Wilmar SR 2009_single

8/7/2019 Wilmar SR 2009_single

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SUSTAINABILITYR E P O R T 2 0 0 9


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IntroductIonWelcome Stateme t rom the Chairma a d CEO 2O erall Assura ce Stateme t 4Our Targets or Impro eme t 7

our busInessO er iew o Wilmar I ter atio al 10Our Pla tatio s 14Palm Oil i I do esia a d Mala sia 17

sustaInabIlIty governance and strategy Leadership rom the Top 20Third-Part Sta dards, Certi catio s a d Commitme ts 22

envIronmental Per ormanceCommitme t to Co ser atio 26Actio Agai st Climate Cha ge 34Soil Ma ageme t 36Co trolli g Fire a d Haze 37Reductio i Chemicals Use 38Protectio o Water Qualit a d Suppl 40

emPloyeesDece t Worki g Co ditio s 44A Supporti e Work E iro me t 46A Sa e Workplace 48

communIty Free, Prior a d I ormed Co se t rom Commu ities 52A Commu it s Perspecti e 56I estme t i Commu it De elopme t 58Basic Educatio or Childre 59Comme t rom Bor eo Child Aid Societ 60I cludi g Smallholders 62

marketPlaceE couragi g Sustai able Practices i the Suppl Chai 66Respo sibilit i the Market 67

annexesGlobal Reporti g I itiati e G3 I de 68Glossar 76Co tact Us

CONTENTS


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WELCOME STATEMEnT FROMTHE CHAIRMAn AnD CEOI am happ to be able towelcome readers to Wilmars

rst Sustai abilit Report,which marks a ew stepi our o goi g jour e

towards tra spare c a daccou tabilit .

Our journe began in 1991, when Wilmar frstestablished plantations in Indonesia. Back then,we were not using the word sustainabilit ,and there was no structured guidance or ourindustr . However, we still knew that productiveand proftable plantations re uired highstandards, both in terms o workers conditionsand in terms o good agricultural practices.

Toda almost two decades later the world isa di erent place. Wilmar is ull committed tothe Roundtable on Sustainable Palm Oil (RSPO)and its Principles and Criteria (P&C). We believethat this is an e ective bod and standard,which brings together the palm oil industr inimproving its practices in a manner which isacceptable to stakeholders and communitieswhile striving to conserve and protect theenvironment.

Sustainabilit is about continuous improvement,and we know that we must ensure that thismindset is embedded throughout the compan .At Wilmar, we want to see pride and respect asvalues that are ingrained in ever emplo eesaction, whether management or workers.Thanks to the hard work o our emplo ees, wehave made tremendous strides orward overthe past ears. At the time o writing, we justpassed an important milestone with the RSPOcertifcation o two o our mills in Kalimantan,

Indonesia and Sarawak, Mala sia both afrst in the industr . This also means that wehave success ull completed certifcation

or all our Mala sian operations, exceptor one. We believe that our certifcation

in such complex regions demonstratesthat palm oil can be sustainable, andcontribute positivel i developedcare ull and responsibl , and with theshared commitment o emplo ees.

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Much debate has ocused on the cost o sustainabilit and certifcation. We do not

think that the cost is burdensome. The mainchallenge is accepting the opportunit cost o re raining rom developing areas identifed ashaving high conservation values that must bemaintained, or the longer timelines involved inensuring the ree, prior and in ormed consento communities be ore development. But inthe longer term, these are sensible precautionsthat help us avoid problems in the uture.

For larger companies, the cost involvedin certifcation against the RSPO P&C ismanageable it is the price o a sound business.We believe that companies the size o Wilmarhave an opportunit and an obligation to gobe ond certifcation and compliance, and investin continued improvements or our sector atlarge. Even or smaller established companies,the certifcation cost is negligible, and will pa

or itsel within a ver short time rame. Thebottom line is that the standards set out in theRSPO P&C are basic sustainabilit standards,and should be adhered to b all operators

in the industr . The palm oil industr is aproftable business, but companies need to beless concerned about their short-term P&L, andmore concerned on their long-term operationalhealth, which relies on good communit andworker relationships, ethical business dealingsand reductions in environmental impacts.Our industr should not wait or governmentintervention, but sta ahead and setan example.

We would o course hope that the bu erso palm oil will also see value in supportingsustainable palm oil. In our largest markets,China and India, we are seeing an increasedinterest in sustainable development, albeitit will still take some time be ore sustainableproducts become mainstream in those markets.Using the slow uptake o certifed sustainablepalm oil, however, as an excuse or inaction isneither acceptable, nor wise. For Wilmar, thedriver or sustainabilit is simpl that it makesgood business sense. Responsible practices

lead to higher productivit through betterields, worker retention and even cost savings.

Some stakeholders eel that irresponsibleactions in our industr should lead to

bo cotts and exclusion o companies romthe marketplace. We pre er to encourageimprovements through positive engagement.Bo cotts will not stop destructive behaviour.One o our ke contributions is to demonstrateour continuous improvements, and sharesolutions with our industr , through e.g.co-chairing the RSPO working groupon greenhouse gases, or working withconservation groups to develop wa s to protectendangered species.

We are not per ect, and we have received ourshare o criticism. Some issues raised in the pastwere relevant and helped us move orward, butothers were simpl ill-in ormed. We welcomeengagement with various stakeholders andsee it as an opportunit or collaboration.The needs o local people, however, mustnever be ignored, so it is important to us thatNGO partners share our vision to supportopportunities or development and job creationwhile ensuring environmental protection.

For Wilmar, responsibilit is not merel aboutphilanthrop . In a world where climate changeand povert pose major threats to humanit ,we must act. We believe that providingdecent jobs and development opportunities

or remote communities is the most e ectivecontribution. Likewise, we want to conservethe natural environment pro-activel andreduce emissions, rather than tr ing to rectidamage a terwards.

As one o the largest companies in theindustr , Wilmar has a responsibilit to investin sustainabilit and show leadership. Our sizemeans that we can invest in fnding innovativesolutions, and document these in a wa that wehope can enlighten and inspire others.

k kh HChairman and Chie Executive O fcer,Wilmar International Limited

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It is a pleasure to comme to Wilmar I ter atio als rstSustai abilit Report or theOil Palm Pla tatio Di isioo its global operatio s.

The report lau ches a bie ial series todescribe Wilmars corporate commitme ts tosustai abilit , a d per orma ce toward meeti gtargets or co ti ued impro eme t. It represe tsa major step orward i tra spare c or o e o the worlds largest corporatio s i egetableoils, a d a leadi g member o the Rou dtableo Sustai able Palm Oil (RSPO). This reportembodies sig i ca t work to compile, re iewa d prese t data i relatio to a broad ra geo sustai abilit co cer s. Wilmar deser essubsta tial recog itio or this e ort.

As Wilmars rst e er Sustai abilit Report,this report will treat some issues too lightl ithe mi ds o some readers, a d o erlook theothers e tirel . Wilmar seeks critical i put oe actl this issue to deepe a d broade uturereports to address issues o greatest co cer .Here, I describe m iews o where the reporte cels, a d pro ide recomme datio s or how

uture reports ca be stre gthe ed.

OvERALL ASSURAnCE STATEMEnT

ABOUTDR. GARy PAOLIDR. GARy PAOLI IS AnECOLOGIST AnD BOTAnISTWITH A PhD FROM THEUnIvERSITy OF MICHIGAn

He has conducted basic and applied researchon biodiversit conservation in Indonesia since1991, and is a ounding Director o DaemeterConsulting, a leading provider o technical

support to achieve responsible orestr andagricultural practices (www.daemeter.org).Dr. Gar is a leading advocate on proper useo the High Conservation Value (HCV) tool

or balancing multiple objectives in naturalresource sectors. He contributes to nationaland international meetings on sustainabilit andpublishes peer-reviewed papers and reports onIndonesian biodiversit and its conservation inproduction and protected landscapes.

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These our issues sta d out as stre gths i the curre t report, i cludi g discussio o stre gths,weak eses, a d areas where urther impro eme ts will be made.

toPIcs descrIPtIon

Tra spare c Demo strated b its participatio i the Carbo DisclosureProject, a i estor-led tra spare c i itiati e to highlightemissio reductio pote tials, a d release i to the publicdomai at least o e High Co ser atio value (HCv) areaassessme t o a ew pla tatio i West Kalima ta .

Ge der equalit Illustrated b programmes to impro e ge der bala ce amo gemplo ees, especiall opportu ities or wome , curre tlreprese ti g 30% o the work orce, to ad a ce to ma agerialle els, where represe tatio is curre tl low (10%) but steadili creasi g.

Smallholder empowerme t Demo strated b programmes or smallholders to impro epractices a d achie e RSPO certi catio agai st the smallholdersta dards. To m k owledge, Wilmars time-bou d (discussedlater) to certi smallerholders i I do esia a d Mala sia is a

rst amo g growers.

Co fict resolutio Illustrated b Wilmars ew s stematic approach or achie i gair a d lasti g solutio s to legitimate disputes, as e ide ced

b the Saji ga Kecil case stud eatured i the later sectio .

Four topics sta d out i the report a d illustrate well Wilmars proacti e sta ce toward sustai abilit .These i clude:

This report embodies sig i ca t work to compile,re iew a d prese t data i relatio to a broad ra geo sustai abilit co cer s.

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It is ack owledged that some o the abo etopics are so comple that space limitatio swill preclude adequate treatme t i utureSustai abilit Reports. I such cases, Wilmarshould co sider lau chi g a series o sub-reports that address these ke topics (a dpossibl others) i greater depth.

I would like to comme d Wilmar o its rstSustai abilit Report. O erall, it pro ides abala ced co erage o Wilmars curre t stre gthsa d targets or co ti ued impro eme t irelatio to a broad ra ge o co cer s. Futurereports will be impro ed urther b addressi gthese comme ts, a d especiall i puts pro idedb other stakeholders. I wish Wilmar good lucki its e orts to co ti ue impro i g i its quest

or achie i g sustai abilit , a d look orward touture reports.

OvERALL ASSURAnCE STATEMEnT

toPIcs descrIPtIon

Free Prior a d I ormedCo se t (FPIC)

This report describes Wilmars approach to impleme ti g FPICprocedures to secure la d release rom local commu ities

or pla ti g. A uller descriptioi o lesso s lear ed romimpleme ti g FPIC i a ariet o comple socio-politicalsetti gs, especiall i I do esia, would co tribute use ull to abroader u dersta di g o these issues.

Gree house Gas (GHG)ootpri t

Wilmar has demo strated leadership i relatio to GHGreductio through participatio i public disclosureprogrammes, modi catio s o mill practices to reduceemissio s, a d b commissio i g a i depe de t stud o pote tial i direct la d-use cha ge impacts caused b ewpla tatio s. I uture reports, a ge eral accou ti g o Wilmarso erall GHG ootpri t would be o kee i terest to a broadcross-sectio o stakeholders as a be chmark or tracki g

uture impro eme ts.

Co tract labour Like most palm oil compa ies, Wilmar relies hea il o the useo co tract (temporar ) emplo ees i its pla tatio s, especiall

duri g the earl stages o pla tatio de elopme t. Futurereports should pro ide data o umber o co tract labourersa d speci c targets or reductio a d speci c programmes toachie e this.

Suppl Chai As a major bu er o palm oil rom other growers, Wilmar has thele erage to promote good practices throughout the pla tatioi dustr , a d does so through a polic o e gageme t toe gage broader adoptio o sustai abilit practices amo gits suppl part ers. I the lo g-term, stakeholders ma wishto k ow more about mi imum pre-co ditio s or Wilmar toco ti ue such e gageme t a d u der what co ditio s Wilmarwould co sider suspe di g a suppl relatio ship.

I uture reports, greater depth a d a al sis would be welcomed or a umber o topics. Amo gthese, leadi g issues i clude:


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We belie e i accou tabilit a d wa t to e sure that we are co sta tl impro i g our practices imeasurable a d practical wa s. As part o our reporti g, we will be tracki g our progress o materialissues a d areas where we are ot satis ed with the curre t status. For some areas where we ha ea clear polic , but where measureme ts are less ta gible, we choose to ocus our commitme t o

uture reporti g. Ke areas with speci c targets or impro eme t are outli ed here, a d discussedi more detail throughout the report.

commItment tImelIne

rsPo c if iAll I do esia mills ha e completed RSPO P&C certi catio audits

All Mala sia mills ha e completed RSPO P&C certi catio audits

2013

2010

P iAchie e combi ed e tractio rate (Perce tage o crude palm oil + palmker el that ca be obtai ed rom per to e o resh ruit bu ch (FFB)) o :26.75 or Kalima ta25 or Sumatra27.1 or Mala sia

Achie e peak ields (to es o FFB per hectare) o :27 or Kalima ta28 or Sumatra30 or Mala sia

2014

2014

bi i ino ew de elopme t prior to the completio o a high co ser atio aluearea assessme t

All e isti g pla tatio s will ha e a high co ser atio alue area assessme t

Reporti g ostatus i 2012

2013

H i ino use o paraquat 2011

H h Mai tai Lost Time I cide t Rate per 200,000 worki g hours (LTIR) below 2.5i all I do esia operatio s

Achie e LTIR below 5 i all Mala sia operatio s

2012

2012

c i ino e pa sio without Free, Prior a d I ormed Co se t rom localcommu ities

Reporti g oStatus 2012

s hAll e isti g associated smallholders i Kalima ta ha e completed RSPOcerti catio audits

All e isti g associated smallholders ha e completed RSPO certi catioaudits

2013

2016

OUR TARGETS FOR IMPROvEMEnT

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We are one o the worlds largestproducers and merchandiserso refned palm and edible oils,

with operational presence in 25countries and a customer base inover 50 countries.

OURBUSINESS Our

buSINESS


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Wilmar I ter atio al Limited is o e o theworlds largest producers a d mercha disers o re ed palm a d edible oils. We grow palm oila d purchase oilseeds which are processed i todi ere t grades o edible oils. Re ed edibleoils are sold to our customers, i cludi g oodma u acturers, co ectio eries a d bio uelproducers. We also produce co sumer pack

edible oil u der our bra d ames a d selldirectl to co sumers. We ha e a operatio alprese ce i 25 cou tries a d a customer base io er 50 cou tries.

our HIstory Wilmar bega operatio s i 1991 as a palmoil tradi g compa . I 2007, we completed amerger with Kuok Oils & Grai s Pte Ltd, PGEOGroup Sd Bhd a d PPB Oil Palms Berhad ia deal worth USD2.7 billio . I the same earwe also completed a restructuri g e erciseto acquire the edible oils, grai s a d relatedbusi esses o pare t compa , Wilmar Holdi gsPte Ltd, i cludi g i terests held b ArcherDa iels Midla d Asia Paci c a d its subsidiariesi these busi esses, or USD1.6 billio .

We are toda :

the largest global processor andmercha diser o palm a d lauric oils;

one of the largest plantation companies inI do esia a d Mala sia;

the largest palm biodiesel manufacturer inthe world;

a leading consumer pack edible oilsproducer, oilseeds crusher, edible oilsre er, specialt ats a d oleochemicalsma u acturer i Chi a;

one of the largest edible oils re ners and aleadi g producer o co sumer pack edibleoils i I dia;

the largest edible oils re ner in Ukraine;a d

the leading importer of edible oils into EastA rica.

an Integrated busIness modelOur busi ess acti ities e te d across thee tire alue chai rom origi atio a dprocessi g to mercha disi g a d distributio .Our i tegrated busi ess model e ha cesour competiti e ess a d resilie ce agai stcha gi g market co ditio s.

Our large a d i tegrated ma u acturi g

operatio s be e t rom eco omies o scale a doperatio al s ergies. We ha e a i -housefeet o essels to acilitate our shippi g eeds,a d ports a d jetties with deep dra t e t to ourma u acturi g comple es to mi imise logisticscosts. Our global distributio a d marketi g

etwork allows us to reach a wide base o customers a d pro ide e celle t marketi gi ormatio . With i tegratio , we are ableto e tract margi s at e er step o the aluechai a d be o e o the lowest cost producerspro idi g the highest qualit products.

OvERvIEW OF WILMARInTERnATIOnAL

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InancIals

The Group achie ed re e ues o USD23.9billio a d et pro t o USD1.9 billio orthe a cial ear e ded 31 December 2009.Compared to the pre ious ear, all ourbusi ess segme ts co ti ued to per ormwell as we remai ed ocused o growi g

our busi esses, e tracti g cost e cie ciesa d risk ma ageme t. The Groupsbala ce sheet co ti ued to stre gthe , astotal assets i creased to USD23.4 billiowhile shareholders u ds i creased toUSD10.9 billio .

r 2009Total: USD27,234 millio *

Processi g

Customers

Mercha disi g,Shippi g

& Distributio

Origi atio

Bulk EdibleOils

Co sumerPack

Edible Oils

Oleo-chemicals

OilseedsMeal

SpecialtFats

Other Products:Rice, Flour,Biodiesel

I a i i m

1,434,0955%

1,118,9554%

12,627,33247%

8,155,57630%

3,897,68714%

Mercha disi g a d processi g-Palm a d lauricsMercha disi g a d processi g-Oilseeds a d grai s

Pla tatio s a d palm oil mills

Others

Co sumer products

* Revenue be ore elimination o inter-segment sales

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Our buSINESS


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our busInessesP i m h i i P l iWe process palm a d lauric oils i to re edpalm oil, specialt ats, oleochemicals a dbiodiesel. We are the largest processor a dmercha diser o palm a d lauric oils a d thelargest palm biodiesel ma u acturer i theworld 1. As at 31 December 2009, the Group hadre eries located i the ollowi g cou tries:

22 plants in Indonesia 15 plants in Malaysia

42 plants in China 5 plants in Europe 2 plants in Vietnam 14 plants in India (associate) 2 plants in Africa (associate) 1 plant in Ukraine (associate) 3 plants in Russia (associate)

P i m h i i oi g iWe process oilseeds i to edible oils a doilseeds meal, a d mill padd a d wheat i torice, four a d other related products. We arethe largest oilseeds crusher a d o e o theleadi g wheat a d rice millers i Chi a. As at31 December 2009, the Group had a total o 38oilseeds crushi g pla ts.

c PWe produce co sumer packs o edible oils,rice, four a d grai s which are marketed u der

our ow bra ds. I Chi a, we are the largestproducer o co sumer pack edible oils. We alsoha e market-leadi g positio s or co sumerpack edible oils i I do esia, I dia, viet ama d Ba gladesh.

P f i - % 2009: USD2,294 millio

Mercha disi g a d processi g-Palm a d laurics

Mercha disi g a d processi g-Oilseeds a d grai s

Pla tatio s a d palm oil mills

Associates

Others

Co sumer products

100

90

80

70

60

50

40

30

20

10

02007 2008 2009

32%

4%

6%

18%

4%

36%

30%

11%

2%

19%

4%

34%33%

24%

13%

20%

8%

2%

1 Total CPO and WIL %

OvERvIEW OF WILMARInTERnATIOnAL

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P i P oi miOur pla tatio operatio s are located iI do esia a d Mala sia, with o er 235,000hectares (ha) i total pla ted area. We alsoow pla tatio s i Uga da a d West A rica iajoi t e tures. Total pla ted areas i Uga daa d West A rica are appro imatel 6,000ha a d37,000ha respecti el .

We operate i e mills i Mala sia a d 26 millsi I do esia which process resh ruit bu chesthat we source rom our ow pla tatio s,smallholders u der the Groups PlasmaSmallholder scheme a d third-part suppliers.We ma age some 34,000ha a d 125,000hau der the smallholders scheme i I do esiaa d West West A rica respecti el .

o h di i i co sist o busi esses whichare compleme tar to our core busi essacti ities. We ma u acture a d distribute

ertilisers, as well as ship liquid a d dr bulk.

emPloyeesOur global work orce o o er 80,000 emplo eesco tributes u ique e pertise a d e perie ceto dri e Wilmars growth. Arou d 60% o ouremplo ees work i the oil palm pla tatiobusi ess i I do esia a d Mala sia.

Wi g p p iTotal 2009 emplo ees: 80,086

Europe & A rica286

I do esia45,996

Chi a13,467

Other Asia-paci c2,089

Mala sia

18,248

Wi y2009 ph

Chi a55%

South EastAsia23%

Other10%

I dia5%

Europe7%

our marketsOur products are sold to customers i o er 50cou tries. Our largest markets are show i thepie chart below:

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Our buSINESS


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Wilmar is Asias leadi g agribusi ess group. Ioil palm, we are amo g the leaders, with a totalpla ted area o 235,799ha as at 31 December2009. About 74% o the total pla ted area islocated i I do esia with the remai i g 26% iEast Mala sia. We process resh ruit bu ches(FFB) that we source rom our ow pla tatio sa d also rom almost 34,000ha o plasmasmallholders i I do esia. The crude palm oil(CPO) a d palm ker el produced b our palmoil mills are predomi a tl supplied to ourre eries a d palm ker el crushi g pla ts.

P 2009: 235,799 hectares

I do esia74%

Mala sia26%

We u dertake the e tire process o oil palmculti atio o our pla tatio s. We de elopseedli gs, mo itor their growth, har est a dmill the resh ruit bu ches. We are impro i gthe ariet a d qualit o seeds through pla tbreed research.

smallHoldersWe support the go er me t-i itiatedsmallholder (plasma) programme b helpi g

to ma age a total o 33,747ha o oil palm asat 31 December 2009. This scheme supportssmallholders i micro- a ci g, la d-cleari g,pla ti g, a d ad ice o good agriculturalpractices. From 2007 to 2009, we i ested moretha USD4.7 millio i this programme.

OUR PLAnTATIOnS

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Ba da Aceh

Meda

Ra tauprapatDumai

Peka baru

Ta ju gkara gTelukbetu g

Pada g

Re gatJambi

Po tia ak

Ke dawa ga

Kumai

SampitPala gkara a

Samari da

manado

Palu Luwuk

Kotamobagu

Ku ak

Sa daka

Lahad Datu

Kota Ki abalu

Bi tulu

Miri

Paloh

Palemba gLubukli ggau

Be gkulu

Merak

Ba du g

George Tow Kota Baharu

Pasir Guda g

sIngaPore

malaysIa

IndonesIa

sulaWesI

sabaH

bruneI

kalImantan

Jakarta

JavaPla tatioPalm Oil Mill

b yi ( /h )

NB: due to drought in our areas o operation in 2007, FFByields su ered a lag e ect and production declined.

2007

22.8

2008

20.9

2009

20.2

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Our buSINESS


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In Hectares average age o Palm

31-d -09 0 - 3 4 - 6 7 - 14 15 - 18 >18 t

I do esia 65,751 38,840 37,366 19,847 11,562 173,366

Mala sia 2,848 8,085 25,687 17,906 7,907 62,433

t P a 68,599 46,925 63,053 37,753 19,469 235,799

% o Total Pla ted Area 29.1 19.9 26.7 16.0 8.3 100

Plasma Programme 1,047 1,624 18,131 9,484 3,461 33,747

% o Pla ted Area 3.1 4.8 53.7 28.1 10.3 100

e i r(% per to e o resh ruit bru ch)

CPOPalm Ker el

25

20

15

10

5

0

%

2007

22.821.0 20.2

4.9 4.9 4.9

2008 2009

OUR PLANTATIONS

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PALM OIL In InDOnESIAAnD MALAySIAIndonesia and Mala sia account or a combined 90% o the worlds palm oil production and40% o the worlds vegetable oil. Situated in the tropics, the region is ideall suited to thecultivation o A rican palm, experiencing an average temperature o 32 oC and receivingon average over 200mm o rain a month. A cultural melting pot, there are hundreds o di erent ethnic communities with their own uni ue language, dialect and culture.

The biodiversit o the region is as rich as its people. It is home to over 27,000 species o plants, mammals, birds, reptiles and resh water fsh. Close to 60% o species ound hereare endemic and cannot be ound an where else on earth. However, this natural wealthis under threat: de orestation is occurring twice as ast as in other parts o the world.

Though protection o large mammals such as the Orang-utan, the Sumatran Tiger and theAsian Rhino have been at the ore ront o the struggles to protect this biological heritage,o ten lost is the act that an estimated 162 2 endemic birds, mammals and amphibiansremain threatened.

oi p i m iMala sia produced 17.7 million metric tonnes (mt) o resh ruit bunches on 4.69 million hao planted area in 2009. The sector emplo ed over 590,000 emplo ees, and contributed to3.2% o the countr s real GDP in 2008 and 7% o total exports in 2009.

oi p i I iIn 2009, Indonesia produced over 20 million mt o resh ruit bunches, and 14.2 millionmt or 44.7% o the worlds palm oil. The industr contributes USD12.4 billion in exportsand 4.5% o the countr s GDP 3,4. It has a planted area o 7 million ha and emplo s over3.5 million people. In Indonesia, 41.4% o planted oil palm is smallholder or plasma areas.The major oil palm producing areas are on the islands o Sumatra and Kalimantan, but newdevelopments are taking place in other areas o Indonesia, such as Papua.

IndonesIa malaysIa

Area 1,919,440 km 329,845 km

Populatio 229 millio 28 millio

GDP per capita USD3,900 USD14,081% li i g below USD2 per da 50%

% li i g u der atio al po ert 17.8% 5.7%

Gi i Coe cie t 34.3 40.3

Huma De elopme t I de 111 66

Corruptio Perceptio I de 111 56

USD1 IDR9,045 RM3.2

2 http://www.biodiversityhotspots.org/xp/hotspots/sundaland/Pages/de ault.aspx 3 Minister o Agriculture at the Indonesian Palm Oil Con erence and Price Outlook 2010. Bali. 2 December 2009 4 http://www.istockanalyst.com/article/viewiStockNews/articleid/3660667

c p i i i i I i m i

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Our buSINESS

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C E R TIF IC A

T E

Field of att

ention:

R S P O

CERTIFICATE

NO:

C UC 80 9 3 6 0

R S P O-1 .2 0 0

8

Issued to

P P B O il P

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15th Floor Wism

a Jerneh, No.3

8 Jalan Sultan

Ismail, Kuala L

umpur, Malays

ia

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SUSTAINABILITyGOVERNANCEAND STRATEGy

We have developed a governanceand management structurewhich seeks to ensure that allour operations are operating to

consistent standards and in amanner that is responsive to bothour shareholders and the widerstakeholder environment.

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STaINabIlITy gOvErNaNCE aNd STraTEgy


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The Chairma o Wilmar I ter atio al Limited isthe head o the CSR Cou cil. The cou cil co sists

o se ior ma agers a d Board Directors, whoserole is to appro e policies to meet sustai abilitpri ciples a d criteria, a d pro ide the ecessarsupport i terms o resources a d u di g. TheCSR Cou cil dri es, mo itors a d re iews theprogress o RSPO impleme tatio .

rsPo ImPlementatIon andmonItorIngAt a operatio al le el, RSPO impleme tatiois the respo sibilit o the Ge eral Ma agerso our pla tatio s, led b the Group Head o Pla tatio s. The are required to e sure thatall aspects o the RSPO P&C are e orceda d i corporated i to sta dard operati gprocedures a d processes. To sa eguard ullcomplia ce, mo itori g a d auditi g teams arei place across all operatio s either o -site, oras a regio al resource. These teams co sist o specialised sta with e pertise i o e or moreaspects o sustai abilit .

busIness etHIcs

I li e with our commitme t to the GlobalCompact 10th Pri ciple, we belie e that

busi esses should work agai st corruptio iall its orms, i cludi g e tortio a d briber .

Our compa Code o Co duct, which is part o our emplo ee ha dbook, prohibits the gi i ga d recei i g o a t pes o bribes, i cludi ggi ts, e tertai me t or other be e ts whichma i fue ce our emplo ees abilit to carrout duties legall a d/or i li e with compai terest. A be e ts or gi ts must be declaredto the earest superior.

allegatIons regardIng vatPayments In IndonesIa

I Ma /Ju e 2010, media reports iI do esia suggested that WilmarsI do esia subsidiaries were bei gi estigated b the I do esia ta o ceo er ctitious alue added ta (vAT)re u ds. We respo ded immediatel tothese reports to de the allegatio sb stati g that we are ull co de tthat our subsidiaries are a d ha e at alltimes bee i ull complia ce with theI do esia vAT laws.

RSPO internal audit and monitoring structure

Sumatra Kalima ta East Mala sia Cross-Groupspecialists

Legal Legal Legal Primatolog

Social Social Social Biodi ersit

E iro me t E iro me t E iro me t GHG

Health &Sa et

Health &Sa et

Health &Sa et

Group Sustai abilit Co troller

Group Head - CSR

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I December 2008, as a result o the certi catioo our o our pla tatio s a d three mills iSabah, we became o e o the rst palm oilcompa ies to be RSPO certi ed. All o ourmills i Mala sia, with the e ceptio o o e,ha e ow bee RSPO P&C certi ed. Ourcerti catio co ers just o er 21,000ha iSarawak a d arou d 50,000ha i Sabah,suppl i g a combi ed 290,000 to es o certi ed sustai able palm oil (CSPO).

Two o our I do esia mills ha e achie edRSPO certi catio , a d o e additio al mill

has u dergo e audit. Combi ed, thesemills produce o er 109,000mt o CSPO romarou d 21,000ha.

I total, these represe t about 40% o ourpla ted area bei g RSPO certi ed.

rsPo suPPly cHaIn certI IcatIonWe are prepari g our acilities a dma ageme t s stems to e sure that ouroperatio s are able to trace our palm oil

suppl back to their respecti e pla tatio s.Prior to the adoptio o the RSPO P&C, wewere alread certi ed with the Gree GoldLabel Certi cate or Chai o Custod a dProcessi g Sta dards (GGL01) i 2007 or ourpla tatio s, mills, re eries a d bulk storage

acilities i I do esia. The GGL01 certi catiodemo strates operatio al complia ce with thecriteria o Agricultural Source or Gree GoldLabel (www.greengoldcertifed.org ).

I Jul 2009, our mills i Sapi Palm Oil Mill,Sabahmas Palm Oil Mill, Sa daka Edible OilsSd Bhd, Lahad Datu Edible Oils Sd Bhd a d PT.Wilmar Bioe ergi I do esia achie ed the RSPOSuppl Chai Certi catio or the suppl o

CSPO usi g the Mass Bala ce Suppl Chaioptio . Our two re eries i Rotterdam(The netherla ds) a d Brake (Germa )were also awarded similar certi catioa d could suppl CSPO usi g bothSegregatio a d Mass Bala ce SupplChai optio s.

adHerIng to InternatIonalcommItmentsAs a global busi ess operati g i ma o theworlds poorest cou tries, we are committedto supporti g sustai able de elopme t.

I 2008, we became a sig ator to the UnGlobal Compact (UnGC), which addressesbusi esses respo sibilit o e iro me talprotectio , huma rights, workers rights a da ti-corruptio . I 2009, we co tributed to thepromotio o the UnGC b submitti g a trai i gcase stud to the U ited natio s Eco omica d Social Commissio or Asia a d the Paci c(UnESCAP). The case stud illustrated o e o the least u derstood pri ciples o complicit ihuma rights abuses, ocusi g o our adoptio

o the ree, prior a d i ormed co se t ramework(see Commu it sectio o this report).

I additio , we aim to co tribute to the UnMille ium De elopme t Goals, which seeks toaddress the most se ere global de elopme tgaps. Our ocus has bee o access to educatio

or all childre (see page 59).

We ha e also participated i the CarboDisclosure Project b reporti g o our carboemissio s, a d ha e sig ed up to the Un CEOWater Ma date. These two i itiati es are crucialto addressi g two o the biggest e iro me talthreats aci g the pla et a d our sector.

malaysIa - 1 o 2010Palm oIl mIlls locatIon csPo

(tonnes)year o

audIt/status

Sapi Mill Sa daka , Sabah 28,400 Certi edSabahmas Mill Lahad Datu, Sabah 60,600 Certi edReka Halus Mill Sa daka , Sabah 33,900 Certi edSaremas Mill 1 Miri, Sarawak 52,000 Certi edSaremas Mill 2 Miri, Sarawak 52,000 Certi edTerusa Mill Sa daka , Sabah 42,800 Certi edRibubo us Mill Sa daka , Sabah 20,000 Certi edSri Kamusa Mill Sa daka , Sabah 24,000 2010

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ENVIRONMENTALPERFORMANCE

We have built a structuredand continuousl evolvingset o activities to ensure thatour operations are run in a

wa which does not causethreats to wildli e habitats andendangered ecos stems.

ENvIrONmENTal PErfOrmaNCE


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Most o our pla tatio s are established ologged-o er la d a d degraded orests withrelati el low biodi ersit alue. We e ertheless

recog ise that areas ear to where we operate a d i some cases co ser atio set aside withiour pla tatio s might be home to u iquemammal species such as ora g-uta s, elepha tsa d proboscis mo ke s. We u dersta dthat this gi es us a great respo sibilit , butalso a sig i ca t opportu it to support theco ser atio o these atural habitats. O erthe past ears, we ha e built a structured a dco ti uousl e ol i g set o acti ities to e surethat our operatio s are ru i a wa whichdoes ot cause threats to wildli e habitats a de da gered ecos stems.

a PrecautIonary aPProacHWe are guided b the co cept o HighCo ser atio value (HCv) Forest, e suri g thata precautio ar approach is take to each ewde elopme t, a d e isti g de elopme ts arereassessed at repla ti g. We e gage third-partassessors to assist us i ide ti i g the prese cea d distributio o i di idual HCv, as well asla dscape-le el impacts o our operatio s. We

also require that all ew operatio s u dergoa third-part HCv area assessme t priorto de elopme t.

conservatIon managementstructureWhile co ser atio is the dail task a drespo sibilit o estate ma agers, we recog isethat there is a eed or coordi atio a d

specialist support. Our e orts are led b ourGroup Sustai abilit Co troller, a d super isedb a Co ser atio Ma ager, who is supported

b site-le el ma agers, tasked with e suri gthat there is a acti e programme taki g placeo the pla tatio le el. This structure is u derco sta t de elopme t a d subject to cha geas our acti ities require speci c atte tio .Curre tl there is o co ser atio ma ageri Sumatra, as there are relati el limitedco ser atio areas withi our largel establishedpla tatio s. O the other ha d, we add resourceswhere eeded. I 2009, we also stre gthe edour ocus o the co ser atio o primates - with

ocus o ora g-uta s - b recruiti g a dedicatedprimatologist to co duct research i our HCvareas a d guide best ma ageme t practices.

conservatIon areas andmanagement PlansHCv assessme ts or ew de elopme t areasare co ducted b third-part co sulta ts,while e isti g pla tatio s make use o i ter ale pertise a d other team members orassessme ts. Ma ageme t a d mo itori gpla s are de eloped or all pla tatio s a d

desig ed accordi g to u ique circumsta ceso the grou d. Special ma ageme t practicesi clude the establishme t o bu er zo esa d wildli e corridors, or setti g aside la d

or co ser atio a d the protectio a de richme t o HCvs. We estimate thatappro imatel 28,500ha (o er 10% o ourpla ted area) has bee set aside across ouroperatio s to date.

COMMITMENT TOCONSERVATION

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Biodi ersit / Co ser atio Ma ager

Group Sustai abilit Co troller

Biodi ersit &Co ser atio Asst.

(Ce tral Kalima ta )

Super isor &Co ductor ateach estate

Biodi ersit &Co ser atio Asst.(West Kalima ta )



(Sumatra)



(East Mala sia)

m s Hcv a

conservatIon In malaysIaRiparia zo es ge erall ser e as a e celle tprotectio or ba k erosio a d to lter o sur ace ru -o s. I Sabah, the Segama Ri er iour Sabahmas Pla tatio is a importa t habitat

or the Proboscis Mo ke s, a species commo l

ou d i ma gro e a d ri eri e orest areas.Listed as a e da gered species o the IUCnRed list, these mo ke s are e demic to Bor eoa d ha e su ered populatio decli e o moretha 50% i the past our decades.

We ha e de eloped a e- ear ripariaco ser atio a d ma ageme t pla aimed ate richi g the riparia area with tree speciesspeci call or the Proboscis Mo ke s i thearea alo g the Segama Ri er. I part ership withthe Sabah Forestr Departme t, the pla calls

or the e largeme t o the riparia area a d therestoratio o habitats o the Proboscis Mo ke s,Sil er Lea - osed Mo ke s a d the migratorBor eo P gm Elepha ts. The project ot o laims to rehabilitate a 20-metre (m) ripariastrip u der the statutor Sabah State laws orcompulsor riparia zo es, but also to pro ide a

urther 30m o our Sabahmas pla tatio la d toe rich the area (total width 50m). I total, 382hao riparia area will be restored a d e richedo er the project duratio .

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COMMITMEnT TO COnSERvATIOn

s Wi i (i h )regIon orest rIParIan

Sabah 5,040 930

Sarawak 1,579 374

Sumatra 3,809 923

Kalima ta 14,659 1,270

t 25,087 3,497Note : This data excludes West Kalimantan because the HGU (Hak Guna Usaha Cultivation right to land) cadastral

has not been fnalised.

We also co tributed towards the operatio s o Rai bow Ridge, a compa set up b o e o our shareholders to ma age a 527ha wildli eco ser atio corridor alo g a co tiguoushill that e te ds rom Tabi Wildli e Reser e(a 120,000ha orest/wildli e reser e) i to ourSabahmas pla tatio . Tabi Wildli e Reser eis home to se eral e da gered, rare a d

threate ed (ERT) species i cludi g the criticall -e da gered Sumatra Rhi oceros which is o

the bri k o e ti ctio , the e da gered CloudedLeopard, the Ba te g (Tembadau - a wildcattle species) a d the e demic Bor eo P gmElepha t, with populatio s larger tha a other

orest/wildli e reser e i Sabah. Tabi Reser e isa critical reser e, as it is home to the remai i gpopulatio o 30 Sumatra Rhi os a d possiblthe si gle largest populatio o Tembadau,

which umbers less tha 400 i the wholeo Sabah.

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The Rai bow Ridge Game Warde U itco sisti g o 16 Ho orar Game Warde s wasestablished i September 2008. This u it ise trusted with the task o protecti g ot o lthis importa t corridor rom illegal poachers,but also to assist i the protectio o theTabi Reser e rom illegal e croachme t a dpoachi g, a d to augme t the Sabah Wildli eDepartme ts ght agai st illegal poachi g a dillegal wildli e trade i the regio . The Game

Warde s are empowered u der the SabahState laws, a d carr the same authorit as theSabah Wildli e Departme t o cers to e orcelaws, i cludi g to arrest illegal poachers a dco scate wild meat.

conservatIon In IndonesIabi i i c iWilmar I ter atio al has part ered with theZoological Societ o Lo do (ZSL) o theBiodi ersit a d Agricultural CommoditiesProduct (BACP) project titled I creasi g theE ecti e ess o Biodi ersit Related RSPOPri ciples a d Criteria. ZSL is a i ter atio alco ser atio orga isatio a d a registeredcharit both i I do esia a d the U ited

Ki gdom. The are worki g together withthe Wildli e Co ser atio Societ (WCS) a dthe I do esia I stitute o Scie ces (LIPI) ataddressi g the critical issues u der the RSPOBiodi ersit Pri ciples a d Criteria (P&C).The WCS is curre tl doi g the gap a al sisa d compili g data o co ficts betweeI do esia laws a d RSPO, which make theco ser atio o HCv areas i I do esia sochalle gi g, while LIPI will pro ide e pertise ithe biodi ersit assessme ts. The biodi ersitassessme ts ocus o our ta o omic groups:

sh, birds, mammals a d reptiles. The will helpto determi e what is the most e ecti e le gth


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a d i -depth research required or a e ecti eHCv mo itori g a d ma ageme t o oil palmpla tatio s, as well as de elopi g a HCv guide

or pla tatio ma agers to ma age HCv areaso their pla tatio s. Two o Wilmars sites werechose o e de eloped pla tatio (PT Ke ca aSawit I do esia i Sumatra) a d the other a ewde elopme t pla tatio (PT Me ta a Sawit Masi Ce tral Kalima ta ). The project will ru ortwo ears with a possible o e- ear e te sio .

Less tha o e perce t o all publicatio s o theoil palm i dustr are related to biodi ersit a dthe research that has bee do e is o te locked

i scie ti c jour als u a ailable to pla tatioma agers. ZSL has alread produced a websiterelated to oil palm a d biodi ersit a d thedata base o the research that has bee do eo biodi ersit i oil palm ca be accessed romthere i both Bahasa I do esia a d E glish -http://www.oilpalm-biodiversity.in o/

Besides eld support a d pro isio o eldsites, Wilmars role i this part ership i cludesthe matchi g o u ds awarded rom the BACP,which is a requireme t u der the gra t. To date,Wilmar has co tributed USD250,000 i direct

a cial co tributio s.

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o - iThe I do esia go er me t has orderedthe closure o all ora g-uta sa ctuaries a drehabilitatio ce tres b 2015 u der a 10- earpla aimed at carbo co ser atio . The pla setsout to co ser e orests a d release ora g-uta si to these orests. Ma ora g-uta ce tres arealread so ull that the ca o lo ger take i

urther a imals. We are curre tl i dialoguewith a i ter atio al ora g-uta co ser atio

orga isatio to trial ru Best Ma ageme tPractices (BMPs) or ora g-uta co ser atiowithi our Ce tral Kalima ta pla tatio s.These BMPs look predomi a tl at mi imisi gco fict betwee ora g-uta s a d pla tatioacti ities through the pro isio o orest bu erzo es a d habitat e richme t. The i te tiois to e e tuall tra s er these BMPs to otherpla tatio compa ies to e sure o more ora g-uta s are se t to rehabilitatio ce tres becauseo oil palm e pa sio .


Image courtesy o Melissa Tolley, Wilmars primatologist

Wilmars dedicated primatologist a d ourCe tral Kalima ta team are curre tl carr i gout a ora g-uta populatio ce sus i theHCv areas o the pla tatio to assess theappro imate umber o ora g-uta s, their e actlocatio s, their home ra ge a d the carr i gcapacit o the la d area. Alo gside the BMPs

or ora g-uta co ser atio , we hope thatsome areas o orested HCv la d ma pro ide

a suitable locatio to recei e tra s-locatedora g-uta s rom small orest ragme ts wherethe habitat is o lo ger suitable or this greatape species.

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WIldlI e In tHe eco-regIon landak dIstrIct, West kalImantan(IndonesIa) and rIbubonus estate, nortH o teluPId (sabaH) Iucn red lIst status

Threate ed birdspecies

Black Hor billBlue-rumped ParrotDiards TrogaGar et PittaGreat ArgusHelmeted Hor billLo g-tailed parakeetReddish Scops OwlRed- aped TrogoRed-throated Su birdRhi oceros Hor billRu ous-collared Ki g sherScarlet-rumped TrogoWhite-crow ed Hor billWri kled Hor billBlu-ba ded Ki g sherBor ea Wre -babblerHook-billed BulbulLarge Gree PigeoShort-toed CoucalStraw-headed Bulbul

near Threate ednear Threate ednear Threate ednear Threate ednear Threate ednear Threate ednear Threate ednear Threate ednear Threate ednear Threate ednear Threate ednear Threate ednear Threate ednear Threate ednear Threate edvul erablevul erablevul erablevul erablevul erablevul erable

Threate ed mammalspecies

Sarawak Su liAsia Elepha t

Bor ea gibboHair - osed otterOtter-ci etSu da pa goliGia t SquirrelLarge f i g oLo g-tailed (crab-eati g) macaqueLo g-tailed macaqueSil er la gurBa ded palm ci etBearded pigBi turo g (Bearcat)Clouded LeopardOrie tal Small-clawed OtterPig-tailed macaqueSambar deerSlow lorisSmooth otterSu BearSu da TarsierTu ted grou d squirrel

Criticall e da geredE da gered

E da geredE da geredE da geredE da gerednear Threate ednear Threate ednear Threate ednear Threate ednear Threate edvul erablevul erablevul erablevul erablevul erablevul erablevul erablevul erablevul erablevul erablevul erablevul erable

number o mammalspecies

La dak District, West Kalima ta , I do esia: 45Ribubo us estate (located orth o Telupid, Sabah, Mala sia): 27

IUCN Red list status is an o fcial classifcation used to categorise threat levels.

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Climate cha ge is o e o the most seriouschalle ges aci g ma ki d. We belie e thatit is crucial or our sector to u dersta d a dimpleme t mitigatio actio s to reduce ourimpact. Shi ts i rai all patter s a d otherclimatic ariables ha e a direct impact oour operatio s across our e tire supplchai , rom ertiliser applicatio or ourupstream operatio s, to shippi g schedules

urther dow stream.

our global carbon ootPrIntI 2007, we commissio ed a ull o er iew o the Wilmar group o compa ies gree housegas (GHG) emissio s, i ol i g most o ouroperatio s globall . The resulti g stud ga eus a complete carbo ootpri t rom the eldto the market measuri g GHG emissio sresulti g rom pla tatio s, mills a d re eriesto shippi g a d tra sport. The o erall di gswere that 54% o Wilmars global emissio scame rom pla tatio s, 40% rom mills a dre eries, a d 6% rom other acti ities. Our

I do esia operatio s accou ted or arou dtwo-thirds o emissio s a d our Mala siaoperatio s appro imatel 7%. The stud ser esboth as a be chmark o which we ca measure

uture emissio reductio s, a d has also beecrucial i allowi g us to i est i GHG emissioreductio i itiati es. We wa t to co ti uouslmo itor our carbo ootpri t resulti g romour operatio s a d d wa s to i tegratee gi eeri g solutio s i to ma ageme tpractices to lower our e iro me tal impact.

addressIng PlantatIon emIssIonsFollowi g our rst carbo ootpri t stud ,di gs o la d use, la d-use cha ge a d

orestr (LULUCF) ha e become a importa tco sideratio or our upstream operatio s,with particular ocus o ew pla tatiode elopme t projects.

We ou d that LULUCF a d peat soils are themai GHG co tributors accou ti g or 97%o emissio s or our upstream operatio s.I teresti gl , we also ou d that our pla tatio sha e er di ere t le els o emissio s basedo the ear o gree eld de elopme t. For

ewl established operatio s, such as thosei Kalima ta , we saw emissio s o o er 100to es o CO 2e per hectare, compared witharou d 30 to es o CO 2e per hectare or ourmatured operatio s i Sarawak, based o a 20-

ear amortisatio rate.

mItIgatIng greenHouse gases (gHg)rom mIlls

E fue t treatme t accou ts or 88% o GHGemissio s origi ati g rom our palm oil milloperatio s, with ossil uel co sumptio orpower ge eratio a d tra sport accou ti g

or the remai der. This highlights the greatimporta ce o metha e-capture a d biogasutilisatio projects, which could reduceemissio s a d suppl electricit to ouroperatio s a d local commu ities.

ACTION AGAINSTCLIMATE CHANGE

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We curre tl ha e si Clea De elopme tMecha ism (CDM) projects registered withthe U ited natio s Framework Co e tioo Climate Cha ge (UnFCCC) a d someha e alread ge erated carbo credits i the

orm o Certi ed Emissio Reductio s (CERs).Most o these projects i ol e biomass boilerpla ts ge erati g steam a d power, utilisi gwaste products such as empt ruit bu ches,shells a d mesocarp bre. While the baseli e

emissio le els ar rom o e project to a other,its goal i displaci g ossil uel co sumptio isco sta t, be it Scope 2 GHG emissio arisi g

rom electricit rom the grid or Scope 1 GHGemissio rom the use o coal, medium ueloil (MFO) or diesel bur i g or steam/powerco sumptio . Se eral more projects are iprogress ra gi g rom a oida ce o metha eemissio rom palm oil mill e fue t treatme tpo ds to steam/power ge eratio utilisi gbiomass rom our rice milli g operatio s iviet am a d Chi a.

PromotIng clImate cHange actIon Inour sectorI 2009, the RSPO decided to dela theadditio o a set o criteria o GHG proposed

or the RSPO Pri ciples a d Criteria. Thesecriteria would mea stro ger mo itori g o emissio s, as well as se ere restrictio s o ewde elopme t o certai soil t pes mai l peat.

The proposed criteria had bee de eloped ia multi-stakeholder RSPO-led worki g group.We support the adoptio o these criteriaas ecessar to achie e reductio s, a d willproceed i adopti g them as soo as thebecome a ailable.

Howe er, we are committed to e couragi gemissio s reductio s throughout our i dustr .To address co cer s rom some producers o

the criteria, a d propose ame dme ts, a seco dGHG worki g group was established, a d ourGroup Head or Corporate Social Respo sibilitwas elected to co-chair the seco d RSPO GHGWorki g Group i 2009.

IncreasIng transParency I 2008, we took part i the Carbo DisclosureProject (CDP) a i estor-led tra spare ci itiati e aimed at e couragi g reporti g o carbo emissio s a d reductio i itiati es.We reported both i 2008 a d 2009, a d arecurre tl o e o o l e Si gapore-listedcompa ies to participate.

Due to operatio al comple ities arisi g romrapid e pa sio o our Groups busi esses, wewere u able to take part i subseque t CDPreporti g but will resume reporti g o ce weare able to co solidate a d streamli eoperatio al data.

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Good soil mea s health a d producti epalms. We take this i to accou t, both wheselecti g la d or ew de elopme ts a di mai tai i g a d impro i g our e isti gpla ti gs. A combi atio o suitable soil, reuseo biodegradable waste a d optimal ertiliseruse is the ke to attai i g the ield pote tial o the palms.

maIntaInIng and ImProvIng soIl

ertIlIty We ollow best i dustr practices, such asapplicatio o empt ruit bu ches to ewpla ti gs a d establishi g co er crops a dlea e biodegradable materials duri g the la d-cleari g stages. Such processes are recog isedto release utrie ts a d orga ic matters i tothe soil, impro e soil properties, reduce erosioa d lowers carbo dio ide emissio s.

I additio , we co duct research o the use o soil microbes to impro e soil ertilit with theaim o reduci g usage o i orga ic ertiliser.Studies ha e also bee do e o impro eme to ertiliser applicatio tech iques with the aimo reduci g leachi g. We use co trolled release

ertiliser a d practice sub-sur aci g ma uri gwhere appropriate to reduce leachi g losses.Our soil co ser atio measures i cludeco structio o pla ti g plat orms a d terraces

or soil, a d water co ser atio terraces i o -terraced areas.

selectIng suItable soIls avoIdIng PeatAlthough good ma ageme t practices casig i ca tl impro e the producti it o mostt pes o tropical soil, we aim to de elop o l ola d which is suitable rom both a productioa d e iro me tal perspecti e.

Peatla d is ge erall a di cult growi g mediumor oil palm, requiri g sig i ca tl more

ma ageme t tha other soil t pes. I additio ,we recog ise the role o peatla ds as a carbosi k a d the detrime tal e ect o carboemissio s which the cleari g a d drai age o such areas ca ha e. As a co seque ce weha e a polic to a oid e te si e de elopme tso peat. I Mala sia, o e o our estates areo peatla d. I I do esia, we do ot allow acleari g o e te si e peat la d o more thathree metres, but our e isti g pla tatio s iI do esia ha e 17,228ha o peat, ra gi g roma ew square metres to arou d 2,400ha i size.These pla ti gs were established prior to thedebate a d recog itio o the role a d alue o tropical peatla ds. Our ocus or these areas isstrict mo itori g a d ma agi g o water tables.

SOIL MAnAGEMEnT

200720082009

i i - i(To es/hectares) 1.02

Sumatra WestKalima ta

SabahCe tralKalima ta

Sarawak

0.68

1.26

0.671.19

1.17 1.24

0.99 0.860.78

0.730.73 0.74

1.33

0.71

2007

20082009

i i - (To es/hectares)

0.73

0.921.15 1.59

1.621.31

1.18

1.18 1.061.04

1.13 1.02

2.91

1.641.75



Sarawak

36



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Ope bur i g is a sig i ca t problem i someo the regio s where we operate, damagi ghigh co ser atio alue areas, pla ted areas

a d soils; polluti g the air throughout theregio ; a d creati g se ere impedime tsto our work. We adhere strictl to a polic o zero-bur i g or site preparatio a d workco ti uousl to put a e d to a use o ope

re withi our operatio s a d surrou di g areas.

Withi pla tatio s with sig i ca t re risks,we ha e i itiated local re brigade crews,i stalled watch towers a d water pumps,a d ha e a mo itori g s stem or re-pro eareas. We also co duct re drills as part o ouremerge c respo se pla . To augme t our

eld-based earl -detectio s stem, we ha ea satellite mo itori g s stem i place whichdetects hotspots.

I 2009, our re crews were called out to 91reported cases o res, which caused damageto 560ha o our pla tatio s. O the total bur t

areas, 38% was o pla ted areas at a highcost to our operatio s. Further, due to se eredrought i Ce tral Kalima ta , there was asig i ca t i crease i res, with 76 reports. Thisis a i crease rom a a erage o 19 res romthe two pre ious ears.

We ha e i estigated the reaso or the resthrough a i depe de t assessme t. Most

res were started b illages borderi g ourpla tatio s that used bur i g to clear la d orshi ti g culti atio , which is part o their localtraditio . These res o te are u co trolled a d

spread to our pla tatio s. We are e gagi gwith the local commu ities to support them iusi g alter ati e methods to clear la d.

COnTROLLInG FIRE AnD HAZEi i

Central Kalimantan West Kalimantan Sumatra- Riau MalaysiaPla tedHectaresBur t

78.0 4.1 173.0 4.0 0.7 6.3 15.0 30.0 8.5 0 0 0

U pla tedHectaresBur t

22.5 46.6 339.0 0 0 20.0 37.0 30.0 15.0 0 0 0

numbero Fires 25 13 76 2 1 8 1 2 7 0 0 0

2007 20082007 2008 2009 2007 2008 2009 2007 2008 2009 2009

37



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REDUCTIOn In CHEMICALS USE

200720082009

H i i . p- i(Litres/hectare)

NB: Sarawak usage increased due to changes in cover cropand oil palm age profle

0.160.71

1.770.54

8.56

1.691.06

8.80

3.69

5.17

3.37

4.81 4.49



Sarawak

200720082009

H i i . p- (Litres/hectare)

1.221.09 1.19

2.95

6.36

2.72

1.232.00

4.34 3.98

2.302.80

2.30

7.467.39



Sarawak

Our pla tatio s ha e a well-establishedi tegrated pest ma ageme t (IPM) s stemwhich is desig ed to mi imise the use o pesticide. We co ti uousl e plore betterma ageme t practice where the use o chemical co trol is co sidered o l as a lastresort whe alter ati e biological a d culturalmethods ail.

As part o our commitme t to the RSPO, we

are setti g targets or reductio s i pesticidesa d herbicides. Howe er, tracki g a daddressi g chemicals usage reductio s i shorttime rames ca be misleadi g, as it will refectspeci c weather co ditio s, pest outbreaks a dwill ar with the palm age pro le. I additio ,some o -chemical pesticide strategies suchas be e cial pla t species will o l take e ecta ter a umber o ears.

Our pla tatio s are based i disti ctl di ere tclimatic a d geographical regio s, a d as aresult, weeds, i sects, u gi a d other pestma ageme t strategies ar treme dousl .

I additio , the age o the palms also requiredi ere t le els o chemicals applicatio s. Fore ample, our Ce tral Kalima ta operatio sare rece tl established, a d require astabilisatio regime to co trol lo g-established weeds a d pests, whereas some o the estates i the West Kalima ta regio ha ebee i operatio or o er se e ears; barri ga immediate pest outbreaks, most chemicalsusage is or mai te a ce purposes.

PHase-out o ParaquatParaquat remai s o e o the most highl -publicised a d co tro ersial herbicides used ioil palm. Although we belie e it ca be usedsa el a d e ecti el , we u dersta d that ourstakeholders co ti ue to ha e co cer s. OurMala sia pla tatio s, as well as our largestde elopme t i Ce tral Kalima ta , I do esiaha e alread phased out all paraquat usage;a d remai i g u its ollow a strict mi imisatiopolic worki g towards phase-out. We ha eset a target to elimi ate all use o paraquat iI do esia b ear-e d 2011.

38



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200720082009

200720082009

P - i(Litres/hectare)

P - (Litres/hectare)

0.730.92

1.15

0.08

2.91

1.641.75


Ce tralKalima ta

1.30

1.60

1.30

0.01

0.68

1.030.79


Ce tralKalima ta

No data available or Sabah and Sarawak or 2007 No data available or Sabah and Sarawak or 2007

HandlIngChemicals are o l applied ma uall a d btrai ed spra i g crews, who recei e o goi gtrai i g i chemical-ha dli g. All spra ersare required to wear authorised perso alprotecti e equipme t (PPE), which co ersthe ull bod , as well as hair, e es a d mouth;a d must shower a ter each shi t. Super isorsare charged with e suri g complia ce, a dsa et procedures are mo itored throughi ter al audits. Spra i g crews are alsorequired to go or medical check-ups o amo thl basis at acilities pro ided b Wilmar.

dIsPosal and storageAll chemicals are stored i speciall desig edlocked acilities with a drai i stalled to pre e ta accide tal spillage polluti g the grou d or

earb water sources. Likewise, a co tai erspre iousl used or chemicals are collected,stored a d disposed o separatel i accorda cewith the legal requireme ts.

39



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Our busi ess is hea il depe de t o water.Our oil palm pla tatio s require water orco ti uous ruiti g, a d our emplo ees a dlocal commu it eighbours rel o cleaa d dri kable water to sustai their li es a dli elihoods. Recog isi g that water is goi gto be the e t global crisis li ked to climatecha ge, we ha e joi ed leadi g i ter atio alcompa ies to e dorse the U ited natio s CEOWater Ma date to help address the worldswater challe ges.

Chemical polluta ts a d agricultural wastescompromise water qualit , a d pose a threatto the e tire ecos stem. Ma u k owe iro me tal risks ha e arise rom thewidespread use o chemicals a d i appropriatema ageme t o agricultural wastes. We arethere ore committed to usi g sou d waterma ageme t practices to e sure that thequalit o local water resources is otcompromised b our operatio s.

At the mill, we mo itor a d treat all e fue t a dwaste-water be ore dischargi g i to the aturalwaterwa s. We ha e e fue t po ds i our millsthat collect waste-water ge erated b milli gacti ities. The orga ic materials i the waste-water are broke dow b atural acti ities o

aerobic a d a aerobic bacteria. This processelimi ates the eed to add chemicals be orethe water is discharged. I I do esia, we alsouse e fue t or la d applicatio . I someo our mills i Mala sia, we ha e i stalledtertiar treatme t pla ts to urther reduce theBiological O ge Dema d (BOD) le els.

We also use e fue t water or la d irrigatio a dertilisers, e abli g us to reduce water usage

a d mi imise the eed or additio al ertilisers.

I the ma ageme t o our pla tatio s, weestablished practices that mi imise soil erosio ,usi g tech iques such as pla ti g grou d-co er crops, a d pla ti g plat orms a dma ual cleari g o steep or otherwise se siti eslopes. E cessi e soil erosio e couragesloadi g o water-courses a d disturbsaquatic ecos stems.

We a oid e cessi e use o chemicals, asthis practice ma co tami ate the soil, a dsubseque tl sur ace a d grou dwater. Wepre er the use o a i tegrated pest ma ageme tapproach (IPM) i stead.

PROTECTION OF WATERqUALITy AND SUPPLy

40



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bod i i h i i(mg/l)

ri i h

Sabah Sarawak Sumatra

51 7420664 46 17337 44 180

l pp i i

WestKalima ta

SumatraCe tralKalima ta

2,521

282306

733

1,250914

169

866

Note: Malaysia operations have installed water meters in 2010. These indicate lower water usagethan previously reported.

SumatraWestKalima ta(mill o l )

Sabah Ce tralKalima ta

Sarawak

2007 2007 2007 2007 20072008 2008 2008 2008 20082009 2009 2009 2009 2009

W (m3) p b (mi )

2.50

2.00

1.50

1.00

0.50

0.00

Water use per to e o FFB

1.69

1.92 1.89

1.20 1.17

2.02

1.68

1.201.06

1.89

2.14

1.18 1.26

1.72

200720082009

Sumatra2007 2007 2007 2007 20072008 2008 2008 2008 20082009 2009 2009 2009 2009

WestKalima ta(mill o l )

Sabah Ce tralKalima ta

Sarawak

W (m3)

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

000

Rai water

Water utilities

Grou d water

Ri ers a d lakes

41



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42


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We are committed toundamental human rights and

core labour standards whichinclude respect or reedom o association, non-discrimination,decent pa and working hours,as well as a complete ban on

orced or child labour.

EMPLOyEESEmPlOyEES


46/80

e p r i

12,57733%

8,609

22%

9,08324%

7,97421%

Sumatra (2009 e cl. BHL)Ce tral Kalima ta

Mala siaWest Kalima ta

e p w i 2009

Ma ageme tSta Workers

BHL- Buruh Harian Lepas ( reelance daily workers)

5 RP1 = USD0.000108 6 USD81/26 days

Our commitme t to the Un Global Compactas well as our RSPO programme requiresus to assess our adhere ce to u dame talhuma rights a d core labour sta dards. Thesei clude respect or reedom o associatio , o -discrimi atio , dece t pa a d worki g hoursa d a complete ba o orced or child labour.

With more tha 40,000 emplo ees rel i g oour pla tatio s a d mills or their li elihood,

most o whom also li e i the estates, o e o our oremost respo sibilities is to e sure thatbasic worki g a d housi g co ditio s are aira d dece t.

I ta dem with our growth, we ha e see ai crease i the total umber o emplo ees,mai l i the categor o operatio al workerswho accou ted or 89% o our emplo ees i2009. The operatio al workers categor o emplo ees i cludes har esters, spra ers, dri ers,mill operators as well as ge eral workers.

decent Pay and condItIonsMi imum wages i I do esia are ot set b

atio al sta dards, but rather b pro i cial a ddistrict wage cou cils that set di ere t mi imumwage requireme ts that ar b pro i ce a dsector. It ca be as high as 1,100,000 rupiah permo th (USD118) i Papua to as low as 500,000rupiah per mo th (USD54) 5 i East Ja a. U derlaw, I do esia has a 40-hour work week a d ase e to eight-hour work da .

Our mi imum wage i our I do esia operatio sor both temporar a d perma e t emplo ees

is equal to or higher tha the regio al mi imumestablished b the wage cou cil. Our lowestmi imum wage is i Wester Kalima ta atUSD81 per mo th or USD3 per da 6. This wageis suppleme ted urther b be e ts such ashousi g, tra sportatio , utilities, educatio a dmedical ser ices to our sta , be e ts that maworkers i I do esia do ot recei e.

DECEnT WORKInG COnDITIOnS

89%

9%

2%

44



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mi i w i h i Wi i i p 2008

Wage councIl WIlmarRiau Rp 800,000 Rp 800,000Jambi Rp 724,000 Rp 724,000WestKalima ta

Rp 645,000 Rp 663,333

Ce tralKalima ta

Rp 765,868 Rp 867,725

There is o mi imum wage i Mala sia. Basedo a eight-hour da , 26 worki g da s amo th, a t pical mo thl wage ca ra ge romappro imatel MyR650-1,000 (USD210-325) ora ge eral worker, a d up to MyR1,700 (USD550)

or a har ester. I additio to this, all workers arepro ided with ree housi g, water a d electricit

ree o charge.

casual and temPorary WorkersA high proportio o our workers i I do esiaare temporar workers. This is largel a u ctioo the ew de elopme ts i Ce tral Kalima ta .We are reduci g our relia ce o temporarworkers sig i ca tl o er the comi g ears, bothto pro ide better co ditio s, a d because wewish to grow a stable a d producti e work orce.

reedom o assocIatIonI I do esia, the law protects the right o allworkers to orm a d joi u io s regardless o political a liatio . Te or more workers ca

orm u io a d there are thousa ds o u io sregistered i I do esia. With the e ceptio o

ci il ser a ts, workers ha e the right to strikea ter ma dator mediatio is attempted but ails.

Wilmar ull supports the right o emplo eesto orm or participate i trade u io s, a d iI do esia the proportio o our work orce withu io membership has grow to just u der 40%as o 2009.

malaysIaTrade U io s i Mala sia are regulated u der theI dustrial Relatio s Act (1967), which pro ides

or reedom o associatio . Wilmar ull supportsthe right o emplo ees to orm or participate itrade u io s; howe er, there are curre tl otrade u io s i our Mala sia operatio s.

emPloyment o cHIldrenno i di idual below the age o 16 i Mala siaa d 18 i I do esia is allowed to work o ourpla tatio s. We do recog ise the prese ce o childre o our pla tatio s a d we aim to makesure that the are pro ided with educatio a dhealth-care. Duri g our RSPO audit i o e o our estates, some workers were ou d to ha ebee emplo ed be ore the age o 18 (but abo e

the legal age o 16). The policies o mi imumage requireme ts ha e ow bee highlightedto all ma agers or the o -complia ces tobe corrected.

orced labourWe do ot allow a t pe o orced or bo dedlabour o our pla tatio s. Each worker isdocume ted, with salaries a d compulsorco tributio s clearl stated o pa -slips writtei the atio al la guage.

HousIngWe aim to pro ide clea a d com ortablehousi g co ditio s or all o our emplo ees,whether the are temporar labourers,perma e t operatio al sta or ma ageme t.I our more established operatio s i Mala siaa d Sumatra, workers are t picall housedi brick buildi gs with i door plumbi g a delectricit . Families are housed together, a dsi gle workers usuall housed i ge der-separated u its with our workers to o e house.

We aim or a similar sta dard or our ewde elopme ts, e e or temporar housi g.

u i (% o emplo ees)

1009080706050403020100

2007 2008 2009

Central Kalimantan and Sumatra only.

no -u io 34,11610,312

38,74710,932

21,77113,442U io

45

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48/80

Co trar to public perceptio , oil palmculti atio requires a high le el o specialistskill whether at the eld worker or ma agerialle el. We are there ore stro gl ocused oattracti g, de elopi g a d retai i g emplo eesas well as e pa di g our pote tial labour poolthrough local capacit buildi g a d a proacti eequal opportu ities polic .

develoPIng local talent

I our I do esia operatio s, it ca o tebe di cult to attract a d retai e perie cedma agers, due to a i creasi gl competiti elabour market. Howe er, we are committedto de elopi g local ma ageme t skills, a d

there ore se d our e perie ced ma agersrom other regio s to trai a d me tor ew

colleagues. E patriates accou t or 7% o ma ageme t sta as the bri g e pertiseto pla tatio ma ageme t. As we buildlocal capacit , our relia ce o e patriates ima ageme t has decreased, a d we ha e seea stead decli e.

I Mala sia, we ha e ocused o de elopi g astro g local ma ageme t team. Almost 60% o our ma agers are i dige ous to the two statesi which we operate Sabah a d Sarawak.

As ar as the ge eral work orce is co cer ed iMala sia, the situatio is er di ere t. Due tothe se ere worker shortage i our i dustr , themajorit o our workers are oreig workers mai l I do esia .

buIldIng uture caPacIty The Ipas Trai i g Ce tre was set up i 1993 ithe Sapi Pla tatio Estate, Sa daka , Sabah.Ipas was de eloped to pro ide tech icaltrai i g o best ma ageme t practices i

A SUPPORTIvE WORKEnvIROnMEnT

%I diaMalaChi eseI dige ous

Others

m h i i(Mala sia)

100

80

60

40

20

02007 2008 2009

62

30

44 44

61

32

88 7

60

29

66

I do esia

no -I do esia

233

45

232

39

411

33

m c p i i(I do esia)

100

80

60

40

20

0

%

2007 2008 2009

46



49/80

oil palm culti atio , i cludi g those requiredor complia ce with the RSPO Pri ciples

a d Criteria. To date, Ipas has produced365 graduates. The trai ees get theoreticala d practical lesso s o bota , peoplema ageme t skills a d e e budget pla i ga d ma ageme t. I 2005, we also establisheda similar trai i g school i Sampit, Ce tralKalima ta , I do esia.

oPPortunItIes or WomenWe belie e that a di erse work orce creates amore harmo ious workplace a d commu it .Although we operate i a e iro me t thathas traditio all bee male-domi ated, weha e made a co scious e ort to e sure thatour pla tatio s o er opportu ities or wometo ad a ce i a o -threate i g e iro me t.As a result, o er 30% o our total work orce is

emale, a le el we belie e to be amo g thehighest i the i dustr .

Wome are also represe ted at ma ageme tle el, albeit at a much lower rate arou d 10%o our ma agers are emale. We hope to seethis proportio i crease, as more wome ithe ge eral work orce are gi e opportu itiesto ad a ce.

We ha e achie ed this through a umbero i itiati es, i cludi g structured wome scommittees i which elected represe tati esha e the opportu it to meet to discuss worka d housi g-related issues. I additio , thesecommittees assist i resol i g issues relatedto our se ual harassme t policies, e suri gthat a cases are addressed se siti ela d e ecti el .

W % p

17.1

28.6 27.5

6.5

15.2

35.6

6.4

36.8 37.0

5.0

48.9

37.1

2007

20082009

2007

20082009

W %

SumatraSumatra(i cl. BHL)

Ce tralKalima ta

Ce tralKalima ta(i cl. BHL)

Mala sia(Q3 09)

Mala sia WestKalima ta

WestKalima ta(i cl. BHL)

9.912.7 12.812.6 13.9 13.511.7

8.7

15.9

2.47.1

16.7

47

EmPlOyEES

47


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A SAFE WORKPLACE

All emplo ees ha e the right to a sa e worki ge iro me t. To achie e this, we ha eimpleme ted a s stem o hazard ide ti catio ,risk assessme t a d co trol (HIRAC), whichempowers our sta to ide ti areas o da gera d work towards elimi ati g these risks.

accIdents - IndonesIaOur operatio s i I do esia ha e a relati ellow accide t rate due to the o goi g trai i go all eld workers a d igorous e orceme to perso al protecti e equipme t (PPE) use iboth pla tatio a d mill operatio s. Our

I do esia operatio s ha e workers a dma ageme t committees which ide tipote tial sa et impro eme ts a d co cer s.The relati el ew machi er ou d i our

mills i Kalima ta also helps to reducei dustrial accide ts. For e ample, our Ce tralKalima ta mill uses a ertical steriliserwhich pre e ts some o the se ere accide tsassociated with the traditio al cage s stem breduci g huma i teractio with pote tiallda gerous machi er .

Our commitme t to health a d sa et or ourworkers resulted i the Zero Accide t Award

rom the Mi istr o Labour a d Tra smigratioo I do esia or the period o 1 Ja uar 2005to 30 September 2007, awarded to our o our

subsidiaries. Our target or I do esia is tomai tai lost time accide t rates at less tha 2.5per 200,000 worki g hours at all operatio s.

l i i i - p i

Lost timei cide t rate

Sabah2007 2007 2007 20072008 2008 2008 20082009 2009 2009 2009

Sarawak SumatraCe tralKalima ta

Data not availableor West Kalimantan

Data not available

or Central Kalimantan or 2007 & 2008

12.0

16.017.7

6.1

0.4

4.8

2.5

7.0

1.92.8

LTIR is per 200,000 working hours

Sabah2007 2007 20072008 2008 20082009 2009 2009

Sarawak Sumatra

l i i i - i

Lost timei cide t rate

Data not availableor West Kalimantan

and Central Kalimantan

12.0

4.0

2.0

5.76.5

0.3

7.5

0.1

7.2

0.1

Note: Lost time accidents in Malaysia are recorded a ter one days absence, while Indonesia records lost timeaccidents a ter 3 days absence, in accordance with national legislation. We aim to create a new reportingsystem or 2011, allowing comparison across the two countries.

48



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accIdents - malaysIaLost time accide ts ha e i creased i Mala siao er the past ears. We belie e that this isprimaril due to a e ort to cha ge i theculture o reporti g a d recordi g accide ts.ne ertheless, we are adopti g aggressi etargets to reduce lost time accide t rates to 5 iour Mala sia operatio s b 2012.

atalItIes

U ortu atel , we recorded eight atalities i2009. E e o e death is u acceptable, a d isollowed up b a thorough re iew o cause a d

actio s to pre e t recurre ce. Most accide tstook place i the eld, a d were tra c-related.The re iews are ollowed up b co ti ued

e orts to e sure that dri ers are well-trai eda d aware o the hazards o dri i g, a d thatworkers e ercise cautio whe tra elli g withithe estates.

accessIble HealtH servIcesThe majorit o accide ts i the eld i ol emi or cuts a d thor pricks, which ca becomeseptic i ot treated. Immediate treatme tpre e ts this, resulti g i much less discom ort

a d lower lost time rates. I 2009, we de elopeda campaig to e sure that our workers hadaccess to immediate rst-aid or such cases, aswell as or emerge cies. We co structed rst-aid rooms, trai ed rst-aid deli er perso s a dpro ided rst-aid kits or use i the eld.

i i(number o work-related deaths)

i - i i i i

Mala sia2007 200720072008 200820082009 20092009

I do esia

11

142183

14030 34

1,167

509

First-aid KitFirst-aidersFirst-aid Rooms

11428

2

7

1 1 1

49

EmPlOyEES


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50


53/80

We believe that our businesssuccess can onl be achieved i thelocal communities grow in tandem

with our own growth.

COMMUNITyCOmmuNITy


54/80

FREE, PRIOR AnD InFORMEDCOnSEnT FROM COMMUnITIESWe are ull committed to co tributi g tosustai able commu it de elopme t where erwe operate. We belie e that our busi ess successca o l be achie ed i the local commu itiesgrow i ta dem with our ow growth. Howe er,our e perie ces i I do esia o er the past

ears ha e highlighted areas where such e ortsrequire major cha ges i polic impleme tatio

to sa eguard the protectio o huma rights.

land con lIct In IndonesIaI I do esia, the gra ti g o la d use rightsis e tremel complicated commu it la drights are rarel well-de ed, a d bou dariesare u clear a d o erlappi g. To some e te t,la d rights a d te ure agreeme ts i I do esiastill refect the impositio o Wester te ures stems o pre-e isti g customar s stems,creati g co ficts i the wa rights to aturalresources are distributed betwee the state a di dige ous commu ities. La d i I do esia ispredomi a tl state-ow ed; compa ies a di di iduals are gi e la d-use rights b the localgo er me t u der lice sed areas or which eesor ro alties are pa able. A e ceptio to thiss stem is traditio al illage la d, usuall smallplots o which illagers grow subsiste ce a dcash crops.

Disputes o te arise rom o erlappi g claims tothe same la d, or through lack o demo strable

la d titles a d claims o traditio al rights. As aco seque ce, comme surate with i dustrial

orestr a d agricultural e pa sio , co fictso er la d i I do esia ha e i creased, a d

compa ies like ours ca be ou d at the ce treo co ficts arou d la d-use claims a d humarights, despite compl i g ull with atio al a dlocal legislatio s.

I 2007, our West Kalima ta operatio s(PT AnI i Sambas District) was challe gedb a group o i ter atio al a d grassroots

nGOs, represe ti g commu ities objecti g too goi g de elopme t o the area (see accou to co fict rom the commu it s perspecti e opages 56-57).

The co fict attracted i ter atio al atte tio ,a d a ected the compa s reputatio withcustomers a d reduced i estor co de ce.The co fict was e e tuall resol ed througha multi-stakeholder process i ol i g nGOs,le ders a d e te si e co sultatio with thea ected commu ities.

Due to the comple la d te ure la dscape, weu dersta d that this case is ot u ique. I deed,we are curre tl i the process o resol i g 43co ficts i Kalima ta a d 5 i Sumatra.

natIve customary rIgHts In malaysIaI Mala sia, nati e Customar Rights (nCR) tola d are i pri ciple much clearer. We are awarethat there are o goi g dispute cases relati g tooil palm i both Sabah a d Sarawak. I Sarawak,

we ha e ot had a sig i ca t issues, but iSabah, we are curre tl resol i g a o goi gdispute o er 57ha i Sabah.

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our aPProacH to PIc and communIty collaboratIonThe West Kalima ta case i Sambas hasprompted sig i ca t cha ges to our ha dli go co ficts, a d our e orts to a oid a d pre e tthem i the rst place. We ha e stre gthe edour co trol a d docume tatio procedures, butmore importa tl are worki g to u dersta d

a d i corporate the ree, prior a d i ormedco se t (FPIC) pri ciples de eloped b ForestPeoples Programme (FPP).

O the basis o this e perie ce, we realise thatour e gageme t eeds to be more proacti e,which could e able us to help resol e ambiguito er la d ow ership, a d a oid allegatio s o la d co ficts a d huma rights abuses. This

ew approach e sures that customar a di dige ous rights are respected, a d thatcommu ities are empowered to gi e their ree,prior a d i ormed co se t to de elopme t.

As a result o our e perie ces i I do esia,we ha e stre gthe ed our la d acquisitioprocedures to e sure that we do ot i ad erte tlco tribute to the dise ra chiseme t o i dige ous populatio s, or breach customarrights. We ha e de eloped a umber o policiesa d procedures to e sure that all mutualagreeme ts with commu ities a d i di iduals

are clearl de ed, docume ted a d legallestablished, thus demo strati g clear e ide ceo lo g-term use rights o la d. Although ourcurre t FPIC procedures di er slightl to refectdi ere ces i the regio s where we operate, thepri ciples appl to all o our operatio s.

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The approach is as ollows:

We do not develop oil palm in areaswhere local commu ities are otsupporti e, are di ided or where thedispute de elopme t. This is do ethrough the use o the FPIC ramework

or all ew de elopme ts.

Implementation of FPIC is securedthrough egotiatio s directl withi di idual la dow ers (where applicable),commu it la dow ers a d commu itleaders.

This entire process is witnessed by localo cials, a d is docume ted i detail.

The company pays statutorycompe satio to the i di idual localcommu it members or leaders (asappropriate) or the e isti g crops ortrees that ma be replaced with oilpalm, together with a ull otarizatio o agreeme ts docume ti g ow ership o la d rights.

In areas where our presence is welcome,a d commu ities are happ with thebe e ts our de elopme t ma bri g,we co ti ue to pla a acti e role ie ha ci g socio-eco omic de elopme t,especiall through emplo me t a dplasma small-holder schemes.

Aside from monetary compensationor agreeme t to pla t oil palm, we

also o er emplo me t that e ables theillagers to ear a lo g-term i come.

In cases where local communities areu willi g to gi e up their la d, thoseareas will be deli eated as sociale cla es or commu it use a d will otbe pla ted u less commu it memberscha ge their mi d.

I cases where there are e isti g co ficts, weuse a similar approach, based o Free a dI ormed Co se t (albeit Post rather thaPrior). Our La d Claims Resolutio S steme compasses a i clusi e multi-stakeholderapproach, worki g closel especiall with localci il societ orga isatio s.

We are committed to respecti g a d protecti gi ter atio al huma rights. Howe er, the legalambiguities o la d rights ca e da ger ouroperatio s a d reputatio through allegatio so de i g commu ities their traditio al la drights. The FPIC ramework has helped topro ide guida ce or us, particularl i areaswhere customar a d i dige ous rights are ot

ull refected i the atio al legal rameworks.Although the FPIC ramework should ideall beused to pre e t co ficts through prior co se t,our e perie ce shows that the ramework caalso be help ul i resol i g e isti g co ficts.

The FPIC ramework has helped us de elop aprocedure that is desig ed to acilitate a disputeresolutio process betwee the ma ageme t,emplo ees, local commu ities a d othere ter al parties. The e t page shows how themecha ism is impleme ted. This is based oa case-stud o a social co fict that we ha eresol ed i o e o our projects taki g placei I do esia.

Our approach to la d acquisitio a dde elopme t has impro ed sig i ca tl asa result o the cha ges described, a d thecompa belie es that this will be e t oto l commu ities, but also our commercialrelatio ships with le ders a d customers, whichwill be stre gthe ed. I additio to these directbe e ts, Wilmar is also committed to shari gits e perie ces through i creased tra spare ca d accou tabilit to help commu ities a d

other compa ies operati g i ambiguouslegal e iro me ts.

FREE, PRIOR AnD InFORMEDCOnSEnT FROM COMMUnITIES

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Stakeholder dialogue

Complai t recei ed(commu it /i di idual)

Ide ti the issues to beresol ed

Results prese ted to bothparties

I commu it /i di idualagrees

Mo itor a d e aluateprogress agreeme t

impleme tatio

Impleme t the agreedterms

Sig agreeme t I commu it /i di idualagrees

Go to Court o Law ornati e Court

no -legal resolutiothrough a mediatio

process

I commu it /i di idualdisagrees

I commu it /i di idual stilldisagrees

Start dispute resolutioprocess accordi g toCo fict Resolutio

Roadmap

I the egotiatio ails,re egotiate with other

compromisi g alter ati es

Ide ti the positi e a d egati e impactsto both compa a d commu it

Prepare mitigatio a d pre e ti e actiopla s to address egati e impacts

c p i & g i P

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Documents

Wilmar SR 2009_single