PT. SOCFIN INDONESIA Tanah Gambus Mill and Its Supply Bases. Tanah Gambus, Kecamatan Lima Puluh, Kabupaten Batubara COMMERCIAL- IN CONFIDENCE

Transcription

1 Audit Report Surveillance Audit for PT. SOCFIN INDONESIA Tanah Gambus Mill and Its Supply Bases RSPO20007 RSPO Membership number: Audited Address: Tanah Gambus Mill: Tanah Gambus, Kecamatan Lima Puluh, Kabupaten Batubara NORTH SUMATERA IDN Its Supply Bases: Tanah Gambus, Kecamatan Lima Puluh, Kabupaten Batubara NORTH SUMATERA IDN Date of audit: 13/09/2013 COMMERCIAL- IN CONFIDENCE ACTIVITY ID :Activity_ID QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Page 1 of 162

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 106 of the surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of 107 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 99 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 99 List of Figures Page 1 Map of Mill and Estates Location 7 2 Map of HCV 8 List of Appendices Page A Audit Record 108 B Previous nonconformities, corrective actions and status 110 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 2 of 162

3 Audit Report C Nonconformities, Corrective Actions and Observations Summary 124 D Stakeholder s issues and comment 158 E Definition of, and action required with respect to audit findings 161 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 Tanah Gambus 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 162

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 162

5 Audit Report 1.0 SCOPE OF THE CERTIFICATION ASSESSMENT 1.1 Introduction SAI Global conducted an audit of PT. Socfin Indonesia Tanah Gambus Mill and Its Supply Bases on 11 to 13 September 2013 with Major Nonconformities identified. Follow up audit has been conducted on 11 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. Tanah Gambus Mill PT. Socfin Indonesia Location: Kecamatan Lima Puluh, Kabupaten Batubara 21255, Sumatera Utara, Indonesia GPS Location: East 99 24' 14" North 3 12' 15" Annual production: CPO/year: 17, ton, PK/year: 3, ton QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 5 of 162

6 Audit Report Tanah Gambus Estate PT. Socfin Indonesia Location: Kecamatan Lima Puluh, Kabupaten Batubara 21255, Sumatera Utara, Indonesia GPS Location: East 99 o o North 3 o o Annual FFB Production: 72, ton Total Area: 3, 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 Tanah Gambus Mill 99 24'14" E 3 12'15" N Tanah Gambus Estate 99 o o E 3 o o N QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 6 of 162

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 162

8 Audit Report Figure 2 Map of HCV QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 8 of 162

9 1.5 Description of supply base Audit Report 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) Tanah Gambus 3, , Source: Socfin Indonesia, November Date of plantings Table 3: Age Profiles of Planted Palms Estate Planted Area (Ha) % of Planted Area Year Mature Immature Mature Immature QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 9 of 162

10 Audit Report Total 2, Grand Total 3, 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 Tanah Gambus Mill Tanah Gambus 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 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 162

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) Tanah Gambus 2, Source: Socfin Indonesia, November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 11 of 162

12 Audit Report Table 7: Plantation Hectare Statement AREA HECTARES Mature area 2, Immature area Total area planted 3, Emplacement and Mill Nursery 1.19 Effluent 3.81 Swamp HCV Total leased area 3, Source: Socfin Indonesia, November Approximate tonnages offered for certification (CPO and PK) The approximate tonnages certified are: CPO/year: 17, ton, PK/year: 3, 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 Date of issue of certificate Date of issue of certificate: 04 November 2012 Date of previous audit (1 st surveillance audit): 17 to 19 and 22 to 23 October AUDIT PROCESS QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 12 of 162

13 2.1 Certification body Audit Report 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 11 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 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 13 of 162

14 Audit Report 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, 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 industrial s including several palm oil mill and oil palm plantation. Several trainings are also participated 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 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 14 of 162

15 Audit Report 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 three sessions. The first session especially for stakeholder directly affected on estate and mill around, i.e. Head of village, FFB supplier. The second session is especially for labour union, gender committee and representative worker. And the third sessions is especially for Local NGO. It was noted, at the moment interview or group discussion, complaint or aspiration from stakeholder and worker could be as a part of audit evidence which should be clarified. 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, was also sent to National/International NGO to invite for comment to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. Table 8: List of internal and external stakeholder STAKEHOLDERS Internal stakeholder Head of SPM Head of Gender Committee Representative of worker Nurse and care worker External Stakeholder Head of Village around estate and mill Mingguan Gebrak (Local NGO) Pedang Keadilan (Local NGO) Realitas (Local NGO) Social and Labour Agency Agriculture and Plantation Agency Environment Agency of National land Agency METHOD OF CONSULTATION Group discussion Group discussion Group discussion One on one Interview Group discussion Group discussion Group discussion Group discussion Sending an invitation letter to comment Sending an invitation letter to comment Sending an invitation letter to comment Sending an invitation letter to QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 15 of 162

16 Audit Report BadanPertanahanNasional (BPN) comment District Police of Limah Puluh Sending an invitation letter to comment District Head (Camat) of Lima Puluh Sending an invitation letter to 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 was issue that were not properly actioned yet in the criterion 4.8 indicator major 1 and the non-conformance was reissued. Further, there were two major non-conformances issued against minor indicators, since it was reviewed that they were repetitive issues from certification audit back in 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 162

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? Are there any records of responses to information requests? Procedure SOC/PSM/9.01 Social communication, Rev 1 date 01 January 2013 Logbook Record of information request and responses Logbook Record of information request and responses Mill and Estate (Head of administration KTU) 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. Records of information request from stakeholder were kept by Mill and Estate on 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, invitation for area meeting and dissemination of work norm of child from Local Labour Department, work visit from local parliaments of Batubara, etc. And also there are request from tax office of Kisaran District about coordinate map data.overall the requests from stakeholder were directly responded by the organization. Status QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 17 of 162

18 1.1.3 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 Audit Report 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 162

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 162

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 162

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 Sustainability Sub Department (SAI Global use) Evidence of compliance with applicable local, national and ratified international laws and regulations of Tanah Gambus 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 2 nd semester 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. Example: employment agreement, social security, training programs, employment list, CSR program and its implementation, list of employees, payroll and over time calculations, menstruation leave, result of environmental monitoring and measurement, hazardous waste manifest, etc. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 21 of 162

22 Audit Report PROPER evaluation by Ministry of Environment has concluded that Tanah Gambus Mill granted for Blue award which indicated status of their environmental legal compliance for period Several regulations were noted not compliance yet such as: Permenaker 1/1988 Boiler Operator Permenaker 9/2010 Lifting Operator Permenaker 15/2008 First aid The improvement plan has been determined and planned to be finalised within this year. However, it was found inconsistence implementation of working time according with related regulation, e.g.: (UU No.13/2003, clause 77 and Labour and Transmigration Ministry Degree No.102/2004, clause 1). Opportunity for improvement: It could be considered to delete obsolete regulations from the identification and evaluation of compliance with law and regulations 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 January 2011 SOC/Form/ Identification and evaluation compliance Sustainability Sub Department Update and compliance review against change of law and regulation was conducted six monthly. Organization has been review and update regulation in October Based on procedure, it should be conducted in April or May 2013, however it was observed that the last updating of regulation was conducted in August There was no evidence of contact to government institution was conducted regularly. Major Nonconformance NCR closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 22 of 162

23 2.1.1 minor Is there a documented system, which includes written information on legal requirements that the palm oil company should comply with? against law and regulation Identification and evaluation compliance against law and regulation Audit Report 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 August Information on applicable legal and other requirements have been reviewed and summarised. Minor Nonconformance NCR 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 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. Identifying inconsistencies between national, regional and local regulations. Implementing all legal requirements is an essential baseline requirement for all growers whatever their location or size. Relevant legislation includes, but is not limited to, regulations governing land tenure and land-use rights (including customary rights), labour, agricultural practices (e.g. chemical use), environment (e.g. wildlife laws, pollution, environmental management and forestry laws), storage, transportation and processing practices. It also includes laws made pursuant to a country s obligations under international laws or conventions (e.g. the Convention on Biodiversity, CBD). Furthermore where countries have provisions to respect customary law, these must be taken into account. For small-scale produces the focus should be on the grower having adequate knowledge of the main legal requirements and implementing them. Key international laws and conventions are set out in Annex List of Related Laws and Regulations QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 23 of 162

24 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 28/01/1998, valid to 31 December Total area: 3, Ha Plantation permit: Surat Pendaftaran Usaha Perkebunan No. HK.350/82DjiBun. 5/11/2002 Head of administration KTU (SAI Global use) Copy of land title (HGU) of Tanah Gambus Estate was sighted and legally owned by PT. Socfindo. Copy of land use title was available and well maintained in the office of Tanah Gambus Estate, while the original one was kept in the Head Office Medan. 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 I (3º N and 99º E) 2. SOC III (3º N and 99º E) 3. SOC IIId (3º N and 99º E) 4. SOC VI (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 with items checked were identity, condition and position of pegs. All activities were carried out inside the legal QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 24 of 162

25 Audit Report 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 Local NGO (Pedang Keadilan, Realitas and Mingguan Gebrak) on 12 September 2013 Letter # 03/TN- SU/VIII/2007, date 16 August 2007 from farmer groups of Tanah Perjuangan Estate and Head Office Planted areas of the Estate 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 Lima Puluh and Perkebunan Gambus on 11 September 2013 and also group discussion with Local NGO (Pedang Keadilan, Realitas and Mingguan Gebrak) on 12 September 2013 that there were no land conflict at all land within estate and mill. However, on 2007 there are claim from farmer groups of Tanah Perjuangan +/- 483 Ha. Letter invitation (# 03/TN-SU/VIII/2007, date 16 August 2007) by Local NGO Trisula Nusantara was submitted to National Land Agency. A chronological report of public claim refer to Criterion 6.4 Not Applicable minor minor Is there evidence of land acquisition resolution with free prior and informed consent? Is there a mechanism to resolve conflict which is accepted by all parties? Group discussion with Village Head of Lima Puluh and Perkebunan Gambus on 11 September 2013 Interview with Head assistant of Estate Procedure SOC/PSM/9.02 Social complaint handling Procedure Estate Estate and Head Office Based on group discussion with Village Head of Lima Puluh and Perkebunan Gambus on 11 September 2013 and interview with Head Assistant of Estate, no land acquisition after 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 Not Applicable QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 25 of 162

26 SOC/PSM/9.05 Identification and compensation calculation Audit Report to loss of land and customary rights where identified. Dissemination for procedure introduction was evident and documented. It was communicated to related on 18 November 2010 to related parties (Village head, 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 26 of 162

27 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 Guidance 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 Lima Puluh and Perkebunan Gambus on 11 September 2013 and also group discussion with Local NGO (Pedang Keadilan, Realitas and Mingguan Gebrak) on 12 September 2013 SIA report HCV assessment report Estate (SAI Global use) It was confirmed during group discussion with Village Head of Lima Puluh and Perkebunan Gambus on 11 September 2013 and also group discussion with Local NGO (Pedang Keadilan, Realitas and Mingguan Gebrak) on 12 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 BMLE and SPNA. Status Not Applicable 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 27 of 162

28 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 2013 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. The Management Plan was under preparation and approximately finished at end of year Status QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 28 of 162

29 3.1.1 minor Is there annual replanting programme, where applicable, projected for a minimum of 5 years with yearly review? Replanting Program for 5 years Tanah Gambus Estate period Audit Report Estate Overall replanting program project for the next 5 years was available for all Estate of PT. Socfindo including Tanah Gambus Estate. It was verified that 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 Tanah Gambus Estate was 1988 which was in Division III. Replanting for 2013 was planned at Division III. 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 29 of 162

30 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 has been established and documented on SOC- POM/PSM/7.08 (FFB receiving), SOC- POM/PSM/7.09 (processing of CPO and PK) and SOC-POM/PSM/7.06 (delivery). Work instruction for supporting Mill activities has been established and documented; SOC-POM/IK/01 through SOC- POM/IK/16 for all of its operations from receiving of FFB through production and processing and dispatch of the CPO and PK. The procedure describes quality control check, sampling methods including its reporting from receiving of FFB up to dispatch of CPO and PK. Work Instructions are available at work QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 30 of 162

31 4.1.1 minor Are there records of at least yearly checking and monitoring of operations? Resume of Agricultural Department Visit (TN/LB/Bi/000/201 3) Minute of Management Review Meeting 30 March 2013 Internal Audit Report 21 march 2013 Monthly Report of July 2013 Audit Report Head Office stations in the Mill. The organisation conducted monitoring and checking for all applicable procedure and GAP through periodic visit of Department of Agriculture. Periodic visit was conducted two times a year. The last visit was conducted on 28 May to 1 June The content of the report covers evaluation of operational activities including harvesting, maintenance, pest management, cost etc. The report includes recommendation for follow up from Head of Agriculture Department and progress of follow up action from the previous visit. 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 19 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 minor Are there records of operational results? Monthly Report of Tanah Gambus 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 Mill and Estate The records of operational performance and result were well maintained in Tanah Gambus Estate on 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, EFB and composite application and larva 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 31 of 162

32 delivery on period July September 2013 Audit Report 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. The Mill maintains records of monitoring reports, such as shift log sheets with records of operating conditions at each of the mill work stations. A review operation daily report (July - September 2013) found that in general the documented procedures has been consistently implemented and monitored with few exceptions. CPO and PK are delivered to Refinery and Fractionation Factory which located around the Mill. A brief tour to processing facility was done during audit to review a number of work station: receiving and grading, sterilizing, threshing, pressing, clarifying, nut and kernel processing 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: Working Instruction SOC-POM/IK/05 requires that screw check should be done once a week; QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 32 of 162

33 Audit Report unfortunately no records demonstrate this procedure has been done as required. Gap maximum 6 mm, some were more than 6 mm (f) but no action clear. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 33 of 162

34 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 2011 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 is 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 Tanah Gambus Estate taken in June to July It was 133 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 34 of 162

35 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 Tanah Gambus Estate 2013 Estate Tanah Gambus 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 Tanah Gambus 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 Tanah Gambus 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 nutrient N and control weed. The LCC planted was QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 35 of 162

36 Audit Report 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 Block 14 Division I and Block 24 Division IV. LCC growth was well maintained. Empty fruit bunches (EFB) were applied in all immature area and a small part of mature area. Application of EFB was conducted based on Work Instruction. Quantity and area applied were based on recommendation from Agriculture Department in Socfin Medan Head Office. EFB application for N0 plant was sight at Block 14 Division I. Dosage of EFB application was 10 Ton/Ha or ± 80 kg/stand. Land application of Palm Oil Mill Effluent (POME) was not applied in Tanah Gambus Estate. POME was treated in WWTP and then discharged to water body. 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 36 of 162

37 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 Tanah Gambus 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 Tanah Gambus 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 10% of area is poorly drainage and Ha was peat soil. Tanah Gambus Estate has slopes 0 to 24 %. 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. Minor Nonconformance Evidence of terracing was sight at replanting area Block 14 Division I. Practice to control and minimize erosion have been applied by terracing and planting legume cover crop. However there has been no quantitative measurement taken to monitor whether the action effective to prevent erosion or not minor Is a road maintenance program presence? Procedure of road maintenance (SOC- KB/IK/07) Road Maintenance Program using 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 37 of 162

38 Grader and Compactor 2013 Audit Report 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 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 of Ha in Block 8, which was planted in 2010, was 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 six different fixed measuring points with a marker and signboard 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. Data monitoring was sight for months October 2012 to September 2013, and the lowest water level was at 48 cm from the peat surface. Over all, the management of the peat land in Tanah Gambus 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 minor Is a management strategy in place for other fragile and problem soils (e.g. sandy, low organic matter, acid sulphate soils)? Soil of Tanah Gambus Oil Palm Estate dated 1 January 2013 issued by Agricultural Estate Another problem soil in Tanah Gambus Estate was poorly drainage soil. 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. Poorly drainage soil in Block 14 Division I has been sight and satisfactory in QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 38 of 162

39 Department Procedure of Drainage Ditch (SOC/PSM/ ) Audit Report accordance with the procedure. Guidance 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 39 of 162

40 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) Tanah Gambus Estate was traversed by little river: A, B, C and Pluit 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 2013 period in Block 66, 3 Division to verify procedure implementation. It was observed, It was sighted only manual control conducted in the riparian buffer zone.this buffer zone is enriched with beneficial plants includingcassia cobanensis, Turnerasp. andwoody trees includinggmelinaarborea. Status minor Is there an implemented water management plan? Permit of ground water abstraction from Bupati Batu Bara #503/ABT/BB/003. A/X/2010 Mill The main source of water for Mill activity is ground water wells (deep well) from 6 (six) deep wells. Permit of water abstraction to six well has been obtained on 6 October 2010 and valid through 3 years. Tanah Gambus Mill is located in the same area with Tanah Gambus Fractionation and Refining Factory also Tanah Gambus Palm Kernel Oil Factory. The three factories shared the same water supplies. 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. arranging ground water abstraction Minor Nonconformance NCR QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 40 of 162

41 Audit Report by not all pumps are operated, arranging water distribution to staff housing, reusing cooling water from turbine for vacuum in clarification station minor Is there monitoring of effluent BOD? Permit of waste water disposal from Bupati Batu Bara #503/PLC/KP2T/00 1/XII/2011 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 minor Is there monitoring of mill water use per tonne of FFB? Mill operation monthly report Mill Mill water use per tonne of FFB is monitored monthly. Result of monitoring of mill water use per tonne of FFB was sighted for 2012 and period January to August It was noted that mill water use per tonne of FFB period January to August 2013 was decreased being compared with 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 41 of 162

42 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 Tanah Gambus 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 fiel observation. Status minor Is there monitoring extent of IPM implementation including training? Realisation of IPM Programme Realisation of Planting Benficial Palnts (Turnera subulatta, Casia cobanensis and Estate The implementation of Integrated Pest Management was monitored. Census of caterpillar, Oryctes (beetle), Ganoderm and rodent is 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 42 of 162

43 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 30 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 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 43 of 162

44 wherever possible. Audit Report QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 44 of 162

45 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 organisation 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 Tanah Gambus 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 2017 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, amount applied per ha and number of applications)? Monitoring of Pesticides Use period 2011, 2012 Estate Pesticides were used based on annual work programme. Activities using pesticides among others circle and path spraying, selective spraying etc. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 45 of 162

46 and Audit Report 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, January 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 14A Division I to activity spraying circle and path. Dosage used was 300 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 January 2013 by supplier Syngenta. Material trained includes understanding of pesticides used, their nature and characteristic as well as first aid treatment if accidently exposed to dangerous level of agro-chemicals. Training record such as attendance list and photograph were evident. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 46 of 162

47 Audit Report 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 SOC/DP/ Method of agrochemical 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. Opportunity for improvement: It could be considered to clean PPE in office QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 47 of 162

48 container handling Record of hazardous waste Audit Report division to ensure that liquid waste from cleaning of PPE is reused for the next spraying application 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 Tanah Gambus, period 2013 has been established 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 Tanah Gambus 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 Tanah Gambus 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 is performed one 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 Are there records showing that no work with pesticides for pregnant and breastfeeding women? Monthly checking record of pregnant test. Clinic (Nurse) There were 40 totally sprayer for all division. All divisions still involve women as pesticides sprayer. To ensure that there were no pregnant women during spraying of pesticides, there are lists of women worker including data of monthly checking conducted by nurses. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 48 of 162

49 Audit Report Group discussion with sprayer was conducted on 12 September There was no breastfeeding sprayer during spraying of pesticides QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 49 of 162

50 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.) 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), working at height and welding. Work permit system Status Major nonconformance NCR closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 50 of 162

51 OHS Patrol records Inspection and test records from authorised body for boilers, sterilisers, electrical installation, lighting protection, lifting equipment, etc. Audit Report 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 implemented. Workers were interview during this audit and generally they were understood the risk of QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 51 of 162

52 Audit Report their work and the purpose of using PPE. Observation for OHS implementation is conducted to Block 44 Division III for harvesting, mechanical fertilising at Division II block 22, spraying at division III Block 71, mills activities (loading/unloading, processing including utilities, workshop, storage, laboratory including waste water pond) 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? Organisation structure of P2K3 OHS briefings records OHS committee meeting report for Q1 and Q Document Control, Mill The safety committee (P2K3) has been updated and on progressing to approve to local authority (letter dated on 9/9/2013). The chairman of safety committee is Estate Manager. 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 with total 23 personnel. 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 minor minor Is there provision for accident insurance for workers? Is there regular health examination by a doctor for workers in stations or exposed to high-risk work? Copies of insurance payment SOP/PSM/4/19 Copies of medical check-up certificate for Spray operators, Mill and Estate (Head of administration KTU) Clinic 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. 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. High-risk worker is assigned to be checked with special test such as lever test, blood test, etc. Result QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 52 of 162

53 welder and boiler operators Audit Report of medical check-up is sight and evident minor Is there documented risk assessment for Occupational Health and Safety (OHS)? SOC/PSM/4.13 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 Nonconformance NCR minor Are there records of OHS training? Training schedule for year 2012 and 2013 Attendance list Training certificate for boiler operator, heavy equipment, hyperkes Document control, clinic 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. Compliance minor Is there accident and emergency preparedness procedure? SOC/PSM/ Emergency procedure Emergency organisation chart for Division 3 (11/112) and for Tanah Gambus Mill (14/5/2012) Emergency tools list Emergency simulation plan and realisation record Mill and Estate 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 but not ready for use, see minor non-conformance under criterion 5.5, 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 14/6/2012, earthquake 10/8/2012, fire 23/5/12 Minor Nonconformance NCR QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 53 of 162

54 Audit Report (estate) and 16/7/2012 (16/7/2012). Along 2013, planning for simulation has been defined such as fire 28/8/2013, explosion 16/9/2013, spill 21/10/ minor Is there evidence of OHS and first aid equipments available at worksites? Emergency tools list Emergency kit inspection records (Monthly) 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. Minor Nonconformance NCR minor Are workers trained in first aid should be present in both field and mill operation? Emergency organisation chart Copies of emergency training Document Control 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. Minor Nonconformance NCR minor Are there records of the occurrence of any work accidents are maintained and regularly reviewed? SOC/PSM/ Monitoring and measurement procedure SOC/PSM/ Incident investigation procedure OHS statistic reports (Monthly) Incident investigation records for year Document control, clinic 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 54 of 162

55 2012 and 2013 Audit Report Guidance 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 55 of 162

56 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 noncompliance NCR closed Are there records of training for each employee kept? Training records (attendance list and certificates) 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 Is there evidence that the company uses experienced or trained contractors? SOC/PSM/6-07 Sample of contracts (Service maintenance steam turbine) Document control 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 56 of 162

57 Audit Report documentation. Guidance Training should be given to all staffs and workers by growers and millers to enable them to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of these principles, criteria and guidance. Contractors should be selected for their ability to fulfil their jobs and responsibilities in accordance with documented procedures, and in compliance with the requirements of these principles, criteria and guidance. Workers on smallholder plots also need adequate training and skills and this can be achieved through extension activities of growers or mills that purchase fruit from them, by smallholders organisation, or through collaboration with other institutions and organisations. For small holders training records should not be required by anyone working on the farm should be adequately trained for the job they are doing. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 57 of 162

58 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 Tanah Gambus Mill and Estate #660.1/0213/LH/2 005 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) Document of RKL and RPL was approved by Head of Asahan District Environmental Agency on August 18, Tanah Gambus 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 Tanah Gambus Mill and Estate was performed on 01 June Tanah Gambus 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 58 of 162

59 5.1.1 minor environmental management in accordance with relevant regulations? Are revisions to environmental management document if there are changes in companies operating areas or activities? RPL 3 rd and 4 th quarter 2012 and 1 st and 2 nd quarter 2013 Receipt note of RKL RPL submission Initial AMDAL #RC.220/476/B/III/ 94 Document of RKL and RPL for Tanah Gambus Mill and Estate #660.1/0213/LH/2 005 Procedure SOC/PSM/4.04 Environmental aspect and impact identification Audit Report Estate Mill and Estate however the content has not complied with RKL RPL document. The reports were submitted to North Sumatera Province and Batu Bara District Environmental Agency, Central of Environmental Management Regional Sumatera and Ministerial Office of Environment. Initial Environmental Impact Assessment documents (ANDAL, RKL and RPL) which were approved by Department of Agriculture of Republic of Indonesia on March 17, 1994 for Tanah Gambus Mill and Estate were available. The document was revised and approved by Head of Asahan District Environmental Agency on August 18, For internal environmental aspect and evaluated its impact document, as required by the procedure. 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 1 June 2013 conformance NCR closed 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: 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 59 of 162

60 Audit Report 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: 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. Building new roads, processing mills or other infrastructure. 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 60 of 162

61 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 HCV assessment Estate of any protected, rare, threatened or report endangered species, and HCV habitat? Peer Review report Attendance list of consultation public (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 Tanah Gambus Estate. The HCV assessment performed in September to October Peer Review was conducted by WWF Indonesia on 12 March Public consultation was carried out at Lima Puluh Sub-district on August 19, 2010, participated by 34 people representing the local community and government.it had intended to get aspiration and responses from stakeholders related identification result of HCV and its management. Status If, rare, threatened or endangered species, or high conservation value habitats are Procedure Estate HCV identified including : HCV 1.1 and HCV 4.1 : riparian buffer zone of the A(5.75 ha), riparian buffer zone of the B (11.64 ha), riparian buffer zone of the C (4.06), Pluit River (19,93 ha) and Swamp Forest (40,66 ha ) HCV 1.2, species of bird endangered based on red list of IUCN was identified, e.g. Alcedoeuryzona. Species of mammal found was Lutrasumatrana. Public cemetery was identified as HCV 6 (1.00 ha) The management of HCV areas was presently based on the company s SOP of HCV area management. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 61 of 162

62 present, are appropriate measures to preserve them to be taken? SOC/PSM/ HCV management and monitoring, 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 Audit Report The HCV management and monitoring plan has been prepared and available at the site. It was 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. Organization 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 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? Matrix of identification and evaluation compliance against law and regulation HCV Management plan 2013 period Estate and Head Office 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 62 of 162

63 Audit Report 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 66, 3 Division Estate Posters and sign boards concerning HCV areas and protected species are available in the necessary places Dissemination about protectec against HCV Area and protectec wildlife was conducted on 8 March 2013, 10 April 2013 and 12 August In according interview indicate that staff and employees wereinformed 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/Div/Bi/752/13, date 4 September 2013 Estate Tanah Gambus Estate has appointed HCV officer to ensure the implementation of management and monitoring plan. These HCV Officers have no particular background for HCV management, however they has been trained in regard identification, management and monitoring of HCV on 21October 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 63 of 162

64 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 Tanah Gambus Mill and Estate activities was evident. The source of pollution, type and control method of waste was documented. Status 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 Tanah Gambus Mill #660/127/LH/III/20 10 Permit of CV. Amindy Barokah as hazardous 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 solid from decanter were used for fertiliser in Tanah Gambus Estate. Fibre and Shell from Tanah Gambus Mill was used for boiler feed. Rest of shell was sold to the third party. 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 floodfree 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 Major Nonconformance NCR closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 64 of 162

65 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 to be transported by licensed vendor. Temporary storage of hazardous waste still held valid permit from Batu Bara District Environment Agency on 1 March 2010 and valid through 5 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 Batu Bara District Environmental Agency, Central of Environmental Management Regional Sumatera and Ministerial Office of Environment. Receipt note was also sighted minor Is there management plan of hazardous waste and instruction of disposal of agrochemicals and their containers waste in accordance with the product label and existing regulations? Record of hazardous waste Record of economical waste Estate Empty agrochemical containers from Estate activities were cleaned using a triple rinse method. Empty 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 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 65 of 162

66 economical waste Audit Report was recorded. Quantity of empty agrochemical jerrycans was recorded. 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 66 of 162

67 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 7% of FFB processed. Total energy generated by steam turbine generator for Tanah Gambus 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 tube in boiler #3 was changed therefore boiler operation was more efficient. 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, emergency diesel generator and FFB transportation. In January to August 2013 fossil fuel use was increased compared with 2012 due the compactor was used more than budget. 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 67 of 162

68 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 I. 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 14 Division I. Status Are there records of implementation of zero burning policy? Progress Report of Replanting, 2013 Contract letter #619/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 14 Division I Are there procedure and records of emergency responses to land burning (tanggap darurat kebakaran lahan)? SOC/PSM/ 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 68 of 162

69 5.5.1 minor 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 March 2012 and August 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. However, consistency of monitoring equipment condition was not good as noted in this report. Major Nonconformance NCR closed Guidance Fire should be used only where an assessment has demonstrated that it is the most effective and least environmentally damaging option for minimising the risk of severe pest and disease 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 69 of 162

70 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 Tanah Gambus Mill activities was evident. The source of pollution, type of pollution and its control was documented. The information of pollution and emission sources at Tanah Gambus 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 70 of 162

71 Audit Report Segregation of organic and non-organic waste. Manuring application based on recommendation 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 Tanah Gambus Mill waste water was processed through a series of waste water treatment ponds: two anaerobic ponds, 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 71 of 162

72 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 and mill management including replanting that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement 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 2010 and January Scope of assessment covered villages: Tanah Itam Ulu, Perkebunan Lima Puluh, Lubuk Besar and Simpang Gambus. 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 Negative impacts were identified, such as: ash and smell from the mill Status 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 72 of 162

73 Audit Report monitoring of social impact was annually conducted. Monitoring against social impact was conducted through PRA (Participatory Rural Appraisal). Last monitoring was conducted on September 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 & RPL Document in 1994 Revision RKL and RPL Document in 2005 Estate and Mill Initial Environmental Impact Assessment documents (ANDAL, RKL and RPL) which were approved by Department of Agriculture of Republic of Indonesia on March 17, 1994 for Tanah Gambus Mill and Estate were available. The document was revised and approved by Head of Asahan District Environmental Agency on August 8, The revised RKL and RPL were available at Tanah Gambus Mill and Estate minor Are there a regular and scheduled environmental management and monitoring report? RKL-RPL report for January to June 2013 period 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 Guidance 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, Tanah Gambus Estate Not Applicable 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 73 of 162

74 Audit Report 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 74 of 162

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 6.2 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, Local NGO (Pedang Keadilan, Mingguan Gebrak and Realitas), Camat, Village Head around estate and mill, FFB supplier, Police of district, Worker union and gender committee. Stake holder list was made detail, QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 75 of 162

76 Audit Report address and phone numbers were mentioned in the list. It was update in September minor Are there records of local communities aspiration and responses or follow up actions by companies to there requirements? Group discussion with Head of Lima Puluh and Perkebunan Gambus Village on 11 September 2013 Group discussion with Local NGO on 12 September 2013 Clarification process with Head of Estate Assistant on 13 September 2013 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. Respond against community aspiration from Lima Puluh village so that there was organization effort against soil erosion of community garden as an effect of organization activities was not recorded. Based on group discussion with Head of Lima Puluh and Perkebunan Gambus Village on 11 September 2013, group discussion with Local NGO on 12 September 2013 and clarification result against its issue with Head of Estate Assistant on 13 September 2013, there are aspiration from community of Lima Puluh Village so that there was organization effort to handle soil erosion of community garden which adjacent with estate Blok 70, 3 division as effect of making isolation trench on Respond against its aspiration was not recorded. It was be remain an issue which should be responded and it would be check for next surveillance audit. Minor Nonconformance NCR minor Is there a dedicated person responsible for consulting and communicating with local communities? Letter # UM/X/Bi/2765/10, date 15 November 2010 Sustainability Sub Department 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. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 76 of 162

77 Audit Report 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 77 of 162

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 6.3 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 Group discussion with Head of Lima Puluh and Perkebunan Gambus Village on 11 September 2013 Group discussion with Local NGO, Worker union, gender committee, worker of office administration on 12 September 2013 Clarification process with Head of Estate Assistant on 13 September 2013 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 18 November 2010 Based on group discussion with stakeholders, there is complaint from Village Head of Lima Puluh, representative worker of mill and estate, Gender committee, worker union, family worker, Local NGO (Pedang Keadilan and Mingguan Gebrak). It was also related criteria2.1.ma 1, criteria 6.2.Mi 2, criteria Mi 1 and criteria 6.5.Mi 1. Clarification was conducted with Head of Estate Assistant on 13 September Detail of compliance was described on each related criteria and Appendix D this report. Status Are there records of handling of the Procedure Estate (Head A chronological report of public claim was shown at the time of audit. There was a land conflict in block 9 Minor Non- QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 78 of 162

79 minor complaints? SOC/PSM/9.02- Social complaint handling, date 1 January 2011 Letter invitation from local parliaments # 03/TN- SU/VIII/2007, date 16 August 2007 Letter No. 005/1623, 16 Nov 2011 Letter from Bupati Batubara #. 005/3284, date 11 June 2013 about audience of land case in PT. Socfin Indonesia Group discussion with Head of Independent Employee Cooperative Koperasi Karyawan Ollein, Deputy and Secretary of union worker, Gender Committee and Worker of office administration on 12 September 2013 Audit Report of administration- KTU) area (division I) nearby Simpang Gambus Village. Claim from farmer groups of Tanah Perjuangan +/- 483 Ha. Letter invitation (# 03/TN-SU/VIII/2007, date 16 August 2007) by Local NGO Trisula Nusantara was submitted to National Land Agency. In November 2011, there was meeting between organisations with farmer groups which facilities by local parliament. The last claim was reported on February 2012 where discussion was also taken by all parties (police department, Socfin, local government and farmer s community). There was informal agreement between local government (Local Government of Batu Bara) and farmer s community to carry forward the issue to Supreme Court although the company has explained that all plantation area is operated accordingly with legal HGU. In June 2013 there are audience between organizations with farmer groups which facilities by Bupati Batubara. It was agreement that this case would be resolved by Supreme Court. 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 Head of Independent Employee Cooperative KoperasiKaryawan Ollein, Deputy and Secretary of worker representative, Gender Committee and Worker of office administration on 12 September 2013, there was gripe and complaint from worker of office administration, including : Give birth expenses during maternity leave at beyond the estate was not covered by the organization. She was give birth in Medan during maternity leave. Related this issue, meeting for clarification has been conformance NCR QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 79 of 162

80 Audit Report conducted with Deputy and Secretary of worker representative, Gender Committee, Nurse and Worker of office administration on 12 September Clarification result following as: - Information from Nurse Reimbursement submission could not be processed. Reimbursement recommendation from clinic was not submitted because birth can be planned based on the analysis of parturition, namely: patient could be giving birth at the end of May Based on PKB 2012, only sick leave worker could be covered by organization (PKB clause XIV) - Information from worker Birth processes was early conducted rather than nurse diagnose, because rupture of the membranes. So that it was conducted caesarean section on 17 Mei During group discussion was conducted confrontation between Deputy and Secretary of worker representative, Gender Committee, Nurse and Worker. Worker should be prepared letter from doctor. If the birth processes because rupture of the membranes, so this cause was classified as sick when leave. PKB clause XIV was be in forced for this case. - Review could be conducted, worker and worker union could be submitted meeting with management for discuss those complaint. Progress of complaint handling of this case would be check for next surveillance minor Are there procedures for identification and calculation of fair compensation for the loss of legal or customary right of the land, with the involvement of local community representatives and relevant agencies and made publicly available? Procedure SOC/PSM/9.02- Social complaint handling, date 1 January 2011 Estate (Head of administration- KTU) Procedure for complaints and grievances was determined and agreed by related parties (head of villages). It was communicated to related parties on 18 November 2010 Estate QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 80 of 162

81 Audit Report 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 81 of 162

82 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 18 November 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 and local NGO. There has been consession 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 and local NGO. 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 and local NGO. Not Applicable QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 82 of 162

83 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 83 of 162

84 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 Letter no /141/KPTS/2013. 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 2013 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 84 of 162

85 Audit Report and the organisation 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? Interview with worker family on 12 September 2013 (wife of Toni Manurung-fruit porters of 3 division Field observation in housing of 3 division Clarification process with Head Assistant of Estate on 13 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, based on interview with worker family on 12 September 2013 (wife of Toni Manurung-fruit porters of 3 division), there was complaint against housing condition, including: old housing buildings was effected leaky roof, door of bathroom and bedroom has been damaged, shutters hinged has also been damaged. Moreover field observation in housing, found there was no bedroom and bathroom door of fruit porters house of division 3 and also roof of family room has been leaky. Result clarification with Head Assistant of Estate on 13 September, there was no maintenance program of housing buildings especially for estate worker. Major Nonconformance NCR closed Opportunity for improvement - It was high recommended to provide first aid kid on child care on central clinic housing. - It was suggested to establish clearly mechanism using permit of operational vehicle of staff for patient transportation minor Are agreements entered into with contractors to specify that contractors abide by labour laws? Working agreement No. TG/SPK/43//08/20 13 Head Office Local contractors were used by organization for several activities. It was found, there was working agreement between organization with third party (contractor) was not required contractors abide to labour laws. Working agreement between organization with Koperasi Serba Usaha Ollein to executed period maintenance work was not required Koperasi Serba Usaha Karyawan abide to labour Minor Nonconformance NCR QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 85 of 162

86 Audit Report laws. For example: Working agreement No TG/SPK/43//08/2013. 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 162

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 language 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 125/org/PC FSP PP-SPSI- BB/XI/2012 Minutes of meeting date 01 Februari PKB dissemination meeting 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 Batu Bara District (Decision letter #Kep 125/org/PC FSP PP-SPSI-BB/XI/2012). As found during group discussion with PUK mill and estate, conditional meeting was also held to discuss QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 87 of 162

88 Minutes of meeting date 02 July Organization consolidation Minutes of meeting date 23 July 2013 SPSI verification Audit Report 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 162

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 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 Lima Puluh and Perkebunan Gambus on 11 September 2013 List of worker period August 2013 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 head of Lima Puluh and Perkebunan Gambus on 11 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 162

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 162

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 committe structure year 2010 Workers interview and group discussion with gender committee and workers representative on 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 and group 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 with gender committee and workers representative on September 2013, it was concluded that QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 91 of 162

92 discussion with gender committee and workers representative on September 2013 Audit Report 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 162

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? Price information week 1 September 2013 Mill and Estate (SAI Global use) There is only one out grower supply FFB to Tanah Gambus Mill (CV Maju Jaya). FFB pricing is available and informed to the supplier. The pricing components consider the transportation cost, grading and oil potential content. Status Are pricing mechanism for FFB and inputs/services documented (where these are under control of the mill or plantation) Price Mechanism 2013 Mill and Estate Price mechanism of FFB is determined by Medan HO (Purchasing Department) and reviewed in monthly basis (the last revision was 9 September The company updates the information based on the FFB pricing formula that includes details of transport, milling and shipping costs, each month and provides it to the supplier minor Is the evidence available that all parties understand the contractual agreements they enter into, and that contracts are fair, legal and transparent? MOU (# /01/2013) Mill, Estate and Purchasing Department Annual contract are made between FFB suppliers and mill, describing FFB specification required, contract period, determination of FFB pricing, and term of payment. The current contract is MOU (# /01/2013). Information of FFB set was available to the FFB suppliers and the commitment was stated in the procedure. The selection and evaluation of supplier/vendor was based on capability of supplier and vendor to supply required inputs and or services. Specification of inputs and or services required was communicated to the supplier/vendor through tender document or request for quotation minor Are agreed payment made in timely manner? Payment records March Estate and Finance A review to payment records March September 2013 demonstrated that the payment of FFB QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 93 of 162

94 Audit Report September 2013 Department purchased has been conducted two weeks after complete invoice received by finance. It was appropriate with the MOU. Guidance 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 162

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 foto 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, building mosques, clean water assistance, maintenance of Pulo Puli canal, 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 162

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). Tanah Gambus 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 162

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. manuring using fertilizer spreader as an effort to intensification, micron herby spraying using double head so that the spraying result was wider, 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 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. Status Regular evaluation of plantation and mill operation was performed through internal and external audits. The coverage of the audit including production 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 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 97 of 162

98 Audit Report 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 162

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 (Kg) CSPO (Kg) Certified PK (Kg) CSPO sold (Kg) Certified PK sold (Kg) October 5,629,770 1,378, ,881 Nil Nil November 5,860,460 1,413, ,925 Nil Nil December 6,233,450 1,529, ,081 Nil Nil 2013 January 6,376,990 1,514, ,563 Nil Nil February 5,202,580 1,232, ,903 Nil Nil March 5,343,700 1,289, ,274 Nil Nil April 6,156,750 1,465, ,474 Nil Nil May 5,477,560 1,268, ,207 Nil Nil June 6,137,590 1,425, ,484 Nil Nil July 6,887,630 1,622, ,831 Nil Nil August 6,492,520 1,514, ,208 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 2014 Month FFB (Ton) CPO (Ton) PK (Ton) January 6,347,798 1,509, ,837 February 5,792,064 1,381, ,411 March 5,893,046 1,395, ,442 April 6,271,920 1,486, ,646 May 5,986,400 1,409, ,920 June 6,298,403 1,489, ,387 July 6,464,547 1,524, ,070 August 6,261,933 1,474, ,586 September 6,335,878 1,485, ,244 October 6,090,241 1,426, ,089 November 6,139,028 1,440, ,539 December 6,246,564 1,473, ,959 Total 74,127,822 17,497,105 3,264,130 Source: Socfin Indonesia, November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 99 of 162

100 Audit Report PART A COMPANY DETAIL Company Name: PT. Socfin Indonesia Tanah Gambus Mill RSPO member number: UTZ number: Site Address: Tanah Gambus, Kecamatan Lima Puluh, Kabupaten Batubara NORTH SUMATERA IDN Management Representative: Hasan Bisri Mill capacity: 23 MT FFB/hour App/Cert No: RSPO20007 Audit Type: Annual Surveillance SAI Global Auditor/Team: Irawan Bawono Audit Date: 11/09/13 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 and January August 2013 Estimated tonnage of certified CPO produced: 17, ton (2013) Estimated of tonnage of CPO produced 21, ton (2013) Estimated of tonnage of certified PK produced: 3, 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 162

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 is sold under Green Palm scheme. All of certified CPO and certified palm kernel estimated produced in 2013 (see above) has been 100% sold under Green Palm scheme within August 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 Sustem 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 Pihak Ketiga QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 101 of 162 STATUS (NC/AoC/ )

102 Supply Chain Certification Standard Audit Report AUDIT FINDINGS / OBJECTIVE EVIDENCE 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 Hamdani (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 Tanah Gambus 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 is a projected overproduction. There is a documented procedure concerning the immediately inform SAI Global if there is a projected overproduction. No overproduction identified in QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 102 of 162

103 Supply Chain Certification Standard Audit Report AUDIT FINDINGS / OBJECTIVE EVIDENCE 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 Tanah Gambus. 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 in relevant documents, e.g. *product name*/mb or Mass Balance. The supply chain model used should be clearly indicated. No physical delivery of certified CPO and palm kernel. Delivery only conducted for uncertified CPO and palm kernel. QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 103 of 162

104 Supply Chain Certification Standard 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. The last training was done on 2 September 2013 for Mr. Hamdani (Krani). 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/ ) PART C SUPPLY CHAIN CERTIFICATION SYSTEM QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 104 of 162

105 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 can not 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 162

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 162

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 20 December 2013 Signed for and on behalf of PT. SAI Global Indonesia Ms. Inge Triwulandari Technical Manager Date 19 December 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 107 of 162

108 AUDIT REPORT Appendix A Audit Record Date Auditor Audit meetings plus functions/ processes/ areas/ *shifts audited: # Shifts* Times* From - To Tanah Gambus Mill and Estate Ria, Eko, Rezza, Irawan, Anwar Eko Anwar Opening meeting RSPO Criteria: 2.2 indicator major 1, 2 Criteria: 3.1 all indicators RSPO 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: 4.6 indicator minor 2 Criteria: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.11 all indicators Criteria: 8.1 all indicators Anwar Interview with mill employees Anwar Interview with: stakeholder and supplier Tanah Gambus Estate Rezza Ria RSPO 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 RSPO Criteria: 2.1 all indicators Criteria: 4.6 indicator major 4 Criteria: 5.3 all indicators Criteria: 8.1 all indicators Tanah Gambus Estate Eko Anwar RSPO 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 Criteria: 4.4 indicator 1 Major Criteria: 5.2 all indicators

109 Anwar Audit Report Site visit for general facilities including interview with Estate employees Anwar Interview with NGO Irawan Ria Rezza Tanah Gambus Mill RSPO Criteria: 4.1 indicator major 2, minor 1, 2 Criteria: 6.10 all indicators Criteria: 8.1 all indicators RSPO 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 RSPO 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 Criteria: 8.1 all indicators Tanah Gambus Mill Irawan Supply Chain Tanah Gambus Mill and Estate Eko Time bound plan Ria Partial certification requirements Rezza Audit continue for OHS aspect Anwar Audit continue for social aspect (verification of group discussion and public consultation result if any) Anwar Interview with SP and committee All Closing meeting QEF08sa.RSPO.01 / Issue Date: 2009-Apr-15 SAI Global Indonesia Copyright 2009 Page 109 of 162

110 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 indicator major 1 Details Corrective Action PIC Completion Date Re-identification of applicable law and Estate, ISO July 2011 regulation and evaluate the Secretariat compliance with law and regulations. Complete with action plan if there are the gaps. Ministry of Agriculture Decree #7/permentan/sr.140/2/2007 have not been included in evaluation of compliance with law and regulations performed in March Moreover regulation regarding management of peat land Agriculture Decree #14/permentan/PL.110/2/2009 was evaluated as non applicable regulation. Actually there is peat land in the organisation. 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. Re-evaluation compliance with regulation Act No. 3/1992. Complete with action plan if there are the gaps Estate, ISO Secretariat July 2011 Status Closed Closed indicator major indicator minor 2 The maintenance of peg was reported on report of HSE inspection. However, in the report does not mentioned the number of peg, and therefore it was not clear if all pegs within map covered in maintenance activity. Violation to the defined procedure was observed at sterilization process. The cycle of sterilization was not conducted as required by working instruction. One peak of sterilization is done separately with the rest two peaks. Revise the form of pegs inspection by mentioning number of pegs. Conduct sterilization process as required by work instruction. ISO Secretariat July 2011 Closed Mill May 2011 Closed 4.1 indicator major 2 Working Instruction for Sounding has not been established. Establish work instruction for Sounding ISO Secretariat August 2011 Closed

111 4.1. indicator minor 2 Sounding reporting was not conducted in appropriate manner. Only one sounding record is reported on the daily report. AUDIT REPORT Report each sounding in the record of daily sounding. Mill May 2011 Closed 4.1. indicator minor indicator minor 2 Thermometer used for sounding has not been calibrated. Round test (proficiency test has been regularly conducted; however the result has not been analyzed (evaluated). Calibrate thermometer used for sounding. Mill August 2011 Closed Evaluate result of round test. Laboratory June 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. Analyse soil at all blocks at the next period. Mention criteria and location of sampling in the report. Agriculture Department 2012 Closed indicator minor 4 Work instruction for peat land management, SOC-KB/IK/08 1 st May 2011 does not mention Piezo meters and monitoring procedures, the dam does not have a watergate which can be opened and closed, no Piezo meters have been applied, and no weekly water level monitoring data was available. Revise the procedure by mentioning application of piezo meter and its monitoring period Re-evaluate dam whether it can water level stable as needed. Estate/Agriculture Department August 2011 Closed 4.3 indicator minor 3 Found not well condition of road for transportation by vehicle and workers which normally using motorcycle at Division III. Maintain road according to program of road maintenance. Assistant June 2011 Closed indicator major 1 Quality of A, B, C and Pluit Water River and spam water outlet is being analysed by Laboratory of Bapedalda Sumantera Utara. Water sample was sent to the Laboratory on 8 April Result of analysis has not been finished yet by the Laboratory. Analysis result of quality of River has been finished. Technological Department May 2011 Closed indicator minor 1 There was no monitoring extent of IPM implementation regarding growth and length of beneficial plants. Monitor the extent of IPM implementation regarding growth and length of beneficial plants. Assistant July 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 111 of 162

112 4.5 indicator minor 1 Circular letter #Tan/Keb.KS/Bi/88/2005 regarding rodent controlling required that census of rodent is conducted monthly at the same time with census of caterpillar. There was no evidence that census of rodent was conducted. AUDIT REPORT Record the result of rodent census as required by circular letter. Assistant Closed 4.5 indicator minor 2 There was no monitoring of pesticide toxicity units (a.i. active ingredient / LD50 per tonne of FFB or per hectare). Monitor the pesticide toxicity units Estate/Agriculture Department July 2011 Closed 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. Register Decis 25 EC in the list of pesticide used within organisation Assistant May 2011 Closed 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 The wheel tractor driver was holding license from the police (SIM B) while actually need Operator license from manpower authority (SIO). It was found unsafe act where the helper of wheel tractor standing on no proper place while wheel tractor working. Get license for operator or wheel tractor Add the chair for assistant of wheel tractor operator Briefing to assistant of wheel tractor operator Mill/Technical Department December 2011 Closed 4.7 indicator major 1 Found non-permanent employee (harvester) working without using glass as required by work instruction SOC-KKS/IK/07. He was wearing shoe but the shoe not provided by the company. The cover of harvesting tool was not a standard and creating hazard. Complete PPE to all employees by the organization Complete all harvesting tools with proper cover Estate August 2011 Closed 4.7 indicator major 1 Found several poor conditions of electricity at mill, e.g. most electrical panel with electrical hazard were accessible by un-authorized persons. Inspect the condition of electricity. Repair if necessary. Lock all electricity panels and only authorised person who can open Mill July2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 112 of 162

113 4.7 indicator major 1 Found a very un-maintained of welding machine at the mill which may create unsafe condition. AUDIT REPORT Maintain welding machine regularly Suggest to change welding machine in not good condition Mill June 2011 Closed 4.7 indicator major indicator major 1 Found contractor work unsafely, e.g. welding cutting operator did not wear welding mask, the LPG cylinder was put horizontally. Immediate action was performed by Manager by providing briefing to the contractor. The cleaning CPO tank just been recently performed in beginning May However, the confined space entry guideline including safe work permit was not implemented. Briefing to contractor regarding work safely has been conducted. Clean the CPO tank according to confined space procedure. Mill May 2011 Closed Mill 2012 Closed 4.7 indicator major indicator minor 1 The access way (stair and platform) for moder bath, was not appropriate. Accident insurance scheme for non-permanent employees has not been established and provided. Repair access was (stair and platform) for moder bath. Insurance all non-permanent employees. Mill June 2011 Closed Estate Manager Closed 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 1 Environmental impact of high pressure sprayer (HPS) has not been analysed. Analyse environmental impact of HPS operational. Estate/ISO Secretariat July 2011 Closed indicator major indicator major 2 Availability and condition of HCV 6 regarding public cemetery was not monitored. Some inconsistencies of waste management and hazardous material management were identified: (Estate) Briefing regarding segregation of organic and inorganic wastes is not Monitor availability and condition of HCV 6 routine. Routine briefing regarding waste segregation. Inspect and report the condition of temporary storage of organic and inorganic waste. Assistant July 2011 Closed Estate and Assistant June 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 113 of 162

114 conducted monthly. Provision of temporary storage of organic and inorganic waste was not reported AUDIT REPORT 5.3 indicator major 2 Some inconsistencies of waste management and hazardous material management were identified: (Mill) Waste battery was disposed on February 2011 through PT Bekasi Environmental Service to CV Yudhi Raja Mandiri, however both vendors have no license to collect waste battery. No evidence that vehicle used for transporting waste oil and waste battery from Tanah Gambus on February, , BK8227ND, as documented in the disposal manifests ZE and YR has valid permit for hazardous waste transporting. Hazardous waste balance reported on February 2011 was not complete, only covered waste disposed to third party, but not covered hazardous waste stored and used. 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 and Technological Department September 2011 September 2011 June 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. ISO Secretariat August 2011 Closed 5.5 indicator minor 1 Facilities to respond land burning have been provided at each division however availability and condition of all facilities have not been monitored. Inspect condition of all facilities to respond land burning. Assistant June 2011 Closed indicator Guidance for operation of waste water treatment ponds SOC/DP/ requires monitoring of DP SOC/DP/ has been revised to amend frequency of ISO Secretariat May 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 114 of 162

115 minor 2 ph and temperature of anaerobic pond discharge every week, however there was no evidence that this parameter were monitored within SOC/Form/ indicator minor 1 According to site visit to housing (Housing I and IV), it was found that the room condition is very hot due to not proper roof. AUDIT REPORT monitoring of ph and temperature monthly. Monitor ph and temperature monthly in SOC/Form/ Change roof of housing Mill 2012 Closed There was no stock for vitamin at clinic central and clinic division where it is needed for women worker at spraying. Provide vitamin to women working at spraying Estate July 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 Socfindo ); however it has not been registered and controlled as required. Control the document Mechanism of Recording and Monitoring of Sustainable Palm Oil (SPO) Balance in POM PT Socfindo. ISO Secretariat August 2011 Closed Procedure of daily reporting when Harvest System down has not been formally documented. The estimation of quantity of kernel on virtual silo has been defined at the day audit. The stock of the day audit has been calculated according to the defined arrangement. However the specific gravity (relative mass) of kernel was (use 0.6 kg/m3) not issued by laboratory. Establish procedure of daily reporting when Harvest System down. Define specific gravity of kernel which to be used as reference in determining weight of kernel. ISO Secretariat August 2011 Closed Laboratory June 2011 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 115 of 162

116 2 5 Back ERP data has been conducted; however it was not consistently reported on daily back up report. AUDIT REPORT Report back ERP consistently on daily back up report. Mill May 2011 Closed 1 st surveillance Minor non-conformances RSPO Principe and Criteria, Indonesian National Interpretation No RSPO Indicator indicator major indicator major 1 Details Corrective Action PIC Completion Date Procedure SOP/PSM/4.19 was General Nov2012 revised on 1 December 2012 to Department amend that medical check-up is performed annually as required by Permenaker #02/Men/1980. The evaluation of compliance against OHS regulation in regard Permenaker No. 02/Men/1980 was justified complied, in fact, not. The procedure SOP/PSM/4.19 has been revised and mentioning that the frequency for medical check-up is every 5 years for office and administration staff less than 45 years of old, every 3 years for employee more than 45 years of old, every one year for employee directly exposed to hazard. This policy in regard medical check-up is not in compliance with the requirements as stated in the above mentioned regulation in regard the regular medical check-up (every one year) and special medical check-up. There was no documented overtime request and approval evidence from respective employee as required by national law (Ministry Decree 233/2003) to ensure voluntary overtime. The daily overtime logs have not been signed by respective employee to justify records of overtime hours (especially for factory workers) Program of medical check-up 2013 has been established and onprogressing to be finalised at end of year 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 Status Closed Estate Nov 2012 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 116 of 162

117 2 2.1 indicator major 1 There is no hand-over evidence that trained employee has received training certificate from the company after attending a course. ( refer to UU no.13 clause 18) AUDIT REPORT Organization has been given training certificate to worker which has been followed competence training, such as: Sprayer worker (Limited pesticide), Boiler Operator, Sterilizer operator, Electricity technician, Loader operator, Forklift operator, Overhead traveling crane, etc. Attendance list of hand over certificate was sighted and well documented General Department Nov 2012 Closed indicator major 1 There is no clear written agreement between company and apprentices (i.e. students from universities). The agreement shall covers statement rights and obligation between two parties including prohibition of working in the company because there s no work accident insurance provided by the company if students are doing observation only in the company rather than working. (Refer to UU no.13 clause 22) Refer to UU No.13/2003, clause 22, contract agreement was only for an intern employee. While student from university was only conducted field work practice. However, contract agreement between company and student was still arranged. For example : General Department Nov 2012 Closed indicator major 1 Evaluation of compliance with permit of waste water disposal was conducted to permit issued in Actually there was permit of waste water disposal issued in Compliance with new permit of waste water disposal has been evaluated. ISO Secretariat Des 2012 Closed indicator major indicator minor 1 The management plan did not include the planning for the use of FFB from third party. In fact, FFB from third party was used as part of input for mill operation. Checking and monitoring of Estate operation 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 Working Instruction SOC-POM/IK/05 requires that screw check should be done 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 Result of checking and monitoring and its corrective action was available on Resume of Agricultural Department Visit (TN/LBBi/000/2013). Follow up action was consistently recorded in the Monthly Report and Minute of Management Review Meeting. Record result of screw check weekly according to determined work instruction QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 117 of 162 Management Representative Des 2012 Closed Estate Nov 2012 Closed Mill Closed

118 indicator minor indicator minor indicator minor indicator minor indicator minor indicator minor indicator major 1 once a week; unfortunately no records demonstrate this procedure has been done as required. Procedure SOC/PSM/6.03 point describes that preventive maintenance is done based on maintenance program of transportation and process installation equipment Program Pemeliharaan Alat Transportasi & Instalasi Pengolahan. However, in fact, this program did not implement properly. Preventive maintenance activities were included in daily maintenance planning issued by Technician II. Moreover, no evident that the form Work Order (SOC/Form/ ) was in use as required by the procedure point Leakage was observed on hot water pipe on digester line #3. Pressure gauge on screw press #2 was broken; while in IK SOC-POM/IK/05 point 8.10 is required that screw press pressure should be set to 50 bar, as well as the ampere. It was observed overflow on kernel dryer while the bin was almost empty. Some records (2012) of kernel moisture were found more than 7%. It indicated that the capacity of the drying (kernel) was not balance with the kernel flow from previous process. Accumulation of dust & debris was observed on footbridge over the kernel dryer 1. Riparian buffer zone is prohibited being sprayed with pesticide only manual control was conducted in the riparian buffer zone. Based on activity record, there was manual control activity in riparian buffer zone conducted by worker. However program of AUDIT REPORT Maintenance activities have been conducted according to Program Pemeliharaan Alat Transportasi & Instalasi Pengolahan. Work order has been used as required. Mill Oct 2012 Closed Pipe in digester #3 has been repaired. Mill Nov 2012 Closed Pressure gauge in screw press #2 was replaced with new one Kernel dryer was not overflowed any longer. Kernel flow was arranged to prevent the overflow and kernel moisture were not more than 7%. Dust and debris on footbridge over the kernel dryer 1 has been cleaned Manual control was conducted based on monthly riparian monitoring result. Manual control realization was recorded on activity record every month which showed block working location. During audit, filed observation was conducted on Block 60, 3 Mill Nov 2012 Closed Mill Nov 2012 Closed Mill Oct 2012 Closed Assistant Des 2012 Closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 118 of 162

119 indicator minor indicator minor indicator minor indicator minor indicator minor 1 manual control has not been made and record of realisation has not been proper to ensure that all riparian buffer zones are treated with manual control. IPM for rodent control has not been described in documented procedure. The control was only described in circular letter #Tan./Keb.KS/B1/155/2003. Picking of oryctes larva is programmed every four or six months. However the realisation was more than four or six months. There was no evidence that workers in Division 3 who perform IPM has been trained regarding IPM. Counting of monitoring of pesticide toxicity units was not correct. Toxicity unit of each pesticide was not counted. Although use of paraquat was reduced however there was no documented program to reduce paraquat. AUDIT REPORT Division and it was indicated and sighted only manual control conducted in the riparian buffer zone. The organization has established procedure of integrated rodent control Prosedur Pengendalian Hama Tikus Secara Terpadu (SOC/PSM/ ). Based on Monitoring of Oryctes Larva Handpicking 2013, the activity was conducted in six month intervals, which was on January to April and July to October. IPM Training has been performed on 30 January 2013, all IPM workers recorded on census and handpicking data have been trained. The calculation of pesticides toxicity unit has been done correctly e.g. {pesticide active ingredient (kg) / LD50 (mg/kg)} / Tonne FFB. Paraquat Reducing Program of Tanah Gambus, period 2013 has been established. Agriculture Department Agriculture Department Des 2012 Des 2012 Closed Closed Estate Des 2012 Closed Assistant Des 2012 Closed Assistant Des 2012 Closed indicator major 1 Found substandard conditions and acts e.g.: o Motor cycles utilized for transportation by workers were not completed with mirror and the drivers not wearing safety helmet. o Harvester and sprayer were not wearing safety glass as required by the PPE standard. o During rainy season like at the moment, the road was very slippery and creating hazard and risk for transportation (especially motorcycle) and reducing the productivity of FFB transportation QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 119 of 162 Improvement has been made and considered as closed. The improvement which observed are as following: o As observed, motorcycle has been installed with mirror and driver has been using helmet o The briefing regarding to road safety during raining season has been made. o Hoist chains were inspected and provided with tagging o Improvement of cable installation has made as observed Estate / Mill Des 2012 Closed

120 o o o o o o and increasing the maintenance cost for truck. Several hoist chains were utilized at the mill. There was no inspection and test and tagging system for this lifting device. Gas cylinders for welding were not stored properly, some horizontally placed. Some pressure gauge of pressure gauge of welding gas cylinder was damaged. Non proper of installation of cable was observed. Wheel belt of high pressure pump was not 20guarded. Safety latch of one boiler was damaged. Eyewash and emergency shower at mill and estate (Div 4) was not ready for use. AUDIT REPORT o Safety guard has been installed to high pressure pump o Safety latch to boiler has been replaced. o Eyewash and emergency shower has been improved and ready to use. Several issues such as PPE usage is still found during this audit and noted NCR indicator major indicator major indicator 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. The method to justify whether the contractor meet the experience and training requirement was not implemented, e.g. for land clearing activity conducted by PT. Suria Baru in February At least evidence that this contractor has experience or training required could not been verified during this audit. The list of species occurring in the HCV areas in Tanah Gambus plantation have not been updated, although new species have 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. Moreover, training realization for 2013 was not done and no justification. Training records for external in 2012 was sight As sample taken during audit, it was verified that selection for contractor has been made considering with experiences of contractor. Relevant documentations are sight such as company profile, experience documentations, contracts, monitoring of contractor works. Update list of species was conducted on August During audit, list of species in signboard of wildlife protection in 3 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 120 of 162 Document control Nov 2012 Open NCR Agriculture Department Des 2012 Closed Division Nov 2012 Closed

121 AUDIT REPORT major 2 been found. Division was verified and it was observed that the signboard has been refurbished appropriate with list of new species indicator minor 2 Record of used fertiliser sack was not completed with quantity of usage and disposal of used fertiliser sack. Record of fertilizer sack use and disposal has been completed with quantity of usage and disposal of used fertiliser sack. Division Nov 2012 Closed indicator major indicator major indicator minor indicator major indicator minor indicator minor indicator minor indicator Used oil filter has not been disposed since January Permit of temporary storage of hazardous waste mentioned that hazardous waste is required being stored within 90 days. Sand trap in several areas was full with sludge, e.g. at back of workshop, heavy equipment cleaning area and CPO tank cleaning area. Water truck was not ready for used for handling of land fire; not placed at the intended location and the pump, hose and nozzle was missing. 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. Monitoring WWT operation was not used required form SOC/form/ therefore several activities were not monitored, e.g. checking of ph in the first pond, etc. During audit circle indicator of basculator was not operated. ph in the first and last pond was not checked as required by procedure. It was not clear who conduct monitoring of ph. The monitoring report of social impact action plan was not provided since the last Social Used oil filter was kept not more than 90 days and has been transported by the authorized institution. Sand trap at back of workshop, heavy equipment cleaning area and CPO tank cleaning area has been cleaned regularly. Water truck was placed at assigned location and equipped with pump, hose and nozzle. In the attachment of contract letter #619/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). Record monitoring of waste water pond condition has been according to SOC/Form/ ph and temperature in the first pond has been monitored. Basculator has been repaired and during audit the basculator was operated. ph in the first and last pond has been monitored regularly by laboratory employee. Organization has been established environment and social impact analysis QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 121 of 162 ISO Secretariat Des 2012 Closed Mill Nov 2012 Closed Mill Nov 2102 Closed Agriculture Department Nov 2012 Closed Mill Nov 2012 Closed Mill Nov 2012 Closed Mill Nov 2012 Closed ISO Secretariat Des 2012 Closed

122 minor 1 Impact Assessment in Such monitoring was not also performed after replanting on division 3 areas in indicator minor 1 The frequency of social impact monitoring has not been clearly defined in a procedure of social impact assessment. AUDIT REPORT matrix for replanting activity on December Monitoring environment and social impact replanting activity has been conducted on 3 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. ISO Secretariat Des 2012 Closed indicator minor 1 According to current plantation map, there are some villages which are not registered yet in stakeholder list, such as: Bangun Sari, Taman Sari, Kampong Getek, Pulo Puli. Therefore the previous RSPO awareness and CSR program are not fully addressed to those villages. Auditee information, Taman Sari, Kampong Getek, PuloPuliis a part of Perkebunan Tanah Gambus. During group discussion with Village Head of Lima Puluh and Perkebunan Tanah Gambuson 11 September 2013, this information has been clarified. KTU/ Estate Oct 2012 Des 2012 Closed Taman Sari, Kampong Getek, PuloPuli has been represented by Perkebunan Tanah Gambus Village on list stakeholder. RSPO awareness has been conducted on 18 October CSR program has been done for Perkebunan Tanah Gambus Village, for example: Cleaning of PuloPuli Canal Block 31 up to Block 8 on 27 August 2013.Evidence of this implementation was sighted including: minutes of activity implementation which signed by Village Head Of Perkebunan Tanah Gambus indicator There was no progress report either rescheduled date of cleaning plan for Pulo Puli canal which is expected to be done in On 31 July 2013, Organization has been sending invitation letter to Head Village of Perkebunan Tanah Gambus for audience QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 122 of 162 Estate Des 2012 Closed

123 minor indicator major 1 May The canal cleaning was requested since august 2010 by villagers due to potential flood on Simpang Gambus canal as utilized by surrounding villagers. Although in practice there were some improvements, however most of them were not documented. AUDIT REPORT (Letter # TG/X/B1//719/13). Audience was conducted on 2 August 2013 and its result including : Cleaning of PuloPuli canal was manually conducted. It was started on 27 August 2013 from Bloc 31 up to Block 8. Spraying of canal banks could be conditionally conducting tomaintenance of canal Evidence of this implementation was sighted including: minutes of activity implementation which signed by Village Head Of Perkebunan Tanah Gambus. Improvement plan and realization has been recorded. ISO Secretariat Des 2012 Closed Mill Supply Chain Certification System None QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 123 of 162

124 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 Tanah RSPO20 App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill Std. and Clause No(s): RSPO Criterion 2.1 indicator major 1 NCR#: Category: Major Section 1- Details of non-conforming situation: Non-conforming situation: 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). Requirement: RSPO Criterion 2.1 indicator major 1 Objective evidence: Based on group discussion with local NGO (Pedang Keadilan, Mingguan Gebrak and Realitas) on 12 September 2013 and premium provision Hitmen-Centeng be at work 2 shift or 12 hours/day. There was no overtime calculation. Moreover, premium is low rather than security which work 3 shifts ( IDR < IDR). Due Date: 12 November 2013 Name Ria Gloria Organisation s Name Audit Team Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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 for Hitmen-Centeng did not consider legal aspect. Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Change work hour for Hitmen-Centeng from 2 shift to 3 shift. 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. Organisation Representative : Name: Hasan Bisri Date: 6 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

125 AUDIT REPORT Section 4- SAI Global Verification of Corrective Action for effectiveness Work hour of Hitmen-Centeng has been changed from 2 shifts to 3 shifts. Letter of work hour change was distributed to Hitmen-Centeng on 1 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 was inline with regulation Kepmenaker No.102 tahun 2004, article 8 to 11 and NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 11 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 125 of 162

126 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 Tanah RSPO20 Activity #: Client: App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill RSPO Criterion 2.1 Std. and Clause No(s): NCR#: Category: Major indicator major 2 Section 1- Details of non-conforming situation: Non-conforming situation: There was no evidence of efforts made to comply with changes in the regulations. Requirement: RSPO Criterion 2.1 indicator major 2 Objective evidence: Update and compliance review against change of law and regulation is conducted six monthly (Procedure SOC/PSM/4.05). In 2012 organization has reviewed and update regulation in October. Based on procedure, it should be conducted in April or May 2013, however it was observed that the last regulation updating was conducted in August Due Date:12 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Lack of implementation of evaluation of compliance with legal and other requirements procedure. Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Update every six months as required period. For 2 nd semester 2013, period of evaluation was July December 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): Define period of updating: 1 st semester in January for period July December previous year and 2 nd semester in July for period January June. Organisation Representative : Name: Hasan Bisri Date: 6 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 126 of 162

127 AUDIT REPORT Procedure SOC/PSM/4.05 was revised to amend period of evaluation of compliance on 15 October Compliance with regulation is evaluated every six months. Period I in January and period II in July Next evaluation of compliance is conducted in January 2014 for performance of period July December NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 11 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 127 of 162

128 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 Tanah RSPO20 App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill Std. and Clause No(s): RSPO Criterion 2.1 indicator minor 1 NCR#: Category: Minor Section 1- Details of non-conforming situation: Non-conforming situation: It was found inconsistence against implementation of procedure SOC/PSM/4.05 about Identification and evaluation environment, occupational, health and safety regulation Requirement: RSPO Criterion 2.1 indicator minor 1 Objective evidence: Law and regulation list on form SOC/FORM/ was not updated. Last up date was conducted on 2010 Due Date: Next surveillance Name Ria Gloria Organisation s Name Audit Team Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Mechanism to update regulation mentioned in procedure SOC/ PSM/ 4.05 was difficult being implemented by related personnel Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Update law and regulation per December 2013 Revise procedure SOC/ PSM/ 4.05 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): Update law and regulation annually at the end of the year 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 128 of 162

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. Activity #: Client: PT. Socfin Indonesia Tanah RSPO20 App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill Std. and Clause No(s): RSPO Criterion 4.3 indicator minor 2 NCR#: Category: Minor Section 1- Details of non-conforming situation: Non-conforming situation: Practice to minimize negative impact of erosion has been done to riparian, such as planting Beneficial Plant species e.g. Cassia cobanensis and terracing to slope area. However there has been no quantitative measurement taken to monitor whether the action effective to prevent erosion or not. Requirement: RSPO Criterion 4.3 indicator minor 2 Objective evidence: Monitoring of erosion in Pluit-2 River was limited to visual monitoring. There has been no measurement of erosion at terrace area. Due Date: Next surveillance Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Method of erosion monitoring has not been defined Method of erosion in terrace area has not been defined Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Develop manual to monitor and measure erosion Monitor erosion quantitatively Monitor erosion in terrace area 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): Monitor erosion periodically Organisation Representative : Name: Ria Gloria 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 162

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. PT. Socfin Indonesia Tanah RSPO20 Activity #: Client: App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill RSPO Criterion 4.4 Std. and Clause No(s): NCR#: Category: Minor indicator minor 1 Section 1- Details of non-conforming situation: Non-conforming situation: Although system to maintain water source has been implemented 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 with slurry from clay bath station and boiler ash spill. Quality of water from open drainage has not been measured. Due Date: Next surveillance Name Ria Gloria Organisation s Name Audit Team Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Slurry trap was not well functioned therefore slurry drained to open drainage Boiler ash has been cleaned and not located properly therefore spilled to open drainage Cleaning of slurry in clay bath pit was no conducted periodically Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Improve slurry trap of clay bath and adjusted with capacity of slurry drained during process Clean clay bath slurry periodically and put slurry in the determined area Put boiler ash in the determined area Completion date: 28 February 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): Inspect condition open drainage surrounding Mill through EHS patrol when the above condition reoccur, it can be followed up immediately 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 130 of 162

131 AUDIT REPORT Section 5- SAI Global NCR Closure: Name: Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 131 of 162

132 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 Tanah RSPO20 App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill Std. and Clause No(s): RSPO Criterion 4.7 indicator major 1 NCR#: Category: Major Section 1- Details of non-conforming situation: Non-conforming situation: There are limited control observed in order to ensure prevention of hazard and risk has been consistently implemented. Requirement: RSPO Criterion 4.7 indicator major 1 Objective evidence: Required/proper PPE was not used by operators during performed job (e.g. safety glass during harvesting, proper mask during spraying, PPE at fertiliser storage, earplug at press area, apron for welder at maintenance area, workshop transport). No standard cover for axe used by harvester (currently using gunny sack) Provision of MSDS at point of use (e.g. fertiliser storage and poison room) Control of work tools is limited as broken hammer available at transport maintenance. Maximum pressure sign was not always available at manometer of steriliser. The rotary machine (fan belt) at boiler area was found unguarded. Electric plug condition was found improper and used for grinder tool. Operator who perform job on roof was not using proper PPE to prevent from fall. Laboratory staff is conducting daily test in waste water pond. Observation has been made and found that no proper PPE or safety fence to prevent from falling. Moreover, no warning sign available at area (e.g. sink hazard) as part of operational control defined. The inspection of lifting equipment (hoist crane) was not including load test 125%. Monitoring for work temperature and illumination was not yet made. Due Date: 12 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Lack of employee awareness in using of PPE and using safe equipment. Standard of axe cover has been defined but not implemented. MSDS has not been provided in fertiliser storage and agrochemical room. Maximum pressure sign at manometer of steriliser has been available but broken. Guard of rotary machine was available but not installed. Electricity inspection was not periodically conducted. PPE for laboratory employee who conducting daily test in waste water pond has not been provided. Warning sign has been provided but broken. Local Disnaker did not have equipment and personnel to conduct load test. Area of temperature and illumination monitoring has not been defined. Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 132 of 162

133 AUDIT REPORT Use PPE for operators during performing job (e.g. safety glass during harvesting, proper mask during spraying, PPE at fertiliser storage, earplug at press area, apron for welder at maintenance area, workshop transport). Provide axe cover. Provide MSDS in fertiliser storage and agrochemical room. Replace broken hammer with new one. Provide minimum and maximum sign at manometer of steriliser. Guard rotary machine (fan belt) at boiler area. Repair electric plug for grinder tool. Communicate PPE use during working at high. Equip safety jacket for laboratory employee who conduct daily test at waste water pond. Conduct load test of hoist crane. Monitor and measure temperature and illumination at working area. 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. Order axe cover as needed. Provide folder for MSDS and inspect availability of MSDS Improve awareness of employee regarding using of safe equipment through briefing. Repair minimum and maximum sign at manometer of steriliser if broken. Inspect completeness of rotary machine guard through EHS patrol. Inspect electricity condition through EHS patrol. Provide PPE for laboratory employee who taking sample of waste water and repair warning sign. Conduct load test of hosting crane according to permit. Determine area of monitoring and measurement of temperature and illumination. 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: 6 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 Dissemination of PPE use was conducted on 24 September 2013 for press operator, 28 September 2013 for operator press and workshop/welder, 8 October 2013 for harvester, 7 October 2013 for spraying operator. Receipt note of new mask to spraying operator and fertiliser warehouse employee was sighted. EHS patrol has been conducted to PPE use. Axe cover was requested on 8 October 2013 and still is being purchased. Material Request #68/G/TN/MR/2013 from Estate to Purchasing was sighted. MSDS has been provided in fertiliser storage and agrochemical room Broken hammer at transport maintenance has been replaced by the new one. Dissemination of using safe equipment to employee was conducted on 24 September Maximum pressure sign has been available at manometer of steriliser #1, #2 and #3. The rotary machine (fan belt) at boiler area has been guarded. Electric plug condition has been repaired used for grinder tool. Completeness of rotary machine guard was checked regularly. Electricity condition was inspected through EHS patrol. Briefing was conducted on 1 October 2013 to maintenance staff regarding use of PPE during working at high. Laboratory staff conducting daily test at waste water pond has been equipped with safety fence to prevent from falling. Warning sign has been available at area (e.g. sink hazard). Briefing has been conducted on 11 October QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 133 of 162

134 AUDIT REPORT Lifting equipment (hoist crane) has been inspection with load test 125% internally. Test was conducted on 21 October Work temperature and illumination has been monitored on 10 October 2013 internally. These is measured annually with location at process and office NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 11 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 134 of 162

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. Activity #: Client: PT. Socfin Indonesia Tanah RSPO20 App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill Std. and Clause No(s): RSPO Criterion 4.7 indicator minor 3 NCR#: Category: Minor Section 1- Details of non-conforming situation: Non-conforming situation: Several hazards have not been identified. Requirement: RSPO Criterion 4.7 indicator minor 3 Objective evidence: Identification regarding to sprader (mechanical fertilising) was not made and registered into existing hazard identification. Same conditions were noted for daily tank cleaning and sampling at waste water ponds. Due Date: Next surveillance Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): The activity was not identified Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Identify and evaluate risk of mechanic fertilising (sprader) 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): Identify and evaluate risk of new or modification activity and new or modification equipment/machine 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 135 of 162

136 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 Tanah RSPO20 Activity #: Client: App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill RSPO Criterion 4.7 Std. and Clause No(s): NCR#: Category: Minor indicator minor 5 Section 1- Details of non-conforming situation: Non-conforming situation: Process to ensure updating and assignment emergency organisation is limited. Requirement: RSPO Criterion 4.7 indicator minor 5 Objective evidence: Updating of emergency team for Tanah Gambus was not made as several personnel has been rotated (last update May 2012) The emergency team member for POM personnel is limited only for fire fighting Due Date: Next surveillance Name Ria Gloria Organisation s Name Audit Team Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Emergency response team has not been updated since there was personnel rotation Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Update emergency response team (Mill) according to actual personnel Revise composition of emergency response team which consist of personnel from each working area, e.g. POM, FRF, PKOF, Workshop, Warehouse, etc. 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): Update emergency response team annually to ensure that current emergency response team is still working in the organisation and rotate responsibility of emergency response to each personnel 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 136 of 162

137 Section 5- SAI Global NCR Closure: Name: AUDIT REPORT Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 137 of 162

138 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 Tanah RSPO20 App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill Std. and Clause No(s): RSPO Criterion 4.7 indicator minor 6 NCR#: Category: Minor Section 1- Details of non-conforming situation: Non-conforming situation: Process of monitoring emergency equipment is limited as inconsistently found. Requirement: RSPO Criterion 4.7 indicator minor 6 Objective evidence: Consistency for provision first aid kit item (e.g. eye wash) was not made (e.g. harvesting and spraying) Testing has been made during audit for hydrant and mobile water tank and found that hose was damaged. Fire extinguisher at transport workshop is found over pressure. Due Date: Next surveillance Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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 personnel to check provision of fresh water for emergency condition periodically Checking of function and properness hydrant and mobile water tank was not conducted periodically Fire extinguisher was put in the area exposure by the sun directly Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Provide jerrycan or bottle contained fresh water for harvesting and spraying mandor Completion date: 31January 2014 Replace hydrant hose Completion date: 30 April 2014 Move fire extinguisher to area where not exposure by the sun but still taken by personnel when emergency condition occurred 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): Assistant ensure that each harvesting and spraying mandor carry out jerrycan contained fresh water to site for emergency condition. Fresh water is given to mandor during morning briefing Completion date: 31 December 2013 Check hydrant condition monthly Completion date: 31 January 2014 Check fire extinguisher condition monthly Completion date: 31 December 2013 Organisation Representative : Name: Hasan Bisri Date: 6 December 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 138 of 162

139 AUDIT REPORT 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 139 of 162

140 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 Tanah RSPO20 App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill Std. and Clause No(s): RSPO Criterion 4.7 indicator minor 7 NCR#: Category: Minor Section 1- Details of non-conforming situation: Non-conforming situation: First aid training has not been conducted. Requirement: RSPO Criterion 4.7 indicator minor 7 Objective evidence: First aid training was not conducted for POM as no first aider assigned Due Date: Next surveillance Name Ria Gloria Organisation s Name Audit Team Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Was not identified Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Train first aid to emergency response team Completion date: 31 March 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): Train all personnel according to training requirement in personnel qualification Completion date: 31 December 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 140 of 162

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 Tanah RSPO20 Activity #: Client: App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill RSPO Criterion 4.8 Std. and Clause No(s): NCR#: Category: Major 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 4.7 indicator minor 7 Objective evidence: 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 process: 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. Training realisation for 2013 was not done and no justification. Training records for external in 2012 was sight Due Date: 12 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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: 6 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 141 of 162

142 AUDIT REPORT Training required for all personnel has been identified and the training has been programmed in training program 2014, i.e. PPE use in January 2014, analysis of CPO quality and its derivatives in February 2014, visitor controlling in March 2014, fertilising in April 2014, CPO and PK process in May 2014, risk and hazard working in steriliser in June 2014, risk and hazard working with panel in July 2014, risk and hazard working in clay bath in August 2014, handling of hazardous material and waste in September 2014, road grader operation in October 2014, press filter operation in December NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 11 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 142 of 162

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. Activity #: Client: PT. Socfin Indonesia Tanah RSPO20 App/Cert: Gambus 007 Function/Area/Process: Mill and Estate Site: Batu Bara Std. and Clause No(s): RSPO Criterion 5.1 indicator major 2 NCR#: Category: Major Section 1- Details of non-conforming situation: Non-conforming situation: Environmental monitoring and measurement result has been reported to government institution. However the report has not been consistent. Requirement: RSPO Criterion 5.1 indicator major 2 Objective evidence: Measurement result of community well quality has not been included in the RKL RPL report as required by RKL RPL document. Due Date: 12 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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: 6 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 Result of community well quality and community health has been included in RKL RPL report. The report has been sent to BLH Kab. Batu Bara and Bapedalda Sumatera Utara. Receipt note was sighted. NCR closed QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 143 of 162

144 AUDIT REPORT Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 11 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 144 of 162

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. Activity #: Client: PT. Socfin Indonesia Tanah RSPO20 App/Cert: Gambus 007 Function/Area/Process: Mill and Estate Site: Batu Bara Std. and Clause No(s): RSPO Criterion 5.3 indicator major 2 NCR#: Category: Major Section 1- Details of non-conforming situation: Non-conforming situation: System to manage waste has been defined however several inconsistencies were found. Requirement: RSPO Criterion 5.3 indicator major 2 Objective evidence: Handling of contaminated rags was not clear Hazardous wastes were stored more than 90 days. The two last disposal was on 29 April 2013 and 10 September Copy #7 of hazardous waste manifest has not been provided for hazardous waste disposal in December Therefore the processor of hazardous wastes was not clear. Non organic wastes were found being burnt in area of waste final disposal in block #53. Due Date: 12 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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. Lack of monitoring of hazardous waste keeping period. Copy #7 of hazardous waste manifest has not been requested to the hazardous waste transporter (CV. Amindy Barokah). Lack of awareness of not burning waste. 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. Monitor keeping period of hazardous waste not more than 90 days. Request copy #7 December 2012 to transporter, CV Amindy Barokah. Set warning sign of prohibition of waste burning in TPA. Disseminate to all employee not to burn waste in TPA. 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 145 of 162

146 AUDIT REPORT Develop contract with hazardous waste transporter and collector. Monitor and record hazardous waste which has been kept within 80 days. Inform to Medan Office regarding hazardous waste which has been kept within 80 days therefore Medan Office has 10 days to contact transporter. Arrange transporter by Medan Office before 90 days. Monitor delivery of copy #7 manifest to transporter. Disseminate to all employee not to burning waste in TPA. Organisation Representative : Name: Hasan Bisri Date: 6 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 3 October 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 Monitor hazardous waste keeping period by stating consistently planning date of waste disposal. Based on balance report of hazardous waste, next transportation is conducted in December Due to mistaken from transporter, 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. Warning sign of prohibition of waste burning has been set in TPA. Dissemination not to burn waste was conducted on 2 October 2013 to employee, 4 October 2013 to community around Estate. NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 11 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 146 of 162

147 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 Tanah RSPO20 App/Cert: Gambus 007 Function/Area/Process: Mill and Estate Site: Batu Bara Std. and Clause No(s): RSPO Criterion 5.5 indicator minor 1 NCR#: Category: Major Section 1- Details of non-conforming situation: Non-conforming situation: Emergency tool was not ready for use. (Repetitive finding of certification audit) Requirement: RSPO Criterion 5.5 indicator minor 1 Objective evidence: The hose connection of water truck was not good as simulated during audit. Due Date: Next surveillance Name Ria Gloria Organisation s Name Audit Team Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Checking of properness of water tank was not conducted periodically Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Replace hose connection of water truck 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): Check water truck and its hose connection condition to ensure the readiness and properness monthly Completion date: 31 January 2014 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 Hose connection of water truck has been replaced with new one. Condition of water truck including hose, pump and nozzle is checked monthly. Record was sighted. NCR closed Section 5- SAI Global NCR Closure: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 147 of 162

148 AUDIT REPORT Name: Ria Gloria Date: 11 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 148 of 162

149 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 Tanah RSPO20 Activity #: Client: App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill RSPO Criterion 6.1 Std. and Clause No(s): NCR#: Category: Minor indicator minor 3 Section 1- Details of non-conforming situation: Non-conforming situation: 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. Requirement: RSPO Criterion 6.1 indicator minor 3 Objective evidence: There was no reporting social impact management and monitoring implementation in RKL-RPL report for Jan-Jun 2013 period Due Date: Next surveillance Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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 149 of 162

150 Section 5- SAI Global NCR Closure: Name: AUDIT REPORT Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 150 of 162

151 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 Tanah RSPO20 App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill Std. and Clause No(s): RSPO Criterion 6.2 indicator minor 2 NCR#: Category: Minor Section 1- Details of non-conforming situation: Non-conforming situation: Respond against community aspiration from Lima Puluh village so that there was organization effort against soil erosion of community garden as effect of organization activities was not recorded Requirement: RSPO Criterion 6.2 indicator minor 2 Objective evidence: Based on group discussion with Head of Lima Puluh and Perkebunan Gambus Village on 11 September 2013, group discussion with Local NGO on 12 September 2013 and clarification result against its issue with Head of Estate Asisten on 13 September 2013, there are aspiration from community of Lima Puluh Village so that there was organization effort to handle soil erosion of community Estate which adjacent with estate Blok 70, 3 division as effect of making isolation trench on Respond against its aspiration was not recorded. It was be remain an issue which should be responded and it would be check for next surveillance audit. Due Date: Nest surveillance Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Complaint was not conducted in written Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Respond complaint from community of Lima Puluh Village regarding oil erosion cause by making of isolation trench in 1990 in Block 70 Division III 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 the community to deliver complaint in written 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 151 of 162

152 AUDIT REPORT Section 5- SAI Global NCR Closure: Name: Date: QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 152 of 162

153 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 Tanah RSPO20 App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill Std. and Clause No(s): RSPO Criterion 6.3 indicator minor 1 NCR#: Category: Minor Section 1- Details of non-conforming situation: Non-conforming situation: Worker complaint and gripe handling record were not available. Requirement: RSPO Criterion 6.3 indicator minor 1 Objective evidence: Receipt 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. Due Date: Next surveillance Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Complaint handling was not properly documented 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 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): Record all complaint in the log book 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 153 of 162

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. PT. Socfin Indonesia Tanah RSPO20 Activity #: Client: App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill RSPO Criterion 6.5 Std. and Clause No(s): NCR#: Category: Major indicator minor 1 Section 1- Details of non-conforming situation: Non-conforming situation: It was found some worker housing condition has been damaged. (repetitive finding of certification audit) Requirement: RSPO Criterion 6.5 indicator minor 1 Objective evidence: Based on based on interview with worker family on 12 September 2013 (wife of Toni Manurung-fruit porters of 3 division), there was complaint against housing condition, including: old housing buildings was effected leaky roof, door of bathroom and bedroom has been damaged, shutters hinged has also been damaged. Moreover field observation in housing, found there was no bedroom and bathroom door of fruit porters - Krani buah house of division 3 and also roof of family room has been leaky. Result clarification with Head Assistant of Estate on 13 September, there was no maintenance program of housing buildings especially for estate worker. Due Date: 12 November 2013 Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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): Repairing of housing is still in progress and conducted gradually Correction with completion dates (what was the immediate fix? Submit objective evidence of correction): Repair housing based on program of repairing of housing in 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): Check housing condition through EHS patrol Repair housing based on annual program of repairing of housing 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 154 of 162

155 AUDIT REPORT Program to repair housing of employee has been developed. Repairing is planned from February to June Condition of housing is checked monthly through EHS patrol. Checklist of housing inspection was sighted. NCR closed Section 5- SAI Global NCR Closure: Name: Ria Gloria Date: 11 November 2013 QEF08sa.RSPO.01 / Issue Date: July SAI Global Indonesia Copyright 2009 Page 155 of 162

156 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 Tanah RSPO20 App/Cert: Gambus Mill and its supply base 007 Function/Area/Process: Mill and Estate Site: Tanah Gambus Mill Std. and Clause No(s): RSPO Criterion 6.5 indicator minor 2 NCR#: Category: Minor Section 1- Details of non-conforming situation: Non-conforming situation: It was found working agreement between organization with third party (contractor) was not required contractors abide to labor laws. Requirement: RSPO Criterion 6.5 indicator minor 2 Objective evidence: Working agreement between organization with Koperasi Serba Usaha Ollein to executed period maintenance work was not required Koperasi Serba Usaha Karyawan abide to labor laws. For example: Working agreement No TG/SPK/43//08/2013. Due Date: Next surveillance Audit Team Name Ria Gloria Organisation s Name Hasan Bisri acknowledgement of Leader Date: 13 September 2013 receipt of NCR Date: 13 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 Ollein 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): Include requirements to comply with labour law in working agreement between organisation and the other the third parties Completion date: 31 January 2014 Organisation Representative : Name: Date: 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 156 of 162