Roundtable on Sustainable Palm Oil - TÜV Rheinland...Roundtable on Sustainable Palm Oil Annual Surveillance Audit Report Report no.: ASA4_14012 4th Surveillance assessment against

Roundtable on Sustainable Palm Oil Annual Surveillance Audit Report

Report no.: ASA4_14012

4th Surveillance assessment against the RSPO Principles & Criteria Indonesia National Interpreta-tion (INA-NI) Year 2008 & 3rd Surveillance of RSPO SCCS Nov 2011 and 2nd Surveillance

Main assessment Scheme Smallholder Indonesia National Interpretation (INA-NI) Year 2009

Name of client

Wilmar International Limited PT Kencana Sawit Indonesia Plantation and Mill

Location of client’s holding

Jorong Sei Kunyit, Sangir Balai Janggo Sub-District, Solok Selatan District, West Sumatera

Indonesia

Date of assessment: February 22 to 26th, 2015

Report prepared by: Aswan Hasibuan

(RSPO Lead Auditor)

Certification decision by: Abdul Qohar

(Director of PT TUV Rheinland Indonesia)

Certification Body: TUV Rheinland Indonesia, PT

Menara Karya 10th Floor Jl H.R. Rasuna Said Block X-5 Kav. 1-2

Jakarta 12950 – Indonesia Telp +62 21 579 44 579 Fax +62 21 579 44 579

Www.tuv.com

TABLE OF CONTENTS ................................. .............................................................. 2

1.0 SCOPE OF ANNUAL SURVEILLANCE AUDIT............. ........................................ 3

1.1 National Interpretation Used ........................................................................................................ 3 1.2 Type of Assessment ..................................................................................................................... 3 1.3 Certification Details ...................................................................................................................... 3 1.4 Location and Maps ....................................................................................................................... 3 1.5 Organizational Information / Contact Person ............................................................................... 6 1.6 Description of Supply Base .......................................................................................................... 6 1.7 Actual production volumes, tonnages and projected outputs. ..................................................... 7 1.8 Dates of Plantings and Replanting Cycles ................................................................................... 7 1.9 Area of Plantation (Total, Planted and Mature) ........................................................................... 8 1.10 Progress Against Time Bound Plan ........................................................................................... 9 1.11 Compliance to Rules for Partial Certification ........................................................................... 11 1.12 Progress of associated smallholders or out growers towards RSPO compliance .................. 12 1.13 Approximate Tonnages Certified ............................................................................................. 12

2.0 ASSESSMENT PROCESS .................................................................................. 13

2.1 Certification Body ....................................................................................................................... 13 2.2 Qualifications of Lead Assessor and Assessment Team .......................................................... 13 2.3 Assessment Methodology & Agenda ......................................................................................... 13

3.0 ASSESSMENT FINDINGS ................................................................................... 15

3.1 Summary of Findings ................................................................................................................. 15 3.2 Status of Previously Identified Non-conformities ....................................................................... 32 3.3 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions for RSPO requirement ....................................................................................................................................... 37 3.6 Noteworthy Positive Components .......................................................................................... 40 3.7 Issues Raised by Stakeholders and Findings Pertaining to Issues........................................... 40

4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INT ERNAL

RESPONSIBILITY .................................... ........................................................... 41

4.1 Date of Next Visit ........................................................................................................................ 41 4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client .......................... 41

APPENDICES ..................................................................................................... 42

Appendix 1: List of Abbreviations ..................................................................................................... 42 Appendix 2: List of Stakeholders Interviewed and Contacted ......................................................... 43 Appendix 3: Observations and Opportunities for Improvement ....................................................... 43

RSPO Annual Surveillance Audit Report

Kencana Sawit Indonesia – West Sumatera

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1.0 SCOPE OF ANNUAL SURVEILLANCE AUDIT

1.1 National Interpretation Used

The operations of the palm oil mill(s) and its supply base of FFB were assessed against the Indonesia Na-tional Interpretation (INA-NI) year 2008 of the RSPO Principles & Criteria, RSPO SCCS November 2011 and the Indonesia National Interpretation (INA-NI) year 2009 of the scheme smallholder principle & criteria.

1.2 Type of Assessment

The annual surveillance assessment was carried out on PT Kencana Sawit Indonesia Mill and 3 estates under PT Kencana Sawit Indonesia owned by Wilmar International Tbk, including smallhoderschemeunder PT Kencana Sawit Indonesia i.e. Swamata Cooperative Scheme smallholder consist of Sei Kunyit estate, Sei Kulai Talao estate and Sei Keruh Talao estate. The date of certification of this unit was April 21, 2011 valid until April 20, 2016.

1.3 Certification Details The details of RSPO certification of PT Kencana Sawit Indonesia are as per the table below Table 1: RSPO Certification details of PT Kencana Sawi t Indonesia

1.4 Location and Maps

Table 2: GPS locations for all estates and mills in cluded in annual surveillance assessment (in-clude smallholder estate)

RSPO Membership no.: 2-0017-05-000-00.

RSPO Certificate no.: 824 502 14012

Date of first RSPO certificate & validity: 2011-04-21 until 2016-04-20

Date of certification audit: 2010-11-21 to 2010-11-25

Date of previous surveillance audit: 2014-03-25 to 2014-03-28

Date of revised RSPO certificate & va-lidity (if applicable):

2015-08-12

CPO tonnages claimed: 38,658 tonnes

PK tonnages claimed: 9,829 tonnes

Name of mill / es-tate

Location GPS locations

Latitude Longitude PT KSI Mill Sei Kunyit, Sangir Balai Janggo

sub-district, Solok Selatan Dis-trict, West Sumatera, Indonesia

01° 27’ 32” 101° 32’ 31”

KSI Estate, Division 1 Sei Kunyit, Sangir Balai Janggo sub-district, Solok Selatan Dis-trict, West Sumatera, Indonesia

01° 26’ 20.32” 101° 32’ 24.54”

KSI Estate, Division 2 01° 29’ 27.5” 101° 27’ 06.6”

KSI Estate, Division 3 01° 29’ 23.86” 101° 31’42.23”

Cooperation Swamata Sei Kunyit, Sangir Balai Janggo sub-district, Solok Selatan Dis-trict, West Sumatera, Indonesia

01° 26’ 20.32” 101° 32’ 24.54”



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Figure 1a: Location map of PT Kencana Sawit within t he West Sumatra Province, Indonesia

Figure 1b: Map of PT Kencana Sawit Indonesia Estate



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Figure 1c: Map of Sei Kunyit estate - Swamata Coopera tive Figure 1d: Map of Sei Kulai Talao estate and Sei Keru h Talao estate - Swamata Cooperative



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Figure 1d: Map of Sei Keruh Talao estate - Swamata Co operative

1.5 Organizational Information / Contact Person

Contacts details of the company are as follows:

1.6 Description of Supply Base

Table 3: FFB Receipt in PT Kencana Sawit Indonesia Mil l year 2014 & year 2015 (Jan 2015)

FFB Contributors FFB supplied

Tonnes 2014 % Tonnes 2015

%

Company owned estates :

KSI 1 54,937.99 31.28% 5,428.83 34.00%

KSI 2 59,156.67 33.69% 5,247.10 32.86%

KSI 3 50,275.553 28.63% 4,302.25 26.94%

Sub Total 164,370.22 93.60% 14,978.18 93.80%

Smallholders / outgrowers :

Company Name: PT Kencana Sawit Indonesia

Address: Sei Kunyit, Sangir Balai Janggo sub-district, Solok Selatan district,

West Sumatra, Indonesia.

Contact Person: Andi Anwar Aripin

Telephone: +62-81278204888

Email: [email protected]



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FFB Contributors FFB supplied

Tonnes 2014 % Tonnes 2015

%

Sei Kunyit 4,874.98 2.77% 852.30 2.85%

Talao 5,650.93 2.86% 793.41 2.81%

Sub Total 10,525.91 5.63% 1,645.71 5.66%

Outgrowers 1,097.80 0.77% 198.17 0.54%

TOTAL 195,905.37 100.00% 27,504.32 100.00%

Note: *) Year 2014

**) Year 2015

1.7 Actual production volumes, tonnages and project ed outputs.

Table 4: Certified tonnages claimed, certified tonna ges purchased or sold, total and projected CPO and PK production from PT Kencana Sawit Indonesia

Note: *) Budget of CPO & PK production for year 2015

**) Projected FFB processed in year 2015 is 188,668.326 tonnes (KSI 1 is 59,214..096 tonnes, KSI 2 is 64,597.196 tonnes, KSI 3 is 55,625.363 tonnes and smallholders are 9,231.671 tonnes.

1.8 Dates of Plantings and Replanting Cycles

The company follows a replanting cycle of 25 years. Information on the dates of plantings is as per the ta-ble below. Replanting program begin in year 2020 for year 1994 planted area in KSI II (39.10 Ha) and KSI III (744.97 Ha).

Table 5: Age and year of plantings of company estat es supplying to PT KSI mill year 2015

Age & Year of Plant-ings

Oil palm planted area at each estate (Ha)

KSI 1 KSI 2 KSI 3

0 – 5 yrs. (2010 – 2015) 0.00 0.00 0.00

5-10 yrs. (2004 – 2009) 70.00 0.00 100.00

Amount (MT)

CPO PK

Certified tonnages claimed 38,658 9,829

Certified tonnages sold year 2014 0.00 0.00

Certified tonnages purchased year 2014 0.00 0.00

Actual Certified Production year 2014 35,509.723 9,082.973

Actual Total Production year 2014 39,612.07 10,128.31

Conversion Factor (%) year 2014 OER : 20.22 KER : 5.17

Projected total output for year 2015 38,904 9,892

Projected Conversion Factor (%) *) OER : 20.49 KER : 5.21



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KSI 1 KSI 2 KSI 3

10-15 yrs. (1999 – 2003) 884.97 912.56 525.92

15-20 yrs. (1994 – 1998) 1,577.02 1,941.01 1,716.94

20-25 yrs. (1989 – 1993) 0.00 0.00 0.00

TOTAL 2,531.99 2,853.57 2,342.86

The Swamata Cooperative follows a replanting cycle of 25 years. Information on the dates of plantings is as per the table below.

Table 6: Age and year of plantings of smallholder e states supplying to PT KSI mill year 2015



Sei Kunyit Talao

0 – 5 yrs. (2010 – 2015) 0.00 0.00

5-10 yrs. (2004 – 2009) 93.62 78.00

10-15 yrs. (1999 – 2003) 206.38 272.00

15-20 yrs. (1994 – 1998) 0.00 0.00

20-25 yrs. (1989 – 1993) 0.00 0.00

TOTAL 300.00 350.00

1.9 Area of Plantation (Total, Planted and Mature)

Table 7: Oil Palm Planted Area Summary, FFB Product ion and Average yield/ha for PT KSI estate year 2014

Estate Name Total area (Ha)

Oil Palm Planted area

(Ha)

Mature (Production)

area (Ha)

Immature (Non-

production) Area (Ha)

FFB Production (tones)

Average yield/ Ha

KSI 1 3,450.61 2,531.99 2,531.99 0.00 54,937.99 21.69

KSI 2 3,320.99 2,853.57 2,853.57 0.00 59,156.67 20.73

KSI 3 3,444.50 2,342.86 2,342.86 0.00 50,275.553 21.45

TOTAL 10,216.00 7,728.42 7,728.42 0.00 164,370.22 21.34

Table 8: Oil Palm Planted Area Summary, FFB Product ion and Average yield/ha for Smallholder estate year 2014

Estate Name Total area (Ha)

Oil Palm Planted area

(Ha)

Mature (Production)

area (Ha)

Immature (Non-

production) Area (Ha)

FFB Production (tones)

Average yield/ Ha

Sei Kunyit 380.88 300.00 300.00 - 4,867.47 16.22 Talao 423.02 350.00 350.00 - 5,018.22 14.34

TOTAL 803.90 650.00 650.00 - 9,885.69 16.19



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Table 9: Land use data for PT KSI estate year 2015

Estate Name Total ar-ea (Ha)

Oil Palm

Planted Area (Ha)

HCV/

Potential HCV

areas* (Ha)

Land used for other purposes (ha)

Local

Govern-ment office

Nursery Cleared

Area Other Land

KSI Division 1 3,446.92 2531.99 800.92 - - - 114.0 KSI Division 2 3263.32 2853.57 321.17 - - - 88.6 KSI Division 3 3,505.76 2342.86 1,107.50 - - - 55.4

TOTAL 10,216.00 7,728.82 2,229.59 257.99

Table 10: Land use data for Smallholder estate year 2015

Estate Name Total ar-ea (Ha)

Oil Palm

Planted Area (Ha)

HCV/

Potential HCV

areas (Ha)

Land used for other purposes (ha)

Local

Govern-ment office

Nursery Cleared

Area Other Land

Sei Kunyit 380.88 300.00 7.06 - - - 73.82 Talao 423.02 350.00 4.70 - - - 68.32

TOTAL 803.90 650.00 11.76 142.14

1.10 Progress Against Time Bound Plan There are some changes of Wilmar Plantation time bound plan due to some reasons as determined on the explanation below. Table 11: Time Bound Plan of the Other Management Uni ts

Name of Holding Location

Time bound

plan for certifi-cation (year)

Remarks

Sapi (1 + 2)

Sandakan, Sabah 2008 Certified

Sabahmas

Lahad Datu, Sabah 2008 Certified

Reka Halus


Saremas (1 + 2)

Miri Serawak 2008 Certified

Kaminsky


Suai


Segarmas


Terusan (1 + 2)


Kiabau




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Time bound


Remarks

Ribubonus


PT Perkebunan Milano (Sungai Daun, Batang Saponggol & Merbau estate)

North Sumatra 2009 Certified

PT Mustika Sembuluh Central Kalimantan 2009 Certified

PT Kencana Sawit Indonesia West Sumatra. 2010 Certified

PT Kerry Sawit Indonesia Central Kalimantan 2010 Certified

PT Tania Selatan (Burnai Barat & Burnai Timur estate)

South Sumatra 2010 Certified

Hibumas Sandakan, Sabah 2010 Certified

Sri Kamusan Sandakan, Sabah 2010 Certified

Sekar Imej Sandakan, Sabah 2010 Certified

Aktif Kukuh & Koerasi Sandakan, Sabah 2010 Certified

PT AMP Plantation West Sumatra 2011 Certified

PT Primatama Muliajaya West Sumatra 2011 Certified

PT Agro Nusa Investama (Sambas) West Kalimantan 2012 Certified

PT Buluh Cawang Plantations (in-clude Bambu Kuning estate (PT Tania Selatan))

South Sumatra 2012 Certified

PT Bumi Sawit Kencana Central Kalimantan 2012 Certified

PT Sarana Titian Permata Central Kalimantan 2012 Certified

PT Gersindo Minang Plantations West Sumatra 2013 Certified

PT Daya Labuhan Indah (Cabang Dua Estate)

North Sumatra 2013 Certified

PT Permata Hijau Pasaman West Sumatra 2013 Certified

PT Perkebunan Milano North Sumatra 2013 Certified

BBPOP (Benso Plantation) Ghana 2014 Certified

PT Citra Riau Sarana Riau 2014 has been sold

PT Mentaya Sawit Mas Central Kalimantan 2014 Main audit

PT Sinarsiak Dianpermai Riau 2015 Planned

PT Pratama Prosentindo West Kalimantan 2016 Rescheduled

PT Putra Indotropical West Kalimantan 2016 Rescheduled

PT Agronusa Investama (Landak) West Kalimantan 2016 Rescheduled

PT Agronusa Investama (Pahauman) West Kalimantan 2016 Rescheduled



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Time bound


Remarks

PT Murini Sam Sam Riau 2015 Planned

PT Daya Landak Plantation West Kalimantan 2014 Planned

PT Indoresins Putra Mandiri West Kalimantan 2014 Planned

PT Agro Palindo Sakti South Sumatra 2015 Main Assessment done

PT Agro Palindo Sakti West Kalimantan 2014 Planned

PT Buluh Cawang Plantation West Kalimantan 2014 Planned

PT Musi Banyuasin Indah South Sumatra 2016 Rescheduled

PT Karunia Kencana Permaisejati Central Kalimantan 2015 Planned

PT Rimba Harapan Sakti Central Kalimantan 2015 Planned

1.11 Compliance to Rules for Partial Certification

Compliance of the uncertified management units of Wilmar International Indonesia against the rules for par-tial certification according to RSPO Certification System clause 4.2.4 was assessed by reviewed Wilmar Plantation self assessment reports that submitted to TUV Rheinland Indonesia office. A summary of find-ings is as stated below.

Partial Certification Requirements Audit Findings

(a) The parent organization or one of its ma-jority owned and / or managed subsidiaries is a member of RSPO.

Wilmar International Indonesia is RSPO member with membership number 2-0017-05-000-00.

(b-d) A challenging time-bound plan for certi-fying all its relevant entities is submitted to the Certification Body (CB) during the first certification audit. The time-bound plan should contain a list of subsidiaries, estates and mills.

Any revision to the time-bound plan or to the circumstances of the company shall cause the plan to be reviewed. For whether it is still appropriate, such that changes to the time-bound plan are permitted only where the or-ganisation can demonstrate that they are justified

See table above, some changes on company’s time bound plan due to several reason explained above.

(e) No replacement of primary forest or any area identified as containing High Conserva-tion Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3. Any new plantings since Janu-ary 1st 2010 must comply with the RSPO New Plantings Procedure

Based on results of self assessment from auditee that no replacement of primary forest or HCV area and there are not New Plantings activities for es-tates which have not conducted audit by third par-tied

(f) Land conflicts, if any, are being resolved through a mutually agreed process, e.g.

Based on results of self-assessment from auditee and evidences submitted to the certification



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RSPO Grievance procedure or Dispute Set-tlement Facility, in accordance with RSPO criteria 6.4, 7.5 and 7.6.

body (for estates which has not been certified above) year 2014 that no land conflict which have been raised.

(g) Labour disputes, if any, are being re-solved through a mutually agreed process, in accordance with RSPO criterion 6.3.

Based on results of self-assessment from auditee and evidences submitted to the certification body (for estates which has not been certified above) year 2014 that no labour disputes which have been raised.

(h) Legal non-compliance, if any, are being resolved in accordance with the legal re-quirements, with reference to RSPO criteria 2.1 and 2.2.

Some of Wilmar’s other management units have not complied with certain legal requirements, for example in Sarana Titian Permai, Kerry Sawit In-donesia estate under another Wilmar International management unit, there is an issue with the land area stated in the land use right certificate (HGU). However, the company is taking action by inviting the National Land Agency (BPN) to remeasure the land and resolve the issue. The process is still on-going.

1.12 Progress of associated smallholders or out gro wers towards RSPO compliance

The company has 2 smallholders groups supplying FFB to PT Kencana Sawit Mill i.e. KKPA (Koperasi Kredit Primer Anggota- Prime Cooperative Credit for Member) Sei Talao and KKPA Sei Kunyit, both small-holders group has been fulfil RSPO requirement and certified by TUV Rheinland Indonesia also in June 2014 PT Kencana Sawit Palm Oil mill also receive FFB from independent out growers, they have signed a con-tract with PT Kencana Sawit Indonesia mill, and are committed to supplying only legal and responsible FFB to PT Kencana Sawit Indonesia Mill.

1.13 Approximate Tonnages Certified The approximate tonnages certified are as follows : Crude Palm Oil (CPO): 38,658 tonnes Palm Kernel (PK): 9,829 tonnes



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2.0 ASSESSMENT PROCESS

2.1 Certification Body PT TUV Rheinland Indonesia is a member of Group TÜV Rheinland Group, a global leader in independent testing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 490 locations in 62 countries on all five continents. TUV Rheinland Indonesia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, SA 8000, ISCC as well as CDM Validations and Verifications. TUV Rheinland Indonesia’s office is located in Jakarta Indonesiab.

2.2 Qualifications of Lead Assessor and Assessment Team The assessment team members of this surveillance audit that were part of the same assessment team for the previous audit are as follows: 1) Aswan Hasibuan 2) Harso Yuli Antena New assessment team members that were not part of the previous assessment team are as per the table below:

Name Position Qualifications / Experience

Dhewi Akbari Auditor

Education: Bachelor of Agriculture, Department of Socio and Economic of Agriculture, Sriwijaya University (1992). Trainings attended: Lead Auditor QMS 9001:2008 Course (IRCA) (2009), Lead Auditor OHSAS 18001:2007 ( 2007), Internal Auditor QMS 14001:2004 Course (2009), Lead Audittor Course ISPO (Indonesian Sustainable Palm Oil ) , at Bogor May 21- 26 2012 Working experience: Consultant , Trainer and Auditor of : - Quality Management System (ISO 9001), - Environment Management System (ISO 14001), - Safety Management System (SMK3/ OHSAS 18001)

- ISPO (Indonesian Sustainable Palm Oil) Consultant , Trainer and Auditor of Quality Management System. SMK3/OHSAS 18001, Environmental Management System ( ISO 14001) PT Surveyor Indonesia Pekanbaru

Wahyu Auditor

Education :Master Degree of Management of Manufacturing Engineering, Facultyof Engineering, University of Pancasila Trainings attended - Calculation of Green House Gas at Palm Oil Plantation, Komisi ISPO - ISPO Lead Auditor Course, Komisi ISPO - ISO 9001:2008, Premysis - Verified Legal Compliance & Reduced Impact Logging Auditor Training,

by Tropical Forest Foundation Working experience : - ISO 14001:2004, IRCA Approved Course No. A 13993 2010 – May 2014, PT Mutu Hijau Indonesia, Jakarta as Technical Manager Oct – Dec 2009, Sentral Sistem Consulting, Jakarta, as Management Con-sultant

2.3 Assessment Methodology & Agenda

The surveillance assessment was conducted between February 22nd to 26th, 2015 as per the assessment program below. The assessment was carried out in accordance with TUV Rheinland Indonesia’s RSPO audit procedure as well as the RSPO Certification Systems document. During assessment, the qualified



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TUV Rheinland assessors used the RSPO standard as endorsed for the country in which the assessment took place and recorded their findings.

Due to the location and proximity of the estates, combined with common management systems, it was possible to carry out both field and document assessments of all estates and the mill within the time frame without compromising the integrity of the assessment in anyway.

All 3 estates, smallholder area and 1 mill were visited and the surveillance audit team carried out field and document assessments of compliance to all the RSPO principles and criteria. Common systems were identified and specific evidence was recorded for individual estates. Interviews were conducted at all es-tates and the mill.

The company proposed the correction and corrective action for all identified non-conformities raised to the certification body 30 days after the closing meeting. Verification of closure of major non-conformances was conducted 2 months after the closing meeting of the main assessment and implementation of corrective actions for minor non-conformities will be verified during the next surveillance audit. The certification as-sessment agenda is as explained below. 4th Surveillance Audit Agenda.

Date Location/ Main sites Main activities February 22nd, 2015

KSI Traveling from Jakarta to Padang to KSI site

February 23rd, 2015

Opening Meeting KSI office and Small-holder office

Documentation check by WHY regarding Environment, Economic and Legal Issues, covering: Compliance of regulation, Legal Land, Riparian zones. Train-ing, HCV, Zero burning, New Planting, Continual improve-ment Documentation check by HYA regarding Social issues, covering: Compliance of regulation , Conflict , Labour or employee, New Planting, Continual improvement Documentation check by AH regarding Environment and OHS issues , covering: Legal aspect, OSH, Environmental management & monitoring Continual improvement Documentation check by DWA regarding Transparancy, Best Practice and Waste Management issues , coverin g: Transparancy, Field operations/Best Practice, Environmental impact, Waste, New planting, Continual improvement

February 24rd, 2015

KSI Estates covering KSI-1, KSI-2 and KSI-3

Field Visit by WHY regarding Environment, Economic and Legal Issues, covering: Compliance of regulation, Legal Land, Riparian zones. Train-ing, HCV, Zero burning, New Planting, Continual improve-ment Field (stake holder) Visit by HYA regarding Social issues, covering: Compliance of regulation , Conflict , Labour or employee, New Planting, Continual improvement Field Visit by AH regarding Environment and OHS is-sues , covering: Legal aspect, OSH, Environmental management & monitoring Continual improvement Field Visit by DWA regarding Transparancy, Best Pract ice and Waste Management issues , covering: Transparancy, Field operations/Best Practice, Environmental impact, Waste, New planting, Continual improvement



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3.0 ASSESSMENT FINDINGS

3.1 Summary of Findings The following is a summary of findings during this surveillance audit for the criteria listed in the RSPO Principles & Criteria Indonesian National Interpretation year 2008.

Principle 1: Commitment to transparency

Criteria assessed: CR1.1, CR1.2

February 25th, 2015

KSI Smallholder (Co-operative Swamata and Talao) Estates

Field Visit by WHY regarding Environment, Economic and Legal Issues, covering: Compliance of regulation, Legal Land, Riparian zones. Train-ing, HCV, Zero burning, New Planting, Continual improve-ment Field (stake holder) Visit by HYA regarding Social issues, covering: Compliance of regulation , Conflict , Labour or employee, New Planting, Continual improvement Field Visit by AH regarding Environment and OHS is-sues , covering: Legal aspect, OSH, Environmental management & monitoring Continual improvement Field Visit by DWA regarding Transparancy, Best Pract ice and Waste Management issues , covering: Transparancy, Field operations/Best Practice, Environmental impact, Waste, New planting, Continual improvement

February 26th, 2015

KSI Mill

Documentation check and implementation by WHY re-garding Environment Management plan and Training, covering: Compliance of regulation, Management Plan, Legal Land,. Training, and Continual improvement Documentation and Implementation check regarding SCCS, OSH & Pollution/Emission Issues, covering: Agrochemical, energy Efficiency, Hazardous Waste Issues, Continual improvement, CPO Processing and Mass Balance. Documentation check and stakeholder interview by HYA regarding Social issues, covering: Compliance of regulation , Conflict , Labour or employee, New Planting, Continual improvement Documentation check by DWA regarding Transparancy, Best Practice and Waste Management issues , coverin g: Transparancy, Field operations/Best Practice, Environmental impact, Waste handling , land application Continual im-provement, etc

Main Office All auditor - Auditor discussion - Closing Meeting Preparation - Closing Meeting

February 27th, 2015

Travelling from estate to Padang Proceed to Jakarta



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Criteria not assessed: Findings: KSI Mill and estate show their commitment to transparency, they still implement RSPO P&C Consistently. The procedure SOP-Mill-005 rev.0 issued from October 2010 still implemented as the guide of Information sharing with stakeholder. Each request/ receiving information, complaints, suggestions and criticism aimed at the Mill or Estate will be noted by the document control section into the logbook. Document con-trol will forward the information to the Mill Manager / Estate Manager for later follow-up. Copies of all re-quest and replies are kept properly. Records of information requests based on the Log Book Inbox in 2014 there were 61 letters, most of which include: invitations, Application support (funds, transportation and tuition practical work), Application for Industrial Field Experience Student PT UNP, No. 1058 / UN35.1.7.8 / PP / 2014 from the State University of Padang received on December 22, 2014, response let-ter from PT KSI dated December 27, 2014 letter number: 040 / BM-MSG / XII / 2014

There is publicly available documents at Swamata Cooperative office inline with applicable regulation as follow: • Legal: Evidence of legal ownership of the land or land-use rights;(certificate). Ownership evidence of the out grower area is map of the land officially issued by National Land Agency of Solok Regency on April 30th, 1999 no 070/1079/BPN-1999 as 721,6 Ha and no 070/1079/BPN-1999 and on 16/07/2002 no. 11/2002. Another publicly available documents at Swamata Office are: • Environmental: SEIA document (AMDAL), available at the smallholder’s organization. There is docu-ment report of identification of dangerous and risk, environment and safety & health aspects. • Social: smallholder’s organization has documents of organizational and social activities.

There is publicly available documents at PT KSI office inline with applicable regulation as follow: Environmental: SEIA document (AMDAL), Company Annual Reports, Company Policy, HGU permits and other relevant permits. Monthly reports mill production, The area of plantation and mill operations, The organizational structure of the company, Social activities of the community relations report and Occupa-tional health and safety program Based on Procedure Information for Stakeholders No. KSI-PRO-BNM-003 Rev 01 on September 25th 2012, The company to respond constructively and promptly to requests for information from stakeholders and other concerned parties after 7 days of information received As stated on the SOP about records control no doc: KSI-PRO-BNM-03, issued June 15, 2010 in KSI es-tates, the retention time for records keeping is at least for 3 years for administrative documents, where re-quests for information and the responses made are included, except financial and accounting records for which the retention time is 10 years. In KSI mill there is another procedure for records control i.e. PROMill-008 dated January 1, 2010, in the procedure stated that all incoming and outgoing records will be maintain for 4 years except finance records which shall be maintained for 10 years and personnel records are to be retained for 7 years. The general manager will destroy records maintained beyond the stated retention time upon approval. Notes on destroyed records are maintained Compliance status: Full compliance

Principle 2: Compliance with applicable laws and reg ulations



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Criteria assessed: CR2.1, CR2.2, Criteria not assessed: CR2.3 Findings: During this 4th surveillance audit it found that the company still to keep on the track in order to comply with RSPO P&C. There is evidence of effort to comply with legal requirements. The following licenses for the company were checked and found to be valid: 1) License of temporary storage of hazardous wastes at the PT KSI estate central warehouse no. 660/62/KLH/III-Tahun 2012 issued by the Regent of Solok Selatan dated 2 March 2012 (valid for 5 years) and permits storage for no more than 180 days for following types of hazardous wastes: used oil containers, oil filters, diesel containers, used batteries, used air filters, contaminated rags and gloves, fluorescent lamps and chemical containers. This is new license for storage at the Central Warehouse. To date, there has been no storage of hazardous wastes at the warehouse yet as the license is new, previously all was still sent to the mill. 2) Extension of License for Disposal of Palm Oil Mill Effluent PT. KSI to Jujuan River, dated 29 Decem-ber 2010 and valid for 5 years, license no. 660/177/KLH/XII.2010. Standard limits as follows: pH: 6-9; BOG 100 mg/l, COD 350 mg/l, suspended solids 250 mg/l, oil and grease 25 mg/l, total nitrogen 50 mg/l. The organization has established documented procedure for Identification of Compliance and Evaluation of Applicable Laws and Regulations (KSI-PRO-BNM-01) dated 15 September 2010. In order to evaluate their compliance to the applicable laws and regulation, the organization has divided into 4 (four) fields, they are Estate Field, Environmental Field, OHS Field and Human Resource Filed. During year of 2014 – February 2015, the organization has revised their Law Register especially for estate and environmental fields as below: a. Law Register - Environmental Field

1. Revision dated, April 21, 2014, a. Insert PermenLH Nomor 08 Tahun 2013 regarding Tata Laksana Penilaian dan Pemeriksaan

Dokumen Lingkungan Hidup Serta Penerbitan Izin Lingkungan b. Insert PermenLH Nomor 14 Tahun 2014 regarding Symbol and Label of Hazardous Waste c. Withdrawal Decree Head of Environment Number Kep-05/Bapedal/09/1995 regarding Symbol

and Label of Hazardous Waste, due to is no longer valid. 2. Revision dated, August 21, 2014

a. Insert Minister Regulation ESDM Number 14 year 2012, regarding Energy Management b. Insert Minister Regulation Environment Number. 5 year 2011 regarding Program Evaluation

Company Performance (Proper) in Environment Management 3. Revision dated, January 7, 2015

a. Insert Law Number 101 year 2014, regarding Hazardous Waste Management

b. Law Register – Estate Field 1. Revision dated, April 17, 2014,

a. Insert Permen Negara Agraria/Kepala BPN Nomor 03 Tahun 1997 tentang Ketentuan Pelaksanaan PP Nomor 24 Tahun 1997 tentang Pendaftaran Tanah

b. Insert Permen ESDM Nomor 14 Tahun 2012, tentang Manajemen Energi 2. Revision dated, August 22, 2014,

a. Insert Permentan Nomor 14/Permentan/OT.140/2/2013, tentang Pedoman Penetapan Har-ga Pembelian TBS-KS Produksi Pekebun

b. Withdrawal Permentan Nomor 395/Kpts/OT.140/11/2005, tentang Pedoman Penetapan Harga Pembelian TBS

c. Insert PP Nomor 38 Tahun 2011 Tentang Sungai d. Withdrawal PP Nomor 35 Tahun 1991 Tentang Sungai e. Withdrawal PP No. 61 Tahun 2012 tentang Perubahan Atas PP Nomor 24 Tahun 2010 ten-

tang Kawasan Hutan f. Insert Peraturan Kepala BPN Nomor 2 Tahun 2011 tentang Pedoman Pertimbangan Teknis

Dalam Penerbitan Izin Lokasi, Penetapan Lokasi, dan Izin Perubahan Penggunaan Tanah g. Remove Permen ESDM Nomor 14 Tahun 2012 tengtang Manajemen Energi into Law Reg-



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ister of Environmental field. 3. Revision dated, December 01, 2014

a. Insert UU Nomor 39 Tahun 2014 yang menggantikan UU Nomor 19 Tahun 2004 tentang Perkebunan yang tidak beraku lagi.

b. Insert UU Nomor 19 Tahun 2004 tentang Penetapan PP Pengganti UU Nomor 1 Tahun 2004 tentang Perubahan Atas UU No. 41 Tahun 1999 tentang Kehutanan

c. Insert PP No 44 Tahun 1995 tentang Pembenihan Tanaman d. Insert Peraturan Kepala BPN Nomor 3 Tahun 2011 tentang Pengelolaan Pengkajian dan

Penanganan Kasus Pertanahan e. Insert UU Nomor 25 tahun 1992 tentang Perkoperasin f. Insert UU No 13 tahun 2006 tentang tentang Perlindungan Saksi Korban

4. Revision dated, February 14, 2015 a. Insert UU Nomor 17 Tahun 2012 tentang Perkoperasian

The estates still temporarily store hazardous wastes at the central warehouse but these are regularly sent to the mill store for hazardous wastes, which is licensed to store these, e.g. there are records of types of wastes amounts sent to the mill for 15 February 2012, 11 January 2012 and 22 November 2011. The company has also recently received a license permitting temporary storage of hazardous wastes at the central warehouse, dated 2 March 2012 and valid for 5 years. The company carries out identification of all applicable legal requirements in accordance with their Pro-cedure for Identification of Compliance and Evaluation of Applicable Laws and Regulations (KSI-PRO-BNM-01) dated 15 September 2010. Legal requirements registers for all requirements pertaining to agri-culture businesses, environment, occupational safety and human resources are documented and up-dated and evaluated on August 1st, 2013, there is no new registered law or regulation during this period. This should be added into the legal requirements register. An evaluation of compliance to all legal re-quirements was carried out on December 01st, 2014 and the last evaluation was conducted in January 10th, 2015.

There was no change on company’s land title during this 2nd annual surveillance audit. The company has the land use right for a total land area of 10,216.1 hectares based on their HGU (Land Use Right) certifi-cate no. 4/HGU/BPN/1997 valid for 35 years commencing on 22 January 1997. Base on a decision letter from the National Land Agency (BPN) head dated January 22, 1997, no 4/HGU/BPN/97, HGU decree letter includes 2 measurement books (buku ukur)/, which are maps showing the areas within the company’s land which legally belong to other parties. In this case, measurement book no. 1 covers an area of 7222.5 ha belonging to the community of Sei Kunyit Village, while measurement book no. 02 covers an area of 2993.6 ha belonging to the community of Talao Village, both of which are located within PT KSI’s HGU ar-ea in Sangir Sub-District, Solok Selatan District, West Sumatera.

PT KSI maintained the boundary stones through yearly monitoring program, such cleaning, painting and routine inspection where period year 2014, Maintenance of boundary stones implementers are estates workers. Replacement of broken stones is planned done every 5 years. Land Occupancy on Field 207 Base on record evidence “Monthly report of HCV Finding, September 2014, checked by Assistant Gen-eral manager, in September 22th 2014”, HCV team has checked area 207 and reported that the location of occupancies has abandoned by the occupant. Checking on field during audit found that the plant still maintain by the occupants. They still conduct maintenance and harvesting activities in occupied land. This finding raise as an observation, KSI has no specific frequent routine HCV monitoring conducted to this area. Some trees also found fells near the planted area and some coffee seeds found not far from there. KSI HCV officer state that they only know this situation. The last fields check at this area (in September 2014) found different situation with present. All evidences found in field shows that there were some oc-cupant efforts to widening his planting area. This findings lead to indicative conclusion that the occu-pant has violated their agreement with PT KSI. Company’s compliances to Labor Regulations: In this 4th surveillance, PT KSI shows their commitment to comply all Labor Regulations in Plantation Man-agement but found inconsistencies in Mill area. Overtime records showed that there are some workers



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who have working overtime over 3 hours per day and 14 hours per week. According to regulations, there are no legal consequences for this finding as long as the company supplied additional meal to the worker and the worker done the overtime in voluntary manner. Because of that, in this 4th surveillance this finding is raised as observation. Due to the evidences found regarding the overtime hours (some found to high), KSI should evaluate their human resource management, especially if there is a need to any additional operator in order to reduce the overtime hours. Company should make a working risk evaluation for some operators than make a rank in order of the highest risk. Then, management should determine the kind of work (high risk one) that can’t be conducting in a long overtime hours. There is law regiter for applicable law and regulation for smallholder plantation including safety and health, environment and labor. There is also report of annual health assessment for sprayers and verti-lizer worker. Growers can demonstrate the right to use land. Legal land ownerships of smallholders are in form of land maps dated 30 April 1999 number 070/1079/BPN-1999 with land area of 721,6 Ha and number /1079/BPN-1999 dated16/07/2002 number 11/2002 which are saved in notary since the agreement be-tween Koperasi Swamata and PT Tidar Sungkai Sawit (TSS-the former name of KSI) was made regard-ing the development of oil palm plantation. During this period, there were no objections or complaints from the stakeholders on smallholder, as well as on the cooperation of head company with the smallholders. The land use for oil palm does not diminish the legal and customary rights of other user. The land, which is used for Plasma Sungai Kunyit, was approved by agreement with the local community. There are letters of agreement with: 1. Ninik Mamak (Board of traditional leader) Sei Kunyit including Ninik Mamak Sei Betung 2. Public figure Kenagarian Sei Kunyit and Lubuk Betung 3. Youth leaders Kenagarian Sei Kunyit and Lubuk Betung 4. Sungai kunyit village government 5. All villagers of Sei Kunyit On September 28, 1999 with PT Tidar Sungkai Sawit (the former name of PT KSI). The 1. PT TSS agreed to develop plantation for Sei Kunyit community for land area of 300 Ha outside the

core plantation with KKPA, where the local community prepared the land; and the palm planting was started in 16 months after this agreement was made.

2. Plasma with land area of 300 ha in Sei Kunyit had been replaced by growing plant pertaining De-cree of Solok Head Regency and would be charged to Plasma participants as credit load.

3. With the agreement from Ninik Mamak Sei Kunyit and Lubuk Betung, community in Lubuk Betung will receive Rp 44.000.000 from PT TSS as compensation of 100 Ha, where Rp 22.000.000 was paid in cash and Rp 22.000.000 was allocated for economic improvement for community in Lubuk Betung which would be actualized on October 19, 1999 in Lubuk Betung

4. PT TSS would give Sirih Pinang (symbolic traditional respectiveness) to the present Ninik Mamak to make an agreement of Rp 20.000.000 at the Regent office, which would be realized on October 15, 1999.

There was a letter of statement from Ninik Mamak Lubuk Betung. i.e. Nagari which is bordered with Nagari Sei Kunyit, on October 29, 1999 confirmed that ninik mamak Lubuk Betung would approve the agreement which had been made by Ninik Mamak Sei Kunyit and PT TSS. There was a letter of seal dated 15 Octo-ber 1999 as a proof of funds of Rp 44.000.000 by ninik mamak lubuk betung. There was a record of transfer of Rp 350.000.000 in cheque (Bank Nagari) with serial number YY 892534 from PT KSI to Koperasi Swamata. The fund of the sales revenue would be used to compen-sate the land that had been given by the owner to Koperasi Swamata to build the palm oil plantation in Kenagarian. Talao Sei Kunyit under Prime Cooperative Credit for Member (KKPA- Kredit Koperasi Pri-mer kepada angotanya) scheme and land area of 350 Ha using “bapak angkat” system. There was a proof of transfer funds by koperasi Swamata to the landowner dated May 23, 2008. There was a land map of Plasma in Nagari Sei Kunyit region and in the Talao Sei Kunyit region. All parties still obey this agreement in respectfully.

Based on documents verification and fields observation during the 4th surveillance, there are sufficient evidence that the organization has taken effective correction and corrective action. The documents were reviewed as below: - Schedule of installation and maintenance of BPN Boundaries Stone year of 2014.



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1. Installation of BPN Boundaries Stone of March, April and May year of 2014 2. Maintenance of BPN Boundaries Stone, periodically every 3 months (March, June, September,

and December) - Schedule of Signboards Maintenance year of 2014. - Official report of installation Boundaries Stone of BPN, dated march 30, 2014.

a. Installation dated March 30 until May 04, 2014 b. Location: Fields 016, 017, 043, 051, 056, 060, 061, 065, 066, 067, 069, 094, 101, 105, 106,

121, 127, 150, 153, and 154 c. BPN Boundaries Stone No: 005, 006, 007, 008, 009, 013, 014, 015, 016, 017, 018, 050, 052,

053, 054, 071, 075, 079, 080, 081, 082, 083, 084, 085, 086, 087, 088 and 010 - Minutes of meeting maintenance Boundary (HGU), dated March 10th, 2014 – complete as:

a. BPN Boundaries Stone Number: 52 Boundaries (HGU) at totally. b. Additional Boundaries Stone: 30 Boundaries.

Based on fields visit, at Pal boundary HGU Number 080, 081,dan 088 exist and maintained.

There was no change on company’s land title during this 3rd annual surveillance audit. The company has the land use right for a total land area of 10,216.1 hectares based on their HGU (Land Use Right) certifi-cate no. 4/HGU/BPN/1997 valid for 35 years commencing on 22 January 1997. Base on a decision letter from the National Land Agency (BPN) head dated January 22, 1997, no 4/HGU/BPN/97, HGU decree let-ter includes 2 measurement books (buku ukur)/, which are maps showing the areas within the company’s land which legally belong to other parties. In this case, measurement book no. 1 covers an area of 7222.5 ha belonging to the community of Sei Kunyit Village, while measurement book no. 02 covers an area of 2993.6 ha. belonging to the community of Talao Village, both of which are located within PT KSI’s HGU area in Sangir Sub-District, Solok Selatan District, West Sumatera. Compliance status: Compliances with Observation

Principle 3: Commitment to long-term economic and fi nancial viability

Criteria assessed: CR3.1 Criteria not assessed: - Findings: The organization has developed and implemented management plan in order to achieve long-term eco-nomic and financial liability. The documentation were reviewed are: 1. Profit & Loss Simulation for the next 5 (five) years

The documents contain projection of cost of all activities, revenue and profit (before and after tax). And also there is projection of: a. % Cost than sales b. % Profit before tax c. % Profit after tax d. % Cost mature / ton Based on this simulation, financially, the organization has good projection.

2. Cash flow Simulation for the next 5 (five) year (2015 – 2019) This document was demonstrate forecast/simuation of cash flow for the next five year. The infor-mation can get from this documents is the Net Cash (after tax) increase from year to years. - 2015: 134,129 M; - 2016: 140,751 M; - 2017: 141,623 M; - 2018: 142,296 M; - 2019: 141,794 M; In year of 2019 showed a decrease, this is due to the increase in COGS (cost of goods sold)

3. Schedule 2. Areal Statement



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The data of (2015 – 2019) show: - Year of planting for 1994 – 2006: 7.699,91 ha � Mature Oil Palm - Immature Oil Palm: 0 ha - Total Plantable Oil Palm: 7.699,91 ha - Unplanted area:

a. POM = 17,40 ha b. Road, housing, HCV and Riparian: 2.498,79 ha

- Total area: 10.216,10 ha 4. Schedule 4. FFB Processed

The data show: projection crop of Own Estate and Plasma (Swamata) from 2015 – 2019 as folow: 2015 (197.900 ton), 2016 (197.904 ton), 2017 (199.354), 2018 (199,478 ton) dan 2019 (199,971 ton) � total 2015-2019: 994,607 ha

5. Schedule 5. FFB Cost of Production Consist of expenditure of Maintenance, collection, harvesting, manuring, general and admin, amorti-zation mature area, and depreciation cost. The data of grand total cost of expenditure are: 2015 (16.333), 2016 (17.168), 2017 (18.302), 2018 (18.928) and 2019 (19.733)

6. Schedule 5.B. Milling Cost (Mill Expenditure) The information consist of : variable cost, fixed cost, total milling cost (include depreciation) and total cost (exclude depreciation)

7. Schedule 7. Capital Expenditure The document berisi informasi Account Heading Mill, yang terdiri dari : Palnt and Machinery, Building Housing Amenities, Agriculture & taransport vehicle equipment, office equipment, Water instalation, Eletricity installation, Workshop equipment, and Domestic equipment

- Account heading Estate terdiri dari : land & building, machineries, equipment, furniture, 8. Summary Cost General & Administration 2015 – 2019

Including cost for EHS, Social dan RSPO 9. Action plan of Program of RSPO/CSR PT KSI – 2015

Including action plan of quality, environment, EHS, Social, Licencing and Management System of RSPO� The program has been approved by Asst Group Manager dated January 24, 2015

10. Action plan of Program of RSPO PT KSI – 2016 Including action plan of quality, environment, EHS, Social, Licencing and Management System of RSPO� The program has been approved by Asst Group Manager, dated January 24, 2016




14. Schedule 1: Financials Projection from 2011 – 2030 The document contain inforation such as: Total planted area: 7.728 ha; FFB Production, plan of re-planting (starting at year of 2020, for year of planting 1994)

15. Schedule 2: Areal Statement Kebun Inti from 2011-2030 - Planted area: Mature (7.728 ha) & Immature: 0 ha - Unplanted area - Total Area - Including planning of re-planting (starting at year of 2020 for year of planting 1994)

16. Schedule 3: Crop Inti and Plasma from 2011 – 2030 17. Schedule 4: FFB Pocessed from 2011 – 2030

Plasma Swamata Projection from 2015 - 2019 1. Schedule 1 Financials (Land clearing: 803,9 ha); Mature area: 650 ha (year of planting 2001-2004) 2. Schedule 2 Areal Statement (Mature: 650 ha; Immature: 0; Unplanted (not planted 37,77 ha and

Road – drainage – housing – other : 116,13 ha)� total 153,90 ha then Total area 803,90 ha 3. Projection of Report of Revenues and Expenditure of Plasma Talao and Sei Kunyit



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Compliance status: Full Compliance

Principle 4: Use of appropriate best practices by gr owers and millers

Criteria assessed: CR4.1, CR4.2, CR4.3, CR4.4, CR4.5, CR4.6, CR4. 7, CR4.8 Criteria not assessed: - Findings: The estates still maintains SOPs for all activities in estate (land clearing until harvesting) and mill (re-ceipt FFB until dispatch CPO & PK), including workshop, polyclinic, warehouse, information technolo-gy, nursery, land clearing without burning, planting, treatment, harvesting, usage of pesticides (circle and path spraying, selective and spot spraying), manuring, etc. During the year 2014 there were revision procedures include: Sorting Fruit of FFB .Document Number .KSI-PRO-EST-002 Revision 02 effective date: February 25, 2014, a history of document changes: Changes in quality assessment in POM of FFB: of FFB Receipts of Core / Group (raw fruit / 00 fractions, Half-ripe fruit / fraction 0, ripe fruit, fruit is too ripe, bunches Empty, rotten fruit, fruit stalk length, fruit wet, sandy fruit) its all accepted without decrease, selection of FFB harvest be tightened in place.

The cooperative has a list of SOPs for scheme smallholders in folder 'SOP Plasma GB-8401 F' all dated 11 April 2012. The SOPs cover all aspects of scheme management including land clearing, nursery, spraying, harvesting, manuring, IPM techniques and census, etc. The SOPs are not provided to scheme smallholders or the cooperative, as they are not directly involved in the plantation management. There is evidence of implemented procedures, for example the company prepares a program for spraying to be conducted once every 4 months in accordance with SOP, and maintain daily pest census records for IPM management. Records of operations both in real operations and mill operations, among others, embodied in the following documents: 1. Management of the reviews conducted on February 6, 2015 with discussion materials: Review the

results of operational activities of plantation and mill in 2015, results of the discussion: a. Communication with internal and external parties related: based on reports logbook incoming and

outgoing mail in 2014 that all incoming mail and outgoing mail already responded and resolved good by the Management.

b. Process performance and product conformity. Achievement of production in 2014 was still below budget by 12.99%. Caused by: his High rainfall from January to March 2014 so that the effect on harvest yields and evacuation, as well as the shortage of harvest workers who have an impact on harvest rotation is not achieved as much as three times per month.

2. Manager Report for the Estate include: Area Statment, Crop Production, Nursery, Actual vs. Projected Planting, Employee detail, Organitation chart, Comment on social / Security, Rainfall, Heavymechine and bluiding,

3. Manager Report to Mills include TBS and TBS Reception rejected; Sports capacity; Production and Extraction; and delivery of operational CPO.Rekaman agronomy, among others, include: (1) broad staple crops; (2) The record harvest TBS; (3) Use of chemicals; (4) recording and control pests; (5) land recording aplication: (6) the recording of fertilizer

The Company has established guidelines in the form of a document GAP "Agriculture Manual and Standard Operating Procedure for Oil Palm in 2011. These guidelines refer to and adopt the" Technical Guidelines Development Palm Estate "by the Ministry of Agriculture - Directorate General of Plantation, Jakarta, in December 2006. The Company has established SOPs to ensure the balance and the availability of soil nutrients so plants can grow and produce optimally maintain soil fertility. Procedures and SOPs include: 1. SOP Fertilization, KSI-SOP-EST-004 Rev. 04 dated 12 April 2012 2. Application SOP



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Empty Fruit Bunch, KSI-SOP-EST-012, Rev.00, dated 11 April 2012 PT KSI still use information from soil analysis report for PT KSI’s 3 estates i.e. ‘Soil Verification Study with Special Reference to oil Palm Estate West Sumatera, PBB Oil Palms Berhad, Agromac SDN.BHD, Febru-ary 2006’ as consideration for fertilizer recommendations to provide good fertilizer inputs for most soils. Leaf analysis results and foliar analysis report for sampled fields of PT KSI’s estate for year 2012 are also available, with results dated June 2012 by the Eco-Management Unit Central Kalimantan Project

The organization has conducted internal audit on October 15-22, 2014 appropriate with internal audit pro-cedure (KSI-PRO-GEN-003 Rev.02). Result of internal audit (KSI-FRM-GEN-036) is there are incosisten-cies in the implementation of procedures such as : There are still burning domestic waste in housing, not all workers in the fertilizing get briefed on RSPO, using of PPE by employee, there is still oil spills in work-shops. In order to maintain the quality and availability of surface water and ground water, the organization has been establish a documented procedure as follow:

1. Procedure number KSI-SOP-GEN-008, Pengelolaan Sempadan Sungai 2. Procedure number KSI-SOP-GEN-009, Pengelolaan Daerah Aliran Sungai

The purpose of procedures are for maintain and protection of riparian buffer zones of watercourses and wetlands, including socialization the importance of watercourses, maintaining and restoring appropriate ri-parian buffer zones, prohibition of agrochemical application activities nearby rivers or watercourses, and etc. The implementation of the procedures, which is observed by visiting related area such as riparian zones, housing complex, and etc. During field visit to division III (block 207), division I (block 43), Tengah Pulau housing complex, Tengah Pulau Hill, Jujuhan river, Salo housing complex at division III, and Ganeh hous-ing complex, the auditor was found installed Prohibition Signboard Plang at nearby rivers and watercours-es (small trench, embung, and etc.), applied Red Mark at oil palm as sign that the application of agro-chemical fertilizers and spraying are prohibited.

PT KSI still use information from soil analysis report for PT KSI’s 3 estates i.e. ‘Soil Verification Study with Special Reference to oil Palm Estate West Sumatera, PBB Oil Palms Berhad, Agromac SDN.BHD, Feb-ruary 2006’ as consideration for fertilizer recommendations to provide good fertilizer inputs for most soils. Leaf analysis results and foliar analysis report for sampled fields of PT KSI’s estate for year 2012 are also available, with results dated June 2012 by the Eco-Management Unit Central Kalimantan Project. During field visit to KKPA Sei Kunyit and based on interview with member of KKPA Sei Kunyit, there is sufficient evidence that the procedures has been well implemented. It was verified in site that the compa-ny have been consistently not to carry out spraying work near rivers (Jujuhan river, Ganeh river and Suir river). Supplying water to housing area is from water treatment facilities at each division. The water treatment fa-cility at Division 3 just has been operation. Water usage is monitored every day and recorded on a daily basis, with monthly and yearly summary records available. The data of water usage at POM for year 2014, as below:

a. Processing: 265.062 M3 b. Domestic: 221.449 M3 c. Claning: 39.743 M3 d. FFB Processes: 175.644,704 Ton

Based on the above data, the average of water consumption for year 2014 was 1.51 M3/ ton FFB.

PT KSI still use information from soil analysis report for PT KSI’s 3 estates i.e. ‘Soil Verification Study with Special Reference to oil Palm Estate West Sumatera, PBB Oil Palms Berhad, Agromac SDN.BHD, Feb-ruary 2006’ as consideration for fertilizer recommendations to provide good fertilizer inputs for most soils.



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Leaf analysis results and foliar analysis report for sampled fields of PT KSI’s estate for year 2012 are also available, with results dated June 2012 by the Eco-Management Unit Central Kalimantan Project. The workers in KKPA Sei Kunyit emplacement dispose all domestic waste into the riverbank. � Based on field visit to housing complex of KKPA Sei Kunyit at 24 February 2015: - Domestic waste bin has been available for organic, and an-organic and hazardous waste

Landfill for domestic waste has been available, where the location is quite far from the housing complex. The organic and non-organic waste disposed of separately.

Permit for Storage and usage of Agrochemical for Agrochemical of PT Kencana Sawit Indonesia based on Surat Keputusan Kepala Dinas Kehutanan dan perkebunana Kabupaten Solok Selatan Number; 525.1/14/Bun/III-2014 re : Storage and usage of Agrochemical for Agrochemical PT KSI di kabupaten So-lok Selatan, they used Agristik 400L, Starlon 665EC, Glisat 480 Sl, Lindomin 865 SL, Tiara 20 WG (methil metsulfuron 20%), BM Delta 28 FC

PT KSI estate has records of fertilizer application programme for year 2014 and actual fertilizer applica-tions for Urea, NPK, MOP, Kieserite, Dolomite, RP, and Borate. The fertilizer application programme was developed internally by Willmar’s Research & Development Department, based on the results of the leaf and soil analysis reports. Records of actual fertilizer applications shows that applications are carried out according to the recommended amounts. Recommendations of the use of fertilizers on year 2014 is Divi-sion I = NPK Super K (round I): 713.47 ton, Dolomite: 109.51 ton, Kieserite: 81.62 ton, Borate: 1.83 ton, urea: 276.53 ton, MOP: 413.13 ton, RP: 16.44 ton and NPK Super K (round II): 600.71 ton; Division II = NPK Super K (round I): 817.19 ton, Dolomite: 118.73 ton, Kieserite: 95.41 ton, Borate: 3.69 ton, urea: 316.08 ton, MOP: 472.85 ton, RP: 11.90 ton and NPK Super K (round II) : 833.46 ton; Division III = NPK Super K (round I) : 654.64 ton, Dolomite : 93.59 ton, Kieserite : 75.78 ton, Borate : 4.70 ton, urea : 256.57 ton, MOP : 371.44 ton, RP : 39.76 ton and NPK Super K (round II) : 652.24 ton. Generally usage of agro-chemical tend to decrease as recorded in “TREND PENGGUNAAN BAHAN AGROCHEMICAL, TAHUN 2014”, covering Trend Total of active ingredient and Glisat, Trend dosage of active ingredient, trend dos-age of Trap 20 WG, and total usage of Trap 20 Wp.

Agrochemical waste and containers properly disposed as procedure handling of Hazardous waste as were found in the field.

Company does not use any Paraquat neither chemicals categorised as World Health Organisation Type 1A or 1B, or listed by the Stockholm or Rotterdam Conventions.

Medical surveillance conducted in October 23rd, 2014 for 227 worker who work related to agrochemical, for cholinesterase, all workers were normal, for mill operator 23 workers found 6 have hearing disfunction which is follow up by specialist check. Doctor recommends improving controlling of PPE usage and better working time arrangement to reduce affection of noisy level to workers.

HIRAC as A documented risk assessment for Occupational Health and Safety (OHS) available and review every year at least, as reviewed in February 2014 by Asistant General Manager. There is no new activity or new process or new equipment in plantation process.

Training conducted and recorded such as OHS basic training, OHS briefing for all employees in every morning muster is a must, at April 15th, 2014 for Operator, Wheel Loader, fertilizer Operator and Spraying.

Emergency Preparedness Procedure (KSI-PRO-GEN-013), covering fire, Chemical Spillage, Levee dam-age, and Machine explosion. Company held training and drill for fire fighting at July 01st, 2013. Procedure Tim Penanggulangan Keadaan Darurat (TPKD) KSI-SOP-GEN-010, including plantation Fire.

Every Mandor (foreman) in plantation equipped by first Aid Kit in every activity, as verified in field of har-vesting and Spraying. In mill company has clinic inside the mill with trained paramedic, as well as first aid person in field those have trained also, as mandor Spraying, Harvesting mandor, Fertilizering Mandor and. Training for first aid conducted at April 15th, 2014.

Company maintain record of accident during 2014, every accident investigated by safety specialist and recorded and reported to general manager. Record of Accident recorded and reported to Government side three monthly, as observed at document of “Summary of Clinic Case Accident”.



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4.8 The auditor were reviewed some related documents of training and found that there is sufficient evi-dence that all staff, workers, smallholders and contractor appropriately trained. The documents were verified are: � Training Matrix of POM Internal Training, Document No.: FRM-EHS-006; Rev.01; the training has

been implemented namely: 1. First Aid Training was conducted on October 2014 2. Emergency Response Plan Training was conducted on November 2014 3. Hazardous Material Handling and Emergency Sign Training was conducted on November 2014 4. LOTO & Work Permit Training was conducted on March 2014 5. RSPO, SCCS, ISPO, and ISCC Training not implemented yet 6. Accident Investigation Training not implemented yet

� Report of POM Emergency Response Plan Simulation, at February 21, 2015. � Agronomist gives evaluation and Refreshment for First Aid Box Holders at October 29, 2014. The

evaluation has been attended by First Aid Box Holders. � Hazardous Materials and Hazardous Waste Training, has conducted at November 12, 2014. The

training contents are including: a. Legal basis of hazardous waste (LB3) and hazardous materials (B3), that are PP74 year of

2001; PP 85 Year of 1999 about revision of PP 18 Year of 1999; Permenlh No. 03 Year of 2008 and No. 05 Year of 1995)

b. Background c. Identification of LB3 and B3 d. Classification of LB3 and B3 e. Spillage Handling of LB3 and B3

Training of Hazardous Material Handling, has conducted at dated February 17, 2015 Training / Socialization Programme of Estate Year of 2014; Some of programme has been implemented, they are:

a. Best Practices / SOP Socialization has implemented on January, April and May 2014 b. First Aids Training has implemented on October 2014 c. EHS Training has implemented on January, March and April 2014 d. HCV Socialization has implemented on January, March and April 2014 e. RSPO, ISCC and ISPO Socialization has implemented on January and April 2014 f. Grading Training has implemented on January 2014 g. Sustainability Workshop has implemented on April 2014 h. Land Fired Simulation has implemented on September 2014

The supporting documents of the training and/or socialization are available such as: invitation letters, of-ficial reports, attendance lists, activity reports, minute of meetings, and other related documents. Training / Socialization Programme of Estate Year of 2015; The programme including Best Practic-es/SOP, First Aids, EHS, HCV, RSPO- ISCC and ISPO Socialization, Land Fire Simulation. There is no programme has implemented until the 4th surveillance audit conducted. � Training / Socialization Programme of Plasma Year of 2014; Some of programme has been imple-

mented, they are: a. Best Practices / SOP Socialization has implemented on March and April 2014 b. EHS Training has implemented on March and April 2014 c. HCV Socialization has implemented on March and April 2014 d. RSPO Socialization has implemented on March and April 2014 e. Land Fired Simulation has implemented on March 2014 The supporting documents of the training and/or socialization are available such as: official reports, attendance lists, activity reports, minute of meetings, and other related documents.

Compliance status: Full compliance



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Principle 5: Environmental responsibility and conse rvation of natural resources and biodiversity

Criteria assessed: CR5.1, CR5.2, CR5.3, CR5.4, CR5.5, CR5.6 Criteria not assessed: - Findings:

As found during the certification audit, the company has conducted an Assessment of Environmental & Social Impacts (AMDAL) according to Indonesian regulations. This includes the social and environmental impact assessment (ANDAL) document prepared under the previous name of the company, PT Tidar Sungkai Sawit, and it was approved by Ministry of Agri-culture Indonesia dated December 28, 1998 through latter no40/ANDAL/RKL-RPL/BA/XII/1998. The company is currently in progress to revise their ANDAL document, with the evidence in the form of letter no. 12/PKS-KSI/III/2012 dated 26 March 2012 from the company to the Environmental Department of West Sumatera requesting instruction from the de-partment on how to proceed with revision of the AMDAL document. The AMDAL also includes the monitoring and management plan (RKL/RPL) document dated August 1998 approved by the environmental department, which states three aspects required to be monitored which are water quality of Jujuhan River (where treated effluent is discharged to), level of disturbance to flora and fauna, and community dissatisfaction, particularly communities from Talao Village and Kunyit River village. The company has conducted an Assessment of Environmental & Social Impacts (AMDAL) according to Indonesian regulations as Aspek dan Dampak Lingkungan dan Resiko, last update in April 2013. This includes the social and environmental impact assessment (ANDAL) document prepared un-der the previous name of the company, PT Tidar Sungkai Sawit, and it was approved by Ministry of Agri-culture Indonesia dated December 28, 1998 through latter no40/ANDAL/RKL-RPL/BA/XII/1998. The AMDAL also includes the monitoring and management plan (RKL/RPL) document dated August 1998 approved by the environmental department, which states three aspects required to be monitored which are water quality of Jujuhan River (where treated effluent is discharged to), level of disturbance to flora and fauna, and community dissatisfaction, particularly communities from Talao Village and Kunyit River village. However there are no records of management and monitoring social impact for year 2014. The company prepares a report to the local environmental department once every 6 months in accord-ance with legal requirements, and the report sighted for Semester II of 2014 (July to December 2014) in-cludes a more detailed identification of all estate and mill environmental impacts as well as plans for management and monitoring of these impacts, including liquid, solid and hazardous wastes, air and water quality, noise, disturbance of flora and fauna, pests and diseases, potential for fire, reduction in income for local communities, hiring of workforce, community health, quality of soil and land. Monthly Results of the analysis of monthly discharge treated wastewater into the river from July to December 2014 and in-cluded in the report and pointed out where BOD and COD are still below the maximum threshold of 100ppm and 350ppm. The mill is currently also planning to carry out land application for mill effluent in-stead of discharging to the river. There is sufficient evidence that the organization maintain records of results of identification of any pro-tected, rare, threatened or endangered species, and HCV habitat. The records is contained in the doc-ument “Laporan Pemenuhan Management Plan High Conservation Value (HCV) Year of 2014”. In the palm oil plantation areal of PT KSI, there are areal of HCV Forest. The HCV Forest is located at Sungai Kunyit, Sub-district of Sangir Balai Janggo, South Solok District, and West Sumatera Province. To identify presence of key fauna at HCV areal, PT KSI has install “camera trap”, and fortunately the camera has successfully record a Harimau Sumatera (Phantera tigris sumatrae). This discovery is the first time to be caught by the camera in the area of HCV PT KSI. Beside the HCV Forest, there are also another HCV area that is riparian zone



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In order to preserve identified rare, threatened or endangered species, or high conservation value habi-tats are present, the organization has been taken appropriate measures that are by:

- Socialization identified HCV Areal to the all worker and communities around the plantation areal - Installed Sign Board at HCV Areal and other strategic location and maintain periodically - Installed Sign Board at Riparian Zone and Painting at Palm Oil Tree as sign that chemical and ferti-

lizer application at riparian zones are prohibited - Installed Camera Trap at HCV Forest to monitor presence of key fauna - Socialized protected fauna at PT KSI areal according to PP No. 7 Year 1999. - Performed patrol together with security and police in order to ensure there is no destruction of HCV

areal. - Etc.

The organization has formed a HCV Team and appointed personnel that dedicated and trained officers to monitor any plans and activities. In other hand, the organization has formed a partnership with Anda-las University and Yayasan Kalaweit to perform some activities associated with HCV. Identification of pollution sourcess as defined in The AMDAL also includes the monitoring and manage-ment plan (RKL/RPL) document dated August 1998 approved by the environmental department, which states three aspects required to be monitored which are water quality of Jujuhan River (where treated effluent is discharged to), level of disturbance to flora and fauna, and community dissatisfaction, particu-larly communities from Talao Village and Kunyit River village. The company has conducted an Assess-ment of Environmental & Social Impacts (AMDAL) according to Indonesian regulations as Aspek dan Dampak Lingkungan dan Resiko, Control of dispose effluent to Jujuhan River to parameter pH, COD, BOD, TSS, and Oil and Grease as licence and monitored every month, result for all parameter is Normal, for example test result July 15 th, 2014, pH=7,99, BOD= 27,12, COD= 145, TSS= 126, Oil and Grease =7,1 ppm, nitrogen total= 12,6. Study about usage waste in palm estate. Empty bunch utilize as organic fertilizer and, fibre and shell as renewable energy for boiler. Also boiler ah utilize as backfill and the Hazardous Waste submitted to li-cenced collector and end user, PT Shali Riau Lestari as manifest number 0001952 dated September 13th, 2014. Emission of Boiler, Power Generator set emission, Noisy level, monitored and reported to Environmental Agency Solok Selatan District Selatan on January 30 2015 for 2nd semester year 2014.

Monitoring of quality of pollution and emission sources identified is conducted regularly and reported to the local government every six months, in line with local regulations. These include air emission monitor-ing results, mill effluent analyis results and noise levels. Air emissions monitoring was last done on No-vember 5th 2014 and including noise level monitoring. All results were documented on RKL/RPL report for semester II, 2014

Monitoring of air emissions last conducted in November 2014 and included monitoring of noise levels. All results are documented analysis RKL / RPL for the first half and the second in 2014 consisted of:

Evaluation of the Liquid Waste Quality, the parameters COD, BOD, TSS and oil / fat when compared with the effluent standards for the palm oil industry in July - December 2014 was still below the waste water parameter threshold values

Evaluation of solid waste such as leftover oil palm fruit bunches, palm leaves that have died and domestic waste is managed by providing a TPS that have been separated according to the type of waste (organic, inorganic and B3)

Energy Efficiency calculated and monitored, for ; calculated and Effeciency Energy reach 69,05 %. Fossil energy calculation, renewable energy calculation compare with production, (FORM-MILL-012)



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5.4

Usage of fossil fuel recorded and analyzed. Energy usage compare to FFB processed and CPO produc-tion. Company has record of usage of renewable energy and it’s efficianecy analysis (energy/ton CPO, or atau energy/ton palm product) as recorded in Report of Fossil fuel usage compare to FFB production and ratio in Liter/ton FFB. During year of 2014 a significant increase of usage shown, since decrease of FFB production and also usage of fossil fuel increament from 913,534 liter in year 2013 become 972,178 liter in year 2014.

5.5 There is no evidence that the organization was use of fire for waste disposal. Based on field visit to nu-cleus estate areal and plasma (KKPA) Sei Kunyit, they are has made landfills to disposal domestic waste. There is separation between organic waste and non-organic waste. The locations of landfills are quite far from the housing complex.

There is no change of pollution sorce since the last identification as documented in AMDAL and Environ-ment aspect and Impact Document

Monitoring of quality of pollution and emission sources identified is conducted regularly and reported to the local government every six months, in line with local regulations. These include air emission monitor-ing results, mill effluent analyis results and noise levels. Air emissions monitoring was last done on No-vember 2014 and including noise level monitoring. All results were documented on RKL/RPL report for semester II, 2014 The company currently has no GHG emissions reduction programme. Records also shows that air emis-sions have been decreased through regular maintenance of boiler and generator sets. The smallholder scheme still has not undergone any replanting and next replanting cycle is not planned for another 12 years. The company implements a zero-burning policy but has not been implemented yet as there has been no replanting on the smallholder area The identification of pollution sources for smallholder activities is in line with the Aspek Dampak Ling-kungan; i.e.: Identification of pollution sources at smallholder inline with Environment Aspect Impact Identification as well as; Transportation, spraying, Manuring, Power Generator Operation, Domestic activity, usage of Fos-sil Fuel. Etc. Emission reduction plan covered in SOP Mitigasi Emisi Gas Rumah Kaca (PRO-MILL-005 Compliance status: Non Compliance

Principle 6: Responsible consideration of employees and of individuals and communities affect-ed by growers and mills

Criteria assessed: CR6.1, CR6.2, CR6.3, CR6.4, CR6.5, CR6.6, CR6.7 , CR6.8, CR6.9, CR6.10, CR6.11 Criteria not assessed: Findings: CR6.1. In this 4th surveillance audit found that the company has no relevant SIA management Plan. The man-agement plan available that time was SIA management plan 2010-2013 that has not been evaluated yet. In this 4th surveillance the company has evaluated the plan and develop new document known as SIA Management Plan 2014-2016. The Management Plan (MP) consist some objectives such as: a. FFB Supplies Sustainability, b. Conducive Social Environment c. Smallholder Welfare d. A high profit and healthy Cooperation e. Diversification of Cooperation’s business



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f. Cooperation Assistances g. Cooperation Legality and Procedures Documentation h. Business Plan development The SIA management plan has developed by considering stakeholder participations. Records of stake-holder participations during SIA MP development has showed during audit, such as minute of meeting of SIA MP document evaluation, minute of meeting of the SIA management plan development. The en-tire Minutes of meetings are completed with attendants list that shows the attended strategic stakehold-ers such as att. list on meeting in April 22th 2014. Community Development (CD) Program has been created as part of social impacts management Plan. According to this program, the company has records such as: a. CD/CSR plan 2014 b. CD/CSR report 2014 c. CD/CSR plan 2015 d. CD/CSR progress report 2015 CR6.2 Communications and Consultations examples During the consultation public with local governance found that KSI’s Bina Mitra and CD/CSR officer still conducting consultation with stakeholders. All obligated reports has submitted to all relevance stakehold-er. Discourse about new projects regarding waste management also has communicated and consulted to stakeholders. In social securement areas, KSI’s management has made a good relationship with local sector Police Office of Sangir Jujuhan regency. The relation has developed as coordination and communi-cation manner. CR6.3 KSI still using the existing open system for dealing with communication and consultation with the communi-ties as defined in an SOP KSI-PRO-BNM-05 issued on 1 June 2010 still applicable. Grievances and com-plaints from both, internal and external stakeholder recorded using logbook. KSI also provide suggestion box if there are any reports from stakeholder who don’t want to be known (anonymous). CR6.4 Regarding land use and compensation, the conditions during 4th surveillance still the same with the last surveillance. There is no new land use as plantation or any other Company’s operations. CR6.5 Payment The company maintains documentation of employees’ pay and wages paid are in compliance with the min-imum wages defined in both local and national government regulation. On the standard minimum wage, the company complies with the regional minimum wage as per the decree from the Governor of West Su-matera province (No. 562-802-2014 regarding Minimum Wage payment 2015). This regulation states that the minimum wage payment for West Sumatra 2015 is IDR 1.615.000,00 per month. In order to complying with this regulation, the head of the Human Resources Department of Wilmar International Plantation is-sued a letter (Internal Memo No. 003/WIP-HRD/Int-I/2015) which states that minimum wages for daily workers at PT Kencana Sawit Indonesia adapting the governor regulation (IDR 1.615.000 per month or IDR 64.600 per day). During this surveillance, audit evidences has shown to proof the consistency of company’s policy regarding minimum payments, such as:

a. Pay Slip of Harvester, Maintenance Daily Rate Permanent worker of each division, b. Pay Slip of Harvester, Maintenance Daily Rate un-Permanent worker of each division, c. Pay Slip of lowest level worker of Mill, d. Overtime recapitulation of each sample worker.

During stakeholder consultation found that some stakeholders still confusing on how minimum wage pay-ment requirements apply on piece rate workers. An officer of Labor and Transmigration Office of Solok Selatan has been interviewed to clarify this issue. He said that there is a fair formulation in applying mini-mum wage payments requirements to daily piece rate worker. The average productivity of all piece rate workers in the company calculated and the result determined as the basic daily piece rate for all workers.



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In order to comply with minimum payment regulation, KSI has their own piece rate formulation and has re-mark as company’s policies. The piece rate has always sensitive and adapted to the change of local min-imum wage payment regulation. Working agreement and Working contract status PT KSI’s labor union has developed new Collective Working Agreement (PKB) 2015. This Agreement is the result of a long series of Labor Union meeting with KSI’s Management since November 2014 to Janu-ary 2015. The meeting known as LKS Bipartite meetings that attended by labor Union Representative Members and KSI’s Representatives Management. PT KSI also show evidence that the company still commit to comply regulation regarding the changes of daily rate workers contract from in-permanent (BHL) to permanent (KHT). Every KHT has accepted offering letter and Work Order Letter from top management confirming their working contract status. The company still consistently provides adequate housing, medical, educational and other facilities free of charge to employees. During the 4th surveillance, the problems found at 3rd surveillance such as housing facilities has been solved. The company has repair housing facilities such as wastewater sewerage. Some of the water pump that has been broken has been repaired. KSI has shown evidences such as out-sourcing working contract documents and payment receipts for the contractors. Field Checking on the housing facilities found that not all off the housing facilities has a good and enough water supplies. Some of water springs that located in planted areas have not complimented with signs regarding no “chemist” and ”fertilize” activities surrounding water springs area. Some of housing area has not well maintained by the residents, puddles of wastewater found in some areas. These findings are rise as observations. CR6.6 There is an existing worker union in PT Kencana Sawit Indonesia called Serikat Pekerja Seluruh Indonesia (SPSI). The worker union representatives are re-elected periodically, and for PT KSI, elections for the third replacement cycle of union representatives has been done for the period of 2010 to 2014. Documented minutes of meetings with the labor union are available at SPSI’s estate office, and the worker union holds meeting as required especially if there is a labor issue. There is also a Bipartite Cooperation Institute (Lembaga Kerja Bersama - LKS - Bipartit) between SPSI and management of Kencana Sawit Indonesia as seen on meeting records as follow.

a. Meeting Records, November 20th 2014, attended by 20 attendants. The meeting agenda are dis-cussing the rules, date, places, duration, and members in conducting of PKB draft agreement;

b. Meeting Records, January 15th 2015, attended by 17 attendants. The meeting agenda are dis-cussing changes of some clauses in PKB.

c. Meeting Records, January 20th 2015, attended by 17 attendants. The meeting agenda are dis-cussing changes of some clauses in PKB.

d. Meeting Records, January 31th 2015, attended by 17 attendants. The meeting agenda are dis-cussing changes of some clauses in PKB.

CR6.7 During the audit, company shows their online system regarding employee information. They also show their printed record known as "employee master list" period year 2014 and 2015. By both checking found that there is no workers under the age of 18 were found to be working on company either as permanent or temporary worker. Field check on working area such as estate and mills found that there is no worker un-der 18 participated in the whole company’s working/production process. CR6.8 No workers interviewed on-site complained about any form of discrimination from the management of the estates or mill. Company has shown evidence that worker has recruited from varies areas. The evidence is Record of Worker Recapitulation 2015 that consist information regarding gender, religion, ethnic’s origin. No such gang or small social group or exclusive community base on religion and ethnicities found in the field. Every worker has the same rights as parts of the company. CR6.9 A policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights has been developed and is implemented. No evidence of sexual harassment was found during the time of the audit as explained by Gender Committee. PT KSI’s gender committee shows a se-



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ries of records of their activities in handling of grievances and complaints from a worker’s spouse. The gender committee facilitates the process of problem solving such as supporting in the divorcing process and make sure the women and children got their rights properly. In this 4th surveillance, company still shows their commitment supporting reproduction rights. As mentions on PKB, every women worker has maternity leave and special sick leave. KSI has developed leave permit forms (H1 for period, and H2 for give birth and maternity) regarding reproduction rights and has known by all workers. Filled H2 form has been shown during the audit for maintenance worker. There are some rec-ords showed, such as:

a. Purpose Letter for Mutation to Working Area that out of agro chemical activities, b. Pregnancy letter published by head of Polyclinic c. Purpose Letter for Maternity Leave d. Company Letter permitting the Maternity leave.

CR6.10 Current FFB prices and previous day FFB prices are clearly published on the notification board in front of PT KSI’s mill at the security office, and near weighbridge, e.g. FFB price for March 2014 was seen on site. In year 2015, only one Supplier who supplies FFB to PT KSI as the agreement they have made. Interview result with the supplier found that PT KSI still comply the agreement that have been made. There is no problem regarding process and payment methods. CR6.11 In the 4th surveillance, PT KSI still shows their commitment to contribute to local development. PT KSI shows their commitment into external CSR activities such as supporting local community’s traditional cer-emonial, road maintenance, building and construction, and donation. All activities since that conducted in January to December 2014 has spent IDR 119.921.728, -. The social activities regarding contribution to lo-cal local communities have agreed development. During the audit, KSI shows evidences such as payment receipt, pictures and event records. Compliance status: Compliances with Observation

Principle 7: Responsible development of new planting s

Criteria assessed: CR7.1, CR7.2, CR7.3, CR7.4, CR7.5, CR7.6, CR7. 7 Criteria not assessed: all Findings: There is no evidence of development of new estate areas within the company’s area and all existing oil palm estate areas consist of mature palms. The company has no plan to extend their estate area. There-fore Principle 7 is not applicable. Compliance status: Not Applicable

Principle 8: Commitment to continuous improvement in key areas of activity

Criteria assessed: CR8.1 Criteria not assessed: - Findings: The company assessment of environmental and social impacts (AMDAL) also includes the monitoring and management plan (RKL/RPL) document dated August 1998 approved by the environmental department, which states three aspects required to be monitored which are water quality of Jujuhan River (where treat-ed effluent is discharged to), level of disturbance to flora and fauna, and community dissatisfaction, par-ticularly communities from Talao Village and Kunyit River village. The company prepares a report to the lo-cal environmental department once every 6 months in accordance with legal requirements, and the report



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sighted for Semester II of 2011 (July to December 2011) includes a more detailed identification of all estate and mill environmental impacts as well as plans for management and monitoring of these impacts, includ-ing liquid, solid and hazardous wastes, air and water quality, noise, disturbance of flora and fauna, pests and diseases, potential for fire, reduction in income for local communities, hiring of workforce, community health, quality of soil and land. There is evidence of implementation of the environmental management and monitoring plan, e.g. as fol-lows: - Plans to carry out land application of treated mill effluent instead of discharge to the river. This is

currently under feasibility study. - Preparations of spill kits, warning signs and labels and secondary containment at hazardous wastes

storage areas. Observed that new spill kits and secondary containment facilities were present at these areas. The company has also recently obtained a license for storage at the hazardous wastes store at the estate, where previously they only had such a license for the mill.

- Protection of rivers and waterways by installing signboards informing that chemical application ad-jacent to rivers is not permitted. Sprayers interviewed are aware of this requirement and confirmed that river buffer zones are marked to indicate areas where spraying is not allowed.

Cooperation manager has not established corrective action for overdue maximum harvesting period, erosion, fertilizer and protection to watercourses quality. This is raises as non conformity Compliance status: Non compliance Non-conformance 2014-SS-02 of 04 (Major non-conform ity) Cooperation manager has not established corrective action for overdue maximum harvesting period, erosion, fertilizer and protection to watercourses quality.

3.2 Status of Previously Identified Non-conformities

The findings from last 3rd surveillance audit are 5 non conformities were identified. These consisted of 2 major non-conformity and 3 minor non-conformities. For the major non-conformances, the company has taken the necessary corrective action to close these non-conformances within 60 days of completion of the assessment, and the audit team through document verification audit submitted by the company verified this. For the minor non-conformances, the company has taken corrective action against these as well, and for those, which could not be verified as closed through document checks, the closure of these minor non-conformities will be assessed during the next surveillance audit. A summary of all identified non-conformances, corrective actions taken and auditor conclusions is as below:

Criterion: 2.1.1. (Indicator minor) A documented system, which includes written informat ion on legal requirements that the palm oil company should comply with.

Non-conformance 2014-01 of 05 Regulation of Ministry of Agraria/head of National Land Agency No. 3 years 1997 has not listed on legal and law register. Verification of Correction/Corrective action. Company already added the Ministry of Agraria/head of National Land Agency No. 3-year 1997 on legal and law register on company list of regulation and continue to implement Identification and evaluation legal and other regulation. Auditor Conclusions: Closed

Criterion: 2.2.2 (Indicator major). Evidence that legal boundaries are clearly demarcat ed and visibly maintained.



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Non-conformance 2014-02 of 05 There were some boundary stones missing and were not visible be maintained such as stone no. 88; no. 87 and No. 81. Verification of Correction/Corrective action. Company conducts re-install the boundary stone on the field by following the BPN geographic coor-dinate. Official report of Maintenance of Legal Boundaries Stone dated March 10, 2014 – Finish. The da-ta as bellow:

a. Number of legal boundaries: 52 pcs (HGU) b. Additional boundaries: 30 pcs (non-HGU)

Based on field visit, the auditor was found that legal boundaries, especially BPN Boundaries number of 081, 087 and 088, has been available, clearly demarcated and clearly visible main-tained Auditor Conclusions: Closed Criterion: 5.2.1 (Indicator minor) Posters and signs warning of the presence of protec ted spe-cies are to be produced, distributed, and made visi ble to all workers and the community, in-cluding guidelines in handling them. Non-conformance 2014-03 of 05 There is no HCV sign board and information board in front of “Lipai Hill 1” Riparian River Verification of Correction/Corrective action. Company install HCV signboard and information board in front of “Lipai Hill 1” Riparian River. - To make sign board/information board mapping that has been installed in all PT KSI area to en-

sure that all identified HCV has been provide by relevant sign board/information board. - To installed the sign board/information board in rest of identified HCV according to the map. - To conduct periodic monitoring to check the existence of sign board/information board. - To check road access to all identified HCV. Based on review document of HCV’s Official Report, dated March 30 & 31, 2014, the organiza-tion has installed “Sign Board Warning”

a. Location: Bukit Lipai 1, Field 56 & 65 b. Dated: April 11, 2014 c. The photos documentations are available

Field visit has conducted on Tuesday, February 24, 2015 to Bukit Lipai 1, Field 56 and 65 found that the in the field condition is according to the documents data. Auditor Conclusions: Closed

Criterion: 6.1.1. (Indicator minor) Regular monitoring and management of social impact, with the participation of local communities.

Non-conformance 2014-04 of 05 There are no records of management and monitoring social impact for year 2014. Verification of Correction/Corrective action. The company conducts a meeting to evaluate social impact management and monitoring performance year 2012 and 2013. and establish social impact management and monitoring program year 2014-2016

During 4th Surveillance audit, KSI provide document and records such as: 1. Social Impact Monitoring and Management Plan 2014. The document consist as follow:

a. FFB supplies sustainability



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b. Conducive Social Environment c. Smallholder Member’s Welfare d. Profit and Health Smallholder Cooperation e. Diversification of Smallholder Cooperation f. Assistance and Supports to Smallholder Cooperation g. Legality of The Cooperation h. Business Plan Development

2. Records of Meetings regarding SIA MP evaluation and development. a. Minutes of Meeting Tuesday Morning April 22nd 2014, evaluation to implementation of

Social Impact Management 2010-2013. b. Minutes of Meeting Tuesday Evening April 22nd 2014, Social Impact Management Plan

2015 – 2017 development. c. Attendants list

Review procedure of Social Activities effectively Auditor Conclusions: Closed Criterion: 6.5.1. (Indicator minor) Growers and millers provide adequate housing, water sup-plies, medical, educational, and other facilities f or employees where such facilities are not available or accessible. Non-conformance 2014-05 of 05 There were found some broken facilities in several emplasment Division 1, II, and II such as: - No clean water due to broken water pump. - Broken sewage drainage. - Broken pipeline from toilet to septic tank, the septic tank has been full and leakage. - One G 10 housing type at Tengah Pulau emplasment was flooded during raining season. Verification of Correction/Corrective action. The company repairs all broken facilities such as: - No clean water due to broken water pump. - Broken sewage drainage. - Broken pipeline from toilet to septic tank, the septic tank has been full and leakage. - One G 10 housing type at Tengah Pulau emplasment was flooded during raining season. The company also make regular schedule for maintain, monitoring and checking all housing facili-ties at housing division I, II and III. To identify all broken facilities and make repair program, as soon as identification result. And rec-ords all relevant result.

During 4th Surveillance audit, KSI provide document and records such as: 1. Records regarding housing facilities repair and maintenance

a. Payment receipt for contractor of housing facilities repair and maintenance. b. Filled Checking Form of working order complimented with pictures c. Agreement letter for sewerage service and housing road (June 23rd 2014).

2. Housing maintenance Program 2015 in CAPEX 2015. Budget & Cost Preparation 2015 items:

- Building Upkeep - Compound Upkeep - Welfare - Water and electricity - Miscellaneous Expenses

Auditor Conclusions: Closed



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Status of Previously Identified Non-conformities reg arding Smallholder Scheme Requirement . . . . The during previous certification audit there were 4 (four) nonconformance’s were identified. These consisted of 3 major non-conformities and 1 minor non-conformities. Verification result The following information is For the major non-conformances, the company has taken the corrective actions all findings was conducted during 3rd surveillance audit, the company has taken corrective action against these as well. A summary of all identi-fied non-conformances, corrective actions taken and auditor conclusions as below :

Criterion 4.4.1 (Minor indicator 1). Evidence of efforts to prevent erosion and maintain natural water resources. Non-conformance 2014-SS-01 of 04 (Minor non-conformi ty) The workers in KKPA Sei Kunit emplacement dispose all domestic waste into the river bank. Verification of Correction/Corrective action. The company provide disposal waste bin in workers emplasement KKPA Sei kunyit. Based on field visit to housing location of KKPA Sei Kunyit at 24 Februari 2015: - Domestic waste bin has been available for organic, and an-organic and hazardous waste - Landfill for domestic waste has been available, where the location is quite far from the housing loca-

tion. - The organic and non-organic waste disposed of separately. Auditor Conclusions: Closed

Criterion 6.1.1.(Minor indicator 1) Smallholders own records of management and monitoring of social impacts (RKL/UPL), which are available at smallholder’s organisation. Non-conformance 2014-SS-02 of 04 (Major non-conform ity) There is no evidence of social impact management program for year 2013. Verification of Correction/Corrective action. The company has conduct management of social impact based on social impact assessment report and to monitor the progress. The company has established program of social impact well conducted and monitored as specified in action plan. There is report of social impact management of smallholder, held on July 2013. The company has provided new management and monitoring plan for identified social impact and mon-itoring plan and records of socialization of social impact conducted on July 2013. - Records of Meetings regarding SIA Management Plan and development. - Minutes of Meeting Tuesday Morning April 22nd 2014, evaluation to implementation of Social Impact

Management 2010-2013. - Minutes of Meeting Tuesday Evening April 22nd 2014, Social Impact Management Plan 2015 – 2017

development. - Attendants list Auditor Conclusions: Closed

Criterion 6.2.1. (Minor indicator 1) Smallholder’s organisation has records on communities’ aspiration and their responses or follow-up actions. Non-conformance 2014-SS-03 of 04 (Major non-conform ity) There is neither record of communities’ aspiration nor record of the follow-up action at Plasma Talao and Sei Kunyit. Verification of Correction/Corrective action.



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Assign special person in charge who has responsibility to records incoming complain i.e. Syahbudin and Martius Rizal. To introduce the jobs and description to the assigned persons, and provide mechanism to for complaint to all workers. To records all incoming complain and claim both internal and external. There is decree letter signed by estate manager regarding assignement of person incharge who has re-sponsibility to records incoming complain i.e. Syahbudin and Martius Rizal. Assigment letter including in-formation on their job description. Records of Meetings regarding SIA Management Plan and development. Minutes of meeting Tuesday Morning April 22nd 2014, evaluation and monitoring to implementation of So-cial Impact Management 2010-2013. Auditor Conclusions: Closed Criterion 8.1. (Major 1) . Scheme manager, together with smallholder, prepares action plan for continuous improvement, based on consideration of the main social and environmental im-pacts and opportunities for improvement. Non-conformance 2014-SS-04 of 04 (Major non-conform ity) Cooperation manager has not established corrective action for overdue maximum harvesting period, erosion, fertilizer and protection to watercourses quality. Verification of Correction/Corrective action. The company and Cooperatin management conduct management review to discuss about operational performance in smallholder ares such as for harvesting period, erosion, fertilizer program and protection water courses. It was showed company establish action plan as follow up management review result. The company provide management review result meeting. The result including document for opera-tional performance in smallholder area such as for harvesting period, erosion, fertilizer program and protection water courses. During 4th surveillance audit, there is no overdue maximum harvesting period. Auditor Conclusions: Closed



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3.3 Identified Non-conformances, Corrective Actions Taken and Auditors Conclusions for RSPO re-quirement

During this 4th surveillance audit none of non-conforminies were identified. There is only 2 observation find-ing which is company do not have to prepare corrective actions neither submitted to auditor, this observa-tion will be observe in the next audit by auditor.

3.4 Identified non-conformance against RSPO Scheme Small holder requirements, Corrective Actions Taken and Auditors Conclusions During this 4th surveillance audit none of non-conforminies were identified for Scheme smallholder. There is only 2 observation finding which is company do not have to prepare corrective actions neither submitted to auditor, this observation will be observe in the next audit by auditor.

3.5 Description of Supply Chain Management System PT Kencana Sawit mill is one of the palm oil mills owned by Wilmar International in West Sumatera. PT Kencana Sawit Indonesia mill was established in July 2001 with a production capacity of 45 tons/hours. The company was initially a National Investment Company owned by Tidar Kerinci Agung group, and the company then changed status to a Multinational Investment Company i.e PPBOP Sdn. Bhd, based on “Surat Keputusan Menteri Negara Agraria No. 1-VIII-1998 regarding Land Use Right transfer Permit from PT Tidak Kerinci Agung to PT Tidar Sungkai Sawit. Based on notarial decree letter no. 96 (Notaris Buntario Tigris SH, SE, MH), the name of PT Tidar Sungkai Sawit was changed to PT Kencana Sawit Indonesia (PT KSI). A decree letter from Minister of Justice and Human Rights Republic of Indonesia No confirmed this. C-14 718 HT.01.04.TH.2006 about approval of company’s charter (Anggaran Dasar) changing of PT Tidar Sungkai Sawit to PT Kencana Sawit Indonesia. Currently PT Kencana Sawit Indoneia Mill is receiving approximately 85.82% of its supplies of fresh fruit bunches (FFB) from 1 company-owned estates comprising of 3 divisions (KSI 1, KSI 2 and KSI 3) and the remaining 14.18% from the company’s smallholder schemes, neighbours plantation such as PT Perke-bunan Nusantara VI and independent outgrowers sorrunding Solok Selatan District.

The company has 2 (two) smallholders groups supplying FFB to PT Kencana Sawit Mill as known as. KKPA scheme (Koperasi Kredit Primer Anggota) Sei Talao and KKPA Sei Kunyit, while the mill only purchases FFB from independent outgrowers that have already signed a contract with PT Kencana Sawit Indonesia mill, and are commited to supplying only legal and responsible FFB to PT Kencana Sawit Indonesia Mill.

PT Kencana Sawit Indonesia Palm Oil Mill is producing crude palm oil (CPO) and palm kernel (PK), the the audit time has not register their transaction in the RSPO IT System, because company currently sell their product without claiming it as certified sustainable palm oil (CSPO) or certified sustainable palm kernel (CSPK), all CPO produced from KSI’s estate are sold as International Sustainability Carbon Certification (ISCC) certified claimed product, as company already certified according to ISCC requirement on February 2011. However, according to explanation from the company that the company will follow all requirements from RSPO to support implementation of sustainability requirements.

The company implements SCC-RSPO with “Mass Balance (MB)” model and the module the mill was as-sessed against i.e Module E of the RSPO Supply Chain Certification Standard, according to the nature of mill FBB supply condition. The following is a description of the company’s supply chain management system ac-cording to the RSPO SCCS requirements, including status of compliance of the company and their out-sourced third parties to RSPO SCCS requirements:

1. Documented procedures

Findings: Kencana Sawit Indonesia Palm Oil mill still use the existing standard operation procedure since incoming FFB until product dispatch, as well as incoming order procedure is handled by trading department in Wil-mar headquarters. The last update procedure for implementation of SCCS (issued on March 30,2012) where last procedures were issued on March 01, 2012. List of SOP stated on "Daftar Induk Dokumen (master list documents (FRM-GEN-004-01 Rev.01 for mill and KSI-REK-GEN-001 Rev.01 for estate)". The company has policy regarding which SCCS model will be used for CSPO/CSPK production process signed by mill head regional manager i.e. POL-KSI-09 or SK No. 09.PKS-KSI/III/2012. According to policy, com-pany implement “Mass Balance” model due to company receive 14.18% incoming FFB from smallholder scheme, neighbours plantation and independent out growers surrounding Solok Selatan District.

A set of production procedures has been established such as:



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• SOP-MILL-002 rev. 02 (issued on March 30, 2012) for Incoming/reception of FFB, • SOP-MILL-001 Rev.01 (issued on March 30, 2012) for Weighbridge of FFB in Mill, • PRO-MILL-001 Rev.02 (issued on March 30, 2012) for Traceability of CPO production • SOP-MILL-005 Rev.00 (issued on January 31, 2011) for Despatch CPO and PK • SOP-MILL-010 Rev.02 (issued on March 30, 2012) for Mass Balance • SOP-MILL-011 Rev.00 (issued on January 31, 2011) for administration of despatch • SOP-MILL-014 Rev.00 (issued on February 16, 2011) for control of record • SOP-MILL-015 Rev.01 (issued on March 30, 2012) for inform to CB if projected of over production • Etc.

The existing mill manager still assigned as management representative and having overall responsibility for and authority over the implementation of SCCS & ISCC requirements and compliance with all applica-ble requirements. The mill manager is expected to be able to demonstrate awareness of the facilities pro-cedures for the implementation of SCCS & ISCC standard. Whereas in estate is Senior Assistant Manag-er. Compliance status : Full Compliance

2. Purchasing and goods in

Findings: Until the 4th surveillance audit, the mechanism for receiving FFB both from certified sources and non-certified sources still it. The documents required to verify that the FFB are from certified sources are Weighbridge slip, Bunch Ticket including wet stamp from the origin estate and certified code and grading records. Whereas FFB from smallholders/out growers are accompanied by delivery letter, and weigh-bridge slip (include non certified FFB).

A person has been appointed to be responsible to check and ensure the FFB quality and quantity as per purchase documents i.e. Security officer and weigh bridge operator. When receiving RSPO certified palm, personnel in the loading ramp are to verify physically the claimed category of the material. The company has no mechanism to inform the certification body immediately if there is a projected overproduction. Until the 4th surveillance audit there is no over production for certified product since the company still not sale their product using RSPO claim. Compliance status: Full Compliance

3. Records Keeping

Findings: The oorganization has established a mechanism for control and maintenance of the data and document used in production process following procedure of PRO-GEN-001 (Document and Data control Procedure revised on March 01, 2012) and SOP-MILL-014 (Control of record) including the requirement of retention time for all SCCS records and reports for at least for five (5) years. The storage and maintenance of docu-ments is the responsibility of the respective departments.

The mill has record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO on daily basis and three-monthly basis including record for PK production. The material balance already inform about : incoming FFB from company’s estate and outgrower of FFB processed, FFB produced, CPO production result including OER, PK production result including KER, product dispatch and balance prod-uct in the storage tank including the mass balance percentage. Method of Mass Balance calculation has been explained on SOP–Mill-010 issued on March 30, 2012.

All volumes of palm oil that are delivered are deducted from the material accounting system according to actual daily conversion ratios. The material balance can show deliver product sales from a positive stock.



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Based on CSPO products daily and monthly movement summary report on year 2014 (period of January to December) is FFB receiving from company’s estate (certified FFB) is 164,370.22 tonnes, FFB receiving from smallholder outsiders (certified FFB) is 9,885.69 tonnes and outgrowers is 1,351.37. CPO production of certified is 35,509.723 tonnes, PK from certified is 9,082.973 ton. All CPO were sold as ISCC certified claimed while for PK were sold as non-certified.

The mill has indicated product name and supply chain model in Weighbridge Document, including infor-mation about RSPO certificate number, and Mass Balance only for CPO but not for Palm Kernel (PK) product. All certified CPO is transferred to PT Wilmar Nabati Indonesia, Plintung-Riau for ISCC claimed. The mill does not sell Palm Kernel Oil, all kernel product from Palm Oil Mill were sold to PT Sinar Alam Permai. Compliance status: Full Compliance.

4. Sales and Good Out

Findings: The sales and goods out mechanism of the company are still described in their procedure of sales of palm oil. Records of all sold RSPO certified materials will be recorded in material balance sheet. However since there is no product sold claimed as RSPO the material balance for certified product transaction still empty. The information stated that production of certified product and outgoing product for non RSPO claimed.

All product dispatch to PT Wilmar Nabati Indonesia and PT Sinar Alam Permai a refinary owned by Wil-mar, every certified product delivered using Weightbridge Slip (WB Slip), information on WBS already in-cluded data about : Reference Number, Date of issued, Delivery Order number, Contract Number, buyer name, buyer’s address, while for delivery palm kernel documents consist of Weighbridge Slip and delivery note which has information about the quantity of the products delivered and Reference to related transport documentation. The company has been prepare for all delivery document for CPO and Palm Kernel prod-uct will indicate information about RSPO certificate number, and supply chain model by using wet stamp as required by SOP-LOG-002, SOP-LOG-003, SOP-MILL-005 and SOP-Mill-011. Compliance status: Full Compliance

5. Training

Findings: PT Kencana Sawit Indonesia has training procedure PRO-GEN-003 and annual training program for their employee, such as training program year 2013; The training for SCCS has been conducted for KSI Mill workers and other relevant staff because the entire person in charge every section related of SCCS im-plementation have been trained. The Last of SCCS training was held on September 20th, 2014 where at-tended by 10 participants from all operators relevant in mill with evidences such as list of participant, pho-tograph and training material. Compliance status : Full Compliance

6. Claims

Findings: The company has specific SOP for making claims regarding the use of or support of RSPO certified oil



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palm products product according RSPO communication and claims. Until 4th surveillance audit, the com-pany has not used claim for end products (CPO and PK) and logo of RSPO due to the product type from KSI is not end-consumed product, which is not required to use logo claim. Compliance status: Not Applicable

3.5 Identified non-conformance against RSPO SCCS requi rements, Corrective Actions Taken and Auditors Conclusions

During 4th surveillance audit that there is no non-conformities.

3.6 Noteworthy Positive Components

No. Indica-tor

Description

1. 4.4.1 The company has strong commitment to protect riparian river, it was sighted that the existing riparian such as Riparian Jujuhan River has been comply with government regulation. The company always monitors water quality to ensure it is within govern-ment standard and ensures community surrounding company area can use it properly.

2. 4.7 The mill has a designated room for first aid, including a bed and stretcher to be used in case of emergencies.

3. 5.2.1 The company has well managed database of whole biodiversity information within HGU area. .

4. 5.3 Good Facilities for secondary containment at hazardous wastes and oil stores.

3.7 Issues Raised by Stakeholders and Findings Perta ining to Issues

No. Issues Raised Audit Verification

1 There is no annual meeting between Swamata cooperative member and cooperative officer.

There is no annual meeting because member did not pay obligative (simpanan pokok ) and compulsary saving (simpanan wajib) yet.

2

There is no explanation from Swa-mata Cooperative officer to all mem-bers regarding to fluctuation of monthly earnings

The Swamata Cooperative officer already estab-lish program for this kind activity within next month agenda.



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4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INT ERNAL RESPONSIBILITY

4.1 Date of Next Visit

The next audit is planned for January 2016 as Renewal Audit.

4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client

It is acknowledged that the assessment visit was carried out as described in this report and we accept the assessment findings and report content.

Signed on behalf of PT Kencana Sawit Indonesia …………………………………………. Date:

Signed on behalf of TUV Rheinland Indonesia Aswan Hasibuan Lead Auditor Date: November 2015



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APPENDICES

Appendix 1: List of Abbreviations

AMDAL ANDAL

Analisis Dampak Lingkungan & Sosial (Social & Environmental Impacts Assessment) Analisa Mengenai Dampak Lingkungan (Analysis of Environmental Impacts)

Bapedalda Badan Pengendalian Dampak Lingkungan Daerah (Regional Body for Management of Environmental Impacts)

BPD Badan Pembangunan Desa (Village Development Body) BPN Badan Pertanahan Nasional (National Land Agency) CD Community Development CPO Crude Palm Oil CSR Corporate Social Responsibility EIA Environmental Impact Assessment ERTs Endangered, Rare & Threatened species ESH Environmental Safety & Health FFB Fresh Fruit Bunches EFB Empty Fruit Bunches FORKAS Forum Komunikasi (Communication Forum) HCV High Conservation Value HRD Human Resource Department Hyperkes Hygiene Perusahaan & Kesehatan Kerja (Company Hygiene & Occupational Health) IPM Integrated Pest Management KER Kernal Extraction Rate KKPA Koperasi Kredit Primer Anggota (Prime Cooperative Credit for Members) KSI Kencana Sawit Indonesia KUD Koperasi Unit Desa (Village Unit Cooperative) LKS Lembaga Kerjasama (Cooperative Institute) MSDS Material Safety Data Sheets NGO Non-Government Organization OER Oil Extraction Rate OSH Occupational Safety & Health PGA Personnel and General Affairs PHT Pekerja Harian Tetap (Permanent Daily Worker) PK Palm Kernel PKB Perjanjian Kerja Bersama (Working Agreement) PKO Palm Kernel Oil POM Palm Oil Mill POME Palm Oil Mill Effluent PPE Personal Protective Equipment RKL Rencana Pengelolaan Lingkungan (Environmental Management Plan) RPL Rencana Pemantauan Lingkungan (Environmental Monitoring Plan) SIA Social Impact Assessment SIO Surat Izin Operator (Operator Permit Letter) SMK3 System Manajamen Kesehatan dan Keselamatan Kerja

(Occupational Safety & Health Management System) SOP Standard Operating Procedure SPSI Serikat Pekerja Seluruh Indonesia (Indonesian Workers Union) TSS Tidar Sungkai Sawit UKL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UPL Upaya Pengelolaan Lingkungan (Environmental Management Efforts) UPTD Unit Pelaksana Teknis Daerah (Regional Technical Unit)



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Appendix 2: List of Stakeholders Interviewed and Co ntacted

No. Name of Stakeholder

Institution - Address Remark

Stakeholders Interviewed On-Site 1. Agus Salim Alfat RSPO Coordinator 2. Mrs. Nova Document Controler 3. Memed Edyos Estate Manager 4. M. Fundy Chalid EHS HO 5. Indra RSPO Coordinator West Sumatera 6. Edrin Moss RSPO Manager 7. Rachman Mill Supervisor 8. Irvan BM LO Padang 9. Fazry OR Operasional 10. Hainul Nandi Mill Supervisor 11. Hendra Mill Supervisor 12. Selvi Indah Ria EHSC-Medan 13. Sutanto EMP AMP 14. Sulimi Arman DMI 15. Daniel FAA 16. Eric Co 17. Herni Zen FAA 18. Harri Purnama 19. Aprizal Anang Mill 20. Wagino Mill Administration 21. Leonardo S Mill 22. Zulsyahri DC/QC 23. Anas Community Head

Appendix 3: Observations and Opportunities for Impr ovement

No. Observations / Opportunities for Improvement Criteria 1 Sebaiknya hasil SOP compliance audit tidak hanya menuliskan kes-

impulan secara umum, tetapi semua ketidaksesuaian sekecil apa-pun seharusnya dilaporkan agar bisa ditindaklanjuti secara tepat. It’s recommended that the result of ‘SOP compliance audit’ not only conclusion in general, but all the slightest discrepancy should be re-ported, therefore can be follow up appropriately.

RSPO P&C 4.1.2

2 Pemeriksaan terhadap Fire Extinguisher hanya checklist yg menan-dakan telah diperiksa, tidak menunjukkan kondisi atau item apa yg diperiksa Examination of the Fire Extinguisher supposed to be detailed, not only precursory checklist “have been checked” , does not indicate any con-ditions or items inspected, for example FE number. 9 at POM

RSPO P&C 4.7.5

Appendix 4: List of Stakeholders Interviewed and Co ntacted


Institution/Position Remarks

Stakeholders Interviewed On-Site 1. Mutiah Maintenance divison worker



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Institution/Position Remarks

2. Mundarsih Maintenance division worker 3. Sulam Maintenance division worker 4. Wali Village Head/advisor of Swamata

Cooperative

5. Anas Cooperative Treasurer 6. Musariyanto Harvester 7. Munawir Harvester 8. Midi Harvester 9. Yadi Harvester 10. Emi Wati Swamata Cooperative Member 11. Maridis Village Officer 12. Hendri Warma Harvester 13. Dt. Musa Sei Kunyit Site Officer 14. Kosi Sei Kunyit Site Officer 15. Yansen Swamata Cooperative Member 16. Memed Edios Scheme Manager 17. Sosialisman Estate Manager 18. Octawira Ober Conservasion/EHS officer 19. Zul Syarhi Document Controller 20. Daniel PGA officer

Documents

Roundtable on Sustainable Palm Oil - TÜV Rheinland...Roundtable on Sustainable Palm Oil Annual Surveillance Audit Report Report no.: ASA4_14012 4th Surveillance assessment against