site. It was Major Nonconformance NCR closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 63 of 159

64 date 1 January 2011 Procedure SOC/PSM/9.07- management of riparian buffer zone, date 15 August 2012 HCV Management plan 2013 period Record of riparian buffer zone monitoring, protected wildlife monitoring and HCV sign monitoring Letter form Dolok Masihul District # 18.45/614/279/20 13 Notification river cleaning program, date 23 July 2013 Audit Report sighted that the management and monitoring plan were consistent with the identified HCV in the assessment report. HCV management program including: Setting of boundaries Planting areas of prone erosion to river bank and planting native species. Setting of river protection signboards, including: prohibition to hunting wildlife, prohibition to protected area, During audit, records of HCV management implementation were sighted, however there was no perennials (woody trees) plant program that produce flowers and fruit for bird food as a part of management program of HCV area riparian zone on replanting area. Based on HCV assessment on September 2009, it was found HCV 1.2 on Martebing riparian buffer zone (Two species of birds endangered based on red list of IUCN were identified, e.g. Alcedo euryzona and Pycnonotus zeylanicus). Riparian buffer zone management procedure mentioned that, after replanting riparian buffer zone is planted with beneficial plants and plants (woody trees) that produce flowers and fruit for bird food. According with replanting realization report 2012 and field observation was sighted that the area of Block 54 Afdeling 1 was replanted; however perennials (woody trees) plant program on Martebing Riparian buffer zone on Blok 54 was not established. Some areas along the Martebing on Block 54, Division 3 are occupied and cultivated by the local community. Organization has been put on sign about occupy prohibition of concession area. Moreover, filed observation was conducted in QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 64 of 159

65 Audit Report Martebing riparian buffer zone on Block 58. On August 2013, it has been cleaning on riparian buffer zone with heavy equipment by local government. Organization has been planted Tunnera sp. on river bank to minimize effect of cleaning activity. Organization was also developed and established monitoring program to ensure condition and the existence of HCVA, including: Existences monitoring of HCV 1.2 using list species method. Monitoring condition and the existence of riparian buffer zone, HCV sign and protected wildlife monitoring. Monitoring activities was well conducted. Its records was documented and sighted. Opportunity for improvement It was recommended to choose and established native plant species, fast growing and strong root to planting Martebing river bank in Blok 58 afdeling 1 to minimize erosion of river bank Are measures taken for protecting species and their habitats in accordance with relevant laws and included actions to control any illegal or inappropriate hunting fishing or collecting activities? SOC/Form/ Identification and evaluation compliance against law and regulation HCV Management plan 2013 period Estate & HO The HCV management and monitoring plan described measures taken for each HCV and its monitoring. Relevant laws were taken into account for determining appropriate measure including Government regulation #7/1999, President Decree #32/1990, and Government regulation #35/1991. HCV management areas maps were established 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? Field Observation on Block 54 and Block 58, Division 1 Estate Posters and sign boards concerning HCV areas and protected species are available in the necessary places Dissemination about protected against HCV Area QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 65 of 159

66 Audit Report Attendance List and protected wildlife was conducted on 8 March 2013, 10 April 2013 and 12 August In according interview indicate that staff and employees were informed in regard HCV areas and ERT species minor Does company appoint dedicated and trained officers to monitor any plans and activities as above? Decision Letter from manager # TG- TM/DIV/Bi/063/20 13, date 12 Augustus 2013 Estate Bangun Bandar Estate has appointed HCV officer to ensure the implementation of management and monitoring plan. The HCV Officers have no particular background for HCV management, however they has been trained in regard identification, management and monitoring of HCV on 22 October 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 66 of 159

67 Audit Report PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY Ref. CRITERION AND INDICATORS Reference Department in Charge 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? SOC/Form/ Waste Register Mill and Estate (SAI Global use) Identification of waste and pollution sources from Bangun Bandar Mill and Estate activities was evident. The source of pollution, type and control method of waste was documented. Status Opportunity for improvement: It could be considered to update result of waste identification according to waste generated by each activity Are estates and mills waste management and disposal implemented to avoid or reduce pollution? Procedure SOC/PSM/4.11 Waste Control SOC/Form/ Waste Register Supporting document SOC/DP/ Method of waste disposal Supporting document SOC/DP/ Method of agrochemical container handling Permit of temporary storage of hazardous waste for Bangun Sustainability Sub Department, Mill and Estate Procedure waste handling including hazardous waste handling has been established and implemented. The procedure required waste to be segregated from point of generation. In addition Mill and Estate also established waste register, which described wastes generated from each activity/location, its classification (organic, inorganic or hazardous), and its control measure. EFB and POME was treated in composting process. Solid from decanter were used for fertiliser in Bangun Bandar Estate. Fibre and Shell from Bangun Bandar Mill was used for boiler feed. Rest of shell was sent to Tanah Gambus Mill. It was observed that organic and inorganic waste was segregated at point of source. Mill and Estate including housing has provided different colour 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. Areas of organic and inorganic wastes disposal was far from housing, in the flood- Major Nonconformance NCR closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 67 of 159

68 Bandar Mill #18.31/660/430/2 012 Permit of CV. Amindy Barokah as hazardous waste transporter Permit of CV. Noor Annisa as hazardous waste collector Hazardous waste manifest Report of RKL RPL 3 rd and 4 th quarter 2012 and 1 st and 2 nd quarter 2013 Receipt note of RKL RPL submission Audit Report free area and not in swamp area and completed with warning sign not burning wastes. Hazardous wastes generated by Mill and Estate are used oil, used oil filter, used battery, medical waste and used lamp. Temporary storage of hazardous waste was available to collect hazardous waste prior to be transported by licensed vendor. Temporary storage of hazardous waste still held valid permit from Serdang Bedagai District Environment Agency on 11 October 2012 with permissible period 180 days and valid through 3 years. Disposal of hazardous waste were performed in coordination with Sustainability Sub Department in Medan Head Office. These hazardous wastes were managed by licensed vendor: CV. Amindy Barokah for transporter and CV. Noor Annisa as collector. Disposal of hazardous waste was completed with manifest. Manifest of disposal were sighted for December 2012, April and September Hazardous waste was reported to North Sumatera Province and Serdang Bedagai District Environmental Agency, Central of Environmental Management Regional Sumatera and Ministerial Office of Environment. Receipt note was also sighted. Opportunity for improvement: It could be considered to put warning sign not burning waste in organic and non organic final disposal waste area minor Is there management plan of hazardous waste and instruction of disposal of Record of hazardous waste Estate Empty agrochemical containers from Estate activities were cleaned using a triple rinse method. Empty QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 68 of 159

69 agrochemicals and their containers waste in accordance with the product label and existing regulations? Record of economical waste Audit Report agrochemical cans and bottles were disposed to landfill and separated from organic and inorganic waste. Empty agrochemical jerrycans were reused for chemical solution during spraying. Fertiliser sacks were cleaned prior to be reused for lose fruit layer during harvesting. Estate has been completed with area to clean agrochemical containers and fertiliser sacks. Liquid waste from cleaning was reused for agrochemical dilution during spraying or gardening minor Are there records of waste monitoring or analysis? Record of hazardous waste Record of economical waste Mill and Estate The hazardous wastes balance was made for each type of hazardous waste: waste oil, waste battery, used fuel and oil filters, and medical waste. Quantity of empty agrochemical cans and bottles disposed was recorded. Quantity of empty agrochemical jerrycans was recorded. Minor Nonconformance NCR Guidance The waste management and disposal plan should include measures for: Identifying and monitoring sources of waste and pollution. 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). 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 69 of 159

70 Audit Report PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY Ref. CRITERION AND INDICATORS Reference Department in Charge 5.4 Efficiency of energy use and use of minor renewable energy is maximised. Are records of monitoring renewable energy use and its efficiency analysis? (energy/ton CPO, or energy/ton palm product) Result of monitoring of renewable energy use and its efficiency Mill (SAI Global use) 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 2013 (January to August). The quantity fibre generated from the Mill was estimated about 12.5% of FFB processed and shell about 6.25% of FFB processed. Total energy generated by steam turbine generator for Bangun Bandar Mill was recorded daily and evaluated monthly as total energy (kcal) per ton of CPO produced. Total energy per ton CPO produced was decreased in period January to August 2013 compared with 2012 due new boiler has being operated therefore energy use was more efficient and feeding of fibre and shell uses blower feeding. Status minor Are records of monitoring of fossil fuels use for operational reason and its efficiency analysis? Result of monitoring of fossil fuel use Mill Fossil fuel used for Mill and Estate activities were recorded. Fossil fuel was used for heavy equipment, diesel generator and FFB transportation. In January to August 2013 fossil fuel use was decreased compared with 2012 due new boiler and turbine with more capacity has being operated therefore use of diesel generator was less than before and was only used for boiler fire up. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 70 of 159

71 Audit Report PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY Ref. CRITERION AND INDICATORS Reference Department in Charge 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 Is there documented assessment where fire has been used for preparing land for replanting? Procedure of Replanting (SOC/PSM/ ). HSE Inspection Report Estate (SAI Global use) The procedure of replanting mentioned that field assistant should do an inspection to ensure that the contractor does not doing burning for land preparation for replanting. Inspection report was evident. Replanting 2013 was performed in Division IV. No fire used for preparing land for replanting. During field observation there are no evidence of fire uses during land preparation on replanting area Block 102 Division IV. Status Are there records of implementation of zero burning policy? Progress Report of Replanting, 2013 Contract letter #618/PD- GM/X/SP/2012 dated 26 November 2012 between PT. Socfindo and CV. Surya Baru Estate The organisation has policy of zero burning documented in Ethics Policy SOC/Dp/ clause 11, procedure of land preparation and circular letter #PD-GM/KS/Bi/470/10. Realisation of land preparation for replanting activities in 2013 was well documented and reported including activities of chipping, ripping, cleaning ditch, making ditch and total area prepared. Zero burning activity was monitored during HSE inspection. During field observation there are no evidence of fire uses during land preparation on replanting area Block 102 Division IV Are there procedure and records of emergency responses to land burning (tanggap darurat kebakaran lahan)? SOC/PSM/4.08 (Emergency procedure) Estate Emergency preparedness and response procedures for handling land fire was included in the procedure SOC/PSM/4.08 The team to handle emergency conditions has been established consists of fire fighting team, medical team, evacuation team, external relation, etc. The simulation of land fire QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 71 of 159

72 5.5.1 minor Guidance Are there presence of appropriate fire extinguishers and facilities, depending on the risks assessment? List of emergency tools Emergency kit inspection records (Monthly) Audit Report Estate handling has been performed in 7 September 2013, reports were sighted. The equipment for land fire handling has been provided, this including portable fire extinguisher, mobile water truck and other mechanical equipment for localizing the fire. This equipment was justified sufficient based on the simulation as mentioned above. 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 outbreaks, and with evidence that fire-use is carefully controlled. Use of fire on peat soils should be prohibited. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 72 of 159

73 Audit Report PRINCIPLES 5: ENVIRONMENTAL RESPONSIBILITY AND CONSERVATION OF NATURAL RESOURCES AND BIODIVERSITY Ref. CRITERION AND INDICATORS Reference Department in Charge 5.6 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 of Environmental Aspect, SOC/Form/ Mill and Estate (SAI Global use) Identification of pollution and emission sources at Bangun Bandar Mill activities was evident. The source of pollution, type of pollution and its control was documented. The information of pollution and emission sources at Bangun Bandar Mill was reviewed and updated on 1 June 2013 including boiler emission, methane from Palm Oil Mill Emission, diesel electricity generator and vehicles and heavy equipment. Status Is there monitoring of emission quality of the sources identified? Environmental Monitoring Matrix Report of analysis for boiler emission, generator emission, ambient air, noise Mill and Estate Monitoring of pollution and emission quality of sources identified has been programmed. Monitoring and measurement results for 2 nd semester of 2012, 1 st semester of 2013 were sighted for boiler emission against Environment Ministry Decree #07/2007, diesel electricity generator against Environment Ministry Decree #Kep13/Menlh/3/95, 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/ minor Are there records of efforts and strategies employed to reduce pollution and emissions? Environmental management objectives, targets and programs Mill and Estate Efforts and strategies employed to reduce pollution and emissions were sighted, e.g.: Substitute diesel fuel to fibre and shell to operate boiler Installing closed conveyor to drain boiler ash therefore it can prevent air pollution from ash. Installing hopper to collect boiler ash. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 73 of 159

74 Audit Report Segregation of organic and non-organic waste. Manuring application based on recommendation. Reducing operation hour of diesel generator minor Are there records of identification, monitoring, and treatment methodology for POME? Work guidance SOC/DP/ WWTP operation Certificate of analysis Monitoring of pond Mill Bangun Bandar Mill waste water was processed through a series of waste water treatment ponds: one anaerobic pond, one facultative pond and one aerobic pond. Process parameter monitoring and maintenance of the ponds were sighted. Quality of waste water effluent is monitored monthly in line with the requirements of the Decree of the Minister of Environment #51/1995 attachment B.IV by external laboratory. The results of monitoring of waste water effluent were reviewed including measurement of BOD for September 2012 to August The result of discharge effluent conforms to the limits for parameters of the Decree of the Minister of Environment #51/1995 attachment B.IV. Several conditions of WWT operation are monitored periodically, e.g. checking of circulation pump and aerator condition, cleaning in pond, etc. Minor Nonconformance NCR Note: It was noted that minor NCR was issued for this indicator in certification audit, however since the nature of the findings was not the same and monitoring of water effluent indicated compliance with environmental limit, the finding still classified as minor NCR. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 74 of 159

75 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 6.1 Aspects of plantation nand 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 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? Report of Social Impact Assessment 2011 Estate and Mill (SAI Global use) Social impact assessment was conducted by the organisation. Assessment was conducted through PRA (Participatory Rural Appraisal) and involved the local community. And also some interview was conducted with leaders community. This assessment was conducted during period June to September Scope of assessment covered villages: Scope of assessment covered villages: Bantan, Martebing, Dolok Sagala dan Aras Panjang. Evidence of participatory action from local communities was also sighted in related SIA documentation including photos. Positive impacts were identified, such as: increased income of the village economy ease of road access economy and welfare level of the surrounding community is increase Negative impacts were identified, such as: ash and smell from the mill Action plan to implement and monitor social impact with community has been determined. Positive impacts were maintained with organisation and necessary action was planned by the organization. Status QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 75 of 159

76 Audit Report minor Are there regular monitoring and management of social impact, with the participation of local communities? Procedure SOC/PSM/9.03, Social impact analyses, Rev 1, date 1 January 2013 Estate and Mill Action plan to implement and monitor social impact with community has been determined. Positive impacts were maintained with organisation and necessary action was planned by the organization. And negative impacts (ash and smell) were followed up with corrective action. A documented procedure was described that the monitoring of social impact was annually conducted. Monitoring against social impact was conducted through PRA (Participatory Rural Appraisal). Last monitoring was conducted on Augustus 2013 and its report sighted and well documented 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? ANDAL, RKL and RPL Document in 1994 Revision RKL and RPL Document in 2005 Procedure SOC/PSM/9.03- Social impact assessment, Rev 1, date 1 January 2013 Estate and Mill Initial Environmental Impact Assessment documents (ANDAL, RKL and RPL) which were approved by Department of Agriculture of Republic of Indonesia on May 24, 1994 for Bangun Bandar Mill and Estate were available. The document was revised and approved by Head of Serdang Bedagai District Environmental Agency on June 20, Bangun Bandar Estate RKL RPL #660/084/Tarukim- SB/2005. There was a change in the operation scope (replanting on some areas) that require new social impact assessment. Organization has been established environment and social impact analysis matrix for replanting activity in December Monitoring environment and social impact replanting activity has been conducted in Augustus 2013 appropriate with established procedure Based on monitoring report, environment and social impact of replanting activity was managed and there was increased enrolment of period worker. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 76 of 159

77 6.1.3 minor Are there a regular and scheduled environmental management and monitoring report? RKL-RPL report for Jan-Jun 2013 period Audit Report Estate Organization was carried out management and monitoring against social impact based on SIA report, however regular and scheduled reporting to related agency was not yet done. There was no reporting social impact management and monitoring implementation in RKL-RPL report for Jan-Jun 2013 period. Minor Nonconformance NCR minor Are particular attention paid to the impacts of outgrower schemes (were the plantation includes such a scheme) There was no outgrower scheme in PT. Socfindo, Bangun Bandar 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: Access and use rights Economic livelihoods (e.g. paid employment) and working conditions. Subsistence activities. Cultural and religious values. Health and education facilities. Other community values, resulting from changes such as improved transport/communication or arrival of substantial migrant labour force. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 77 of 159

78 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 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 Is there documented procedure and records of communication and consultation with the communities? Procedure SOC/PSM/9.01 Social communication, Rev 1 date 01 January 2013 Head of administration- KTU (SAI Global use) Documented procedure for communication and consultation with public was established. Stage of communication and consultation with public was described in the procedure and it has been communicated to stakeholder on 18 November Communication and consultation has considered differential access to information for male/ female, workers, villagers representative both old and new villagers including ethnics. Communication and consultation can be done using verbal or using letter. Result of communication and consultation was recorded in the log logbook e.g. road maintenance, donation, facilities support, invitation for memorial, etc. Most of requests were an invitation to follow the event held by the stakeholders, for example: invitation for memorial of religious holidays, invitation for area meeting from local labour department, etc. Status minor Is a list of stakeholders maintained? List of stakeholder, September 2013 Head of administration- KTU Stakeholder list was made and mentioned interested party. Stakeholder list covered District Head, Forestry and Plantation Department, Environmental Agency, Labour, transmigration and social Department, National Land Agencies, Camat, Village Head around estate and mill, FFB supplier, Police of district, Worker union and gender committee. Stake holder list was made detail, address and phone numbers were mentioned in the list. It was update on QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 78 of 159

79 Audit Report September 2013 Based on list of stakeholder, there was no NGO as a organization stakeholder. However, 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 8. List of national/international NGO for consultation) minor Are there records of local communities aspiration and responses or follow up actions by companies to there requirements? Group discussion with Head of Martebing and Farmer groups Yakin 16 September 2013 Logbook stakeholder aspiration Estate Community aspirations were kept and recorded by the Head of Administration on logbook stakeholder aspiration e.g. road maintenance, donation, scholarship, invitation for memorial, etc. Interview result with farmer group was concluded that the prices paid for FFB was transparent and complied with agreement. Determination of FFB s price was conducted through the pricing mechanism of government. In general, interview result indicated that the communication between local society and Estate was evident where some agreements were made to improve social relationship minor Is there a dedicated person responsible for consulting and communicating with local communities? Letter # UM/X/Bi/2765/10, date 15 November 2010 ISO Secretariat Based on decision letter from Top Management, Manager was responsible to coordinate communication and consultation with stakeholder Guidance 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 79 of 159

80 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties Is there an open mechanism, which is accepted by affected parties, to receive complaints and resolve dispute in an effective, timely and appropriate manner? Procedure SOC/PSM/9.02- Social complaint handling, date 1 January 2011 Estate (SAI Global use) Procedure for complaints and grievances was determined and agreed by related parties (head of villages). It was communicated to related parties on 27 September 2010 Opportunity for improvement It was suggested to established duration of each stage in procedure social complaint (SOC/PSM/9.01) from receive of aspiration, communication and complaint from stakeholder up to its responds and or its completion. Status minor Are there records of handling of the complaints? Procedure SOC/PSM/9.02- Social complaint handling, date 1 January 2011 Group discussion with Head of Multipurpose Employee Cooperative Koperasi Serba Usaha Karyawan, Deputy and Secretary of worker representative, Estate (Head of administration- KTU) Receipt and handling of complaint from internal (worker) was not recorded appropriate with established procedure. Based on its procedure, complaint should be registered in the form/complaint logbook, however form/logbook of complaint was not available. During group discussion with worker, including : Date 16/09/2013 with processing foreman, workshop worker, and weigh bridge worker and date 17/09/2013 with Head and secretary of worker union, Gender committee, representative of spraying worker, worker cooperation manager and others. There are some complaint from worker has been clarified on 18 September 2013 but it was be remain an issue which should be responded and it would be Minor Nonconformance NCR QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 80 of 159

81 Gender Committee and representative sprayer from Division 2, on 17 September 2013 Clarification process with Head of Estate Assistant on 18 September 2013 Audit Report check for next surveillance audit, including : Sick employee was difficultly to access nursing services after pm. Clarification result: control schedule of nurse has been established every month, however it was not inform to worker. Moreover, evidence of control against nurse appropriate with schedule was not sighted. Head of clinic as a responsible to give reference medication to hospital life in outside the estate, however there was no representative of clinic head which have same authority. Clarifcation result: Handling mechanism for emergency condition of patient was not clearly described. For housing area in afdeling 4, there was no clinic. There was no nurse in housing area of afdeling 4. Moreover, visit by nurse to housing area of afdeling 4 has not been conducted since 2 last month. Clarification result: Auditee information, routinely visit by nurse was conducted, however evidence of nurse visit was not sighted. There was reduction of side dish for sprayer, from 4 pcs milk and 4 eggs was monthly given to sprayer be only 1 pcs milk and 1 eggs. Clarification result: Based on Shit Issue Request January to March 2013 period, 2 pcs milk and 2 eggs was monthly given to sprayer, however since April 2013 only 1 pcs milk and 1 egg. It was not available with Joint Working Agreement (Perjanjian Kerja Bersama) Colour of clean water which was organization provide to community around mill was blackish when water reservoir washing. Clarification result: There was no information dissemination about using of water warning when reservoir/water tank cleaning Are there procedures for identification and Procedure Estate (Head Procedure for complaints and grievances was QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 81 of 159

82 minor calculation of fair compensation for the loss of legal or customary right of the land, with the involvement of local community representatives and relevant agencies and made publicly available? SOC/PSM/9.02- Social complaint handling, date 1 January 2011 Audit Report of administration- KTU) determined and agreed by related parties (head of villages). It was communicated to related parties on 27 September 2010 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 82 of 159

83 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 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 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? Procedure SOC/PSM/9.02- Social complaint handling, date 1 January 2011 Procedure SOC/PSM/9.05 Identification and compensation calculation Head Office (SAI Global use) A mechanism to resolve conflict which is accepted by all parties was described in the procedure for social complaint handling including claim or conflict of land and in the procedure identification and compensation calculation to identify and determine calculation method to provide fair compensation due to loss of land and customary rights where identified. Dissemination for procedure introduction was evident and documented. It was communicated to related on 27 September 2010 to related parties (Village head, Camat, Police district, Local plantation and forestry department, local environmental agency) Status minor Are there records of identification of people entitled to receive compensation? 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 with village head. There has been concession area before Not Applicable minor Are there records of negotiations processes and/or the details of compensation settlements? 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 with village head. Not Applicable minor Are there records of the implementation of compensation payment? 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 with village head. Not Applicable QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 83 of 159

84 Audit Report Guidance 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 84 of 159

85 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 6.5 Pay and condition for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages Is there documentation of employees pay rates? Northern Sumatera Governor s Decree Letter no /141/KPTS/ Minimum wages payment 2013 Estate (Head of administration- KTU) (SAI Global use) Documentation of employees pay rates was made by the organization. Workers were classified into daily worker (BHL Buruh Harian Lepas), and permanent worker (KHT Karyawan Harian Tetap & employees). Evidence that the workers have received wage according regulation could be shown. Minimum wages payment refers to latest Northern Sumatera Governor s Decree. 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 shit. Daily attendance for workers was recorded and controlled manually by the each Assistant. Status Are there a company working regulations and work contracts, in accordance with existing regulations? PKB year 2012 Estate (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 ). 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) year 2012 between employees and the organisation. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 85 of 159

86 Audit Report 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? Result of wells water analyse by Sucofindo Group discussion with Deputy and Secretary of worker representative, Gender Committee and representative sprayer from Division 2 on 17 September 2013 Clarification process with Head Assistant of Estate on 18 September 2013 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, futsal, and tennis), etc. Housing for workers and medical facilities (clinics) were was provided by the organisation with basic facilities. However, During group discussion on 17/09/2013 with employee (sprayer in afdeling 2), there was again complaint about water condition in housing area of afdeling 2. Wells water colour was yellowish caused white dress be sallow. Test against quality of employee wells water was for ensuring appropriateness standard as water consumption was established on October Testing result was indicated that the wells water was not appropriate with clean water standard. Dissemination of prohibition to don t using of wells water was conducted, however there was no availability clean water for employee in housing area of afdeling 2. Major Nonconformance NCR closed minor Are agreements entered into with contractors to specify that contractors abide by labour laws?. Working agreement No. BB/SPK/07/VII/20 13 Head Office Local contractors were used by organization for several activities. It was found working agreement between organizations with third party (contractor) were not required contractors abiding to labour laws. Working agreement between organizations with Koperasi Serba Usaha Karyawan to executed period maintenance job was not required Koperasi Serba Usaha Karyawan abide to labour laws. For example: Working agreement No. BB/SPK/07/VII/2013. Minor Nonconformance NCR 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 86 of 159

87 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 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 all such personnel. Is there documented company policy recognising freedom of association? Ethics Policy SOC/DP/ (Kebijakan Etika SOC/DP/ ) Rev 2, date 01/08/2013 Mill and Estate (SAI Global use) A published statement in local languages recognizing freedom of association was stated in the Ethics Policy SOC/DP/ (Kebijakan Etika SOC/DP/ ), Appendix IV and approved by the top management. Memorandum stated that the organisation respect to comply with regulation pertinent to freedom of association. Also PKB stated that freedom of association can be conducted by the worker through Labour Union. Status 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 minor Area there documented minutes of meeting with any labour union (if any)? Decision letter #Kep 29/org/PC FSP PP-SPSI- SB/X/2011 Minutes of meeting date 31 December Bipartit of premium submission Mill and Estate There are SPSI (Serikat Pekerja Seluruh Indonesia- Indonesian Worker Union) for Mill and Estate. Each estate and mill has PUK (Pengurus Unit Kerja- Caretaker unit). Worker representative was elected independently among workers. Worker Union has been registered in Indonesian Worker Union Srdang Begadai District (Decision letter #Kep 29/org/PC FSP PP-SPSI-SB/X/2011). As found during group discussion with PUK mill and each estate, conditional meeting was also held to QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 87 of 159

88 Minutes of meeting date 23 July 2013 Ied gifts Audit Report discuss any issues as necessary and recorded in minutes of meeting. Several issues discussed at meetings were not limited to labour issues. Meetings have also discussed cleanness and safety of housing areas. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 88 of 159

89 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 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. Is there documented company policy on worker age requirements, in accordance with national laws? Ethics Policy SOC/DP/ (Kebijakan Etika SOC/DP/ ) Rev 2, date 01/08/2013 PKB 2012 Mill and Estate (SAI Global use) Organisation has policy for minimum age for worker and mentioned in the Ethics Policy Appendix V and the PKB. List of worker and related document was verified and there was no worker under 18 years old. According to observation result in Mill and Estate, there was no worker under 18 years old Status minor Are there records of implementation of company policy on worker age requirements? Group discussion with Village head of Martebing and Farmer groups Yakin on 16 September 2013 List of worker period August 2013 Letter # TM- BB/UM/Bi/004/201 3 Job opportunities Mill and Estate Job opportunities were communicated and given to surrounding villagers at first priority where no discrimination found observed during group discussion with Village of Martebing and Farmer groups Yakin on 16 September 2013 and related records of workers being employed. All workers are treated equally in accordance with company regulation including rights of worker as well. Guidance 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 89 of 159

90 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 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. Is there documented equal opportunities policy? Ethics Policy SOC/DP/ (Kebijakan Etika SOC/DP/ ) Rev 2, date 01/08/2013 Mill and Estate (SAI Global use) Policy for against discrimination was determined by the organisation. Ethical policies Appendix 6 also mentioned ban of discrimination for all worker in the organisation. Status minor Is there evidence of equal treatment in working opportunities for workers? Group discussion with representative worker, worker union and gender committee on September 2013 List of worker period August 2013 Mill and Estate Worker list mentioned that all workers came from different back grounds (race, religion, gender, etc). Ethnic diversity of worker and also during interview with workers, no discrimination was identified based on religion, ethnic, gender. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 90 of 159

91 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 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 Is there a documented company policy on sexual harassment and violence? Is there a documented company policy on the protection of reproductive rights? Ethics Policy SOC/DP/ (Kebijakan Etika SOC/DP/ ) Rev 2, date 01/08/2013 Mill and Estate (SAI Global use) Policy for sexual harassment and violence and to protect women reproduction rights was determined in the Ethical policies Appendix 7 & Appendix 8. Status minor minor Is there proof of implementation of sexual harassment policy? Is there proof of implementation of reproductive rights policy? Gender committee structure year 2010 Group discussion with Deputy and Secretary of worker representative, Gender Committee and representative sprayer from division 2 on 17 September 2013 Mill and Estate Gender committee was established by the organisation since The committee has representatives from all areas of work. The committee consider matters such as; trainings on women s rights, counselling for women affected by violence, 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. Communication to all workers pertinent to prevent sexual harassment and protect women reproduction was conducted by the gender committee team and attended by the organisation minor Is specific grievance mechanism is available? Procedure SOC/PSM/9.02- Social complaint handling, date 1 January 2011 Workers interview Mill and Estate Complaint handling procedure for sexual harassment was determined. All complaints can be issued verbal and or written and informed to all administrator, gender committee and Mill/Estate Manager. Based on workers interview and group discussion QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 91 of 159

92 and group discussion with gender committee and workers representative on September 2013 Audit Report with gender committee and workers representative on September 2013, it was concluded that there was no sexual harassment and violence within the organisation. Guidance 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 92 of 159

93 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 6.10 Growers and mills deal fairly and transparently with smallholders and other local business Are current and past prices paid for FFB publicly available? Are pricing mechanism for FFB and inputs/services documented (where these are under control of the mill or plantation) Price information week 1 September 2013 Price Mechanism 2013 Mill Mill (SAI Global use) There is one out grower supply FFB to Bangun Bandar Mill (Kelompok Tani Yakin). FFB pricing is available and informed to the supplier. The pricing components consider the transportation cost, grading and oil potential content. Price mechanism of FFB is determined by HO Medan and described in agreement #PD- GM/X/Bi/089/ The company updates the information on the FFB pricing formula based on global CPO based price that includes details of transport, milling and shipping costs and this information provides it to the FFB supplier via and directly informed by POM. Status minor minor Is the evidence available that all parties understand the contractual agreements they enter into, and that contracts are fair, legal and transparent? Are agreed payment made in timely manner? MOU #PD- GM/X/Bi/089/ ) Payment records March September 2013 Mill and Purchasing Department Mill and Finance Department Annual contract are made between FFB supplier and mill, describing FFB specification required, contract period, determination of FFB pricing, and term of payment. The current contract described on agreement #PD-GM/X/Bi/089/ Information of FFB set was available to the FFB suppliers and the commitment was stated in the procedure. The selection and evaluation of supplier was based on capability of supplier to supply required inputs and services. Specification of inputs and or services required was communicated to the supplier/vendor through tender document or request for quotation. A review to the current FFB purchase records (July 2013 to current) shows that the price set was consistently used as recorded in the record of FFB QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 93 of 159

94 Guidance Audit Report receiving. The payment of FFB purchased were done twice weekly; in line with term of payment agreed within the contract. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 94 of 159

95 Audit Report PRINCIPLES 6: RESPONSIBLE CONSIDERATION OF EMPLOYEES AND INDIVIDUALS AND COMMUNITIES AFFECTED BY GROWERS AND MILLS Ref. CRITERION AND INDICATORS Reference Department in Charge 6.11 Growers and millers contribute to local sustainable development wherever minor appropriate. Are there records of company contributions to the local developments? CSR Program 2013 Social assistance list and picture Estate and Mill (SAI Global use) Records of organization contribution to regional development were evident, among either: agreement contract, and social assistance list. CSR program was provided by the organization and deployed in to CSR program. Activity of CSR was identified by the estate/mills, including:, repairs the village road, low-cost market, mosques renovation in Aras Panjang Village, honor assistance to teacher of TK Aulia, etc. Implemented document was recorded within photo and minutes of aid delivery. Opportunity for improvement Recommended to do CSR program analysis based on previous achievements as a basis for next CSR plan arrangement. For instance: to carry forward incomplete actions to next CSR program, determine necessary action to address previous program which incomplete, etc. Status 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 95 of 159

96 Audit Report PRINCIPLES 7: RESPONSIBLE DEVELOPMENT OF NEW PLANTINGS Ref. CRITERION AND INDICATORS Reference Department in Charge 7.3 New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values Are new plantings within November 2005 and November 2007 in compliance with existing regulatory requirements that related to social and environmental impacts management, and with the legalized land spatial planning? Procedure of Responsible Development of New Planting (SOC/PSM/9.04). Head Office (SAI Global use) A procedure regarding responsible development of new plantings was available in the estate (Document SOC/PSM/9.04). Bangun Bandar Estate was a very old plantation, and therefore only replanting of Oil Palm and conversion from the companies Rubber Plantation into Oil Palm (within the same concession / licence area) was practiced here. No planting activity in new land acquisition. No Primary Forest of HCV area has been present since long time, as this plantation was established during the Dutch period in the beginning of the 20 th century. Since then, only implantable swamps consisting of bushes and shrubs, and riparian zones planted with oil palms remained, and these have all been identified as HCV areas. No other HCV areas or forests were present here between November 2005 and November Status Not Applicable Are there maps showing plan and realization of land clearing in accordance with HCV identification? Guidance Not applicable Where it can be proven that the land did not contain HCV in November 2005, the land can enter RSPO certification programme. Where the HCV status of the land is unknown and/or disputed, the land will be excluded from the RSPO certification programme, until an acceptable solution for HCV compensation has been developed. Companies owning such land can enter the other estates in the programmed. This arrangement is valid only for land development between November 2005 and November 2007 which was the RSPO P&C initial pilot implementation period. This criterion applies to forest and other vegetation types. This applies irrespective of any changes in land ownership or farm management that have taken place after this dates. High Conservation Values (HCVs) maybe identified in restricted areas of a land holding, and in such cases new plantings can be planted allowed the HCVs to be maintained or enhanced. The HCV assessment process requires appropriate training and expertise and must include consultation with local communities particularly for identifying social HCV. HCV assessment should be conducted according to the national interpretation of the HCV criteria or according to the Global HCV toolkit if a national interpretation is not available. Development should actively seek to utilise previously cleared and or degraded land. Plantation development should not put indirect pressure on forest through the use of all available agricultural land in area. Although planned development may be consistent with landscape level planning by national and local authorities, this requirements for protection of social and biological HCVs must be still be complied with. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 96 of 159

97 Audit Report PRINCIPLES 8: COMMITMENT TO CONTINUOUS IMPROVEMENT IN KEY AREAS OF ACTIVITY Ref. CRITERION AND INDICATORS Reference Department in Charge 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 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: Reduction in use of certain chemicals (criterion 4.6) Environmental impacts (criterion 5.6) Waste reduction (criterion 5.3) Pollution and emissions (criterion 5.6) Social impacts (6.1) Report of external audit Quality objectives OHS and Environmental Management Objectives, targets and programs Mill and Estate (SAI Global use) Evidence of several improvements was shown, e.g. Water from decantation tank is reused for dilution water in station press. Previously water was disposed to WWTP. Installing closed conveyor to drain boiler ash therefore it can prevent air pollution from ash Installing hopper to collect boiler ash Started in September 2013 empty agrochemical containers are rinsed, destroyed and collected in the warehouse prior being transported by the authorised institution Composting process - all EFB was processed in composting mixed with 40-40% total of POME and boiler ash. Management of the poor drainage areas by making 1 x 1 m ditch and outlet ditches so the plants become fertile. Status The Mill and Estate is certified to ISO 9001:2008, ISO 14001:2004 and ISO 18001:2007 continually set management objective and target which were supported by quality, environment and safety management program. Regular internal and external audit and management review meeting was held to evaluate the adequacy and effectiveness of the management system. Regular evaluation of plantation and mill operation was performed through internal and external audits. The coverage of the audit including production QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 97 of 159

98 Audit Report planning, production, power generation and utilization, consumable, process control, quality control including waste water treatment, maintenance, occupational health and safety, FFB incoming and inspection, and laboratory. The above audit reports indicated that any gaps against standard operation procedure of plantation and operation were noted. Corrective action plan was issued and implemented to demonstrate effort for compliance as well as continual improvement minor Are there records of follow-up actions taken against RSPO audit findings, if any? Internal audit result Corrective and preventive action request Mill and Estate RSPO internal audit has been conducted in March 2012 combine with ISO internal audit. Audit was done for the Mill and Estate. Internal audit report was reviewed, and internal audit findings were followed up by the Mill and Estate. A list of findings and its corrective action plan was used for monitoring their status. Action plan matrix is established for findings issued during SAI Global RSPO certification audit. Corrective action plan has been established and implemented. The effectiveness of the corrective action taken has been verified. 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 98 of 159

99 Audit Report MILL SUPPLY CHAIN REQUIREMENTS Table 9: Mill Production and Delivery of ALL Certified Products (CPO and Kernel), actual volume since date of last reporting period Month 2012 Total certified FFB (Ton) CSPO (Ton) Certified PK (Ton) CSPO sold (Ton) Certified PK sold (Ton) October 3,828, , ,753 Nil Nil November 4,597,910 1,108, ,120 Nil Nil December 4,829,960 1,211, ,494 Nil Nil 2013 January 5,288,440 1,256, ,917 Nil Nil February 4,604,770 1,131, ,286 Nil Nil March 4,968,450 1,190, ,128 Nil Nil April 4,987,810 1,176, ,945 Nil Nil May 4,898,200 1,180, ,908 Nil Nil June 5,577,960 1,352, ,747 Nil Nil July 5,481,510 1,314, ,537 Nil Nil August 4,242, , ,006 Nil Nil Source: Socfin Indonesia, October 2013 Note: CSPO and CSPK was sold through other scheme Green Palm certification Table 10: Estimated of production of FFB, CPO and PK Month FFB (Ton) CPO (Ton) PK (Ton) January 4,439,855 1,074, ,216 February 4,349,256 1,056, ,038 March 5,789,797 1,403, ,128 April 5,095,839 1,228, ,620 May 5,789,782 1,391, ,195 June 5,585,399 1,346, ,400 July 5,935,601 1,441, ,372 August 5,366,684 1,290, ,844 September 5,411,827 1,304, ,166 October 5,463,243 1,314, ,698 November 4,582,262 1,100, ,278 December 4,889,929 1,159, ,101 Total 62,699,474 15,113,122 2,825,056 Source: Socfin Indonesia, November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 99 of 159

100 Audit Report PART A COMPANY DETAIL Company Name: PT. Socfin Indonesia Bangun Bandar Mill RSPO member number: UTZ number: RSPO_PO Site Address: Kecamatan Dolok Masihul, Kabupaten Serdang Bedagai, NORTH SUMATERA IDN Management Representative: Hasan Bisri Mill capacity: 23 MT FFB/hour App/Cert No: RSPO20008 Audit Type: 2 nd Annual Surveillance SAI Global Auditor/Team: Irawan Bawono Audit Date: 18/09/13 Activity/Audit No: NA Objectives: to verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers Supply Chain Model: Module E - CPO Mills: Mass Balance Pertinent record period: October December 2012, January August 2013 Estimated tonnage of certified CPO produced: 15, ton (2013) Estimated of tonnage of CPO produced 23, ton (2013) Estimated of tonnage of certified PK produced: 2, ton (2013) Estimated of tonnage of PK produced: 4, ton (2013) Outsource activity(ies) (if any): Independent third party(ies) performing outsource activity(ies): name, address and capability NA NA QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 100 of 159

101 PART B SUPPLY CHAIN CERTIFICATION 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) Audit Report AUDIT FINDINGS / OBJECTIVE EVIDENCE There is no physical shipment of certified CPO and certified palm kernel in 2012 and The certified CPO and palm kernel is sold under Green Palm scheme. The quantity that already sold under Green Palm scheme were 2,961 MT (certified CPO) and 1,088 MT (certified palm kernel). STATUS (NC/AoC/ ) Supply Chain Certification Standard E.1 Documented procedures AUDIT FINDINGS / OBJECTIVE EVIDENCE E.1.1 The facilities shall have written procedures and/or work There are documented procedures available on site to ensure the instructions to ensure the implementation of all the implementation of RSPO SCC requirements. elements specified in these requirements. This shall SOC/PSM/9.09 (Prosedur Supply Chain Certification System include at minimum the following: Palm Oil Mill Revision January 2013 SOC/DP/ (DP Perhitungan Jumlah TBS yang diolah SOC/DP/ (Perhitungan Produksi CPO dan Kernel QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 101 of 159 STATUS (NC/AoC/ )

102 Supply Chain Certification Standard Audit Report AUDIT FINDINGS / OBJECTIVE EVIDENCE Pihak Ketiga SOC/DP/ (Pedoman Peyimpanan File SCCS) STATUS (NC/AoC/ ) a. Complete and up to date procedures covering the implementation of all the elements in these requirements The procedures are updated, appropriate with actual condition. Implementation of the RSPO SCC is integrated with quality management system ISO 9001:2008. b. 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. E.1.2. The facility shall have documented procedures for receiving and processing certified and uncertified FFBs. Currently, personnel who having overall responsibility is Mr Hasan Bisri (as Sustainability Manager) and Mr Bahrul (Mill representatives). They are having awareness and knowledge for the implementation of RSPO SCC standard. There is documented procedure for receiving and processing certified and uncertified FFB, including the grading up to CPO and Kernel dispatch are described within the procedure (see description on E.1.1). E.2 Purchasing and goods in E.2.1. The facility shall verify and document the volumes of certified and non-certified FFBs. Mill of Bangun Bandar has a clear system for recording FFB received from certifiable supply base and non-certifiable supply base. It was verified that receiving of FFB was traceable to the supply base unit. Weighing slip and receiving report issued clearly stated weight off FFB receive and its source. Weighbridge has been calibrated. A review to the current records (January August 2013) found that they were well maintained and retrievable. The mechanism for handling non-conforming material/documents include inform to certification body if there is overproduction is described in SOC/PSM/9/09 point 5.6. This mechanism should also be used to take appropriate steps when there is a projection of overproduction. E.2.2. The facility shall inform SAI Global immediately if there There is a documented procedure concerning the immediately inform QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 102 of 159

103 Supply Chain Certification Standard is a projected overproduction. Audit Report AUDIT FINDINGS / OBJECTIVE EVIDENCE SAI Global if there is a projected overproduction. No overproduction identified in STATUS (NC/AoC/ ) E.3 Record keeping E.3.1. The facility shall maintain accurate, complete, up-to-date and accessible records and reports covering all of these requirements. A review to the records and related documentation of the implementation of the SCCS found that accurate, complete and up to date records and report have been maintained by Mill of Bangun Bandar. E.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). E.3.3. a. 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. E.3.3.b. All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system according to conversion rations stated by RSPO. Balance among all FFB, CPO and PK receipts, produced and delivered is conducted in daily basis and recapitulation is done once a month. The records (January August 2013) are well maintained. There are no deliveries of certified CPO and certified palm kernel since they have been sold under Green Palm scheme. See description on page 2. The system of delivery that is deducted from the material accounting system according to conversion ratios are available. E.3.3.c. The facility can only deliver Mass Balance sales from a positive stock. However, a facility is allowed to sell short. There are no deliveries of certified CPO and certified palm kernel since they have been sold under Green Palm scheme. See description on page 2. The system of delivery that only conducted from a positive stock is available. E.3.4. The following trade names should be used and specified No physical delivery of certified CPO and palm kernel. Delivery only in relevant documents, e.g. *product name*/mb or conducted for uncertified CPO and palm kernel. Mass Balance. The supply chain model used should be QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 103 of 159

104 Supply Chain Certification Standard clearly indicated. E.3.5. In cases where a mill outsources activities to an independent palm kernel crush, the crush mill fails under the responsibility of the mill and does not need to be separately certified. The mill has to ensure that the crush is covered through a signed and enforceable agreement. E.4 Sales and good out E.4.1. The facility shall ensure that all sales invoices issued for RSPO certified products delivered include the following information: E.5 Training 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 or Mass Balance) d) the quantity of the products delivered e) reference to related transport documentation E.5.1. The facility shall provide the training for all staff as required to implement the requirements of the Supply Chain Certification Systems E.6 Claims E.6.1 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 Report AUDIT FINDINGS / OBJECTIVE EVIDENCE No outsourced activities available. No physical delivery of certified CPO and palm kernel. Delivery only conducted for uncertified CPO and palm kernel. Training for all staff to implement of the RSPO SCC standard has been provided. No claim has been made since no physical delivery of certified CPO and palm kernel conducted. The facility has awareness of the using claim as required by RSPO Rules for Communications and Claims. STATUS (NC/AoC/ ) QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 104 of 159

105 PART C SUPPLY CHAIN CERTIFICATION SYSTEM Audit Report 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 a detail records have been compiled of the closing meeting including: a list of the participants in the meeting records of certified FFB received on monthly basis records of CSPO and certified PK produced 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) Y Y Y Y Y Y QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 105 of 159

106 Audit Report 3.4 Recommendation The recommendation from this audit is your certification as a producer of RSPO Certified Sustainable Palm and Palm Kernel. Audit recommendations are always subject to ratification by RSPO. This report was prepared by: Ria Gloria, Irawan Bawono, M. Rezza Arbie, Eko Purwanto and AnwarsyahHarahap 3.5 Environmental and social risk for this scope of certification for planning of the surveillance audit Environmental risk: compliance with regulations, hazardous waste management, RKL RPL reporting Social risk: compliance with regulations OHS: prevention of hazard and risk QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 106 of 159

107 Audit Report 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. Signed for and on behalf of PT. Socfin Indonesia Hasan Bisri Kasyhuri Management Representative Date December 17, 2013 Signed for and on behalf of PT. SAI Global Indonesia Ms. Inge Triwulandari Technical Manager Date December 16, 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 107 of 159

108 AUDIT REPORT Appendix A Audit Record Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts audited: # Shifts* Times* From - To Monday Ria, Rezza, Irawan, Eko, Anwar Opening meeting Eko Eko Anwar RSPO Bangun Bandar Mill and Estate Bangun Bandar Mill and Estate RSPO Verification of corrective action on previous non conformances Document review: Criteria: 2.2 indicator major 1, 2 Criteria: 3.1 all indicators Time bound plan Document review: Criteria: 4.1 indicator major 1 and minor 1, 2 Criteria: 4.2, 4.3, 4.5 all indicators Criteria: 4.6 indicator major 1, 2, 3 and minor 1 Criteria: 5.5 indicator major 1, 2 Criteria: 7.3 all indicators Criteria: 8.1 all indicators RSPO Verification of corrective action on previous non conformances Document review: Criteria: 1.1, 1.2 all indicators Criteria: 2.1 all indicators Criteria: 2.2 indicator major 3, and minor 1, 2 Criteria: 2.3 all indicators Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11 all indicators Anwar Interview with mill employees Anwar Interview with: community representatives and supplier Bangun Bandar Estate Rezza Estate site visit for OHS aspect Rezza RSPO Verification of corrective action on previous non conformances Document review: Criteria: 2.1 all indicators Criteria: 4.6 indicator minor 2 Criteria: 4.7 all indicators Criteria: 4.8 all indicators Criteria: 5.5 indicator major 3 and minor 1 Criteria: 8.1 all indicators Ria Estate site visit for environmental aspect

109 Ria Irawan Tuesday Audit Report RSPO Verification of corrective action on previous non conformances Documentation review: Criteria: 2.1 all indicators Criteria: 4.6 indicator major 4 Criteria: 5.3 all indicators Criteria: 8.1 all indicators Bangun Bandar Mill RSPO Verification of corrective action on previous non conformances Document review and mill site visit Criteria: 4.1 indicator major 2, minor 1, Eko Eko Anwar Anwar Irawan Ria RSPO Bangun Bandar Mill and Estate Bangun Bandar Estate RSPO Verification of corrective action on previous non conformances Estate site visit for Estate operation and legal boundaries Site visit for legal boundaries Document review for Estate operation RSPO Verification of corrective action on previous non conformances Document review and site visit for HCV Criteria: 4.4 indicator 1 Major Criteria: 4.6 indicator minor 2 Criteria: 5.2 all indicators Criteria: 8.1 all indicators Site visit for general facilities including interview with Estate employees Bangun Bandar Mill Verification of corrective action on previous non conformances Criteria: 6.10 all indicators Criteria: 8.1 all indicators RSPO SC Module E all indicators RSPO Verification of corrective action on previous non conformances Document review: Criteria: 2.1 all indicators Criteria: 4.4 indicator 1, 2, 3 minor Criteria: 5.1, 5.3, 5.4, 5.6 all indicators Criteria: 8.1 all indicators Ria Mill site visit for environmental aspect Ria Continue for document review Rezza RSPO Verification of corrective action on previous non conformances Document review: QEF08sa.RSPO.01 / Issue Date: 2009-Apr-15 SAI Global Indonesia Copyright 2009 Page 109 of 159

110 Audit Report Criteria: 2.1 indicator major 1 Criteria: 4.6 indicator minor 2 Criteria: 4.7 all indicators Criteria: 4.8 all indicators Criteria: 5.5 indicator major 3 and minor 1 Rezza Mill site visit for OHS aspect Rezza Continue for document review Wednesday RSPO Bangun Bandar Mill and Estate Bangun Bandar Mill and Estate Eko, Rezza, Irawan Audit continue for outstanding issues Anwar Verification of group discussion and public consultation result if any Ria Partial certification requirements Ria, Rezza, Irawan, Eko, Anwar Auditor discussion All Closing meeting QEF08sa.RSPO.01 / Issue Date: 2009-Apr-15 SAI Global Indonesia Copyright 2009 Page 110 of 159

111 AUDIT REPORT Appendix B Previous Nonconformities and Opportunity for Improvement Summary Certification audit Non-conformances RSPO Principe and Criteria, Indonesian National Interpretation No RSPO Indicator indicator major 1 Details Corrective Action PIC Completion Date Status No flow meter installed for measuring river water Flow meter for measuring river water Technical July 2011 Closed abstraction, and flow meter used for measuring abstraction will be installed and flow consumption of ground water has not been meter used for measuring consumption functioned since September It was of ground water will be repaired. informed that local authority has approved the estimation of river water consumption by using ratio of total FFB processed monthly. However no documented statement from the local authorities regarding this matter, although that calculation of the retribution and retribution payments were sighted. 2.1 indicator major indicator major 1 Several law and regulations have not been included in evaluation of compliance with law and regulations performed in March 2011, e.g. ground water abstractions permit, river management against Government Regulation #35/1991 and limited pesticide use baded on Ministry of Agriculture Decree #7/permentan/sr.140/2/2007. The result of evaluation of compliance with regulation Act No. 3/1992 in regards employee social benefit was reported complied to. In fact not all requirements have been complied, e.g. in regard to employee social benefit for non permanent employees. Compliance with law and regulations, e.g. ground water abstractions permit, river management against Government Regulation #35/1991 and limited pesticide use baded on Ministry of Agriculture Decree #7/permentan/sr.140/2/2007 will be evaluated in the next period. The gaps will be completed with action plan. Compliance with regulation Act No. 3/1992 will be re-evaluated. The gaps will be completed with action plan. Mill, Estate, ISO Secretariat Estate, ISO Secretariat July 2011 July 2011 Closed Closed indicator It was observed during site observation that the recording of sterilization was not conducted as Record of Rototherm chart will be improved. Identity and date will be Technical May 2011 Closed

112 minor indicator major indicator minor 2 actual condition. The steam sterilizer #2 was down however it was not recorded on Rototherm report. Working Instruction for Sounding has not been established. Sounding reporting was not conducted in appropriate manner. Only one sounding record is reported on the daily report. AUDIT REPORT provided in the chart. Establish work instruction for Sounding Mill/ISO Secretariat August 2011 Closed Revise recording of sounding Mill August 2011 Closed 4.1 indicator minor indicator minor 2 Thermometer used for sounding has not been calibrated. Water analysis is done with not appropriate equipment. There was no scale on the pipe used for titration of water alkalinity. Thermometer used for sounding has been calibrated. Analysis of water treatment will be completed with burette. Technical May 2011 Closed Technical August 2011 Closed indicator minor 1 Last soil analysis was reported in February Report mentioned that not all divisions were analysed. Criteria of soil analysed and location coverage of sampling point was not clear. Soil at all blocks will be analysed at the next period. Criteria and location of sampling will be mentioned in the report. Agriculture Department 2012 Closed indicator minor 4 The peat area was not identified as HCV area as it has been developed for alonger period of time already, and the area was not mentioned in the HCV report. No best management practices for peat conservation are applied for the area. No piezo metes have been applied. Peat area in block 68 will be included in HCV assessment report and will be managed according to procedure of peat soil management including application of piezo meter. Estate/ISO Secretariat September 2011 Closed 4.3 indicator minor 3 Found not well maintained of several parts of road for transportation by vehicle and workers which normally using motorcycle. Broken road will be maintained according to program of road maintenance. Assistant July 2011 Closed indicator major 1 Quality of Martebing and Belutu Water River is being analysed by Laboratory of North Sumatera District Environmental Agency. Water sample was sent to the Laboratory on 13 April Result of analysis has not been finished Analysis result of quality of Martebing and Belutu River has been finished. Technological Department May 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 112 of 159

113 yet by the Laboratory. AUDIT REPORT 4.4 indicator minor 1 No evidence of measurement of daily ground water abstraction as well as river water, as required by procedure water management SOC/PSM/4.22. Currently flow meter exists and functioned only for Boiler feed-water. The flow meter exists for measuring ground water consumption has not been functioned since end of September Ground water abstraction as well as river water will be measured as required by procedure Technical June 2011 Closed. 4.4 indicator minor 3 Monthly monitoring data of Mill water consumption per ton of FFB was not accurate (January 2010 to April 2011), e.g. water used for Mill was actually from ground water, but data reported was from river water. Water consumption per ton of FFB has been measured in accurate. Technical June 2011 Closed 4.4 indicator minor 2 BOD of effluent is required to be monitored monthly. However result of BOD monitoring of waste water treatment ponds effluent in March 2010 and December 2010 could not be found during audit. BOD of effluent is monitored consistently monthly. Technical May 2011 Closed indicator minor 2 There was no monitoring extent of IPM implementation regarding growth and length of beneficial plants. Extent of IPM implementation regarding growth and length of beneficial plants will be monitored. Assistant July 2011 Closed 4.5 indicator minor 2 Training of IPM implementation has been conducted to one of four assistant and foremen. It was noted that the assistant was moved to other Estate. The three other assistants have not been trained regarding IPM implementation. All assistants will be trained regarding IPM. Agriculture Department August 2011 Closed 4.5 indicator minor 3 There was no monitoring of pesticide toxicity units (a.i. active ingredient / LD50 per tonne of FFB or per hectare). Pesticide toxicity units will be monitored Estate/Agriculture Department June 2011 Closed indicator major 3 Agro chemical solution carried out to site was not completed with information of hazard nature of agro chemical. Agro chemical solution carried out to site will be completed with information of hazard nature of agro chemical. Assistant May 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 113 of 159

114 AUDIT REPORT 4.6 indicator major 1 Decis 25 EC with active ingredient Delta metrin was used within organisation. The agro chemical has had license from Department of Agriculture however the agro chemical has not been registered in the list of pesticide used within organisation. Decis 25 EC will be registered in the list of pesticide used within organisation Assistant May 2011 Closed indicator minor 6 The first aid kit was not available at harvesting activity (Foreman Mr. Junadi) and at the pile construction of composting project by contractor. First aid kit in foreman will be checked. First aid kit will be changed when broken, not complete and is not provided in foreman. Assistant July 2011 Closed 4.7 indicator major 1 It was found non-permanent employees working for loading FFB to truck without worn PPE considering the risk. Check to all workers regarding the completeness of PPE and complete if necessary. Mill and Estate August 2011 Closed 4.7 indicator major 1 Work instruction for harvesting did not mention requirement on OHS, e.g. the requirement for using complete PPE. Revise work instruction for harvesting with the requirement on OHS, e.g. the requirement for using complete PPE. ISO Secretariat August 2011 Closed 4.7 indicator major indicator major indicator major 1 The vertical stair to access water torn was not provided with cover for fall prevention. The housekeeping of pump house for waste water treatment was very poor. Found several poor conditions of electricity, e.g. at pump house of WWTP, most electrical panel with electrical hazard were accessible by unauthorized persons. Provide vertical stair with cover to fall prevention. Pump house has been cleaned. Clean the pump house regularly. Inspect electricity condition. Repair if necessary Lock all electricity panels and only authorised person who can open Technical August 2011 Closed Technical May 2011 Closed Technical August 2011 Closed 4.7 indicator major 1 Noise hazard at mill was not well controlled, e.g. most workers did not wear hearing protection. Inventory completeness of ear muff according to number of workers and complete if necessary. Improve awareness to all workers regarding the importance of ear muff use. Warn to worker who not use ear muff. Technical August 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 114 of 159

115 4.7 indicator major 1 In the area of workshop, found oil jerry can without any identification of content and hazard symbol. AUDIT REPORT Complete oil jerry can with identification of content and hazard symbol. Mill May 2011 Closed 4.7 indicator major 1 Last inspection and test of hoisting crane was on Inspection and test must be conducted every 1 year. Inspect and test hoisting crane this year. Mill May 2011 Closed 4.7 indicator major 1 The cleaning CPO tank just been recently performed in April However, the confined space entry guideline including safe work permit was not implemented. Clean the CPO tank according to confined space procedure. Mill 2012 Closed 4.7 indicator minor indicator minor 1 The schedule for exercising of emergency plans for 2011 has not been issued. Accident insurance scheme for non-permanent employees has not been established and provided. Develop schedule for exercising of emergency plans. General Department May 2011 Insurance all non-permanent employees. Estate Manager September 2011 Closed Closed indicator major 1 The existing training requirements stated in personnel qualification does not consist of training related to HCV and social issues. Include training related to HCV and social issues to qualification personnel. General Department August 2011 Closed 4.8 indicator major 1 Training plan for 2011 has not been established. It was noted that some employees have not completely follow the training stated in personnel qualification e.g. Spraying Supervisor and Processing Supervisor. Training plan 2011 is being reviewed and will be issues soon. Train the employees who have not obtained the required training. General Department May and December 2011 Closed indicator major 2 Monitoring of nuisance to HCV area was conducted once in February Monitoring plan mentioned that monitoring of nuisance to HCV area is conducted monthly. Monitor the nuisance to HCV area monthly. Assistant June 2011 Closed 5.2 indicator major indicator Availability and condition of HCV 6 regarding public cemetery was not monitored. Several inconsistencies of waste management were identified (Estate): Monitor availability and condition of HCV 6 routine. Complete warning sign board regarding prohibition of waste Assistant June 2011 Closed Assistant June 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 115 of 159

116 major 2 Warning sign board regarding prohibition of waste burning was not provided in the final disposal area of organic and inorganic waste. During audit fibre waste was burned at site in block 48. Organic and non organic wastes were mixed in the final disposal area of organic and non organic waste. Briefing regarding segregation of organic and non organic wastes is not conducted monthly as required. AUDIT REPORT burning in the final disposal area of organic and inorganic waste. Complete warning sign board regarding prohibition of waste burning and inform that fibre is flammable. Routine briefing regarding waste segregation. 5.3 indicator major 2 Some inconsistencies of waste management and hazardous material management were identified (Mill): It was found trace of waste burned at composting project area. Vehicle/heavy equipment wash bay was not completed with silt and oil trap. Although boiler chemicals provided with bund wall, some container of chemicals were stored out of bund area. Inconsistent use of hazardous waste symbol was found in front of general workshop contaminated rags bin was not completed with hazardous waste symbol. Waste battery was disposed in February 2011 through PT Bekasi Environmental Service to CV Yudhi Raja Mandiri, however both vendors have no licenses to collect waste battery. No evidence that vehicle used for transporting waste oil and waste battery from Bangun Bandar on February, , BK8227ND, as documented in the disposal manifests ZE and YR has valid permit for hazardous waste transporting. Briefing to contractor of composting project regarding prohibition of burning. Complete vehicle/heavy equipment wash bay with silt and oil trap. Provide secondary containment for all boiler chemicals. Provide hazard symbol in hazardous substance and waste storage. Provide license of waste battery collector, PT Bekasi Environmental Service dan CV Yudhi Raja Mandiri. Change the collector if the above collector cannot show the license. Extent the license of hazardous waste transportation. Record hazardous waste balance for hazardous waste stored and used, not only waste disposed to the third party Mill Technologica l Department May 2011 June 2011 May 2011 May 2011 September 2011 September 2011 June 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 116 of 159

117 Hazardous waste balance reported in February 2011 was not complete, only covered waste disposed to third party, but not covered hazardous waste stored and used. AUDIT REPORT 5.3 indicator minor 2 Monitoring of quantity and use of boiler burner residue and clay sludge using economic waste record SOC/Form/ was not performed as required by procedure of waste management SOC/PSM/4.11. Record quantity and use of boiler burner residue and clay sludge in economic waste record SOC/Form/ as required by procedure of waste management SOC/PSM/4.11. Mill July 2011 Closed 5.3 indicator minor 2 Volume organic and inorganic waste disposed to landfill using non-economic waste record SOC/Fom/ was not performed individually for each type of waste as required by procedure of waste management SOC/PSM/4.11. Separate recording of volume of organic and inorganic waste disposed to landfill. Mill July 2011 Closed indicator major 3 Although emergency responses to land burning has been tested/drilled at site however scenario of land burning drill did not refer to procedure of emergency response to land burning. Moreover evaluation of drill against procedure was not accurate. Evaluate the procedure therefore the procedure can implement in Estate. Estate August 2011 Closed 5.5 indicator minor 1 Facilities to respond land burning have been provided at each division however availability and condition of the facilities have not been monitored. Inspect condition of all facilities to respond land burning. Assistant June 2011 Closed indicator minor indicator minor 1 Guidance for operation of waste water treatment ponds SOC/DP/ requires monitoring of ph and temperature of anaerobic pond discharge every week, however there was no evidence that this parameter were monitored within SOC/Form/ Some facilities at the clinic located in division #3 needs to be improved: Nurses and or officer not presence DP SOC/DP/ has been revised to amend frequency of monitoring of ph and temperature monthly. Monitor ph and temperature monthly in SOC/Form/ Improve condition of clinic in Division #3: Provide nurses and or officer every day at clinic. ISO Secretariat May 2011 Closed Assistant August 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 117 of 159

118 every day at clinic. Some of materials which not relevant with clinic were stored under bed. Bed for take a rest women workers was not provided. AUDIT REPORT Clean clinic from some of materials which not relevant with clinic. Provide bed for take a rest women worker. 6.5 indicator minor 2 Working agreement with contractors did not require that the contractors abide by labour laws, e.g. land clearing CV Surya Baru and civil work CV. Cikini Raya. Contract agreement with contractors has mentioned requirements of labour laws. Agriculture Department May 2011 Closed indicator minor 1 Meeting with Labour Union was conducted, however it was not recorded. Record result of meeting with Labour Union. Administration May 2011 Closed Non-conformances - SCCS No SCCS Details Corrective Action PIC Completion Status Requirements Date 1 1 Documented procedure related to SCCS has been established ( Mechanism of Recording and Monitoring of Sustainable Palm Oil (SPO) Balance in POM PT Control the document Mechanism of Recording and Monitoring of Sustainable Palm Oil (SPO) Balance in POM PT Socfindo. ISO Secretariat August 2011 Closed Socfindo ); however it has not been registered and controlled as required. Procedure of daily reporting when Harvest System down has not been formally documented. Establish procedure of daily reporting when Harvest System down. ISO Secretariat August 2011 Closed 2 5 Production Daily Report from POM has not been kept in a specified arrangement. Arrange production daily report from POM. Mill/ISO Secretariat August 2011 Closed 3 6 SCCS training has not been given for Expedition personnel and Weighbridge operator. Train the SCCS to Expedition personnel and Krani Timbang ISO Secretariat July 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 118 of 159

119 AUDIT REPORT 1 st surveillance Minor non-conformances RSPO Principe and Criteria, Indonesian National Interpretation No RSPO Indicator indicator major 1 Details Corrective Action PIC Completion Date Status Compliance with regulation Ministry Decree Organization was performed identification ISO Secretariat December 2012 Closed 233/2003 has not been assessed and and evaluation of compliance with Ministry mentioned in the latest compliance report Decree 233/2003. It has been assessed (October 2012). This regulation says about and mentioned in the latest compliance working on holidays with specific job. report oi May indicator major indicator major indicator major 1 The overtime logs have not been signed by respective employee. Overtime shall be voluntary and signed in a documented record (refer to Ministry Decree 102/ 2004) It was found that peg #51 on block 101 was not maintained in proper. Inspection and maintenance report for the peg #51 on block 101 was OK. The management plan did not include the planning for the use of FFB from third party. In fact, currently around 40-50% of FFB to the mill were supplied by the third party. Overtime mechanism has been established, effective on 1 January It was described in form of daily attendance and overtime sheet. Verify was conducted against sampling daily overtime record of worker for January to August 2013 and it was observed daily overtime logs has been signed by employee. It was approval evidence from respective employee Pegs #51 (3º N and 98º E) was observed during audit, it was found that the pegs in the good condition and clearly sight, the position was right and identity number was well maintained. FFB input from third party included in the Draft of Management Plan period The Management Plan was under preparation and approximately finished at end of year Estate October 2012 Closed Division October 2012 Closed Management Representative December 2012 Closed Checking and monitoring of Estate operation Result of checking and monitoring and its Estate Nov 2012 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 119 of 159

120 indicator minor indicator minor indicator minor indicator minor indicator minor indicator minor indicator minor indicator minor 3 was performed more than once in a year by Principal Director, Agriculture Department or Group Manager. However result of checking and monitoring and its follow up was not consistently recorded. Thermometer for sounding has not been calibrated. Progress: Remained the same. Daily report of press station has not been logged at the time audit (14.00). The production has been started at It was found that pressure gauge on screw press #2 was in shut position, whilst the procedure IK SOC-POM/IK/05 requires that the pressure of screw press should be set to 50 bar. The use of hot water in Digester was not properly recorded. Reviewed records; January September Not enough evident that preventive maintenance of transportation and process installation equipment Program Pemeliharaan Alat Transportasi & Instalasi Pengolahan has been implemented as required by procedure SOC/PSM/6.03 point Manual road maintenance program has been made. However mechanic road maintenance program has not been made although realisation of mechanic road maintenance was sighted. Monthly monitoring data of Mill water consumption per ton of FFB was not accurate (January 2010 to April 2011), e.g. water used for Mill was actually from ground water, but data reported was from river water. Progress: Flow meter for mill water AUDIT REPORT corrective action was available on Resume of General Manager Visit (PD- GM/G2/BB/Bi/251/13). Follow up action was consistently recorded in the Monthly Report and Minute of Management Review Meeting. Thermometer used for sounding has been calibrated Daily report of press station has been recorded consistently. Pressure gauge on screw press #2 has been set to 50 bar. Hot water consumption in Digenster has been recorded consistently Preventive maintain all process installation and transportation has been implemented as per program. Road Maintenance Program using Grader and Compactor (mechanic) of Bangun Bandar Estate year 2013 was evident, equipped with map, location (Block and Division) and length of road to be maintained. Realisation of road maintenance was also well recorded. Mill water use per ton of FFB has been recorded. Mill Nov 2102 Closed Mill October 2012 Closed Mill October 2012 Closed Mill October 2012 Closed Mill October 2012 Closed Estate October 2012 Closed Mill December 2012 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 120 of 159

121 indicator minor indicator minor indicator major indicator minor indicator major 1 has just been installed in July 2012 and mill water use per ton of FFB has not been monitored. Training with regards to IPM has not been delivered to two workers in Division II who perform IPM. Counting of monitoring of pesticide toxicity units was not correct. Toxicity unit of each pesticide was not counted. Bimaron 80 wp and Karmec was used by organisation. The agro chemical has had license from Department of Agriculture however the agro chemical has not been registered in the list of pesticide used by organisation. Although use of paraquat was reduced however there was no documented program to reduce paraquat. The cleaning of tanks was performed in 2012, no evidence that the procedure of confined space entry implemented (work permit system, checking of air adequacy). This non-conformance has been issued from previous audit. AUDIT REPORT IPM Training has been performed on 29 January 2013, all IPM workers recorded on census and handpicking data have been trained. The calculation of pesticides toxicity unit has been done correctly, active ingredient of each pesticide was counted, in formula: {pesticide active ingredient (kg) / LD50 (mg/kg)} / Tonne FFB. Agrochemical Bimaron and Karmec have been registered in the list of pesticides used by Bangun Bandar Estate. Paraquat Reducing Program of Bangun Bandar, period 2013 has been established. Simulation of tank cleaning according to confined space procedure was conducted on 7 December Work permit was issued and checking of air adequacy was conducted during the simulation. Result of simulation has been evaluated. Gas detector has been provided and use of gas detector is interchangeably with the other Mills within PT. Socfin Indonesia. Schedule of gas detector use has been established. Estate December 2012 Closed Assistant December 2012 Closed Assistant October 2012 Closed Assistant December 2012 Closed Mill Nov 2012 Closed indicator major 1 Found substandard condition and act e.g.: Motor cycles utilized for transportation by workers were not completed with mirror and the drivers not wearing safety helmet. Non proper electrical installation at Improvement has been made as verified as follow: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 121 of 159 o Moto cycles as observed during audit has been completed with mirror and driver using helmet Estate/Mill Nov 2012 Closed

122 indicator minor indicator major indicator major indicator major indicator major indicator minor indicator minor indicator major 1 workshop where electrical hazard may expose to worker. The moving part (wheel, chain) at decanter and welding machine at workshop were not guarded. Two hydrant outlets at mill was not provided with handle to open the valve and nozzle. The hose found leakage. The form Evaluation of personnel qualification was not well implemented and therefore it was difficult to justify whether the training programme established based on the training need identification. Evidences for qualification of welder and electrician could not been found. Record of regular report on environmental management (RKL RPL implementation) could not be shown during audit for reporting in September 2011 and June Conveyor to transfer boiler ash from dust collector to container was leak. Boiler ash was scattered and can cause air pollution. Mixing of chemical solution was performed nearby trench and did not use dip tray. Spill of chemical pollution was potential to pollute trench. Fossil fuels use for operation was monitored and recorded. However its efficiency (energy/ton CPO) was not monitored and analysed. Although in practice zero burning was implemented during preparing land and there was zero burning policy from top management, contract agreement for preparing land between the organisation and contractor did not cover requirement of zero burning. o o AUDIT REPORT Electrical installation at workshop has been improved Safety guard has been provided at decanter and welding machine Hydrant outlets at mill have been provided with handle. Hose was found in proper condition. The form has been implemented and sight for August However, the clear information who and when training shall be conducted was not sight. The existing plan was not also covered above requirement. (As Major non-conformance) The qualification of welder and electrician are available. RKL RPL implementation is reported quarterly. During audit, report of RKL RPL implementation was sighted for period 2012 and January to June Conveyor to transfer boiler ash from dust collector to container has been repaired. Dip tray to collect potential spill during chemical mixing has been provided. Moreover briefing to sprayer team has been conducted regarding not to mix the chemical solution nearby the trench. Fossil fuels use and its efficiency has been analysis for 2011, 2012 and 2013 (January to August). In the attachment of Contract letter #618/PD-GM/X/SP/2012 dated 26 November 2012 between PT. Socfindo and CV. Surya Baru, for replanting work 2013, stated that During land clearing activities, burning is not allowed in replanting area (zero burning). Mill Nov 2012 Closed Agriculture Department Mill/ General Department Head of Administration/ Document control Nov 2012 April 2013 October 2012 Open, NCR issued Closed Closed Mill Nov 2012 Closed Division Nov 2012 Closed Mill December 2012 Closed Agriculture Department October 2012 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 122 of 159

123 indicator minor indicator minor indicator minor indicator minor 3 Procedure required that several conditions of WWT operation is monitored periodically. However last monitoring to WWT operation was conducted in May 2012, e.g. checking of circulation pump and aerator condition, cleaning in last pond, ph, temperature, etc. The monitoring report of social impact action plan was not provided to describe follow up status of following plan: road repair, use of plantation resources by surrounding villagers (shall be monitored once every month), maintenance of public facilities. Monitoring was not also performed on replanting areas in 2012 (e.g. division I: block 48,52,53,54, division II: block 12 and conversion from rubber planting on division IV: block 80 & 102). The frequency of social impact monitoring has not been clearly defined in a procedure of social impact assessment. There are not enough evidence (records) to ensure that stakeholders (as recipient) has received some financial and equipment supports as proposed to the mill. E.g. provision of heavy equipments to Dolok Sagala village (9/5/2012), delivery of trichoderma to Sumatera Bioscience (7/5/2012). AUDIT REPORT Monitoring of waste water pond condition according to SOC/Form/ has been recorded consistently. Organization has been established environment and social impact analysis matrix for replanting activity on December Monitoring environment and social impact replanting activity has been conducted September 2013 appropriate with procedure SOC/PSM/9.03, Rev 1, date 1 January 2013 Based on monitoring report, environment and social impact of replanting activity was managed and there was increased enrollment of period worker. Procedure SOC/PSM/9.03, Rev 1, date 1 January 2013 was described that the monitoring of social impact was annually conducted. Organization has been arranging social assistance list for 2013 period. Implemented document of CSR activity was recorded within photo and minutes of aid delivery. Activity of CSR was identified by the estate/mills, including: repairs the village road, low-cost market, mosques renovation in Aras Panjang Village, honor assistance to teacher of TK Aulia, etc. Mill October 2012 Closed ISO Secretariat December 2012 Closed ISO Secretariat December 2012 Closed Head of Administration Nov 2012 Closed indicator major indicator minor 1 The awareness briefing of procedure social issues handling has been done in 2010 without involving representative from Kerapu Village. The deep well water analysis was done in 2011 and concluded that water is not appropriate for drink due to high number of Communicate method to handle social complaint to Head of Village or community leader of Kerapu Village was performed on Kerapu Village office, date 24 August Test against quality of employee wells water for ensuring appropriateness standard as water consumption was QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 123 of 159 Estate December 2012 Closed Estate December 2012 Open, NCR issued

124 indicator major 1 E-coli bacteria found during analysis. However several people in housing complex has used this water for drink consumption (after boiled) as informed during interview while no formal notification/ recommendation from the company about the analysis result. Although in practice there were some improvements, however most of them were not documented. AUDIT REPORT perform by Sucofindo on October Testing result was indicated that the wells water was not appropriate with clean water standard. Dissemination of prohibition to dont using of wells water was conducted however there was no availability clean water for employee in housing area of Division 2. Refer to nonconformity against Criteria 6.5 Minor 1 Improvement realization has been recorded. ISO Secretariat December 2012 Closed Mill Supply Chain Certification System None QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 124 of 159

125 AUDIT REPORT Appendix C Nonconformities and Opportunity for Improvement Summary RSPO Principe and Criteria, Indonesian National Interpretation QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 2.1 Std. and Clause No(s): indicator major 1 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Major RSPO20008 Bangun Bandar Mill and Estate Non-conforming situation: Several inconsistencies were found during evaluation of compliance with legal and other requirements. Requirement: RSPO Criterion 2.1 indicator major 1 Objective evidence: It was found inconsistence implementation of working time of worker according with related regulation. (UU No.13/2003, clause 77 and Labour and Transmigration Ministry Degree No.102/2004, clause 1). Moreover, deviation of work hours permit No.18.14/560/113/IPW/2013 also require the excess of working time 7/8 hours per day should be calculated as overtime. Group discussion with weigh bridge worker (Novita Guranti) and based on premium provision 2013, she was work from 7.00 am to pm, break during 2 hours. Overtime during 2 hours was not calculated as overtime appropriate with UU No.13/2003, clause 77 and Labour and Transmigration Ministry Degree No.102/2004, clause 1. The statement of compliance with regulations was not in line with actual condition. Several regulations were noted as complied such as Permenaker 4/1987 P2K3 (Safety committee) Permenaker 1/1979 Hyperkes training for paramedic Permenaker 1/1976 Hyperkes training for doctor Actually the relevant regulations were found not complied (P2K3 secretary was not as AK3 Umum, record of hyperkes training was not available for one paramedic, record of hyperkes training for doctor was not available). Hence, this statement was not complied with regulation evaluation record. Due Date:17 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Determining of work hour did not consider legal aspect. Information obtained during evaluation of compliance with regulation was not complete. Correction with completion dates (what was the immediate fix? Submit objective evidence of correction):

126 AUDIT REPORT Pay overtime for excess of 2 working hours per day for weigh bridge worker in line with regulation. Change work hour for Hitmen-Centeng from 2 shifts to 3 shifts therefore work hour become 8 hours per day. Pay overtime for excess of 1 working hour per day in line with regulation. Re-evaluate compliance with regulation Permenaker 4/1987 P2K3, Permenaker 1/1979 and Permenaker 1/1976 according to actual condition. Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Consider legal aspect during determining of working hour Collect complete data during evaluation of compliance with regulation Organisation Representative : Name: Hasan Bisri Date: 8 November 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Ria Gloria Date: 9 November 2013 Section 4- SAI Global Verification of Corrective Action for effectiveness Working hour of Hitmen-Centeng has been changed from 2 shifts to 3 shifts. Work hour change was communicated to Hitmen-Centeng on October Working hour of weigh bridge worker has been rearranged to 2 shifts: 6 am 4 pm and one hour break; 4 pm 2 am and one hour break. Excess of working hour was calculated as overtime: Monday Thursday and Saturday: 2 hours overtime; Friday 4 hours overtime. The arrangement was communicated on 19 October Based on objective evident of wage and working hour in October 2013 it was observed that rate of wage and overtime of hitmen-centeng and weigh bridge worker was inline with regulation Kepmenaker No.102 tahun 2004, article 8 to 11 and P2K3 structure has been revised. Currently secretariat of P2K3 is AK3 Umum. P2K3 structure has not been validated by Dinas Tenaga Kerja dan Koperasi Kab. Serdang Bedagai. Application has been sent to Dinas Tenaga Kerja dan Koperasi Kab. Serdang Bedagai on 22 October Training for paramedic is conducted January Evaluation result of compliance has been revised on 30 September 2013 with compliance status was according to actual condition. NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 16 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 126 of 159

127 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill Site: RSPO Criterion 4.4 Std. and Clause No(s): indicator minor 1 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Minor RSPO20008 Bangun Bandar Mill and Estate Non-conforming situation: Although system to manage water sources has been defined however several inconsistencies were found. Requirement: RSPO Criterion 4.4 indicator minor 1 Objective evidence: Open drainage has not been properly managed. Open drainage was contaminated from several sources, e.g. slurry from clay bath, WTP regeneration and blow down boiler. Quality of water from open drainage has not been analysed to ensure that quality of water was still in line with regulation. Water tap in front of temporary storage of hazardous waste was leak. Due Date: 16 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Quality of slurry from clay bath, WTP regeneration and blow down boiler is normal because slurry from clay bath was not contaminated with hazardous material, regeneration water has been neutralised and blow down water was treated. It was not identified Lack of employee awareness regarding natural resources Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Analyse quality of water from open drainage contaminated by slurry from clay bath, WTP regeneration and blow down boiler Repair water tap in front of temporary storage of hazardous waste Completion date: 31 January 2014 Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Take corrective action if analysis result of quality of water from open drainage exceeds the permissible limit Disseminate to employee regarding natural resources consumption and efficiency Completion date: 31 December 2013 Organisation Representative : Name: Hasan Bisri Date: 6 December 2013 Section 3- SAI Global Response Review: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 127 of 159

128 AUDIT REPORT Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Date: Section 4- SAI Global Verification of Corrective Action for effectiveness Section 5- SAI Global NCR Closure: Name: Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 128 of 159

129 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Estate Site: RSPO Criterion 4.6 Std. and Clause No(s): indicator minor 2 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Minor Non-conforming situation: Relevant record regarding to medical check-up was not consistently controlled. Requirement: RSPO Criterion 4.6 indicator minor Bangun Bandar Mill and Estate Objective evidence: One record of medical check-up for spraying operator (Monica sprayer block 58 Div 2) could not be shown during audit. Due Date: Next surveillance Name Ria Gloria Organisation s Name Audit Team Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): There was no copy of medical check-up record in clinic and receipt note of MCU distributing to employee Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Complete result of MCU year 2012 for all employee including spraying operator Completion date: 31 January 2014 Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Copy result of MCU year 2013 for all employee including spraying operator and make receipt note of MCU distributing Completion date: 30 April 2014 Organisation Representative : Name: Hasan Bisri Date: 6 December 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Date: Section 4- SAI Global Verification of Corrective Action for effectiveness Section 5- SAI Global NCR Closure: Name: Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 129 of 159

130 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 4.7 Std. and Clause No(s): indicator major 1 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Major 008 Bangun Bandar Mill and Estate Non-conforming situation: Operational control in order to prevent from work incident/illness was not consistently implemented as observed during audit. Requirement: RSPO Criterion 4.7 indicator major 1 Objective evidence: Several unsafe conditions/acts were observed during audit in order to prevent from accident/incident as following: Inconsistencies of using required PPE as following: o Safety glass and shoes (fertiliser), o Proper apron for welder at construction area (by contractor) o Ear plug at process o Safety glove at water treatment Control of mechanic protection was not well implemented as found unguarded rotary equipment such as at fibre blower, kernel station The condition of loading ramp was not sufficient to prevent from hit object. There are no safety rails installed and existing fence was found with hit mark. There is maintenance process available at fibre blower but implementation of LOTO is not available. (Note: immediate action was made during audit). Control of mechanic tools is limited. There are connection of hammer with bad condition (own welded) There is insufficient condition at sample point of waste water pond. The platform was rusty and with hole. No safety fence to prevent from fall. Moreover, no warning sign is available. Insufficient cable condition is sight at general workshop. Uncovered sword is kept on boot The monitoring and measurement was not covering work temperature and illumination Several inspection record was not covering required item test as follow: o The electrical installation inspection was not covering isolation and load test (79/IL/D/W2/1995) o Thunder protection installation was not covering with isolation test (18.15/560/18/IPP/2010) o Overhead crane test was not covering with load test 125% (417/PAA/W2/1993). Daily inspection record for welding machine could not be shown Due Date: 17 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 130 of 159

131 AUDIT REPORT Lack of employee awareness in using of PPE Guard of rotary equipment has been provided but not installed. Loading ramp condition was assumed has been adequate. Lack of employee awareness in LOTO implementation Lack of employee awareness in using equipment safetly Material to repair equipment for sampling point of water sample in WWTP has not been provided Electricity inspection was not consistent Lack of employee awareness in carrying out sharp equipment Area of temperature and illumination monitoring has not been defined. Local Disnaker did not have equipment and personnel to conduct load test. Daily inspection of welding machine has been conducted but not recorded Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Use PPE for operators during performing job (Safety glass and shoes (fertiliser), proper apron for welder at construction area (by contractor), ear plug at process, safety glove at water treatment) Guard rotary machine at fibre blower, kernel station Install safety guard at loading ramp Implement LOTO Replace hammer with new one. Repair sampling point in waste water pond and complete waste water pond with warning sign. Repair cable condition at general workshop. Disseminate method of carrying out equipment safely Monitor and measure temperature and illumination at working area Test and inspect of isolation and load test of electrical installation, isolation test of thunder inspection and load test of crane Inspect welding machine daily Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Improve awareness of employee regarding PPE use through briefing Inspect completeness of rotary machine guard Disseminate awareness of LOTO implementation to employee Disseminate to employee to change or replace un-safe or un-proper equipment Provide material for repairing sampling point in waste water pond Inspect electricity condition consistently Disseminate method of carrying out of equipment safely to employee Determine area of monitoring and measurement of temperature and illumination Conduct testing and inspecting of isolation and load testing of electrical installation, isolation testing of thunder inspection and load testing of crane according to permit Record daily inspection of welding machine in the determined form Re-identify checklist items in EHS patrol. (31 Des 2013) Assign competence personnel according to area inspected to conduct EHS patrol. (31 Des 2013) Organisation Representative : Name: Hasan Bisri Date: 8 November 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Ria Gloria Date: 9 November 2013 Section 4- SAI Global Verification of Corrective Action for effectiveness QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 131 of 159

132 AUDIT REPORT Briefing regarding PPE use has been conducted, e.g.: contractor on 27 September 2013, process operator on 27 September 2013, water treatment operator on 27 September 2013, fertilising operator on 30 September EHS patrol regaring PPE use is conducted monthly in areas using PPE, e.g. ear muff, helmet and safety shoes for process operator and apron, gloves, goggles, mask and safety shoes for fertilising operator. PPE patrol to contractor has not been provided on 29 September 2013 Inspeksi kontraktor. Control of mechanic protection has been implemented as shown on documented evident such as at fibre blower, kernel station For mechanical protection, improvement has been done as shown on documented evident. Machines have been installed with safety guard such as at loading ramp Implementation of LOTO has been done and improved as shown on documented evident. LOTO station has been provided, electric panel has been tagged out and locked during maintenance process to prevent from un-authorised operation Dissemination regarding awareness of LOTO implementation to employee was conducted on 20 September Hammer has been replaced with new one. Dissemination regarding hazard in using un-safe or un-proper equipment was conducted on 27 September The platform has been repaired. Safety fence to prevent from fall has been equipped in each pond. Warning sign is available, e.g. pond depth of pond is 4-6 m, be careful Cable at general workshop has been repaired and covered. Condition of electricity installation is checked monthly through EHS patrol. Sword has been covered. Dissemination regarding method to carry out sword safely was conducted on 27 September 2013 to all mandor. Work temperature and illumination has been monitored and measured on 24 September Temperature and illumination is programmed to be measured annually. Several inspection records were sighted: o The electrical installation inspection has covered isolation and load test (79/IL/D/W2/1995). Test was conducted on 21 September 2013 o Thunder protection installation has covered isolation test (18.15/560/18/IPP/2010). Test was conducted on 24 September o Overhead crane test has covered load test 125% (417/PAA/W2/1993). Test was conducted on Daily inspection record for welding machine could be shown Opportunity for Improvement: Considered to conduct EHS patrol by staff of sustainability sub department staff. NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 16 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 132 of 159

133 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 4.7 Std. and Clause No(s): indicator minor 2 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Minor Non-conforming situation: Record control for medical check-up result was not consistently implemented. Requirement: RSPO Criterion 4.7 indicator minor 2 Objective evidence: Medical check-up record could not be shown for following employees: Boiler and welder operators Due Date: Next surveillance 008 Bangun Bandar Mill and Estate Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): There was no copy of medical check-up record in clinic and receipt note of MCU distributing to employee Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Complete result of MCU year 2012 for all employee including boiler and welder operators Completion date: 31 January 2014 Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Copy result of MCU year 2013 for all employee including boiler and welder operators and make receipt note of MCU distributing Completion date: 30 April 2014 Organisation Representative : Name: Hasan Bisri Date: 6 December 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Date: Section 4- SAI Global Verification of Corrective Action for effectiveness Section 5- SAI Global NCR Closure: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 133 of 159

134 Name: AUDIT REPORT Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 134 of 159

135 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 4.7 Std. and Clause No(s): indicator minor 6 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Major 008 Bangun Bandar Mill and Estate Non-conforming situation: Control of first aid equipment was not consistently implemented as several required equipment were not available. (Repetitive findings from certification audit) Requirement: RSPO Criterion 4.7 indicator minor 6 Objective evidence: No scissor available as required on list (fertilising) No clear identification of kit (spraying selective) First aid kit usage log not available (spraying micron herbi) Expired medicine is available (estate I office) Due Date: 16 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): No routine inspection to first aid equipment carried out by mandor Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Complete first aid box carried out by mandor with: scissor, list of medicine and equipment in first aid box, form of medicine using Replace expired medicine with new one Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Inspect by nurse weekly regarding completeness of medicine and equipment stored the first aid box, list of medicine and equipment in first aid box, record of medicine using and expire date of medicine Organisation Representative : Name: Hasan Bisri Date: 8 November 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Ria Gloria Date: 9 November 2013 Section 4- SAI Global Verification of Corrective Action for effectiveness QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 135 of 159

136 AUDIT REPORT First aid box carried out by mandor has been completed with: scissor, list of medicine and equipment in first aid box, form of medicine using Expired medicine has been replaced with new one Checklist of completeness of medicine and equipment has been made and stored in first aid box. Checklist covered inspection of medicine, equipment, record of medicine using NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 16 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 136 of 159

137 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 4.8 Std. and Clause No(s): indicator major 1 Section 1- Details of non-conforming situation: Non-conforming situation: Previous non-conformance has not been closed out yet Requirement: RSPO Criterion 4.8 indicator major 1 App/Cert: NCR#: Category: Major 008 Bangun Bandar Mill and Estate Objective evidence: Previous audit issue: o The form Evaluation of personnel qualification was not well implemented and therefore it was difficult to justify whether the training programme established based on the training need identification. Verification result: o The form has been implemented and sight for August However, the clear information who and when training shall be conducted was not sight. The existing plan was not also covered above requirement. Due Date: 17 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Evaluation result of personnel was not considered during establishing training program Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Identify training required which has not been realised for all personnel based on their qualification. Establish training program 2014 based on training identifying result. Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Consider evaluation result of personnel qualification during establishing training program Organisation Representative : Name: Hasan Bisri Date: 8 November 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Ria Gloria Date: 9 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 137 of 159

138 AUDIT REPORT Section 4- SAI Global Verification of Corrective Action for effectiveness Internal and external training program 2014 has been developed for employee who has fulfilled qualification, e.g.: Analysis of quality for mill administration in January 2014, risk of working with boiler, loading ramp, hoist crane, steriliser, capstans, empty bunch conveyor for boiler and process employee in February 2014, SCCS and weigh bridge operation for mill administration, expedition operator and weigh bridge operator in March 2014, emergency response of fire for mill and expedition operator and process mandor in August 2014 and for mandor in Estate in November 2014, hazardous material and waste handling for mill administration, mandor of process and boiler, head of general workshop and transport workshop, oil man and technician in October 2014 and for Estate employee in January 2014, understanding of LOTO to head of machine room and electricity workshop and electricity operator in November 2014, harvesting for harvester in April 2014 and IPM in December NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 15 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 138 of 159

139 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 5.1 Std. and Clause No(s): indicator major 2 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Major 008 Bangun Bandar Mill and Estate Non-conforming situation: Result of environmental monitoring and measurement has been submitted to government institution. However submission has not been consistent. Requirement: RSPO Criterion 5.1 indicator major 2 Objective evidence: Monitoring and measurement result of community well and community health has not been included in RKL RPL report as required by RKL RPL document. Due Date: 17 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site Visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Establishing RKL RPL report did not consider matrix of monitoring and measurement mentioned in RKL RPL document. Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Include monitoring and measurement result of community well quality and community health. Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Establish RKL RPL report according to matrix of monitoring and measurement mentioned in RKL RPL document. Organisation Representative : Name: Hasan Bisri Date: 8 November 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Ria Gloria Date: 9 November 2013 Section 4- SAI Global Verification of Corrective Action for effectiveness QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 139 of 159

140 AUDIT REPORT Result of community well quality and community health has been included in RKL RPL report. The report has been sent to BLH Kab. Serdang Bedagai and Bapedalda Sumatera Utara. Receipt note was sighted. NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 16 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 140 of 159

141 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. PT. Socfin Indonesia Bangun RSPO20 Activity #: Client: App/Cert: Bandar Mill and its supply base 008 Function/Area/Process: Estate Site: Bangun Bandar Estate RSPO Criterion 5.2 Std. and Clause No(s): NCR#: Category: Major indicator major 2 Section 1- Details of non-conforming situation: Non-conforming situation: There was no perennials (woody trees) plant program that produce flowers and fruit for bird food as a part of management program of HCV area riparian zone on replanting area. Requirement: RSPO Criterion 5.2 indicator major 2 Objective evidence: Based on HCV Assesment on September 2011, it was found HCV 1.2 on Martebing Riparian buffer zone (Two species of birds endangered based on red list of IUCN were identified, e.g. Alcedo euryzona and Pycnonotus zeylanicus). Riparian buffer zone management procedure (SCO/PSM/9.07, date 15 Agustus 2012) mentioned that, after replanting riparian buffer zone is planted with beneficial plants and plants (woody trees) that produce flowers and fruit for bird food. According with replanting realization report 2012 and field observation was sighted that the area of Block 54 Afdeling 1 was replanted, however perennials (woody trees) plant program on Martebing Riparian buffer zone on Blok 54 was not established. Due Date: 17 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Planting of beneficial plant and woody trees in riparian buffer zone after replanting is conducted gradually. In 2013 based on HCV management plan, planting was only conducted for beneficial plant while planting of woody trees is conducted in Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Develop HCV management plan 2014 for planting of woody trees. Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Develop HCV management plan 2014 for planting of woody trees. Organisation Representative : Name: Hasan Bisri Date: 8 November 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 141 of 159

142 AUDIT REPORT Section 4- SAI Global Verification of Corrective Action for effectiveness HCV management plan 2014 has been developed and included program of planting of woody trees. Planting is planned to be conducted in May and December NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 15 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 142 of 159

143 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 5.3 Std. and Clause No(s): indicator major 2 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Major Non-conforming situation: Waste management has been defined however inconsistencies were still found. Requirement: RSPO Criterion 5.3 indicator major Bangun Bandar Mill and Estate Objective evidence: Handling of contaminated rags was not clear. There was no evident of temporary storage and transportation by the authorised institution of contaminated rags. Handling of chemical bottle used in boiler was not clear. Copy #7 of hazardous waste manifest has not been provided for hazardous waste transported in December 2012 to ensure that hazardous wastes were processed by the authorised institution. Drainage and pit of slurry from clay bath was full of slurry therefore slurry was drained to open drainage. Due Date: 17 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Contract with hazardous waste transporter and collector did not cover the above mentioned hazardous waste. Final handling of chemical bottle has not been defined: reused or no. Copy #7 of hazardous waste manifest has not been requested to the hazardous waste transporter (CV. Amindy Barokah). EHS patrol has not been conducted consistently Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Handle contaminated waste according to procedure: collected in temporary storage of hazardous waste, recording quality of contaminated rags in Catatan limbah B3 and transported by the authorised institution. Define handling of chemical bottle by triple rinsing, kept in the determined area, reused of transported by the authorised institution. Request copy #7 December 2012 to transporter, CV Amindy Barokah. Clean clay bath therefore slurry from clay bath did not flow to open drainage Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 143 of 159

144 AUDIT REPORT Develop contract with hazardous waste transporter and collector. Record handling of chemical bottle. Monitor delivery of copy #7 manifest to transporter. Conduct EHS patrol in clay bath area consistently Organisation Representative : Name: Hasan Bisri Date: 8 November 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Ria Gloria Date: 9 November 2013 Section 4- SAI Global Verification of Corrective Action for effectiveness Contaminated rags have been identified in Identifikasi dan pengendalian limbah. The wastes were generated from general workshop, transport workshop and engine room. Quantity of contaminated rags stored in temporary storage of hazardous waste has been recorded since September The wastes have not been transported due to storage period was still less than 90 days. Communication with authorised transporter has been conducted and contractual agreement with CV. Amindy Barokah has been made #320/AB/Plane 1&2/IV/2013 on 24 June 2013 and has covered contaminated rags. Also contractual agreement with processor has been made with PT. Wahana Pamunah Limbah Industri #390/SI-KA/SPK-LB3/X/2013 on 16 October Chemical bottle have been identified in Identifikasi dan pengendalian limbah. Chemical bottle has been stored in temporary storage of hazardous waste and the quantity has been recorded since September The wastes have not been transported due to storage period was still less than 90 days. Communication with authorised transporter has been conducted and contractual agreement with CV. Amindy Barokah has been made #320/AB/Plane 1&2/IV/2013 on 24 June 2013 and has covered contaminated rags. Also contractual agreement with processor has been made with PT. Wahana Pamunah Limbah Industri #390/SI-KA/SPK-LB3/X/2013 on 16 October Due to mistaken from tranporter, CV. Amindy Barokah, manifest copy #7 could not be provided by transporter. Through letter #462/AB-SK/IX/2013 date 20 September 2013, CV Amindy Barokah apologised to all organisations which using their service in order the organisation and letter 438/AB-MENLH/IX/2013 date 9 September 2013 to Ministry of Environment that the organisation was not blame in hazardous waste handling due has not been provided manifest copy #7. One of evidences that hazardous waste has been managed by authorised processor which could be provided by CV Amindy Barokash was Certificate of Hazardous Waste Treatment from PT. Wastec Internasional for used filter and medical waste. Drainage of clay bath go in the direction of open drainage has been cleaned. Slurry in sedimentation pond has been taken. There was a program to repair slurry pit in order sedimentation of slurry is better. Repairing will be finished in March Condition of clay bath pit and drainage is checked monthly through EHS patrol. Checklist of EHS patrol was sighted. NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 15 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 144 of 159

145 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 5.3 Std. and Clause No(s): indicator minor 2 Section 1- Details of non-conforming situation: Non-conforming situation: The use of used chemical jerican and fertiliser sack was not clear. Requirement: RSPO Criterion 5.3 indicator minor 2 App/Cert: NCR#: Category: Minor 008 Bangun Bandar Mill and Estate Objective evidence: There was no record of used chemical jerican and fertiliser sack quantity as required by SOP. Due Date: Next surveillance Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Procedure of reused hazardous waste has not been distributed to Estate Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Record used chemical jerican and fertiliser sack in the hazardous waste record Catatan limbah B3 Completion date: 31 December 2013 Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Distribute procedure to Estate Disseminate hazardous waste handling to person in charge Completion date: 31 December 2013 Organisation Representative : Name: Hasan Bisri Date: 6 December 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Date: Section 4- SAI Global Verification of Corrective Action for effectiveness Section 5- SAI Global NCR Closure: Name: Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 145 of 159

146 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill Site: RSPO Criterion 5.6 Std. and Clause No(s): indicator minor 2 Section 1- Details of non-conforming situation: Non-conforming situation: Inconsistent implementation of SOP for POME handling. Requirement: RSPO Criterion 5.6 indicator minor 2 App/Cert: NCR#: Category: Minor 008 Bangun Bandar Mill and Estate Objective evidence: There was no evidence that basculator was verified in Procedure required that basculator is verified annually. Environmental management program required that aerator is operated 15 hours every day as a minimum. However interview with the operator indicated that he worked only from 06 am to 5 pm. Due Date: Next surveillance Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Verification result of basculator was not well documented Inconsistency WWTP operator working hours in operating aerator Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Verify basculator and record its result (Completion date: 31 January 2014) Operate aerator in 15 hours per day and record its operation result (Completion date: 10 December 2013) Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Verify basculator annually in January (Completion date: 31 January 2014) Refresh to WWTP operator regarding WWTP operation (Completion date: 10 December 2013) Organisation Representative : Name: Hasan Bisri Date: 6 December 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Date: Section 4- SAI Global Verification of Corrective Action for effectiveness QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 146 of 159

147 AUDIT REPORT Section 5- SAI Global NCR Closure: Name: Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 147 of 159

148 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: Std. and Clause No(s): RSPO Criterion 6.1 indicator minor 3 App/Cert: NCR#: Category: Minor 008 Bangun Bandar Mill and Estate Section 1- Details of non-conforming situation: Non-conforming situation: Organization was carried out management and monitoring effort against social impact based on SIA report, however regular and scheduled reporting to related agency was not yet done. Requirement: RSPO Criterion 6.1 indicator minor 3 Objective evidence: Reporting management and monitoring effort of social impact in RKL-RPL report for Jan-Jun 2013 Report was not available. Due Date: Next surveillance Name Ria Gloria Organisation s Name Audit Team Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Report of management and monitoring effort of social impact has been developed but has not been sent to government institution Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Send report of management and monitoring effort of social impact to government institution Completion date: 31 December 2013 Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Conduct monitoring and measurement of social aspect according to defined frequency and report it to government institution Organisation Representative : Name: Hasan Bisri Date: 6 December 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Date: Section 4- SAI Global Verification of Corrective Action for effectiveness QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 148 of 159

149 Section 5- SAI Global NCR Closure: Name: AUDIT REPORT Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 149 of 159

150 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 6.3 Std. and Clause No(s): indicator minor 1 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Minor Non-conforming situation: Records of handling of the complaint and gripe form worker were not available. Requirement: RSPO Criterion 6.3 indicator minor Bangun Bandar Mill and Estate Objective evidence: Acceptance and handling of complaint from internal (worker) was not recorded appropriate with established procedure SOC/PSM/9.02. Based on its procedure, complaint should be registered in the form/complaint logbook, however form/logbook of complaint was not available. During group discussion with worker including : Date 16/09/2013 with processing foreman (Sabuki), workshop worker (Syarifuddin), and weigh bridge worker (Novida) and date 17/09/2013 with Head and secretary of worker union (Alwi and Irawan), Gender committee (Dien Novita Ilmi), representative of spraying worker (Nursila), worker cooperation manager (Edi Syahputra) and others. There are some complaint from worker has been clarified however, it was be remain an issue which should be responded and it would be check for next surveillance audit, including : Sick employee was difficultly to access nursing services after pm. Clarification result: control schedule of nurse has been established every month. however it was not inform to worker. Moreover, evidence of control against nurse appropriate with schedule was not sighted. Head of clinic as a responsible to give reference medication to hospital life in outside the estate, however there was no representative of clinic head which have same authority. Clarifcation result: Handling mechanism for emergency condition of patient was not clearly described. For housing area in afdeling 4, there was no clinic. There was no nurse in housing area of afdeling 4. Moreover, visit by nurse to housing area of afdeling 4 has not been conducted since 2 last month. Clarification result : Auditee information, routinely visit by nurse was conducted, however evidence of nurse visit was not sighted. There was reduction of extra fooding for sprayer, from 4 pcs milk and 4 eggs was monthly given to sprayer be only 1 pcs milk and 1 eggs. Clarification result :Based on Shit Issue Request January to March 2013 period, 2 pcs milk and 2 eggs was monthly given to sprayer, however since April 2013 only 1 pcs milk and 1 egg. It was not available with Joint Working Agreement (Perjanjian Kerja Bersama) Color of clean water which was organization provide to community around mill was blackish when water reservoir washing. Clarification result: There was no information dissemination about using of water warning when reservoir/water tank cleaning. Due Date: Next surveillance Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 150 of 159

151 AUDIT REPORT Form of internal complaint record has not been attached in the procedure Schedule of nurse duty was only informed to nurse internally Manual to manage emergency of medical patient was provided but not in written Visiting of nurse to Division IV was only according to defined schedule Person in charge has not knew determination of extra food There was no additional valve to close water tap when water tank was being cleaned Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Make log book special for complaint and record each complain both for internal and external complaint Inform schedule of nurse duty to employee and make attendance list of nurse duty Develop manual to manage emergency of medical patient Make attendance list for nurse visiting to Division IV Give extra food as requirement Install additional valve Completion date: 31 January 2013 Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Attach form of internal complaint record to procedure Distribute schedule of nurse duty of each Division and Mill Distribute manual to manage emergency of medical patient Check attendance list of nurse visiting regularly Inform to person in charge regarding requirement of extra food giving Inform to water user when cleaning of water tank conduct Completion date: 31 January 2013 Organisation Representative : Name: Hasan Bisri Date: 6 December 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Date: Section 4- SAI Global Verification of Corrective Action for effectiveness Section 5- SAI Global NCR Closure: Name: Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 151 of 159

152 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 6.5 Std. and Clause No(s): indicator minor 1 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Major 008 Bangun Bandar Mill and Estate Non-conforming situation: Provided of clear water for employee from wells water was not conformed with clean water standard. (Repetitive from previous audit) Requirement: RSPO Criterion 6.3 indicator minor 1 Objective evidence: Test against quality of employee wells water was for ensuring appropriateness standard as water consumption was established on October Testing result was indicated that the wells water was not appropriate with clean water standard. During group discussion on 17/09/2013 with employee (Nursila-sprayer in afdeling 2), there was again complaint about water condition in housing area of afdeling 2. Wells water color yellowish caused white dress be sallow. Dissemination of ban to using of wells water was conducted, however there was no availability clean water for employee in housing area of afdeling 2. Due Date: 17 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Water source nearby septic tank Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Inform to employee who has in-appropriate water well not to use water well for drinking water Provide water in Division II Office Move water well far from septic tank Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Inform to employee who has in-appropriate water well to use water in Division II Office Organisation Representative : Name: Hasan Bisri Date: 8 November 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Ria Gloria Date: 9 November 2013 Section 4- SAI Global Verification of Corrective Action for effectiveness QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 152 of 159

153 AUDIT REPORT Not to use water well for drinking water has been informed to employee who has in-appropriate water well Water tank has been provided in Division II Office Water has also been provided in Mill located nearby security therefore employee is free to take clean water Provision of water tank in Division II Office and Mill located nearby security has been informed to employee who has in-appropriate water well NCR Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 16 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 153 of 159

154 AUDIT REPORT QEF08E.10 Non-conformance Report Failure to provide action plans as arranged with SAI Global and/or to implement correction and corrective action within the nominated time frames may lead to a recommendation that your certification be denied or suspended. Note to Auditors: Use one page per deficiency. For extra pages use to select all (ctrl+a) put curser at the bottom of the last page and select copy (ctrl+c) would like to see the warnings up front if possible. RSPO20 Activity #: Client: PT. Socfin Indonesia Bangun Bandar Mill and its supply base Function/Area/Process: Mill and Estate Site: RSPO Criterion 6.5 Std. and Clause No(s): indicator minor 2 Section 1- Details of non-conforming situation: App/Cert: NCR#: Category: Minor 008 Bangun Bandar Mill and Estate Non-conforming situation: It was found working agreement between organizations with third party (contractor) was not required contractors abide to labor laws. Requirement: RSPO Criterion 6.3 indicator minor 1 Objective evidence: Working agreement between organization and Koperasi Serba Usaha Karyawan to executed period maintenance job was not required Koperasi Serba Usaha Karyawan abide to labor laws. For example: Working agreement No. BB/SPK/07/VII/2013. Due Date: Next surveillance Name Ria Gloria Organisation s Name Audit Team Hasan Bisri acknowledgement of Leader Date: 18 September 2013 receipt of NCR Date: 18 September 2013 SAI Global Verification Method: (record if site visit is required or what information is to be provided): Site visit Section 2- Organisation s Response: (Attach separate sheet if required) Root Cause Analysis (record or attach 5 why, 8D, fishbone diagram, etc to support this analysis): Working agreement has not considered requirement in RSPO Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Include requirement to comply with labour law in working agreement between organisation and Koperasi Serba Usaha Karyawan Corrective Action Taken/Planned (with completion date(s) (record what action is planned or will be taken to prevent recurrence. Submit objective evidence of completed corrective actions): Include requirements to comply with labour law in working agreement between organisation and the other the third parties Organisation Representative : Name: Hasan Bisri Date: 6 December 2013 Section 3- SAI Global Response Review: Response is not acceptable for these reasons: Please submit a revised response by: Reviewer: Date: Response is acceptable please see section 4 for details. Reviewer: Date: Section 4- SAI Global Verification of Corrective Action for effectiveness Section 5- SAI Global NCR Closure: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 154 of 159